Snyder administration cleaning up state rulebook

The state has too many regulations and it costs too much to comply with them.

That has long been a mantra of business groups. Now Gov. Rick Snyder has adopted the approach for state government as well. His Office of Regulatory Reinvention has been given the daunting task of sifting through all of the several thousand administrative rules promulgated over the past 40 years to determine which ones are, in fact, excessive.

In 2011, the Wall Street Journal reported that the percentage of workers who needed a state license to perform their tasks had risen from below 5 percent in the 1950s to 23 percent by 2008.

On Monday, ORR announced recommendations that include the elimination of licensing requirements for 18 different occupations -- or 17 percent of all the occupations the state regulates. Among the fields recommended for deregulation are landscape architects, interior designers and auctioneers. ORR also is advising the end of a variety of state oversight panels, including the Board of Carnivals & Amusement Rides and the Board of Speech Language Pathology. Such reductions are expected by advocates to benefit businesses and consumers alike.

"Licensed workers earn, on average, 15 percent more than their unlicensed counterparts in other states -- a premium that may be reflected in their prices, according to a study published by the National Bureau of Economic Research," the Wall Street Journal reported.

While various Michigan departments do regularly review their rules, particularly those tied to federal regulations or where there are statutory changes, Snyder’s ORR is undertaking the first deliberate effort to sort through all of Michigan's regulatory rulebook.

As of this writing, the ORR’s website boasted a net total of 363 rules and regulations rescinded in the past year.

“We’ve sort of reached the point where a lot of our work is coming to the fore,” said Steven Hilfinger, director of the Department of Licensing and Regulatory Affairs, which oversees ORR.

The need for that work, he said, is some 40 years of accumulated rules. While there was a boom of rulemaking in the early 1970s as the 1963 Constitution was being implemented, Hilfinger said no particular past administration at fault for the condition of the rules.

“I don’t think it’s so much the age; it’s the accumulation of rules,” Hilfinger said. “All of a sudden you’ve got too much complexity.”

Then things get buried in the books, like a provision for the state Public Service Commission to regulate storage of data on computer punch cards.

"We are very impressed with the depth and breadth of the ORR process and the seriousness of the effort," said Rob Fowler of the Small Business Association of Michigan. "I've heard talk of regulation reform over the years but these guys are serious and determined."

The goal of the seven Advisory Rules Committees was, to an extent, to get at the low-hanging fruit, particularly where Michigan regulations were more stringent than federal requirements. So far, these efforts have met with little resistance.

The Environmental Advisory Rules Committee, for instance, stripped out a substantial number of obsolete rules, where the statutory authority for the rules or the funding for a program had expired.

A highlight of the Insurance and Finance Advisory Rules Committee was rescinding the rules prohibiting use of credit scores in setting insurance rates, which courts had ruled invalid.

And the Workplace Safety Advisory Rules Committee recommended rescinding several rules that were duplicative or where the state really no longer had authority (such as specifications for ladder or welder construction).

“Our MIOSHA people said it was a lot like cleaning out your garage,” Hilfinger said of digging through the rules.

The end result is not only a cleaner administrative code, but one employees are more willing to adhere to, explained Rob Nederhood, head of the Office of Regulatory Reinvention. “One of the biggest challenges as workplace safety people is to get employees to go along,” he said. “If they have to comply with obsolete rules, it causes all the rules to lose credibility.”

Not all changes have advanced without opposition. Lorray Brown, a consumer attorney on the insurance committee, said some consumer protections are being lost, such as the one that required independent insurance agents to provide customers the lowest-cost policy from among the companies they represent.

James Clift, policy director for the Michigan Environmental Council and a member of the environmental committee, said that group had recommended some changes that could put people and the environment at risk.

The one exception to the smooth process of developing recommendations could be the Liquor Control Advisory Rules Committee, where there are indications some of the wholesaling interests have strong objections to what other members are proposing.

What the objections are at this point -- and the nature of any of the discussions -- are being kept under wraps until Snyder has reviewed each report and signed off on the recommendations. The meetings of each committee have been closed.

And that was by design, Hilfinger said. If the meetings had been public, it would “chill innovation, chill looking at things in new ways,” he said.

“People could float ideas. Some would be off the wall; some would be controversial,” he said about the closed sessions.

“Part of the whole philosophy was to make sure we had the regulators and the regulated community in the room at the same time to make sure we come out with something realistic,” Hilfinger said.

What has not changed, at least so far, is the process once the committees make their recommendations. Hilfinger said the department and the ORR are looking at the rules process itself, but have not so far made recommendations for changes to the Administrative Procedures Act.

“We don’t want the rulemaking process to be so intimidating or expensive that departments are hesitant to clean up old rules or improve rules,” he said.

The process has already been improved some over recent administrations, at least from the executive standpoint.

Departments wanting or needing to make rules changes must gain approval from a central agency, a process begun by former Gov. John Engler. Prior to that, departments could make rules changes at will, without any oversight from a central administrative agency.

Once the idea for the rule is approved, the new language is drafted, and that again is submitted to the central agency (now the ORR) for approval. The approved draft then goes out for public comment.  The final draft is then submitted to the legislative Joint Committee on Administrative Rules for its review, a key change to process also made under Engler.

The Legislature has 15 session days to review a rule, but JCAR has to recommend, and the Legislature pass, a bill to overturn a proposed rule if there are objections. That extended review was part of a negotiation under Gov. Jennifer Granholm to fend off an attempt by the Legislature to insert itself further into the rulemaking process, said Steve Liedel, her legal adviser at the time.

He said the Granholm administration did not conduct a more thorough review of the rules because, with the economy, it was generally more focused on efficiencies. For instance, the Department of Environmental Quality worked on initiatives to reduce the time it took to issue permits. “There would have been a review of rules that would have been barriers to timely issuing of permits,” he said.

While Snyder's Advisory Rule Committees have combed through an extensive catalog of rules, Nederhood said they have only touched about 40 percent of the state’s administrative writings.

And there are other areas to address.

For instance, the ORR is looking now at building codes, or at least the enforcement of them. “Just to see where things stand and whose desk something is on can take two to three calls,” Hilfinger said.

Chris Klaver is a reporter for the Gongwer News Service in Lansing, where he has worked for 20 years. Prior to joining Gongwer, the Michigan State University grad worked for the Grand Traverse Business Journal. 

Editor's note: This story was produced in a collaboration between Bridge Magazine and the Gongwer News Service.