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Tue Nov 26 13:51:16 UTC 2013

As Michigan's chief regulator, Steve Arwood oversees policies affecting 10 million residents

Nov. 24, 2013   |

Kimberly P. Mitchell/Detroit Free Press

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Story by Steven R. Reed | srreed at lsj.com

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Steve Arwood, Director of the Michigan state department of licensing and regulatory affairs, says the decision for officials not to show up for hearings

unless $15,000 in benefits are at stake, instead of the state-mandated $3,500, is based on lack of resources and reorganization of the Unemployment Insurance

Agency in the conference room of the Ottawa building in Lansing, Mich. on Wednesday, April 10, 2013. Kimberly P. Mitchell/Detroit Free Press

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Steve Arwood, Director of the Michigan state department of licensing and regulatory affairs, says the decision for officials not to show up for hearings

unless $15,000 in benefits are at stake, instead of the state-mandated $3,500, is based on lack of resources and reorganization of the Unemployment Insurance

Agency in the conference room of the Ottawa building in Lansing, Mich. on Wednesday, April 10, 2013. Kimberly P. Mitchell/Detroit Free Press / Detroit

Free Press

Steve Arwood Timeline

» 1981: graduated from Central Montcalm High School

» 1981-82: attended Montcalm Community College

» 1982-86: studied at James Madison College, Michigan State University, bachelor’s degree spring 1986

» 1986: staff, Sen. Norm Shinkle and clerk, Senate Finance Committee

» 1987: staff aide, Sen. Jack Welborn

» 1987: married Cheryl Ancel

» 1988-90: executive director, Associated Builders and Contractors of Michigan

» 1990-92: state director, National Federation for Independent Business-Michigan

» 1992-94: director, Michigan House Republican programs and policy staff

» 1994-99: Michigan Jobs Commission deputy director, industry and investment relations; president and chairman, Michigan Strategic Fund

» Nov. 24, 1998-March 7, 2007: founding owner, Arwood Group LLC

» July 11, 2001-Oct. 10, 2005: member, Michigan Natural Resources Trust Fund Board

» October 2002-December 2003: helped start up and served as chief operating officer for NextEnergy Center

» 2004: Helped establish and served as executive director, Heart of the Lakes Center for Land Conservation Policy

» October 2005-January 2008: start-up director, treasurer, Michigan Sustainable Energy Coalition

» 2006-08: vice president, Third Planet Wind Power

» March 18, 2008-Dec. 17, 2012: founding owner, Forest Hill LLC

» Oct. 31, 2008–April 2010: founding owner, Forest Hill Energy-Fowler Farms LLC

» April 2010-April 2011: U.S. regional director, Windlab Developments USA

» March 6, 2011: appointed senior deputy director, Department of Licensing & Regulatory Affairs (then Energy, Labor & Economic Growth)

» May 2011: director, Michigan Unemployment Insurance Agency

» November, 2012: acting director, LARA

» Jan. 31, 2013: appointed director, LARA; member, Michigan Strategic Fund and Michigan Emergency Financial Assistance Loan Board

LARA’s big umbrella

Compared with the departments of Transportation, Agriculture, Education, Natural Resources, Environmental Quality and Treasury, the Licensing and Regulatory

Affairs name is cryptic.

Licensing and regulating what, exactly?

The answer has been a moving target thanks to frequent executive branch reorganizations under a series of governors. Whether as Licensing and Regulation,

Consumer and Industry Services or Labor and Economic Growth, LARA has been a catchall.

“It was the place you’d put everything that didn’t fit anywhere else,” said John Truscott, press secretary to former governor and frequent reorganizer John

Engler.

But don’t confuse catchall with unimportant. LARA’s responsibilities probably touch your life if your interests include any of the following:

» Alcoholic beverage manufacture, sales

» Workplace safety

» Business formation and development

» Rate-setting for power, communications and transportation services

» Nursing homes (440)

» Licensed, registered or certified health professionals (400,000)

» Unemployment insurance and compensation

» Worker’s compensation

» Building and construction codes

» Labor disputes

» Securities and investments

» Consumer complaints and fraudulent business practices

» Medical marijuana

» Fire safety

» Wage and hour law

» Services for the blind

» Storage tanks and tanker trucks

» The administrative hearing system, including the Michigan Tax Tribunal

» Licensing and certification programs for hospitals, psychiatric facilities, hospices, freestanding surgical outpatient and rehabilitation facilities

