Waters of the US Regulation: “Leaving Small Businesses in a Lurch”

By SBE Council at 24 March, 2015, 2:16 pm

EPA’s proposed “waters of the U.S” regulation seeks to expand federal government control over bodies of water across the country. The proposed regulation will have vast impact, but the EPA failed to review the impact of the regulation on small businesses as required by law.

By Karen Kerrigan-

Today the Senate Agriculture Committee will convene a hearing on one of the most burdensome and far-reaching regulations proposed by the Environmental Protection Agency (EPA) and the Army Corps of Engineers (ACOE), the “Waters of the United States,” or WOTUS, rule. The intent of WOTUS is to clarify the Clean Water Act (CWA), but in practice it will mean greater uncertainty, more litigation, higher compliance costs, and lost jobs. The rule will extend federal bureaucrats’ reach into every corner of the American economy, affecting small businesses of every type, including those involved in, among many others, oil and gas production, mining, homebuilding, and agriculture.

On March 14^th, Sen. Deb Fischer (R-NE) chaired a field hearing on the WOTUS rule in Nebraska for the Senate Environment and Public Works Committee. Local officials and small businesses testified about the harmful impacts of regulations on competitiveness and job creation. The WOTUS rule, they said, will only make those problems worse.

Donald Wisnieski, owner of Wisnieski Construction, headquartered in Norfolk, NE, who also serves as president of the Nebraska Homebuilding Association, explained how government regulations have hampered the homebuilding industry:

I have an intimate understanding of how the federal government’s regulatory process impacts small businesses in the real-world. Many of these regulations have made it significantly more difficult to do business and have hampered job creation. Housing serves as a great example of an industry that would benefit from smarter and more sensible regulation. According to a study completed by the [National Association of Homebuilders], government regulations account for 25% of the price of single-family home. Nearly two-thirds of this impact is due to regulations that affect the developer of the lot, with the rest due to regulations that fall on the builder during construction. 

These statistics come as no surprise to small businesses or the American public. In a survey conducted last year for the Center for Regulatory Solutions, 66 percent said that government regulations “mostly hurt” small businesses and entrepreneurs, while 61 percent said government regulations are “more likely” to harm the economy by stifling job creation and competitiveness.

Wisnieski sees a missed opportunity with the WOTUS rule. By “improving the CWA’s implementation, removing redundancy, and further clarifying jurisdictional authority,” he explained, federal agencies could “do an even better job at facilitating compliance and protecting the aquatic environment.” But the EPA and ACOE have decided, as they have so many times before, to err on the side of more bureaucracy and greater centralized control. As Wisnieski said:

Unfortunately, the proposed rule falls well short of providing the clarity and certainty the construction industry seeks. This rule will increase federal regulatory power over private property and will lead to increased litigation, permit requirements, and lengthy delays for any business trying to comply. These changes will not improve water quality, as much of the rule improperly encompasses water features that are already regulated at the state level. 

Not only is water quality threatened, but so too the constitutional balance between the federal and state governments. The result is more litigation and greater bureaucratic control from Washington, putting small businesses and state regulators at the mercy of courts and federal bureaucrats:

If this rule is finalized, the federal government will severely cripple the state’s role in protecting our nation’s water resources, which would be a huge mistake as well as unconstitutional. Litigation is a likely result, and while it makes its way through the court system, regulators and businesses will be left in a lurch. 

The confusion wrought by WOTUS will wreak havoc on the permitting process, and thereby destroy economic activity, and in this case, investment in homebuilding and real estate for local communities. As Wisnieski explained:

If environmental liabilities, such as an onerous permitting process, exceed the purchase price of a real estate transaction, those liabilities could delay or eventually kill a deal-making process. If the rule is finalized in its current form, the ability to sell, build, expand, or retrofit real estate projects will suffer notable setbacks, including added cost and delays for development and investment.

The Senate Agriculture Committee will hear testimony today from a variety of stakeholders, including state officials from Arkansas, North Carolina, and Kansas, and from local power cooperatives, ranchers, and small businesses. Thanks to Senators Fischer and Pat Roberts (R-KS), chairman of the Senate Agriculture Committee, as well as the small businesses and federal, state, and local officials who are speaking out and making their voices heard, the American public is learning about how dangerous and costly the WOTUS will be, along with the more general threat to competitiveness, innovation, and job creation from an overreaching federal bureaucracy.

For additional information see: “Will Proposed ‘Waters of the US’ Regulation Drown Small Businesses?” 

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council (SBE Council). The Center for Regulatory Solutions is a project of SBE Council.