Small businesses beware: Our federal government is pushing new regulations, and aggressive enforcement steps will be taking place. It could be detrimental to most businesses, and in turn, the economy and jobs, too.

New federal regulations come about because Congress gives government agencies the power to interpret and enforce statutes. Generally, federal laws get passed with language that is vague about how the laws will be interpreted and implemented. Federal agencies then write voluminous specific rules and regulations that will affect the businesses or organizations supervised by those agencies.

Federal regulations should protect consumers, businesses and employees. Regulatory statutes enforce laws to protect the environment, products like drugs and automobiles, restaurant and food services, workplace safety and employee rights, and patent and copyright enforcements, to name but a few.

In many instances, regulatory penalties for minor non-compliance activities or violations impose excessive fines. Such rulings can be very harmful to small businesses, which often operate close to the break-even point, or barely scrape out an adequate profit margin. In fact, most new businesses fail in their first few years, so they need help, not anti-business regulation enforcement. 

Let’s face it, small and big businesses support more deregulation, while reformers and activist organizations want more regulation. Much of the drive for new regulations has occurred because of the stock market downturn in 2008. Some new regulations were undoubtedly needed, but what we are getting is a huge overreaction that will cost businesses a great deal of time and money, without gaining adequate consumer protections. There has to be a meeting halfway between runaway capitalism and runaway government.

The Administrators Procedures Act needs to be fixed. The APA was supposed to consider the economic impact of rules and regulations on businesses, especially small businesses. Small businesses are fortunate to have the U.S. Small Business Administration evaluate the economic impact of regulations on small businesses. The SBA looks to protect small businesses from being affected unfairly, especially fighting for aggrieved small businesses through the SBA’s National Ombudsman office. If facts bring out unfair or overly aggressive actions that result in high fines that are unjust, those violations and fines can be adjusted.

States can be worse than the federal government in adding rules and regulations affecting small businesses. Federal government seems to be more lenient on regulations to small businesses, but the states go the other way. Businesses have tons of problems with states micro-managing them with new regulations, in addition to the federal statutes. Unfair over-regulation makes it difficult for small businesses to stay in business.

Many regulatory agencies are staffed by longterm government agency employees, without actual business experience, who continue to add more regulations at their own discretion. The real decision-makers to change or add regulations should be the agency heads, many of whom have real-world business experience, but these executive heads come and go with the change of each administration.

Most regulations are not bad nor do many small businesses look for loopholes at the expense of regulatory short cuts. However, businesses want to make money and need to know what new regulations they have to prepare for, especially from agencies such as EPA and OSHA. There are rumors spreading that harsher fines and new, stricter rules will be coming in 2011.

Prudent, well-thought-out regulatory behavior is needed, so small businesses will not feel restricted by violations or huge fines. In like manner, citizens must be protected from bad services and products. Jobs will suffer and our economy will falter if more regulations impact growth and survival of small businesses.

Information sessions are needed between federal regulators and small businesses. Mutually cooperative, friendly feedback will help businesses understand what regulations are in effect for their specific industries and how the regulations will affect their operations in the future.

Business people make mistakes like everyone else, but the state and federal regulators should not assess heavy fines that are unjust for minor infractions or mistakes, which can end up putting many people out of business.

Broad regulatory restrictions should not be imposed without input from small business owners. States and the federal governments must keep rules and regulations fair and consistent for small businesses to survive and thrive in our economy.

— Bernard Featherman is a business columnist and past president of the Biddeford-Saco Chamber of Commerce. He can be reached by e-mail at bernard@featherman.com.