Rules Written in Washington, Paid for in Texas: The Federal Regulatory Burden Crushing Our Small Businesses

There is a particular kind of frustration that settles over a business owner who has done everything right—hired locally, invested in their community, built something from nothing—only to find themselves buried under a mountain of federal mandates they never voted for and cannot afford to ignore. Across Texas, that frustration has become a defining feature of small business life. And it is costing the state far more than most people realize.

The federal regulatory apparatus has grown steadily for decades, but the pace of expansion in recent years has been staggering. According to the National Federation of Independent Business, small businesses spend an average of $12,000 per employee per year complying with federal regulations—a figure that climbs even higher in industries subject to environmental or labor oversight. For a ten-person shop in Waco or a family-owned manufacturer in Tyler, that is not a line item. That is the difference between hiring a new employee and laying one off.

The Weight of Distant Decisions

Consider the experience of Marcus Delgado, who owns a small fabrication and welding business in Midland. For nearly two decades, his company has served the oil and gas sector, employing twelve workers and generating steady income for families in the Permian Basin. Over the past three years, however, he estimates that compliance costs related to federal environmental reporting requirements have added more than $40,000 annually to his operating expenses—costs that have nothing to do with whether he is actually polluting anything.

"They write these rules for big corporations that have whole departments to handle this stuff," Delgado said. "I don't have a compliance department. I have a bookkeeper and a foreman. Every hour I spend on federal paperwork is an hour I'm not running my business."

His story is not exceptional. It is representative. Across Texas, small business owners in agriculture, construction, food service, healthcare, and manufacturing describe a regulatory environment that increasingly favors large, well-resourced companies over independent operators. The rules are uniform in their application but deeply unequal in their impact. A multinational corporation can absorb compliance costs that would shutter a small-town business.

Labor Mandates and the Hiring Freeze

Federal labor regulations present a particularly acute challenge. The layered complexity of rules governing overtime classification, independent contractor status, and workplace safety reporting has made the simple act of hiring a calculated risk for many Texas employers. Business owners report that uncertainty around federal labor policy—especially when rules shift with each new administration—makes them reluctant to expand their workforce.

Sarah Nguyen, who runs a catering and event services company in Houston, employs a mix of full-time staff and part-time contractors. Changes to federal contractor classification rules over the past several years have forced her to restructure her workforce multiple times, incurring legal fees and administrative costs each time Washington changed course.

"I've spent more money on employment lawyers than I have on new equipment," she said. "That's not how I want to run my business. I want to invest in people and tools, not in figuring out what the federal government decided this year."

McKennon's policy framework addresses this directly. His deregulation agenda prioritizes restoring clarity and predictability to labor policy by pushing for Texas-based enforcement standards wherever federal law permits flexibility, and by advocating at the federal level for streamlined rules that distinguish meaningfully between small operators and large corporations.

Environmental Compliance: Protection or Punishment?

Texas businesses have long accepted reasonable environmental stewardship as part of doing business. What they increasingly resist is a federal regulatory posture that treats every small operator as a presumptive violator and demands documentation to prove otherwise. Environmental compliance costs for small manufacturers and agricultural operations have risen sharply, driven in part by reporting requirements that seem designed for industrial-scale enterprises.

A third-generation cattle rancher in the Hill Country—who asked not to be identified by name, citing concerns about federal agency scrutiny—described spending two full weeks each spring compiling water use and land management reports for federal regulators. "My grandfather didn't need a federal permit to run cattle on land our family has owned for sixty years," he said. "Something has gone seriously wrong."

McKennon has been unequivocal on this point: environmental protection and economic freedom are not mutually exclusive, but federal overreach has pushed the balance dangerously out of alignment. His platform calls for devolving regulatory authority to state agencies wherever constitutionally permissible, allowing Texas—which has its own robust environmental infrastructure through the Texas Commission on Environmental Quality—to set standards appropriate to Texas conditions and Texas businesses.

McKennon's Deregulation Agenda: Local Control as Economic Policy

At the heart of McKennon's approach is a straightforward conviction: the people best positioned to understand what Texas businesses need are Texans themselves. Washington bureaucrats operating on national averages and political imperatives are poorly equipped to craft rules that serve a small fabrication shop in Midland or a family ranch in the Hill Country.

His deregulation agenda rests on four pillars. First, an audit of existing state-level regulatory burdens to identify mandates that exceed federal minimums unnecessarily and can be reduced without compromising public safety or environmental integrity. Second, a legislative push to require cost-benefit analyses—specifically accounting for small business impact—before any new state regulation takes effect. Third, active engagement with Texas's congressional delegation to reform federal rules that disproportionately burden small operators. Fourth, the creation of a small business regulatory ombudsman within state government, empowered to advocate for entrepreneurs navigating federal compliance requirements.

This is not a promise to eliminate all regulation. It is a commitment to ensuring that rules serve the public interest without becoming instruments of economic attrition against the very businesses that sustain Texas communities.

The Stakes for Texas's Economic Identity

Texas has built its economic reputation on a combination of natural resources, a skilled workforce, and—critically—a business climate that rewards initiative and tolerates risk. That climate does not sustain itself automatically. It requires active stewardship from elected officials willing to push back when distant power centers threaten to erode it.

The small business owners who spoke for this article are not asking for special treatment. They are asking for the same thing Texans have always asked for: a fair chance to compete, to grow, and to build something lasting. When federal regulations make that chance harder to seize with each passing year, the state's economic identity is not just inconvenienced—it is undermined.

McKennon's campaign is built on the belief that Texas's best days lie ahead, but only if its leaders are willing to fight for the conditions that make those days possible. Protecting small businesses from regulatory overreach is not a niche policy concern. It is foundational to everything this state has ever stood for.

The rules should serve the people who live and work in Texas—not the other way around.