Do bureaucrats’ incentives impede organizational reform? Using novel data on firms’ permit applications and internal communications from the environmental regulator in India, we show that a delegation reform that was intended to give decision-making rights to junior officers in the regulatory agency over low-stakes applications was only partially implemented. Low-stakes applications were more likely to be decided on by junior officers after the reform, but only at about two thirds the rate prescribed by the reform. We argue that senior officers chose to retain decision rights over the applications that would have the worst consequences for these senior officers if handled wrongly by junior officers. In particular, delegation was less complete for applications with the highest pollution potential.