Organizational Process, Rulemaking Pace, and the Shadow of Judicial Review

• DOI: http://doi.org/10.1111/puar.13068
• Published date: 01 September 2019
• Date: 01 September 2019
• Author: Christopher Carrigan,Russell W. Mills

Organizational Process, Rulemaking Pace, and the Shadow of Judicial Review 721

Russell W. Mills is director of the Center

for Regional Development and associate

professor in the Department of Political

Science at Bowling Green State University.

Previously, he worked as a policy analyst

for the Federal Aviation Administration in

Washington, DC. His research has appeared

in

Public Administration Review, Regulation

& Governance, Legislative Studies Quarterly,

Journal of Public Policy,

and

Administration

& Society

.

E-mail: millsrw@bgsu.edu

Abstract: Scholars have long understood that structuring internal work processes into more hierarchical or team-

based arrangements has consequences for organizational outputs. Building on this insight, this research examines

the relationship between how agencies organize their rulemaking routines and the resulting rules. Tracking the job

functions of rule contacts for economically significant rules proposed over a four-year period, the analysis demonstrates

that expanding the breadth of personnel types closely involved in a rulemaking is associated with a reduction in the

time it takes to promulgate the rule. However, increasing the pace at which rules are finalized is not without cost, as

those completed faster appear more likely to be overturned when challenged in court. The article not only adds another

dimension to empirical scholarship studying rulemaking, which has largely focused on how forces originating outside

the agency affect rules, but also suggests the importance of considering competing priorities in designing rulemaking

processes.

Evidence for Practice

• While most agencies that promulgate rules incorporate the perspectives of a diverse set of employees,

including subject matter experts, economists, and attorneys, they differ significantly with respect to when in

the rulemaking process these varied viewpoints are consulted.

• Rulemaking processes that emphasize team- based structures, in which relevant perspectives are included from

the beginning, typically produce rules that are promulgated faster than hierarchical structures, in which rules

are primarily written by the program office and subject to later approval by other groups in the agency.

• Rules that are finalized more quickly appear more likely to be overturned when challenged in court,

suggesting that a trade-off exists in using team-based organizational designs compared with more hierarchical

approaches.

• Consistent with findings from studies in other organizational contexts, the noticeable differences in the

timing and character of rules emanating from regulatory agencies using more team-based approaches are

contingent on fostering a greater breadth of competencies among core group members.

• In contrast to the procedural requirements that agencies face, such as notice and comment and executive

review, agency and departmental leadership typically have great latitude in structuring rulemaking processes

in their organizations, suggesting a promising lever for managers to affect rulemaking outputs.

Christopher Carrigan

George Washington University

Russell W. Mills

Bowling Green State University

Christopher Carrigan is associate

professor of public policy and public

administration at the Trachtenberg

School and codirector of the Regulatory

Studies Center at George Washington

University. His research focuses on

regulatory policy making, including how

agency organizational design and internal

processes affect policy implementation. He

is author of

Structured to Fail? Regulatory

Performance under Competing Mandates

(Cambridge University Press, 2017) and

coeditor of

Does Regulation Kill Jobs?

(University of Pennsylvania Press, 2013).

E-mail: ccarrigan@gwu.edu

Public Administration Review,

Vol. 79, Iss. 5, pp. 721–736. © 2019 by

The American Society for Public Administration.

DOI: 10.1111/puar.13068.

Organizational Process, Rulemaking Pace, and the

Shadow of Judicial Review

Finding ways to encourage agencies to increase

the pace at which they promulgate rules is on

a short list of the most persistent and complex

issues occupying scholars of regulation. Many

observers accept the notion that elongated time frames

are part of the rulemaking process, but less agreement

exists on the causes of and potential solutions to

alleged protracted timelines. One oft-cited reason

for regulatory delay is the cumbersome requirements

placed on agencies by external actors such as

Congress, the president, and the courts. For example,

scholars have argued that the procedural constraints

codified in the Administrative Procedure Act (APA)

of 1946 (5 U.S.C. §§ 551–559, 701–706) as well as

those mandated by executive orders have caused the

rulemaking process to become “ossified” (McGarity

1991a; Seidenfeld 1997; West 2005).

Just as forces originating outside the agency can affect

how quickly rules are promulgated as well as how they

are written, the ways in which processes are organized

inside agencies may also be important to consider.

The controversy that engulfed the Pipeline and

Hazardous Materials Safety Administration (PHSMA)

in 2015 and 2016 following a series of fatal explosions

involving U.S. pipelines offers one example. In the

wake of the accidents, PHSMA faced significant

criticism for its perceived inability to finalize rules

to toughen pipeline safety standards in response to

statutory deadlines imposed by Congress (Restuccia

Research Article

722 Public Administration Review • Sept embe r | Oc tobe r 201 9

and Schor 2015). To explain the failure, media accounts fixated

on efforts by oil and gas companies to slow down the rulemaking

process at the agency.

