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Newsletter
Volume 89
April 1, 2011
New Professional Applicator Training - Coming to a City Near You!
The Asmark Institute will offer a new professional applicator training program starting this summer. The new course will be a full day of hands-on instructions and demonstrations and will be offered remotely at 24 locations around the United States. New Professional Applicator Training Dr. Bob Wolf is recognized throughout the United States for his knowledge of application technologies and will be the lead instructor for this course. The primary focus will be developing and delivering high quality, consistent and cost effective educational experiences for employees considered to be commercial handlers, and/or applicators, and the management that supervise them. This course has been almost two years in development and utilizes more than $250,000 in equipment and technology in the course. In addition to the hands-on course and fresh new handout materials, the Asmark Institute will provide the infrastructure essential to support registration and the tracking of continuing education credits as well as on-going communications. Please contact Dustin Warder at 270-926-4600, Extension 203 or dustin@asmark.org if you would like to request the course be offered in your area. Sites for 2011 are being selected in the next few weeks.
NPDES Permit Requirement Delayed
The Sixth Circuit Court has granted USEPA's requested six month stay for compliance with the NPDES permits. The deadline for complying with this regulation has been changed from April 11, 2011 to October 31, 2011. In the meantime, legislation has been introduced in Congress which will exempt agriculture from having to comply with this burdensome requirement. On Thursday, March 31st, the US House of Representatives was scheduled to vote on HR 872, legislation to eliminate the need for NPDES permits for pesticide applications. There are nearly 100 co-sponsors of this legislation which received bi-partisan support. More news to come on this issue.
DOT Proposes Loading/Unloading Rules for Nurse Tanks
DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing additional requirements for loading and unloading cargo tanks, such as nurse tanks used for anhydrous ammonia. The proposal includes the following requirements for those engaged in loading and unloading cargo tanks:
  • Assess the risks of loading and unloading operations.
  • Develop written operating procedures.
  • Annual training on operational procedures.
  • Annual qualification of hazmat employees who perform loading and unloading operations.
  • Develop a periodic maintenance schedule to prevent the deterioration of equipment.
  • Conduct periodic operational tests to ensure equipment functions as intended.
  • Ensure equipment meets the performance standards for specification cargo tanks.
Comments on this regulatory proposal are due May 10, 2011. Click here for a copy of the proposal.
Nurse Tank Research on Stress Corrosion Cracking Underway
The Federal Motor Carrier Safety Administration (FMCSA) initiated research at Iowa State University in 2009 regarding stress corrosion cracking. The project, Testing and Recommended Practices to Improve Nurse Tank Safety, stems from a recommendation by the National Transportation Safety Board (NTSB) which addresses nondestructive testing on nurse tanks to help identify material flaws that could develop and grow. NTSB's recommendation came as a result of the catastrophic failure of a nurse tank in Calamus, Iowa.
The Nurse Tank Research Project Meeting was held recently in Ames, Iowa and was attended by representatives from FMCSA, the Pipeline and Hazardous Materials Safety Administration, a cargo tank testing facility and a cargo tank manufacturer and Pam Guffain, Vice President of Member Services for The Fertilizer Institute. The meeting was called to review the preliminary results of the research. Iowa State intends to issue its final report to DOT at the end of May.
According to researchers, stress corrosion cracking of nurse tanks was common in the nurse tanks tested and could become a safety issue at a certain crack length. The only credible means to ensure the integrity of a nurse tank with stress corrosion cracking is an ultrasound inspection.
OSHA Issues Grain Storage Bin Alert
OSHA recently sent out a warning letter to Grain Storage locations throughout the United States concerning the upward trend in injuries and fatalities to workers entering grain storage bins. Researchers at Purdue University documented 51 grain entrapments in 2010 alone. OSHA has found that grain entrapments generally occur because of employer negligence, non-compliance with OSHA standards and/or poor safety and health practices.
