FERC captured

Gather ‘round,. boys and girls.  It’s time for another political science lecture from Dr. Roy.  Today’s topic is Independent Regulatory Commissions, with a special emphasis on the Federal Energy Regulatory Commission, known as FERC.

The United States government has created a number of agencies that are independent of Congress and the President.  While the President appoints members of these commissions with the approval of the Senate, once members are appointed they can’t be removed unless they do something really bad and are impeached.  Most members serve staggered terms of five or seven years.  The idea is that the members can make decisions without regard to politics, hence the name independent.  They usually regulate some aspect of the economy, hence the name regulatory.  They usually have five or seven members, hence the name board or commission.

Some of them you may have heard of are the Commodity Futures Trading Commission, the Consumer Products Safety Commission, the National Labor Relations Board, the Securities and Exchange Commission, the Nuclear Regulatory Commission, and perhaps most importantly, the Federal Reserve Board.

Here’s a problem.  Let’s say you are the President, and you need to appoint a member to fill vacancy on the Securities and Exchange Commission, which regulates the stock market.  Who knows about the stock market?  Not plumbers.  Not farmers.  Not astronauts.  No, the pool of people who know about the stock market are stock brokers, financial analysts, and Wall Street operators.  

Consider who the SEC will be dealing with on a day-to-day basis.  Not plumbers.  Not farmers.  Not astronauts.  No, the SEC, when it holds hearings, will be hearing from stock brokers, financial analysts, and Wall Street operators.

As a result, the Independent Regulatory Agencies get “captured.”  The appointment process and the day-to-day dealings of the agencies mean that they will adopt the interests and world-view of the very people they are supposed to be regulating.

This, I believe, is what has happened to FERC.  It was obvious to me that the FERC staffers who took testimony on Wednesday night at Penn’s Peak were really not interested in what participants had to say.  I know a great deal about Wild Creek Falls and the Wild Creek Cove on Beltzville Lake, far more than the PennEast Pipeline company, yet I was cut off at three minutes.

FERC has adopted the mindset of the pipeline companies.  The very fact that it has approved 100% of pipeline applications is a telling statistic.  The worst part of this is that it does me no good to write to my U.S. Representative or my U.S. Senators.  The Independent Regulatory Agencies are walled off from political pressure.  They are not, however, walled off from the very interests they are supposed to be regulating.