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PRESIDENTIAL DOMINANCE FROM A COMPARATIVE PERSPECTIVE: THE RELATIONSHIP BETWEEN THE EXECUTIVE BRANCH AND REGULATORY AGENCIES IN BRAZIL MARIANA MOTA PRADO* National legal systems appear increasingly similar, largely due to the wholesale transplantation of legal principles and institutional arrangements across national borders. However, although these transplanted institutions might initially look similar, considerable differences emerge as they operate in practice. By definition, transplanted institutions function within a different political system. Immersed in a new political environment, these institutions will not always mimic their counterparts in the country of origin. The effectiveness of transplanted laws, and, therefore, the institutions created by them, depends on their consistency with or their adaptation to the preexisting legal order in the receiving country (Berkowitz et al. 2003). For comparative law scholars, the different operation of original and transplanted institutions suggests that transplanted academic theories, based on the country of origin, cannot be uncritically applied to analyze these new institutions. To illustrate this, I shall discuss the case of regulatory agencies. In the last two decades, independent agencies have become the primary means of regulating infrastructure industries worldwide (Gilardi 2008). This is especially true in Latin America (Jordana & Levi Faur 2005). The United States independent agency model served as a blueprint in most cases. Despite these institutional similarities, there is one important difference: Latin American agencies operate within Presidential systems that differ significantly from the U.S. system. For example, the Brazilian President is substantially more powerful vis-à-vis the Brazilian Congress than the White House is vis-à-vis the American Congress. U.S. literature uses the principal-agent framework to analyze regulatory agencies, showing that Congress is the principal. This became the prevailing view of regulatory agencies in the United States and is known as the “theory of congressional dominance”. I use the same theoretical framework (principal-agent) to analyze Brazilian agencies and support my contention that they are controlled by the President (i.e., the President is the principal). I do not attempt to explain why power has been delegated, but rather discuss the interaction between Brazilian regulatory agencies and political institutions once the decision to delegate has been made. I conclude that a “theory of presidential dominance” is better suited to describe the interaction between the government and the regulatory agencies in Brazil. This conclusion raises the question of whether the “theory of presidential dominance” might also be applicable to other countries. Brazil has one of the strongest presidencies of the world, and it could be an exception. The United States might be an exception at the other extreme. If this is true, the theories of Congressional and Presidential dominance might be special cases within the principal-agent approach.

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I am grateful to Alec Stone Sweet, who suggested that a theory of Presidential dominance was the missing piece in my previous analyses of independent regulatory agencies in Brazil, and encouraged me to explore the topic in more detail. Also, I would like to thank Marcio Grandchamp, Conrado Hubner, Fernando Limongi, Michael Trebilcock, and the participants of the Seminario en Latinoamérica de Teoría Constitucional y Política (Seminar in Latin America on Constitutional and Political Theory, SELA) conference for helpful comments and suggestions to an earlier version of this paper. Eventual errors are my sole responsibility.

1 Electronic copy available at: http://ssrn.com/abstract=1690815

In addition to engaging with the descriptive exercises proposed by the theories of Congressional and Presidential dominance (namely, which branch of the government exerts most control or influence over regulatory agencies), one could also ask the normative question: who should control regulatory agencies? In the United States, there is a heated debate about the constitutional legitimacy of the political control of agencies. “The unitary executive” thesis suggests that, despite the fact that Congress created some agencies independent of the President, these agencies, nevertheless, should be under Presidential control. In contrast, other U.S. scholars argue that Congress can choose to delegate powers to the executive branch or to independent agencies. In contrast to the U.S., the Brazilian constitution places the entire bureaucracy within the Executive branch, under the control of the President. As a consequence, the normative legal-constitutional debate in Brazil is not focused on which branch of the government controls agencies, but it is instead concerned with the level of Presidential influence over agencies that is constitutionally legitimate. The chapter proceeds as follows. The first section details the institutional reforms that took place in Brazil in the mid-1990s and indicates the most important institutional features of independent regulatory agencies. The second asks whether the principal-agent theory helps us to understand the delegation of powers to independent regulatory agencies. The third demonstrates the application of the principal-agent framework in the U.S. context, and it spells out the “theory of congressional dominance” as formulated by U.S. scholars. The fourth section explores the uniqueness of Presidential systems in Latin America, especially Brazil, and suggests that due to the peculiarities of these systems, the “theory of congressional dominance” does not adequately capture the Brazilian reality. The fifth section asks whether the President should control regulatory agencies and assesses the legal-constitutional debates in Brazil and the U.S. regarding Presidential control of regulatory agencies. I. TRANSPLANTING INDEPENDENT REGULATORY AGENCIES (IRAS) TO BRAZIL Between 1996 and 2002, the Brazilian government established IRAs for electricity, telecommunications, oil and gas, transportation, and other infrastructure sectors.1 Following the formulas advocated internationally (Smith 1997), Brazilian IRAs were designed to have fixed terms of office for commissioners, congressional approval of presidential nominations, and alternative sources of funds to ensure their financial autonomy. These and other institutional features sought to guarantee that these agencies were not subordinated to any branch of government, thereby providing them a high level of independence. Gesner Oliveira constructed an index to measure the independence of agencies, and he indicates that, at least formally, Brazil has one of the highest levels of independence in the world (Oliveira 2005; Machado et al. 2008). Lack of removal power (neither the President nor any other Executive official has the power to remove these agencies’ commissioners at will once they are appointed)2 is a central 1

In this period, nine regulatory agencies were established: Agência Nacional de Energia Elétrica, ANEEL (Electricity); Agência Nacional do Petróleo, ANP (Oil and Gas); Agência Nacional de Telecomunicações, ANATEL (Telecomunications); Agência Nacional de Vigilância Sanitária, ANVISA (Sanitary Vigilance/Health Inspectors); Agência Nacional de Saúde Suplementar, ANS (Private Health Care Services); Agência Nacional de Águas, ANA (Water); Agência Nacional de Transportes Aquaviários, ANTAQ (Water Transportation); Agência Nacional de Transportes Terrestres, ANTT (Ground Transportation); Agência Nacional do Cinema, ANCINE (Cinema). 2 Normally the expression used in statutes is removal only for “cause”, because the President lacks power to remove commissioners at will, though they can still be removed through an administrative or judicial process for misconduct. In Brazil, there are very few situations under which commissioners can be dismissed before the end of