The letter goes on to state OSHA will not tolerate non-compliance with the Grain Handling Facilities standard. OSHA has investigated several cases involving worker entry into grain storage bins where they have found that the employer was aware of the hazards and of OSHA's standards, but failed to train or protect the workers entering the bin. If any employee dies in a grain storage facility, in addition to any civil penalties proposed, OSHA will consider referring the incident to the Department of Justice for criminal prosecution pursuant to the criminal provisions of the Occupational Safety and Health Act of 1970. Click here for a copy of the letter.
FMCSA Enhances Pre-Employment Screening Program's Driver Data
The Federal Motor Carrier Safety Administration (FMCSA) has enhanced its Pre-Employment Screening Program (PSP) by adding data for co-driver safety and post-crash violations to the roadside inspection and crash records previously available. The PSP report also now shows the date drivers' safety records are updated. Launched in March 2010, PSP is an essential safety tool that allows commercial truck and bus companies to electronically obtain drivers' safety records as part of the hiring process. Click here to access the PSP program.
RMP Data Available to Public: See what's out there on your facility!
OMB Watch says updated risk management plans for approximately 14,000 facilities were recently made available to the public through the Right-to-Know Network (RTK NET) website. Believe it or not, some of your facility information may be readily available to the public right now, despite what you've heard about EPA restrictions on public access. The law requires this information be available to the public. While the information helps local fire, police and emergency response personnel, EPA places restrictions on the public's access to the RMP information. For example, the government does not provide online access to RMPs, requiring citizens instead to visit one of the federal reading rooms across the country. EPA also restricts the number of plans a citizen may view each month and prohibits photocopying.
According to OMB Watch, RTK NET is currently the only easily accessible public source for much of the information included in the RMPs. Since 1999, RTK NET has provided free, 24-hour online access to the RMPs while allowing users to search by various criteria. For example, a user may search for RMPs for all facilities within a particular state or zip code, or a user may search for RMPs covering a particular chemical. The offsite consequences analyses remain available only at the reading rooms. Click here to access the RTK Net website.
SPCC Update
Compliance dates for the Spill Prevention and Control and Countermeasure (SPCC) rule have been in flux since 2002. New compliance dates and extensions were finalized last October. What does this mean for your facility? Retail agricultural facilities are eligible for the compliance extension to update or prepare their SPCC plans. Their new compliance date is November 10, 2011. EPA is still developing a rule to extend the compliance date by which a facility must address milk and milk products, and associated piping and appurtenances. Although EPA hasn't finished finalizing the rule, they always note that it's important to remember that the amendments do not remove the regulatory requirement for owners or operators of facilities in operation before August 16, 2002, to maintain and continue implementing an SPCC plan in accordance with the SPCC regulations then in effect. Such facilities continue to be required to maintain plans during the interim until the applicable compliance date for amending and implementing the amended plans.
OSHA Updates Acetylene Standard
OSHA finalized amendments to replace references to consensus standards within its Acetylene Standard at 29 CFR 1910.102 with updated references that reflect current industry practices in the acetylene industry. The revised standard now requires that employers ensure that in-plant transfer, handling, storage, and use of acetylene cylinders comply with Compressed Gas Association (CGA) Pamphlet G-1-2003, Acetylene. This change removed reference to the 1966 edition. The more recent 2003 edition has substantive new provisions over the older edition. These new provisions relate to cylinder storage prohibitions, flow rates, warnings about handling procedures and visual examinations. Facilities and equipment used to generate acetylene or to fill acetylene cylinders are also now required to comply with National Fire Protection Standard NFPA 51A-2006, Standard for Acetylene Charging Plants.
Post Office Hikes Rates...Again
The Postal Service will implement a new pricing structure on April 17th. The services we use that will be affected are First Class Mail, Certified Mail and the Return Receipt Service. Priority Mail and Delivery Confirmation prices will stay the same. One change to note in the pricing structure is that you are no longer required to send first class mail weighing more than 13 ounces via priority mail. Instead, the post office has gone to a "per ounce" system where the price for any first class mail over 13 ounces can be calculated by adding $0.20/per ounce for letters & flats or $0.17/per ounce for parcels.
