HomestoryCorporateering Campaign › Governor's crusade against business rules has found no villains

News Story

Governor's crusade against business rules has found no villains

Contra Costa Times (California)

SACRAMENTO -- When Arnold Schwarzenegger took office, he vowed to whack away at a tangle of California regulations he blamed for choking the frail state economy.

In one of his first acts as governor, Schwarzenegger put an immediate six-month freeze on hundreds of pending rules and directed his staff to get rid of anything that was putting a crimp on business.

Consumer groups braced for the worst. They expected the Republican governor to take aim at hard-fought protections for everything from the environment to consumers.

Instead, during his first year in office, Schwarzenegger embraced the kinds of rules he railed against during the campaign.

After perusing scores of regulations, Schwarzenegger's administration gave the green light to higher fees on businesses and new fire-safety regulations for mattresses. It OK'd pioneering water-conservation standards for washing machines opposed by manufacturers and noise-reduction rules that drew the ire of off-road enthusiasts. It cleared the way for higher fees on farmers and endorsed tougher safety rules for construction workers.

A Times Sacramento Bureau review of more than 150 frozen regulations found none the Schwarzenegger administration killed.

"This myth that agencies are sitting around creating gratuitous red tape to hamper or hamstring business is ridiculous," said Robert Fellmeth, director of the Center for Public Interest Law and editor of the California Regulatory Law Reporter. "That's not what they're doing."

Administration officials said the decisions to allow the regulations to take effect should not be seen as undermining the governor's commitment to improving California's business climate.

"Reform of the state business climate is a multipronged, multifront effort, and this governor has launched a campaign to reform it across the board," said Schwarzenegger spokesman Vince Sollitto. "The executive order was the beginning step in an ongoing campaign that is still far from complete."

That's what worries consumer activists. Although they breathed a sigh of relief after last year's review process, they now are sounding alarms about new efforts to water down consumer-protection rules.

In the past three months, the administration has delayed regulations that would increase the number of nurses in California hospitals, tried to use emergency procedures to change lunch break rules for workers and prodded the Public Utilities Commission to shelve consumer rights protections for cell phone users.

"Last year they were looking for an easy, almost apolitical, way to kill regulations and what they found was that they were basically being done right," said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica advocacy group. "Now the governor is hellbent on destroying consumer protections in California, and he's going at it with guns blazing."

Politicians across the nation -- from city halls to the White House -- routinely throw red meat to voters by attacking the evils of bureaucracy and regulation. Schwarzenegger was no exception.

During the 2003 recall, the Republican actor lampooned government regulations and accused Gov. Gray Davis of imposing unconscionable rules that had stifled California businesses.

As soon as he took office, he issued an executive order that blasted the "onerous impact of overregulation on the daily lives of Californians" and directed aides to scour every department and agency for pending rules that were hurting the economy.

In addition, anyone who wanted to keep any of them had to come up with a good reason and clear it with then-Finance Director Donna Arduin, a conservative number cruncher with no love for government bureaucracy.

Time and again, Arduin and her staff cleared the regulations, even when business groups were doing their best to derail them.

One of the first major showdowns took place over lawn mowers. When Schwarzenegger took office, California regulators were crafting rules designed to cut down on pollution spewing from gas-powered grass trimmers.

Opponents vociferously argued that the required new clean-air device could easily shoot out sparks and increase the danger of wildfire. Schwarzenegger refused to step in and allowed the anti-pollution standards to move ahead.

When the industry took its case to Washington and sought to strip California of its ability to impose the measures, Schwarzenegger angrily fought back. The Republican governor called his closest allies in Washington and joined with Democratic U.S. Sen. Dianne Feinstein to successfully fight the attempt to restrict California's authority.

Industry attorneys were dismayed. "The final regulations, I think, would have been exactly the same had that executive order never been issued," said William Guerry Jr., an attorney for the Outdoor Power Equipment Institute, which led the fight against the rules. "It wasn't very satisfying."

One of the few times Arduin or her staff threw up a roadblock in the regulatory process came in the battle over washing machines. But, even then, the administration ultimately allowed tough rules to take effect.

Initially, the administration rejected a request from the Air Resources Board to press ahead with first-in-the-nation standards limiting the amount of water and power home washing machines could use.

The air board slowed down the rule-writing process but made no significant changes. Over the continued objections of the industry, the administration and board approved the landmark water-saving standards, which are now awaiting a federal waiver before taking effect.

In agency after agency, top Schwarzenegger aides asked for and received clearance from the governor's finance team to press forward with regulations proposed by their Democratic predecessors working for Davis.

