Regulatory Agencies Have Failed Us–Let’s Fail Them: Out of the Agencies and Into the Legislatures (2010)

By Jane Anne Morris

Too Big to Fail?

Billowing smokestackRegulatory agencies are not, and never were, the Great Protectors of the public interest that hazy origin myths suggest.1 Understanding regulatory failure entails accepting this inconvenient truth and then moving on.

Are we ready to go beyond the usual ritualistic laments about how darned ineffective our “watchdog” agencies are? As the afterglow of Summer 2010’s trifecta of spectacular regulatory agency2 flameouts fades, are we content to just roll our eyes at derivatives and subprimes, tsk-tsk at another mine explosion, and heave tar balls at BP logos?

Is this a good time to consider that the whole regulatory agency concept is fundamentally flawed? Is there something not only undemocratic but insidious about this “fourth branch” of government? Is even massive “beefing up” of regulatory agencies enough to effect a cure? Are regulatory agencies that seem too big to fail really just too flawed to work?

Acknowledging the fundamental failure of the regulatory system does not require embracing a libertarian free market ideology where economic liberty means abandoning all sense that human beings are creatures of communities: ecological as well as social ones. Nor does it call for denying economy’s absolute dependence on ecology and planet.

But, it does mean going beyond the usual panaceas offered in times of especial regulatory travail. Beyond drastically increased funding for regulatory agencies so they can actually test, inspect, and enforce. Beyond tougher laws to jam revolving doors between corporations and regulators. Beyond hiring honest, hardworking people who genuinely believe in regulation to run the agencies.

Those who bristle at the suggestion that regulatory agencies are more problem than solution should consider this pinch of history. From a corporation’s perspective, the perfect regulatory agency is

“[S]omething having a good sound, but quite harmless, which will impress the popular mind with the idea that a great deal is being done, when, in reality, very little is intended to be done.”3

Charles Francis Adams, director and later president of the Union Pacific Railroad, used those words in the early 1880s to explain what the railroad corporations wanted (and got) in a regulatory agency. Railroad corporation executives knew exactly what they were getting, because they designed and approved it. Historian Gabriel Kolko’s work on regulatory bodies offers dozens of similar quotes, most from industry trade publications and official correspondence among corporate magnates.4

The upshot is that the first federal regulatory agency, the Interstate Commerce Commission (ICC: established 1887, abolished 1995), was thoroughly of the corporations, by the corporations, and for the corporations it supposedly regulated.5 This heritage remains with us today, for “success” made the ICC (set up to regulate railroad corporations) the model for a long list of federal regulatory bodies in industry after industry in later decades, including the rash of new ones in the 1970s.6

In other words, for over a century we’ve been working within a regulatory agency template based on design specs laid out by large corporations. It should be no surprise that the resulting regulatory knockoffs have not excelled at protecting the public interest. Regulatory agencies have long been workhorses in our democracy theme park.

I recently reread Dioxin: The Orange Resource Book, (Synthesis/Regeneration’s 1995 double issue).7 From today’s vantage point, I offer two observations. First, though it was not intended as an analysis of regulatory agencies, every one of its 96 pages screams regulatory failure. And second, dioxin is no less a problem today than it was then.

Dare we reconsider our commitment (addiction, really—more on this later) to the regulatory model? It prevents us from seeing that there are better ways to protect the public against the scams, labor exploitation, pollution, accidents, shoddy goods, dangerous food, and ruthless resource profligacy of this vast empire twitching in decline.

If this is not a good time to ask fundamental questions, what are we waiting for? Another Gramsci study group? At the rate we are going, we can expect the next bridge collapse, GMO fish, pipeline blow-up, or baby-food recall any moment now if we need a reminder of how our regulatory agencies are doing.

2010’s Regulatory Failure Triple Crown

The financial meltdown began (depending on what you count) around 2007, precipitating an economic crash that just keeps on taking. Unemployment, record foreclosures, social service cuts, further hemorrhaging of an already classist health care system, small local businesses paying for big corporations’ misdeeds, and a host of other “repercussions” inexorably ping around the economy like ingested plutonium decay byproducts in soft body tissue. Wall Street had its derivatives cut off and stuffed into its mouth. (No, wait: they were stuffed into our mouths, as taxpayers swallowed corporate bailouts in a variety of guises. What color is your corporate parachute?)8 Tilting up a few windmills, adding lanes to highways, and throwing around the ho– word will not fix this.