Reminder: Post Your 300A Until April 30th
It's time to complete your 2010 injury and illness recordkeeping obligations by posting the Summary of Work-Related Injuries and Illnesses (OSHA Form 300A). OSHA requires that the notice be displayed from February 1st to April 30th of each year in a conspicuous place where employee notices are customarily posted. A company official must certify the information in Form 300A was examined and is believed to be correct and complete. Click here to access the form and instructions.
Soil Samplers vs. The Utilities in Nebraska
A Nebraska Senator's efforts to exempt professional soil samplers from the state's "Ask Before You Dig" rule, meant to protect against utility accidents and risk to people and property, has turned out not to be so simple at all. It all began near Columbus, Nebraska in late November between Northern Natural Gas maintenance technicians and two Central Valley Ag soil samplers working at the 20 to 30-inch deep level. It has been standard practice as far back as the 1950s for soil samplers to sink probes as far down as 30 inches in a dozen or more spots in a single field without clearing the task beforehand with utilities. Critics from the utilities industry are on record as saying the soil probing raises some serious potential safety issues. The collision between competing interests comes at a time when buried services across rural property, including fiber optics and petroleum pipelines, are seen as the path to progress. At the same time, Nebraska farmers depend heavily on independent crop consultants and other outside parties to sample the soil profile and the root zone hundreds of thousands of times each year to help them tightly manage their commercial fertilizer use. So far the utilities aren't budging, threatening to enforce the $10,000 penalty for failing to call the Diggers Hotline.
New Soil Fumigant Toolbox Available
To learn more about fumigant management plans or buffer zones, go to EPA's new Soil Fumigant Toolbox. Information aimed at fumigant handlers and certified applicators is available in this new resource aimed at providing training, outreach and other resources for anyone interested in understanding and implementing the current requirements for the safe use of soil fumigants. Other features you can find on the site include handler safety brochures by EPA and soil fumigant registrants; training modules on new soil fumigant requirements; and fact sheets on soil fumigant mitigation measures and implementation schedules. Click here to access the new Soil Fumigant Toolbox.
Scotts to Remove Phosphorus in Fertilizer
ScottsMiracle-Gro will remove all phosphorus from its lawn-maintenance fertilizers sold in the U.S. by the end of next year, the company said today. The Marysville, Ohio-based lawn care and garden-product company said it has reformulated its products and will focus on creating more "efficient and optimized" ways to use nitrogen in its lawn fertilizers. Phosphorus is associated with algae blooms that last summer closed lakes, reservoirs and beaches in Ohio and have created "dead zones" in Lake Erie. "We want to provide customers with the tools they need to create the lawn and garden they want while also being stewards of the environment," Jim Hagedorn, Scotts Chairman and CEO, said in a statement.
U.S. Replaced by China as the World's Largest Manufacturer
China overtook the U.S. as the world's leading manufacturer last year, according to IHS Global Insight. China garnered 19.8% of the global manufacturing market, compared with 19.4% for the U.S. China had 100 million workers, while the U.S. used 11.5 million workers. The U.S. growth rate in the manufacturing sector was 1.8%, compared with China's more than 20%.
Study Shows Small Businesses Face Higher Regulatory Compliance Costs
According to a study released by the Small Business Administration's (SBA) Office of Advocacy, small businesses still face a disproportionate burden when it comes to costs of federal regulations compared to larger firms. SBA found that compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms. Although SBA agrees that regulations are needed to provide the rules and structure for societies to properly function, its view is that costs of regulatory actions are relatively hidden.
Unlike most fiscal actions taken by government, SBA believes that the costs of government regulations get stirred into the indistinct mixture of countless economic forces that determine prices, costs, designs, locations, profits, losses, wages, dividends, and so forth. The report entitled The Impact of Regulatory Costs on Small Firms, attempts to bring transparency to the compliance costs companies face today.
According to researchers the total costs of federal regulations, as well as the costs per employee, have increased from the level established in the 2005 study. Specifically, the total cost of federal regulations has increased to $1.75 trillion - an amount equal to 14 percent of U.S. national income - while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).
