Ag Policy Blog

Small Business Advocacy Group Calls for CWA Rule to be Withdrawn

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Though U.S. farmers have come out in droves against EPA's proposed Clean Water Act rule -- calling on the agency to withdraw the rule for fear of what many landowners believe is an attempted land grab -- farmers and ranchers may have gotten a boost from an unlikely source: A group within a federal agency that represents small businesses.

An advocacy group within the U.S. Small Business Administration Wednesday asked EPA Administrator Gina McCarthy and the U.S. Army Corps of Engineers to withdraw the rule. The group said the two agencies didn't considering how the rule could affect small business owners across the country.

The office of advocacy of the SBA said in the letter that it "believes that EPA and the Corps have improperly certified the proposed rule under the Regulatory Flexibility Act (RFA) because it would have direct, significant effects on small businesses. Advocacy recommends that the agencies withdraw the rule and that the EPA conduct a small business advocacy review panel before proceeding any further with this rulemaking."

The SBA group said the Small Business Regulatory Enforcement Fairness Act requires small entities to be "considered in the federal rulemaking process," the group said. Federal agencies are required to consider the "impact of their proposed rules on small businesses.

"When a rule is expected to have a significant economic impact on a substantial number of small entities, agencies must evaluate the impact, consider less burdensome alternatives, and in the case of EPA, convene a Small Business Advocacy Review panel," the group said in its letter.

The group said it may file written comments on the rule to reflect "small business concerns about the impact of a rulemaking. Because of small business concerns with the proposed rule, advocacy held a roundtable on July 21, 2014 and has heard from numerous small entities in many industries."

While EPA contends that the CWA rule is required to help clear up confusion about which waters are waters of the U.S., the SBA advocacy group said in its letter that, "The courts have left much uncertainty regarding what constitutes a 'water of the United States.' Such uncertainty has made it difficult for small entities to know which waters are subject to jurisdiction and CWA permitting."

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The group said, however, that according to federal law EPA is "required to conduct small business advocacy review panels, often referred to as SBREFA panels, when it is unable to certify that a rule will not have a significant economic impact on a substantial number of small businesses."

The panels would include EPA representatives, others from the Office of Management and Budget's Office of Information and Regulatory Affairs and the chief counsel for the SBA advocacy group.

"Advocacy believes that the agencies have improperly certified this rule," the letter said.

INCORRECT ANALYSIS

The group said it believes that in drafting the CWA rule EPA and the Corps used an "incorrect baseline" for determining their obligations under the law, that the rule "imposes costs directly on small businesses," and the rule will have a "significant economic impact on small businesses."

The group said EPA should have evaluated the potential costs of the rule based on the new rule itself, and not based on the current CWA rule.

"The 'existing regulations' that the agencies refer to in this reasoning is the 1986 rule defining the scope of waters of the United States," the letter said. "Compared to the 1986 definition, the proposed changes represent a narrowing of coverage. However, in the economic analysis accompanying the rule, the agencies assess the regulation vis-à-vis current practice and determine that the rule increases the CWA's jurisdiction by approximately 3%.[24] The agencies' certification and economic analysis contradict each other.

"In the current case, the Clean Water Act and the revised definition proposed in this rule directly determine permitting requirements and other obligations. It is unquestionable that small businesses will continue to seek permits under the Clean Water Act. Therefore they will be subject to the application of the proposed definition and the impacts arising from its application."

In addition, the group said the rule defines the scope of the CWA, "The rule does not, for example, set a goal for which types or how many waters must be included in jurisdiction, leaving the Corps or states to determine the exact definition of waters of the United States in particular instances. This rule establishes the definition and all small entities are bound by it."

The group said the CWA rule will have a "significant economic impact on small businesses."

"In the analysis, the agencies examine the anticipated changes to permitting under CWA Section 404 (development projects that discharge dredge or fill materials into waters of the U.S.)," the group said in the letter. "They find that in current practice 98% of streams and 98.5% of wetlands meet the definition of waters of the U.S. Under the revised definition these figures rise to 100%.

"They find zero percent of 'other waters' (the seventh category in the revised definition) to be covered in current practice, but the revised definition would cover 17% of this category."

The SBA group said the economic analysis also "singles out a particular class of businesses potentially affected by the revised definition, yet fails to evaluate any of these potential effects.

"Concerns raised by small businesses as well as the agencies' own economic analysis both indicate that small businesses will see a cost increase as a result of the revised definition."

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