Schwarzenegger's then-EPA Secretary Terry Tamminen got the OK to impose new pesticide fees on thousands of farmers. The Department of Parks and Recreation brushed aside complaints from off-roaders and imposed new noise regulations on ATVs. Regulators at the Air Resources Board got approval to collect fees from paint manufacturers. The Occupational Safety and Health Standards Board was cleared to adopt enhanced safety rules for workers in warehouses and
construction sites.

The Bureau of Home Furnishings and Thermal Insulation got the go-ahead to enact new fire safety standards for mattresses that had been the subject of tortuous but successful negotiations between regulators and the industry.

When the regulation was temporarily frozen, mattress manufacturers actually urged the Schwarzenegger administration to adopt them.

"More often than not, the regulatory process comes out with something people can begrudgingly live with," said Gene Erbin, a Sacramento attorney who represented the mattress industry and worked to ensure the industry could work with the rules. "The process worked as designed in this case."

Fellmeth, head of the Center for Public Interest Law, said the entire process underscores the notion that the much-maligned regulatory process, while not perfect, is not the devil incarnate portrayed by its critics.

Like Erbin, Fellmeth said business groups usually have advocates on the regulatory boards who are able to work out a happy compromise, despite public perceptions.

"Most rules, believe it or not, are supported by industry because industry is in control of most of these agencies," he said.
---------------
THE INVESTIGATION

Hours after he took office Nov. 17, 2003, Gov. Arnold Schwarzenegger signed an executive order placing a six-month freeze on proposed regulations being drafted by state agencies, departments, boards and commissions.

State officials were ordered to review every proposed regulation and reassess effects to the state business climate. If the officials wanted to press ahead with the rules, they had to ask the Department of Finance for an exemption from the freeze.

Every state agency was ordered to file a comprehensive report detailing all the regulations written or revised under Democratic Gov. Gray Davis. Although the Schwarzenegger administration had no unilateral power to kill existing regulations, the review provided the new governor with an overview of rules, some of which he is now working to dilute.

Using state public records laws, the Times Sacramento Bureau reviewed all 158 exemption requests filed with the Finance Department, along with boxes of reports prepared by state officials in response to the executive order.

Of the 158, only five were temporarily halted, and all were eventually allowed to move through the rule-making process.

APPROVED REGULATIONS

Arnold Schwarzenegger railed against government regulations during the 2003 recall campaign, but his administration approved more than 150 pending rules after he took office. Here are some examples.

MATTRESSES: The Bureau of Home Furnishings and Thermal Insulation received permission to adopt landmark mattress flammability standards. Although they had looked down on the new rules, industry officials worked with state regulators on a compromise acceptable to both sides.

WASHING MACHINES: The California Energy Commission was given the OK to approve first-in-the-nation water- and energy-saving washing machine regulations. Although immediate approval of the rules was rejected, the administration ultimately gave the commission authority to finalize rules that mpose higher standards on home washing machines.

LAWN MOWERS: The California Air Resources Board got approval to adopt new anti-pollution rules for lawn mowers and other garden equipment. The industry argued unsuccessfully that the required anti-smog device would send out dangerous sparks that would increase fire danger.

FOOD AND LODGING: The Employment Development Department was cleared to adopt higher reimbursement rates for food and lodging provided to food service workers, fishermen, apartment managers and various other small businesses. The regulations were expected to cost nearly 300,000 California businesses an extra $7 million a year, according to the department.

PESTICIDES: The Department of Pesticide Regulation got the green light to raise fees on pesticides to fund monitoring and worker protection programs. The cost to manufacturers of registering or renewing a pesticide increased from $200 a year to $700. The department raised the fee on pesticide sales from 1.7 cents of every dollar to 2.1 cents. It also imposed a series of new fees on the industry.

METHYL BROMIDE: The Department of Pesticide Regulation got approval to limit use of methyl bromide near schools. Use of the pesticide has long been an issue for farmworkers and children living in rural areas. The rules were expected to cost about 2,000 businesses an additional $540,000 a year, according to the department.

WATER QUALITY: The State Water Resources Control Board received permission to collect $4.4 million in new fees from property owners, cities, counties and others to fund state water quality control programs.

TIRE DISPOSAL: The Integrated Waste Management Board was given the go-ahead to adopt new fines on companies and individuals that improperly dispose of used tires.

OFF-ROAD VEHICLES: The State Department of Parks and Recreation adopted new regulations limiting noise from all-terrain vehicles used on state land. Off-road enthusiasts vociferously opposed the changes.

FISHING: The Department of Fish and Game was given the OK to shut down the state groundfish and whitefish seasons as required by federal law. The decision affected more than 400 commercial fisherman in California.
--------------
Reach Dion Nissenbaum at dnissenbaum@mercurynews.com