On This Day in History (ok this was originally flagged November 18) 1883: Railroads create the first time zones

This is from History.com and it touches on points I like to make in class about the interrelationship between business and the national government in the expansion of the nation, as well as the expansion of the authority of the national government. The setting of time seems to have been primarily a local matter until technological change (faster transportation) made it necessary for localities to yield this power.

Railroad companies instigated the change, which were then adopted by many state legislatures. It would later be made legal by the national government - most likely under the constitutional authority of the interstate commerce clause, though I've yet to see that stated clearly anywhere. As you'll see below, the power to oversee was given to the Interstate Commerce Commission. That's a give away.

- Click here for the article.

The need for continental time zones stemmed directly from the problems of moving passengers and freight over the thousands of miles of rail line that covered North America by the 1880s. Since human beings had first begun keeping track of time, they set their clocks to the local movement of the sun. Even as late as the 1880s, most towns in the U.S. had their own local time, generally based on “high noon,” or the time when the sun was at its highest point in the sky. As railroads began to shrink the travel time between cities from days or months to mere hours, however, these local times became a scheduling nightmare. Railroad timetables in major cities listed dozens of different arrival and departure times for the same train, each linked to a different local time zone.

Efficient rail transportation demanded a more uniform time-keeping system. Rather than turning to the federal governments of the United States and Canada to create a North American system of time zones, the powerful railroad companies took it upon themselves to create a new time code system. The companies agreed to divide the continent into four time zones; the dividing lines adopted were very close to the ones we still use today.

Most Americans and Canadians quickly embraced their new time zones, since railroads were often their lifeblood and main link with the rest of the world. However, it was not until 1918 that Congress officially adopted the railroad time zones and put them under the supervision of the Interstate Commerce Commission.

The law referenced above was the Standard Time Act of 1918, which was passed during the 65th Session of Congress after being introduced by Senator William Calder, a Republican from New York. This was the Congress responsible for declaring war on Germany. Not surprisingly the bulk of the laws passed by Congress were related to WWI. The creation of a uniform time system - along with the more controversial daylight saving provision, was considered key to the wear effort. The uniformity was far less controversial that the daylight savings component.

The 65th Congress also passed the Child Labor Act of 1919, which would be found unconstitutional in the case of Bailey v. Drexel Furniture. The law placed an excise tax on the profits of companies that employed children. The Supreme Court ruled the tax was really a penalty, which was unconstitutional. The court has since argued that this process is in fact constitutional. Time zones in the United States are currently regulated by the system put in place by the Uniform Time Act, which was passed in 1966 by the 89th Congress.

For a look at the language in the U.S. Code that relate to time zones, click here:

- 15 U.S. Code Sec. 261: Zones for standard time; interstate or foreign commerce.

For more on the Interstate Commerce Commission, which originally implemented the law, click here:

- Wikipedia: Interstate Commerce Commission.

The ICC was the first independent agency established by Congress. It exists outside the tradition executive departments, which gives it greater autonomy from the president. The ICC's jurisdiction expanded considerably over its history. It began with regulating railroads and would eventually also regulate trucking, telephone, telegraph, and wireless companies. It was commonly argued to have been captured by the railroad companies, meaning that its regulations served to enhance - not limit - the power of railroads.

It is one of the few executive agencies that have ever been terminated. This was done in the ICC Termination Act of 1995 which was passed by the 104th Congress (the Contract With American Congress) and signed by President Clinton. Its functions were shifted to the newly created Surface Transportation Board, an agency within the Department of Transportation. This includes the implementation of policies related to time zones. For detail on the purpose of the shift, click here to read President Clinton's Statement on Signing the ICC Termination Act of 1995.

From Vox: Bernie Sanders is right the economy is rigged. He’s dead wrong about why.

The author thinks the problem is occupational licensing, which is primarily a function of the states.

- Click here for the article.

The first step on the path to wisdom is to give up on the idea that there’s any such thing as the economy, exactly. What we have instead is a dizzying array of interlocking markets that function (or don’t) to meet consumer demand for specific goods and services, and a vast body of law that defines these markets and regulates their operation.