Then, the subterranean horror of Massey Energy Company’s Upper Big Branch Mine “accident”/disaster added local texture to the ongoing economic chain reaction. The explosive, gritty tragedy in Appalachia, wrapped in boom-bust poverty, provided splendid contrast to the bar-charted credit-default-swapped-out abstractions of finance. The mine blast burst onto news screens, the grim families waited. The countdown of miners missing, bodies found, and memorials sung finally ended. A medley common as tailings piles in mining communities.

Just as the mine disaster memorials were fading from newscasts, and the economy story had defaulted to second place in the news sweepstakes, the Deepwater Horizon oil rig blew up and gave us the Mother of All Oil Spills. As compelling as the offshore explosion was, with its wetly mirrored flares and horrendous deaths, they played prologue to the main act: a months-long, mile-deep, slow-motion, 24-7 live web cam submarine oil spill, just off the coast of Katrina-land, and just ahead of hurricane season.9

Almost as fast as it developed, the summer was over, its aftermath upon us. The economy is “recovering” joblessly. Massey Energy Co. is back to sending lawyers to debate the regulatory minutiae of mine ventilation and proper paperwork. According to mainstream sources, most of the oil in the gulf has “disappeared.” (So much for Barry Commoner’s second law of ecology: “Everything has to go somewhere.”)10

Now we’re back to the usual oops/recall/recant/deny/blame syndrome: manganese, eggs, brakes, baby chew-toys, E. coli, surgical equipment, HRT (hormone replacement therapy), melamine, Enron…as previous generations had the Savings and Loan Crisis, the Exxon Valdez, methyl isocyanate, Three Mile Island, Corvairs, thalidomide…An almost endless trail of regulatory failures stretches back, and back. If my corn bread recipe had the same record as our regulatory agencies over the last century, I’d have thrown it out long ago and tried something else.

The Regulatory Oops Story

We know these disasters; we know their backstories and their sequels. They seem familiar because they are familiar, nearly exact repetitions; yet somehow people conjure up the energy to be shocked, shocked, each time it happens again.11

As the economy tottered around its tippling point, the Masters of the Universe occasionally took time off from preening about American “exceptionalism” to crow about the strength of the economy’s “fundamentals.”12 “Experts” portrayed the US economy in 2007 as one big happy-meal, at least if you weren’t overly curious about package contents. Federal agencies have long regulated both food and finance, with predictable results.

Wall Street did with mortgage-backed securities what fast food purveyors do with hamburger patties, for similar reasons and with similar results. Meat from hundreds of animals, often from different countries, is sliced and diced, processed, and blended into a single fast-food burger. Serial reformatting and repackaging insures that there is no way to know its exact contents, origin, or quality. After purchase we behold between the buns an essentially unknowable commodity, so dizzy with derivations that tracing disease, contamination, or other problems is nearly impossible.13 The chain of custody does not reach the molecular level.

With that composite burger in mind, imagine that it would take a mile-long arpeggio of paperwork to determine who owns one house. Map that onto millions of loans, valuations, and potential foreclosures. Put the process of which that is but a tiny part into the hands of complicitous regulators in a grab bag of partly overlapping and competing agencies that makes the Keystone Cops look like a synchronized swim team.

Serially re-bundled securitized loans and other collateralized debt obligations mask the origin, disguise the provenance, confuse the history, inflate the quality, and generally muddle the characteristics of derivatives and other financial instruments that are bought, sold, owned, hedged, lost, and cursed. The chain of custody of who owes what to whom, and how much risk it entails, is nearly impossible to trace. Today, the foreclosure process (appropriate or not) is clogged, and many lives painfully unresolved, because no one can even say who owns many properties. Federal regulators presided over all of it.

But not to worry. Just after the August 2008 subprime crisis, the federal takeover of Fannie Mae and Freddie Mac, the bankruptcy of Lehman Brothers, emergency Federal Reserve loans to avert AIG bankruptcy, and Bush’s signing of the TARP, the Director of the Securities and Exchange Commission’s Office of Compliance gave assurances that the SEC will continue to “guard the interests of investors,” and foster the “integrity of our markets.”14

After investigators had a chance to do the equivalent of going through people’s wastebaskets, it turns out that the SEC and the Federal Reserve Board of New York, among others, were “clueless,” about much of what was happening, failed to act on information they did have, failed to share important information with each other about how serious many problems were, and failed to even keep up with routine paperwork.15 Those SEC computers that weren’t working so well on regulation seemed to work well enough for other pursuits. According to an internal SEC investigation, as one headline put it, “SEC Staff Surfed Porn Sites During Crisis Buildup.”

