Overregulation limits growth, companies say - Time needed for approvals often more damaging than extra costs

Originally published Sunday, January 5, 2003
Ron Cooper/Statesman Journal
The Olympian

CHRIS CLOUGH, AND SHAWNA ROREM THE OLYMPIAN; STATESMAN JOURNAL Washington and Oregon businesses face regulations on their size, scope and location intended to protect taxpayers and the unique environment that is part of the Northwest's attraction.
But some think the regulations go too far. Others say it's the regulatory process, rather than the regulations, that needs to be streamlined.

"We couldn't agree more, and the Competitiveness Council was very strong on this, that part of the high quality of life here is the environment," said Bob Watt, vice president of government and community relations for Boeing's commercial airplane division. "But there's protection, and then there's overregulation."

Watt, who served as Seattle deputy mayor under Norm Rice, said the region's largest city is an example of a well-intentioned system gone awry.

"The regulations I know best are Seattle's. I don't believe that at any time in the last 20 years has anybody done a complete revision of the building codes. Therefore, we have layer upon layer of regulations, some of them contradictory, making it nearly impossible for the people that have to administer these things. It's a nightmare."

George Puentes said overregulation is a problem at both the state and local level.

Puentes, owner of Puentes Brothers/Don Pancho Mexican Foods in Salem, said "system development charges" -- fees to pay for roads, sewers and parks -- on his company's new plant already exceed $100,000.

Puentes, who specializes in tortillas, sells his products throughout the Northwest and has a plant in Yakima.

"We're building a bigger plant to expand our business and employ more people," he said.

"But everywhere we turn, we're being hit with these fees. The attitude of the businesses having the deep pockets has to change."

J.L. Wilson, Oregon director of the National Federation of Independent Business, agrees.

He named several examples of businesses burdened by what he says are unfair regulations, including his family's own radio station in Grants Pass.

"The work we did on our radio station was a huge pain," he said.

"There were fees and permits, issues about access. Nothing came easily; it was all like slogging through mud."

Separate from the balance -- or what some would say conflict -- between business and environmental interests, there is the process of regulation that some businesses bemoan.

"It's not necessarily the money that is involved in going through the regulatory process, though that can be a real burden. It's time," said Kriss Sjoblom, vice president for research at the Washington Research Council. "Businesses have to move quickly. It's possible to speed up the regulatory process without degrading the quality of the decisions that are being made."

How fees are collected is a point of contention as well.

Businesses often have to bear the cost up front, as with impact fees that are collected before a house is built. That forces the builder to have more capital in hand before a project starts, raising the cost of financing and often forcing the builder to construct more expensive housing.

It's not until the house is sold that the builder recovers the impact fee.

The ramifications extend far beyond the building industry.

"As you drive cost of regulation up, you drive people off shore where there are fewer environmental restrictions, fewer labor restrictions, fewer safety restrictions," said Don Brunell, director of the Association of Washington Business. "We have to be pretty prudent on how we regulate because you can regulate yourself into jobs in Singapore, Malaysia, Hong Kong and other places."

Balancing interests

Pragmatic regulation is all about balance: Protect the Northwest environment -- which Alan Mulally, president and chief executive of Boeing Commercial Airplanes, refers to as paradise -- while encouraging a healthy economy.

"There needs to be a complete mind-set turnaround of our regulatory agencies in this state that continue to think business can carry the load of regulation, increased regulation," said Tim Sheldon, a Washington state senator and executive director of the Economic Development Council of Mason County. "There is a limit."

Sheldon and others say a hostile attitude toward business has pervaded governmental agencies in both states for years.

"Business and government need a better relationship," Puentes said. "Even in Portland, they are looking to cut back on regulations. All the governments need to do the same thing."

One of the problems is lack of customer-service mentality on permitting, Watt said.

"If someone in a regulatory position comes at a permit 'how can I help this get done?' rather than 'how can I stop this?' it makes all the difference in the world," he said. "We ought to go through and simplify, as well, but that attitude would help a lot."

Wilson is working to create a business "SWAT" team at government agencies that would make it easier for small businesses to expand and grow, and eventually add more jobs.

"Nothing is ever easy when working with the government," he said. "No one is on time; it's always more complicated than you expect it to be."

The state and cities such as Olympia are taking measures to improve the regulatory process. Gov. Gary Locke appointed Paul Isaki, his chief of staff, to lead an effort to identify ways to streamline the permitting process at the Department of Ecology.

"Improving the system was one of the key recommendations of the Competitiveness Council," Locke said. "The improvements are a very good example of the new day in Ecology, without sacrificing environmental standards."

Brunell said there has been progress, but the state should pursue programs that have worked elsewhere, such as Build Now New York, which have tried to eliminate duplication and make the permitting process more efficient and timely.

Sheila Martin, executive policy adviser to Locke, said the state has looked at using generic environmental impact statements that could clear areas that appear appropriate for development before a specific project is proposed. With the generic statement in hand, it would be easier for the state or cities to lure out-of-state companies.

Finding money for such a program is the primary hurdle, she said.

There are examples of how big-picture planning can be successful. DuPont is home to an Intel plant, a State Farm Insurance regional office and hundreds of new homes.

It was a project developed by Weyerhaeuser and has spread thousands of jobs into the less urban part of Pierce County.

"One of the reasons we selected the site is that it was a master plan community," said David Fisher, Washington site manager at Intel's plant in DuPont, where about 1,500 people are employed, mostly in research and development. "Weyerhaeuser did much of the work including the environmental impact statement before we came on board. Time to market was a huge factor."

Jim Johnson, a venture capitalist and former vice president of Intel, gives an example of what he calls "land-use policies run amok."

Applied Materials, one of Intel's major suppliers, wanted to locate next to Intel in Hillsboro, Ore., but the 100-acre site on which it wanted to build a plant that would create 2,000 new jobs was just outside the urban growth boundary. The company's plans were denied, he said.

The land in question is a strawberry field.

"A strawberry field that doesn't employ anyone, and whose owner wants to sell it," he said.

"We need to aggressively, systematically look at all these issues, and we need to make a decision about how to protect the environment, while still growing the economy," he said.

But what some consider regulatory impediments, others consider careful stewardship of the environment.

"The economy is cyclical," said Sid Friedman, spokesman for 1,000 Friends of Oregon. "If we retain the quality of life, those amenities will enable us to rebound quickly."

All those rules that businesses complain about are what help to keep this state attractive, he said.



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