FREEMAN & ROSSI 02/16/12 – 8:48 PM VOLUME 125 MARCH 2012 NUMBER 5 © 2012 by The Harvard Law Review Association ARTICLE AGENCY COORDINATION IN SHARED REGULATORY SPACE Jody Freeman and Jim Rossi CONTENTS INTRODUCTION .......................................................................................................................... 1134 I. LEGISLATIVE DELEGATIONS AND THE INEVITABLE COORDINATION CHALLENGE ........................................................................................................................ 1138 A. Explaining Congressional Delegations to Multiple Agencies .................................... 1138 B. Redundancy Versus Shared Regulatory Space ............................................................ 1145 C. The Limits of Consolidation .......................................................................................... 1151 II. COORDINATION TOOLS .................................................................................................... 1155 A. Interagency Consultation ............................................................................................... 1157 1. Discretionary Consultation ....................................................................................... 1157 2. Mandatory Consultation ........................................................................................... 1158 3. Public Response Requirements ................................................................................ 1159 4. Default Position Requirements ................................................................................ 1159 5. Concurrence Requirements ...................................................................................... 1160 B. Interagency Agreements ................................................................................................. 1161 C. Joint Policymaking ......................................................................................................... 1165 1. Joint Rulemaking. ...................................................................................................... 1166 2. EPA-NHTSA Joint Rule. ......................................................................................... 1169 D. Presidential Management of Coordination .................................................................. 1173 1. Policy Offices and Councils ..................................................................................... 1176 2. Regulatory Review .................................................................................................... 1178 III. ASSESSING AGENCY COORDINATION INSTRUMENTS ............................................. 1181 A. Efficiency, Effectiveness, and Accountability .............................................................. 1181 1. Impacts of Coordination on Agency Decision Costs ............................................ 1182 2. Impacts of Coordination on Private Transaction Costs ....................................... 1183 3. Impacts of Coordination on Agency Expertise and Decision Quality ............... 1184 4. Impacts of Coordination on Arbitrage and Capture ............................................ 1185 5. Impacts of Coordination on Drift ........................................................................... 1187 6. Impacts of Coordination on Transparency ............................................................ 1189 B. Matching Coordination Tools to Collective Action Problems ................................... 1191 1131 FREEMAN AND ROSSI - DRAFT 01/29/12 – 7:43 PM 1132 HARVARD LAW REVIEW [Vol. 125:1131 C. Improving Coordination Tools ....................................................................................... 1193 1. Developing Agency Coordination Policies ............................................................. 1193 2. Sharing Best Practices .............................................................................................. 1194 3. Supporting and Funding Interagency Consultation ............................................. 1194 4. Increasing the Visibility of MOUs .......................................................................... 1195 5. Tracking Total Resources ......................................................................................... 1196 IV. IMPLICATIONS OF COORDINATION FOR POLITICAL AND LEGAL OVERSIGHT OF AGENCIES ............................................................................................................................. 1196 A. Centralized Supervision by the President ................................................................... 1197 B. Implications for Judicial Review of Agency Action ................................................... 1203 CONCLUSION ............................................................................................................................... 1209 FREEMAN & ROSSI 01/29/12 – 7:43 PM AGENCY COORDINATION IN SHARED REGULATORY SPACE Jody Freeman∗ and Jim Rossi∗∗ Interagency coordination is one of the great challenges of modern governance. This Article explains why lawmakers frequently assign overlapping and fragmented delegations that require agencies to “share regulatory space,” why these delegations are so pervasive and stubborn, and why consolidating or eliminating agency functions will not solve the problems these delegations create. Congress, the President, and agencies have a variety of tools at their disposal to manage coordination challenges effectively, including agency interaction requirements, formal interagency agreements, and joint policymaking. This Article also assesses the relative strengths and weaknesses of these coordination tools using the normative criteria of efficiency, effectiveness, and accountability, and it concludes that the benefits of coordination will frequently be substantial. To varying extents, these instruments can reduce regulatory costs for both government and the private sector, improve expertise, and ameliorate the risk of bureaucratic drift without compromising transparency. Coordination can also help to preserve the functional benefits of shared or overlapping authority, such as promoting interagency competition and accountability, while minimizing dysfunctions like discordant policy. Shared regulatory space can be challenging for the executive branch, but it also presents the President with a powerful and unique opportunity to put his stamp on agency policy. This Article recommends a comprehensive executive branch effort to promote stronger interagency coordination and improve coordination instruments. Any presidential exercise of centralized supervision will often be politically contentious and must, of course, operate within legal bounds. On balance, however, presidential leadership will be crucial to managing the serious coordination challenges presented by modern governance, and existing political and legal checks on potential overreach are sufficient to manage any conflicts with Congress. This Article concludes by exploring the implications of enhanced interagency coordination for judicial review. Courts might adjust standards of review to promote coordination, but even if they do not, policy decisions arrived at through strong ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ∗ Archibald Cox Professor of Law, Harvard Law School. Professor Freeman worked on a number of policy initiatives described in this Article when she served as Counselor for Energy and Climate Change in the White House in 2009–2010. The discussion of these examples is based exclusively on documents available to the public. ∗∗ Harry M. Walborsky Professor and Associate Dean for Research, Florida State University College of Law. The authors thank David Adelman, Steven Ansolabehere, Curtis Copeland, Neil Eisner, John Ferejohn, Tara Grove, Sam Issacharoff, Sally Katzen, Harold Krent, David Landau, Jeff Lubbers, Anne Joseph O’Connell, Amanda Rose, J.B. Ruhl, Mark Seidenfeld, Kevin Stack, Mat- thew Stephenson, Peter Strauss, and workshop participants at Florida State University, Harvard University, New York University, the University of Chicago, the University of Minnesota, the University of Virginia, and Vanderbilt University law schools for their discussions about previous drafts. We are grateful to Lisa Jungham at the Harvard Law School Library and Michael White at the U.S. National Archives and Records Administration for generating the data on joint rule- making for this project. For outstanding research and editorial assistance, we thank Rachel He- ron, Jaime Santos, and Sandra Ullman Wolitzky. 1133 FREEMAN AND ROSSI - DRAFT 01/29/12 – 7:43 PM 1134 HARVARD LAW REVIEW [Vol. 125:1131 interagency coordination likely will attract greater deference. Greater coordination is relatively unlikely to impact the outcome of the Chevron inquiry when reviewing agency legal interpretations. Some minor doctrinal adjustments could lead to greater deference where agencies use certain coordination instruments to adopt shared interpretations, but no major change in how courts approach judicial review is necessary for coordination to flourish. The larger conceptual purpose of this Article is to draw attention to the phenomenon of shared regulatory space and highlight the pressing need for interagency coordination as a response. It invites scholars and practitioners to focus on interagency dynamics, which requires a departure from the single-agency focus that has traditionally been central to administrative law. There are 12 different