“As the 2008 financial crisis was developing, top Securities and Exchange Commission employees and contractors were using government computers on official time to view pornography.”16

Not long before the Big Branch mine disaster, the US Mine Safety and Health Administration (MSHA) gave Massey Energy three Sentinels of Safety awards, “the highest safety honor in the mining industry.”17 Just days before the April 5 explosion, MSHA certified that the Upper Big Branch mine had no outstanding major safety issues, and found the mine to be in “good condition.”18

When President Obama opened new areas to offshore drilling just three weeks before the Deepwater Horizon well exploded on April 20, he assured the public, “We’ll protect areas that are vital to tourism, the environment, and our national security.”19 As with Massey Energy Company’s mine collapse, the road to the BP’s spectacular oil rig malfunction was paved with safety awards. In 2009, the federal Minerals Management Service (MMS) gave BP and Transocean, the owner of the Deepwater Horizon rig, Safety Awards for Excellence (SAFE) for “outstanding safety and pollution prevention performance.” In 2010, BP was a finalist for a SAFE award.20 According to the company web site, BP also received an “Offshore Leadership Award” in 2009 from MMS. (The MMS won’t be passing out any more awards: on June 18, 2010, it was renamed BOEMRE–the Bureau of Ocean Energy Management, Regulation, and Enforcement.)

The Stock Characters

Once the crime scene is seeded with the usual boasting, assurances, awards, reassurances, and slipshod paperwork, the same characters appear on stage.

Loyal and conscientious workers and government regulators warn of irregularities, problems, violations, omissions, and dangers, are briefly heard, then ignored if not fired. A puppet show of “experts” is paraded out to pronounce those concerns feeble, unusual, exceptional, uninformed, exaggerated, and unwarranted. Whistle-blowers blow in vain, after which they are often blackballed. [Insert your favorite regulatory agency here] managers are either out to lunch, looking the other way, watching porn-in-the-morn, asleep at the bank, covering up, or cheerleading for the wrong side. The Fed feeds market bubbles by keeping interest rates low; cooking the books goes into high gear. At the Big Branch Mine and the Deepwater Horizon oil platform, corporations skip over basic safety measures like fine print on a social networking site.

As profits flow and stock prices soar, corporate higher-ups say tut-tut or on with the show. Regulatory agency administrators shuffle papers and enjoy perks. PR flacks repeat, for the media, just after each event’s major undeniable “oops” moments: “…tragedy…no warning…deeply distressed at the loss of life….” Outraged politicians determinedly insist that they’ll “get to the bottom of this.” If the political fallout is dire enough, they may even (gasp) set up another regulatory body. Intrepid reporters, some of whom will receive awards, promotions, and fame, eventually figure out, Hey, this is exactly what happened last time!

Exactly.

Getting to the Bottom of This — Every Generation a Commission

Since the proliferation of regulatory agencies on the national scene in the early twentieth century, regulators periodically reach such a low ebb of credibility and the public such a high level of frustration–that somebody has to do a massive report, much like the ones we’ve come to expect after urban riots, presidential assassinations, partial nuclear meltdowns, terrorist attacks, and other such events that require attention at the highest levels to the patching and spiffing up of the current ideological safety net.

Every generation or so, the torch is passed to a new blue ribbon commission to address regulatory failures. Soon after World War II one wave of criticism left behind the Administrative Procedures Act (1946), which outlined measures that would supposedly make regulatory agencies less arbitrary by making them more like courts. (Ahem.) Marver Bernstein stepped up in 1955 with a classic critique whose pronouncements still ring true (and are often quoted) today. Bernstein called the ICC “a part of the railroad industry,” described regulatory agencies as ways of “converting public power into private gain,” and concluded that the regulatory agency concept “has significant antidemocratic implications.”21

In 1960, James Landis, a regulatory agency veteran, delivered a special report to President-elect John F. Kennedy. Landis, a supporter of the regulatory agency concept, nevertheless conceded that regulatory agencies were mired in “Alice in Wonderland” procedures; the costs were “staggering”; the delays “inordinate”; and the failures sometimes “spectacular.” Then in 1975 Christopher D. Stone’s Where the Law Ends delivered an updated and still devastating analysis, this one encompassing the newer 1970s crop of regulatory agencies. Stone acknowledged that “the agencies almost all show evidence (the more so as they age) of protecting the industries they are supposed to regulate, rather than the public,” and that “corporations are engaged in making the regulations to which they are supposedly subject.”22

