The possible VP candidate comments on the current state of regulatory capture in the rulemaking process. The process is biased towards corporate interests from the start.
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Regulatory capture is a big deal. It is one way in which powerful corporations rig the system to work for themselves—and the rest of America pays the price. The tilt in Congress is pretty much out there for everyone to see, but corporate influence works its magic even better in the shadows—and that’s where rulemaking occurs. This essay focuses on one aspect of this pervasive phenomenon: the capture of agencies as they write the rules.
When it comes to undue industry influence, our rulemaking process is broken from start to finish. At every stage, the process is loaded with opportunities for powerful industry groups to tilt the scales in their favor.
The tilt starts early. For example, a 2011 study of U.S. Environmental Protection Agency (EPA) records from 1994 to 2009 found that industry groups held a virtual monopoly over informal communications with EPA that occurred before proposed rules on hazardous air pollutants were publicly available. On average, industry groups engaged in 170 times more informal communications with EPA than public interest players—communications that occurred before any proposed rules were even written.
Similarly, with financial regulation, the big banks and their friends have been lobbying the agencies aggressively. Following the worst financial crisis in three generations—one that resulted in taxpayers spending hundreds of billions to bail out the big banks—Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act to ensure that a crisis of that sort never happened again. This law included a provision called the Volcker Rule to stop banks from engaging in certain kinds of risky behavior. But before that rule was even written, groups representing Wall Street interests met with federal regulators 419 times, accounting for over 93 percent of meetings between federal regulators and external parties about the Rule. Less than 7 percent of meetings were with individuals and groups representing the public interest.
As rules wind their way through the process, the lobbying intensifies. When proposed rulemaking notices are published and the public has a formal opportunity to weigh in, their views are quickly buried in an avalanche of detailed, well-funded, well-credentialed comments from industry insiders and their highly-paid allies. Those EPA rules on dangerous air pollutants? Industry groups submitted 81 percent of the comments during the notice-and-comment period. Public interest groups submitted 4 percent.
