Stealth Deregulation: The Untold Story

Whenever possible, Republican presidents have pursued a policy of widespread deregulation. They have used a variety of stealth tactics to undermine important financial, environmental, consumer and workplace regulations.

The enormous ecological and economic damage in the Gulf of Mexico caused by the British Petroleum oil spill is just one telling example of the breakdown of regulation and oversight by the federal government. There are many more. Consider the 2009 outbreak of salmonella in several peanut butter factories. And of course it is now clear that the lack of government oversight of the financial sector was a major cause of the mortgage loan crisis and the severe economic recession that it triggered.

Some people have blamed such regulatory lapses on the inherent incompetence of the federal government. But these failures have little to do with incompetence and everything to do with the rise of a conservative, anti-government ideology that has been fundamentally hostile to regulation. “Deregulation” was the mantra of President George W. Bush and his Republican predecessors, and many of the problems we are now facing are the predictable result of this failed political philosophy. Importantly, these conservatives not only undermined federal oversight of the energy industry, the food system, and the financial sector, they also worked to reduce broad protections for consumers, workers, and the environment.

One particularly glaring example of this atmosphere of deregulation: the Minerals Management Service (MMS) of the Department of the Interior, the agency charged with overseeing oil operations in the Gulf of Mexico. During the Bush administration, the staff of MMS frequently partied with oil company representatives and accepted expensive gifts from them. In return, British Petroleum got a waiver from conducting an environmental impact analysis and no inspections were conducted of its blowout preventers. In addition, BP was allowed to not use an advanced blowout prevention technology (one that is required by many other countries) because the MMS agreed with the company that it would be too expensive. Not surprisingly, Randal Luthi, MMS director under Bush, eventually was rewarded with a well-paying job as head of the National Oceans Industries Association, a private trade group that focuses on creating "a favorable regulatory and economic environment for the companies that develop the nation's valuable offshore energy resources."

Most Americans still do not know the full story about this Republican effort to weaken and dismantle regulatory protections for the public. Indeed, most were not even aware that it was happening on such a wide scale. That is because much of this deregulation was accomplished behind closed doors, deep in the bowels of the federal bureaucracy where it got little attention.

This article will bring to light how this strategy of stealth deregulation was pursued in the administrative branch under George W. Bush. It is a story of devious appointments, slashed budgets, weakened rules, and relaxed enforcement. I will also discuss what needs to be done to solve the problems caused by this era of runaway deregulation.

The Attack of the Anti-Regulators

Imagine the following scenario: a new president comes into office and announces that he will appoint a dedicated pacifist to head the Department of Defense and a mafia lawyer as Director of the FBI. What would be the reaction? Many in the public would be outraged and the media would go into a feeding frenzy. In short, all hell would break loose.

In reality, of course, the chances of a president getting away with such ridiculous and disruptive appointments would be slim to none. And yet President George W. Bush did essentially the same thing: he routinely appointed officials whose political priorities ran exactly counter to the missions of the agencies they were charged with running. And many of these appointees worked for or represented the very industries that these agencies were supposed to be policing. For example, important posts in the Food and Drug Administration were filled by people who had careers working for the drug industry.

Exhibit One is Daniel Troy, who Bush appointed to be Chief Counsel for the Food and Drug Administration. Previously, as a lawyer, he filed a number of lawsuits against the FDA arguing against its right to regulate drug companies. Once in office, he stalled efforts to investigate the problems surrounding ephedra - a dietary supplement implicated in the deaths of more than 100 people. Amazingly, in a speech he gave to drug industry lawyers after his appointment, he offered the help of the government in defending these companies against lawsuits by consumers, such as those claiming that medications caused devastating side effects. Not coincidentally, enforcement actions against improper drug advertising went down dramatically after his appointment.

J. Steven Griles was another example of a Bush appointment that seemed designed to sabotage the agency to which he was appointed. He served as Deputy Secretary of the Interior in Bush’s first term. He worked previously as a high-paid lobbyist for the coal and oil companies – the very industries he was then put in charge of regulating. Not surprisingly, the National Mining Association celebrated his appointment, lauding him as “an ally of the industry.” And to top it off, while working for the government, he still received $284,000 a year from his former lobbying firm that continued to represent those industries.

This strategy of handing over regulatory bodies to the industries they are supposed to regulate has been dubbed by critics as “foxes guarding the henhouse.” Among some of the other more obvious foxes in the Bush administration:

Eugene Scalia, appointed to be Labor Department Solicitor. Scalia’s sympathies were unlikely to be on the side of labor since his previous job was specializing in anti-labor law and representing the management side in labor disputes. He also represented many of the companies that were opposing the new ergonomic rules that were later abandoned by the Department.

Jeffrey Holmstead, who became the EPA's assistant administrator for Air and Radiation. How protective could he be of the environment when he formerly worked as a lawyer representing numerous corporations seeking to block environmental regulations? He eventually headed the administration’s efforts to relax clean air requirements for coal-fired power plants – a move that Sen. James Jeffords called “the biggest rollback of the Clear Air Act in history.”

Marianne Horinko, Asst. Administrator for the Office of Solid Waste and Emergency Response – in charge of the Superfund program to clean up toxic waste sites. Before this, she worked as an attorney representing the industry side in Superfund suits. The rate at which Superfund sites were being cleaned up fell dramatically under the Bush Administration.

Michael F. Duffy, Federal Mine Safety and Health Review Commission. His primary experience was working as an attorney for the National Mining Association and the American Mining Congress.

Chuck Lambert, United States Department of Agriculture official in charge of regulating the meat packing industry. His previous job was working for a lobbying group for the National Cattlemen’s Beef Association. He was just one of a dozen people with ties to the meat industry who were appointed to the USDA, leading one consumer advocate to observe that “the USDA gives the impression of being a wholly owned subsidiary of America’s cattlemen."1

And these are just a few examples. An investigative reporter for the Denver Post found that over 100 of the high level officials appointed by President Bush in this first term of office were “overseeing” the industries they used to represent as lobbyists, employees, or lawyers. As Maria Weidner of the Earthjustice Legal Defense Fund observed at the time: “They are lawyers and lobbyists who build their careers by helping industry get out of … regulations. Now they will be doing the same things, only the taxpayers will be paying for it."2

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