The blue-ribbon panel routine is as much part of our regulatory agency ritual as the revolving door is part of agency staffing patterns. Perhaps with our current triple crown fresh in memory, it is time for the present long generation — still boasting of the 1970s environmental legislation, hobbled and threatened as it now is — to take a close look again at our regulatory agency heritage.23

Regulatory Agencies’ Unchanging Legacy

Regulatory agency studies since WW II offer strikingly similar conclusions.24

  1. Regulatory agencies advantage large corporations over small and independent businesses, and individuals. Everything about regulatory agencies is difficult for small fry: the geographical distance, the cost of proceedings, the level of detail demanded (both procedural and evidentiary), the need for expensive expert and legal expertise, and the amount of time consumed (often measured in years if not decades).

    Regulatory agencies stabilize the market and prices for the few big players, while smaller ones are squeezed out. In addition, it is much easier to successfully complete an enforcement action against Mildred’s Hair Parlor than, say, Monsanto Corporation. If you want to get a good count for your annual report, you stay away from transnational corporations. In short, regulatory proceedings help the big fish get bigger, and ease the way for the little fish to go out of business.

  2. The public and the government bear the costs of infrastructure for coordinating an industry, developing standards, maintaining quality control, carrying out inspections, and enforcing laws. Fines levied on corporations come not from management or director compensation, but from lower wages and benefits for workers, higher prices for consumers, and (sometimes) reduced dividends for stockholders.
  3. Regulatory agencies offer a corporate refuge that replaces a system where those actually responsible were blamed for problems. Both corporations and the government (especially elected officials) are shielded against public anger as regulatory agencies become targets for public frustration and dissatisfaction that was once aimed at corporations and elected officials. Corporate public relations teams blame regulation for economic ills, and the public blames regulatory agencies for “not doing their jobs.” As early as the first decade of the twentieth century, corporate propaganda blamed radicals and regulation for the Panic of 1907.25 Post-disaster, corporations defend themselves (and often escape legal sanction) by saying they got the permits, filed the papers, allowed the inspections, and did everything regulatory agencies asked.
  4. Regulatory agency personnel and outlook reflect the views of the large corporations in the regulated industry. Sometimes referred to as regulatory “capture,” this phenomenon finds regulators and their corporate counterparts, despite being officially “on opposite sides,” sharing so much of each other’s worldview that the public interest part is vestigial at best.
  5. Regulatory agencies are anti-democratic, even when they do “good” things, such as fining a major corporate polluter, because they wield enormous discretionary power. Broad grants of discretion (through interpretation of the law, exemptions, variances, enforcement decisions, and so on) give them what is in effect the power to make law. This discretionary power is almost invariably abused.
  6. Regulatory agencies garnered the “fourth branch of government” nickname largely because they combine in a single institution the powers of all three branches of government.26 In carrying out their duties, regulatory agencies do some things that are a lot like making laws (a legislative function); they enforce their regulations through penalties and other sanctions (an executive function); and they judge compliance with regulations and rules (a judicial function).27

    The constitutionality of the fourth branch of government is defended on the grounds that implicitly or directly, other branches of government have “delegated” some of their power so that regulatory agencies can fulfill their functions. Critics claim that the concentration of “delegated” power from all three branches of government into relatively inaccessible regulatory agencies is unconstitutional.

  7. Questions of law and procedure replace questions of substance. Underlying issues (stop polluting the river) are trivialized or lost entirely in what lifelong regulator Landis called “Alice-in-Wonderland procedures.” Fairness and justice (not to mention common sense) lose out to court-like procedures as grounds for decision-making.

Despite the fact that even supporters admit to such substantial and persistent shortcomings, not to say failures, many keep trying to tweak regulatory agencies into effectiveness without explaining why they think said tweakings will work “this” time.

What is it called when you go somewhere frequently, over weeks and years, expend scarce resources; neglect friends, family, community; lose money time after time after time while failing to reach your goals; and convince yourself that next time will be different, that your failure is a signal to repeat previous efforts? When people do it in a casino, it is called gambling addiction. When people do it in regulatory agencies, we call it “citizen activism.”28

During their time on stage, regulatory agencies have never lived up to the public’s expectations, yet they continue to gain rather than lose influence.

