By Bitsy Skerry, Regulatory Policy Associate, Public Citizen
The Stop Corporate Capture Act (H.R. 1507) is a groundbreaking regulatory reform bill that would finally make the rulemaking process work in the public interest instead of for corporate special interests. And who better to help explain U.S. Rep. Pramila Jayapal’s (D-Wash.) bill than a fictional family of corporate elites (the Roy family) and their associates, who would absolutely despise the legislation and everything it stands for?
Note: This post is not sponsored by HBO. The author simply loves the show.
What is “corporate capture?”
Government agencies whose mission it is to protect the public with strong and effective regulations are typically much more in contact with lobbyists from the industries and corporations they are supposed to regulate than consumers, workers, and everyday Americans during the rulemaking process. Over time, this asymmetry can cause agencies to lose their objectivity as they become aligned with the industries (including certain individuals and interests) they regulate. Making matters worse, agency officials often go through the “revolving door” to work for the corporations they regulate. When this happens, the agency may become “captured,” and act less independently. Corporate capture can lead to the creation of federal regulations that are industry-friendly instead of in the public interest.
What perpetuates corporate capture?
There are multiple factors that perpetuate the pervasive phenomenon known as corporate capture:
First, corporate domination during the rulemaking process can cause companies to have a greater impact on rules than other actors. This can lead to more industry wishes being granted while public protections are weakened (more on this in a moment).
Second, weak public accountability and poor transparency in the regulatory process can create an exclusive and secretive atmosphere that is unfriendly toward everyday people and beneficial to industry.
Third, the U.S. Office of Information and Regulatory Affairs (OIRA) located in the White House Office of Management and Budget is tasked with the review of proposed and final Federal regulations that protect consumers, workers, public health, and the environment. Historically, OIRA review has been a “black box” where people on the outside can’t see what’s really happening to the rules that come into the office. Oftentimes, rules are weakened to satisfy corporate interests. Sometimes, rules never see the light of day; they simply “die.”
The good news is the current OIRA under the Biden administration is making improvements to the regulatory process that help level the playing field by uplifting people’s voices and encouraging greater public participation. In April, OIRA issued an Executive Order on Modernizing Regulatory Review (EO) along with a proposed update to Circular A-4 on regulatory analysis (guidance for agencies on how to assess the benefits and costs of regulations), which are the most important and impactful reforms to the regulatory process in decades. For example, the updated Circular A-4 calls for agencies to consider the nonquantifiable impacts of rules (such as the priceless value of clean air and clean water to society), which is critical to ensuring that public protections are finalized. These improvements will modernize our regulatory system and make it work better for the public.
“Economically significant” rules (the most important regulations that benefit the public such as those that ensure clean air and clean water) under review at OIRA are subject to anti-regulatory scrutiny via economic or cost-benefit analysis. Cost-benefit analysis is an assessment, quantification, and monetization of the benefits and costs of a proposed regulation. While this may sound like common sense, in practice it is anything but. This analysis is inherently designed to weaken or block regulation because many regulations to protect the public and curb corporate power have benefits that can’t be quantified, such as the value of a life saved, a healthier environment, or increasing human dignity, while the costs to corporations are much easier to put a price tag on. One of the sad realities of the regulatory process is that agencies often place a higher priority on reducing the costs of new regulations to corporations than on saving more lives or making their regulations the most beneficial to the public. Thankfully, as I mentioned above, Biden’s OIRA has taken steps to change this reality, but these changes must be strengthened and codified (which is where the Stop Corporate Capture Act comes in). Finally, the rulemaking process lacks social equity considerations. The impact of a regulation on historically marginalized groups who may be affected is often not considered, thereby leading to rules that harm members of frontline and low-income communities as well as communities of color and women.
The solution? The Stop Corporate Capture Act
The Stop Corporate Capture Act would do three major things to, well, stop corporate capture: 1) end unbridled corporate influence; 2) prioritize social justice and equity; and 3) restore scientific integrity and independent expertise.
- End unbridled corporate influence
The Stop Corporate Capture Act would increase the transparency of the “black box” of OIRA review by requiring disclosure of changes to draft rules and the source of those changes. This would make public any changes that OIRA made to regulations for political reasons to appease corporate special interests, and as mentioned above, begin to codify changes being made by OIRA itself under the Biden administration.
Furthermore, the bill would make it a federal crime for corporations to submit false information to influence agency regulators during the rulemaking process. For example, corporations often make “sky is falling” claims that new regulations will kill jobs and harm the economy while saying the exact opposite to their own shareholders to reassure them that such regulations will not in fact impact their bottom line. We can’t have corporations gaming the regulatory process by speaking out of both sides of their mouth regarding the impacts of new regulations that protect the public.
2) Prioritize social justice and equity
The Stop Corporate Capture Act would create, for the first time ever, an Office of the Public Advocate that helps the public participate in the rulemaking process, researches the social equity impacts of rules, and performs social equity assessments of pending rules upon request. This would give everyday Americans who benefit from regulatory protections, such as consumers, workers, minorities, and vulnerable populations, a seat at the table when regulations are being developed and ensure that government agencies are not only hearing from corporate lobbyists.
The bill also would strengthen agency procedures for notifying the public about rulemakings, especially members of structurally marginalized communities and people who speak languages other than English.
Biden’s OIRA has also taken steps to prioritize social justice and equity that align with the Stop Corporate Capture Act’s principles. For example, the EO recognizes the importance of: expanding public participation; actively seeking out diverse perspectives to include in the regulatory process; and taking seriously the distributional and equity impacts of rulemaking.
3) Restore scientific integrity and independent expertise
The Stop Corporate Capture Act would require anyone submitting scientific or technical research to agencies during the rulemaking process to disclose any potential conflicts of interest. Agencies should not be in the dark when corporate lobbyists cite data, evidence, and studies that are fully bought and paid for by those very lobbyists when opposing new regulatory protections.
In addition, as agencies are the subject matter experts on rules they create, the bill would authorize agencies to quickly reinstate any rules that were overturned through the use of the Congressional Review Act (CRA). The CRA is an anti-regulatory tool that Congress has at its disposal to overturn final rules it does not like. A rule is successfully overturned if both the House and the Senate pass a joint resolution of disapproval of the rule and the president signs the resolution into effect. Once a rule has been “CRA’d” (disapproved), the agency cannot issue a rule that is “substantially the same.” Gutting the effect of the CRA is critical to preserving rules that serve the public interest and allowing agencies to do their job. The bill would do just that.
The Stop Corporate Capture Act would also codify (write into law) Chevron deference, the decades-old judicial doctrine that prevents judges’ own political preferences from influencing their decisions in cases involving regulations. The doctrine requires courts to defer to the expert agencies that Congress empowered to protect the public, which makes sense, as agencies know best.
Why the Stop Corporate Capture Act matters
The Stop Corporate Capture Act is the first progressive bill to reform the anti-regulatory, corporate-friendly regulatory process in groundbreaking ways. There are many bad bills out there in the congressional ether, such as the Regulations from the Executive in Need of Scrutiny (REINS) Act (H.R. 277), which would require the most important and beneficial regulations to get congressional approval before taking effect, which is nearly impossible in the age where Congress is completely gridlocked and dysfunctional due to the filibuster. The Stop Corporate Capture Act is the antithesis of anti-regulatory legislation.
Above all, the Stop Corporate Capture Act would reimagine the rulemaking process in a way that works for the people, not corporations, by ensuring that agencies are finalizing strong rules to protect the public. The bottom line is regulations are good and necessary. They keep our cars safe to drive, our food safe to eat, our products safe to use, and our air safe to breathe. That’s something you can’t put a price on.