The House Subcommittee Studying the Movement of Personnel Between Regulating Bodies and Regulated Industry was established pursuant to House Resolution No. 38 of the 1977 session of the General Assembly. Delegate Gerald L. Baliles of Richmond was chief patron of this resolution.

At the time of the resolution's introduction Delegate Baliles pointed out that the governmental regulatory process works in an ineffective manner when employees of the regulatory agencies leave those agencies in great numbers and join the industries that the agencies regulate. He held that if great numbers of such people join the regulated industries, the by-product of this would be a reduced vigilance among the regulatory agencies. This would be only natural, under these circumstances, he said, because no employee would want to deliberately antagonize a potential future employer.

Delegate Baliles emphasized that this situation is now a major problem at the federal level. He stressed that he did not know whether this is, in fact, a problem in the Commonwealth's State government. A subcommittee should be founded, he said, that would study the potential problem, determine whether a problem exists; and if such a problem does exist, propose legislation to remedy the problem. This, he indicated, was the reasoning behind the introduction of House Resolution No. 38.