First they played as tragedy—-federal regulatory agencies were set up with the cooperation of corporations, which obtained the assurance that they could run to court with any problems. Then they played as farce: regulatory agencies would provide coordination, price assistance, subsidy, protection, and even awards to those that they were supposedly regulating. And now, as hallucination: despite over a century of regulatory agency failure, people embrace the gambler’s credo that what has failed to “work” need only be repeated in order to achieve a “win.”

A Green Trifecta

As long as corporations retain their current form and power, regulatory agencies will not “work” as people imagine they should. In order to “fix” regulatory agencies, corporations must first be fixed.

We could package it as a green trifecta.

First, end corporate constitutional rights and other constitutional protections for corporations.29

Second affirm a state’s control over corporations that it creates, starting with a rewrite of current corporate codes.30 Include a reinstatement of clear state legislative power to revoke corporate charters (or, in the case of corporations chartered outside the state, the power to deny permission to do business in the state.)31

Third, stop dressing up as animals and picketing corporate headquarters: the fattened corporate elite that benefits is not the cause of the problem. Instead, take the struggle to the lawmakers: state legislators who write the state corporate laws that affirm the huge platter of powers now exercised by corporations, and the Congress that gave the US Supreme Court most of the powers it now possesses.32

What would this green trifecta accomplish?

Without Fourteenth Amendment equal protection “rights,” corporations would not be able to have laws invalidated by claiming that they were being “discriminated” against, as, for instance, by treating a mining company differently from a grocery store. (Corporations have even sought damages under the 1964 Civil Rights Act for “discrimination.”)33

Without Fourteenth Amendment due process “rights,” corporations would not be able to orchestrate an unending string of rehearings and appeals of regulatory action to frustrate the application of a law.

Without Fourth Amendment “rights” to protect them against unreasonable searches and seizures, corporations would not be able to turn inspections into canned tours and government requests for information into doomed treasure hunts. (OSHA inspections have been severely restricted under this “right.”)34

Without First Amendment speech “rights,” and under the strict “purpose” clauses that were once the rule, corporations could not participate in any fashion in politics, much less dominate the public discourse and election campaigns as they now do.35

Corporate constitutional protections that don’t depend on the gateway of corporate “personhood” insure that, even without constitutional rights, corporations emerge from the regulatory gauntlet not chastened but strengthened. The federal judiciary has been an especially effective silent partner to corporations in this more subtle kind of constitutional protection.36

For example, without the judicial magic that repurposed legislative acts that create corporations into constitutionally protected sacrosanct “contracts,” legislatures could alter or repeal corporate charters at the people’s will.37 State legislatures once did this, many hundreds of times, before the judiciary intruded to protect corporate property.38 Corporate charters should be recognized as the legislative acts that they are; legislatures should overturn their attempted judicial transmutation into “contracts.”

The later judicial gift that turned the Constitution’s commerce clause into a near-automatic censor of countless state and national laws seeking to control corporate behavior made the U.S., half a century before Bretton Woods, into a domestic “free trade” zone administered by federal judges. Any provision that corporations found limiting or annoying could be labeled a “trade barrier” and have a good chance of being declared unconstitutional.39 Democratic efforts will be frustrated as long as the gift stands.

In the end, pursuing the green trifecta involves little more than recognition that decisions about the future should be made by human persons acting through democratic processes. That this seems radical to some is a measure of the success of the regulatory mindset, including the notion that a legal fiction (the corporate “person”) can have constitutional protection.

Out of the Regulatory Agencies, Into the Legislatures

We’ve had seven generations to watch regulatory agencies fail to work for the public interest. A span that coincides exactly with the rise of national, then global corporations. An era during which the locus of power shifted from local and state to national and global; from legislatures to courts; from the voting booth to the hearing room; from the baker, the barber and the butcher to the “neutral” expert, the corporate lawyer, and the faceless trade minister.

It is not corporations but the public that is regulated by regulatory agencies. Their main functions are now to legitimize public harm (“We got a permit!”), act as energy sinks for citizen activism, and protect corporations from upset citizens. They are decoys. But neither regulatory agencies nor corporations per se are our proper targets.

Regulatory agencies and the controversies that surround them distract attention from the fact that government officials—judges, legislators, regulatory agency administrators—enable corporations every moment they don’t challenge them. The target of activism should be the government that creates corporations, enables them, protects them, and clothes them with constitutional protections written for human beings.40 The problem is our elected officials who do nothing to overturn the platter of corporate constitutional protections.

