The cost of energy conservation was an order of magnitude more than the benefits, so it disappeared from the final plan. Steven Hayward covers how one of the important legs of the clean power plan disappeared on Powerline and The Weekly Standard. The enviro’s noticed that the costs greatly outweighed the benefits even by EPA’s flawed model and quietly suggested it disappear from the final. An agency willingly captured by the enviro’s.
What’s surprising is EPA and the enviro’s just didn’t ignore the economic failure and keep right on going. After all, when you have a signature transformation, what’s the matter with a little cost discrepancy?
Over the years, “agency capture” has been a staple of the economic analysis of regulation—the phenomenon whereby regulatory agencies would come to be largely controlled by the industries they purported to regulate, or at the very least would protect those industries as a cartel in a tradeoff for regulatory control. Railroads dominated the Interstate Commerce Commission during much of its early life, and for decades airlines used the Civil Aeronautics Board to stifle competition and innovation.
Agency capture is still a probable outcome of many regulatory schemes. The Federal Communications Commission is likely to implement its new “net neutrality” rules in such a way as to cement an Internet cartel to the detriment of consumers and innovation. And the Dodd-Frank Act appears headed toward the cartelization of the big banks, to the detriment of medium-sized and small banks. But increasingly the regulatory state has solved the problem of agency capture by industry. It has instead become captive to ideological interest groups.
This is nowhere more evident than at the Environmental Protection Agency, which has for practical purposes become a wholly owned subsidiary of the environmental movement. Beyond a revolving door between environmental advocacy and senior EPA staff positions, there is ample evidence of close collaboration between environmental organizations and EPA staff in regulatory rule-making and even in permitting decisions.