The Vested Oracles: How Industry Regulates Government

...Peter Petkas, an attorney with Nader, last year described a September, 1970, meeting he attended of the Communications Industry Committee of OMB’s advisory council...

...Industry committees perform the dual function of stopping government from finding out about corporations while at the same time helping corporations get inside information about what government is doing...

...By May, 1971, portions of the October pamphlet discussing the chemical, NTA, were scientifically and legally incorrect...

...The law requires that these 15 members consist of six from investment, commercial banking, and railroads...

...In his conclusions, “wholeheartedly endorsed” by W. P. Gwinn, chairman of United Aircraft, and W. F. Rockwell, Jr., North American Rockwell’s chief, Shepherd said that federal agencies, including the FBI, should share their intelligence with industry, and that special FBI agents should work closely with industry “to identify potential militants...

...The government environmental protectors faced several veterans of the meeting held several years earlier...

...The industrialists were whisked over to the White House to stand on the lawn with the President and witness the effectiveness of new air pollution abatement equipment on commercial jetliners...

...The industry representatives, as Petkas put it, “quite literally put [the FCC man] through the wringer...

...Even when the President conformed with a congressional mandate setting up a broadly based advisory committee on railroads, the result was simply another panel stacked with businessmen...

...As early as February, 1962, President Kennedy, concerned about the use and abuse of government advisory committees, issued an executive order “prescribing regulations for the formation and use of advisory committees...

...So it initiated a pilot, voluntary inventory...

...Prior to introduction of the Senate bill on advisory committees, OMB discouraged public knowledge of its advisory meetings...

...The October 14, 1970, meeting was not publicly announced...

...Clearly, we must eliminate this source of government by special interests...

...At the same meeting, Ron Fox, Assistant Secretary of Army Installations and Logistics, referred to a memorandum issued by Deputy Secretary David Packard which outlined major Pentagon policy changes in contracting...

...Lest silly, groundless fears of civil libertarians and other bleeding hearts allay the government from taking industry’s recommended course, United Aircraft’s W. P. Gwinn warned that industry would do it themselves...

...On industry’s side, contractors gladly exchange the right to publicly protest for the chance to get inside the Pentagon, where things can be worked out amicably among friends and there is always enough for everybody...

...William M. Allen, Boeing’s chairman, was a charter member of IAC, serving from 1962 to 1969...

...And as of mid-1 970, 12 of the 24 members were from among the top 40 defense contractors, their firms holding $6.12 billion in prime military contracts let last year...

...To combat the excesses of these committees, I introduced a bill in the 9 1 st Congress to diversify the representation in the advisory groups in the Office of Management and Budget, at least...

...While not guaranteeing all societal interests equal political resources and influence, at least all interests will share an equal chance at information and access...

...But each of these requirements carried a most convenient escape clause: the requirements could be dispensed with if the head of the department or agency felt that they “would be unduly costly or impracticable” or “would interfere with the proper functioning...

...IAC members also enjoy what all other private citizens’ groups are deniedtopsecret briefings on the war, Soviet technology, domestic militants, and the Administration’s economic “game plan...

...two from the Treasury Department...

...Rising into view over the Jefferson Memorial, a trail of heavy, black smoke belched from the three jet engines...

...These discrepancies were rectified in the March report on detergents, but Procter and Gamble neglected to mention the council’s March report, passing off the earlier pamphlet as Commerce’s “full story...

...Mike Manatos, associate director of governmental relations (a fine euphemism for lobbyist) at Procter and Gamble, pleaded in a recent letter to me that the idea that phosphates in detergents pollute is a “misguided notion...

...The FPC pleaded that such an inquiry was impossible without Budget Bureau (now the Office of Management and Budget-OMB) approval...

...The President apparently felt that council effectiveness demanded the recruitment of the world’s most renowned experts on pollution, for he set about naming representatives of companies that have the greatest experience in spewing filth and poison into our environment...

...But this is exactly the position the nation’s largest companies enjoy inside the Defense Department, the Department of Commerce, and elsewhere...

...To be sure, each report carries the disclaimer that “it does not necessarily represent the views of the Department of Commerce or any other Government agency...

...Not one member of the council represents conservation groups, consumers, universities, or other public interest groups...

...After wrangling over the form for seven hours, the advisory committee adjourned, failing to resolve its conflict with the Public Health Service...

...In creating the National Railroad Passenger Corporation, Congress set up a 15-man financial advisory group...

...Little more than one year after its inception, the council has published approximately 25 reports printed at public expense by the Government Printing Office, including a “Casebook of Pollution Cleanup Actions...

...They were denied entrance...