» Portable X-ray machines, ambulatory surgical, dialysis and home-health centers

» Long-term care workforce background checks

» Pain management

» Prescription drug diversion

» Amusement parks and traveling carnivals

» Polygraph examiners

» Vehicle protection product warranties

» Security alarm system contractors

» Private security guards and professional investigators

» Employment agencies

» Barbers and barbershops

» Cosmetology (hair, skin and manicuring services and electrology)

Licensing and Regulatory Affairs

» Employees: 2,745

» 2013-14 budget: $502,918, 700

» Director: Steve Arwood

» Mission: Support business growth and job creation while safeguarding Michigan's citizens through a simple, fair, efficient and transparent regulatory

structure

Source: LARA

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Fiercely determined to bring business efficiencies to state government, Gov. Rick Snyder welcomed Steve Arwood into his administration in early 2011 and

promoted him to be the state’s chief regulatory officer 10 months ago.

Snyder told Arwood to continue reinventing the state’s regulatory system and put him in charge of a massive department with dozens of operations that touch

your wallet, workplace and home.

If you paid a utility bill, bought an alcoholic beverage, lost a job, own almost any kind of business or want to start one, or get your hair cut in barbershops

or styling salons, the director of Licensing and Regulatory Affairs oversees people or policies that affect you.

“It’s the health and safety of 10 million people through everything we regulate,” Arwood, back in state government for the first time since 1998, said of

the responsibilities housed in LARA.

As director, Arwood, 51, has the power to help ease chronic pain for some — or prolong it. LARA can approve or reject the recommendations of a 10-member

panel that considers petitions to add conditions for the legal use of medical marijuana.

Arwood had been in his $151,500 job barely six weeks when he voted, as the newest

of three members on the Local Emergency Loan Board, to approve Kevyn Orr as Detroit’s emergency manager.

Earlier, Arwood had agreed Unemployment Insurance Agency officials would not show up at administrative fraud hearings unless at least $15,000 was at stake

-— even though the Legislature had just lowered the fraud threshold to $3,500.

“He isn’t afraid to tell people what he thinks,” John Truscott, former press secretary to three-term Gov. John Engler and now president of the Truscott

Rossman public relations firm in Lansing, said of Arwood.

“Steve is not a maintenance guy,” said Doug Rothwell, president and CEO of Business Leaders for Michigan and Arwood’s mentor at the Michigan Jobs Commission

during the Engler administration.

“He won’t just maintain organizations. He’s either going to start them up or turn them upside down.”

Self-conscious, suspicious

As an adult, Arwood has cycled between government, conservation and entrepreneurship — holding at least 15 jobs since graduating from the James Madison

College public affairs program at Michigan State University in 1986.

Given all of the job-hopping, some might conclude he has a short attention span. But there’s a stronger argument for diversity of interests, relentless

curiosity and conflicted desires to help Arwood’s team and assert his independence.

Often, Arwood craves a fresh challenge.

After teaching thousands of students during 44 years on the James Madison faculty, Dr. Richard Zinman still remembers Arwood “very vividly and very fondly.”

“He was a very bright young man but he was also someone who was very self-conscious about the fact he came from this small rural community where almost

no one ever went to college,” Zinman said in a recent interview.

“From very early on he was a kind of — it’s hard to say, ‘conservative’ isn’t the right term to describe him. He was always suspicious of big government

and especially the possibility of big government being efficient.”

Fair or foul, that’s the impression Arwood made. To whatever degree Zinman’s assessment remains true three decades later, Arwood finally may have found

his dream job — making big government efficient.

Not that the appeal of a dream job won’t wear off eventually and find Arwood exploring some new path.

Dairy dreams

In his youth, Arwood’s influences included a community banker father, an agricultural work ethic and the pace and limits of life in Sheridan, a central

Michigan village with a 1960 population of 262.

Through junior high, high school and a year at Montcalm Community College, he worked on dairy farms and kept his dreams low on the horizon.

“I had always thought I would probably stay there and hopefully find some way to dairy farm,” Arwood said during a recent interview in his spacious Ottawa

Building office near the Capitol.

He was focused on agriculture when he went to MSU. Near the end of his first year on the East Lansing campus, though, Arwood heard about James Madison.

“It sounded intriguing and I went over and enrolled,” he said.

“He quickly discovered he was interested in not just politics but political theory and a whole range of related subjects,” Zinman said. “It was as if a

whole new world had opened up to him.”

