Understanding the Consequences of Doing Business in a Regulated State

by Leonard Lang

What has document destruction got to do with California e-waste regulations? Right now there's nothing. But what if you're in that business in California and a law is passed that affects your ability to serve your customers? What if your vision determines that you are no longer in the document destruction business, but now in the information destruction business? What if a bill to add computers to California's Advanced Recycling Fee (ARF) e-waste recycling program passed?

First some background is needed. In California a law was passed which created the Administrative Procedures Act. Simply, its purpose is to provide procedure to government agencies that create law. This law (APA) also created an agency to oversee other agencies in the performance of creating regulation (OAL). They're supposed to help ensure that the regulations created by other agencies follow certain rules for your protection.

Some of the most important are that the regulations are clear, do not exceed the law's authority, and are not overly burdensome on small business. In theory this is good. But my experience shows that the system is imperfect. Most businesses that come under regulation generally do the same things: They ask the regulating agency what they want, and then work to meet those requirements. They let government train them.

It is not uncommon in my experience to see well intended agencies increase requirements without authority. Authority is important here. Authority only comes from statute or regulation. When they ask for something that is not in either, they break the law. The term for this is called "underground regulation".

If companies want to do it properly, key areas of the business must be trained in the regulatory process. They must know how regulatory agency requirements affect everything they do. Why? Because if something in the regulations is overly burdensome (too restrictive, costly, unclear, ridiculous, or all the above) they need to know what to do. But the job of dealing with regulations usually goes to an accounting type who may say: "Just make sure we get paid and as soon as possible"! So no one reads regulations, researches definitions, audits all the cross references, reads the Statement of Reasons, and the Administrative Procedures Act itself.

So what does document destruction have to do with California e-waste? Nothing unless you're in California, or in a state looking at that model. So what are the consequences of not knowing how to manage in a regulated environment? The consequences are increased costs, loss of revenue, and waste of your most valuable asset, TIME. You will incur inefficiencies and problems you should not. You will struggle to meet customer service requests in a changing world. And if you should be so unfortunate, you may spend an enormous amount of time to resolve citations, fines, and civil penalties.

And, if the Office of Administrative Law doesn't see knowledgeable comments coming from the regulated community, they may mistakenly presume that the regulatory agency understands your business to your satisfaction. Remember, the burden is in the eyes of the beholder. It's like that old commercial, I think it was about changing you car oil regularly, "pay me now or pay me later". The payment is TIME (yours and others in the business)! You either take the time to learn or you lose it when you're not prepared. It's about time! That's one resource that isn't on the balance sheet.

Mr. Lang began working in the recycling industry in 1969. He is experienced in legislative matters and has served on the legislative committee for the Institute of Scrap Recycling Industries (ISRI). Additionally he served on ISRI's E-waste Council which is directs the organization's best management practices. He is an authority on the California Beverage Container Recycling Program and is currently using that experience to direct regulation for the California E-waste Recycling program. He is past president of the Association of California Recycling Industries (ACRI).