Organizing Agencies to Promulgate Rules

Carrigan & Xie
By Christopher Carrigan & Zhoudan Xie
March 09, 2018

Although federal law specifies procedures and requirements for agencies to consider public feedback in how they design their rules, the ways in which they plan for and develop these rules internally is largely a “black box” which is far less understood by this same public, or even scholars for that matter. Yet, as a recent GW Regulatory Studies Center working paper by Christopher Carrigan and Russell Mills demonstrates, agencies can employ very different decision-making configurations to administer their internal rulemaking processes, which can have important effects on the character and timing of the resulting rules.

What is the process for drafting a rule?

Inside an agency, a rulemaking begins with identifying the need for a rule, after which the process of drafting the proposed rule and its supporting documents begins. Once the draft rule is prepared, it is submitted to the agency’s internal clearance procedures, which can end with sign off by some of the most senior officials at the agency. Often, a rule must also pass through a similar process at the departmental level as well before it is submitted to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) for interagency review. After the public comment period for the proposed rule, the agency personnel participating will draft the final rule considering the feedback and, once again, obtain all agency and departmental approvals before the final rule is published in the Federal Register.

Which agency personnel are involved?

The personnel that take part in drafting and reviewing the rule can vary substantially by agency as well as by the significance of the rule. Still, given the administrative requirements and technical complexity typically involved, personnel with a variety of expertise are often required. Generally, five types of agency officials participate in the process of developing and finalizing a rule:

  • Subject matter program office personnel who serve as the technical specialists most intimately familiar with the proposed content of the rule;
  • Attorneys from the office of the general counsel who ensure the rule is developed following the appropriate procedures and in a manner consistent with its authorizing legislation;
  • Economic or policy analysts who are responsible for producing the regulatory impact analysis required by Executive Order 12866 for significant rules;
  • Regulatory affairs officials who oversee the procedural aspects of the rulemaking, including coordinating meetings and managing the rule timeline;
  • Senior executives who manage the political challenges associated with developing and finalizing the rule.

How is the process organized?

While perhaps best thought of as a continuum, the organizational processes that agencies use to produce rules generally follow certain distinct patterns. These arrangements vary with respect to the extent to which they allocate the core responsibility for developing the rule to one office or several groups within the organization. Broadly, designs can be thought as either following a more traditional hierarchical design, a team-based approach, or a combination of the two, referred to by some scholars as the “outside advisor” model.

With the hierarchical model, rulemaking is centralized at the subject matter program office, which is responsible for developing the rule, considering alternatives, and preparing the supporting materials. Agency groups with the associated expertise then review at least portions of these documents during the approval process. The outside advisor approach replicates a hierarchical design in the sense that the program office still takes the lead in drafting the rule and related documents. In this case, however, the office consults with agency experts on legal, policy, and other relevant issues during the process. Thus, the primary difference between the two approaches is in the timing of when agency personnel outside of the office initiating the rulemaking become involved.

The rulemaking structure at the Food and Drug Administration (FDA) within the U.S. Department of Health and Human Services offers one example of an organizational design that embodies the outside advisor approach. Although the program office initiating the rulemaking is responsible for identifying the need for as well as designing the rule, it is assisted by various groups inside the organization in doing so. It may, for example, consult the economic staff within FDA’s Office of Planning to help with the preparation of the economic assessment. Once the draft is ready, it passes through required reviews at various places in the agency, including other FDA centers and offices affected by the regulation, the Office of Chief Counsel, the Office of Policy, and eventually agency leadership.

In contrast to the hierarchical model and, to a certain degree, the outside advisor approach as well, team-based rulemaking begins by creating a workgroup incorporating personnel from multiple offices to collaborate in preparing the rule. In addition, officials from the agency’s regulatory affairs office typically take on the responsibility of organizing the workgroup’s interactions. At the Federal Highway Administration (FHWA) in the U.S. Department of Transportation, for example, a rulemaking team is formed after a program office has identified a need to develop or modify a rule. The team usually consists of a program office staff member, attorney, economist, and personnel from other offices interested in the rulemaking, especially when the rule crosses over to other content areas. The draft of the proposed rule and supporting documents are prepared collaboratively by the team and then passed to and reviewed by the legal divisions of FHWA, the administrator, and the Office of the Secretary of Transportation before they are submitted to OIRA.

Does organization matter for rulemaking?

Although scholars have intensively studied the impacts of decision-making structures on private and public organizational performance more broadly, much less is known about how alternative designs affect the timing and character of rulemakings at regulatory agencies specifically. The hierarchical model is often viewed as efficient, given that it is less dependent on individual interactions and communication, at least during the drafting process. However, such initial streamlining belies the potential for subsequent delays, given that those who might otherwise identify unintended consequences of a particular action become involved later in the process. Moreover, research by GW Regulatory Studies Center affiliated scholar Stuart Shapiro demonstrates that when other interested parties do not have the opportunity to participate in the rulemaking at the beginning, their input may become less influential as well. Even so, assuming these groups do still have an impact, rules initiated using a hierarchical approach are more likely to require significant revisions during the internal clearance process and OIRA review, potentially resulting in protracted rulemaking timeframes.

Relative to the hierarchical approach, the team-based model typically requires greater upfront investments of time and resources. Moreover, it can sometimes spark tension as officials attempt to marry their competing perspectives to produce a rule. Nevertheless, a substantial literature studying team-based designs finds that teams are generally more accountable for achieving organizational outcomes. Further, when certain design features are employed, such as increasing the diversity of the personnel involved and ensuring distinct roles for team members to mitigate conflict, some of the classic impediments to effective team decision-making, including groupthink and group polarization, can be managed.

Applied to the regulatory context, creating a rulemaking team with broad expertise early in the process might actually shorten timeframes to promulgation relative to a more hierarchical approach by eliminating the need for revisions at later stages. In addition, building from the scholarship studying organizations more generally, a more streamlined final rule may actually result, assuming the workgroup members have diverse competencies and occupy well-defined roles. Although empirical research has shown that team characteristics can affect outcomes in related political contexts such as independent policymaking commissions and advisory committees, the aforementioned paper by Carrigan and Mills offers evidence specifically tying agency decisions regarding how they organize their rulemakings to the timing and character of the resulting rules. Tracking the job functions of the listed agency contacts for over 200 economically significant proposed rules, the research finds that expanding the breadth of personnel types closely involved in a rulemaking appears to reduce the level of detail with which the rule is presented as well as the time needed to promulgate it. Still, while it seems clear that how an agency designs its rulemaking process has real effects, much remains to be discovered about these relationships, suggesting this is a promising area for future scholarly attention.