"Government regulations and red tape are one of the top concerns of our members," said Karen Harned, executive director of the Small Business Legal Center at the National Federation of Independent Business (NFIB), in a recent press release.

According to Harned, most small business owners cannot count on regulatory compliance specialists and lawyers to help them keep up with all of the new federal regulations that they must follow. Only larger companies can afford these specialists. "With an average of ten new regulations a day, small business owners are spending more time on paperwork and less time focusing on their business," she said. "That is bad for their bottom line and for job growth nationwide."

Harned added that regulatory costs for small businesses are now almost $12,000 per employee per year, which is 30 percent higher than the regulatory cost burden that larger businesses face.

Last month, NFIB warned Congress that the federal regulatory bureaucracy is a "runaway train, and that the office in charge of approving regulations appears to be asleep at the switch."

Harned testified at a House Judiciary Subcommittee on Regulatory Reform hearing, which was reviewing the regulatory actions of the Obama administration. The specific focus of the subcommittee was on the activities of the Office of Information and Regulatory Affairs (OIRA), which has final review over all impending regulations. The OIRA is a branch of the Office of Management and Budget (OMB).

"OIRA is not performing the rigorous independent analysis needed to ensure that the proposed benefits of a new rule truly outweigh the negative economic impacts," she said. "They are supposed to make sure that the agencies are doing their homework, but instead they just seem to be acting as a rubber stamp right now."

She cited two examples in specific of how government agencies recently failed to consider the harm done to small businesses by regulations.

One was the "waters of the United States regulation," promulgated by the U.S. Environmental Protection Agency and the Army Corps of Engineers, which was pushed forward despite objections from the Office of Advocacy of the Small Business Administration. One of the objections from the Office of Advocacy was that the EPA and Army Corps had refused to conduct a required Regulatory Flexibility Act study.

The other was the recent Department of Labor rule that would more than double the salary threshold for required overtime pay. According to the NFIB, that rule would be particularly expensive for small businesses in small and rural markets, where cost of living and average wages tend to be lower.

Harned also testified about the NFIB's concern over a trend for agencies to push new policies forward that are even outside of the regulatory process, called "subregulatory" activities.

Instant Insights /

Small business regulatory burden is growing unchecked

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