Distribution of Regulatory Compliance Costs by Firm Size
Cost per employee for firms with:
Type of regulation
Cost per employee for all firms
Fewer than 20 employees
20-499 employees
500 or more employees
All federal regulations
$8,086
$10,585
$7,454
$7,755
Economic
$5,153
$4,120
$4,750
$5,835
Environmental
$1,523
$4,101
$1,294
$883
Tax Compliance
$800
$1,584
$760
$517
OSHA & DHS
$610
$781
$650
$520
The underlying force driving this differential cost, researchers stated, is that many of the costs associated with regulatory compliance are "fixed costs," that is, a firm with five employees incurs roughly the same expense as a firm with 500 employees. In large firms, these fixed costs of compliance are spread over a large revenue, output, and employee base, which results in lower costs per unit of output as firm size increases. This is the familiar empirical phenomenon known as economies of scale, and its impact is to provide a comparative cost advantage to large firms over small firms.
However, it is worth mentioning that not all regulations fall more heavily on small businesses than on larger firms. For example, the cost per employee of economic regulations falls most heavily on large firms. The researchers stated that this likely reflects the fact that some industrial structures do not lend themselves to small firm participation (Example, utilities, telecoms, or mining) because large scale operations are a precondition to remain competitive. In other words, it simply reduces the number of small enterprises that would be affected.
The report details the distribution of regulatory costs for five major sectors of the U.S. economy: manufacturing, trade (wholesale and retail), services, health care (including social assistance), and "other" (a residual category containing all businesses not included in the other four). This is the same five-sector grouping that was used in the prior report for SBA.
The sector-specific findings revealed that the disproportionate cost burden on small firms is most dramatic in the manufacturing sector; the compliance cost per employee for small manufacturers is more than double the compliance cost for medium-sized and large firms. In the health care sector and the "other" sector categories, the compliance costs also appear starkly higher in small firms compared with medium-sized and large firms. In the service and trade sectors, the distribution of regulatory costs among firm sizes is much more even overall, yet varies depending on the type of regulation.
Click here for a complete copy of the report.
2011 Asmark Institute, Inc. This information is believed to be reliable by the Asmark Institute, however, because of constantly changing government regulations, interpretations and applicability or the possibility of human, mechanical or computer error, the Asmark Institute does not guarantee the information as suitable for any particular purpose.
New Professional Applicator Training - Coming to a City Near You!
The Asmark Institute will offer a new professional applicator training program starting this summer. The new course will be a full day of hands-on instructions and demonstrations and will be offered remotely at 24 locations around the United States. New Professional Applicator Training Dr. Bob Wolf is recognized throughout the United States for his knowledge of application technologies and will be the lead instructor for this course. The primary focus will be developing and delivering high quality, consistent and cost effective educational experiences for employees considered to be commercial handlers, and/or applicators, and the management that supervise them. This course has been almost two years in development and utilizes more than $250,000 in equipment and technology in the course. In addition to the hands-on course and fresh new handout materials, the Asmark Institute will provide the infrastructure essential to support registration and the tracking of continuing education credits as well as on-going communications. Please contact Dustin Warder at 270-926-4600, Extension 203 or dustin@asmark.org if you would like to request the course be offered in your area. Sites for 2011 are being selected in the next few weeks.
NPDES Permit Requirement Delayed
The Sixth Circuit Court has granted USEPA's requested six month stay for compliance with the NPDES permits. The deadline for complying with this regulation has been changed from April 11, 2011 to October 31, 2011. In the meantime, legislation has been introduced in Congress which will exempt agriculture from having to comply with this burdensome requirement. On Thursday, March 31st, the US House of Representatives was scheduled to vote on HR 872, legislation to eliminate the need for NPDES permits for pesticide applications. There are nearly 100 co-sponsors of this legislation which received bi-partisan support. More news to come on this issue.
DOT Proposes Loading/Unloading Rules for Nurse Tanks
DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing additional requirements for loading and unloading cargo tanks, such as nurse tanks used for anhydrous ammonia. The proposal includes the following requirements for those engaged in loading and unloading cargo tanks:
  • Assess the risks of loading and unloading operations.
  • Develop written operating procedures.
  • Annual training on operational procedures.
  • Annual qualification of hazmat employees who perform loading and unloading operations.
  • Develop a periodic maintenance schedule to prevent the deterioration of equipment.