Still, underlying the media’s focus on PHSMA’s relationships

with its regulated entities, a report by the U.S. Department

of Transportation’s Office of Inspector General (2016, 3)

simultaneously highlighted the value of considering dynamics

inside the agency to help explain the breakdown. Focusing on

PHSMA’s rulemaking process, the inspector general noted that 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.”

The significance of internal structure has not been lost on scholars

who study organizations broadly. Economists and organizational

theorists have long debated the optimal structure of work processes,

comparing systems that emphasize traditional hierarchies with those

that adopt more team-based approaches (Powell 1990; Williamson

1967). Moreover, while the empirical scholarship studying the

organization of work processes has often focused on its role in

driving results in firms, alternative methods for designing workflows

using team-based approaches are increasingly being used in public

organizations (Breul and Kamensky 2008).

Like organizational theorists, scholars of bureaucratic politics have

recognized the key role that structure can play in shaping regulatory

activities as well. This research has highlighted, for example, that

internal organization affects an agency’s ability to cultivate a clear

mission, manage goal ambiguity, and coordinate tasks to improve

regulatory performance (Carrigan 2017; Eisner, Worsham, and

Ringquist 2006; Wilson 1989). Additionally, others have shown

how more collaborative structures and processes can lead to better

regulatory outcomes as well as how such cooperation can be

extended to include external stakeholders (Coglianese 1997; Fiorino

2006, 2009; Lubbers 2008; Rinfret 2011).

Despite these applications of organizational theory to the study

of regulation more generally, less is known about how alternative

organizational designs affect the specific rules promulgated by

regulatory agencies across policy contexts (McGarity 1991b;

West 2005). In fact, those who have employed large-sample

cross-sectional approaches to study rulemaking have traditionally

focused on how those outside the agency, such as interest groups

and political overseers, can affect the pace of rulemaking and the

characteristics of the resulting rules (e.g., Balla and Wright 2005;

Shapiro 2002; Yackee and Yackee 2010, 2012). Of course, agencies

do differ with respect to how they organize their processes for

promulgating rules (Kerwin and Furlong 2010). Although many

rely on variations of team-based approaches in which the rulemaking

office coordinates the participation of various interests, others use

hierarchical designs in which 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 (McGarity 1991b).

In studying how regulators differentially organize their rulemaking

efforts, this article offers the first systematic quantitative

examination of how variations in internal rulemaking processes

across a suite of federal agencies affect the pace at which rules are

promulgated as well as the properties of the rules. The research sheds

light on how differences in rulemaking processes among agencies

affect not only how quickly rules are formed but also the likelihood

they will be invalidated by courts through judicial review. To do so,

the analysis employs a novel data set created by tracking the contacts

listed in notices of proposed rules and proposed interim final rules

for the set of economically significant rules that were submitted to

the Office of Information and Regulatory Affairs (OIRA) by a broad

set of agencies over the period from 2007 to 2010.

By identifying the offices in which those contacts worked as well

as their job titles and supplementing those data by appealing to

agency documents outlining internal rulemaking procedures, this

study seeks to uncover the processes these agencies use to prepare

rules. Specifically, the data collection assesses the extent to which

an agency’s process emphasizes breadth of expertise among those

employees most closely involved in a rulemaking. Collecting

information on the time elapsed from the date of the submission

of the proposed rule or proposed interim rule to OIRA to the

promulgation of the final rule, in addition to whether any portion

of the rule was set aside when it was subsequently challenged in

court, the article investigates the impact of organizational design on

the timeliness and character of agency rules.

The regression analyses suggest that increasing the diversity of

personnel types most closely involved reduces the time it takes to

promulgate rules. In addition to its statistical significance, the effect

is meaningful, such that adding another personnel grouping to the

rulemaking effort is associated with a decrease of more than 30

percent in the number of days it takes to finalize the rule. Yet, at the

same time, a statistically significant relationship also exists between

the time frame to promulgate the rule and the probability that at

least a portion of it is subsequently invalidated through judicial

review. In fact, a one standard deviation decrease in the time frame

to complete the rule is associated with more than a 7 percentage

point increase in the likelihood that some part of it is set aside by

a court. Moreover, the analysis employs a formal mediation test

(MacKinnon, Fairchild, and Fritz 2007; Zhao, Lynch, and Chen

2010) to show that the collective pathway from agency structure

to rulemaking pace to judicial review outcome is statistically

significant, thereby suggesting the importance of the linkages

between the three variables.

Collectively, these results reveal that explaining variation in

the timeliness and character of promulgated rules may require

considering not only elements outside of the regulator’s direct

influence but also factors originating from within. Regulatory

scholars have demonstrated that procedural requirements, oversight,

and interest group participation matter for the pace of rulemaking;

this analysis similarly suggests that rule timelines might be sped up

or slowed down based on how agencies choose to organize their

rulemaking processes.

The results also indicate the possible existence of trade-offs in

designing rulemaking procedures. Examining the impact of agency