Arlington, Va., hosts many successful small businesses, including the Good Food Co., which sells freshly prepared breakfast, lunch and snacks to Washington-area day care centers and schools. The firm employs 42 people and has a waiting list for new customers. The Good Food Co. should be looking to expand. But it won’t be as long as the U.S. Department of Agriculture is stepping up enforcement of a 40-year-old regulation that could cripple Good Food’s bottom line.
As President Obama loves to point out, food inspection is one of the core functions that almost everyone agrees the federal government must perform. Since 1906, the Federal Meat Inspection Act has required the USDA to inspect any facility where meat products are slaughtered and processed.
But while slaughterhouses and packing plants clearly need federal inspection, Congress never believed that public health required every restaurant with beef on the menu to be inspected, too. So FMIA specifically exempted “retail stores and restaurants” from federal inspection.
Then, in 1970, the USDA extended the restaurant exemption to caterers, provided that caterers serve their food “directly to individual customers.” Good Food was founded in 1979, and in its 30-plus years of existence, the USDA has never subjected the firm to inspection. Then Obama was elected.
This year, the Food Safety and Inspection Service, the USDA’s enforcement arm, notified Good Food that it was in violation of FMIA. Despite zero evidence of any actual harm to consumers, the USDA determined that because Good Food delivered its food to day care centers and schools, instead of directly serving it to individual customers, it did not qualify for the caterer exemption.
According to FSIS documents, the agency believes that “the nature of the catering business has changed” and it has “concerns” that caterers are “losing control of how the food is being handled.”
So FSIS conducted a sting operation of 54 caterers nationwide. The stunning finding? “No food safety violation observed.”
Despite no evidence of any food safety violations, or any actual harm to consumers, FSIS gave Good Food and 17 other caterers a “Notice of Warning,” meaning they had “180 days to modify their business model and comply with FSIS rules and regulations.”
Specifically, FSIS presented present Good Food with three options: 1) rework its business model so that food would be served directly to individuals; 2) stop supplying school lunches; or 3) apply for a grant of federal inspection.
Option 1 would not fit the needs of Good Food’s customers. Option 2 could mean going out of business entirely. And option 3 is an expensive and distracting ongoing process. Good Food could probably afford option 3, but it would slow expansion plans, preventing the company from hiring more people.
Just days before the Department of Labor released its latest jobs report showing the nation’s unemployment rate had ticked up to 9.2 percent, Obama said at a June 29 press conference, “Keep in mind that, you know, the business community is always complaining about regulations.”
That may be true, but it doesn’t make their complaints any less valid. Small businesses in particular are hit harder by invasive regulations than larger firms are. They simply do not have the resources to navigate the federal regulatory maze that big businesses do. But small businesses still manage to employ roughly half of all Americans and account for almost 60 percent of job creation.
If you’re looking for one reason the Obama recovery is underperforming, the flood of new regulations and stepped-up enforcement emanating from the federal bureaucracy under Obama’s control is a leading suspect.
Conn Carroll is a senior editorial writer for The Washington Examiner. He can be reached at [email protected].
