Regulatory Regimes, Agency Actions, and the Conditional Nature of Congressional Influence

Charles Shipan, 2004

Stefano Alessandro Rognoni

821495 - EPS

Goals

Answer to these questions: Are the actions of bureaucrats

responsive to the preferences, and changes in the preferences, of political actors?

What’s the role that congressional committees play in this process?

Congressional influence Many studies found clear evidence of

congressional influence over agencies internal institutions, such as the committee system in Congress, may have important political repercussions

Others studies, however, found that Congress either exerted no influence on the activities of agencies or provided only limited support for the presence of such influence

Agency behaviour according to political actors’ preferences When the preferences of elected political

actors change, an agency that is anticipating the reactions of these other actors faces a different political context.

At different times agencies will be making decisions in different regimes. Therefore, they will take different actions, even if their own preferences remain the same.

Assumptions Legislature (for now unicameral)

delegates responsibility over some policy to an agency A

The floor of this legislature (F) has delegated primary responsibility within the legislature to a committee (C).

Policy and the actors' preferences can be aligned along a single ideological dimension

C has gatekeeping powers Action proceeds under an open rule

Stages of the game Agency makes proposal

a The committee chooses

between introducing a bill b or gatekeeping if committee gatekeeps, the game ends with outcome a

If the committee introduces a bill, the floor can reject it (and the outcome would be a), approve it (outcome b) or amend it (outcome b*)

bill

gatekeeping

reje

ct

appro

ve

amend

FLOOR

COMMITTEE

AGENCY

a

a b b*

Committee-Floor Regime A is located to the left of the

indifference point for the committee with respect to the floor C(F) = 2C – F

If the agency propose a = A, the committee would propose the legislation b and the floor – under the open rule – would amend it. The outcome would be b* = F.

If the agency thinks strategically it will choose a = C(F), so that the committee would keep the gate close and allow the agency proposal to stand.

FA CC(F)

Moving...

If the committee moves to the right, so will do the agency outcome

If the floor moves to the right, the agency can locate far to the left

Gatekeeping regime A Є [C(F), F] the committee prefers A,

the agency's choice, to F, which would be the policy outcome under an open rule

A will always be the outcome, whatever will be the legislature preferences

The agency has a considerable amount of autonomy

C(F) A C F

Floor regime F Є [C, A] the committee prefers F,

the legislative outcome under an open rule, to any point to the right of F.

the only way the agency can avoid legislation is to locate at F

C F A

Conclusions of regime model

Whether an agency is affected by the legislature, and by a committee within the legislature, depends on the nature of the regime

The nature of the regulatory regime must be taken into account in any statistical analysis of political influence on agencies.

The President We could consider the president's

choice of the agency's ideal point as the first stage of the game.

The president has the advantage of being able to act unilaterally to influence the agency's goals and preferences the agency's ideal point will be located in the same region as that of the president.

Implications in constructing the model The president is most likely to be able to exert

influence on the exact location of the agency's action in the Gatekeeping Regime.

It lets us examine whether there is any observable evidence of congressional influence even if we give the president the significant advantage of being able to set the agency's ideal point.

It could bias the coefficients for the congressional variables toward zero and make it more difficult to find significant results for congressional variables in the Committee-Floor and in the Floor regimes

Veto player? Congress frequently can pass

legislation even when the president opposes it

There is empirical evidence of unlikely use of presidential veto

Including the President as a veto player would complicate things to the point where the model is not testable given a limited number of observations.

Bicameralism

In a bicameral legislature like the U.S. Congress, the House and the Senate and their respective committees will have an interest in the agency's decisions.

Consequences on the model

We have 5 distinct regimes: the agency might be influenced by the House committee and floor, the Senate committee and floor, the House floor alone, or the Senate floor alone, or it might operate entirely autonomously from both chambers of the legislature

Since, in order to overrid the agency, the vote of both houses is needed, the agency would only pay attention to one house preferences disregarding the other ones.

In principle the agency might worry about both floors and both committees, but in reality it needs to worry about pleasing only one committee-floor pair (in the first regime) or one floor (in the third regime)

Therefore, even when there are two chambers, configurations of preferences can still be classified into the three regimes discussed earlier

Cost and benefits

Focusing on only the committee and the floor that might matter, regardless of chamber, we are able to limit the statistical analysis to three regimes

1. preserve degrees of freedom

2. it is possible that there might be very few observations in any given regime, a situation that would be exacerbated by using five regimes

we lose the ability to determine whether this influence is coming from the House or the Senate

Benefits Costs

Operationalization

The hypothetical function describing the level of agency outputs, Yt, is

Yt = β0 + β1 DCFCommitteet + β2 DCFFloort + β3 DGPresidentt + β4 DFFloort + βi Xi,t + εt

where DCF, DG, and DF are dummy variables set equal to one for the Committee-Floor, Gatekeeping, and Floor regimes, respectively, and zero otherwise, and where Xt represents a vector of control variables.

