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We need regulatory reform, Part 1

Reagan Haynes’ report in Trade Only Today on Sept. 25 on the threatened lawsuit against the Environmental Protection Agency by the Sierra Club and California Communities Against Toxics is a stark reminder that we badly need regulatory reform.

The probable lawsuit will claim EPA has failed to review toxic standards for 46 industries including our industry, which they were required to do under the 1990 Clean Air Act. According to National Marine Manufacturers Association director of environmental and safety compliance John McKnight, while it would take time in the courts, it’s likely to result in more regulations for boatbuilders that increase costs and make our products harder to sell.

But there’s an even broader consideration here and it’s the fact that we appear to be in an era of rampant regulation. The fact is while the economy and jobs were shrinking, the federal regulatory business was booming. Under the Obama Administration, regulatory agencies have seen their combined budgets grow a whopping 16 percent since 2008, topping $54 billion (so much for cries of hardship from sequestration). Employment at federal regulatory agencies climbed 13 percent at the same time that private-sector jobs were declining by 5.6 percent.

No surprise, then, that regulation production has been in overdrive as agencies, seemingly now on steroids, churn out more rules. To illustrate, Sen. John Barrasso, R-Wyo., previously reported that in just one month, regulators imposed a total of 379 new rules. The cost of those alone was projected to top $9.5 billion. Moreover, many more were on the way. At one time the Federal Register, where all new regulations must be published, noted that more than 4,200 more rules were awaiting publication.

I am fed up with the cry of regulatory proponents that what they do is always in the interest of public health and safety. Such benefit claims are made to support their actions. But, in reality, the benefits they claim frequently don’t accurately quantify costs/benefits and/or fail to show the issue deserves federal regulation in the first place. Case in point: the claim mandating ethanol in gasoline will lower our fuel costs and benefit the environment. Not and not.

Let’s face it: what might give regulators job security does the opposite for us in business. That’s because complying imposes burdensome costs, especially on small businesses, a group that includes virtually all marine dealers and marina operators. A 2010 study by the Small Business Administration found complying with federal regulations exceeded $1.75 trillion a year. Since then, hundreds of new regulations have pushed that figure even higher.

In a nutshell, here’s what it can mean to every dealer. The SBA study revealed small businesses must spend 36 percent more per employee to comply with regulations than larger companies. One estimate says the per-employee cost of complying with federal regulations is $10,585 for businesses with fewer than 20 employees, while only $7,755 for businesses with more than 499 workers.

So how do we turn the tide to a more acceptable regulatory atmosphere? Who is fighting in the trenches for the industry? What are the prospects for reform? Is there action dealers can be engaged in?

We’ll answer these and other questions on Thursday in Part 2 of “We need regulatory reform.”

Comments

5 comments on “We need regulatory reform, Part 1

  1. Rob Boyle

    It is too bad that your article is littered with such broad condemnations that reflect or mirror political rhetoric. Looking at the Federal Register you can quickly see that many of those nasty regulations are pro business; a regulation against dumping Vietnamese shrimp into our markets, an FAA regulation that amends the NO-GO rule when a defibrillator is not functioning, allowing outsourcing of laboratory services for analysis, etc. Mostly amendments to existing legislation to correct or fix them.

    The difference in per employee cost for a Small Business of less than 20 and a business of over 499 is generally one of scale that often drives acquisitions and merges; not as you suggest an Obama conspiracy against Small Businesses.

    I am not suggesting that regulatory requirements can not be a burden and expensive at times. That doesn’t mean the whole process should be condemned but is a call for those affected to be involved…with less drama and more solutions.

  2. Captain Dan

    when all you have to do is think about ways to justify your position and not have to worry about making any money or paying any bills I am sure you can become a regulator

  3. Craig

    How many of those regulations were going to affect the boating industry, or were most of them regulating the banking industry, which are really needed? or are you just bringing those facts out for shock value, or are you just plain ignorant of what the regulations are and you just don’t care about the details? You are spreading fear based on untruths and innuendo.

    And if you have a problem with ethanol, you need to get the factis, and if you know the facts, then you are lying, or trying to scare people. Or maybe you don’t know the facts. The ethanol mandate, which I really dislike, is because of the support in congress from the ethanol producing states. Talk to them. Environmentalists are against the ethanol mandate because they know that it takes more energy to make ethanol in the U.S. than it produces. The regulations stem from that mandate. Want to get rid of the regulations? Get rid of the mandate.

    But at least be honest and know the facts.

  4. AnonymousBob

    Excellent reply, Craig. Keep in mind the author is a staunch Right-Winger, which explains his need to spread the misleading and fearful talking points we see here.
    The author seems to conveniently forget that these regulations are the result of businesses lobbying the government towards the furtherance of their particular agendas. Ethanol is the perfect example and we see the results: no decrease in gas prices, broken down engines, higher feed prices, higher food prices, but much richer energy companies and corn farmers. Guess who has a stronger lobby than the Marine industry?! Just about everyone, really.
    The Marine industry is too fragmented with too many fragile egos. The last thing the “players” in our industry want to do is work together. Until pride is set aside and these people decide to coalesce in a united front, we’ll continue being a Red-Headed Stepchild even though our industry has a multi, multi-billion dollar impact on the economy.

  5. captA

    Well said Craig. Don’t blame the regulator–blame Congress–especially the ones form the major corn-producing States. Ethanol was introduced to try and lower (not eliminate) our dependence on fossil fuel. Well guess what folks, the USA is now an NET EXPORTER OF FOSSIL FUEL. We really don’t need the ethanol.

    Ethanol does have some evirronmental benefits as it relates to the amount of air pollution per gallon of fuel burned, however the fertilizer used to produce the corn ends up to help choke the Chesapeake Bay or the Gulf of Mexico.

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