Nalivka: The Economic Burden of Regulations
We often speak of the tax burden on businesses, but the greater culprit can be the imposition of regulations written by Federal and State bureaucracies, not only from the standpoint of compliance, but also the additional cost to the business associated with compliance. That fully supported through cost-benefit analysis as those associated costs can be calculated and tracked along with valuing any potential benefit.
Cost-benefit analysis of government regulations is mandated by Executive Order issued in 1993. Under that order, this would apply to any regulatory action that would have an annual economic cost of $100 million. This threshold was recently increased to $200 million (Wall Street Journal, Aug. 14). Who knows how many new regulations will be imposed on the economy, but even more important on U.S. agricultural producers - ranches and farms. The intent of this Executive Order as it was first written was to protect taxpayers by requiring that regulatory costs had to be justified. In addition to raising the cost threshold to $200 million, the analysis is now extended to include global impacts. Climate change comes to mind. Consequently, one must conclude that the door has been opened to more regulations, or as they say, “the camel was allowed to get his nose under the tent.”
Bringing this issue of regulatory cost down to the ranch level, I have used cost-benefit analysis as a primary tool to assess the economic impact of changes to Federal grazing regulations or new regulations on individual ranchers holding permits on grazing allotments. Others areas are land use and water rights. Over the years, I have applied the analysis in courtroom expert testimony to provide a clear picture of how changes in regulations or new regulations impact the bottom line to the ranch. I know that often the opposing side in the courtroom had little use for my cost-benefit analysis!
While the well-defined costs of ranching and farming are often the focus of managing the business, these sometimes little watched regulatory costs can quickly come to the forefront with few answers to address them. Some regulations are necessary - application to food safety is one of those. However, for all the necessary regulations, there are many that fall under the heading of burdensome and costly to businesses, industries, and ultimately taxpayers. Consequently, businesses must remain vigilant regarding the regulatory impact.
