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February 2, 2015 Rule of Law

Is the rule of law at risk in CT?

John Horak

The rule of law is a principle taught in high school civics because it is important for many reasons, not the least of which is that commerce is impossible in its absence. Anyone who invests in a business will want to understand the applicable law, and be confident it will be enforced fairly.

The nexus between the rule of law and business was brought home to me years ago when, fresh out of law school, I overheard a remark about parts of the world where obtaining legal approvals was as simple as losing all 18 holes of a high-stakes golf game with “the general.” Investors sleep better when the general is subject to the law, and not the other way around.

Connecticut, of course, has a General Assembly and not a general. Nevertheless, in light of the state's anxiety with its “unfriendly to business” stigma, it is reasonable to ask if inadequate adherence to the rule of law may be the root of the problem.

Readers may scoff at the temerity of raising this question in, of all places, the Constitution State. However, I prefer the wisdom in the adage about listening to whispers before they become roars, and the murmurs I hear suggest a problem: Regulatory agencies are acting outside of the law and getting away with it. In other words, complaints about “excessive business regulation” are not rhetorical and are based on an underlying reality that is deleterious to commerce.

While complaints about excessive regulation are common, the possibility that this phenomenon could inflate sufficiently to weaken the bonds of the law didn't occur to me until reading “Is Administrative Law Unlawful,” by Columbia University Law School professor Philip Hamburger. While the book addresses federal regulation, its reasoning fits comfortably within our borders — so let me summarize the reasoning and then provide as an example a duel between a small junk yard and the Department of Energy and Environmental Protection (DEEP).

Government is divided into three branches to establish a system of “checks and balances “ on power: the legislative power (to make the law) resides in the legislative branch (the General Assembly); the executive power (to enforce the law) in the executive branch (the governor and the regulatory agencies of which we speak); and the judicial power (to interpret law) in the judicial branch (the courts). It is unlawful for one branch to infringe upon the powers of another. The General Assembly does not decide lawsuits and the courts do not set tax rates.

The field of administrative law evolved to accommodate the emergent practice of assigning to executive branch agencies responsibility for filling in the details of complex legislation (writing policy and regulations), and deciding contested cases arising from enforcement actions (convening administrative hearings).

While there are safeguards designed to prevent an agency's policies from infringing on the statute drafting power of the General Assembly, and its administrative hearings from trumping the powers of the judiciary, the safeguards have not worked. This is a bold claim.

Professor Hamburger suggests that the legislative and judicial branches are too deferential to the executive, while I would add that agencies get away with things because most businesses cannot afford to fight. Nevertheless, the point is that legislative and judicial powers have trickled to these agencies, which brings me to my example.

The junk yard is owned by an elderly couple making a modest living recycling automobile parts, and oil and other fluids occasionally and inevitably leak into the ground. For years, the owners and DEEP went back and forth about permits, discharges and the like, but in 2009 DEEP brought an enforcement action directly to the courts.

DEEP wanted a minimum fine of $400,000, and a “maximum level” remediation of the site with a six figure price tag of its own. After a lengthy trial DEEP won — having proved technical violations of the law.

However, the court found that the owners had not acted intentionally and that there was no proof of a condition requiring the “maximum” level remediation desired by DEEP. Using “equitable” powers that have resided in the judicial branch for centuries, the court imposed a $10,000 fine and ordered compliance with an alternative less costly state environmental program. The court described DEEP's damages and remediation request as “over kill” and “unrealistic.”

Lawyers often celebrate victories with a steak dinner; but because its victory did not include the pound of flesh it wanted, DEEP appealed its own victory to the Supreme Court (now pending), arguing (and here is the point) that the judicial branch (which coincidentally includes the Supreme Court) must subordinate its traditional “equitable” powers to DEEP's demand to remediate the site to the “maximum level” even though DEEP knows there is no money to do this.

So, by not drawing clear lines between the powers of the three branches we have ended up with an emboldened executive branch agency appealing a “victory” and telling the judicial branch what to do; a small business caught in the crossfire between the branches spending on appellate litigation in which it is essentially defending the judicial branch's powers to order compliance with the alternative environmental program; and political anxiety about an anti-business stigma that seems well deserved.

John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. The views expressed are his own.

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