Bad public policy hinders small business

As the U.S economy remains stuck in neutral, small businesses owners, often an optimistic group by nature, have grown increasingly cynical about the future. The problems are clear. But, despite concerns from businesses of all sizes, federal agencies continue to dole out costly and burdensome new regulations at the expense of sustainable growth.

The impacts of such aggressive federal policies are typified by one regulation in particular. The Environmental Protection Agency (EPA) has proposed to vastly expand federal authority by redefining the “waters of the United States.”

{mosads}The proposal would go well beyond “navigable waters” – the traditional domain of federal regulators – to include dry creek beds, standing water in fields, and ditches. If finalized, the rule would introduce stringent restrictions on the use of public and private land.

For small business owners, farmers, and manufacturers, the change could require special permitting to expand their business, clear vegetation or modify their facilities. Any alteration to a federal “water,” including those that are dry most of the year, could require costly and time-consuming permitting. A recent U.S. Supreme Court case cited the average cost of a permit to be $270,000. Violating the regulation would be punishable by fines of up to $37,500 per day.

Even more troubling, the rule does not take into consideration the economic impact on small businesses. Under the Regulatory Flexibility Act, federal agencies must review the cost of a proposed rule on small business; the EPA, however, bypassed this requirement, suggesting the new rule not directly affect small businesses. Key members of Congress disagree, including both the House and Senate Small Business Committees. In comments to the EPA, we at the National Federation of Independent Business (NFIB) emphasized the proposed regulation “represents bad public policy because it increases regulatory burdens on small business landowners by expanding the jurisdictional reach of the Clean Water Act.” We asked the EPA to withdraw the rule until the required comprehensive analysis is complete.

Unfortunately, discounting the impact to small businesses has become the new norm. Today more than 3,300 new rules and regulations are in the federal pipeline, most of which would directly affect small businesses that lack the resources of their larger competitors to navigate the complex regulatory thicket. It is of little wonder over the past 70 consecutive months small businesses have cited government regulations as one the biggest obstacles to their growth in a monthly poll conducted of NFIB members.

Washington’s regulatory expansionism, though grown over the last two decades, conflicts with President Obama’s own rule-making guidance. In 2011, the President issued an executive order requiring federal agencies to limit the scope and weigh the full impact of new rules. That directive has largely gone unheeded. In the first 10 months of this year, regulators added more than 3,100 final regulations the Federal Register.

Small business owners are hard-working and self-reliant. They create jobs and serve consumers in their communities. They want a regulatory system that works with them, not against them. One that gives them a voice in how rules are shaped and considers their interests. Sadly, this is not representative of the current rule-making process.

To create a modernized system, federal agencies must be held accountable for the rules they propose, forming a more open and transparent process. Each new rule should undergo rigorous cost-benefit analysis to ensure each rule provides a significant benefit without imposing large costs to small businesses.

At a time of stagnating economic development and growing concerns about the future, the EPA is testing the resolve of small business owners across the country through regulatory overreach. There is, however, a clear solution: Washington must ease uncertainties and remove unnecessary obstacles to economic growth. The solution is regulatory reform.

Bosch is the manager of regulatory policy for the National Federation of Independent Business (NFIB).