Combatting External and Internal Regulatory Capture

From: RegBlog | Penn Program on Regulation

In these hyper-partisan times, one is hard-pressed to identify any areas of overlap between the left and right. One rare exception is the concept of “regulatory capture.” Tea Party Republicans, Progressive Democrats, and centrists in both parties regularly decry the evils of “crony capitalism,” though each side emphasizes different aspects of the problem. A recent forum on regulatory capture hosted by the Administrative Conference of the United States highlighted this bipartisan consensus: U.S. Senators Mike Lee (R-Utah), Elizabeth Warren (D-Mass.), and Sheldon Whitehouse (D-R.I.), as well as a range of academics from across the political spectrum, all pointed to a common malady, but they offered somewhat different sets of cures.


By more explicitly setting forth its policy goals in statute, Congress can help mitigate both external and internal capture of this sort. To this end, Congress should identify the specific problem it intends to solve, establish the rubric by which to measure success, and set forth procedures designed to ensure that the agency meets these goals. For instance, if Congress intends the agency to maximize net economic benefits, it should state this objective, and it should explicitly direct the agency to apply benefit-cost analysis in assessing the rule adopted. If, by contrast, Congress intends to advance some unmonetizable goal, such as preserving natural scenery, it should clearly identify that goal and explicitly state that effectuating that goal trumps considerations of economic efficiency. In my recent article, Market Corrective Rulemaking, I explore how this might work with respect to regulations designed to correct market failures.

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