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Archive for November 6th, 2012

“If you’re a small operator, they’re just putting you out of business”

Raising the word “regulation” tends to make eyes glaze over. That’s why it’s key to understand the smothering impact of this country’s regulatory web on business and job creation. Here are multiple real-world examples of outrageous, destructive regulations imposed on people who are simply trying to live their lives and/or operate their businesses. This is what happened to Brad Jones.

Jones is one of the owners of Buckingham Slate, a Virginia business a little over an hour’s drive west of Richmond. The company is distinguished by the quality of the highly valued Arvonia slate it produces. And by the fact that its roots trace back almost to the Civil War. And by the fact that federal regulators smacked it with a $4,000 fine.

Over a trash can.

The offending can — or “waste receptacle,” in the words of the Mine Safety and Health Administration’s official citation — was “not covered.” What’s more, “the receptacle was full.” It “could be smelled.” There were — brace yourself — “flies fl[y]ing in and around the receptacle.” And to crown all, “management engaged in aggravated conduct constituting more than ordinary negligence” by allowing this “condition to exist.” The horror.

Here in North Carolina, regulatory reform is a key area of concern and focus of the John Locke Foundation. In Agenda 2012, you will find key facts and recommendations to curb the regulatory web and help spur economic growth. See below.

 

Regulatory Reform

Much has changed for the good concerning North Carolina’s regulatory environment with the passage (and override of Gov. Bev Perdue’s puzzling veto) of the Regulatory Reform Act (RRA) of 2011, tort reform, medical malpractice reform, and workers’ compensation reform. Nevertheless, given the state’s history for imposing onerous regulatory burdens, much more remains to be done.

Key Facts

 

  • Surveys of small business leaders consistently find regulatory burden as a major obstacle to growth and job creation. Government regulations force businesses to bear compliance costs and legal fees, taxing man-hours without production.
  • State agencies’ rule-making power is legislative power delegated by the legislature to the executive branch.
  • The Rules Review Commission is tasked with reviewing regulations and keeping agencies from exceeding their authority. The commission’s practical authority is highly limited, however.
  • Under RRA, state environmental rules can be no more stringent than federal rules without legislative action.
  • RRA requires the state to review existing rules and encourages the elimination of those that are burdensome, outdated, unnecessary or vague.
  • For disputes between a regulated party and a state environmental agency that are heard by the state Office of Administrative Hearings (OAH), RRA changed the way appeals were handled. Before RRA, if the OAH decision went against the agency, the agency could simply overrule it. Now both parties have to appeal to Superior Court. But this reform applies only to environmental agencies. Other state agencies can still overrule any unfavorable OAH decision.
  • RRA requires agencies to provide cost estimates for many kinds of rules as well as give at least two alternatives to any proposal with “substantial economic impact” (over $500,000). Those requirements are not, however, substitutes for true cost/benefit analysis.
  • The federal government has required cost/benefit analysis of proposed rules for nearly 40 years. Also, 32 states require periodic review of existing state rules.
  • 35 states require agencies to conduct “small business flexibility analysis” to test whether rules have a disproportionate impact on small businesses.
  • The legislature has passed many deleterious measures without regard for costs outweighing benefits. E.g., the state’s renewable energy portfolio standard hikes electricity costs, its Clean Smokestacks Bill costs ratepayers over $3.2 billion, its high number of insurance mandates increases health insurance costs, and its high number of workers requiring occupational licenses (including barbers, auctioneers, and librarians) raises the cost of doing business and hurts job creation.
  • Overregulation’s costs frequently go unseen. A case in point is North Carolina’s unique automobile insurance system. Five players influence auto insurance rates in North Carolina: Rate Bureau, insurance commissioner, Reinsurance Facility, court system, and private insurers. This system disadvantages safe drivers but helps protect insurance companies.
  • A hidden tax — one auto insurers are forbidden from disclosing on statements — supports the mandated Reinsurance Facility, in which private insurers dump “risky” drivers. That surcharge on every auto insurance policy averages to about 6 percent a year.

 

Recommendations

 

  1. Expand the Regulation Reform Act‘s fix of the administrative appeals process to apply to all agencies, not just environmental agencies.
  2. Require agencies to quantify projected costs and benefits of proposed regulations, and require rejection of rules for which the costs exceed the benefits. Apply the same cost/benefit test to laws previously enacted by legislators, repealing those that fail the test.
  3. Implement small-business flexibility analysis for prospective rules to prevent regulations from running roughshod over small employers.
  4. Strengthen the Rules Review Commission to reject regulations unless the relevant agency can prove the rules are clearly within the limited power delegated to it by the legislature.
  5. Reform North Carolina’s auto insurance market by eliminating guarantees of insurer profits, encouraging product innovation, disclosing any cross-subsidies on insurance bills, and reducing the extent to which ratepayers subsidize the premiums of risky drivers.
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The Tea Party Is Dead?

Much of tonight’s initial focus will be on the presidential, gubernatorial, judicial, and Council of State races. But be sure to pay attention to the U.S. House races, not only in North Carolina but across the United States. For months U.S. House Democrats have boasted they will snatch control of the House from Republicans and that 2012 will be a repudiation of the 2010 Tea Party election when a cadre of limited-government conservatives were elected from across the country. As Roll Call reports, that narrative has been replaced as party leaders privately acknowledge the hope of a Democratic Party “takeback” of the House has ended. Here, according to Roll Call, is the new narrative on control of the U.S. House. Listen tonight for this story line from party operatives.

Meanwhile, the Democratic Congressional Campaign Committee is spending the final 24 hours framing the elections as rolling back the “tea party tsunami” of 2010. The committee is also touting its perceived successes this cycle — the factors it describes as being “within the DCCC’s control.”

“Democrats have been on offense,” a DCCC memo said. “We outraised the [National Republican Congressional Committee] by more than $16 million despite being in the minority, we recruited a wide field of over 50 Red-to-Blue candidates, we stayed competitive on the air despite being outspent, and we mobilized an historic ground game, especially in ‘orphan’ states.”

A second missive sent today focused on Republicans who won election in 2010 as right-wing warriors, only to tack to the center in 2012 to win re-election.

“Regardless of whether they win or lose, the Tea Party of 2010 is over. They’ve been forced on defense in the message fight all cycle long, and now those who win will have done so by giving up on the Tea Party,” the memo said.

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This Debt Chart Is Stunning

Here’s what $16 trillion in debt means to each and every one of us.

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