An Activist Approach To Dealing With Regulators

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At the other extreme, employees are quick to pick up on an uncaring attitude. I know of one recent situation in which we had to lay off some employees and demote others, and perhaps didn't handle the situation as smoothly and caringly as we might have. Not long thereafter, we were reported to the local U.S. Department of Labor office for inadequate maintenance of our forklift trucks. I am certain that one of the demoted employees was the culprit. When he became resentful toward the company, he also became a regulatory risk. In that instance, a little more paternalism might have saved us some grief.

* Don't accept others' risks.

In today's insurance market, you may be assuming someone else's risk any time your company accepts a delivery or visitor. That company delivering potentially explosive oxygen cylinders may not be sufficiently insured. Similarly, the driver delivering spare parts with his personal van may be covered for damage to the car only and not for damages to your facility or for workers' compensation to pay for time lost when he fractures his ankle jumping from your loading dock.

Secondary liability -- paying for an uninsured party's loss -- is a real possibility in today's litigious society. The only way to guard against getting stuck is to check on the coverage of all trucks and vans coming onto your company's property for business purposes.

People entering our facilities to perform any kind of service must show commercial general liability, auto liability, and workers' compensation coverage, along with specialized coverage, depending on the vendor. Thus, a welder working on the customers' equipment we are warehousing must have a certificate showing adequate coverage for workers' compensation for that employee. In addition, we have the welder's employer sign an agreement, endorsed by his insurance company, that in the event of an accident or injury, the employer holds Turner Bros. harmless. We keep records of everyone who comes onto our property for deliveries or repair work, and we enter the data into our computers.

Of course, such policies are only as effective as the people who enforce them. Employees must be trained to folow through on such tedious and seemingly arbitrary procedures. It's easy for an employee to overlook the procedure when a truck driver wants just to change a tire in your company's yard. You have to explain to employees the ramifications of an oversight in this area of operations, so that they take the trouble to comply.

* Be prepared to play hardball.

Any activist will tell you that there are times when flexibility, negotiation, and positive thinking just don't work: sometimes you have to stand up and fight. That's the way it is in today's world of regulation. And it's important that the regulators know you're prepared to be pushed only so far.

Turner Bros. is currently involved in a case that has demanded a tougher approach than we would like. A property owner adjoining one of our facilities complained to the EPA that contaminated storm water was being discharged from one of our facilities. We approached the EPA and offered to put together a plan to remedy the problem. The EPA agreed, and I prepared a plan to determine the extent of the problem, with the intent of getting rid of any contamination that might exist. An EPA official agreed orally to the plan. Unfortunately, the official moved to another position, and a month later we got a letter from the EPA's legal department saying that we were being charged with contaminating the environment.

We tried some more of the "good old boy" approach, but the more we offered to do, the more the EPA officials wanted from us. For instance, we offered to do soil tests for contaminants. The EPA suggested more extensive tests, which are considerably more expensive than what we proposed. We didn't see the need to do extensive tests if our soil samples demonstrated that the problem was only a surface one.

We calculated that to do everything the EPA wanted would cost somewhere in the neighborhood of $900,000. Our company has $10 million of revenues and is currently operating at a loss because of the depressed domestic oil industry. Nine-hundred thousand dollars is a lot for us to spend on a problem that we believe can be remedied for much less. And we are not exactly a major contaminator, after all.

So we decided to start playing hardball. We hired the best attorneys and consultants available to make our case and put together a reasonable alternate plan. That was when the EPA attorney complained to the Federal Administrative Law Judge that Turner Bros. was "attempting to obscure the issues by inundating Your Honor with paper." We could not help but be amused by this sudden reversal of roles.

Right now, we feel we can clean up the facility for $250,000. We're hoping the regulators will become more reasonable.

I know that many executives of smaller companies will look askance at my activist approach to regulation. They no doubt think I'm slightly crazy for using it at Turner Bros. Why bother to spend so much time dealing with regulators before any problems have arisen? Why draw their attention to your company by getting involved in volunteer state programs?

The reason is survival. As frustrating as the current regulatory environment may be for companies like Turner Bros., we realize that many of the laws we fret over have positive long-term benefits to a society intent on maintaining a balance between the common good and the profit motive. Fighting those laws is an exercise in futility. Ignoring them is a game of Russian roulette. An activist approach, we believe, is the only strategy that offers the promise of dealing with regulation in a cost-effective way.

I admit that I have changed since may days as a dead-serious, optimistic liberal in the 1960s. Back then, my fellow activists and I believed that you could solve almost any problem with persistence and money. More mellow now, I am convinced that peace is hard to achieve, that poverty has a momentum of its own, that justice is elusive and fraught with inconsistency. Government may be able to bring a little truth, righteousness, and justice to the world, but one thing seems crystal clear to me: that will only happen with help from business.'

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