Beware of the Government’s Administrative Process

We’re now ready to take a deeper look at administrative agencies and how they operate. And administrative agencies actually have three functions, they reflect the separation of powers, the executive function, the legislative function, and a judicial function. So the executive function of the administrative agency is to enforce the laws, and here’s a couple of examples involving Twitter and Facebook. There was a FTC, Federal Trade Commission, proceeding involving Twitter, and they reached a settlement. And the cause of this proceeding was that Twitter had a privacy policy, and their policy said, we protect your information from unauthorized access. However, hackers discovered an administrative password and posted phony tweets, in other words, they violated the privacy policy.

For example, one of the tweets was from President Obama offering his 150,000 followers, a chance to win $500 in free gasoline. So FTC filed a complaint and it was settled, and now Twitter must number one, improve its security, and number two it’s on probation for the next 20 years. Another recent example of an agency enforcement involved Facebook. The headline was the FTC settles a privacy issue at Facebook. And Mark Zuckerberg, basically the owner, the head at Facebook, said I’m the first to admit we’ve made a bunch of mistakes. Strangely enough, with both of these proceedings, after the complaints with Twitter and Facebook, this language appeared at the end of a FTC press release announcing the settlement of the cases.

The FTC’s website provides free information and a variety of consumer topics, like the FTC on Facebook and follow us on Twitter. So despite the enforcement actions, the FTC uses Facebook and Twitter. Okay in addition to enforcement laws, the second function of administrative agencies is to legislate. They’re involved in a rule making function, and this function is especially important to business because with this rule making function. You have the possibility of commenting on public proposals. The agencies will publish a proposed rule, and if you don’t like that rule, you can submit a comment, or if you do like the rule, you can submit a comment supporting the role.

So this is called the public comment phase, before the agency finally decides whether to adopt a rule or not. Anyone can comment on a proposed regulations, you can do this right now, if you were to just to try it out, or you have a particular regulations that you are interested in. Let me show you how this website works. If you go to regulations.gov and you hit Advance Search, and then, click Public Submission. And then, type in the name of a company you’re interested in, so I’m just going to select, randomly, Microsoft.

And then, at the bottom, we’ll pick a random comment. The first one by Kevin One which was submitted November 17th, 2015. And he’s commenting on an optional

practical training program, I think that was OPT stands for. For STEM students, Science, Technology, Engineering, and Math students, and he’s talking about why expanding this program is good for the United States and for the US economy. He says first of all he’s from Seattle, and in Seattle, one foreign worker creates nine local jobs in the service sector. Secondly, in the STEM area, there are not enough US graduates to fill job positions. And finally, he talks about diversity and foreign talent of US offices, had been the cutting edge for US businesses. And he mentions the advantage that the US has in important a large number of foreign workers and he sites examples such as Von Neumann.

One of the founders of game theory, Cate Blanchett the actress, Sergei Brin, Jerry Yang, etc., were all foreign born. So here is somebody from Microsoft, commenting on, why expanding the opt for STEM. The optional practical training program for STEM is a good idea. So you could read what companies you’ve commented on or you can also comment yourself. Now take a look at the final Branch of Administrative Agencies work, which is a Judicial Function. In other words they not only Enforce Laws through the Executive Function, and create laws through the Legislative Function, but they also decide on whether you have violated a law.

So in summary, the separation of doctorate and powers does not apply to administrative agencies, and they engage in all three functions of government, which makes them very powerful. And that’s why people feel they touch our lives more than the three main branches of government. If you’re interested here is a video summary of administrative law. This was a summary of the law turned into a song by a friend of mine a professor and I’ll warn you in advance that, that he was not nominated for a Grammy award. Although he doesn’t have a bad voice, but actually he does a fantastic job in giving you a nutshell summary of what administrative law is all about.

So I highly recommend you take a look at this video. And in our next segment then, we’re going to move to risk management, and look at how you can control the risks associated with government regulations.