2 Electronic copy available at: http://ssrn.com/abstract=1690815

institutional guarantee of independence (Miller 1988; Morrison 1988). Many U.S. IRAs protect commissioners against dismissal at will,3 and Brazilian agencies also adopted this feature.4 Collegial decisions, as well as staggered and predefined terms of office are other institutional features that help to enhance agencies’ independence. It is easier to influence one commissioner than it is to influence a commission that makes collegial decisions. It is even harder to influence a commission whose members have staggered terms of office because the current President will not have appointed all of its members. In addition, requiring senatorial approval of presidential nominees constrains the President’s choices, giving the Senate veto power over nominations. Following the U.S. design, almost all constitutive statutes in Brazil require this approval.5 Brazilian IRAs also have alternative sources of funding that are separate from the Executive’s fiscal accounts. The same mechanism exists in the United States,6 and was recommended to developing countries by international institutions such as the World Bank (Estache and Martimort 1999). Brazilian agencies' main sources of income are supervising fees and fines paid by regulated companies.7 These funds are earmarked, meaning that the law forbids their use for purposes other than those related to the sectors in which these companies operate. The alternative funding mechanism has the potential to guarantee independence if the amount collected is sufficient to cover all of the agency’s operational costs. All aspects of the Brazilian IRA’s design described above were inspired by the experience of the country with the longest tradition of independent regulators in the world: the United States. Not only has the United States had IRAs for a long time, but U.S. scholars have also produced a vast academic literature on the topic, which will be analyzed briefly below. Before doing that, however, I will ask whether the principal-agent theory is appropriate for independent regulatory agencies, in general, and those in Brazil, in particular. II. UNDERSTANDING DELEGATION: THE PRINCIPAL-AGENT FRAMEWORK Delegation is often analyzed using the principal-agent framework, under which one entity (the principal) delegates its authority to another entity (the agent). Delegation normally happens when it benefits the principal. For instance, the agent might be able to perform a certain function their terms of office. These are: resignation, judicial conviction, or conviction in a disciplinary administrative process. See, e.g., Lei No. 9.472 de 16 de julho de 1997, art. 26 (provisions applicable to the telecommunications agency in Brazil). 3 Examples include Federal Communications Commission (FCC), Federal Maritime Commission (FMC), National Labor Relations Board (NLRB), Nuclear Regulatory Commission (NRC), Federal Energy Regulatory Commission (FERC) and Securities and Exchange Commission (SEC) (Breyer 1999, p. 101). 4 Lei No.9.986 de 18 de julho de 2000, art. 9. From 1997 to 2000, the President could remove the Electricity Agencies’ (ANEEL) commissioners at will in the first four months of their terms of office. Since 2000, this general law regulates the removal power of the President in many other agencies, including ANEEL. 5 See Lei No. 9.472 de 16 de julho de 1997, art. 23 (ANATEL); Lei No. 9.427 de 26 de dezembro de 1996, art. 5 (sole paragraph (ANEEL)); Lei No. 9.478 de 6 de agosto de 1997, art. 11, § 2 (ANP); Lei No. 9.961 de 29 de janeiro de 2000, art. 6 (sole paragraph (ANS)); Lei No. 9.782 de 26 de janeiro de 1999, art. 10 (sole paragraph (ANVISA)); Lei No. 10.233 de 5 de junho de 2001, art. 53, § 1 (ANTAQ and ANTT); Brazil Provisory Measure No. 2,228-1 de 2001, art. 8, § 1 (ANCINE). The only exception is ANA. 6 In the United States, for instance, some agencies have alternative sources of funds, which come from fees paid by the regulated industry. 7 See, e.g., Lei No. 9.472 de 16 de junho de 1997, art. 47 (ANATEL); Lei No. 9.427 de 26 de dezembro de 1996, arts. 11-13 (ANEEL).

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better than the principal due to specialized knowledge. But there are costs as well: The principal may not be able to perfectly control the agent to assure that it acts in the principal’s best interest. The delegation decision ends up being, therefore, a complicated cost-benefit analysis: the principal needs to make sure it will enjoy the benefits of delegation, while limiting the costs. If the costs outweigh the benefits, delegation should not take place. The creation of regulatory agencies is interpreted as an act of delegation,8 and therefore can be analyzed under the principal-agent framework. The justification of delegation is that specialized regulators are better equipped to govern certain sectors of the economy than elected politicians. But although politicians may be willing to delegate their powers, they also want to create mechanisms of control to ensure that regulatory outcomes are aligned with their interests. Under the principal-agent framework, it would be irrational for a principal to delegate powers completely and permanently, given the risks of uncertain or unwanted outcomes. In addition to the costs associated with delegation, the principal-agent framework also shows that there are benefits. Indeed, according to this framework, politicians may decide to delegate powers to independent regulatory agencies because it could solve at least two problems: credible commitment and political uncertainty. Broadly speaking, delegation to independent regulatory agencies is one solution to the problem of credible commitment. The agent guarantees to third parties that the principal will not be able to modify its promises ex post. The establishment of independent regulatory agencies might provide a higher level of security to investors, increasing the levels of investment. Thus, this concern provides compelling explanation of why delegation takes place. But the credible commitment approach does not explain why regulatory agencies are not completely independent, or at least as independent as courts. In this regard, the principal-agent framework can illuminate the complex cost-benefit analysis involved in obtaining the benefits of credible commitment, while keeping control over relevant public policies. Hence, the principal-agent theory shows that while credible commitment is a plausible hypothesis for creating independent regulatory agencies, this hypothesis does not account for the costs of delegation (i.e., the risk of having regulation misaligned with the principal’s interests), and the measures that the principal takes to reduce them. The second reason is political uncertainty. The concern here is to tie up the hands of future majorities, who could be tempted to change the programs and policies of the current majority (Gilardi 2002, 2005). This is especially salient in contexts in which there could be a conflict of interest between regulatory activity and any remaining stakes that the government has in state-owned companies. However, outside the United States, many authors claim that the principal-agent framework is not useful for explaining the creation of independent regulatory agencies (Majone 2001; Gilardi 2001) or other types of delegation, such as delegation to constitutional courts (Sweet 2002). Instead, in the specific case of IRAs, two international factors seem to have played an important role; deeper economic integration (Majone, 1997) and policy diffusion across countries. Many countries adopted reforms because similar reforms were adopted earlier in neighboring countries (Jordana and Levi-Faur 2004). 8

Delegation, for the purposes of this paper, can be defined as “an authoritative decision . . . that transfers policy making authority away from established representative organs (those that are directly elected, or are managed directly by elected politicians) to [governmental entities that possess and exercise some grant of specialized public authority, separate from that of other institutions, but are neither directly elected by the people, nor directly managed by officials]”. (Tatcher and Sweet, 2002).

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It remain unclear, however, why IRAs were created in Brazil. We do know that they were created by the President and are strongly influenced by him, despite having institutional guarantees of independence (Prado 2008a). Some suggest that credible commitment could explain the creation of IRAs in Brazil (Mueller 2001). However, it is hard to reconcile the credible commitment hypothesis with the strong Presidential control over agencies in Brazil. This Presidential control suggests that other factors, such as policy diffusion, may have played a role in the Brazilian case. The reason for the creation of IRAs in Brazil requires further research, but given that IRAs exist, the principal-agent framework is a much better tool for analyzing the consequences of delegation than the credible commitment approach (Gilardi 2001). It can illuminate what instruments of control are available to the Brazilian President, and how they are used to influence independent agencies. I turn to that issue next.

