Article by Erik Smith. Published on Tuesday, October 18, 2011 EST.

Plenty of Exceptions, but Business Says it’s Still Refreshing

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Oct. 17.—Last November, Gov. Christine Gregoire declared a moratorium on new regulation and stunned Washington’s business community. Late last week she did it again, and while the announcement didn’t carry the same shock value, there were plenty of thank-yous and appreciative murmurs from those at the state’s business associations.

            So far state agencies under the governor’s control have put 436 new rules on hold, about half of what they had proposed. The remainder fell under a lengthy list of exemptions, among them rules necessary for public, health and safety, and those mandated by laws, court orders or the state’s own desperate budget situation.

            With the economy in the tank, the state can’t afford big new initiatives, and businesses can’t afford to comply with them, Gregoire said. “It’s clear from the state of our economy that the timing isn’t right to end the moratorium,” the governor said in a statement. “Giving small businesses and local government more time to devote their full attention creating jobs, and helping communities will help support the economy.”

            The announcement might not have attracted a ripple of attention. But it was a rare acknowledgement, for the second year in a row, that regulation by state agencies can carry huge costs.

            Plenty of Exceptions

            The new executive order extends the moratorium on new rulemaking until Dec. 31, 2012. Agencies are supposed to review all rules in progress and determine which ones can be put off at least a year. And wherever they can, they are supposed to “redirect scarce resources away from rulemaking to front-line service delivery,” according to a memo from the state Office of Financial Management.

            The list of exceptions, just like last year, is big enough to drive a truck through. Last year sweeping environmental initiatives from the state Department of Ecology made it through under one or another of the many exemptions – things like greenhouse-gas regulation, air pollution rules, and a moratorium on new wells in the Kittitas Valley. And the state Building Code Council moved forward with a controversial new set of energy efficiency standards that can add as much as $15,000 to the cost of a new house, because those rules had already been published in the state register.

            State agencies say that about half of the rules they adopted this year were required by state and federal law. Another major exception is provided for rules requested and negotiated by the parties that will be affected.

            The Thought That Counts

            By the end of the year, state agencies are supposed to issue a report detailing precisely which rules were blocked. But for now, prominent folk in the state’s business community are saying it’s the thought that counts. Gary Chandler, government affairs director at the Association of Washington Business, called it an important recognition of the costs of regulation. “We’re glad to see the governor do it,” he said. “I think she realizes that with the way the economy is right now, anything we can do to avoid writing new rules that make it harder for business to operate, the better off we are.”

            Patrick Connor, director of the Washington chapter for the National Federation of Independent Business, said it’s a nice move, and it’s too bad the same thought isn’t going into other state initiatives. “This doesn’t solve some of the bigger problems that small business faces, and the rules moratorium will help with some issues, but it won’t stop the minimum wage increase, it won’t stop the Labor and Industries rate hike, and it is not going to impact any changes to unemployment insurance costs.”

            Doesn’t Go Far Enough

            State Rep. Ed Orcutt, R-Kalama, who first proposed the rules moratorium in a bill last year, said the only problem with the executive order is that it doesn’t go far enough. Why one year? How about two?

            “If you go for just one year, it doesn’t give employers regulatory certainty, because a lot of them want to plan on a longer-term horizon than just one year. If we want to give them true regulatory certainty, we need the moratorium to last more than a year.”

            His measure would have extended the moratorium until 2014, or until the economy improves. He noted that there are the equivalent of 43 full-time rule-writers in the Department of Ecology, all of them ready, willing and able to start regulating away the moment they get the green light. That’s a little spooky, he says.

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