When Picking Apples on a Farm With 5,000 Rules, Watch Out for the Ladders – NYT

When I read recent stories that regulations don’t burden business, I was stunned. The stories (and the studies cited) mentioned how relatively minor compliance costs were for Fortune 500 companies:

Trump White House quietly issues report vindicating Obama regulations
It was easy to miss, but OMB demolishes the GOP’s deregulatory claims.
Vox, March 6, 2018

OMB gathered data and analysis on “major” federal regulations (those with $100 million or more in economic impact) between 2006 and 2016, a period that includes all of Obama’s administration, stopping just short of Trump’s. The final tally, reported in 2001 dollars:

Aggregate benefits: $219 to $695 billion
Aggregate costs: $59 to $88 billion
By even the most conservative estimate, the benefits of Obama’s regulations wildly outweighed the costs.

According to OMB — and to the federal agencies upon whose data OMB mostly relied — the core of the Trumpian case against Obama regulations, arguably the organizing principle of Trump’s administration, is false.

Maybe the team over at Vox, and elsewhere, should check out a New York Times article from December 2017. As the Times discovered, it is small businesses that struggle with regulatory compliance. It is easy for a Walmart or a nationally franchised fast-food chain to comply with some regulations. But, if you are a small business it is much harder and the costs are proportionally higher for these firms. If anything, regulation in all fields helps eliminate competition from smaller companies that surrender to the higher costs.

Regulation ends up concentrating economic growth into fewer and fewer larger companies. The small companies sell out or go out of business. Those that do survive often continue through sheer willpower.

The full article in the New York Times is a long read, but worth the investment of your time. Regardless of your personal bias for or against the regulatory systems (state and federal), you should be familiar with how out-of-control regulatory compliance has become.

When Picking Apples on a Farm With
5,000 Rules, Watch Out for the Ladders

Produce growers represent a textbook example of what businesses describe as regulatory fatigue. President Trump is tapping into the discontent.

By STEVE EDER
DEC. 27, 2017

ALTAMONT, N.Y. — For eight weeks every fall, Indian Ladder Farms, a fifth-generation family operation near Albany, kicks into peak season.

The farm sells homemade apple pies, fresh cider and warm doughnuts. Schoolchildren arrive by the busload to learn about growing apples. And as customers pick fruit from trees, workers fill bins with apples, destined for the farm’s shop and grocery stores.

This fall, amid the rush of commerce — the apple harvest season accounts for about half of Indian Ladder’s annual revenue — federal investigators showed up. They wanted to check the farm’s compliance with migrant labor rules and the Fair Labor Standards Act, which sets pay and other requirements for workers.

Suddenly, the small office staff turned its focus away from making money to placating a government regulator.

The investigators arrived on a Friday in late September and interviewed the farm’s management and a group of laborers from Jamaica, who have special work visas. The investigators hand delivered a notice and said they would be back the following week, when they asked to have 22 types of records available. The request included vehicle registrations, insurance documents and time sheets — reams of paper in all.

Over the next several days, the Ten Eyck family, which owns the farm, along with the staff devoted about 40 hours to serving the investigators, who visited three times before closing the books.

“It is terribly disruptive,” said Peter G. Ten Eyck II, 79, who runs the farm along with a daughter and son. “And the dimension that doesn’t get mentioned is the psychological hit: They are there to find something wrong with you. And then they are going to fine you.”

I admit that I am biased in favor of the small business owners. My wife and I have owned and operated small businesses. Her family owns a small farm and a small bookstore. These are not massive, million-dollar operations. If anything, they are decidedly middle-class and struggling in the changing economy. That’s a reality the family will need to address, and I fear the farm might not continue for another generation.

For a larger agribusiness conglomerate, regulation is annoying but not threatening. If anything, the large farms keep buying up the smaller farms. Consolidation is a result of regulatory fatigue and a general admission that small businesses cannot provide a living income.