III. THE THEORY OF CONGRESSIONAL DOMINANCE Following the principal-agent framework, scholars argue that in the United States the principal for IRAs is Congress. It delegates power and subsequently seeks to control the agencies. Under the assumption that delegation will only take place if the principal can guarantee that the agent will protect its interests, Congress will only delegate its powers if it is able to control the agencies.9 This idea, that Congress controls its spawns, especially regulatory agencies, is labeled the theory of congressional dominance (TCD).10 According to TCD, there are basically two ways in which Congress exercises control over regulatory agencies: ex post oversight, and statutory provisions that establish ex ante agency structures and processes (Bawn 1997). Regarding ex post oversight, Congress can sanction agencies because it controls appointments, budgets, and the legislative agenda. As a result of these potential sanctions, Congress controls the agenda of the agencies after delegating power to them, and is able to influence bureaucratic behavior (Moe 1987). More specifically, by participating in the appointment process, Congress can screen candidates in order to reduce the risk of approving a bureaucrat whose incentives are insufficiently aligned with congressional preferences. Congress can also reduce or increase the budget of one particular agency from year to year depending on the implemented policies. Finally, it can threaten to amend the law if the agency adopts policies that are not aligned with Congressional preferences; Congress can enact legislation modifying personnel, programs, and the structure of the agency itself. Because bureaucrats care about these issues, the threat of change keeps them acting in line with congressional preferences. Oversight does not imply a constant and close monitoring of every single step of the agencies’ decision-making process. Instead, the threats are supposed to keep agencies “on track” so that Congress needs to intervene only when there is something seriously wrong. To know when there is a problem, Congress uses “fire alarm mechanisms” that, as the name suggests, “go off” whenever there are indications that things are seriously amiss (McCubbins & Schwartz 1984). 9

I am oversimplifying the cost-benefit analysis involved in the delegation decision. For a more complete account, see Thatcher & Sweet (2002). 10 TCD is far from being a cohesive body of work. There are a number of different scholars who present different claims to support the idea that Congress controls agencies. All these different versions will be labeled theory of congressional dominance for the purposes of this paper.

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Another way in which Congress controls agencies is through mandated administrative procedures. These differ from oversight mechanisms because they impose control ex ante. In this case, Congress uses administrative procedures in order to control policy outcomes more closely (McCubbins et al. 1987, 1989). For example, administrative procedures can serve as instruments of political control by enfranchising one set of constituents and increasing the likelihood that bureaucrats will favor them in the decision-making process. The Administrative Procedure Act (APA) has been interpreted as a Congressional attempt to influence the decisionmaking process of regulatory agencies because it reduced administrative discretion, increased transaction costs involved in changing policies, and granted the courts power to interpret agency statutes, limiting the ability of new appointees to announce new interpretations of statutes (McCubbins et al. 1999). Despite being an influential theory, TCD is not uncontroversial. Against the idea that there are mechanisms of congressional control over the bureaucracy, scholars argue that the ex post oversight mechanisms provide limited control over bureaucracy (Moe 1987) and that administrative procedures are not mechanisms of ex ante political control, but instead serve other purposes such as fairness and accountability (Mashaw 1990). Others criticize the theory for its lack of empirical support, and show that in some instances the conclusions of TCD are unwarranted (Moe 1987; Balla 1998). Some regard the principal-agent framework as an unnecessary oversimplification of the political process (West 1995) and argue that the American administrative process is an arena for competition between President and Congress (West and Cooper 1989:581). More recently, political scientists have emphasized that the American President is much more powerful than the constitutional text indicates, and this is reinforced by the increasing use of Executive Orders (Mayer 2000, 2002; Howell 2003). Other studies document the growing Presidential influence over regulatory agencies in the U.S concerning procedural and substantive matters (Kagan 2001; Pildes & Sunstein 1995; Lessig & Sunstein 1994).11 As Steven Croley puts it “among the most important developments in administrative law over the past two decades – indeed among developments in domestic policymaking generally – efforts by recent presidents to exert greater control over regulatory agencies rank near the very top.”(Croley, 2003:821). These criticisms and the increased use of Executive Orders show that we should avoid a simplistic use of TCD in the United States. In spite of these caveats, however, the theory retains a hold on the efforts to understand the relationship between political entities and regulatory agencies. In the next section, I use that framework (principal-agent) to analyze the Brazilian scenario. The purpose of this analysis is to ascertain whether TCD could be fruitfully used to analyze regulatory agencies in Brazil. As we shall see, the answer is “no”. If I am correct, this is a significant finding, since TCD has been (or was, until recently) one the most influential institutional theory in U.S. scholarship on regulatory agencies.12 Thus, my analysis complements critical work on the U. S. case by showing that TCD also has limited applicability in another national context.

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See Rose-Ackerman (2007) for a collection of the main articles, a review of the available empirical evidence, and a useful summary of this literature. 12 Terry Moe shows that in the last 15 years the most influential theory of bureaucratic behavior has been the capture theory, formulated by Stigler and Peltzman in the 1970s. Unlike TCD, however, the capture theory omits institutions from the model. The implicit assumption is that institutions do not matter. If we adopt the opposite assumption, as I do here, TCD is the most influential theory(Moe 1987:475).

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IV. A NEW PROPOSAL: A THEORY OF PRESIDENTIAL DOMINANCE If political entities respond to incentives, and if these incentives are primarily governed by institutional structure, one could posit that the theory of congressional dominance would apply to any country with a presidential system. Separation of powers, however, does not produce the same incentives for the creation of agencies, let alone lead to the replication of the dynamic of power and control that we observe in the United States (Epstein & O’Halloran 1999:240). This will happen only when the political system is very similar to the U.S. system, which is rarely the case. Thus, even for those who assume that institutions matter, it is not necessarily the case that all Presidential systems will generate congressional dominance over regulatory agencies. One needs to take a closer look at the institutional differences between systems before drawing any conclusions. The presidential systems in Latin America illustrate these institutional differences. The U.S. system started off with a relatively weak President and with policymaking power centered in the legislature (Epstein & O’Halloran1999:241). In contrast, in Latin America many presidential systems derived directly from autocracies, and legislative policymaking was never firmly established (Epstein & O’Halloran 1999). In addition to historical differences, structural features also diverge significantly. The constitutional powers of Latin American Presidents, which include executive decrees with force of law, significantly shape the relationship between the legislative and the executive branches (Mainwaring & Shugart 1997:13-14; Carey & Shugart 1998). Thus, in order to understand the relationship between regulatory agencies and political branches in Latin America, it is necessary to understand the allocation of powers within these political systems. The relationship between different branches of government and the allocation of power is particularly interesting in the Brazilian case because for a time it was a puzzle for political scientists. The 1988 Constitution granted the President strong proactive and reactive powers, which include legislative decree powers and veto power that cannot be easily overridden by Congress. Indeed, the 1988 Brazilian Constitution was ranked as granting the second most legislative powers to the President, among forty-three constitutions (Shugart & Carey 1992:155). Political scientists assumed that this system’s fate was deadlock and breakdown because the President would have very few incentives to negotiate with Congress (Shugart & Carey 1992:148). In addition, Brazil had a fragmented party system, and there was a lack of party discipline. Critics assumed that the President was unlikely to have a majority in Congress and that the lack of discipline would make it very difficult to obtain support even if he or she had a majority. As a result, the President would not likely be able to implement major reforms. To overcome the lack of congressional support, the President would have to use his or her legislative powers which would cause conflict with Congress. As a result, paralysis and crisis would prevail. In sum, many commentators viewed the system created in 1988 as nothing but hopeless (Sartori 1997:95-96, 190-193). The actual performance of the system, however, proved these predictions wrong. Since 1988 Brazilian presidents successfully enacted their legislative agendas. Presidents introduced eighty-six per cent of the bills enacted since 1988 and the rate of approval of the bills introduced by the executive was seventy eight per cent (Limongi 2005). In addition, Presidents have used