Arwood’s studies led to a senior-year state Senate staff internship followed by graduation in 1986, staff work for Republican Sens. Norm Shinkle and Jack

Welborn and a stint as clerk of the Senate Finance Committee.

In 1987, he married Cheryl Ancel of DeWitt. She is the executive administrator in the governor’s Legal Counsel Office. They have two daughters and recently

became empty-nesters.

>From 1988-92, Arwood divided time between the Associated Builders and Contractors of Michigan and the National Federation for Independent Business-Michigan.

The jobs kept him in touch with legislators and their staffs, which led to his first return to government in 1993 as director of programs and research for

House Republicans.

Former House Speaker Paul Hillegonds remembers Arwood as a practical, policy-oriented problem solver.

“Philosophically, I would consider him to be a conservative, but always a pragmatic conservative who is trying to figure out how to get things done,” Hillegonds

said.

House work led to the executive branch in 1995, where Arwood was mentored by Engler cabinet members. He found his niche at the Michigan Jobs Commission,

forerunner of the Michigan Economic Development Corp., and worked closely with Rothwell, its director.

“At that level, you might expect someone conservative and risk averse,” Rothwell recalled, but he remembers Arwood as being willing to consider unorthodox

ideas and push the envelope to make sure the job got done.

Still in his early 30s, Arwood accompanied Rothwell, Engler and the governor’s key assistants on a trade mission to Europe — a rising star in a supporting

role but now occasionally on center stage.

Then, with Engler’s third term and a bright future ahead, Arwood walked away.

It was 1998. He wanted to see what he could do on his own, he said. In time, Arwood would be chasing windmills. But not yet.

The innovator

He incorporated the Arwood Group and spent several years lobbying and helping organize start-up businesses and nonprofit innovation and conservation groups

from the “living laboratory for advanced energy technology development” known as NextEnergy Center in Detroit to Heart of the Lakes Center for Land Conservation

Policy.

Late in his third term, Engler envisioned Michigan having its own high-tech incubator where entrepreneurship, innovation, industry, academia and government

(mostly in the form of financial support) converged to bubble up the next big things compatible with the state and its auto-centric personality.

The challenge was finding someone who could transform the vision into something tangible. Arwood got the call.

“Steve is the classic guy who was able to do that,” said Rothwell.

“He was able, in a short period of time, to put that (NextEnergy) center on the map. It survived, it’s robust and it’s living out the vision Gov. Engler

had for it 15 years ago.”

Arwood served as chief operating officer of the nonprofit for 15 months, until December 2003, before resigning.

“I had a young family,” he said. “Going back and forth to Detroit was something that was very difficult to do with younger children.”

Arwood and his wife had purchased a home west of St. Johns in 1993 and were raising their daughters.

Much of 2004 was devoted to getting Heart of the Lakes off the ground. As its executive director, he argued against the sale and development of state parklands,

writing in the Detroit News that Michigan’s citizens “have every right to view their public lands as a perpetual trust.”

In the meantime, Engler had appointed and re-appointed him to the state’s Natural Resources Trust Fund, nurturing “my lifelong interest in those issues,”

Arwood said.

By 2005, one of Arwood’s own visions also was coming into focus, one that could accommodate his varied interests, at least for a while.

Following the wind

Beginning in 2005 and continuing until he joined LARA in 2011, Arwood pursued wind energy development, helping the industry establish itself in several

states and coaxing Michigan to mandate the use of energy from renewable sources.

First, he helped form the Michigan Sustainable Energy Coalition. Its three-year lobbying effort contributed to the passage and signing in October 2008 of

the Clean, Renewable and Efficient Energy Act that requires Michigan electric providers to achieve at least 10 percent of their power from renewable sources

by 2015.

Overlapping that effort beginning in 2006, Arwood traveled the West on behalf of California-based Third Planet Wind Power.

“My role was essentially to go in early and help assess the viability of commercial wind (sites), he said. “The industry was relatively new. There wasn’t

a lot of structure. I wouldn’t call it a gold rush, but it really was a period of time when developers like myself were racing across the United States

in a rental car with a map laid out in our lap.”

He came back home in 2008 and formed Forest Hill Energy LLC, which did developmental work for companies interested in wind power.

In October 2008, Forest Hill applied to Clinton County for a zoning variance to erect a meteorological tower in Bengal Township to test wind-turbine feasibility.