  • Conduct periodic operational tests to ensure equipment functions as intended.
  • Ensure equipment meets the performance standards for specification cargo tanks.
Comments on this regulatory proposal are due May 10, 2011. Click here for a copy of the proposal.
Nurse Tank Research on Stress Corrosion Cracking Underway
The Federal Motor Carrier Safety Administration (FMCSA) initiated research at Iowa State University in 2009 regarding stress corrosion cracking. The project, Testing and Recommended Practices to Improve Nurse Tank Safety, stems from a recommendation by the National Transportation Safety Board (NTSB) which addresses nondestructive testing on nurse tanks to help identify material flaws that could develop and grow. NTSB's recommendation came as a result of the catastrophic failure of a nurse tank in Calamus, Iowa.
The Nurse Tank Research Project Meeting was held recently in Ames, Iowa and was attended by representatives from FMCSA, the Pipeline and Hazardous Materials Safety Administration, a cargo tank testing facility and a cargo tank manufacturer and Pam Guffain, Vice President of Member Services for The Fertilizer Institute. The meeting was called to review the preliminary results of the research. Iowa State intends to issue its final report to DOT at the end of May.
According to researchers, stress corrosion cracking of nurse tanks was common in the nurse tanks tested and could become a safety issue at a certain crack length. The only credible means to ensure the integrity of a nurse tank with stress corrosion cracking is an ultrasound inspection.
OSHA Issues Grain Storage Bin Alert
OSHA recently sent out a warning letter to Grain Storage locations throughout the United States concerning the upward trend in injuries and fatalities to workers entering grain storage bins. Researchers at Purdue University documented 51 grain entrapments in 2010 alone. OSHA has found that grain entrapments generally occur because of employer negligence, non-compliance with OSHA standards and/or poor safety and health practices.
The letter goes on to state OSHA will not tolerate non-compliance with the Grain Handling Facilities standard. OSHA has investigated several cases involving worker entry into grain storage bins where they have found that the employer was aware of the hazards and of OSHA's standards, but failed to train or protect the workers entering the bin. If any employee dies in a grain storage facility, in addition to any civil penalties proposed, OSHA will consider referring the incident to the Department of Justice for criminal prosecution pursuant to the criminal provisions of the Occupational Safety and Health Act of 1970. Click here for a copy of the letter.
FMCSA Enhances Pre-Employment Screening Program's Driver Data
The Federal Motor Carrier Safety Administration (FMCSA) has enhanced its Pre-Employment Screening Program (PSP) by adding data for co-driver safety and post-crash violations to the roadside inspection and crash records previously available. The PSP report also now shows the date drivers' safety records are updated. Launched in March 2010, PSP is an essential safety tool that allows commercial truck and bus companies to electronically obtain drivers' safety records as part of the hiring process. Click here to access the PSP program.
RMP Data Available to Public: See what's out there on your facility!
OMB Watch says updated risk management plans for approximately 14,000 facilities were recently made available to the public through the Right-to-Know Network (RTK NET) website. Believe it or not, some of your facility information may be readily available to the public right now, despite what you've heard about EPA restrictions on public access. The law requires this information be available to the public. While the information helps local fire, police and emergency response personnel, EPA places restrictions on the public's access to the RMP information. For example, the government does not provide online access to RMPs, requiring citizens instead to visit one of the federal reading rooms across the country. EPA also restricts the number of plans a citizen may view each month and prohibits photocopying.
According to OMB Watch, RTK NET is currently the only easily accessible public source for much of the information included in the RMPs. Since 1999, RTK NET has provided free, 24-hour online access to the RMPs while allowing users to search by various criteria. For example, a user may search for RMPs for all facilities within a particular state or zip code, or a user may search for RMPs covering a particular chemical. The offsite consequences analyses remain available only at the reading rooms. Click here to access the RTK Net website.