The economy is the sum of this incomprehensibly complex ecosystem of human exchange, and is far too variegated and decentralized to "rig" all at once. So it gets rigged little by little, one market and one jurisdiction at a time.

The story of how the economy gets rigged is therefore a bunch of homely little stories of people with nice watches screwing over people with less-nice watches. But it’s not class war. It’s not the mega rich against the rest of us. It’s insiders seeking and then protecting special privileges that give them a leg up.

Dentists rig the system against dental hygienists by working to make it illegal for hygienists to clean teeth without totally unnecessary supervision by dentists. Taxi medallion oligopolists rig the system against regular folks with cars who would like turn a buck giving people rides. Beauty school cosmetologists rig the system against hair braiders and sidewalk hair-clipper artistes. "Massage therapists" rig the system against anybody with strong hands who might want to give back rubs for cash.

About 30 percent of all jobs in the United States today require some sort of occupational license, up from 5 percent in the early 1950s. This rather dramatic shift is evidence that the economy has indeed become increasingly rigged — which is really just another word for "regulated."

Click here for Texas' Occupations Code.

From In These Times: The SEC’s Danger of Regulatory Capture How the “cozying up” at the SEC is just another example of regulatory capture.

For our look at regulatory agencies and regulatory capture.

- Click here for the article.

The phrase “regulatory capture” shrouds a serious problem in vaguely academic jargon, making it seem like unimportant esoterica rather than anything noteworthy. But the phenomenon that the euphemism represents is, indeed, significant: When a government agency is effectively captured by—and subservient to—the industry that agency is supposed to be objectively regulating, it is a big deal.

A perfect example of regulatory capture came earlier this month from the Securities and Exchange Commission—the law enforcement agency that is supposed to be overseeing the financial industry.

As part of that responsibility, the agency's top financial examiner, Andrew Bowden, warned last year of rampant fraud, corruption and abuse in the private equity industry, which today manages tens of billions of dollars of public pension money for states and cities across the country.

“When we have examined how fees and expenses are handled by advisers to private equity funds, we have identified what we believe are violations of law or material weaknesses in controls over 50 percent of the time,” Bowden said in that 2014 speech.
That, unto itself, doesn't sound like regulatory capture—in fact, it sounds like quite the opposite. But that's just the prelude to the real story.

Less than a year after raising those red flags, Bowden appeared at a Stanford Law School conference that the school said was designed “to encourage dialogue among the SEC; academics (and) members of the private equity and venture capital industries.” At the March event, Bowden was caught on film expressing his deep affinity for the same industry he had only months before said was plagued by rampant corruption.

"This is the greatest business you could possibly be in—you’re helping your clients,” he said. “The people in private equity, they’re the greatest, they’re actually adding value to their clients, they’re getting paid really really well.” Bowden then added: “I have a teenaged son, I tell him, “Cole, you want to be in private equity. That’s where to go, that’s a great business, that’s a really good business. That’ll be good for you.” That aside was met with an audience member telling Bowden: “I’d love to hire your son.”

Upon seeing the video, former bank regulator William Black wrote: “I would have asked for the resignation of any of my staff who made remarks even remotely like Bowden’s remarks. As financial regulators, particularly if we have the disadvantage of coming from the industry, we maintain at all times a professional distance from those we regulate. The remarks about his son are so beyond the pale that they demonstrate he is incapable of even pretending to maintain such a professional distance. His cheerleader nature is on full display.”

For more:

- Behind the SEC’s Revolving Door.
- The SEC's Revolving Door.
- Capture at the SEC? Let’s Pause for a Sec.
- Why the S.E.C. Didn’t Hit Goldman Sachs Harder.

From Vox: Why critics are worried about the new FDA boss Dr. Robert Califf has close ties with the pharmaceutical industry

Classic - potential - case of agency capture.

- Click here for the article.

