Who Sways the USDA on GMO Approvals?

Government agencies can be "captured" by the very companies or industries they regulate. Looking at how genetically altered food products are approved, Assistant Professor Shon R. Hiatt finds unexpected influencers on the US Department of Agriculture. Key concepts include:
  • "Regulatory capture" describes the phenomenon whereby regulatory agencies tasked with serving the public instead end up advancing the interests of the companies they regulate.
  • Traditional theories of capture such as lobbying and campaign contributions had little effect on whether the US Department of Agriculture approved any particular genetically altered agriculture product.
  • What did seem to affect the approval process was the influence of third-party groups such as associations and even related regulatory agencies.
by Michael Blanding

Many corporations have gotten good at pulling the levers of government to tilt the odds in their favor, weakening regulations or securing perks, justified or not, to further their business interests. Economists use the term "regulatory capture" to describe the phenomenon whereby regulatory agencies serving the public instead end up advancing the interests of the companies they regulate. The main way companies accomplish this, economists theorize, is through lobbying and campaign contributions that convince legislators to pass laws in their favor.

Once those laws are passed, however, it's less clear how companies sway the regulatory agencies that enforce them, which are more isolated from the direct effects of money or persuasion.

“If a company can get enough farmers to support the product and they write letters, then the USDA is going to listen.”

"Traditional theories of regulatory capture cannot be used the same on agencies," contends Shon R. Hiatt, an assistant professor at Harvard Business School. "There are a lot of checks and balances and firewalls in place."

So how are these agencies influenced?

Hiatt, who grew up on a dairy farm in Idaho, began asking that question through research on the controversial issue of genetically modified organisms (GMOs), agricultural products that are genetically altered to increase yield, incorporate pesticide properties, or exhibit other beneficial qualities. (Calgene's Flavr Savr tomato was the first genetically modified product to come to market, in 1992.) However, the organisms also potentially carry health and environmental risks. After reading about these dangers, Hiatt wondered how the US Department of Agriculture (USDA) decides which GMOs to approve—and how agribusiness influences the process.

Traditional Theories Break Down

As Hiatt began investigating, he found that traditional theories of capture such as lobbying and campaign contributions had little effect on whether any particular GMO was approved. Even more direct means of influence such as scientific articles funded by industry or letters written by industry-friendly congresspeople were equally ineffective.

What did seem to affect the approval process, however, was the influence of third-party groups separate from Congress and industry, to which the department looked to justify its decisions.

We may think the primary goal of agencies such as the USDA is to protect public health and safety; based on previous economic theory, however, Hiatt started with a different assumption—the primary goal of an agency is really to protect its own legitimacy. After all, it's the perception of an agency's effectiveness by Congress and the White House that will determine its budget and the career trajectory of its top officials. Of course, there is an overlap between the appearance of doing a good job and actually doing one. "If the USDA weren't doing its job, it would have very little legitimacy," says Hiatt. But that subtle difference in perspective also has the potential to distort the agency's reliance on pure science in its approval of GMOs.

In his working paper "Lords of the Harvest: Third-Party Signaling and Regulatory Approval of Genetically Modified Organisms, written with Sangchan Park, an assistant professor at the National University of Singapore, Hiatt identifies two types of legitimacy important to the USDA. The first, "consequential" legitimacy, is the perception that the process produces effective results; the second, "procedural" legitimacy, is the perception that it is fairly following the rules of the process.

In both cases, the researchers found that the department looked to outside stakeholders in order to establish that legitimacy.

In the case of consequential legitimacy, Hiatt and Park found a strong influence of farmers associations, such as the Iowa Soybean Association or the Kansas Corn Growers Association, which have the power to judge whether the GMOs are performing as intended without side effects. While these groups might have some industry members, they are separate from the agribusiness companies that are introducing GMOs. In cases where they supported a particular organism, there was an 84 percent increase in the likelihood of approval.

"If a company can get enough farmers to support the product and they write letters, then the USDA is going to listen to that and say, 'We have to keep our stakeholders happy,' " says Hiatt.