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their executive decree power extensively. Ultimately, the system has permitted major and sweeping constitutional and legislative reforms. The predictions of deadlock and paralysis were mistaken for two reasons. First, they overlooked the President’s ability to build coalitions, as in parliamentary systems (Abranches 1988:5). Second, even those who recognized the possibility of coalitions regarded them as loose and unreliable due to the lack of party discipline and loyalty (Mainwaring 1997:74). However, the organization of Congress, which is highly centralized, and the degree of control of the Executive over the legislative agenda, manages to create a higher degree of party discipline than initially expected (Figueiredo & Limongi 2000). As a result, [Brazilian] Presidents have formed coalitions to govern, and have been able to reliably obtain the support of the parties that belong to the government coalition in approving its legislation: the average discipline of the presidential coalition, defined as the act of voting in accordance with the public recommendation of the government leader in the floor, was 85.6% (Limongi 2005:47).

This analysis shows that there are radical differences in structure and functioning between the U.S. and Brazilian Presidential systems. It follows, then, that U.S. and Brazilian independent agencies were created in very different contexts (Limongi 2005:48). Specifically, in the Brazilian Presidential system, there is very little room for viable alternatives to executive policymaking. As a consequence, the TCD does not explain how and why policymaking powers were delegated to independent regulatory agencies in Brazil (Epstein & O’Halloran 1999:241). In contrast to the United States, agencies in Brazil were a Presidential initiative (Pacheco 2003). The Executive branch drafted the bills for independent regulatory agencies and submitted them to Congressional approval (Prado 2008a:443-447). The constitutional features of the Brazilian political system also show that most of the control mechanisms that support the TCD are actually allocated to the President. As mentioned earlier, the TCD is largely based on three types of mechanisms of ex post control that Congress exercises over agencies: budget, appointments, and new legislation. Each of these is analyzed in more detail below. A. Budgetary Control 13 Brazilian agencies have alternative sources of funding, which are not part of the Executive fiscal accounts. Like all the expenditures made by bodies of the Executive branch, however, the use of these funds has to be previously authorized by federal budgetary appropriations. As a consequence, the entity that controls these appropriations can influence agencies’ policy choices. According to the TCD, in the United States, Congress has the power of the purse (Carpenter 1996). In contrast, the Brazilian President has substantial control over the budget due to his power to interfere significantly in the federal appropriations process. One of the most important features in securing Presidential dominance is the President’s exclusive power to prepare a budget proposal. Independent agencies’ budgets are incorporated into the presidential budget that is sent for Congressional approval. The preparation of this proposal is the first moment at which the President can influence the appropriations process and hence the agencies' budgets. In addition, in Brazil congressional influence on the appropriations process is limited by constitutional and statutory provisions that allow for significant presidential control over the final 13

The analysis presented here was developed in greater detail in Prado(2008a:490-496).

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outcome of the bill approved by Congress. First, the presidential proposal will be used as law if the Congressional statute is not enacted in a timely fashion. Second, the President may veto some of the provisions in the final statute approved by Congress (Figueiredo & Limongi 2002:303). These unique constitutional provisions put Brazil among the five countries granting the most budgetary power to the President (Mainwaring 1997:64). Finally, the President can modify congressional appropriations (or the parts available to the agencies) after their enactment during the budget implementation phase, at his or her own discretion.14 These reductions are made through presidential decrees,15 which are unilateral acts of the President not subject to any Congressional control. In Brazil, there is no guarantee that the resources appropriated by Congress and allocated to the agency will necessarily reach the agency in question. In contrast, in the United States, the presidential power to impose delays or to cancel budget resources (i.e., impound funds) is subject to Congressional control. Indeed, the Congressional Budget and Control Act of 1974 regulates impoundments and establishes procedures that do not allow the American President to abrogate the intention of Congress. In sum, the Brazilian President controls, determines, or administers the amount of funds the agencies will, in fact, receive, and he or she can significantly affect the financial autonomy of those agencies. These powers might operate as an incentive for agencies to adopt his or her preferences because they raise the threat of budgetary reduction. All these powers have been used to the detriment of the agencies. In the preparation phase in 2003, for instance, the 202 million reais requested by the electricity regulator (ANEEL) were reduced to 162 million by a presidential proposal that was later approved by Congress (Abdo 2003). In the same year, ANEEL had its appropriations reduced by fifty per cent in the execution phase: the 162 million reais approved by the Congressional budgetary appropriations statute (LOA) were reduced to seventy million by presidential decree.16 A similar reduction happened in 2002, again by presidential decree.17 Like ANEEL, the telecommunications agency (ANATEL) also had its budget reduced by the President in 2001, 2002, and 2003,18 the most recent reduction being twenty-five per cent. In 2005, six infrastructure agencies received only sixteen per cent of their appropriations for that year (Vargas 2003; Pereira 2006). These reductions show that the President can decrease the amounts allocated to the IRAs by Congress to the amounts originally proposed by the President or even lower. Although the President cannot increase agency budgets once Congress has approved them, the Executive Branch has a strong influence on the approval process because it can determine how much is approved by Congress in the first place (Prado 2008a:490-496). However, there is no conclusive evidence that the President used his power in these instances to control regulatory outcomes for opportunistic reasons. Indeed, as I have explained elsewhere, the reductions could be explained 14

The budgetary appropriations statute (LOA) defines only the maximum expenditures the President and the Executive branch are authorized to make in a particular fiscal year. Thus, the President cannot surpass the limit approved by Congress (except if the Congress authorizes him to do so). 15 In Portuguese, these decrees are called Decretos de Execução Orçamentária. 16 In May 2003, an additional amount of 12 million was added to the 70 million, summing up 82 million for 2003 (Abdo2003)(stating that in 2002, the 174 millions reais approved by the LOA were reduced to 145 million reais by a presidential decree and only 137 millions were effectively transferred to ANEEL.). 17 Decreto No. 4.120 de 7 de fevreiro de 2002; Decreto No. 4.591 de 10 de fevreiro de 2003 e 4.708 de 28 de maio de 2003 (Brazil). 18 Decreto No. 3.746 de 6 fevreiro de 200l; Decreto No. 3.878 de 25 de julho de 2001; Decreto No. 4.031 de 23 de novembro de 2001; Decreto No. 4.120 de 7 de fevreiro de 2002; Decreto No. 4.591 de 10 de fevreiro de 2003. Portarias No. 301de 2001 e 333 de 2001 (Brazil).

