Editor’s note: The author’s perspective on this topic has been informed by the fact that he served as a vice president of two leading U.S. business associations — the American Petroleum Institute (1988-1992) and the American Chemistry Council (1999-2005).
Throughout the modern era of environmental policymaking that began in the 1970s, the defeat of pro-environmental initiatives was invariably accompanied by public outcries from the environmental community of "business influence" upon legislators or executive branch policymakers. Central to this critique was the role of trade associations in defeating, delaying or watering down pro-environmental legislation or regulation. The historical record provides extensive documentation of trade associations’ role in opposing efforts to curtail cigarette smoking; reduce air, land and water pollution; combat climate change; and protect citizens against the harmful effects of an array of industrial chemicals.
A common assumption among a number of today’s non-government organizations, academicians and reporters is that disproportionate influence continues to be exerted by trade associations in how environmental policy gets shaped or implemented. Is that assumption still valid?
Evolution of trade associations’ roles
Many of the historically influential trade associations (autos, chemicals, mining, petroleum) date from the early 20th century or sooner. Originally, their principal functions were to promote their respective industries; foster policies supportive of their economic development and expansion; conduct economic analysis and research; develop safety and other voluntary standards; and communicate the benefits of their members’ products.
The 1970s enactment of major health, environmental, safety and consumer protection laws, and establishment of major federal agencies to develop and enforce regulations, fundamentally changed the focus of business associations. Henceforth, a major preoccupation would be their participation in legislative and regulatory processes to delay, alter or defeat laws and regulations that would impose compliance costs upon business operations and reduce member companies’ degrees of freedom to conduct their operations. When failing to achieve these objectives, trade associations (oftentimes in combination with each other) would litigate to overturn federal agencies’ final rulemakings.
Today, trade associations largely deal with business-sector-specific regulatory, legislative and public relations issues and have proven less nimble in engaging the political process on broader issues of societal concern...
Until the appointment of large numbers of more conservative judges to the federal bench (including the Supreme Court) by the administration of former President Donald Trump, the courts were generally deferential to agency decisions provided that they presented well-reasoned legal arguments for regulations backed by scientific evidence and other data. Beginning in the 1970s, business associations began to systematically submit legal and technical briefings and fund papers by noted academicians and consultants to formalize the processes of scientific evaluation used to justify regulatory proposals, seek expanded data quality procedures, and advocate expanded review of the costs and benefits of individual rules. Over time, these recommendations become institutionalized and subject to judicial review. While rulemakings continued to be implemented, they occurred at a slower pace and were more complex to develop.
Factors diminishing the influence of trade associations
Ironically, the waning of judicial deference towards federal agency rulemakings (largely the result of more conservative appointees to the bench by the administrations of George W. Bush and, chiefly, Trump) coincided with a declining influence of trade associations. A number of factors explain this development. They include:
- The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission opened the door towards unreported contributions in election campaigns and other causes. This decision subsequently unleashed a flood of unreported money (so called "dark money"), largely bundled by third-party front organizations, that dwarfed the sums contributed by trade associations through their political action committees (PACs) in political campaigns or budgets for issue advocacy.
- Newer institutions emerged that eclipsed the role of traditional business associations. These tended to be multi-sector bodies whereas association representation generally focused on single sectors (with the exception of the U.S. Chamber of Commerce or the National Association of Manufacturers). These newer entities, such as the Koch Brothers’ Americans for Prosperity, have broader funding sources than trade associations, and their advocacy focused not only on environmental policies (particularly climate change) but also overturning policies favoring access to abortion, selection of more conservative judges and political candidates, and opposition to expanding government’s role in providing health care. As a result, multiple voices emerged across many industries and citizens groups that eclipsed those of trade associations.
- The Republican Party has distanced itself from big business and its associations because they are seen as too "pragmatic." The growing partisan divide in American politics has greatly intensified the difficulty for business to work both sides of the aisle or provide campaign contributions to Democratic candidates without becoming subjected to intense criticism by more conservative politicians and pundits. A case in point is the U.S. Chamber of Commerce, long opposed to environmental regulations and control of greenhouse gases. It has come under a withering assault from within the Trump-aligned Republican party for providing campaign contributions to Congressional Democrats that supported its legislative agenda.
- Membership divisions within trade association, always a point of contention, have become more difficult to manage. While a small number of companies actually withdrew their memberships due to policy differences (in 2019, for example, Royal Dutch Shell canceled its membership with the American Fuel and Petrochemicals Manufacturers over its difference on climate change policy), most choose to remain and debate association advocacy priorities. The resulting divisions often result in unclear and ineffective advocacy. During the latter stages of the U.S. Senate debate on the Inflation Reduction Act, conservative Republicans contacted the American Petroleum Institute (API) to more vigorously oppose the legislation. Because members such as Chevron and Exxon Mobil stood to benefit from generous funding provided for carbon capture and storage and development of hydrogen, API’s opposition was more muted.
- Disinvestment in science and analysis in favor of public relations and advocacy has reduced associations’ credibility. Trade associations were once important funders of health and environmental research and maintained significant staff competencies for scientific assessments and evaluating economic issues important to their members. Such funding has receded in recent years due to expanded investment in public relations and lobbying activities. For example, the American Chemistry Council’s Long-range Research Initiative received over $20 million in annual funding 20 years ago and has an approximate allocation of $3.3 million today. Through their strong support of Trump administration policies to undermine robust peer review processes and abandon the commitment to independent scientific advice, trade associations have further diminished their credibility in evaluating the scientific basis of regulatory proposals.
- More recent appointments of major trade association leaders provide lesser value to their members because they lack policy and/or political stature. In former years, it was not unusual to appoint former Cabinet members, senior White House staff or a former governor or member of Congress to lead an association. With the exception of Josh Bolton (George W. Bush’s former chief of staff) at The Business Roundtable, other major association CEOs possess lesser stature and public visibility.
Today, trade associations largely deal with business-sector-specific regulatory, legislative and public relations issues and have proven less nimble in engaging the political process on broader issues of societal concern that directly affect the private sector. These include corporate sustainability; business ethics; diversity, equity and inclusion; investor concerns over environment, social and governance issues; environmental justice; and voting rights. Trade associations played a marginal role in the recent enactment of the Inflation Reduction Act.
So the next time that a non-governmental organization expresses its outrage over a trade association’s opposition to a pro-environment initiative, be sure to ask the next question: Is there a bigger, better-funded, more politically connected, less transparent and more influential coalition standing in the shadows behind it?