Other Agencies Influence Approvals

In the case of procedural legitimacy, the researchers found a strong influence from an unlikely source—the USDA's sister agency, the Food and Drug Administration. In the process of approving GMOs, companies have the option of consulting with the FDA to design nutritional labels for their products, earning a certificate of approval when they address FDA concerns. "They get these consultations and they are somewhat meaningless—they have little to do with the USDA approval process," says Hiatt.

Regardless of that fact, however, Hiatt and Park found that a positive endorsement by the FDA had a huge effect on USDA approval, increasing the likelihood by 157 percent.

Hiatt hypothesizes that in addition to receiving nutritional information on the GMOs, getting the green light from another agency might help insulate the department from criticism. "The USDA could be looking for a scapegoat," he speculates. "A positive signal from a fellow bureaucratic actor could diffuse the blame and provide political cover were the department to approve a faulty product."

These effects seemed to be even higher during instances where there was significant controversy or uncertainty. In cases where there were protests by activists over a particular GMO, the researchers found that the overall percentage of approvals went down, but the degree to which a positive endorsement by farmers associations increased the likelihood of approval by117 percent.

Results were even starker during a congressional election year, in which a heightened political environment presumably casts more scrutiny on agency decisions.

In those cases, farmers associations' influence increased the likelihood of approval by a whopping 400 percent. In addition to increasing the likelihood of approval, says Hiatt, third-party endorsements shorten the approval period. With farmers' approval, agricultural companies shaved about 162 days off the average approval time; with FDA consultation, they cut it down by about 257 days. That can translate to big bucks for companies.

"The average seed company earns about $2 million per day of revenue for high- selling GMO crops such as soybeans," notes Hiatt. "That's a substantial amount."

He stresses that these findings only concern the USDA, and only GMO approval; more research is necessary to determine whether the effect of third-party stakeholders on the USDA has an effect on other agencies or other policy issues. Conceivably, the same findings could hold true for other agencies: for example, the influence of doctors associations on the FDA drug approval process or consumer bureaus on rate increases by public utilities commissions.

Regulators Must Recognize Influencers

To the degree these third-party stakeholders do have influence, it complicates the traditional models of regulatory capture. On the one hand, it is perhaps a relief for democracy if companies don't have such direct influence on the process. On the other, it opens up the possibility that firms could capture these third-party actors instead—for example, drug companies influencing doctors with incentives for prescribing drugs or sponsoring medical conferences.

Perhaps the larger lessons from Hiatt and Park's research, however, concern regulators themselves. It's important that agencies such as the USDA realize their susceptibility to these outside influences, less they short-circuit their reliance on scientific procedures. That is just what happened with the approval of GMO alfalfa and sugar beets: both received positive signals from farmers and the FDA, and were approved by the USDA. But environmental groups protested that these products were approved without a full environmental review, successfully suing to take them off the market. (Alfalfa was subsequently reapproved after a multi-year delay. Sugar beets are still pending approval.)

"Regulators need to be aware of the influence they are putting on these stakeholders and other regulatory agencies," says Hiatt. "In those cases, it's even more important they follow the same scientific procedures they usually do. If they find themselves cutting corners, they could run into problems."

About the Author

Michael Blanding is a writer based in Brookline, Massachusetts

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    • maria
    The USDA and the FDA, government agencies in place to protect the consumer consists of former employees and current employees of Monsanto, the biotech firm that has the patent on this technology. This revolving door exists also in higher places, at the white house. THe ENTIRE WORLD knows gmo is a bad idea and have banned and abandoned it. The USA needs to follow suit!
    • Bill Freese
    • Science Policy Analyst, Center for Food Safety
    While this is an area that deserves serious research, I have to say that the authors' analysis is shallow and filled with mostly irrelevant detail. It misses the most important issues. It's too bad they didn't consult with groups like my own (Center for Food Safety), which has much expertise in this issue.

    The most important overarching issue that was ignored is that the U.S. government has long had a commitment to promote agricultural biotechnology as America's hi-technology of the 21st century, which is expressed in several ways: aggressive lobbying to promote worldwide acceptance of GMOs; and a laughably weak regulatory system to speed GM crops to market while giving a rubber stamp approval to "increase public confidence."

