The Legislative Design of Regulatory Structure.docxVIP

The Legislative Design of Regulatory Structure Mathew D. McCubbins, University of Texas at Austin Studies of Congress and the design of regulation have focused largely upon the origins of regulation and upon the motivations underlying the congressional delegation of legislative authority to administrative agencies. In studying the delegation of legislative authority, how- ever, little attention has been paid to how Congress exercises control over the subsequent bureaucratic selection of regulatory policy. This paper focuses on the how by developing a simple theoretical model of the design of institutional arrangements through which Congress attempts to control bureaucratic policymaking. Specifically, this paper examines the congres- sional choice of the substantive discretionary authority delegated to an administrative entity. This substantive discretionary authority is constructed through the choice of two structural design options: the regulatory scope of the administrative entity and the procedural require- ments imposed on administrative decision making. Propositions concerning the influence of decision uncertainty and conflict of interest on the choice of these agency structural arrange- ments will be derived. Studies of regulatory choice have focused largely upon the origins and impacts of regulation: Whence does regulation arise and who is behind it? Only recently have models of regulatory choice attempted to explain the political motivations underlying the congressional penchant for delegating regulatory decisions to administrative agencies (Fiorina, 1982a, 1982b; Aran- son, Gellhorn, and Robinson, 1982). In studying the delegation of legislative authority, however, little attention has been paid to how Congress exercises * Partial funding for this research was provided by grants from the Mellon Foundation at the Environmental Quality Laboratory, California Institute of Technology, Pasadena, and the University of Texas Research Insti