SPCC Update
Compliance dates for the Spill Prevention and Control and Countermeasure (SPCC) rule have been in flux since 2002. New compliance dates and extensions were finalized last October. What does this mean for your facility? Retail agricultural facilities are eligible for the compliance extension to update or prepare their SPCC plans. Their new compliance date is November 10, 2011. EPA is still developing a rule to extend the compliance date by which a facility must address milk and milk products, and associated piping and appurtenances. Although EPA hasn't finished finalizing the rule, they always note that it's important to remember that the amendments do not remove the regulatory requirement for owners or operators of facilities in operation before August 16, 2002, to maintain and continue implementing an SPCC plan in accordance with the SPCC regulations then in effect. Such facilities continue to be required to maintain plans during the interim until the applicable compliance date for amending and implementing the amended plans.
OSHA Updates Acetylene Standard
OSHA finalized amendments to replace references to consensus standards within its Acetylene Standard at 29 CFR 1910.102 with updated references that reflect current industry practices in the acetylene industry. The revised standard now requires that employers ensure that in-plant transfer, handling, storage, and use of acetylene cylinders comply with Compressed Gas Association (CGA) Pamphlet G-1-2003, Acetylene. This change removed reference to the 1966 edition. The more recent 2003 edition has substantive new provisions over the older edition. These new provisions relate to cylinder storage prohibitions, flow rates, warnings about handling procedures and visual examinations. Facilities and equipment used to generate acetylene or to fill acetylene cylinders are also now required to comply with National Fire Protection Standard NFPA 51A-2006, Standard for Acetylene Charging Plants.
Post Office Hikes Rates...Again
The Postal Service will implement a new pricing structure on April 17th. The services we use that will be affected are First Class Mail, Certified Mail and the Return Receipt Service. Priority Mail and Delivery Confirmation prices will stay the same. One change to note in the pricing structure is that you are no longer required to send first class mail weighing more than 13 ounces via priority mail. Instead, the post office has gone to a "per ounce" system where the price for any first class mail over 13 ounces can be calculated by adding $0.20/per ounce for letters & flats or $0.17/per ounce for parcels.
Reminder: Post Your 300A Until April 30th
It's time to complete your 2010 injury and illness recordkeeping obligations by posting the Summary of Work-Related Injuries and Illnesses (OSHA Form 300A). OSHA requires that the notice be displayed from February 1st to April 30th of each year in a conspicuous place where employee notices are customarily posted. A company official must certify the information in Form 300A was examined and is believed to be correct and complete. Click here to access the form and instructions.
Soil Samplers vs. The Utilities in Nebraska
A Nebraska Senator's efforts to exempt professional soil samplers from the state's "Ask Before You Dig" rule, meant to protect against utility accidents and risk to people and property, has turned out not to be so simple at all. It all began near Columbus, Nebraska in late November between Northern Natural Gas maintenance technicians and two Central Valley Ag soil samplers working at the 20 to 30-inch deep level. It has been standard practice as far back as the 1950s for soil samplers to sink probes as far down as 30 inches in a dozen or more spots in a single field without clearing the task beforehand with utilities. Critics from the utilities industry are on record as saying the soil probing raises some serious potential safety issues. The collision between competing interests comes at a time when buried services across rural property, including fiber optics and petroleum pipelines, are seen as the path to progress. At the same time, Nebraska farmers depend heavily on independent crop consultants and other outside parties to sample the soil profile and the root zone hundreds of thousands of times each year to help them tightly manage their commercial fertilizer use. So far the utilities aren't budging, threatening to enforce the $10,000 penalty for failing to call the Diggers Hotline.
New Soil Fumigant Toolbox Available
To learn more about fumigant management plans or buffer zones, go to EPA's new Soil Fumigant Toolbox. Information aimed at fumigant handlers and certified applicators is available in this new resource aimed at providing training, outreach and other resources for anyone interested in understanding and implementing the current requirements for the safe use of soil fumigants. Other features you can find on the site include handler safety brochures by EPA and soil fumigant registrants; training modules on new soil fumigant requirements; and fact sheets on soil fumigant mitigation measures and implementation schedules. Click here to access the new Soil Fumigant Toolbox.