    First, a major goal of US ag policy is to open up overseas markets to GMOs. This explains the US challenge of more scientifically sound European GMO regulation under the WTO some years ago, aggressive State Dept. interference in European and developing country ag'l policy (opposing GM labelling laws, for instance) and active lobbying of international agencies such as Codex Alimentarius to have GMO labeling regarded as an "unfair barrier to trade." (Fortunately, the latter effort ended in failure, as Codex recently determined that GM labeling is acceptable, and could even provide a means of tracking any adverse health effects triggered by GMOs.) Wikileaks has released a number of damning memos to this effect.

    Second, as regards lobbying to get laws favorable to a company's products, the great accomplishment of biotech companies was to have GMOs "regulated" under a patchwork of old statutes never remotely intended for them. To take one example. USDA first regulated GM crops under the Plant Pest Act, a 1957 statute geared to prevent introduction of plant pests and disease agents from overseas. Needless to say, there's a world of difference between a pathogenic fungus and a genetically modified plant. USDA jury-rigged regulations under the Plant Pest Act to provide extremely weak "regulation" of GMOs that intentionally disregards their real-world impacts - in the interests of promoting America's shining new technology.

    For instance, one of the biggest threats of GM crops relate to omnipresent Roundup Ready (Roundup-resistant) crops. Massive use of Roundup with these crops has created an epidemic of Roundup-resistant weeds, regarded by agronomists as a major challenge to US agriculture -- sharply increasing herbicide use, soil-eroding tillage operations, and even manual weeding not seen for decades; all of which also increase farmer production costs substantially. How does USDA respond? By denying it has any authority to deal with this serious threat, which is clearly a false, overly narrow interpretation of its authority. With a governing statute geared to regulate GM crops, which we do not have, however, USDA could not take such an absurd stance, wrong as it is. There's a lot more to say here....

    I would encourage the authors to consult with public interest experts such as my organization in the future. FYI: The lawsuits over GM alfalfa and sugar beets mentioned at the end were led by my group, Center for Food Safety. The brief description is very incomplete, and could have been much improved. Efforts like this one are much needed, but should be much better informed.
    • Tabuism
    • Vegan Connection's
    Environmental hazards

    "Our current knowledge does not provide us with the means to predict the ecological long-term effects of releasing organisms into the environment. So it is beyond the competence of the scientific system to answer such a question...

    The number of possibilities how the release of Genetically Engineered organisms into the environment may upset the ecology is very large. The possible complications are extremely difficult to evaluate. With few exceptions, governments all over the world are allowing the release of GE organisms into nature without requiring careful scientific investigation of the environmental consequences.

    This is nothing less than blind experimentation with the environment with unknown and unpredictable consequences, especially as the released genes cannot be recalled.

    "... some GMOs can possess genuinely new characteristics that may require greater scrutiny than organisms produced by traditional techniques of plant and animal breeding. Since long-term ecological impacts of GMOs may be extremely difficult to predict or study prior to commercialization, ESA strongly recommends a cautious approach to releasing GMOs into the environment."

    For more info goto: http://www.psrast.org/ctenvir.htm

    Commercial application of genetical engineering for production of foods cannot be scientifically justified and carries with it unpredictable and potentially serious consequences.

    The reasons are as follows:

    The knowledge about the genes and how they work is too incomplete to make it possible to predict and understand all consequences of genetic engineering.

    The knowledge about the health safety of GE foods is seriously incomplete.

    The knowledge about the environmental safety of GE organisms is seriously incomplete.

    It has been scientifically established that unexpected effects can occur from genetic engineering that are hazardous to health and the surroundings.

    Science has established that there is no need for GE organisms for feeding the world or solving nutritional deficiency problems.

    Food biotechnology perpetuates environmentally unsustainable industrial agriculture. It is based on chemicals of various kinds that are demonstratedly harmful to health and to the environment.
    • Tabuism
    • Vegan Connection's
    How is it that the heads of the FDA are former Monsanto staff, hand picked by the Obama administration?
    • Rajiv Mishra
    • SSE, Pune, India
    The author has provided a third angle to view the GMO endorsements by USDA, and that we need to analyse its effects on other approvals by the govt regulatory agencies.
    • Lalena
    Here's my biggest issue with not labeling GMOs. When you look at an ear of organic corn, you know what is in it. Corn. When you look at an ear of GMO corn, you don't realize that you are also holding mutated bacteria and viruses, enough pesticides to piss off mother nature and DNA from god knows what. Yeah, sorry Monsanto but there is a difference between the two and I for one would like to have a damn choice. Thank you!
    • Seif Keilani
    A government is a servant of the people ( at least in democratic states). And government agencies that have regulatory powers should put the general populace as its main stakeholder.

