Small business owners: New water rules will drown my company in regulations


Cattle ranchers fear newly proposed “federal water” rules will make regualtory compliance much more costly and complicated going forward. (Chris Huber/AP)

Every summer, Jack Field takes his herd of about a hundred cows to graze in the same floodplain — a low, flat stretch of land next to a river — in Yakima, Wash.

Under newly proposed regulations, he may not be able to go back next summer. And that’s just one of many problems he says the new rules would create for his business.

“I don’t think the negative impacts of this definition can be overstated,” Field, a cattle rancher, said during a congressional hearing concerning the proposal on Thursday. “It has the potential to impact every aspect of my operation and others like it.”

At issue is the definition of federally protected waters. In March, the Environmental Protection Agency pitched new rules meant to clarify and expand its regulatory reach under the Clean Water Act to include small streams, riverbanks, wetlands and floodplains.

Gina McCarthy, the agency’s administrator, has defended the proposal, saying that it would not significantly expand the department’s authority to monitor and regulate waters.

Several small business owners and lawmakers disagree, warning that the new rules will subject farmers, ranchers, homebuilders and other entrepreneurs to complicated and potentially costly new regulations that were written with other industries and other purposes in mind.

Field, for example, has a small stream running through his pasture from which his cattle drink. Under the new rules, the stream may qualify as federally protected water, requiring a new permit for use of the land and “opening me and my ranch up to significant liability,” he said during the hearing before the House Small Business Committee.

Alan Parks, another executive who testified, said the new rules will make business much more costly for his stone and gravel company in Memphis, Tenn. His firm strives to avoid building new sites in areas that fall under the EPA’s jurisdiction due to what he described as a “long and costly” permitting and certification process.

Should more land be deemed protected, he will have fewer places to mine for rocks, and he may be forced to conduct an expensive review to determine whether sites that were previously not considered bodies of water are now subject to the rules.

Ultimately, the revised definition would make it “very difficult for our industry and other businesses to plan new projects and make hiring decisions,” Parks said.

Rep. Sam Graves (R-Mo.), head of the small business committee, issued a similar warning, arguing that the rule “threatens to drown small businesses in unnecessary regulatory requirements.”

“This regulatory overreach means small businesses and landowners may need costly permits and face lengthy delays for ordinary activities on private property,” he added, calling the revision one of the most “expansive and potentially damaging” proposals the panel has examined during his four-year tenure leading the committee.

On the other side of the aisle, Rep. Kurt Schrader (D-Ore.) described the rules as an “abomination” and “a power grab for private property.”

Graves and more than a dozen other House Republicans sent a letter last week to the EPA and the Army Corps of Engineers, which helped draft the proposal, urging them to rescind the rules and conduct a thorough analysis of the likely effects on small businesses, as required by the Regulatory Flexibility Act.

“Had the agencies conducted outreach to and gotten input from small businesses,” Graves said, “perhaps they would have identified and fixed some of the problems with the rule before it was proposed.”

Nydia Velazquez (N.Y.), the committee’s ranking Democrat, pointed out that small companies in certain sectors may benefit from the EPA’s proposal, including tourism, recreation and fishing businesses. However, she too criticized the department for not conducting the required due diligence regarding the rules’ impact on small firms.

“Such agency indifference is not new to this committee,” she said.

A spokesperson for the EPA pushed back against the criticism, saying that the agency “consulted with small businesses across the country and took into account the feedback we received while drafting” the new rules.

“We will continue to meet with a wide range of stakeholders to gather input that will help inform the rule moving forward,” the spokesperson said.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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