Wednesday, January 19, 2011

Clarity In The Law Is A Good Thing

During my time as a safety and health attorney, I often pitied the poor fool  who started a business and had to learn how to comply with the thousands of state and federal regulations applicable to that business.  My colleagues and I were often the teachers in that learning process, and we had a front row seat to the frustration, anger, and bewilderment that business owners experienced when subjected to inconsistent regulation by the same or different agencies.  If President Barack Obama's order for a government-wide review of existing rules brings clarity to the system currently in place, that action should be lauded as long overdue.

In Toward a 21st-Century Regulatory System (Wall Street Journal 1/18/11), Obama states: "This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth."  Critics complain that the goal of protecting safety, health, and the environment is inconsistent with the goal of promoting economic growth.  The critics are wrong.

Under the current system, the largest obstacle to economic growth is uncertainty.  Uncertainty leads to protracted litigation.  Litigation leads to a waste of time and resources that could be more profitably used in the business.  Waste results in slower growth of the individual company and, by extension, the economy as a whole.

In the regulatory arena, there are two general types of litigation.  The first is cut and dried: was there a violation, and if there was, what is the fine or other punishment.  This type of litigation is possible only when everything is certain: the agency that has jurisdiction over the business, the regulation(s) to be cited, the specific requirements of the regulation(s).

If any of those three elements is ambiguous in any way, you get into the second type: appellate litigation to determine the intent of Congress in passing a law, or the correctness of an agency's interpretation of the law or a regulation, or which agency's regulations apply to the business at issue.  While this type of litigation usually starts at the administrative law judge level, it can proceed up to the United States Circuit Court of Appeals level, and eventually to the Supreme Court.

 The vast majority of business owners I represented over the years viewed litigation as a waste of time.  Consequently, they tried to understand and comply with regulations and worked hard to pass inspections.  They also really cared about their workers' safety.  Of course, the events at the Upper Big Branch Mine demonstrate that not all owners fall into this category.  For the most part, however, companies would rather just comply with the law than get involved in legal wranglings with agency personnel and lawyers.

But regulations are not always the epitome of clarity.  A good portion of any health and safety or environmental lawyer's time is spent trying to discern the intent of Congress and whether an agency's regulations fulfill that intent or overstep the agency's bounds.  Another good portion is spent examining regulatory requirements and determining the actions or procedures necessary to be in compliance.

If President Obama's regulatory weed pulling helps companies more readily understand and comply with safety and environmental laws, his order promises to eradicate a powerful disincentive to entrepreneurship.  This alone will go far in promoting economic growth.

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