The ambiguous regulatory environment stagnates business growth and innovation.
What we think:
Rules that govern businesses must be protected from shifting political winds and the uncertainty created by ever-changing policies.
Businesses thrive on certainty — leaders need to know what rules and regulations are coming and which ones are steadfast in order to prepare for the future.
But today’s regulatory environment is anything but certain.
And industries from health care to energy don’t know what the immediate or long-term future looks like, making it impossible to plan.
Andy Spielman, an attorney with WilmerHale and former chairman of Colorado’s Public Utilities Commission, says the biggest concern among businesses in the energy sector is the ambiguous regulatory environment. As the industry was gearing up to meet requirements under the Clean Power Plan, that’s suddenly unnecessary. As oil, gas and coal regulations change, businesses can’t innovate and they can’t plan for equipment or employment needs.
“They don’t know what to do,” he said. “Should they invest in the technology that might be required under the Clean Power Act? Should they wait? Businesses and innovation do not thrive under uncertain environments.”
But it’s not just the energy sector that is facing confusion because of competing political goals. Health insurers are waiting for congressional action to see if they will retain the subsidies promised by the federal government under the Affordable Care Act. And they’ve watched as Congress has tried — and failed — to replace the act with a different set of rules governing health care reimbursement and insurance plans.
And while Congress dithers and the federal government halts implementation of regulations, businesses wait. And if they can’t act, they can’t innovate. They can’t come up with new ways to address old problems.
Spielman pointed out that refrigerators are now 96 percent more efficient than they were 20 years ago. Cars are more fuel-efficient, so are furnaces. And every innovation that led to more energy efficiency was created in response to a regulation.
While no one wants to overburden businesses with unnecessary, one-size-fits-all regulations, the opposite is also true: No one should create the kind of regulatory uncertainty that leads to stagnation and entrenchment. Businesses should know what the regulations are and should be able to plan for the future with the knowledge that regulations won’t change on a political whim.
“Regulations should be well-drafted, clear and stable,” Spielman says.
And he’s right. Changing regulations with changing political tides is not good for business — which means it’s not good for the rest of us.
It’s best when everyone can come to the table, sit down and have a discussion without rancor. He points to regulatory decisions in Colorado — which have since informed policy around the nation — that were created thanks to compromise.
It’s not changing politics that businesses worry about, he says. It’s the pendulum effect.
“Drastic changes have consequences,” he said. “It’s possible to go too far and create vast uncertainty. The lack of concrete promises from administration to administration does create some peril for businesses.”
Businesses don’t want to spend capital based on certain mandates and then find out the capital expense was unnecessary. They don’t want to meet standards today to find out they’ll be changing tomorrow.