The Food and Drug Administration, which regulates about a quarter of every dollar Americans spend, has a new boss — and he's already under fire for beingtoo cozy with the pharmaceutical industry.

Dr. Robert M. Califf, a cardiologist and researcher, was nominated by President Obama in September to become the new commissioner of the agency. Hisconfirmation by the Senate was delayed by lawmakers, many of them Democrats, who worried that his links with the pharmaceutical industry would bias his ability to regulate that business and who voiced disapproval over the FDA's handling of the opioid abuse crisis in America.

"F.D.A. stands for Food and Drug Administration, but over the last 20 years it really stands for ‘fostering drug addiction,' " Sen. Edward J. Markey (D-MA), said in a Senate floor speech today.

Despite the reservations, Califf was officially confirmed to the position in a 89 to 4 vote.
Califf has worked with many drugs companies, as both a paid consultant and through his research. As Scientific American points out, "In a recent article in the New England Journal of Medicine, Califf listed over a dozen pharmaceutical companies in his conflict-of-interest disclosure."

Unlike previous commissioners, he did not come from a public health background. Instead, the New York Times reported, he "ran a multimillion-dollar clinical research center at Duke University that received more than 60 percent of its funding from industry."

From Vox: Big Marijuana is coming — and even legalization supporters are worried

This story applies to 2305 - since it touches on the influence of interest groups on both the legislative and administrative process - and 2306 because it hits on changed attitudes about marijuana. Modest changes were made in the 84th session of the legislature to criminal law regarding possession and medical marijuana, but some floated the idea of outright legalization.

It appears that some groups promoting legalization also want a monopoly on selling it - we noticed that that was the condition in Ohio when voters were offered the chance to legalize marijuana for recreational use, but only on the condition that sales be restricted to a monopoly.

I flagged the following labels for the story: monopolies, initiatives, lobbying, laboratories of democracy, criminal law, agency capture, 

- Click here for it.

Last month, Ohioans rejected a very unusual marijuana legalization proposal. Beyond legalizing pot, the ballot initiative would have given campaign donors direct rights to the state's 10 pot farms as an explicit gift for their support. It was, even legalization advocates argued, a flagrant display of would-be members of the pot industry trying to cash in on a movement motivated primarily by social justice issues.

But while Ohio's measure was rare in its blatant cash grab, some legalization backers are increasingly concerned that something like Ohio's initiative will become standard — and the interests of the pot industry, which will grow more and more as legalization spreads, will take priority over the public's best interests.

Dan Riffle, the former director of federal policy at the Marijuana Policy Project (MPP), a legalization advocacy group, recently told me that these concerns pushed him to leave MPP. In a revealing interview, he said that "the industry is taking over the movement."
"We used to talk three or four years ago about how we're creating this industry, yet nobody in the industry gives to MPP," Riffle said. "But now that they do give at least a little, it's like, 'Be careful what you asked for.' Because we owe them now, and they get to drive the agenda."

More than posing as a concern for the face and heart of the legalization movement, the worry that the industry will take over poses some challenges on the policy end as well. As support for marijuana legalization continues to grow, the question is quickly shifting from whether to legalize to how to legalize. And a movement that's led by a pot industry has different interests than the public and policy reformers might have.

From the National Journal: The Chairwoman Who’s At War With Her Own Agency: Ann Ravel says the Federal Election Commission is badly broken. But is her very public crusade the way to fix it?

An insider's very frustrated look at the Federal Election Commission - and agency at the hart of the content in the section on campaign finance reform. The FEC - as mentioned in the notes - is hamstrung by rules that mandate that an equal number of members of appointees of each party control it. This makes rulings on major issues regarding alleged violations of campaign finance laws difficult, if not impossible. Critic argue that the FEC has been captured by the forces it is intended to regulate and - deliberately - has no teeth.

The link below takes you to a story which discusses the innovative way the current chair of the FEC is using to bring issues to the commission.

- Click here for it.