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by other hypotheses, such as macroeconomic concerns and consumer protection (Prado 2008a). This raises a number of questions as to whether or not such control is desirable, which will be addressed in section V below. B. Control over appointments19 Most independent regulatory agencies require congressional approval of presidential nominations. This veto power allows congress to control who is appointed, and therefore, it can function as a mechanism to avoid the appointment of those who will not further Congressional interests. Congress will authorize appointments only when the interests of the officials proposed align with congressional political preferences. Some regard this as one of the most effective means of congressional influence over regulatory agencies (Weingast & Moran 1983). Terry Moe (1987:489), however, challenges that claim by pointing out that President retains the power to submit appointees’ names in the first instance. Even if we assume, however, that this veto power generates some congressional influence over agencies, it is curious to observe that in Brazil the Senate rarely rejects nominees. There have only been two vetoes of presidential nominations by the Senate, for two commissioners of the oil and gas agency (ANP), in 2003 and 2005 (Monteiro 2003; Folha de São Paulo 2003; O Estado de São Paulo 2005). In the case of ANATEL, senatorial approval of presidential nominations has been almost unanimous (Folha de São Paulo 1997, 2004). This lack of rejections can be interpreted in two ways: (i) the President controls nominations, and the Senate is not able to oppose appointees on ideological grounds (Moe 1987b: 251); or (ii) the President is forced to anticipate the Senate’s preferences in order to avoid vetoes (Nixon 2004). It is difficult to say which of these two hypotheses better explains the Brazilian case, but there are at least two facts that support the first hypothesis.20 First, President Lula was able to obtain senatorial approval for a number of political appointees, many of them members of the President’s Workers’ Party.21 Second, the two vetoes exercised by Congress were not due to the political affiliation, policy preferences, or personal qualifications of the candidates. Instead, the vetoes were ascribed to personal revenge,22 and political retaliation.23 In addition, the Brazilian President is not constrained by partisan balance requirement common in U.S. independent agencies. All appointees can be affiliated with the same party.24 Exploiting the lack of a partisan balance requirement, President Cardoso distributed the seats in 19

The analysis presented here was developed in greater detail in Prado (2008a:470-482). For facts that could support the opposite hypothesis, see Prado (2008a:480). 21 Three of Lula’s appointees were politicians defeated in the 2002 elections. In 2003, Lula appointed Haroldo Lima, a former representative of the Communist Party in Congress to the oil & gas agency (ANP). In 2005, José Airton Cirilo, a member of the worker’s party, was appointed director of the ground transportation agency (ANTT). Still in 2005, José Machado, also a member of the Workers’ Party, was nominated as director of the waters agency (ANA), after being defeated in the reelection campaign for mayor of the city of Piracicaba in the state of São Paulo (Leitão 2005; Domingos 2005). 22 In the first case, the nominee had led an investigation of corruption against one of the parties with a majority in Congress, and the veto (articulated by the leader of this party in Congress) was regarded as revenge for it (Monteiro 2003). 23 The second veto was seen as retaliation against the Lula administration for refusing to give an important position in the state bureaucracy to one of the parties in the governmental coalition (i.e. it was not related to the appointee himself) (O Estado de São Paulo 2005). 24 Some U.S. agencies require that no more than three out of the total five commissioners belong to the same political party. 20

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the Brazilian agencies among the parties in his political coalition. During the Cardoso administration (1995-2002), two parties nominated all the commissioners of ANATEL and ANEEL.25 In sum, the appointments were used as bargaining chips for political support and coalition building in Congress.26 So, it seems safe to say that the President controls the appointment process in Brazil. C. New Legislation According to TCD, Congress can influence agencies by threatening to approve new legislation. Congress might change personnel, the agency structure, its jurisdiction, or its programs, and the threat of imposing these changes might give agencies an incentive to favor congressional preferences. In the Brazilian case, however, the President controls the legislative agenda in many ways. First, the President’s veto power is not easily overridden by Congress: the party fragmentation in Congress makes it difficult for opposition parties to assemble the required majority to override a veto (Mainwaring1997:61). Second, the President has the exclusive right to initiate legislation pertaining to the agencies, such as increasing salaries or creating jobs in the public sector and organizing and structuring public administration; indeed, everything relating to budgetary matters (1988 Brazilian Constitution, art. 61). Thus, presidential initiatives can modify all the matters that directly affect regulatory agencies. In this regard, the Brazilian case is in a category of its own: very few constitutions grant Presidents such sweeping powers to initiate legislation (Mainwaring 1997:62). In addition to the veto power and the exclusive power to initiate legislation in certain areas, the Brazilian President can legislate by enacting provisional measures (medidas provisórias), which are executive decrees with force of law.27 Admittedly, there are some formal legal obstacles to the President’s ability to limit regulatory agencies’ independence by provisional measures [1988 Brazilian Constitution, art. 246; Supreme Court Decision S.T.F.J. No. 1.819 de 1999 (ADI 2.005-6)]. However, even if there are legal obstacles that do not allow for these executive decrees to be freely used, the government can still change the structure of the agencies by proposing legislation to Congress. As mentioned before, the rate of congressional approval of Presidential legislation is particularly high in Brazil. One episode illustrates the use of such presidential threats against the agencies (Prado 2006). In February 2003, President Lula and other governmental leaders asserted that the agencies’ level of independence was problematic. In March 2003, the Brazilian President 25

The parties were Partido da Social Democracia Brasileira (PSDB) and Partido da Frente Liberal (PFL). Cardoso granted four out of five seats in ANATEL to PSDB and all seats in ANEEL to PFL (Costa & Figueiró 1997). 26 This could explain the right rate of Senatorial approval of presidential nominations. However, it is not completely clear whether Lula had been using this strategy at all in his administration. By not having majority in the Senate, it seems harder for Lula to use these positions as bargaining chips as Cardoso did (Santana 2006). 27 Both President Fernando Henrique Cardoso (1995-2002) and Lula (2003-2010) issued many provisional measures that modified the legislation applicable to the electricity sector. Fernando Henrique Cardoso used provisional measures to regulate the electricity sector during the energy crisis in 2001, to create the insurance against blackouts (a fee paid by consumers in their electricity bills), to install the Brazilian retailer for emergency electricity, and to create the wholesale market. The provisional measures include the following: Medida Provisoria No.1.819 de 31 de marco de 1999; Medida Provisoria No. 2.141 de 23 de marco de 2001; Medida Provisoria No. 2.152 de 1 de junho de 2001; Medida Provisoria No. 2.198 de 27 de julho de 2001; Medida Provisoria No. 2.209 de 29 de agosto de 2001. Lula used the same instrument to modify the rules of commercialization of energy and to create the Company for Research on Energy. See Lei No.10.848 de 15 de marco de 2004; Lei No. 10.847 de 15 de marco de 2004.

