Corporate Failures Not Enough to Trigger Meaningful Regulatory Change in 2010

In 2010, Big Business was often in the news for the wrong reasons. The BP oil spill disaster, the explosion at a Massey Energy mine that killed 29, and the recall of millions of Toyota vehicles, to name a few, made headlines throughout the year, both for their human, economic, and environmental toll and for the negligence they exposed. Despite these failures, 2010 was an excellent year for America's corporate elite. Profits skyrocketed, lobbyists fended off new regulation, and corporate access to Washington decision makers grew even more robust.

American citizens weren't nearly as fortunate: Unemployment continued to hover around 10 percent; workplace hazards, contaminated foods, and environmental pollutants continued to threaten the health of communities and lives of individuals; and the democratic process continued to favor special interests over average citizens.

Time and time again in 2010, Congress let the American people down. Congress took a pass on numerous opportunities to enact policies that could protect the country from health, safety, and environmental hazards.

In the boxes below, OMB Watch briefly describes four major regulatory crises in 2010, each following a similar pattern: the exposure of a gap in regulation, the identification of the need for reform, and the failure of Congress to enact significant change, often under the corrupting influence of Big Business.

The crisis: On April 20, BP's Deepwater Horizon oil rig exploded, and the ensuing spill released at least 185 million gallons of oil into the Gulf of Mexico over the next several months. The explosion killed 11 rig workers.

The regulatory failure: The crisis exposed conflicts of interest and gross incompetence at the Department of the Interior's Minerals Management Service (MMS), the agency responsible for both managing leases and overseeing lessees.

The reform: Despite his expressed support for deepwater drilling just weeks earlier, President Obama ordered a six-month ban on new and existing deepwater drilling, which Interior made official on May 30. Interior reorganized MMS and renamed it the Bureau of Ocean Energy Management, Regulation and Enforcement. Meanwhile, clean energy advocates seized upon the crisis to push for limits on drilling as well as for clean energy legislation.

The corporate influence: The oil industry and its allies in Congress pushed back against Obama's moratorium, and the Interior Department ended the ban on Oct. 12, weeks before it was scheduled to do so. (However, the administration will not offer leases off the Atlantic coast or in the eastern Gulf.) Spill response legislation passed in the House in July but died in the Senate.

The crisis: On April 5, an explosion at Massey Energy's Upper Big Branch mine in West Virginia killed 29 miners. It was the worst coal mine disaster in the U.S. in almost 40 years.

The regulatory failure: Despite Massey's track record of health and safety violations, the Mine Safety and Health Administration (MSHA) had been unable to more aggressively enforce safety regulations against the mining giant; Massey and others had – and continue to – tie up the bureaucracy by appealing many of the violations cited against them.

The reform: MSHA has increased its inspection presence at mines with historically poor health and safety records. Legislation to strengthen MSHA's hand and protect whistleblowers was introduced in both chambers.

The corporate influence: The National Mining Association and the National Association of Manufacturers both lobbied against the bill. The bill failed in a December House vote. In the Senate, Republicans blocked an attempt to pass the bill by unanimous consent.

The crisis: Beginning in 2009 and continuing into 2010, Toyota recalled more than seven million cars and trucks over concerns that the vehicles could suddenly accelerate out of drivers' control.

The regulatory failure: Since 2003, the National Highway Traffic Safety Administration (NHTSA) had investigated at least six complaints about unintended acceleration in Toyota vehicles but failed to take action.

The reform: Bills were introduced in both the House and the Senate. The legislation would have strengthened NHTSA's enforcement authority and required new safety standards in vehicles.

The corporate influence: The auto industry and the U.S. Chamber of Commerce opposed many of the bills' requirements. The bills passed their respective committees in both chambers. Industry lobbying at the committee stage appeared to be successful in removing deadlines for new safety standards. Neither bill was taken up by the full chamber in either house.

The crisis: The string of high-profile foodborne illnesses that has drawn increasing attention over the last several years continued in the summer of 2010 when more than 1,800 people were sickened by salmonella-contaminated eggs. Two firms, Wright County Egg and Hillandale Farms, recalled more than 550 million eggs as a result.

The regulatory failure: The Food and Drug Administration (FDA) does not possess the power to order mandatory recalls, nor does it have sufficient resources to inspect food facilities on a consistent basis.

The reform: The House had already passed a food safety reform bill before the illness outbreak occurred. The Senate's health panel had approved a similar version, but the full Senate had yet to consider the bill. The Senate passed its bill in December but has since been sidetracked by procedural concerns.

The corporate influence: Large farm interests and the U.S. Chamber of Commerce support the bill. Small farms won a concession in the Senate when they were exempted from certain requirements. Larger farms opposed the small-farm exemption.

In response to these events, the administration attempted to make changes around the margins with policies like the drilling moratorium and increased safety inspections, but the systemic problems exposed by these crises beg for systemic fixes. Unfortunately, Congress chose to comply with industry demands, leaving the public behind.

While these examples clearly illustrate the corrupting influence of money in politics, corporations scored perhaps their biggest win in the courts where judges voted to liberalize corporate spending and influence. On January 21, the U.S. Supreme Court overturned two tenets of the Bipartisan Campaign Reform Act, also known as the McCain-Feingold Act, which had restricted corporate contributions in elections. The Court's decision in Citizens United v. Federal Election Commission lifted the ban on corporate spending for express advocacy. It also removed the requirement that corporations set up political action committees (PACs) in order to make political contributions. Corporations may now contribute to PACs and other associations directly from their general accounts for the purpose of influencing elections. v. Federal Election Commission extended the reasoning of the Citizens United decision to include not only campaign spending but certain campaign donations. In, the U.S. Court of Appeals for the District of Columbia ruled that there should be no limits placed on contributions to political action committees. Prior to this ruling, contributions to PACs were limited to $5,000 annually per individual. Based on the Citizens United decision, the court struck down limitations on contributions to PACs.

