Designed to Fail: Why Regulatory Agencies Don’t Work

William Sanjour*

Albert Einstein said the definition of insanity is doing the same thing over and over again and expecting different results. We have been “reforming” regulatory agencies over and over again, and over and over again they have failed. Yet, as a result of the recent catastrophic failures of regulatory agencies, politicians and pundits are talking about the same old “Regulatory Reform” again.  “Fill the regulatory agencies with honest people who won’t cave in to special interests.”  “Give them more money, more authority and more people.”  But my experience has shown that by concentrating all legislative, executive and judiciary authority in one regulatory agency just makes it easier for it to be corrupted by the industries it regulates.

I worked for the US Environmental Protection agency for 30 years and lived through many cycles of “Regulatory Reform,” doing the same “reforms” over and over again and expecting different results. I’ve learned that the way to achieve true regulatory reform is to give regulatory agencies less money, less authority, fewer people but more intelligent regulations. The theme of this article is that by dispersing regulatory authority, rather than concentrating it, we would make corruption more difficult and facilitate more sensible regulation.

Library of Congress: EPA Cleans up the San Juan River oil spill disaster 1972

Why can’t you fill regulatory agencies with honest people who won’t cave in to special interests?

The facetious answer is that there is no civil service exam which can select personnel with such qualities. But the real answer can only be found by looking at regulatory agencies from the inside, which few politicians and pundits are able to do. I’ve worked in a federal regulatory agency for thirty years and I’ve studied and written about why they cannot work as planned. You have to first appreciate what a regulatory agency is supposed to do.

After some catastrophe or new technology, Congress creates a new regulatory agency in a wave of enthusiasm, giving it money and following the same pattern of broad, vague discretionary authority to control the richest and most politically savvy forces on Earth. But the interest of Congress, the press and the public can only be maintained for a few months or years. There are a lot of other things going on. But there is one group whose interest never wanes or wavers. The life, the existence, the future of the regulated industry depends on the pressure it can exert on the regulatory agency. At least that’s what the special interests believe.

The regulated community constantly deals with regulatory agencies through congressional committees, the courts, and meetings with top government officials. This is what the public sees, but it does not stop there. Industry  also constantly interacts with individual agency employees at every level, working directly with the field inspectors and permit writers responsible for making regulatory decisions.

For example, the inspector general of the Minerals Management Service concluded that officials in the agency had frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives (1)

When I was in charge of writing regulations I too was the object of this courtship, showered with flattery, meals, trips, and hints of future employment. People who cooperate with industry also find that its lobbyists will work for their advancement with upper management. Those who don’t cooperate find the lobbyists lobbying for their heads.

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