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appointed a commission to discuss a legislative proposal to change the structure of the agencies (Bragon & Medina 2003; Agência Estado 2003). After the creation of this commission, the government issued public statements proposing reforms that would limit the regulatory agencies’ level of independence from the executive branch (Folha de São Paulo, March 24 and May 22, 2003). During the debate over the independence of regulatory agencies, the President also began a public debate with the telecommunications and electricity agencies over increases in telecommunications and electricity tariffs, which these agencies regulated. Lula's administration advocated tariff increases for both energy and telecommunications that differed from the agencies’ proposals. More specifically, the government's proposals did not follow the strict formulas established by the previous administration in statutes, regulations, and contracts. In the case of electricity tariffs, the agency adopted the government’s proposal, but the telecommunications agency did not.28 The fact that these two episodes –the bill to restructure the agencies and the battle over tariff increases– happened at the same time suggests that the former could have been a strategy to influence the agencies. Between March and September 2003, the agencies were conducting a negotiation regarding tariff increases under the constant threat of having the restructuring bill sent to Congress and enacted into law. After the agencies made their final decisions regarding the tariffs, the threats and complaints publicly addressed to agencies by important governmental officials became less frequent and less intense (Alencar 2003). There are reasons to believe that the regulatory agency for the electricity sector reacted to the threat that at any moment the legislative and regulatory powers of the President could be used to change the structure of the agencies and reduce their independence (Goldman 2003). One possible explanation for the telecommunications agency ability to resist the pressure is the fact that the government itself was divided over the issue: the Minister of Telecommunications wanted to reduce the increase, but the Minister of Finance fiercely opposed the proposal (Prado 2006). Although the President is powerful vis-à-vis the legislature and the IRAs, Brazilian federalism may constrain the power of the executive branch by adding veto players in the politics of policy reforms (Tsebelis 1995, 2002). Does federalism allow states to constrain the legislative powers of the President? On the one hand, some scholars claim that Brazil is a ‘robust federalism’, where veto players are strong and significantly constrain the power of the federal executive (Samuels 2003; Samuels and Mainwaring 2004). On the other hand, others claim that the President’s discretion to allocate state resources offsets the power of regional minorities and their influence in the legislative process (Armijo et al. 2006). Along the same lines, some argue that President Cardoso (1995-2002) managed to neutralize the veto players created by the federal system (Stepan 2004; Almeida 2005). In sum, there are strong arguments to believe that the Brazilian federalist system does not impose severe constrains on the President. And even if robust federalism might offer some obstacles to the implementation of the president’s legislative agenda, it does not necessarily offer any protection to IRAs. Even those who perceive Brazilian federalism as strong, also acknowledge that it is predatory (Samuels 2003). Its predatory aspect comes from the fact that state politics in Brazil are still largely dominated by traditional political elites with parochial political concerns (Willis et al. 1999; Armijo et al. 2006). Thus, robust federalism might imply protection of local interests that go against national interests. As a consequence, even if federal veto players are strong in Brazil, this would not necessarily translate into significant obstacles to the Presidential control of IRAs. 28

For a detailed description of these proposals and the regulation of these sectors see Prado (2008a: 448-456).

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In sum, the President has constitutionally entrenched legislative powers to implement structural reforms in the design of the agencies, and these powers can be used to influence agencies’ policies. The Lula administration’s actions towards independent regulatory agencies illustrate just such a threat. The Executive branch seems to be saying that acts contrary to government policy preferences will be punished with severe structural changes even if they cannot be revoked outright by the President. In conclusion, in contrast to the United States, mechanisms of control ex post in Brazil are in the hands of the President and the President actually uses these mechanisms effectively. (Prado 2008a). If correct, this conclusion could have policy implications. On the one hand, it might be fruitless to transplant accountability mechanisms that exist in the United States, such as congressional hearings for commissioners. If the Brazilian Congress does not have effective mechanisms to sanction agencies, congressional hearings will not serve a useful purpose. On the other hand, other U.S. institutional arrangements, such as executive oversight of agency rulemaking, might be more constraining than in the US. In the United States executive oversight balances congressional dominance. In Brazil, however, it would only add to the long list of mechanisms of Presidential control over regulatory agencies. Many scholars who criticize the TCD claim that mechanisms of control ex post are not effective in influencing regulatory agencies. In response to this criticism, TCD proponents have identified statutory controls over administrative procedures as mechanisms of control ex ante (McCubbins &Schwartz 1984; McCubbins et al. 1987). It would be interesting to see what role these procedures play in Brazil, if any. For the purposes of this chapter, however, that step is unnecessary. In Brazil, the mechanisms of control ex post are effective for Presidential control over regulatory agencies. V. ASSESSING THE NEW PROPOSAL: SHOULD THE PRESIDENT CONTROL IRAS? The analysis of Presidential influence on regulatory agencies and the administrative state has three dimensions: a descriptive, a normative, and a legal-constitutional (Croley 2003). The descriptive dimension analyzes whether there is presidential influence over agencies; the other two discuss whether there should be such influence. Thus far, I have been primarily concerned with the first aspect of the debate, suggesting that a theory of Presidential dominance more appropriately explains the relationship between the government and the regulatory agencies in Brazil than TCD. This section turns to the normative questions, asking whether such Presidential control is desirable. There are two possible answers to the question of whether there should be presidential influence over agencies: one is normative and the other is legal-constitutional. The normative debate focuses on whether greater presidential control over agencies produces sounder regulatory policy, whereas the legal-constitutional debate considers the constitutional legitimacy of these practices. As to the former, there are no empirical studies assessing the impact of Presidential control over the quality of regulation in Brazil. There is some evidence that presidential influence seems to be guided by short term political goals (sometimes populist ones) to the detriment of a long term and sustainable plan for the regulated sectors but, besides being anecdotal, the claim that this influence impaired the quality of regulation is largely inconclusive (Prado 2008a, 2008b). A normative assessment of Presidential control over regulatory agencies in Brazil should be the subject of future work as it remains largely unexplored in the specialized literature.

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The second normative issue involves a legal analysis of constitutional provisions. In the United States, the debate raises two sets of questions. Is it legitimate for the President to control regulatory agencies? Is it legitimate for agencies to perform executive functions without being accountable to the President? The ‘unitary executive’ thesis argues in favor of Presidential control of agencies. Despite the fact that agencies are created by Congress (the principal), the unitary executive thesis claims that from a constitutional perspective administrative power cannot exist, except as a subset of the President’s executive power (Calabresi & Prakash 1994). Scholars have argued that a unitary executive is supported by an original understanding of the American Constitution and is necessary to maintain the Constitution’s separation of powers because the vesting clause of article II placed the totality of executive power under the President’s control (Rivkin 1993; Calabresi 1995). In sum, the unitary executive thesis claims that the President should control all executive agencies in order to preserve the political and constitutional legitimacy of the regulatory state. However, the American legal-constitutional debate is largely inapplicable to the Brazilian case and to some of the other countries that have recently created independent regulatory agencies. As Fernando Limongi argues a bureaucratic or administrative state was not part of the original Constitutional design [in the U.S.]. The executive-legislative struggle over the control of the bureaucracy is a consequence of this constitutional silence. Hence, most of the bad characteristics of the American bureaucracy [Bruce] Ackerman attributes to the separation of powers are, in fact, specific to the U.S. They follow from the incompleteness of the American constitution.(Limongi 2005: 42).

