Regulation-related costs surging for food companies, carriers
Sep 1, 2011 12:00 PM, By Charles E Wilson
WASHINGTON DC residents might be forgiven for initially assuming that last month's earthquake was nothing more than a bookcase of new federal regulations toppling over in the White House. The regulatory overload continues virtually unabated, and it is stifling business recovery from the recession and growth for the future.
The enterprises that grow, manufacture, and distribute the nation's food certainly have not been spared. Also impacted are the many transportation companies — including tank truck fleets — that support the agriculture and food sector.
In this issue of Bulk Transporter, we have a blatant example of the regulatory overreach impacting agriculture. The Federal Motor Carrier Safety Administration (FMCSA) had proposed giving states the authority to require commercial driver licenses for farmers and farm workers moving farm equipment over rural roads.
The proposal brought a swift and fiery response from the farming community and their elected representatives in Washington DC, and FMCSA was forced to back down. FMCSA received about 1,700 comments on the notice, many of them pointing out that FMCSA's proposal could severely damage the agricultural industry, family-owned farms, and small businesses in farming communities.
Work is still underway at the Food and Drug Administration (FDA) on proposed rules covering food transport security requirements, cleaning and sanitation of transport vehicles, and other food transport factors. This could be a very broad rule with significant compliance costs.
Food transport regulations are part of a broader regulatory effort driven by the Food Safety Modernization Act that became law in January. That law reportedly has the potential major changes in safety and security throughout the food chain, and it marks a significant increase in FDA authority.
The agriculture and food processing sectors also have been impacted by the regulatory flood from the Environmental Protection Agency (EPA). The Obama Administration recently identified seven EPA proposed regulations that would each cost private businesses at least $1 billion. A proposed smog standard had estimated compliance costs of $19 billion to $90 billion, depending on how strict the rule would be.
EPA accounted for the largest share of higher regulatory costs imposed on the private sector in fiscal year 2010. Ten major EPA rules came out that year, and that's not including the moratorium on offshore oil drilling that brought higher fuel prices for everyone. The moratorium made the United States even more of a slave to imported oil.
New EPA and Department of Transportation fuel efficiency standards for heavy-duty trucks and other commercial vehicles are likely to drive transportation costs higher for food shippers and carriers in the long run. Announced August 19, the plan calls for commercial trucks to reduce fuel consumption and greenhouse gases by 20%. If adopted, the rules would apply to vehicles manufactured between 2014 and 2018.
The Compliance, Safety, Accountability (CSA) program took effect in December 2010. With stricter safety requirements for truck fleets and drivers, the program has pushed drivers out of the industry and aggravated a growing capacity shortage. CSA was designed to establish and maintain higher safety standards, and it is achieving those objectives, according to FMCSA officials.
CSA is a prime example of federal regulation that truly does benefit industry and the motoring public, but the sheer volume of regulatory activity is simply overwhelming for the private sector. The regulatory flood is part of the reason the US economy is growing at a pathetic 1% annual rate.
In August, no new jobs were created, according to the latest report from the labor Department. Official unemployment remained at 9.1%, with the real number much closer to 21%.
The best stimulus for the food producers, the rest of the US economy, would be a major rollback in federal regulations, unfunded mandates, and user fees. That bold action would motivate the private sector to create new jobs and fire up the economy.
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