On a Thursday morn­ing in June, the six com­mis­sion­ers of the Fed­er­al Elec­tion Com­mis­sion—three Re­pub­lic­an ap­pointees, three Demo­crat­ic ap­pointees—con­vened at their headquar­ters in down­town Wash­ing­ton for their monthly open meet­ing. On the agenda was a pro­voc­at­ive item: The group’s Demo­crat­ic chair­wo­man, Ann Ravel, and one of her Demo­crat­ic col­leagues, El­len Wein­traub, had filed a pe­ti­tion with their own com­mis­sion—as if they were or­din­ary cit­izens rather than two of the six people who ac­tu­ally run the place. The pe­ti­tion urged the FEC to beef up dis­clos­ure of an­onym­ous cam­paign spend­ing and to crack down on the in­creas­ingly com­mon­place prac­tice of co­ordin­a­tion between can­did­ates and sup­posedly in­de­pend­ent su­per PACs.

It was a highly un­ortho­dox move—and that was pre­cisely the point. “People will say: ‘You’re the chair of the com­mis­sion. You should work from with­in.’ I tried,” Ravel told CNN at the time. “We needed to take more cre­at­ive av­en­ues to try and get pub­lic dis­clos­ure.”

Now the six com­mis­sion­ers had be­fore them a tech­nic­al ques­tion: not wheth­er to act on the pe­ti­tion—which was un­likely to hap­pen, giv­en their 3-3 di­vide on ma­jor ques­tions and the sub­stan­tial par­tis­an enmity among them—but merely wheth­er to pub­lish the text of the pe­ti­tion in the Fed­er­al Re­gister. This form­al­ity set off what was surely one of the most bizarre ex­changes in FEC his­tory. In the view of Mat­thew Petersen, one of the three Re­pub­lic­an com­mis­sion­ers, be­cause Ravel and Wein­traub were sit­ting com­mis­sion­ers neither qual­i­fied as a “per­son” eli­gible to pe­ti­tion the FEC.

For more on the FEC, click on these below:

- The FEC homepage.
- Wikipedia: FEC.
- Wikipedia: Regulatory Capture.
- NYT: F.E.C. Can’t Curb 2016 Election Abuse, Commission Chief Says.
- The Atlantic: Another Massive Problem With U.S. Democracy: The FEC Is Broken.
- CPI: Gridlocked elections watchdog goes two years without top lawyer.

From the Texas Tribune: Analysis: When "We" Doesn't Include You

Here's a look at the close relationships that can develop between regulatory agencies and the industries they seek to regulate.

In this case it is the Texas Railroad Commission and the oil and gas industry.

- Click here for the story.

What happens when an elected official says “we” is that we think they’re talking about us — the people who elected them. Sometimes, that’s right. In fact, it’s right most of the time.

Not at the Texas Railroad Commission. It’s a three-person state commission elected by Texas voters and seemingly owned and operated by the oil and gas industry it regulates. Go hear one of their speeches at an industry conference sometime and listen for this: Do they call it “your industry” when talking to oil and gas people, or do they call it “our industry.” A recent sampling suggests the latter.

The latest chapter in the remarkably consistent history of the Railroad Commission is about a letter from Chairman David Porter to the Federal Communications Commission.

The FCC is suffering from a case of regulatory constipation, as reported by The Texas Tribune’s Jim Malewitz, that is blocking some oil and gas companies from getting their hands on some wireless frequencies that would help them monitor their pipelines.

The companies want the FCC to free the frequencies, which are licensed to an unrelated outfit that has encountered bankruptcy and other legal challenges. One of them wrote a letter and got Porter to put it on Railroad Commission of Texas letterhead and sign it himself. This is all documented in emails, which are surely the greatest thing ever invented for lawyers and others who want to piece a story together after the fact.

Porter’s chief of staff, Caleb Troxclair, traded messages last month with Justin Stegall, a Houston intermediary for Enbridge, one of the companies hoping to get its hands on those wireless frequencies. The company’s Washington, D.C., lawyers drafted a letter that he forwarded to Porter’s office with some suggestions about adding some language of their own.