In contrast to the U.S., Brazilian agencies are clearly placed within the executive branch, under the auspices of sectoral ministries.29 The Brazilian Constitution defines the President as the chief of the executive branch, subordinating to him or her all offices of the public administration (1988 Brazilian Constitution, art. 84, II). Although one can debate what are the legal consequences of this subordination (Binenbojm 2006:102; Aragão 2004:14-17), it is clear that IRAs are constitutionally subordinated to the President in Brazil. There is, therefore, less room for a debate as to whether they should be controlled by Congress or by the President from a legalconstitutional perspective. Despite the fact that from a constitutional point of view IRAs are within the executive branch, there is still a legal-constitutional debate in Brazil. The debate focuses on how much Presidential control is legitimate given that the law guarantees IRAs some degree of autonomy. There are specific legislative provisions stating that the regulatory activity should be subordinated to the policies adopted by the Executive branch.30 Thus, although the President should not interfere with the day-to-day functioning of regulatory agencies, agencies should strive to coordinate with public policies implemented by the Executive branch. On one hand, agencies should have enough autonomy to make sound regulatory decisions without being influenced by short-term, opportunistic political interests. On the other hand, this autonomy should not become an obstacle to the implementation of policies of a democratically elected government. In other words, President and agencies are supposed to work independently but in a coordinated way to allow the President to pursue his agenda. The Brazilian legal-constitutional debate focuses on the line that divides legitimate policy guidance from undue Presidential 29

This is not the case for agencies of oversight and monitoring, such as the Tribunal de Contas da União and the Ministério Público (Public Prosecutor’s Office). 30 For a list of these provisions, see Aragão (2004: 17).

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influence. IRAs’ legal mandate is rather vague, and both constitutional provisions and statutes are silent on how the President is supposed to ensure that his policy preferences are being followed by the agencies (Nunes 2007:17; Prado, 2008b:132-133). Moreover, the distinction between public policy and regulatory activity requires a clear differentiation between political and technical decisions. However, drawing a line that clearly differentiates these two types of decisions is not only challenging but also highly questionable. Given the vague legal mandate of IRAs, the legal-constitutional debate in Brazil revolves around two questions: (i) are agencies surpassing their constitutional powers by defining policy priorities that should instead be established by the President and (ii) is the President violating the guarantees of autonomy of agencies, by influencing technical decisions that cannot be classified as public policies and general principles? In response to the first question, some claim that agencies formulate public policies only in cases where the Executive branch has not done its job and did not provide guidelines and principles to regulators (Coutinho et al. 2004:30-31). These acts are certainly unconstitutional, but IRAs did not seem to have much of an option in these cases (Rodrigues 2005:351). As to the second question, others claim that the President is surpassing his constitutional and legal powers in some of his attempts to control agencies in Brazil.31 However, as one might expect, these claim are highly controversial, as the line that divides political from technical decisions is quite blurred. IRAs’ decisions have an impact on macro-economy and other government policies. High rates for telecommunications and electricity services, for instance, may work against efforts to control inflation and may also undermine consumer protections. Should agencies be insulated from political influence when inflation and consumer protection are the reasons for the President to exert influence over IRAs? Should Brazil insulate agencies from all types of political influence or only opportunistic ones? If the latter, who decides what is opportunistic and what is not? In making this distinction, should we consider the fact that Brazil is coming out of decades of hyperinflation and the President may have a justified reason to be overly cautious about inflationary measures? Should consumer protection be considered more salient in a country, such a Brazil, with high levels of inequality? All these questions remain largely unanswered in Brazil. Despite the fact that the legal-constitutional debates in the U.S. and in Brazil emphasize different questions, they have something in common. Both rely on “larger competing views of regulatory politics, and can be fully understood only with reference to those broader visions” (Croley 2003:833-834). In the U.S., those who see greater presidential control as benign tend to see the outcome of unsupervised agency rulemaking as itself problematic. For example, agency rulemaking in the absence of active White house oversight is undesirable because agencies are too easily captured by the regulated interests they represent. (…) Critics of expanded presidential oversight of agency rulemaking imply a more favorable view of agency and possibly even of legislative decisionmaking. Their view finds support, for example, from the traditional picture of agencies as experts whose primary function is not to deliver favorable regulation to politically powerful constituencies but rather to exercise their expertise in a rational way that promotes general welfare. (Croley 2003:834-835)

In Brazil, there are also competing visions of regulatory/democratic politics. On one hand, those who oppose high levels of Presidential control of agencies believe that such control 31

For a detailed discussion of this debate in light of concrete examples of Presidential influence over regulatory issues, see Prado (2008a).

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can lead to opportunistic political decisions driven by short-term electoral concerns that will be harmful to regulated sectors. Therefore, delegation of powers to independent agencies is often interpreted as a sign of credible commitment. The government is predicting the possibility of acting opportunistically once reforms have been implemented and elects to tie its hands in order to avoid doing so. On the other hand, those in favor of greater Presidential control argue that democratically elected Presidents are more likely than agencies to promote the general welfare. The assumption here is that the President is just trying to do his job, and that he will only be able to successfully govern a country and implement his policies if he can coordinate the acts and decisions of many different bureaucratic entities. In both cases, the policy implications depend on the validity of these competing predictions, which in turn need to be assessed by empirical studies (Croley 2003:838). We need to evaluate what Presidential oversight and influence over agencies actually looks like before subscribing to one of these views. As I mentioned before, however, there is very little empirical literature on this topic in Brazil. As long as scholars are mindful of the different circumstances and different issues in the Brazilian context vis-à-vis the U.S., this is an area in which Brazilian scholars could benefit a great deal from the expertise reflected in U.S. scholarship.

CONCLUSIONS Legal transplants make different legal systems appear superficially similar. However, beneath the surface there are often considerable differences. When immersed in a different political system, transplanted institutions diverge from their original models. This chapter illustrates this claim by analyzing independent regulatory agencies in Brazil. American scholarship uses the principal-agent framework to analyze regulatory agencies. Within this framework, the theory of congressional dominance prevails. The basis of the theory of congressional dominance, or TCD, is that Congress delegates its legislative power to independent agencies and is, therefore, the principal. The theory concentrates on three mechanisms used by Congress to influence agencies: budget, appointments, and the threat of new legislation. In the case of Brazil, by contrast, the President is the principal. A careful analysis of the particularities of the Brazilian political system shows that in Brazil the three mechanisms of control over agencies –budgetary control, control over appointments, and threats of new legislation– are concentrated in the hands of the President, not Congress. Thus, from a descriptive perspective, a theory of Presidential dominance is more appropriate in the Brazilian case. From a normative perspective, the chapter discusses how U.S. and Brazilian scholarship address the legal-constitutional debate on Presidential influence over regulatory agencies. In this regard, I suggest that they are trying to answer different questions. Although the U.S. scholarship questions which branch of the government has legitimacy to control the bureaucracy, the Brazilian constitution is clear that the President controls the bureaucracy. As a consequence, in Brazil the debate shifts to a question of how much Presidential interference in regulatory activity is legally acceptable. Despite trying to answer two different questions, the legal-constitutional debates in Brazil and the U.S. have one point in common. Both rely on broad and conflicting views of regulatory activity that are based on different assumptions about how the President and agencies behave and on the expected outcome of interactions between President and agencies. Determining the validity of these conflicting assumptions is an empirical question. This