...For the first few hours he held his giound...

...The detergent report was not just an unfortunate mistake or an embarrassing oversight, but rather the logical result of the council’s methods of operation and stacked membership...

...Budget, I learned, had to call the question form to the attention of something called the Advisory Council on Federal Reports, which in turn would buck the proposed form to one of its utility industry advisory commit tees...

...Apparently, the Pentagon agrees...

...Slow-Talking Polluter Until last year very few people were aware even of the existence of such committees...

...In setting it up, Congress required balanced membership, to include academic, scientific, medical, and legal representatives, as well as at least three ecologists and three students...

...The National Industrial Pollution Control Council is the President’s one official advisory council on industrial pollution...

...Even when diverse representation on advisory committees is legally mandated, the President puts himself above the law by either refusing to appoint the committees or stacking them with businessmen...

...On the government side, it permits the Pentagon to prevent or resolve conflicts between contractors in private, where arrangements can be worked out without the danger that a disgruntled contractor will complain to Congress or the press...

...Subsequently, when federal agencies sent a proposed questionnaire to Budget for its evaluation and approval, the Bureau listed the questionnaire on “birdwatcher sheets” mailed to a few dozen industry and association representatives...

...Five weeks after I publicly cited the CAB case as an example of the partiality of advisory bodies, the CAB disbanded the committee...

...Mini-Arms Race Most of the IAC’s work is carried on by subcommittees, such as the one on military exports that dates back to 1962...

...Advisory committees proliferated in the early post-war years, when the public romance with private industry still blurred the collusion between government and corporations...

...The Intimate Caucus OMB, of course, is not legally required to accept the objections of the industry advisory committees...

...OMB, it was explained, could not assure Petkas’ admittance...

...No wonder the committee dealt with the serious liquidity problem of the carriers and with Mitchell’s suggestion for a large federal ante into the airlines’ kitties to help them pay their bills...

...If something on the sheets caught the corporate birdwatcher’s eye, he would inform Budget of the need for a meeting of the industry advisory committee with the government agency responsible for the proposed form, and Budget would cordially comply...

...Small countries provide a lucrative market for second-hand arsenals, and the IAC subcommittee helps convince them they need to be the first on their continent to have a surplus destroyer or an obsolete jet...

...In our present system, government by advisory committees, the public can have no more confidence in the advice of these panels than it has in the quality and reliability of the products of the industrialists who man them...

...W~ hen Petkas suggested that he might attend the “intimate caucus,” he was bluntly uninvited by the committee’s industry chairman and assured by the OMB reviewing officer that this closed, informal meeting between an OMB advisory committee and the FCC was none of Petkas’ or OMB’s business...

...In June, 1964, officials of the Public Health Service launched negotiations with 27 men from the various industry advisory committees, reviewing a Health Service inventory form designed to catalogue the composition, volume, and locations of water-contaminating industrial wastes...

...He manned the council with 63 top executives of major polluting companies, including the chief officers of airlines and electric utilities, and producers and manufacturers of steel, automobiles, detergents, coal, petroleum, chemicals, beverage containers, and paper and wood products...

...The Defense Industry Advisory Committee (called merely the Industry Advisory Committee, or IAC, since 1968-they dropped the “Defense” in deference to growing public opinion against militarism) was established in 1962 by Secretary of Defense Robert McNamara...

...Petkas recounted industry inquiries concerning “agency policy, the depth of support among the commissioners for carrying out the survey, and the names of commissioners who were responsible for instigating it...

...In short order, Congress overwhelmingly enacted the Federal Reports Act of 1942, instructing Budget to coordinate governmental collection of information...

...The IAC has also concerned itself with the possible threat to the defense industry from domestic unrest...

...All unnecessary advisory committees certainly must go...

...When the IAC advises the Pentagon on defense profits, it advises from experience...

...The widespread and pervasive influence of these committees marks the emergence of the American corporate state, where dominant political power is officially and quasi-officially invested in the massive industrial and financial conglomerates...

...The IAC, wanting to minimize its success in the area of profits, worked to convince the GAO to write another draft of its report, highlighting new information voluntarily and unselfishly provided by industry, showing a lower profit margin of 21 per cent...

...The appearance of the environmentalists at the doors of the meeting apparently embarrassed both the Administration and the council...

...As examples of the wearing-down process, Petkas cites an hour-and-a-half discussion as to which company official should sign the questionnaire and whether it should be notarized, and a three-hour bemoaning of NBC’s difficulty in locating the necessary information in its files...

...The growth of advisory groups in the last 30 years, and particularly in the last decade, has not benefited society through increased information and expertise in government...

