Fight over Crony FDA Regulation Reaches Congress

Fight over Crony FDA Regulation Reaches Congress

In December of this year, a controversial new series of FDA regulations are scheduled to come into effect, imposing criminal penalties and fines on restaurants that do not display required calorie counts and related information on their menus.  Advocates of the regulations argue that they are necessary to protect public health, while opponents argue that they unfairly tilt the playing field in favor of big business.  Today, the House of Representatives will vote on the Common Sense Nutrition Disclosure Act,  H.R. 2017, which may help to clarify this regulation and minimize these negative effects.  For Hispanic small business and restaurant owners, this kind of legislative fix is a step in the right direction toward a more level playing field and away from cronyism.

According to proponents of the bill, small business owners will be particularly negatively affected by the FDA regulation:

“Under the menu labeling rule, restaurant companies that have 20 or more locations are required to provide nutritional information for their menu items,” writes Brent Gardner, Vice President of Government Affairs for Americans for Prosperity. “Franchise locations are caught in the cross-hairs of this rule. Although they have national branding, most are independent small business owners and will have difficulty shouldering the costs of providing new menu displays. Many may have to raise prices or even close their doors.”

The FDA’s nutritional labeling requirements involve complex calculations of portions, calories, and other data that impose significant costs on restaurant owners, especially for small businesses.  Unfortunately, this disproportionate impact of this regulation will benefit big businesses at the expense of their smaller competitors by forcing them to raise prices, risk financial losses, or potentially close up shop. That means these regulations may be no problem for Taco Bell, but for a local taqueria chain in San Antonio or Miami, the FDA’s menu labeling requirements could be a death blow. The result will be an uneven playing field and worsened inequality.

Making matters worse, the menu labeling requirements could have a particularly negative impact on foods with highly variable calorie counts, affecting many cherished Hispanic foods.  As Reps. Henry Cuellar and Tony Cárdenas explain in a letter to the Congressional Hispanic Caucus, “the complexity of the rules make compliance particularly difficult for businesses that sell many foods that are central to our cultural traditions and vary greatly from community to community.”  If you like to eat burritos, tacos, and pupusas from local Hispanic restaurants, these new menu labeling requirements are bad news.

While government regulations are usually put forward with the intent to improve public health and safety, they often result in serious unintended consequences – and benefit established interests over the little guy.  In order to maintain a free market and a level playing field, policymakers should exercise caution when imposing new regulations in order to ensure that they do not disproportionately benefit big businesses at the expense of their competitors.   Unfortunately, the FDA’s menu labeling requirements do not pass this test, and for Hispanic small business and restaurant owners, that is bad news.  It’s up to Congress to fix this unfair regulation.