If regulatory agencies are the fourth branch of government, wielding much power but yielding little access, then corporations are the fifth branch: created by legislatures, given constitutional protections (of human persons) by the judiciary, protected by the force of the executive, and enjoying refuge in regulatory agencies that use their triple-dip fourth branch powers to keep out the rabble. The fourth and fifth branches of government developed in tandem; they will only be fixed in tandem.

People should direct the legislative branch to take up its democratic power to control its own corporate creations. Step one would be stripping the legal fiction of the corporation of constitutional protections. Regulatory agencies could then wither away until they assumed the form of humdrum administrative agencies routinely carrying out the law with no more hoopla than accompanies the taking of a driver’s test to get a license.

* * *

Corporate Anthropologist Jane Anne Morris’s dissertation was an ethnography describing how a quasi-public utility, the Lower Colorado River Authority of Texas (LCRA), waltzed through years of federal and state regulatory procedures despite massive public opposition to a stripmining project. Her recent book, Gaveling Down the Rabble: How “Free Trade” is Stealing Our Democracy (Apex Press, 2008) was cited in an amicus brief filed in support of the Federal Elections Commission in the Citizens United case. She is working on a book about the Supreme Court.

Notes

  1. This origin myth is discussed in Jane Anne Morris, “How to Research the Legal History of Corporations in Your State,” pamphlet first available through the Program on Corporations, Law and Democracy (POCLAD) in 1998; excerpted in Defying Corporations, Defining Democracy (Apex Press, 2001), and in Jane Anne Morris, “Sheep in Wolf’s Clothing,” By What Authority [a POCLAD periodical], Vol. 1, No. 1 (Fall 1998); reprinted in Defying Corporations, Defining Democracy, (ed. Dean Ritz, APEX Press and POCLAD, 2001).
  2. I use the term regulatory agency assuming that most people know one when they see one, but technically there are two kinds of federal ones: Executive Agencies and Independent Agencies. The easiest way to tell them apart is that if the name (of the agency itself, or the bigger agency of which it is a part) starts with “Department of,” then it is an Executive Agency (part of the Executive Branch). Other federal regulatory bodies are considered Independent Agencies.

    For example, the Minerals Management Service (MMS) was part of the Department of the Interior, which also includes the Bureau of Indian Affairs and the Bureau of Land Management. The Office of Thrift Supervision (OTS) is now part of the Treasury Department; OSHA and MSHA, the Department of Labor. Many agencies have been moved by legislation from one bureaucratic roost to another in reshufflings that often follow especially spectacular failures.

    Independent Agencies include the Federal Trade Commission (FTC), the National Labor Relations Board (NLRB), the Nuclear Regulatory Commission (NRC), the CIA, and the Social Security Administration (SSA). The EPA is an independent agency in the Executive branch. See The Federal Regulatory Directory, 11th edition (Congressional Quarterly Press (2003); The US Government Manual, 2009-2010; Black’s Law Dictionary.