    Does the USDA or the FDA consider the general populace their main stakeholder?

    Do they inform the general public and consult with them for guidance in their regulatory process?

    Would the general populace as the main stakeholder in such regulatory agencies guide the regulations to a better outcome?
    • Anonymous
    What concerns me most is the benign name "GMO" - if we were to call most of it what it really is: "Roundup Ready Seed" wouldn't we better understand why Europe has chosen to ban it. European regulators are less ready to poison their population - maybe it is because they know they will foot the bill down the road. Indeed, we who employ them, the public - "stakeholders" are all but ignored by the USDA.
    • Tabuism
    • Vegan Connection's
    "If people let the government decide what foods they eat and what medicines they take, their bodies will soon be in as sorry a state as are the souls of those who live under tyranny."

    ~ Thomas Jefferson, 1781
    • walter P. Blass
    • Visiting prof. of Management, Grenoble Grad Schl of Bus. Grenoble, France
    Your readers may be interested in a somewhat similar historical situation with regard to telecommunications in the U.S. In 1974, the Justice Dep't sued AT&T for anti-trust violations, despite the fact that it had been under regulatory surveillance by the FCC for 40 years. In Judge Harold Greene's court, AT&T was losing badly by September 1981, so that it proposed a horizontal divestiture to the same judge who had presided over a simlar case in 1954. While that Judge accepted the deal, Judge Greene refused and insisted on an open court review.
    The upshot was the breakup of the Bell System. And the FCC? Quiescent throughout! Le plus ca change.....
    • Tracey
    • Against GMO
    I do not consider farmers and doctors the stakeholders. I consider the consumers, the people who are going to buy and ingest these poisons to be the stakeholders. And they do not have much influence in either of these organizations from what I've seen.
    • Ken Dorr
    • Founder, Kale University
    Thank you for posting this article. We are doing our best to get the word out about labeling all products so that we know what is in our food supply. It's a shame that politics has governed how and what we see or don't see on the shelves. The health of individuals and their right to choose is at stake and most big corporations could care less. My family does not eat anything that is not whole, organic and plant-based. Eating clean alive foods are our health insurance policy and is what keeps us balanced, energetic and in the best shape we've ever been in. Gotta love this lifestyle!
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    Without appropriate research by valid organisations followed by thorough testing on the findings, no food item need be approved for use. Consuming edibles simply because of the USDA decisions granting GMO approvals on political considerations (lobbying, etc.) would tentamount to playing with the health of the consumers.
    This is a sensitive issue and decisions are to be arrived at very pragmatically.
    • Anonymous
    Good article. I am, however, appalled by the majority of the comments. Government exists for the people, and that includes the farmers and their organizations, industry (which, contrary to populist perspective, is made up of people who eat food), and the people within the regulating agencies themselves. If we don't want government listening to and risking becoming captive to organizations outside the government, then we don't want these agencies listening to, in this case, the opponents of GMO's. We have invested enormous authority and power in the government and it for that very reason that there are so many people laboring to influence the government.

    There are no one-sided coins -- if you want regulatory agencies to control labeling and the very way that food is produced and marketed, then you will have powerful organizations working to influence those agencies. The real world is real -- not the way people want it to be.
    • Lionel Gambill
    • member, Kauai Alliance for Peace and Social Justice
    When Syngenta, DuPont Pioneer, and Agrigenetics filed their lawsuit against Kauai on January 11th one of their arguments against Ordinance 960 was that their seed production activities "could not have proceeded without exhaustive review of the potential health, safety and environmental risks." I am writing a rebuttal of plaintiff's claims and look forward to working with both The Center for Food Safety and Earthjustice. I came across this article while pursuing information about regulatory capture of USDA by biotech corporations.