Over the years, “agency capture” has been a staple of the economic analysis of regulation—the phenomenon whereby regulatory agencies would come to be largely controlled by the industries they purported to regulate, or at the very least would protect those industries as a cartel in a tradeoff for regulatory control. Railroads dominated the Interstate Commerce Commission during much of its early life, and for decades airlines used the Civil Aeronautics Board to stifle competition and innovation.
Agency capture is still a probable outcome of many regulatory schemes. The Federal Communications Commission is likely to implement its new “net neutrality” rules in such a way as to cement an Internet cartel to the detriment of consumers and innovation. And the Dodd-Frank Act appears headed toward the cartelization of the big banks, to the detriment of medium-sized and small banks. But increasingly the regulatory state has solved the problem of agency capture by industry. It has instead become captive to ideological interest groups.
This is nowhere more evident than at the Environmental Protection Agency, which has for practical purposes become a wholly owned subsidiary of the environmental movement. Beyond a revolving door between environmental advocacy and senior EPA staff positions, there is ample evidence of close collaboration between environmental organizations and EPA staff in regulatory rule-making and even in permitting decisions.
A cache of emails and other communication records that the Energy and Environment Legal Institute and Competitive Enterprise Institute pried from the EPA through Freedom of Information Act litigation reveals close connections between EPA and the Sierra Club, the Natural Resources Defense Council, and the Environmental Defense Fund. While these collaborations may not cross a legal boundary, they certainly violate any sense of transparency and the duty of a regulatory agency to be impartial. And as with Hillary Clinton’s private email server, senior EPA officials went out of their way to communicate through pseudonymous email addresses (like former EPA administrator Lisa Jackson’s “Richard Windsor” emails) and private accounts, in what appears to be a deliberate attempt to avoid public scrutiny. In addition, EPA staff sometimes arranged to meet environmentalists offsite to avoid having to log visits to EPA offices.
For example, documents discovered in the FOIA action demonstrate that the EPA had decided to veto the application for the proposed Pebble copper mine in Alaska even before it had conducted an environmental assessment, and that it relied on an “Options Paper” produced by a lawyer working for the mine’s opponents to justify its veto. Other documents show the EPA is determined to prevent new coal export terminals from being built in the Pacific Northwest, though permitting decisions for such facilities are outside the EPA’s jurisdiction.
The most significant collaboration, though, concerns Obama’s “Clean Power Plan,” the final rule for which was released on August 3. The record is clear that environmental organizations—especially the NRDC—had major input into the design of the Clean Power Plan that was first announced a year ago, and are likely responsible for the major changes in the final, tougher Clean Power Plan rule just released.
The final rule calls for larger greenhouse gas emissions reductions by the year 2030, and will compel the use of wind and solar power over natural gas much more aggressively than the initial proposed rule of last year. The Sierra Club has openly said that after it succeeds in killing coal, natural gas is next on the menu. Having failed to stop the fracking revolution that has brought us cheap and abundant natural gas (the EPA recently gave fracking a clean bill of health after a four-year study), environmentalists now plan to constrict natural gas through the climate plan. The tougher conditions of the final rule came as a surprise especially to the natural gas and nuclear industries, reflecting the likelihood that environmentalists pressed the EPA, saying that its initial proposal wasn’t strong enough. Despite questions about the legal vulnerability of the rule, the EPA decided to double down.