Insulating Agencies: Avoiding Capture Through Institutional Design

Abstract

So-called independent agencies are created for a reason, and often that reason is a concern with agency capture. Agency designers hope that a more insulated agency will better protect the general public interest against interest group pressure. But the conventional approach to independent agencies in administrative law largely ignores why agencies are insulated. Instead, discussions about independent agencies in administrative law have focused on three features that have defined independent agencies: heads who are removable for cause by the President, an exemption from having to submit regulations to the President’s Office of Information and Regulatory Affairs for cost-benefit analysis, and a multimember structure.

But these traditional characteristics of an independent agency are not the only, or necessarily even the most effective, ways in which insulation from interest groups and partisan pressure can be achieved. In fact, under modern conditions of political oversight, other design elements and mechanisms are often just as important if the goal is to create an agency that is best suited to achieve a long-term public-interest mission free from capture. This is particularly true of agencies tasked with protecting the general public in the face of one-sided and intense political pressure. This kind of lopsided pressure can be seen in a range of areas, from criminal justice to consumer protection.

The goal of this Article is to move the conversation about insulation beyond the traditional hallmarks of independence and identify overlooked elements of agency design, deemed equalizing factors, that are particularly well-suited to addressing the problem of capture in the context of asymmetrical political pressure. The Article identifies five such equalizing factors that have received little or no attention in the legal literature on independent agencies but that are critically important for insulation against one-sided interest group dominance. The Article then compares the effectiveness of traditional and equalizing factors in the context of consumer protection, an area with the kind of one-sided interest group pressure that is a breeding ground for capture. The Article explores the relationship between the institutional design of the Consumer Product Safety Commission and its effectiveness and uses those lessons to analyze the Bureau of Consumer Financial Protection, the most significant new federal agency created in decades. This analysis of consumer protection regulatory agencies show-cases both the continuing danger of capture and the critical importance of institutional design in policing it.