Dealing With the Government

By — on / Conflict Resolution

Adapted from “Negotiating with Regulators,” by Lawrence Susskind (professor, Massachusetts Institute of Technology), first published in the Negotiation newsletter.

When preparing to launch new products, plans, and innovations, an organization often must apply for licenses, permits, and other types of regulatory approvals from government agencies. Thankfully, even the most elaborate application processes allow individual regulators a measure of discretion, a fact that gives you multiple opportunities to negotiate with regulators—and, indeed, even requires that you do so.

As in any negotiation context, it helps to put yourself in the other guy’s shoes. When negotiating with a regulator, think like one. Here are four beliefs that most regulators share.

First, regulators assume they can do a good job only if they follow the letter of the law and treat everyone with a similar problem in exactly the same manner. If you are seeking state approval for a new building technology that has already been turned down (when a competitor sought approval), don’t expect the same agency to accept your application. You’ll need to propose something sufficiently different so that the previous decision doesn’t apply.

Second, regulators assume that they will have to account for the decisions they make, as well as the reasons they made them. As a result, they are likely to treat every decision as if it sets a precedent. They will also be careful to create a paper trail that can be used to justify their actions.

Third, regulators assume that most applicants will try to cut corners to save time and money. This forces them to be on the lookout for applicants who skimp on supporting information or who fail to adequately answer required questions. It would be a mistake to try to minimize the burden on regulators by limiting the information you submit.

Fourth, regulators tend to be much less concerned about the net benefits associated with a specific proposal or project than with the extent to which you’re following rules, procedures, and standards. From a regulator’s standpoint, even small risks to the public loom larger than potential gains for proponents or the broader community.

To illustrate, suppose that a chemical company asks state environmental regulators for permission to install a cleaner, “greener” waste-treatment technology. The company argues that, if all goes well, the new equipment will substantially exceed the minimum environmental standards required by law and at lower costs than prevailing technologies. Regulators are likely to balk at this proposal, noting that the new technologies are not fully covered by published standards. If the technologies fail to perform, the regulators will be singled out for blame.

In response, the company might request contingent approval for a trial run of the new technology, with environmental organizations overseeing and evaluating the test results. Benchmarks would assess whether results exceed current regulations and meet minimum safety requirements. When regulators learn that activist groups are involved in the proposal and that the trial run will not set a precedent, they may be willing to go along with the plan.

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