How Much Regulation is Too Much for Small Businesses to Survive?

RICHMOND, VA – In spite of glowing words of support from Washington, small businesses continue to be smothered by a mountain of needless regulations. Supposedly these regulations are for the protection of our citizens, but Martha Boneta, a small-time farmer in Fauquier County, Virginia, sees things differently.

Boneta hosted a birthday party for eight 10-year-old girls, but apparently without the required “events permit.” The county also took issue with her selling items such as birdhouses and yarn that she had not made herself. For this she was fined $5,000.

Outraged local farmers showed up at a zoning-board meeting a couple of months later with pitchforks in hand, but their show of support proved to be only symbolic. She ended up closing her shop anyway.

Brad Jones, part owner of Buckingham Slate, experienced the same government love for small business. Buckingham Slate supplies the area with highly valued Arvonia slate and can trace its roots back to the Civil War. It also was recently smacked with a $4,000 fine by federal regulators.

Jone’s crime against society was an uncovered trash can. According to the Mine Safety and Health Administration’s official citation “the receptacle was full” and “could be smelled.” The code violation, said the agency, showed that “management engaged in aggravated conduct constituting more than ordinary negligence” by allowing this “condition to exist.”

Nathan Hammock and his family own a dairy farm in Museville. Due to drought, they decided to put an irrigation pond on their property. They finally got that pond after three years and $30,000 of red tape wrangling with the Army Corps of Engineers and the Environmental Protection Agency.

Former EPA official Al Armendariz said enforcers should “crucify” offenders to “make an example” of them, which would then make others “easy to manage.” It seems he was doing more than speaking off the cuff. In its first three years, the Obama administration imposed over 100 economically significant regulations as in those costing $100 million or more. The Heritage Foundation says that is four times as many as the Bush administration during a similar period.

While giving great speeches about support for small business, the president has overseen massive regulatory expansions: banking industry; vehicle mileage standards; Obamacare carbon emission limits on coal-fired power plants; energy-efficiency standards for home appliances; and dozens more.

According to the House Committee on Oversight and Government Reform, “The published regulatory burden for 2012 [alone] could exceed $105 billion. . . . Since January 1, the federal government has imposed $56.6 billion in compliance costs and more than 114 million annual paperwork burden hours.”

Brad Jones says that Buckingham Slate is overrun with federal and state agencies, and “each one of them wants something from us all the time that is costing us money.” Jones estimates that five of his 45 employees spend 20 percent of their time simply filling out paperwork.

No one argues that regulations are unnecessary. They help ensure safe food and breathable air. But at what point have regulations gone too far? “If you’re a small operator, they’re just putting you out of business,” says Jones. “It doesn’t matter that we can compete globally. . . . Sooner or later, that kind of regulation is going to shut you down.”