If you haven’t owned a small business, it is difficult to understand how many hours are spent trying to comply with regulations. You live in fear of fines and if you have a retail operation you live in fear of customers having an accident on your premises.

This is life on the farm — and at businesses of all sorts. With thick rule books laying out food safety procedures, compliance costs in the tens of thousands of dollars and ever-changing standards from the government and industry groups, local produce growers are a textbook example of what many business owners describe as regulatory fatigue.

Over the past five decades, Mr. Ten Eyck said, there has been an unending layering of new rules and regulations on his farm of over 300 acres, as more government agencies have taken an interest in nearly every aspect of growing food, and those agencies already involved have become even more so.

Now, a new rule is going into effect that will significantly expand the oversight of one regulator, the Food and Drug Administration, at the farm. And aside from the government, major retailers like Costco and Walmart mandate extensive food-safety planning and audits for their suppliers, all at a cost.

“If it isn’t pest poisons and pesticides, then it is food safety,” said Mr. Ten Eyck, suggesting that one rule maker seemingly tries to outdo the last. “And they come in waves.”

On a back wall in the apple packinghouse, there are 13 clipboards with various logs — first-aid monitoring, pest control, visitor sign-in sheets and more — required for food safety audits. There are about another dozen thick binders and manuals in the farm office for navigating rules and regulations on such things as migrant and seasonal worker protections.

Researchers at the Mercatus Center, a conservative-leaning economic think tank at George Mason University, say apple orchards are facing a growing federal regulatory burden. Quantifying that burden is difficult, but using a computer algorithm that analyzes regulations through keyword searches, researchers from the center’s RegData Project estimated the federal regulatory code contains 12,000 restrictions and rules on orchards, up from about 9,500, or an increase of 26 percent, from a decade ago.

Many of those rules apply to other businesses as well, and some restrict the actions of government regulators, not the orchard owners. Using the Mercatus Center data, and screening for such exceptions, The New York Times identified at least 17 federal regulations with about 5,000 restrictions and rules that were relevant to orchards.

Imagine trying to know 12,000 regulatory restrictions for your business. As the New York Times claims, only half of those rules apply specifically to orchards, but the 12,000 number easily applies to other businesses with manual labor and customers on site. When there are 12,000 rules and restrictions, you are likely violating several at all times no matter how hard to try to be within compliance. In Central California, where we are from, there are anti-dust rules for air quality. At the same time, there are water restrictions that are equally or more important. The only way to contain dust: put water on the dirt. You select which fine you’ll pay as a farmer. (No, you do not pave over the dirt — that’s incredibly bad for the environment. Pavement or asphalt won’t allow water to be absorbed when it does rain, and water that does filter through becomes contaminated.)

There are too many regulations. That’s what Vox and many people not in charge of businesses don’t seem to comprehend. Farmers know this better than most small business owners.

Industry by industry, small businesses have been lobbying governments — from town health departments to federal cabinet agencies — to simplify rules and eradicate redundancy.

Many farmers, including Mr. Ten Eyck, acknowledge that not all regulations are bad. They often have led to ample benefits, including a safer food supply and better working conditions. Last year, an official with the Environmental Protection Agency was welcomed at Indian Ladder Farms, where she promoted new standards to protect farmworkers.

The grievances relate largely to the sheer amount of time and money that it takes to comply, and what farmers see as a disconnect between them — the rule followers — and the rule makers, who Mr. Ten Eyck describes as “people looking at a computer screen dreaming up stuff.”

“The intentions are not bad,” he said. “It is just that one layer after another gets to be — trying to top the people before them.”

There is little hope that things will improve for small business. Why? Because most people are workers, not business owners. Most people don’t appreciate regulatory overload firsthand. The people creating regulations based on legislation signed into law also don’t realize how much harm they do to businesses.

There are good regulations. There are bad regulations. There are contradictory regulations. Government needs to do a better job in selectively drafting regulations while eliminating the outdated or contradictory rules and requirements.