Professor Sidney Shapiro testifies in front of Congress regarding regulatory failures

Photo of Professor Sidney Shapiro

Sid Shapiro is one of the country’s leading experts in administrative procedure and regulatory policy. He has written six books, contributed chapters to seven additional books, authored or coauthored over fifty articles, and is currently working on a book on administrative accountability.

Wake Forest University School of Law Professor Sidney Shapiro has told a congressional committee that certain industries, including oil and mining, have effectively “captured” portions of federal regulatory agencies, which have subsequently weakened health and safety protections for the American public. 

Shapiro testified in front of the Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, which held a hearing on “Protecting the Public Interest: Understanding the Threat of Agency Capture ” on Tuesday, Aug. 3.

“They (BP) are the current poster child for the idea of regulatory capture,” Shapiro said. “The idea is that the industries who are supposed to be regulated end up capturing the regulators. A really good example appears to be the mining industry and the folks who were supposed to be regulating the oil industry who seemingly signed off on what led up to the disaster in the Gulf.”

Congress, he added, wants to know how the largest oil spill on record happened and how a similar environmental disaster can be prevented from occurring in the future.

“When Congress passes and the president signs legislation, the failure to achieve these commitments devalues the democratic processes that produced the legislation and the commitments made in those laws,” Shapiro said in his prepared testimony. “From the BP oil spill to the West Virginia mine disaster to Toyota’s speeding car debacle, we’ve seen lately what happens when federal regulators aren’t getting the job done.”

Shapiro, who is the co-author of a new book “The People’s Agents and the Battle to Protect the American Public: Special Interests, Government, and Threats to Health, Safety, and the Environment,” described three primary types of “agency capture” that pervade federal regulatory agencies:

  • Political Capture, whichoccurs when an agency fails to protect the public and the environment because regulators friendly to industry block regulatory efforts or do not enforce the laws and regulations then in effect.
  • Representational Capture, whichoccurs when industry representatives regularly appear before an agency, offering detailed comments and criticisms, while the agency seldom, if ever, hears from public interest groups or members of the public. Empirical studies have repeatedly shown that this imbalance is significant.

Sabotage Capture, whichoccurs when regulatory critics create roadblocks that slow or prevent regulation even in future administrations that seek to protect the public and the environment. This type of capture is more subtle and difficult for the public to perceive, and is most prominently exhibited today as the defunding of the regulatory agencies and the politicization of rulemaking by the White House.

Shapiro then went on to present four recommendations for Congress:

  • Improved Oversight. Regulatory agencies cannot adequately police themselves, and public interest groups lack the resources to match up with industry in terms of advocacy before agencies and the courts. Congress should institute more systematic oversight.
  • Linking Oversight and Appropriations. Congress has sometimes cut the budgets of regulatory agencies, even as their responsibilities grow with an expanding economy. Congress has failed to study the impacts of these cuts, and without this information, it is not in a position to consider what tradeoffs are involved when agencies lack the resources they need, and whether refunding them is a higher priority than other items in the budget.
  • Positive Metrics. The deterioration of regulatory government has gone relatively unnoticed because Congress lacks a good means for measuring the performance of the regulatory agencies. Congress should therefore require the development of rigorous and concise “positive metrics,” which are measurements of agency performance that would alert Congress and the public when health and safety agencies have been captured.
  • True-Up Budget Estimates. The congressional dialogue over funding would be improved if agencies were required to make it clear how much money it would really take to implement their mandates. Current agency budgets are typically far short of what is required to meet agencies’ statutory obligations, and as a result, Americans are inadequately protected from a variety of hazards. “True-up estimates” would focus on the resources the government itself would need, calculated in constant dollars over a decade-long period, to do the work necessary to protect the public and the environment.

Shapiro’s full testimony is available here:

A webcast is available here:

This isn’t the first time Shapiro has testified in front of a congressional committee, in fact, he said he’s done it several times. “It’s fun, like doing an oral argument,” he explained.