  3. Gabriel Kolko, Railroads and Regulation 1877-1916 (N.J.: Princeton University Press, 1965), p. 37.
  4. For a list of some of these executives, see Jane Anne Morris, “Sheep in Wolf’s Clothing,” By What Authority [a POCLAD periodical], Vol. 1, No. 1 (Fall 1998); reprinted in Defying Corporations, Defining Democracy, (ed. Dean Ritz, APEX Press and POCLAD, 2001).
  5. For history of the regulatory agency idea in the US, see Jane Anne Morris, “Sheep in Wolf’s Clothing,” By What Authority [a POCLAD periodical], Vol. 1, No. 1 (Fall 1998); reprinted in Defying Corporations, Defining Democracy, (ed. Dean Ritz, APEX Press and POCLAD, 2001); and Gabriel Kolko’s two books, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 (New York: The Free Press, 1963), and Railroads and Regulation 1877-1916 (N.J.: Princeton University Press, 1965).
  6. Bernard Schwartz, The Professor and the Commissions (NY: Alfred A. Knopf, 1959), p. 24; Insurance, meat-packing, food, banking, and telephone & telegraph in the first wave (Gabriel Kolko, The Triumph of Conservatism, pp. 20, 90-109, 147-53, 180); see also David Vogel, “The ‘New’ Social Regulation in Historical and Comparative Perspective,” pp. 155-186 in Thomas K. McCraw, ed., Regulation in Perspective: Historical Essays (Boston: Harvard University Press, 1981). Then came the Federal Trade Commission in 1914; the Federal Power Commission in 1930 (based on a predecessor agency set up in 1920); the Federal Communications Commission in 1934 (based on a predecessor agency set up in 1927); the Securities and Exchange Commission in 1934; the Civil Aeronautics Board in 1938.
  7. Summer 1995, Vol. 7/8. This note may be unnecesary/redundant.
  8. It was in September 2008 that the federal government took over Fannie Mae and Freddie Mac, Lehman Brothers went bankrupt, and the Federal Reserve loaned massive amounts to AIG to avert its bankruptcy.
  9. The mine explosion was April 5th; the oil rig explosion and fire was April 20, and it sank two days later.
  10. Barry Commoner, The Closing Circle, (NY: Alfred Knopf, 1971).
  11. A sadly hilarious riff on regulatory realities can be found in Carolyn Raffensperger, “The Enforcement Game,” in Rachel’s Democracy & Health News #922, Aug. 30, 2007.
  12. Hank Paulson, Secretary of the Treasury until January 2009: “The long-term fundamentals of our economy are strong…this is not an emergency” (Jan 18, 2008); “[The economy] is fundamentally strong, diverse, and resilient” (Feb. 14, 2008).
  13. See Eric Schlosser, Fast Food Nation (NY: Houghton Mifflin, 2001).
  14. Lori A. Richards, Speech to the National Society of Compliance Professionals, Oct. 21, 2008. TARP was signed into law Oct. 3, 2008.
  15. Jeff Gerth, “Behind the Financial Reform Push, Worries of Warring Regulators,” ProPublica, April 14, 2010, and Marian Wang, “SEC Rebuked for Regulatory Failure With Lehman Brothers,” ProPublica, April 20, 2010.
  16. Ronald D. Orol, “SEC Staff Surfed Porn Sites During Crisis Buildup: Inspector,” April 23, 2010, Marketwatch.
  17. Testimony of Massey Energy Company CEO & Chairman Dan Blankenship before a Senate Committee, May 20, 2010. There is a discrepancy in my information as to whether the awards were given in 2009 or 2007.
  18. Testimony of Massey Energy Company CEO & Chairman Dan Blankenship before a Senate Committee, May 20, 2010.
  19. John M. Broder, “Obama to Open Offshore Areas to Oil Drilling for First Time,” NYT, Mar 30, 2010.
  20. Leo W. Gerard, “Safety Awards that Endanger Workers’ Lives,” posted May 21, 2010, on alternet.org.
  21. Marver H. Bernstein, Regulating Business By Independent Commission (Westport, Conn.: Greenwood Press, 1955);
  22. James M. Landis, Report on Regulatory Agencies to the President-Elect (December, 1960, Published by U.S. Senate Committee on the Judiciary, 86th Congress, 2d Sess.); Christopher D. Stone, Where the Law Ends: The Social Control of Corporate Behavior (NY: Harper & Row, 1975).
  23. The National Labor Relations Board (NLRB) is also a regulatory agency, in the same vein as others mentioned here. For an eye-opening perspective, See Peter Kellman’s Building Unions (NY: Apex Press), 2001.
  24. In addition to sources already cited, see Louis M. Kohlmeier, Jr., The Regulators (NY: Harper & Row, 1969); James Weinstein, The Corporate Ideal in the Liberal State: 1900-1918 (Boston: Beacon Press), 1968; and R. Jeffrey Lustig, Corporate Liberalism: The Origins of Modern American Political Theory, 1890-1920 (Berkeley: Univ. of Calif. Press), 1982.
  25. David P. Thelen, Robert M. La Follette and the Insurgent Spirit (Boston: Little, Brown & Co., 1976) pp. 63-4.
