Organization, Process, and Agency Rulemaking

agency org chart
By Christopher Carrigan & Russell Mills
March 09, 2018

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Abstract

Organizational theorists and economists have long understood that structuring internal work processes into more hierarchical or team-based arrangements has important consequences for the timeliness and character of organizational outputs. We apply these insights to demonstrate how variation in the design of rulemaking procedures inside regulatory agencies affects the resulting rules. Employing a novel dataset tracking job functions of agency rule contacts for over 200 economically significant rules, we find that expanding the breadth of personnel types closely involved in a rulemaking reduces both the time it takes to promulgate the rule and the resulting detail with which it is presented. Our work not only adds another dimension to empirical scholarship studying rulemaking which has largely focused on the effects of constraints originating from outside the agency, but it also demonstrates how theories describing the implications of assigning team participants distinct roles in private organizations translate to government rulemaking.

Following a series of fatal explosions involving U.S. pipelines, the Pipeline and Hazardous Materials Safety Administration (PHSMA) faced substantial criticism in 2015 and 2016 for its perceived inability to finalize rules to toughen pipeline safety standards in response to statutory deadlines imposed by Congress.[1] To explain the failure, media accounts fixated on efforts by oil and gas companies to slow down the rulemaking process at this little-known yet important agency tasked with ensuring the safety of the network of oil and gas pipelines. Still, underlying the media’s focus on PHSMA’s relationships with its regulated entities, a report by the Department of Transportation’s (DOT) Inspector General simultaneously highlighted how important forces inside the agency were to explaining the breakdown. Focusing on PHSMA’s rulemaking process, the Inspector General[2] noted the agency had “not established policies or processes on rulemaking or implementing mandates and recommendations that provide guidance to the program offices, the Chief Counsel, and the Chief Safety Officer (CSO) on how to fulfill their responsibilities for safety regulations… This lack of sufficient processes, project management, and oversight … impeded the Agency’s ability to meet deadlines.”

As the PHMSA example demonstrates, just as forces originating outside the agency can affect both the content of the resulting rules and the pace with which they are promulgated, how processes are organized inside agencies can also be critically important. This fact has not been lost on scholars who study organizations, especially those which are privately owned. Economists and organizational theorists have long debated the optimal structure of work processes, comparing those systems that emphasize traditional hierarchies to those that adopt more team-based approaches.[3] Moreover, while the empirical scholarship studying the organization of work processes has traditionally focused on its role in driving firm results in firms, alternative methods for designing work flows based on team-based approaches are being utilized more and more in public organizations as well.[4]

Still, despite the attention internal dynamics have received in the organizational theory literature, and the nascent interest in considering how alternative approaches to structuring work affect public sector outcomes, little is known about the ways organization affects regulatory agencies specifically.[5] In this article, we speak to this issue by considering what effects these choices have on the characteristics and timing of federal agency rulemakings. Agencies certainly differ with respect to how they organize their processes for promulgating rules.[6] Although many rely on variations of team-based approaches in which the rulemaking office coordinates the participation of various interests, others utilize hierarchical approaches whereby a single office primarily manages the rulemaking process. Further, some agencies employ a combination of the two approaches, in which the lead office solicits the expertise of other parts of the agency as needed.[7]

To analyze the effects of alternative rulemaking processes, we study a novel dataset created by tracking the contacts listed in notices of proposed and interim final rules for the complete set of economically significant rules that were submitted to the U.S. Office of Information and Regulatory Affairs (OIRA) over the period from 2007 to 2010. By determining in which offices those contacts worked as well as what their job titles were and supplementing these data by appealing to agency documents outlining internal rulemaking procedures, we ascertain the processes these agencies use to prepare rules. Specifically, we assess the extent to which an agency’s process emphasizes breadth or depth of expertise among those employees most closely involved in a rulemaking. Measuring both the length of the regulatory process from the date of the authorizing statute to the promulgation of the final rule and the detail with which that rule is presented through a word count, we investigate the effect of design on the timeliness and content of agency rules.

Our analyses demonstrate that increasing the diversity of personnel types most closely involved reduces both the time it takes to promulgate rules and the resulting detail with which they are presented. In contrast, once the breadth of expertise is accounted for in the analysis, the number of contacts listed has the opposite effect. Intimately involving more staff with the same competencies acts to increase rulemaking timeframes while, simultaneously, elongating the resulting rules. Collectively, these results underscore the point that explaining the characteristics and timeliness of promulgated rules requires considering not only factors outside of the regulator’s direct influence, but also those elements originating from inside the agency.

More generally, the results support findings of organizational theorists which have shown that while teams can be superior to hierarchical arrangements,[8] the team’s features, including how distinctive are its participants’ roles, are critical to determining whether this is the case.[9] In much the same way these researchers stress the importance that distinct functions for group members play in mitigating conflict, limiting groupthink, and inducing greater effort,[10] our analysis reveals that the diversity of representation of those closest to a rulemaking can have similar effects on regulators’ outcomes. The design of the rulemaking process can both increase the pace with which rules are promulgated and reduce the level of detail in which they are presented, but only when care is taken to ensure the individuals intimately involved have greater breadth – relative to depth – in the competencies they bring to the endeavor.

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[1]    Andrew Restuccia and Elana Schor, “Pipelines Blow Up and People Die,” POLITICO, April 21, 2015, http://www.politico.com/story/2015/04/the-little-pipeline-agency-that-co....

[2]    Office of Inspector General (Inspector General), “Insufficient Guidance, Oversight, and Coordination Hinder PHMSA’s Full Implementation of Mandates and Recommendations,” U.S. Department of Transportation, Report No. ST-2017-002 (2016), 3.

[3]    Walter Powell, “Neither Market nor Hierarchy: Network Forms of Organization,” Research in Organizational Behavior, no. 12 (1990): 295–336; Oliver E. Williamson, “Hierarchical Control and Optimum Firm Size,” Journal of Political Economy 75, no. 2 (1967): 123–38.

[4]    Jonathan D. Breul and John M. Kamensky, “Federal Government Reform: Lessons from Clinton’s “Reinventing Government” and Bush’s “Management Agenda” Initiatives,” Public Administration Review 68, no. 6 (2008): 1009–26.

[5]    William F. West, “Administrative Rulemaking: An Old and Emerging Literature,” Public Administration Review 65, no. 6 (2005): 655–68.

[6]    Cornelius M. Kerwin and Scott R. Furlong, Rulemaking: How Government Agencies Write Law and Make Policy (Washington, D.C.: CQ Press, 2010).

[7]    Thomas O. McGarity, “The Internal Rulemaking Structure of the EPA,” Law and Contemporary Problems 54, no. 4 (1991): 57–111. 

[8]    Jeffrey Pfeffer, “Seven Practices of Successful Organizations,” California Management Review 40, no. 2 (1998): 96–124.

[9]    J. Stuart Bunderson and Peter Boumgarden, “Structure and Learning in Self-Managed Teams: Why “Bureaucratic” Teams Can Be Better Learners,” Organization Science 21, no. 3 (2010): 609–24.

[10]   Roy F. Baumeister, Sarah E. Ainsworth and Kathleen D. Vohs, “Are Groups More or Less Than the Sum of Their Members? The Moderating Role of Individual Identification,” Behavioral and Brain Sciences 39 (2016): 1–14.