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Positions:  Creating a Small Business Regulatory Enforcement Fairness Program

S.1503 by Senator Alesi
A.1001 by Member of Assembly Schimminger
AN ACT to amend the economic development law, in relation to creating a small business regulatory enforcement fairness program.

There are two ways to achieve high levels of compliance with the myriad of state laws and regulations governing the conduct of commerce in New York State - through cooperation, or through confrontation.

Unfortunately, despite familiar rhetoric portraying state government as "more business-friendly," convenience stores frequently encounter the adversarial approach, the "gotcha" style of enforcement, a preference to punish rather than educate or remediate.
By creating the Small Business Regulatory Enforcement Fairness Program, S.1503/A.1001 will provide a mechanism for injecting reason, responsiveness, and respect into the regulation of small businesses.

On a per-square-foot basis, convenience stores may be the most heavily regulated small businesses in New York. The Lottery Division, Department of Environmental Conservation, Department of Agriculture and Markets, State Liquor Authority, Department of Taxation and Finance, Department of Health, and Department of Labor all regulate our stores with their own licenses, fees, rules, inspections (often unannounced and/or "undercover"), audits, and penalties for non-compliance.

The vast majority of C-store operators are responsible small business owners, and make sincere efforts to abide by all applicable state and local regulations. But in order to sustain their spirit of cooperation, they need to perceive the regulations as sensible, the enforcement system as fair, and the regulatory personnel as reasonable. Situations like the following tend to strain that good will:

• A store in a small rural town that carries limited quantities of pantyhose and diapers as a convenience to its customers is advised by the state Department of Taxation and Finance that since those products are now exempt from the state portion of sales tax under the clothing sales tax repeal (yet still taxable in that county under the county opt-out provision), the store must file quarterly reports documenting the quantity sold, the date, the price, etc. In other words, "You must regularly report to us how much sales tax you don't collect." The additional paperwork burden is such a hassle, it may cause the store to stop carrying those products altogether.
  
• A retailer with gas pumps at his store is told by the Department of Environmental Conservation that he will be fined several thousand dollars for failing to maintain "10-Day Reconciliation Reports" tracking changes in underground petroleum storage tank contents caused by fluctuations in temperature. Is this a new law, he asks? No, we just haven't been enforcing it until now, he is told. And if you fight this violation, you will end up with a higher fine.
  
• In accordance with his written personnel policy, a retailer accused of violating the state law prohibiting sale of tobacco to minors fires the clerk who made the sale, because she violated not only the law, but store procedure and the training she was given. Based on evidence of the underage sale, the retailer (not the clerk) is fined by the Department of Health. Based on a finding of a lack of evidence of the underage sale, the clerk is granted unemployment benefits by the Department of Labor, effectively penalizing the store owner for doing the right thing to prevent future underage sales from occurring.
  
• In Central New York, Western New York, and certain other regions of the state, there is enormous frustration among small business owners over having to comply with mountains of state regulations and face stiff penalties for non-compliance when the state agencies refuse to carry out any enforcement whatsoever on their nearby Native American competitors.
  The need for a more reasonable, constructive, even-handed approach to regulating small businesses is clear. No one advocates letting bad actors off the hook; that's why the bill sets forth exclusions from the reduction and waiver provisions proposed. But responsible behavior by responsible small businesses should be, and under the bill will be, acknowledged and reinforced.

February 12, 2001

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