Troxclair wrote back a couple of days later, saying Porter had agreed to send it. Two days later, he sent along a version on state letterhead that was added to the FCC’s files by the lawyers in Washington.
None of this cost taxpayers much money. There was a little staff time involved, but it’s not like anyone on the state payroll had to write his or her own letter or anything.

Bracewell & Guiliani and the Revolving Door

While clicking around to find info for the story below I stumbled across lists of people that have worked - or consulted - with Bracewell & Guiliani I noticed that the Center for Responsive Politics has lists of individuals connected with the company and what various positions they have held. They call it an employment timeline.

It provides a specific look at this otherwise general concept.

They do so for all types of companies and firms. Were focusing B&G because the previous story mentioned them and because they are a powerful local firm.

Here's a list of the people in their orbit. By clicking on the link you get an idea of where their connections lie.

- Kay Bailey Hutchison.
- Edward Krenik.
- Gene E Godley.
- Jeffery Holmstead.
- Lisa Jaeger.
- Paul Maco.
- Michael Pate.
- Scott Segal.
- Eric Washburn.
- Salo Zelermyer.

What is the Mountain States Legal Foundation?

The previous post mentions a court case challenging the constitutionality of President Clinton's decision to establish a number of national monuments during his term - as President Obama did last week.

The court case was filed by an interest group called the Mountain States Legal Foundation.

Interest groups are discussed in several sections in class. One of the ways such groups can have an impact on public policy is through the courts. A key strategy is to issue test cases, which simply attempts to force the Supreme Court use its power of judicial review to determine whether a law or executive action is in keeping with what the Constitution allows.

The Mountain States Legal Foundation has done so - so far unsuccessfully - against the Antiquities Act which has been used to restrict the ability of industry to have access to mineral resources in the west. They have been involved in a number of other court cases attempting to limit federal agency activity in the west.

Here's a bit from the Wikipedia Page on the group:

MSLF was incorporated in Colorado in 1977 by western business leaders concerned that advocates for constitutional liberties, property rights, and economic activity were not present during important legal battles. Initially created with funding by the National Legal Center and Joseph Coors, MSLF's first president was James G. Watt. On behalf of his corporate sponsors, Watt initiated lawsuits opposingaffirmative action, limiting safety inspection of businesses, and preventing the implementation of reduced utility rates for the elderly.

It's worth noting that James Watt was appointed Secretary of the Interior in President Reagan's Administration. This meant that for a period of time the interest group had control over the executive agency that implemented the laws that affected that group.

For more on the group:

- Their website.
- Huffington Post: Mountain States Legal Foundation.

For related topics:

- Agency - or Regulatory - Capture.
- Test Cases

Can a Board of Dental Examiners prevent non-dentists from offering teeth whitening services?

One of the cases up for grabs dealt with this question.

- Click here for North Carolina Board of Dental Examiners v. Federal Trade Commission.

The direct answer was no. They - and any other similar licensing board - can be sued for trying arbitrarily to stifle competition.

The reason - as best I can tell - is that doing so allows for monopolistic practices and therefore violates federal anti-trust laws. Normally a state can make its agencies immune from such lawsuits, but the court ruled that that is not necessarily the case if the agency is controlled by a group of professionals that can regulate themselves. In this case, dentists in the state could issue regulations protecting their control of a service. While there can be good reasons for doing so - we don't want just anyone to be able to perform surgery - that same power should not be used to unduly control the market place.

Students interested in writing up this decision might want to look at how the court
struck that balance.

Some useful related terminology.

- License: a document that allows for an activity to be performed - by the holder of the license - the would otherwise be specific. The licensee can be private of public entity.

-  State Licensing: Permission granted by the state for a person or organization to perform a service or engage in an activity or profession. This falls under the reserved powers of the state. Aside from issues raised in cases like this one, the national government giver states leeway in these matters.  For information regard the licensing process in Texas click here for the Texas Department of Licensing and Regulation. 

