THE NEW REVOLVING DOOR.

• Author: Vandenbergh, Michael P.
• Position: The EPA at Fifty Symposium

Abstract

This Article demonstrates that a new revolving door is emerging between environmental-advocacy groups and the private sector. Since the birth of the modern regulatory state, scholars have raised concerns that the revolving door between corporations and government agencies could induce government officials to pursue corporate interests rather than the public interest. The legal and political-science literatures have identified several benefits that may arise from the revolving door, but the thrust of the scholarship to date has emphasized the potential harms. Using several data sources, we demonstrate that as the private sector has begun to play an increasing role in environmental governance in recent years, a new revolving door has emerged between environmental-advocacy groups and corporations, institutional investment firms, and private equity firms. We demonstrate that this new revolving door is surprisingly common, and we examine the implications for the future of public and private environmental governance. Although this new revolving door creates new risks, we argue that it may turn on its head the central concern about the revolving door: The movement of environmental advocates into corporate management positions may play the role of greening corporate behavior and may accelerate the development of private environmental initiatives. We focus on the movement of employees in the environmental area--a new green revolving door--but we suggest that this new revolving door also may be emerging in labor, health and safety, and other regulatory areas.

CONTENTS INTRODUCTION I. THE TRADITIONAL REVOLVING DOOR A. Revolving-Door Literature 1. Benefits 2. Risks B. Regulatory Response II. The New Revolving Door A. Methodology B. Results C. Implications D. Limitations CONCLUSION INTRODUCTION

Private equity firms have been criticized for pursuing profits at the expense of social justice, (1) yet the Carlyle Group and Kohlberg Kravis Roberts (KKR), two of the world's leading private equity firms, have recruited top environmental-advocacy-group staffers to serve as sustainability managers. (2) Similar hiring has occurred elsewhere in the private sector, including not only private equity firms, but also institutional investors and Fortune 500 corporations. Why is this occurring? What effect is it having on environmental governance?

This symposium examines the role of the Environmental Protection Agency (EPA) in environmental law and policy over the last fifty years and looks forward to the next fifty years. Our goal in this Article is to contribute to the forward-looking aspect of the symposium by demonstrating how private environmental governance will affect a core concern of environmental-law scholarship over the next fifty years. We present the results of an empirical study of the movement of employees from environmental-advocacy groups to corporations, institutional investors, and private equity firms, and we demonstrate that this new green revolving door is surprisingly common. We argue that the new revolving door poses some risks to environmental governance, but it is an indication of the growing importance of private environmental governance and a potential driver of additional pro-environmental activity by the private sector.

Private environmental governance occurs when private organizations, including corporations, civic and cultural organizations, religious organizations, colleges and universities, and other non-governmental organizations (NGOs) perform environmental-protection functions traditionally assigned to governments, such as reducing negative externalities, managing common-pool resources, and affecting the distribution of environmental amenities. (3) In the last decade, the social-science and legal literatures have demonstrated that private initiatives now play an important governance role in most of the subject-matter areas addressed by the EPA and other federal environmental and natural-resource agencies, including climate mitigation, product- and project-based environmental disclosure, toxics regulation, and the management of fisheries and forests. (4) Private governance initiatives also deploy many of the same instruments or tools as public governance. (5)

The growth of private environmental governance raises a range of questions about the extent to which private initiatives can perform environmental-protection functions even in the absence of government leadership. (6) But the emergence of private environmental governance also affects many of the cross-cutting aspects of governance that public-law scholars have studied for decades, such as administration, accountability, cost-benefit analysis, equity, and spillover effects. In this Article, we examine the implications of private governance for concerns about agency capture arising from the revolving door. In the legal and political-science literatures, the revolving door refers to the movement of employees between government and corporations. (7) Scholars have examined the mechanisms of this phenomenon and its effects on industries, agencies, and society, but the revolving-door literature has assumed that governance means public governance, and thus the focus has been on the movement of individuals between the corporations and government. (8)

Political scientists and legal scholars thus use the term revolving door to describe the movement of legislators, regulators, and lobbyists between the private and public sectors. (9) The door swings in both directions as individuals rotate from corporate jobs to government positions and vice versa. Although some scholars see merit in the revolving door's ability to foster interconnectedness between the public and private sectors, (10) many have raised concerns that the revolving door may lead to undue corporate influence over government decisions. (11) In particular, the fear is that the exchange of personnel may undermine government integrity or lead to regulatory capture. (12) A captured agency is disproportionately influenced by the entities that it regulates, creating policies that serve the interests of corporations rather than the general public. It is difficult to measure whether an agency is captured, but capture in major regulatory agencies has been a longstanding concern in the public domain. (13) Environmental agencies may be at a heightened risk of regulatory capture for several reasons. For instance, the costs of environmental regulations are high, creating strong incentives to reduce regulatory mandates. In addition, the complexity of environmental policy, such as regulations on water pollutants or greenhouse gases, makes it difficult for the general public to perceive manipulation within environmental agencies, making them more susceptible to regulatory capture than other agencies. (14)

In Part I, the Article discusses the legal and political-science literatures on the standard public-governance conception of the revolving door between the public and private sectors, and it examines the federal statutory and regulatory responses. Part II then introduces the concept of the new revolving door between environmental-advocacy groups, on the one hand, and corporations, institutional investment firms, and private equity firms on the other. It then presents the results of the first empirical study of the new revolving door. We found that, of the entities we studied, roughly 6% of large companies, 15% of large institutional investment firms, and 29% of large private equity firms had at least one environmental manager who worked in the past at an environmental-advocacy group. Although far more research remains to be done, the results demonstrate that the new revolving door has emerged in the environmental field, producing different implications for governance than the standard revolving door. Although the new revolving door is not without risk, we argue that it may turn the central concern about the revolving door on its head: The movement of environmental advocates into private-sector management positions may play the role of greening the private sector and accelerating the development of private environmental initiatives.

The Article concludes by noting that, although the empirical case for the new revolving door relies only on our limited data on recent employment in several sectors, our results set the stage for more comprehensive empirical studies. In addition, the existence of the new revolving door suggests that other common features of the public-governance regime may need to be re-examined in light of the emergence of private environmental governance. We focus on the new revolving door involving environmental-advocacy groups and the private sector--a new green revolving door--but we suggest that the new revolving door also may be emerging in labor, health and safety, fair trade, food safety, and other regulatory areas. (15)

1. THE TRADITIONAL REVOLVING DOOR

   The concept of the revolving door has been a hardy perennial in the legal and political-science literatures for decades. Not surprisingly, given the central role played by government in environmental protection, labor, health and safety, and other areas, the focus of the revolving-door literature has been on the movement between government and the private sector. Scholars have identified positive and negative effects from the revolving door, but, on balance, the literature has focused more on the negative effects that could arise from government being co-opted by the private sector. The congressional response to such concerns reflects this perspective, and legislation adopted since World War II includes a range of provisions that restrict the most troubling revolving-door activity. Part II.A discusses the revolving-door literature, and Part II.B examines the statutory restrictions on the revolving-door-related activities of current and former government officials.

   1. Revolving-Door Literature

      Research on the revolving...