Investigative
10:20 am
Fri December 10, 2010

Regulatory Changes Coming to Michigan?

Business groups say Michigan’s regulations and the state’s regulators make it more difficult to do business in the state than it needs to be.  During his campaign for governor, businessman Rick Snyder made it clear he agreed with that.

“Our regulatory system is backwards in this state.  Not only the amount of regulation, but how people are being treated.  Lansing is treating us as if we’re bad and should be controlled.  The average person is a good, honest person.  The average organization is trying to succeed.  We should be focused in on the exceptions.”

So… what does Snyder have in mind?  Well, that’s not exactly clear.  The campaign was frustratingly short on specifics, but Snyder said one problem was that businesses had to wait too long for state permits.  Permits are issued for everything from starting a daycare to building a new chemical factory.

“Let’s have short, but reasonable waiting periods.  If the state doesn’t respond, you’re permit should issue.  You should be able to go do your activity.  You should be able to succeed.”

Most permits have a 90-day waiting period, but businesses complain that stretches out to six months, nine months, a year or more.

Some of that delay is partially just the slow grinding of bureaucracy… and partially due --ironically-- to government cutbacks.   Staff in many agencies has been cut.   But…sometimes the delays are caused by the fact companies are asking for permits for highly complicated technology.  Advances in nano-technology and chemical and biological wastes could have consequences to air and water that aren’t clear and need some study before granting a permit.  Environmentalists and others think it’s better to be careful rather than rush a permit to keep a company happy.

Doug Roberts, Junior is Director of Environmental & Energy Policy for the Michigan Chamber of Commerce.  He says it really shouldn’t be framed as a choice between hurting the environment or hurting business.

“You should be able to have that high-quality environment.  We should be able to have the greatest water quality, have great protection of the Great Lakes.  But yet, at the same time, move permits around in a timely fashion.  And when you say that it’s going to get done in 90 days, you get it done in 90 days.”

And as Rick Snyder suggested… if you don’t get a response from regulators, you automatically get the permit.

That’s been tried in other states.  Pennsylvania regulators once had to approve  permits in 90 days or else it was automatically assumed to be approved.  Barry Rabe is a professor of public policy and the environment at the University of Michigan.  He says regulators knew in some cases they just didn’t have the time to adequately review permit applications…

“That put an enormous workload pressure on people working in those departments to perhaps in some cases not make any decision at all, not make any evaluation, to rubbers-tamp.  And so, invariably when we’re talking about risk and health safety, environmental safety, it’s not just each and every case, but trying to avoid that case where a real problem does appear.”

And missing something… could lead to a whole lot of problems for the people of Michigan:  environmental disasters, neglected kids, neglected nursing home patients, utilities gouging customers, unsafe buildings.

That’s not going to happen everywhere.  As Governor-elect Snyder says most of the companies are honest.  Most have good records.

And pro-business interests say there’s too much regulation on them.   At the Mackinac Center for Public Policy, Russ Harding has put together a plan to reduce some of the regulatory burden on business.  In it he suggests federal rules are already pretty tough.  Any state rule which goes beyond federal regulations should not be left to the state’s regulators to decide.

“What you end up with is some state employee in a cubicle writing a regulation in their particular narrow interest without the broader view, without a concer about what the cost of that might be, what the unintended consequences might be.  And I think that we need to have accountability and the way we have accountability is to vote for people.”

In other words… anything beyond federal regulations should go to the state legislature for a vote.  That’s something Doug Roberts, Junior at the Michigan Chamber of Commerce likes.

“Certainly there may be cases where it might be right that Michigan has a more stringent water standard, for example, and you know we are the Great Lakes state and we ought to have protection of the Great Lakes.  But on those cases where we make that evaluation we really believe that that ought to be a legislative decision as opposed to what we have today where it’s often state agencies that are promulgating through rules these standards than federal that make us uncompetitive with our neighboring states.”

But… we’ve got a term limited legislature.  Most of them haven’t been on the job long enough to know why the rules are needed.  While the regulators, those people in the cubicles, have been educated, trained and many have decades of experience. 

Environmentalists say the bureaucrats aren’t coming up with these rules just to make it hard to do business in Michigan.  Lisa Wozniak is with the Michigan League of Conservation Voters.  She says she’s concerned the legislators just won’t get it or will be hoodwinked by lobbyists.

“We have a legislature that is extraordinarily new and I would argue has very little understanding of the history that comes before them in terms of protecting these natural resources and it is the fine people who have worked long and hard in Lansing that actually know more about this than those we’ve just elected on November 2nd.”

There is another way.  Governor-elect Snyder has indicated state government could work more like a customer-based service rather than have an adversarial relationship with business.  There’s an approach like that that’s worked well in some other states.  Again… Barry Rabe with the University of Michigan.

“Can you actually offer to firms a bargain that says in effect we’re prepared to be flexible on how you comply with all of these requirements as you comply at a level at or above what would be required under other circumstances.”

That approach has worked in states such as Wisconsin and Minnesota.

In New Jersey, the governor issued an executive order that required all agencies to coordinate their rules, eliminate contradictory requirements, work with companies to let them come up with their own ways to comply with regulations as long as the met or exceeded them.  He called it a common sense approach that saved time, saved the state money and saved businesses money.  But Barry Rabe says the legislature has to avoid tying the hands of the regulators with overly-explicit legislation which is a growing trend.

“To do that, you need to be able to give people working in those agencies some flexibility, some latitude.  Streamlining, negotiation, flexibility… that could potentially be the sweet spot of some of this activity although it’s much, much to early to know which direction Michigan is going to go on this one.”

Special interest groups and lobbyists are honing their arguments… hoping Governor Snyder finds a way to encourage business and bring home jobs… without losing the quality of life and protections the people of Michigan expect.