WASHINGTON, April 12, 2016 - The “waters of the U.S.” rule is in limbo, but its potential impact is causing widespread concern among farmers, Tom Buchanan, president of the Oklahoma Farm Bureau, told a Senate subcommittee today.

Development of new business plans is on hold “as this hangs over our head,” Buchanan said. “Potentially being able to make any new ag business plans are on hold because we don’t really know where this is going to go. Additionally, any sale or purchase of land is in question now. What could that land be used for? So, the impact is growing and is beginning to scare rural America and is really impacting the rights of private property owners.”

The rule is currently stayed nationally as a multitude of parties argue whether all the judges in the 6th Circuit Court of Appeals should decide the legality of the rule, or whether the dispute properly belongs in the district courts.

The hearing, held by Sen. Mike Rounds, R-S.D., chairman of the Subcommittee on Waste, Superfund and Oversight Management, focused on EPA’s implementation of the Regulatory Flexibility Act, which requires the agency to convene a Small Business Advocacy Review panel and prepare a Regulatory Flexibility Analysis when it determines that a proposed regulation will have a significant economic impact on a substantial number of small businesses.

But it can also avoid doing both of those if it “certifies” that a substantial number of small entities won’t be affected – which is what EPA and the U.S. Army Corps of Engineers did with WOTUS. The Small Business Administration’s Office of Advocacy disagreed, citing the agencies’ own economic analysis, which estimated that Clean Water Act Section 404 permitting costs “would increase between $19.8 million and $52 million annually, and (that) Section 404 mitigation costs would rise between $59.7 million and $113.5 million annually,” according to a letter from SBA to EPA Administrator Gina McCarthy on Oct. 1, 2014.

No new legislation is imminent, EPW staff said Monday, but they pointed to a lack of clarity in the law. For example, the RFA does not define terms such as “significant economic impact” and “substantial number of small entities.” In addition, the law contains no provisions to reconcile disputes between EPA and SBA’s Office of Advocacy.

Three of the five panelists – Buchanan, Thomas Sullivan, a lawyer at the Washington, D.C., firm of Nelson Mullins Riley & Scarborough; and Michael Canty, president and CEO of Alloy Bellows & Precision Welding Inc. of Cleveland – said EPA needs to listen to the SBA and take small firms’ concerns into consideration when crafting regulations.

Sullivan, a former head of SBA’s Office of Small Business Advocacy, said recent data show that small firms create two-thirds of the net new jobs in this country and produce “16 times more patents per employee than their larger business competitors,” but they also are hit harder by regulations than their larger counterparts. 

“Small businesses with fewer than 50 employees shoulder $11,724 per employee per year to keep up with regulatory mandates,” he told the subcommittee.

EPA needs to take the RFA more seriously, he said. “There are times when EPA’s deadlines, whether they are judicial, statutory or political, push (agency) careerists to approach the Regulatory Flexibility Act as a set of bureaucratic procedural hurdles,” he said.

The other two panelists, Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce, and Emily Reichert, CEO of Greentown Labs in Massachusetts, said market-driven strategies could co-exist with regulation.

“Despite being in one of the most heavily regulated states in the country, in 2015, Massachusetts experienced the largest single year of growth in the clean energy industry since reporting began in 2010, at 11.9 percent, which represents 10,500 new jobs,” said Reichert, whose Greentown Labs in Somerville is the largest clean tech incubator in the country.

Knapp, who is also the co-chair of the American Sustainable Business Council, an organization that represents 200,000 businesses, said ASBC and the South Carolina Small Business Chamber “applaud the effort to reduce carbon emissions to restrain climate change and its significant negative economic impacts” through the Obama administration’s Clean Power Plan.

“Small business also supports the intent of the Waters of the U.S. rule,” he told the panel. “Besides the obvious environmental damage, water pollution brings huge economic burdens to small businesses, many of which may have to shut down temporarily if water sources are polluted.”



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