- State Licensing Board: The relatively small group of individuals affiliated with a profession that are allowed to determine who can practice that profession. These are established by the state legislature and can be found in the Texas Occupations Code - click here for it. Most of these boards are composed of members who are appointed by the governor - which explains why professional associations get involved in politics. The ability to be able to regulate one's profession is a principle source of power. Click here for a list of the positions that the Texas Governor can appoint.

- Professional Association: Similar to a state licensing board except that they have no governing power. They are nonprofit organizations that seek to further the interests of a particular profession. This includes using the political process to have state boards established and having influence over who is on those boards.

- State Action Antitrust Immunity: A doctrine stating that "state and municipal authorities are immune from federal antitrust lawsuits for actions taken pursuant to a clearly expressed state policy that, when legislated, had foreseeable anti competitive effects. When a state approves and regulates certain conduct, even if it is anti competitive under FTC or DOJ standards, the federal government must respect the decision of the state.' - Source. 

- Antitrust Law: "Legislation enacted by the federal and various state governments to regulate trade and commerce by preventing unlawful restraints, price-fixing, and monopolies; to promote competition; and to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacture and sale of goods at reasonable prices." - Source.

- Sherman Antitrust Act: " . . . a landmark federal statute in the history of United States antitrust law (or "competition law") passed by Congress in 1890. It prohibits certain business activities that federal government regulators deem to be anti-competitive, and requires the federal government to investigate and pursue trusts." - Source.

- Federal Trade Commission: "an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices, such as coercive monopoly." - Source.

- Regulatory Capture: ". . . a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating." - Source.

From the NYT: Telecom Investor Named to Be F.C.C. Chairman

A recurrent theme in this class is elite control of governing institutions. We are said to be a democracy and that rule rests with the people, but we are in fact a democratic republic. This means that the preferences of the population are filtered through a variety of institutions - legislative, executive and judicial - established in the Constitution.

What really matters is who controls those institutions.

Quite often these people are those who have the wealth and organizational ability to help supporters get elected to office, and then have the ability to control the institutions that set the rules that govern what they do. We use a variety of terms to refer to this: agency capture, the revolving door and the iron triangle among them. All refer to the relationships that begin to develop around the different institutions, organizations and people who have an interest in and influence over, some matter of public policy.

The concern is that these relationships - and the fact that private interests are part of these networks - makes it likely that private interests will win out over public interests in how these policies are set and implemented. On the other hand, these relationships ensure that participants in the public policy process have expertise in that field. The trick is balancing these two.

Here's a recent story from the New York Times that highlights this tendency in the communications industry. A well connected telecommunications investor and lobbyist - Tom Wheeler - has been named the head of the FCC - the regulatory agency that sets rules for the industry:

Mr. Wheeler served from 1992 to 2004 as the chief executive of the Cellular Telecommunications and Internet Association, the cellphone industry trade group, and from 1979 to 1984 was chief executive of the National Cable Television Association. That has led some telecommunications watchdog groups to worry that he might favor those businesses over consumers.

And:

Once he takes office, Mr. Wheeler, 67, will be under pressure not only to demonstrate that he understands rapidly changing technologies, but also to make clear that his previous work as a top lobbyist for the cellphone and cable television industries will not prejudice his F.C.C. decision-making.

Mr. Wheeler will have to confront several issues almost immediately upon Senate confirmation and being sworn in. The commission is preparing for a complicated auction next year of bands of spectrum — the electromagnetic airwaves over which television, radio and cellphone signals travel.

. . . Mr. Wheeler and the commission will also have to decide the extent to which various companies will be eligible to bid for the bands of spectrum. Some consumer advocates say they believe that AT&T and Verizon already control too much of the wireless phone market — roughly 70 percent — and should not be allowed to lock up more spectrum.

The companies, some members of Congress and others, however, want the F.C.C. to maximize revenue from the spectrum auction — which would mean allowing AT&T and Verizon to buy as much as they want. 

Since this is topical - we might want to try to unpack the relationships that exist in the telecommunications sectors and the Federal Communications Commission. It'll give us an idea about how political influence really flows on the national level.

