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Business Intimidation in the Rulemaking Process

October 11, 2023

In a new study, Prof. Cary Coglianese and co-author demonstrate the power of businesses to exert substantial influence over agency rulemaking.

In an article for The Regulatory Review, Soojin Jeong L’23 explores a recent study by Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science and Director of the Penn Program on Regulation, and Alex Acs, a professor at Ohio State University. This pathbreaking research, forthcoming in the peer-reviewed Journal of Law, Economics, and Organization, analyzes how the mere presence of businesses’ lobbying activity can influence federal agencies’ regulatory agendas—evincing a long-theorized but seldom confirmed “third-face” of power.

In “Influence by Intimidation: Business Lobbying in the Regulatory Process,” Coglianese and Acs argue that businesses wield significant political power and influence via persistent lobbying efforts. Lobbying can effectively intimidate agencies and “can shape regulatory outcomes to the advantage of certain firms, both through a chilling effect, where lobbying derails nascent regulatory plans, as well as a retreating effect, where opposition to published proposals leads to their withdrawal.”

From The Regulatory Review:

Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political ScienceFederal regulators are taking a more aggressive stance to technology companies, blocking mergers that may harm future competition and seeking to address harmful data practices. In response to increased government scrutiny, tech companies’ spending on lobbying has surged. Five tech giants spent nearly $69 million on lobbying the federal government in 2022.

How might all this business lobbying influence the rulemaking process?

To understand the extent of business influence over agency regulations, political scientists have traditionally looked for differences between proposed and final rules, seeking to identify the extent to which comments from businesses may have led to changes in the rules. Past studies have tended to find business comments linked to at most only a little meaningful change from proposed rule to final rule, sometimes softening the content to make regulation more business friendly.

A new study, however, investigates the power of business lobbying even earlier in the rulemaking process—before agencies have even proposed a rule. In a new article, Alex Acs, a professor at Ohio State University, and Cary Coglianese, a professor at the University of Pennsylvania Carey Law School, demonstrate that businesses can exert significant political influence over agencies’ agendas. Specifically, Acs and Coglianese studied how businesses can influence agencies’ decisions to withdraw proposed rules or never issue them at all.

Acs and Coglianese’s new research shows that persistent business lobbying can be inherently intimidating because it signals business groups’ ability and willingness to marshal their political and legal resources to challenge the agency if it pursues a policy that businesses oppose. Regulators pay attention to political signals, Acs and Coglianese argue, and they may choose not to proceed with a proposed rule if they expect significant opposition.

Read the full piece at The Regulatory Review.

Read Coglianese and Acs’ full article.