Testing evolved to Forest Hill Energy-Fowler Farms, now a county board-approved, $120 million project that calls for 39 wind turbines, each to be built

to a height of 427 feet at the top of their blade rotation.

Arwood withdrew from the project around April 2010, when Windlab Developments of Canberra, Australia offered him a job as regional director of its U.S.

operations.

Tim Brown of Chicago, who took over as manager of the LLC and the project, said Arwood is no longer a member and received no financial settlement when he

left.

Out West and back, again

“Now, you’re probably going to say, ‘how did you get from Windlab back here?’ ” Arwood said during an interview.

“I had been essentially traveling out West and working out ... of an office in either Denver or Cheyenne or out of the car or out of a suitcase two or three

days a week for almost four years and the wind energy business had been very interesting and I think quite fulfilling, but I wanted to come back home to

Michigan. ... I wanted to see if I could help.”

It was mid-January 2011. Some of his former mentors had regrouped to help populate a new Republican administration. The process was well along.

Left alone, they might have remembered Arwood when Snyder needed another administrator to slash red tape, chop dead wood and make Michigan a Top 10 state

in which to do business.

Arwood didn’t know Snyder well enough to reach out directly. He picked up the telephone and called Rothwell, who was serving as co-leader of Snyder’s transition

team.

Arwood says — with sincerity that hints at the self-consciousness Zinman recognized 30 years ago — he didn’t expect a lot to come of his feeler. But by

the first week of March, he was a member of the new team, serving as chief deputy director of LARA and answering to Director Steve Hilfinger.

As had been the case with NextEnergy almost a decade earlier, Hilfinger needed someone to take on a problematic assignment.

The Unemployment Insurance Agency was $3.9 billion in debt. Within days of Arwood’s arrival, UIA was faulted in a state audit report for failing to identify

more than $72 million in overpayments to unemployed workers and failing to pursue fraudulent-claim penalties worth as much as $237 million.

Missing out on that $309 million in revenue had occurred during the final years of the Granholm administration, but it fell to Arwood to respond to the

audit and to identify reasons for the laxity and to implement solutions.

“We can and will do better,” he said, dutifully.

A year later, a helpful Legislature, the sale of more than $3.3 billion in unemployment bonds, a tax increase on businesses and a six-week reduction in

benefit payments combined to make the agency financially sound.

A seemingly insurmountable problem that had developed during the recession suddenly was a success story, if not necessarily an efficiency.

Taking over at LARA

A year ago and with Snyder’s blessing, Hilfinger moved from LARA to the Economic Development Corporation and one of state government’s highest-paying positions.

Snyder announced Arwood would serve as acting director of LARA until a permanent director was appointed.

Two months later, on Jan. 31, he gave the permanent title to Arwood.

“Steve is a talented and experienced professional whose strong leadership has been instrumental in the reinvention of Michigan and I can't think of a better

person to take on this important role” of creating a more practical and efficient regulatory system, Snyder said.

Since taking over, Arwood “has evolved into one of the most capable department directors in Michigan right now,” said Rothwell.

Arwood says government can be a roadblock or a motivator.

Informed of the impression he had made on his old college professor as someone suspicious big government could be efficient, Arwood laughed.

“I wouldn’t say ‘suspicious,’ ” he said of his feelings now. “I think government can be better. Government can be closer to the customer. ... I’m an advocate

of good government. Let’s put it that way. Good government is government that knows its place in a lot of what we do and what we’re sent here to do.”

Striking a balance between cutting red tape and maintaining consumer and worker protections is “very doable,” he said, because reform is not always dealing

with the critical elements of health and safety.

Often, he said, reform is about paper, process, fax machines and duplicative forms.

“We need to continue to look at all of our processes,” he said. “There may have been a piece of legislation passed 20 years ago that created a program that

created a process.

“ The Legislature didn’t tell you to take 18 months to do this process. …

“When I say ‘good government,’ I say, ‘how do we get this process closer to the person’ so that we’re both effective in our regulation, but we’re pleasant,

we’re quick, we’re expedient while protecting the core values ... ”

Government, he said, should not pose an unnecessary obstacle to economic growth in Michigan. And dealing with government shouldn’t take any longer than

necessary.

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http://www.lansingstatejournal.com/article/20131124/NEWS01/311240047/As-Michigan-s-chief-regulator-Steve-Arwood-oversees-policies-affecting-10-million-residents