Deck 4: Government Regulation of Business

Question 1

Is it ethical for the law to impose liability retroactively? Should government force a person to pay for doing something that was legal and carried no penalty at the time it was done?

Answer 1

Retroactive liability occurs when a law imposes responsibility for acts that took place before enactment of the law.
The following is an example of retroactive liability:
Company Ace made airplane parts in the 1940's and during production chemicals seeped into the ground. Even though the company's actions were legal at the time, because of recently passed environmental laws, the company is now responsible for the ground cleanup.
There are opposing arguments about whether situations like the above example are fair or ethical. On the one hand, it is common sense that if a company created a problem, it should fix the problem. Taxpayers should not have the responsibility. This is particularly true if the company profited from the activity that led to the problem.
On the other hand, retroactive liability appears unfair. It punishes a company for actions that were entirely legal when performed. It also seems unjust to assume a company would realize that its actions, which were reasonable at the time, would eventually cause damage.
Based on the above, imposing retroactive liability is the better course. Companies often have common sense knowledge that their actions, although legal, will cause harm. In other words, a company knowingly causes damage and now they are held accountable.However, in cases where the connection between a company's actions and the harm are more tenuous, retroactive liability should not be applied.

Question 2

Why does government regulate business?

Answer 2

Government regulates business for the following reasons:
• Abolish misconduct: Regulations often help find criminal and unethical activities that hurt honest businesses.
• Curb unreasonable activities: Many industries are regulated because their activities, if something were to go wrong, could have serious detrimental effects.
• Enhance the general quality of life: By setting rules by which all businesses can compete ethically, fairly, and reasonably, the well being of the whole community is improved.

Question 3

By whom are administrative agencies run? How long do these individuals serve?

Answer 3

Administrative agencies can be run by a sole administrator serving at the command of an executive, who can be the governor for state agencies or the president of U.S. for federal agencies. It can also be run by a commission of appointed members.
These individuals can serve the administrative agency for a varied term as per requirements, normally consisting of five years.

Question 4

What is the difference between regulatory and nonregulatory agencies?

Question 5

How does the Office of Foreign Assets Control (OFAC) enforce economic and trade sanctions imposed by the U.S. government?

Question 6

What is the procedure a federal agency must follow to develop a new rule?

Question 7

Why was the Federal Trade Commission (FTC) established?

Question 8

What is the rule of reason approach used by courts in antitrust cases?

Question 9

What is the purpose of the Water Pollution and Control Act?

Question 10

How can a potential buyer of property take steps to help reduce the potential of liability under CERCLA and state Superfund statutes?

Question 11

On whom does CERCLA impose liability for cleanup of waste?