Is the TCEQ a captured agency?

Something to chew on.

The Texas Commission on Environmental Quality is supposed to be Texas' version of the national Environmental Protection Agency, but since the governor appoints the TCEQ's commissioners, and he is staunchly pro-business, there are concerns that they protect the interests of business rather than the general public.

Some related stories:

- Agency of Destruction.
- TCEQ: Captured and Corrupted.
- Polluters and Penalties.

The Texas Legislature seems intent on limiting its jurisdiction:

- Texas House Strips TCEQ of Greenhouse Gas Authority.
- Bill Filed to protect buyers of facilities regulated by TCEQ.
- Greenhouse Gas Permits?

Was the fertilizer plant explosion in West, Texas due to lax regulations?

That question is making the rounds.

The Waco Tribune has a comprehensive look at the investigation thus far, and includes this:

Meanwhile, a hazy picture emerged Thursday of the fertilizer plant’s past regulatory issues. Because of the plant’s age, it was “grandfathered” and exempted from a TCEQ air permit until 2004. But it continued without the required permit until 2006, when the TCEQ received a complaint about strong ammonia smells in the neighborhood and served the company with a notice of violation.

That same year, the U.S. Environmental Protection Agency fined the facility $2,300, citing several deficiencies in its risk management plan. The plant got its TCEQ permit in late 2006 for the anhydrous ammonia storage, promising to mitigate any accidental releases of the substance offsite. Another permit for loading and storing dry fertilizer was granted in March 2007. The TCEQ had no records of inspections after January 2007.

The Dallas Morning News reports that Texas regulators did not consider the plant to pose a significant risk to the surrounding area.

The explosion came after years in which state and federal agencies overlooked the potential for what some say was a preventable catastrophe. “Last night’s tragic explosion points to the need for stricter regulations of plants that store and use large quantities of hazardous chemicals,” said Tom O’Connor, executive director of the National Council on Occupational Safety and Health, a union-affiliated nonprofit group.

Neil Carman, a Ph.D. chemist with the Sierra Club in Texas and a former state environmental inspector, said lax controls are putting people in danger in scores of Texas communities “A basic concern here is that the chemical ammonia, NH3, is very weakly regulated at the federal and state level, or else this accident would not have likely occurred,” Carman said.

Officials at the Environmental Protection Agency and the Texas Commission on Environmental Quality did not respond to questions about why they repeatedly approved the companies’ operations without addressing the risk of explosions.

The Huffington Post comments that one culprit is the reduced funds given to regulatory agencies to actually do their jobs:

According to the 2011 budget submitted to congress by OSHA, which provides most of the federal oversight for that industry, there are 7.5 million workplaces in the U.S. and only 2,218 inspectors to check them for safety violations. The number of employed nationally means that there is one inspector for every 57,984 workers. One analyst reported that means OSHA has the capacity to inspect a business work place once every 129 years. Fortunately, state level OSHA workers aren't as pressed and they can get to a facility every 67 years.

The Washington Post surveys a variety of issues related to fertilizer plants, including commentary on regulatory oversight:

. . . the operators of the West Texas facility thought an explosion was impossible. The Dallas Morning News obtained a copy of the facility’s internal safety review for fire or explosive risks. “The worst possible scenario, the report said, would be a 10-minute release of ammonia gas that would kill or injure no one.”

As for other oversight: The Occupational Safety and Health Administration tends to be understaffed and inspections are relatively infrequent. The Texas fertilizer industry has only seen six inspections in the past five years — and the West Texas Fertilizer Co. facility was not one of them.

Random items on the federal bureaucracy

For this week's look at the federal executive:

- The looming sequester - which will lead to across the board cuts to federal spending - will affect the federal work force in a variety of ways including furloughs and pay cuts. Here's detail on how it will affect the U.S. Customs and Border Protection (wikipedia), and here's some regarding the National Parks Service (wikipedia). As commentary, I'd anticipate additional stories regarding cuts that will affect things that people tend to like that government does. in the mid 1990's when the federal government was forced to shut down following a budgetary battle opinions about the need for these services shifted dramatically from con to pro. There may be anticipation that something similar will happen again.