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highlights the importance of empirical research and suggests that Brazilian scholarship could benefit from empirical studies such as those carried out by U.S. scholars. As a general matter, this chapter suggests that legal transplants raise important questions for comparative administrative law scholars. From a descriptive perspective, it is important to analyze administrative law and regulatory institutions within the broader political context in which they operate. A regulatory agency may have the same institutional features in two Presidential systems but have completely different levels of independence depending on the relative power of the President vis-à-vis Congress. For instance, the specific claim of this chapter (the theory that the President, not Congress, controls independent regulatory agencies in Brazil) might be applicable to Presidential systems outside the United States wherever the Presidents hold strong legislative powers. Depending on the number of these systems, the U.S. case –and the TCD– might prove the exception. Or it might be the case that each political system has its own peculiarities so that neither theory applies. From a legal-constitutional perspective, comparative administrative law scholars also need to be mindful of constitutional provisions and legal doctrines. As the Brazilian case illustrates, the existence of a constitutional provision or doctrine may change the course of legal scholarship, setting up a different set of questions to be asked. In sum, comparative administrative law scholars need to have an account of the broader context in which administrative institutions and law function. More specifically they need carefully to consider the legal provisions and the actual functioning of the political and constitutional system of the country they are analyzing in order to make sure they are asking the right questions and identifying the significant differences from and administrative law perspective. In addition to providing an illustration of methodological issues faced by comparative administrative law scholars, this chapter also tackled a subject that is of considerable importance for this field of study. In an era in which ‘one of the most widespread institutions of modern regulatory governance is the so-called independent regulator’ (OECD 2002), determining the most appropriate theory to describe and evaluate IRAs is of considerable importance. I can only hope this is the first of many studies to come.

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Prado, Mariana Mota (2006). ‘Accountability Mismatch: Agências Reguladoras Independentes e o Governo Lula’, Agências Reguladoras e Democracia, Gustavo Binenbojm, ed., Rio de Janeiro: Lumen Juris, pp. 225-251. Prado, Mariana Mota (2008a). ‘The Challenges and Risks of Creating Independent Regulatory Agencies: A Cautionary Tale from Brazil’, Vanderbilt Journal of Transnational Law, 41 (2): 435-503. Prado, Mariana Mota (2008b). ‘O contrato e o plano de gestão no projeto de lei n. 3.337/04: controle desejável e justificado ou influência política indevida?’, Revista de Direito Público da Economia – RDPE, 6(22): 115-140. Rivkin, David B. Jr. (1983) ‘The Unitary Executive and Presidential Control of Executive Branch Rulemaking’, Administrative Law Journal of the American University, v. 7, pp. 309-323. Rodrigues, Walter Alencar (2005) ‘O controle da regulação no Brasil’, Revista de Direito Administrativo, v.241, pp.39-52. Rose-Ackerman, Susan (2007). Economics of Administrative Law. Cheltenham, UK; Northhampton MA: Edward Elgar. Samuels, David & Scott Mainwaring (2004). ‘Strong Federalism, Constraints on the Central Government, and Economic Reform in Brazil’, Federalism and Democracy in Latin America, Edward L. Gibson, ed., Baltimore: Johns Hopkins Univ. Press, pp. 85-130. Samuels, David (2003) Ambition, Federalism, and Legislative Politics in Brazil. Cambridge, UK; New Work, USA: Cambridge Univ. Press. Sartori, Giovani (1997) Comparative Constitutional Engineering. An Inquiry into Structures, Incentives and Outcome. New York: New York Univ. Press. Shugart, Matthew & John Carey (1992). Presidents and Assemblies. Cambridge, UK; New York: Cambridge Univ. Press. Smith, Warrick (1997). ‘Utility Regulators: The Independence Debate’, World Bank, Public Policy for the Private Sector Papers. Available at http://rru.worldbank.org/Documents/PublicPolicyJournal/127smith.pdf. Stepan, Alfred (2004). ‘Towards a New Comparative Politics of Federalism, Multinationalism, and Democracy’, Federalism and Democracy in Latin America. Edward L. Gibson, ed., Baltimore: Johns Hopkins Univ. Press, pp. 323-362. Stone Sweet, Alec (2002). ‘Constitutional Courts and Parliamentary Democracy’, West European Politics, 25(1): 77-100.

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Thatcher, Mark & Alec Stone Sweet (2002). ‘Theory and Practice of Delegation to NonMajoritarian Institutions’, West European Politics, 25(1): 1-22. Tsebelis, George (1995). ‘Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism, and Multipartyism’, British Journal of Political Science, 25(3): 289-325. Tsebelis, George (2002). Veto Players. Princeton: Princeton Univ. Press. Weingast, Barry & Mark Moran (1983). ‘Bureaucracy Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission’, The Journal of Political Economy, 91(5): 765-800. West, William & Joseph Cooper (1989). ‘Legislative Influence v. Presidential Dominance: Competing Models of Bureaucratic Control’, Political Sciences Quarterly 104 (4): 581-606. West, William (1995). Controlling the Bureaucracy: Institutional Constrains in Theory and Practice. Armonk, NY: M.E. Sharpe. Willis, Eliza, Christopher da C. B. Garman and Stephan Haggard (1999). ‘The Politics of Decentralization in Latin America’, Latin American Research Review, 34 (1): 7-56. NEWSPAPERS ARTICLES ‘Agências são alvos de críticas do Governo’, Folha de São Paulo, March 24, 2003. ‘Comissão interministerial discute papel de agências reguladoras’, Agência Estado, March 13, 2003. ‘Comissão rejeita indicação de Lula para Agência do Petróleo’, O Estado de S. Paulo, March 13, 2005. ‘Governo estuda reduzir poder de agências’, Folha de São Paulo, May 22, 2003. ‘Guerreiro vai presidir Anatel por três anos’, Folha de São Paulo, October 23, 1997. ‘IGP-DI reajustará telefonia, afirma Ziller’, Folha de São Paulo, January 25, 2004. ‘Veto foi visto com surpresa por atual diretor’, Folha de São Paulo, June 26, 2003. Alencar, Kennedy (2003). ‘Lula se expõe na mídia para reagir a desgaste’, Folha de São Paulo, August 19, 2003. Bragon, Ranier & Humberto Medina (2003). ‘Reunião interministerial discute destino de reguladoras’, Folha de São Paulo, March 13, 2003.

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Costa, Raymundo & Asdrúbal Figueiró (1997). ‘FHC loteia agências de infra-estrutura’, Folha de São Paulo, December 7, 1997. Domingos, João (2005). ‘Lula começa reforma pelas bordas e partidariza agências reguladoras’, O Estado de S. Paulo, January 18, 2005. Goldman, Alberto (2003). ‘O governo contra as agências’, Folha de São Paulo, April 28, 2003. Leitão, Miriam (2005). ‘Erro Perigoso’, O Globo, January 19, 2005. Monteiro, Ricardo Rego (2003). ‘Veto a Salomão alerta governo para reformas’, Jornal do Brasil, June 26, 2003. Pereira, Renée (2006). ‘Governo Lula corta verbas e asfixia agencias. Sé em 2005 foram R$ 4,4 bi’, O Estado de S. Paulo, July 3, 2006. Vargas, Laszlo (2003). ‘Agências fazem ato contra o governo’, Folha de São Paulo, May 6, 2003. INTERVIEW Santana, Edvaldo Alves (2006). Interview by Mariana Mota Prado with Edvaldo Alves Santana (independent consultant for the privatization process and current director of ANEEL), July 26, 2006.

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