Recent studies contend that public health agencies in the United States are in a state of turmoil because their organizational form causes them to take on conflicting mandates. One key reason is thought to be a trade-off in design: between creating stand-alone agencies for health and environment and creating agencies that combine the two. We use data on the organizational form of state health and environmental agencies to assess the choice of organizational form as a problem of institutional design from the perspective of path-dependency theory. Our results suggest that initial social conditions help explain the choice of combined or independent agencies. We believe that this case provides useful information about the roots of organizational design for resolving competing demands and provides insight into concerns about the delivery of health and environmental protection in the states.