Scotts to Remove Phosphorus in Fertilizer
ScottsMiracle-Gro will remove all phosphorus from its lawn-maintenance fertilizers sold in the U.S. by the end of next year, the company said today. The Marysville, Ohio-based lawn care and garden-product company said it has reformulated its products and will focus on creating more "efficient and optimized" ways to use nitrogen in its lawn fertilizers. Phosphorus is associated with algae blooms that last summer closed lakes, reservoirs and beaches in Ohio and have created "dead zones" in Lake Erie. "We want to provide customers with the tools they need to create the lawn and garden they want while also being stewards of the environment," Jim Hagedorn, Scotts Chairman and CEO, said in a statement.
U.S. Replaced by China as the World's Largest Manufacturer
China overtook the U.S. as the world's leading manufacturer last year, according to IHS Global Insight. China garnered 19.8% of the global manufacturing market, compared with 19.4% for the U.S. China had 100 million workers, while the U.S. used 11.5 million workers. The U.S. growth rate in the manufacturing sector was 1.8%, compared with China's more than 20%.
Study Shows Small Businesses Face Higher Regulatory Compliance Costs
According to a study released by the Small Business Administration's (SBA) Office of Advocacy, small businesses still face a disproportionate burden when it comes to costs of federal regulations compared to larger firms. SBA found that compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms. Although SBA agrees that regulations are needed to provide the rules and structure for societies to properly function, its view is that costs of regulatory actions are relatively hidden.
Unlike most fiscal actions taken by government, SBA believes that the costs of government regulations get stirred into the indistinct mixture of countless economic forces that determine prices, costs, designs, locations, profits, losses, wages, dividends, and so forth. The report entitled The Impact of Regulatory Costs on Small Firms, attempts to bring transparency to the compliance costs companies face today.
According to researchers the total costs of federal regulations, as well as the costs per employee, have increased from the level established in the 2005 study. Specifically, the total cost of federal regulations has increased to $1.75 trillion - an amount equal to 14 percent of U.S. national income - while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).
Distribution of Regulatory Compliance Costs by Firm Size
Cost per employee for firms with:
Type of regulation
Cost per employee for all firms
Fewer than 20 employees
20-499 employees
500 or more employees
All federal regulations
$8,086
$10,585
$7,454
$7,755
Economic
$5,153
$4,120
$4,750
$5,835
Environmental
$1,523
$4,101
$1,294
$883
Tax Compliance
$800
$1,584
$760
$517
OSHA & DHS
$610
$781
$650
$520
The underlying force driving this differential cost, researchers stated, is that many of the costs associated with regulatory compliance are "fixed costs," that is, a firm with five employees incurs roughly the same expense as a firm with 500 employees. In large firms, these fixed costs of compliance are spread over a large revenue, output, and employee base, which results in lower costs per unit of output as firm size increases. This is the familiar empirical phenomenon known as economies of scale, and its impact is to provide a comparative cost advantage to large firms over small firms.
However, it is worth mentioning that not all regulations fall more heavily on small businesses than on larger firms. For example, the cost per employee of economic regulations falls most heavily on large firms. The researchers stated that this likely reflects the fact that some industrial structures do not lend themselves to small firm participation (Example, utilities, telecoms, or mining) because large scale operations are a precondition to remain competitive. In other words, it simply reduces the number of small enterprises that would be affected.
The report details the distribution of regulatory costs for five major sectors of the U.S. economy: manufacturing, trade (wholesale and retail), services, health care (including social assistance), and "other" (a residual category containing all businesses not included in the other four). This is the same five-sector grouping that was used in the prior report for SBA.
The sector-specific findings revealed that the disproportionate cost burden on small firms is most dramatic in the manufacturing sector; the compliance cost per employee for small manufacturers is more than double the compliance cost for medium-sized and large firms. In the health care sector and the "other" sector categories, the compliance costs also appear starkly higher in small firms compared with medium-sized and large firms. In the service and trade sectors, the distribution of regulatory costs among firm sizes is much more even overall, yet varies depending on the type of regulation.
Click here for a complete copy of the report.
2011 Asmark Institute, Inc. This information is believed to be reliable by the Asmark Institute, however, because of constantly changing government regulations, interpretations and applicability or the possibility of human, mechanical or computer error, the Asmark Institute does not guarantee the information as suitable for any particular purpose.