...The detergents sub-council consists of eight industry members, including the president or chairman of Procter and Gamble, Lever Brothers, Purex, and Calgon...

...OMB had made no attempt to notify the FCC in advance of industry allegations and objections to the questionnaire, and, after eight hours of sometimes heated discussion, the advisory committee had reviewed merely five of the 17 questions on the form...

...For in the realm of advisory committees, the ones that don’t say anything seem to be much less detrimental and costly to the public interest than those that do...

...The agenda for that meeting suggests why the environmentalists were barred...

...The February meeting added a new twist to the previous format...

...If the environmentalists, for instance, asked to sit in while government policy was being made and to have free access to the files of the Environmental Protection Agency, they would be scoffed at...

...It has negotiated both for changes in procurement rules and for higher profits, and its success can be measured by a recent General Accounting Office questionnaire that last year found an average 56 per cent profit based on equity invested in 146 negotiated defense contracts examined...

...Such groups as the Tea Tasters and the International Screw Thread Commission have been dodging flak from budget-minded critics who say there is no reason for the $75 million a year the government puts out for these and like ventures...

...At the time of Cross’ designation as council chairman, his company had been under order for four years by the Wisconsin Department of Natural Resources to stop discharging sulfurous wastes into the municipal sewers of Prairie du Chien...

...At a June, 1967, meeting, Henry J. Kuss, Jr., Special Assistant for International Logistics, delivered to IAC the export subcommittee’s recommendations for a joint industryldefense effort to expand the number of U. S. companies engaged in exporting weapons as well as the yearly volume of shipments overseas...

...Five-Sided Profits The Commerce groups may make the polluters look good and the OMB advisory groups may keep government away from industry’s files, but it is at the Pentagon where the real potential of industry expertise is realized, where corporations can advise the government on how to help them make more money off federal contracts...

...Being inside gives the IAC a way to influence procurement rules before they are promulgated, to criticize troublesome government regulations, reporting forms, and audits, and to get advance information on Pentagon decisions so there is still time for industry to apply pressure...

...But a member of my staff also observed the demonstration, coming away less impressed than the President and his polluters’ council...

...The Budget Bureau again did not approve the inventory, thus awarding the decision to the polluters...

...Moreover, the sub-council operates by the stated council rule that it “does not regard its assignment as including a responsibility to obtain, weigh, and reflect all other viewpoints as well, except to the extent that sound business advice regarding industry policies and programs so require...

...By last year, growing attention to this issue from Congress, the press, and Ralph Nader had created a public image problem for the Administration, forcing it to do something, if only to create the illusion of action...

...The analogy certainly befits Bert S. Cross, chairman of the board and chief executive officer of Minnesota Mining and Manufacturing...

...And now it is moving to eliminate all- competition between contractors as well...

...The director of Budget turned to officials of industry for advice on administering the new law...

...Because of their quasi-official status, advisory councils are aware of potential policy changes and inter-agency dissensions that may help them oppose government actions...

...and seven from “the public in the various regions of the Nation...

...The IAC prevailed-the final version of the GAO report de-emphasized the government’s independent conclusions and upgraded the industry’s data showing the lower figures...

...The bank is the major creditor for five of the nine local service carriers and a major stockholder in two airlines...

...But the corporate polluters have now decided they will pass these reports to senators, congressmen, and the public as government pamphlets on the scientific facts of pollution...

...The IAC had some influence on the changes in defense contracting that led to the cost-plus contracts and the lucrative overruns...

...Their request for a transcript of the industrial polluters’ meeting was turned down, as were reporters’ requests that the officials hold a post-meeting press conference...

...Today, the advisory system still acts as if that climate were unchanged...

...Besides, they lamented the frightful costs to industry and the revelations of trade secrets that allegedly would result...

...While only 10 minutes were allotted to Russell Train of the Council on Environmental Quality for discussion of the national pollution standards, one hour and 45 minutes was set aside for an exploration of tax breaks and incentives to promote pollution control...

...The committee even dispensed with the pretense of meeting in the CAB offices and convened for the first time at One Chase Manhattan Plaza, in the office of James P. Mitchell, chairman of the committee and also Chase Manhattan’s vice president in charge of airline finances...

...The procedures, still followed in today’s OMB, bring some strange results...

...Industry rehashed the old argument...

...Airline finances are not merely the concern of banks and business...

...Published in October, 1970, and superseded by a March, 1971, report, it did not represent the views of the Commerce Department, but rather only of the council of polluters...

...My first experience with them and their influence came about six years ago, when I suggested that the Federal Power Commission ask the major utilities whether they gave money to specified right-wing organizations...

