Managing Uncertainty through Bureaucratic Design: Administrative Procedures and State Air Pollution Control Agencies

While several positive theories offer competing explanations of how politicians use administrative procedures to influence bureaucratic performance, few have been submitted to empirical scrutiny. This article examines how state politicians use administrative procedures to design air pollution control agencies. Drawing on a variety of data, the analyses show that politicians use different procedures to manage different types of uncertainty, thus mitigating transaction costs between the politicians and agencies. Procedures can reduce politicians' uncertainty about how agencies perform their policy activities, how future political coalitions might influence the agencies'performance, and how to solve complex policy problems. By using data from a survey of state clean air administrators, the article demonstrates both the conditions under which politicians design agencies to be politically responsive and the conditions under which politicians grant agencies more policy autonomy. The rise of large government programs has led many scholars to worry that government bureaucracies lie outside the reach of democratic accountability. The returns from early research appear to bear this out (e.g., Bernstein 1955). After early progress, the research on bureaucratic responsiveness seems to have hit a stumbling block. Enough research has identified cases of bureaucratic responsiveness to democratic political control (e.g., Weingast and Moran 1983; Wood and Waterman 1994) that no one doubts that bureaucracies can be politically responsive. Likewise, enough research has demonstrated that bureaucracies can resist political control and also be politically influential themselves that no one doubts that bureaucracies can be politically independent and even politically influential (e.g., Balla 1998; Krause 1996). The problem is that no clear picture shows the conditions under which bureaucracies are more politically responsive or more autonomous. 623/Journal of Public Administration Research and Theory Prepared for the annual meeting of the Midwest Political Science Association, Chicago, April 15, 1999. Steve Baila, Ken Bickers, Greg Hager, George Krause and John Williams provided helpful comments on earlier versions of this article. JPART 9(1999):4:623-639 This content downloaded from 157.55.39.206 on Sat, 17 Dec 2016 05:27:59 UTC All use subject to http://about.jstor.org/terms Managing Uncertainty through Bureaucratic Design While several positive theories of administrative procedures offer to resolve this dilemma (for a review see Huber and Shipan forthcoming), few have been submitted to empirical scrutiny (though see Epstein and O'Halloran 1996; Balla 1998; Spence forthcoming) and the accuracy of their models has been called into question (Spence 1997). Consequently, whether administrative procedures can account for the disparate findings of bureaucracies research remains an open question. More important, these theories offer widely different and sometimes conflicting predictions about how politicians use administrative procedures to control agencies. This article seeks to advance the study of bureaucratic performance by examining empirically how politicians use a variety of administrative procedures to lay the groundwork for a broader theory of administrative procedures. This article examines how state politicians use several types of administrative procedures to regulate the processes by which state clean air agencies develop and implement policies. States' clean air programs provide a rich environment in which we can study the politics of administrative design because the diverse population of pollution control agencies, air pollution problems, and political contexts permit measuring key analytic features common along metrics. In this article, I will draw on transaction costs theory to show how politicians use different types of procedures to manage different types of uncertainty. First, politicians use policy analysis procedures to hardwire agencies and reduce political uncertainty. Second, politicians use fire alarm procedures to reduce principal-agent uncertainty. Finally, politicians' choice of consultation procedures reflects a tradeoff between the technical expertise of the agencies' decisions and the politicians' political influence over the agencies. The theory thus helps resolve disparities among extant administrative procedures theories by showing how their differing predictions are grounded in different conceptions of the uncertainty confronting politicians. Overall, the findings in this article support the conclusion that positive bureaucratic theories, if properly conceptualized, are useful for an understanding of bureaucratic design. In the second section of the article, I develop a theory about how politicians use specific procedures, such as those that require agencies to perform policy analysis in order to justify policy decisions, to enhance control of government agencies, and to solve complex policy problems. I will then present the research design and measures of states' air pollution programs used in the study and the results of the analyses of states' administrative procedures. 6241J-PART, October 1999 This content downloaded from 157.55.39.206 on Sat, 17 Dec 2016 05:27:59 UTC All use subject to http://about.jstor.org/terms Managing Uncertainty through Bureaucratic Design ADMINISTRATIVE PROCEDURES THEORY Administrative procedures, or ex-ante controls, are legal constraints that politicians place on the development and implementation of policies by agencies. For example, administrative procedures may require an agency to publicize proposed regulations or conduct policy analysis before it can adopt specific policies. I will present a positive (transaction costs) theory of how politicians use administrative procedures to reduce uncertainty about agency behavior. The theory explains how procedures have different functions in structuring agency performance depending on the type of uncertainty that is at stake. The theory starts with two assumptions about the purpose of administrative procedures. One proposed purpose of procedures is to stack the deck so that agencies' policy decisions favor the political interests that the legislators target. Proponents of the deck stacking hypothesis argue that politicians require agencies to consult with targeted interest groups before making policy decisions, thus allowing the interest groups some influence over agency policy choices (McCubbins, Noll, and Weingast 1987 and 1989; Bawn 1995). A second proposed purpose of administrative procedures is to reduce the various forms of politicians' uncertainty surrounding bureaucratic performance (e.g., Bawn 1995; Moe 1989). First, technical uncertainty involves discerning what policy actions will best achieve the politicians' policy objectives. Politicians may know the outcomes they want to achieve, but they may not know what policies will achieve these outcomes. Second, political uncertainty concerns whether future political coalitions might change the current policy decisions. In such contexts, politicians may face a tradeoff between maximizing their current influence over agency decisions and protecting the longer-term survival of their policy decisions. Finally, principal-agent uncertainty concerns whether the agencies are performing as the politicians would have them perform. After delegating policy authority, politicians would like agencies to perform as the politicians would if they were in the bureaucrats' position, but they do not have all the information and expertise to evaluate whether the agency is performing correctly. The key to understanding administrative design lies in untangling how politicians respond to these types of uncertainty. In this context, each type of uncertainty raises politicians' transactions costs for achieving policy objectives. Transactions costs in turn lead politicians ultimately to tradeoffs among objectives (e.g., controlling the agency versus achieving technically sound policies) and "almost inevitably create inefficiencies and agency loss" (Huber 625/J-PART, October 1999 This content downloaded from 157.55.39.206 on Sat, 17 Dec 2016 05:27:59 UTC All use subject to http://about.jstor.org/terms Managing Uncertainty through Bureaucratic Design and Shipan forthcoming, p. 5). ' Administrative procedures are institutions that potentially can mitigate, though not eliminate, these losses. The discussion below reviews these types of uncertainty in more detail and proposes ways that politicians can use procedures as solutions to uncertainty problems.