- The Centers for Disease Control and Prevention (wikipedia) continue to research childhood obesity and recently released evidence that kids are consuming fewer calories now than they have a decade ago.

- The Obama Administration - and more precisely the Department of Health and Human Services - issued rules requiring health insurance plans to cover mental health care as well as behavioral disorder like drug and alcohol abuse. These fall under the authority established in the Affordable Health Care Act. You'll note information in the slides about the rule making process, we don't cover it in-depth in class, but here's an example of it in action.

- The Federal Communications Commission (wikipedia) is proposing rules that would open additional high-frequency airwaves for use by wireless devices. These rules are needed to allow the commission to catch up with the increased number of devices that are produced and purchased and the increased burdens they impose on the existing spectrum.The FCC is one of a handful of agencies that are commonly accused of being "captured" by the industry they supposed to regulate. With that in mind, it might be useful to consider how these proposed rules benefit the wireless industry, and what process drove the FCC to consider these specific rules.

This is brief, but it mentions rule-making and agency capture so it should make some of this week's material more tangible.

From Texas Tribune: Regulators Face Criticism Over Earthquake Monitoring

The Texas Tribune points out that increased earthquake activity has led to investigations in other states, but not in Texas.

StateImpact Texas wonders if this is because regulatory agencies in the state are controlled by the oil and gas industry.

The FDA and Bayer

The FDA recently approved the continued use of birth control manufactured by Bayer. The Washington Monthly found out that some of the members of the panel that approved this, had financial ties with the company.

For 2301, file this under interest groups, agency capture and iron triangles. This applies to 2302's discussion of the presidency as well.

Judge overturns SEC ruling

2301's should take note of this story. We're covering interest groups and the related concept of agency capture. Sectors of the economy are often accused of "capturing" the regulatory agencies that oversee them by working to have people affiliated with that sector placed at the head of those agencies. The assumption is that once in power, those people will use the power of the regulatory agencies to promote the interests of the economic sector, not the general public.

The Securities and Exchange Commission is commonly accused of doing the biding of the financial sector. This story not only explains how - punishing financial companies with fines while allowing them to not admit to doing anything wrong - but how an independent judiciary can limit this practice.

Consider this to also illustrate the checks and balances and the importance of independent judiciaries. Would an elected judiciary also be able to do this?

From the Washington Post: SEC record purges at odds with other agencies

The story:

While the SEC directed its staff for years to purge certain investigative records, other agencies in the United States and abroad that enforce financial laws have instructed that similar documents be kept.

Law enforcement authorities in related lines of work have preserved records of inquiries even if those probes never led to charges against anyone. Regulators and archivists said that the records could be a valuable source of information for investigators probing other cases and could help hold the authorities accountable.

The inspector general at the Securities and Exchange Commission is investigating a long-running SEC policy that calls for purging records obtained in certain inquiries when the cases were closed. The probe was prompted by an internal whistleblower, who said the destruction of documents went on for 17 years.

The SEC has long been accused of having been captured by the financial sector. We discuss agency capture in both 2301 and 2302, along with the general topic of iron triangles and subgivernment. Current accusations concern whether the agency has purged files that might implicate it in criminal activity that might have occured that lead to the financial crisis in 2008.

- Wikipedia: The SEC.

MMS: A Captured Agency?

More evidence that the Minerals Management Service was captured by the oil industry.

Agency records show that from 2001 to 2007, there were 1,443 serious drilling accidents in offshore operations, leading to 41 deaths, 302 injuries and 356 oil spills. Yet the federal agency continues to allow the oil industry largely to police itself, saying that the best technical experts work for industry, not for the government.

Critics say that, then and now, the minerals service has been crippled by this dependence on industry and by a climate of regulatory indulgence.

Does the Oil Lobby Own Government Regulators?

Perhaps.