The predictions for the model are: β1 > 0, β2 < 0, β3 > 0, and β4 > 0.

Experimental proof (FDA) They are viewed as extremely serious

by the 95,000 firms the agency regulates

The combination of all the activities of FDA over the period gives a good idea of how actively the agency is regulating the firms within its jurisdiction

Congress views FDA’s activities as important

Relevant factors Goal: analyse the influence of political factors on the

FDA’s monitoring activity Data from 1947 to 1995 Political variables Common Space Nominate scores Agency budget (in real dollars) and industry size

(measured controlling for the number of employees in the food and health industries each year)

Kefauver-Harris amendments increased the agency's regulatory authority and led to an increased level of activism: a dummy variable that was set equal to zero prior to 1962 and one from 1962 on is created

We expect the coefficients of budget and K-H variables to be both positive

Classification of regimes Obtaining the ideology

scores for the president, the median member of each committee, and the median member of each floor in each year

17: Committee-floor regime20: Gatekeeping regime12: Floor regime

Others control variables Separate control variables for inspections

and samples to account for different reporting methods used by the FDA over time

From 1975 FDA reported only the count of samples that were physically analyzed dummy variable 0 before 1975 and 1 from 1975 to the end of the observation

Since 1955 FDA reported all established inspections dummy variable equal to 1 from 1955 to the present

Estimators

In order to reduce autocorrelation risk, to estimate the statistical model the author uses the Prais- Winsten autoregressive technique, which is a GLS estimator appropriate for first-order serially correlated residuals and is especially useful with small samples

Test of hypothesis The results in the table

function as test of hypotheses.

None of the congressional variables are significant, and indeed, none are even very close to being significant

No support for hypothesis that preferences of politicians influence agency actions regardless of regime

Results: the table

Results.1 The results in column 1 provide a strong support

for the theory’s predictions1. The floor has a negative and significant influence

in the Committee-Floor Regime, but a positive and significant influence in the Floor Regime

2. The president does not exert a significant influence on the agency in the Gatekeeping Regime

3. In each case the congressional variables remain significant in the predicted directions

4. Two of the control variables are significant in the predicted direction

Results.2 The results in Column 3, which focus on

investigations rather than samples, also provide support for the theory:

1. Both the committee and the floor have the predicted sign in the Committee-Floor Regime, event if at a relatively weak level of significance.

2. The president has the expected positive influence in the Gatekeeping Regime.

3. Only the floor variable in the Floor Regime, which does not differ significantly from zero, fails to provide corroboration for the theory

Further predictions In addition to predicting when certain

congressional variables should matter, the theory also predicts when these variables should not matter

1. The House and Senate floors should not be significant under the Gatekeeping Regime

2. The relevant committees should not be significant under the Gatekeeping or Floor regimes

Proof

Indirect proof by comparing table 2 and 3

The results provide strong evidence that variables matter when the theory says they should matter and some indication that the variables do not matter when they should not

Others considered approaches Political principals attempt to influence

the future actions of the agency by designing specific agency structures and procedures, perhaps to set the agency on "autopilot”

The president who was in office when the sitting chair of the agency was appointed still exerts influence over the agency even after a new president takes office

Checking the approaches All of the theoretical variables except the

president are significant for samples, and all except the floor are significant for inspections

Past budgets contain information for the agency, at least in the realm of samples

No support for the idea that the president who supervised the choice of the agency chair continues to exert influence

Using SUR SUR can be used to

estimate the two equations jointly

The author includes a lagged version of the dependent variable for each equation to account for autocorrelation

The equations for both samples and inspections continue to support the theoretical argument

Others variables Test whether the courts influence the

relationship between Congress and agencies No difference in congressional influence before and after Chevron case

Alternatives to use of the floor median 1. majority party median not significant 2. filibuster pivot in the Senate broadly

similar to the results using floor median voter

Conclusions Does Congress influence agencies? Sometimes Agencies are influenced by other factors when deciding

what sorts of policy actions to take. If a committee and an agency are on the same side of

the floor, then the floor has an incentive to make sure that the committee is as close to the floor as possible.

The more distant the committee is from the floor, the more likely it is that the agency will be able to choose a policy that is far from the floor

Floors should have a strong preference for committees that are located on the opposite side of the floor from the agency

Suggestions for future research