  26. Regulatory agencies have been called the “fourth branch” since at least 1937. “The President’s Committee on Administrative Management reported in 1937 that the agencies “constitute a headless ‘fourth branch’ of the Government, a haphazard deposit of irresponsible agencies and uncoordinated powers. They do violence to the basic theory of the American Constitution that there should be three major branches of the Government and only three.” [Quote from President’s Committee on Administrative Management 39 (1937), as quoted in Kenneth Culp Davis, Administrative Law: Cases, Text, Problems, 6th ed., (St. Paul, Minn.: West Publishing Co., 1977), p. 28. In Davis, see also pp. 28, 30. Also, Louis L. Jaffe and Nathaniel L. Nathanson, Administrative Law: Cases and Materials (2nd ed., 1961), p. 4: “So astute a student as James M. Landis holds that the administrative agency is a distinct organ of government unlike any of the other three in that it combines all three powers.” Compare Justice Robert H. Jackson in a 1952 dissent: “[Administrative bodies such as regulatory agencies] have become a veritable fourth branch of the government, which has deranged our three-branch legal theories much as the concept of a fourth dimension unsettles our three-dimensional thinking.” FTC v. Ruberoid Co., 343 US 470 (1952), at p. 487.
  27. Regulatory agencies follow the administrative process, which has itself been defined as “those law-making and law-deciding powers which are exercised not by the legislature or the traditional courts, but by organs of government classified…as executive.” Louis L. Jaffe and Nathaniel L. Nathanson, Administrative Law: Cases and Materials (2nd ed., 1961), pp. 11-12.
  28. The addiction angle is discussed in Jane Anne Morris, “Help, I’ve Been Colonized and I Can’t Get Up…” in Defying Corporations, Defining Democracy, (ed. Dean Ritz, Apex Press and POCLAD, 2001); reprinted in Rachel’s Environmental and Health News (REHN) # 806 (Feb. 15, 2005), and in “Try This At Home,” in Globalize Liberation , ed. David Solnit, (San Francisco: City Lights Books, 2004).
  29. For a concise review of the constitutional rights currently exercised by corporations, see Carl J. Mayer, “Personalizing the Impersonal: Corporations and the Bill of Rights,” Hastings Law Journal, vol. 41(1990), pp. 577-667.
  30. See Jane Anne Morris, “Fixing Corporations (Part 1): Legacy of the Founding Parents”, “Fixing Corporations (Part 2): Corporations for the Seventh Generation,” Rachel’s Environment & Health Weekly, # 488, 489, April 1996; Reprinted in Defying Corporations, Defining Democracy, (ed. Dean Ritz, APEX Press and POCLAD, 2001) as “Corporations for the Seventh Generation”; and “Why a Green Future is “Unconstitutional” and What to Do about It,” Synthesis/Regeneration 49 (Spring 2009) for an outline of what these “other things” may be.
  31. See Thomas Linzey, “Awakening a Sleeping Giant: Creating a Quasi-Private Cause of Action for Revoking Corporate Charters in Response to Environmental Violations,” Pace Environmental Law Review (Vol. 13, No. 1), Fall 1995.
  32. Jane Anne Morris, “Look to Congress for Supreme Court Fix,” at democracythemepark.blogspot.com Mar. 3, 2010, and in Justice Rising (Alliance for Democracy, www.thealliancefordemocracy.org), ed. Jim Tarbell. spring 2010, Vol. 4, No. 4.
  33. Omnipoint Communications, Inc. v. The Town of Wellfleet, U.S. District Court No 98CV12243RGS. See BWA Spring 1999 (Richard Grossman, “Want to Violate a Corporation’s Civil Rights? Just Say No to Its Cell Phone Tower.”)
  34. See Hale v. Henkel (1906) and Marshall v. Barlow’s (1978).
  35. See “Court’s Campaign Money Ruling is a Red Herring,” Synthesis/Regeneration, Spring 2010, Vol. 52; and “Speak Truth to Power,” in Defying Corporations, Defining Democracy, (ed. Dean Ritz, APEX Press and POCLAD, 2001). State corporate charters used to include narrow “purpose” clauses, (e.g., to sell snow cones on the northeast corner of Jefferson and Pine) under threat of revocation if the corporation either failed to achieve said end, or exceeded it.
  36. For a glimpse of the tremendous changes wrought by the judiciary, see the two-volume work by Morton J. Horwitz, The Transformation of American Law, 1780-1860 (Cambridge, Mass.: Harvard Univ. Press, 1977); The Transformation of American Law, 1870-1960: The Crisis of Legal Orthodoxy (NY: Oxford Univ. Press, 1992).
  37. U.S. Constitution, Art. I. Sec. 10 Cl. 1. ”No State shall….pass any…Law impairing the Obligation of Contracts…”
  38. Dartmouth v. Woodward (1819); See Thomas Linzey, “Awakening a Sleeping Giant: Creating a Quasi-Private Cause of Action for Revoking Corporate Charters in Response to Environmental Violations,” Pace Environmental Law Review (Vol. 13, No. 1), Fall 1995.
  39. The history of use of the commerce clause in this manner is described in Jane Anne Morris, Gaveling Down the Rabble: How “Free Trade” is Stealing Our Democracy (Jane Anne Morris, Apex Press, 2008), which also addresses how to reverse it.
  40. At the time, human beings were defined by the propertied white males who wrote the Constitution as propertied white males. Today, though the legal definition of human person now includes most people, it also includes corporate “persons.”