Utah’s regulatory ‘sandbox’ is more like a black box, Robert Gehrke writes

Details about companies seeking regulatory waivers are private, agency input is confidential and advisory committee meetings are closed.

(Francisco Kjolseth | The Salt Lake Tribune) Robert Gehrke.

Last year, Utah received national attention when it passed a first-of-its-kind “regulatory sandbox,” enabling businesses with new ideas to petition for waivers from state regulations that might hamper getting their innovations to market.

But critics of the program say the sandbox is more like a black box — a flaw of the program I highlighted when the legislation was signed into law.

To find out what had been going on in the regulatory sandbox, two weeks ago I filed an open-records request to the Governor’s Office of Economic Opportunity and last week received a letter that records either didn’t exist or were exempt from public disclosure.

Thus far, despite the fanfare, almost no businesses have sought to play in the sandbox.

Just two companies have sought waivers of state regulations and neither has yet been approved, wrote Dane Ishihara, the director of the Office of Regulatory Relief, in response to my letter. But nothing about the companies or the relief they are seeking is accessible to the public.

Applications submitted by the companies are explicitly exempt from public disclosure in order to protect proprietary information and trade secrets.

After an application is submitted, the state agencies tasked with oversight are given an opportunity to provide feedback on the requested waivers. Those agency reviews, Ishihara wrote, are also not available to the public.

The Regulatory Relief Advisory Commission, an appointed board that reviews the departmental input and recommends whether to approve or deny the request, is expressly exempt from Utah’s Open Public Meetings Act, meaning agendas and minutes cannot be disclosed, according to Ishihara.

I plan to appeal the denial but with the current interpretation, the first chance you or I will get to find out what regulations might be waived and for which companies will be after Ishihara executes a written agreement with the companies.

That doesn’t sit well with the leaders of the Utah Land Title Association, which recently sent a letter to Gov. Spencer Cox expressing concerns about a waiver it says — based on information from the director of GOEO, Dan Hemmert — is being considered for Homie Title.

Three years ago, the Legislature brokered a deal to resolve a bitter fight between real estate brokerages, which wanted to move into the title business, and the title companies who wanted to protect their turf.

The agreement lets real estate agencies set up a title company, but only 70% of the title company business can come from the affiliated brokerage.

I know, it’s convoluted, but the point is that now Homie is trying to use the sandbox to get a waiver from that rule, according to the letter from Justin Sutherland, president of the Utah Land Title Association, and Cort Ashton, the group’s legislative chairman.

The association contends that there is nothing new or innovative about what Homie does, that the waiver exemption would violate the deal made three years ago and the sandbox committee is operating in secret.

“We find the lack of accountability and access to information shocking,” Sutherland and Ashton wrote. “It is called a ‘Sandbox,’ not a ‘Black Box.’ We can think of no state government sphere in which this ‘Black Box’ approach would be tolerated.

They’re right. Because whether or not there is merit to Homie’s application (and right now there’s no way for us to know), government regulations should be designed to protect and serve the public interest and, therefore, need to be done with the public in mind and with public input.

There may be a chance to add some daylight to the process. On Monday, the House approved House Bill 243, sponsored by Rep. Cory. Maloy, that would require meetings of the Regulatory Relief Advisory Commission to be public — unless closing the meeting is necessary to protect proprietary information.

It’s a first step, but an important one. Because if we don’t know which companies are seeking waivers and why, there’s no way for us to know if our interests are still being protected or if the sandbox is being turned into a litter box for ambitious corporations.