...In a paper specifically endorsed by several council members, Shepherd advocated an immediate and farreaching program to combat the radical threat to industry...

...Among the requirements Kennedy imposed were: I) annual publication of the names of members (and their affiliations) of all advisory committees, 2) a full-time salaried officer or employee of the government chairing each committee, and 3) verbatim transcripts of all industry advisory committee meetings...

...Eventually the bill died, but a more comprehensive one has been introduced in the current Congress, and hearings are now in progress...

...Said Gwinn, “It is conceivable that if the present restrictions on the release of such information to industry are not modified, industry may in effect have to establish an undercover organization of its own in order to protect itself...

...The industrialists promptly established the privately financed and operated Advisory Council, consisting of 16 committees on banking, broadcasting, chemicals, equal employment, fats and oils, meat packing, natural gas, oil, railroads, trade, and utilities...

...nevertheless, the committee was made up purely of men from those institutions...

...But these changes, forced because of the bad light in which congressional hearings placed OMB and its advisory committees, do not address the more serious implications of industry’s dominance of these groups and its quiet exercise of governmen tal power...

...In 1968-four long years of mounting pollution after the initial advisory committee meeting-a new team of concerned bureaucrats tried to get the industry group to accept the inventory...

...For instance, a critical national inventory of industrial water wastes was delayed more than seven years by a filibuster of OMB and the advisory committees...

...Established by Congress as part of the 1970 Environmental Education Act, this Office of Education advisory group provides guidance on environmental education programs...

...The advisory group, including representatives of such industrial giants as U. S. Steel, Consolidated Coal, and American Paper and Pulp, challenged the inventory on the basis that the data would find its way into the hands of the news media and opportunistic politicians...

...The industry advisory groups enjoy a favored position over other nonindustry special interests and even public interest groups...

...Little wonder that some have tagged IAC as the “board of directors of the military-industrial complex...

...This subcommittee, representing a large variety of companies, has as its prime objective the selling of the Pentagon abroad by promoting overseas military sales and mini-arms races...

...All of its members, except the Deputy Secretary of Defense, who serves as chairman, are heads of corporations...

...Rather, it has closed off the flow of information and reserved key governmental access points for the leaders of the corporate world...

...In fact, it has no members, Health, Education and Welfare Secretary Elliot Richardson having completely failed to comply with the congressional directive...

...As time wore on he was more willing to accept industry criticism and to offer to make changes accordingly...

...The discussion frequently focused on questions that OMB and industry claim are not supposed to be considered by the advisory committees...

...Obviously, the National Industrial Pollution Control Council must be placed in the category of the rabbit sent to fetch the lettuce...

...Indeed, the research and writing of these reports is carried out entirely by industry...

...Another 727 quickly followed, trailing a remarkably smaller, less dense plume of exhaust...

...First, a Boeing 727 took off from National Airport...

...Industry advisory committees exist inside most important federal agenLee Metcalf is the junior U. S. Senator from Montana...

...Not surprisingly, in case after case, the agency heads, usually at the prodding of the advisory group itself, found that the waiving of these requirements was “in the public interest...

...The Administration’s lack of enthusiasm for more balanced bodies is evidenced by comparing how quickly it staffs such industry committeesnamed either by the President or the heads of federal agenciesand how slowly it mans more representative councils, like the Advisory Council on Environmental Education...

...Their approach seems not unlike a weapons’ sale roadshow, including a more favorable policy on profits so as to stimulate export expansion...

...The result is that we still don’t know who pollutes what, where, and how much...

...Take the National Industrial Pollution Control Council...

...Yet nearly nine months after its inception, the council has not met...

...He also proposed the establishment of a “central repository of criminal data for the purpose of screening job applicants...

...Rumors still abound that the IAC was specifically established to smooth rumpled feelings surrounding the award of the TFX contract to General Dynamics rather than Boeing...

...Just a few firms in each state, including, in many cases, small operators rather than big polluters, are asked to send in information...

...Legally, their function is purely as kibitzer, but in practice many have become internal lobbies-prin ting industry handouts in the Government Printing Office with taxpayers’ money, and even influencing policies...

...Arguing against the low profits that imperil national security, John Dresser, chairman of Dresser Industries, told the February, 1971, IAC meeting that actions must be taken to boost contractor earnings, that defense is inconsistent with haggling over the price, and that “the country will be best served without cutthroat competition...

...Sometimes, the same company that sits on an advisory council that obstructs or turns down a government questionnaire is precisely the company which is withholding information the government needs in order to enforce a law...

...Several environmental and consumer organizations had heard rumors of the pending meeting and presented themselves at the Commerce Department that morning, requesting admission...

