The Legislative Design of Regulatory Structure

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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, however, 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 congressional 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 requirements imposed on administrative decision making. Propositions concerning the influence of decision uncertainty and conflict of interest on the choice of these agency structural arrangements will be derived.