When it comes to understanding the political dynamics of agency rulemaking, the place to start is Rachel Potter’s book Bending the Rules: Procedural Politicking in the Bureaucracy, about which the Yale Journal on Regulation published a blog symposium in 2019. Through a mix of qualitative and quantitative methods, Potter explores how agency officials—both career civil servants and political appointees—play a role in the rulemaking process and leverage procedural rules to help advance their preferred policy outcomes.
It turns out, however, that this depiction of agency rulemaking omits an important category of rule drafters: government contractors. Fortunately for the field of administrative law, the Administrative Conference of the United States engaged Potter and Bridget Dooling to conduct a study of the role of private contractors in federal agency rulemaking. They interviewed some forty-five agency officials, contractors, and other experts. Rulemaking by Contract, which is forthcoming in the Administrative Law Review, presents the descriptive findings of their study and is well worth a close read. Here, however, I focus on their follow-up article, Regulatory Body Shops, which explores the normative implications of their findings in creative and important ways.
In Regulatory Body Shops, Dooling and Potter divide the world of rulemaking contractor relationships into three categories: “ministerial contractors, who perform administrative work; expertise contractors, who provide discrete scientific and technical inputs; and regulatory body shops, which are embedded into agencies, functioning like staff and encompassing many functions.” In Part II, they describe these three categories in detail and provide a helpful table (reproduced with permission) that summarizes the key characteristics of each type of contracting arrangement:
| The Ministerial Contractor | The Expertise Contractor | The Body Shop | |
| Type of Task | Administrative | Substantive | Substantive, but can also include Administrative |
| Number and Frequency of Task(s) | Any | Singular/Infrequent | Multiple/Frequent |
| Nature of Relationships | Any | Transactional/Short-Term | Embedded/Long-term |
| Internal Transparency | Medium | High | Low |
| External Transparency | Low | High | Low |
Dooling and Potter are less concerned about the problems inherent in the former two categories. As the title suggests, they focus on the much more problematic category of “regulatory body shops.” In Part III, they explore the potential risks of regulatory body shops (and the other two categories) regarding ethics, agency reasoned decisionmaking, and administrative capacity.
On the ethical front, they draw on Kathleen Clark’s work to emphasize the potential personal conflicts of interests, especially as private contractors are often not subject to the same extensive disclosure rules as federal government employees. As Dooling and Potter observe, “In the body shop, the embedded nature of the contractors gives them special access not only to the folkways and culture of the agency—something that our interviews suggest agencies value very much because it helps the contractors be effective—but also to inside knowledge about the agency and its planned actions.”
On the reasoned-decisionmaking front, they draw on Jon Michael’s book Constitutional Coup to underscore that some contractors might approach the deliberative process differently than career civil servants. Unlike civil servants, contractors might be, in Michaels’s words (Constitutional Coup at 117), “motivated to be hired, anxious to be retained, and eager to be assigned additional fee-generating responsibilities. They thus have every reason to internalize the agency chiefs’ political priorities.” The risk of less-engaged reasoning potentially affects both expertise contractors and regulatory body shops, but Dooling and Potter argue that the risks are much greater in regulatory body shops because “maintaining the contract and keeping ‘the boss’ (i.e., the agency) happy is likely to be a highly salient concern.”
On the administrative capacity front, Dooling and Potter see little short-term risk in using ministerial or expertise contractors to assist with discrete regulatory activities. Indeed, it often makes financial and practical sense on time-limited projects to outsource to experts and ministers instead of investing more in internal capacity that is only needed for a short period of time. But longer-term reliance on contractors, especially in a regulatory body shop manner, poses serious risks. It could reduce incentives for innovation within the agency as to longer-term improvements to agency processes and infrastructure. Relying on Suzanne Mettler’s book The Submerged State, Dooling and Potter argue that such long-term reliance could also undermine democratic principles, by communicating to the public the private firm’s involvement in the project but perhaps obscuring the federal agency’s role (or vice versa).
Not only are there transparency and accountability concerns. As Dooling and Potter explain, agency reliance on regulatory body shops “can also result in what we call a doom loop, where rather than using contractors as a short-term bridging strategy, agency reliance on contractors morphs into the de facto status quo. Using regulatory body shops may enable an agency to keep up appearances; to top agency leaders and congressional overseers the agency appears to be performing well and producing steady regulatory output. But, because the bureaucrat-contractor equilibrium is not always visible—even to overseers—what began as a capacity deficit within the agency becomes a self-fulfilling prophecy.”
After flagging some doctrinal risks of regulatory body shops in Part IV of the article (in particular, compromising procedural responsibilities and undermining claims for judicial deference), Part V explores how we should respond to the phenomenon of regulatory body shops. Dooling and Potter suggest that Congress or the Office of Management and Budget (OMB) could consider designating rule drafting as “inherently governmental,” which would limit participation to agency staff. OMB has already done so with respect to legislative drafting. They suggest that there should be additional contracting transparency, and they briefly suggest other ways that agencies can build capacity without having to rely on regulatory body shops. This article already covers so much ground in categorizing the contractor types and exploring the risks of each type, so it is understandable that Part V only begins the reform conversation. But hopefully their study for the Administrative Conference of the United States and these two articles will spark much more scholarly and real-world attention to the potential harms of regulatory body shops.
Regulatory Body Shops makes an important contribution to the literatures on agency rulemaking and privatization. Perhaps the most important contribution is that Dooling and Potter further complicate our understanding of privatization in administrative governance. Not all private contracting is inherently bad, and the risks vary across agencies and contractors. Disaggregating contractors into three categories with different functions, time horizons, and risk levels helps us identify and understand the risks and potential solutions. Their ability to disaggregate private contracting arrangements, to diagnosis risks, and to identify potential reforms no doubt benefits from their combined experience working in the federal government, including as policy analysts at the Office of Information and Regulatory Affairs.
There is so much to like (lots) about Regulatory Body Shops. I look forward to seeing how Dooling and Potter’s work in this space sparks further development in the field.
