Complying with regulations has become 'Mission Impossible'

GUEST EDITORIAL

It's hard enough for employers to cope with hundreds of new regulations passed each year, added to the tens of thousands of regulations already on the books.

But now, agencies are adding insult to injury by imposing standards that are impossible to meet.

The Small Business Administration estimates employers spend $1.75 trillion dollars a year complying with federal regulations, a burden that falls heaviest on small businesses, America's job engine. The SBA reports it costs small employers more than $10,500 per employee to comply with federal regulations.

But now, employers are facing what must seem like a nightmare: regulations that are impossible to comply with.

Case in point: Cellulosic ethanol.

Cellulosic ethanol is made from wood waste, crop stalks - even municipal waste. The idea was to create a biofuel that used waste products and didn't take farmland out of production.

The push for cellulosic ethanol began in the Bush administration. The federal government provided grants and loans to producers and imposed mandates on oil companies to blend cellulosic fuel into conventional gasoline. The mandate was 100 million gallons by 2010, 500 million in 2012 and 10.5 billion gallons a year by 2020.

At the time, nobody produced cellulosic ethanol. Today, that's still the case.

Despite $1.5 billion in taxpayer grants and loans, no one has been able to commercially produce cellulosic ethanol. According to The Wall Street Journal, the half-dozen or so companies that received the first round of subsidies never got

off the ground and Cello Energy, which boasted that it would produce 70 million gallons of cellulosic ethanol by 2010, filed for bankruptcy in October of that year.

Nevertheless, the Environmental Protection Agency penalizes refiners for not using cellulosic ethanol in their gasoline. Even though the EPA adjusted the mandates downward, oil companies had to purchase $10 million in "waiver credits" in 2010 and 2011 for failing to comply with a mandate to buy a product that doesn't exist - costs that were passed on to consumers at the pump.

Of course, the federal government doesn't have a monopoly on such regulations.

Seattle's new paid sick leave policy applies to any business with five or more employees - even if that business isn't located in Seattle.  

The new law says that, if one or more of your employees spends more than 240 hours a year in Seattle on business, you must pay them pro-rated benefits.  That's less than an hour per work day. Don't know how long your employees spend in Seattle? You'll need to track their hours to find out.

For example, the city says that, if you operate a flower shop in Kent and deliver bouquets in Seattle, you must keep track of how long each driver was inside the city limits. Have an out-of-state tech company or sales firm that regularly sends people to Seattle? You have to track their time as well. If an employee claims they're not receiving earned benefits, it's up to the employer to document the actual time they spent inside city limits throughout the year.

This rule is a recordkeeping nightmare visited on overwhelmed employers already struggling in these tough times.  

If you faced a paperwork and legal nightmare just for having your employees briefly do business in Seattle, what would you do?

In a time when local governments should be doing everything they can to encourage and attract more business, this does just the opposite. The city's new ordinance might be better called the "Stay out of Seattle" law.

What we don't need right now are reasons to send employers - and jobs - elsewhere.

About the Author

Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington's oldest and largest statewide business association, and includes more than 7,900 members representing 700,000 employees. AWB serves as both the state's chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB's members employ fewer than 10. For more about AWB, visit www.awb.org.