The decisions' impacts were felt almost immediately. The Citizens United ruling opened up the possibility for significant additional spending in the 2010 congressional elections. Forty percent of outside contributions fell into the loopholes created by the decision, according to the Sunlight Foundation, and the spending tilted toward Republican candidates generally favored by business interests.

Emboldened by their string of victories, business lobbyists ramped up their efforts to rollback existing regulations and fend off new ones. The Business Roundtable, a coalition of top corporate executives, launched the opening salvo when it submitted to the White House a list of laws, regulations, taxes, and other policies it wants to see reversed. The list, attached to a June letter to then-OMB Director Peter Orszag, leaves no regulatory stone unturned, arguing against scores of policies intended to help and protect Americans, including recently passed financial reform and health care laws; greenhouse gas emissions rules; worker health and safety policy (including mine safety); pending food safety and auto safety legislation; government contractor responsibility measures; and even oil spill prevention rules.

The U.S. Chamber of Commerce (Chamber), a lobbying and campaign expenditure powerhouse, has been the most vocal critic of the Obama administration's regulatory record. In November, the group launched, a website that maligns regulation, and announced the formation of a lobbying task force dedicated to halting regulations and fighting public protections. The Chamber said it will first target energy and labor standards and attempt to undermine implementation of health care and financial reform.

It should be noted that the business representatives and corporate lobbyists patrolling Washington do not necessarily speak for the entire business community. For example, three business groups, the Small Business Majority, American Businesses for Clean Energy, and We Can Lead, commissioned a poll released in July that surveyed small business owners about their views on climate and energy legislation and its impact on the economy. Fifty percent of the respondents said they support legislation, while 42 percent said they oppose it. Many small businesses are optimistic about legislation's potential effects and recognize that resolving these issues may be better for small business in the long run by reducing uncertainty about federal policy.

Nonetheless, in 2010, Big Business and organizations purporting to represent small business found an audience on Capitol Hill for their anti-regulatory message. In the House, centrist Democrats did not hesitate to join Republicans in voting against public protections. For example, 27 Democrats and 166 Republicans teamed up to defeat mine safety legislation, and 39 Democrats joined 154 Republicans in voting against an oil spill response bill.

In the Senate, procedural holds continued to be used with little discretion, forcing bills to first clear a 60-vote threshold to invoke cloture and end debate before coming up for a simple-majority vote. The strategy meant that corporate lobbyists needed to attract only 41 opponents to legislative proposals, such as energy or mine safety reform, in order to scuttle the bills. Even the Senate's food safety legislation, which enjoyed broad bipartisan support, was subject to a hold, lengthening the amount of time the Senate spent considering the bill on the floor.

After the 2010 elections, congressional Republicans began laying the groundwork for what will likely be a full assault on regulation when they assume control of the House – and close the gap in the Senate – in 2011. House Republicans' Pledge to America – a document outlining their policy agenda – includes a proposal for legislation that would require congressional approval for all new major regulations. The bill would further politicize regulation by forcing rules through the legislative process and creating yet another locus where anti-regulatory interests can exercise their influence. Even rules supported by Congress would suffer: If an agency were to finalize a rule during congressional recess, or if approval of a rule was not a priority for one or both chambers, implementation could be delayed.

Republicans and some Democrats are also likely to continue to target greenhouse gas emissions standards set by the U.S. Environmental Protection Agency (EPA). In 2010, two senators led serious challenges against EPA's efforts to curb climate-warming emissions. Sen. Lisa Murkowski (R-AK) and 40 co-sponsors pushed legislation to overturn EPA's scientific finding that declared greenhouse gases a threat, a finding that underpins the agency's greenhouse gas standards. The resolution lost on a narrow, 47-53 procedural vote in June. Separately, Sen. Jay Rockefeller (D-WV) introduced a bill targeting a specific EPA regulation imposing emissions limits on stationary sources like oil refineries and power plants. The Senate did not vote on Rockefeller's bill.

The congressional power shift is likely to foster an even more favorable climate for Big Business and groups like the Chamber in 2011. Prospects for positive legislative reform in mine safety, worker safety, auto safety, energy policy, or other regulatory areas are all but dashed, and the problems exposed by the regulatory crises of 2010 will remain.

What this means for public protections overall is somewhat unclear. As already noted here and in two recent OMB Watch reports (see The Obama Approach to Public Protection: Rulemaking and The Obama Approach to Public Protection: Enforcement), the Obama administration has been quite active in some areas of regulation, but it needs legislative authority to do more to protect our air, our water, our food, and our public health.

Furthermore, the Office of Information and Regulatory Affairs has been reluctant to reform the regulatory process in any meaningful way, leading to some frustrating rulemaking delays and less transparency than hoped during 2010. The administration has also not been immune to the corrupting influence of Big Business, demonstrated by its actions related to the oil spill moratorium and EPA's pending coal ash rule.

If it is to be successful in protecting the public and blocking congressional and industry assaults on regulation, the Obama administration and the agencies charged with enforcing our nation's laws and regulations will need to show greater resolve. They will have to stand firm and make a solid commitment to ensure that special interests are not put ahead of the public interest.

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