...The Vested Oracles: How Industry Regulates Government By Lee Metcalf The main complaints about the more than 1,500 advisory committees to the federal government have been directed at the ones that don’t do anything significant, or never meet...

...The President did not appoint seven representatives of the public, and did not even bother to dig up a tamed, re tired academician for window dressing...

...The nation might be better off, however, if the healthy, active, and influential advisory committees, especially those from industry, would adopt the ways of their inactive companions...

...The meeting then adjourned with the agreement that issues remaining between the industry people and the FCC be ironed out in “intimate caucu...

...There’s something in the IAC both for the Pentagon and for industry...

...But industry wins out because of its power and its experts, who can cajole and even intimidate government officials into seeing and doing things industry’s way...

...The next gathering, in February, 197 1, convened in the State Department building, where security regulations prohibit entry of non-employees without special arrangements...

...On December 1, 1970, the Department of Transportation announced the Administration’s choices for this advisory body, All 13 non-government members came from business...

...The rapidity with which they backed down may be evidence of the flimsy rationale for the entire industry advisory structure...

...Further, they charged the survey-which was voluntary-would garner incomplete, outdated, and misleading information...

...The meeting, called to discuss a Federal Communications Commission questionnaire probing the effects of conglomerate ownership of broadcasting facilities, was packed with representatives of CBS, NBC, ABC, Westinghouse Broadcasting, and other communications corporations...

...President Nixon created it in April, 1970, to advise the President and the chairman of the Council on Environmental Quality, through the Secretary of Commerce, on industrial pollution problems...

...Many do not even bother to create the appearance of impartiality, as was the case with the Civil Aeronautics Board Finance Advisory Committee, established in 1970 along with similar groups for consumer affairs and for labor...

...The President charged the pollution advisory group with collecting data and evaluating “programs of industry relating to the quality of the environment...

...His program involves giving industry access to federal records and criminal data, so a job applicant can no longer conceal arrests for “loitering, illegal picketing, and disorderly conduct”-misdemeanor charges Shepherd views as indicators of “potential militancy...

...This revelation sparked me to take a closer look at the operations of the Advisory Council...

...The Polluters’ Council This little episode on the White House lawn demonstrates the industrial pollution council’s function as a m as siv e, govern m en t - e s tablished public relations arm of the world’s worst polluters...

...And if some are indispensable, they should be open, representative bodies operating under adversary proceedings, thereby assuring that no interest will be officially enthroned...

...These cleanup actions are “drawn from published accounts of individual company environmental accomplishments throughout American industry”-most of them reprinted from such highly unimpeachable sources as industry trade association publications and house magazines...

...Its rules forbid members to “issue or make public statements regarding the work of the council without prior approval of the chairman,” and rarely does the Pentagon reveal anything about IAC activities...

...He was sure I wanted the “real rights and wrongs,” so he provided me with “a new Commerce pamphlet which gives the full story...

...a combined effort by industry and the Departments of State, Commerce, and Defense to solicit foreign sales, and upgrading of “industrial-educational institutions” in the instruction of problems of military hardware export...

...But most committees continue to function...

...The “new Commerce pamphlet” was, in fact, neither new nor Commerce’s...

...The new guidance provides for more cost-plus contracts and less competition, which, according to Fox, “will probably increase the actual profit earning on defense contracts...

...It dates back to 1942, when the Congress was inundated with small businessmen’s pleas for legislation controlling the flood of forms and questionnaires resulting from wartime rationing and wageprice controls...

...Prospects for such changes are not good...

...My aide’s feeling was that if the first plane had flown at as low a speed and climbed at as slight an angle as the second 727, it too might have significantly reduced its exhaust emissions...

...Advise and Deceive But in reality this is what industry has already done through the vast and complex web of advisory committees...

...Such is the influence of the closed, secretive board, whose nine-year history is shrouded in mystery...

...After hearing the Army’s Provost Marshal, Major General Lloyd B. Ramsey, imply that the increase in the national crime rate and the jump in “student unrest and disobedience” are indicators of a conspiracy to disrupt production, Mark Shepherd, Jr., president of Texas Instruments and IAC member since 1969, took the floor...

...The President and his visitors, official protectors of the environment that they are, delightedly hailed this demonstration as an example of the great, voluntary strides of industry in controlling pollution...

...cies, and even have offices in some...

...The pollution council conducts its meetings in a fashion quite unlike anyone conditioned by industry’s environmental advertising would suppose...

...Today, public interest representatives can be notified of, and sometimes participate in, these gatherings, albeit as observers rather than members...