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October 03, 2013
Small business wants panel on CWA jurisdiction

The self-described “leading small-business advocacy association” is asking the Office of Information and Regulatory Affairs (OIRA), a division of the Office and Management and Budget, to return a draft interpretation of Clean Water Act (CWA) jurisdictional waters to the EPA. 

According to the National Federation of Independent Businesses (NFIB), the EPA did not meet its obligations under federal law to convene a small-business advocacy review (SBAR) panel before submitting the draft to the OIRA.  The Regulatory Flexibility Act and its amendment, the Small Business Regulatory Enforcement Fairness Act, require that federal agencies use SBAR panels to solicit feedback on economic impact and options from small businesses and their representatives during the development of rules that will have a clear and significant economic impact on a substantial number of small businesses. 

The EPA/Corps submitted its draft interpretation to the OIRA on September 17, 2013.  The intent of the draft is to “make clear which water bodies are protected under the Clean Water Act” in light of two U.S. Supreme Court decisions. 

High costs

In its letter, the NFIB states that the “significant expansion of federal jurisdiction” being sought by the agencies will have an economic impact on “virtually all small businesses” and on private landowners in particular.  As the NFIB sees it, the jurisdictional expansion contemplated by the EPA/Corps will compel landowners to either seek a CWA permit from the Corps or a formal jurisdictional determination from the agencies.  Both these actions typically require that small business seek costly outside professional guidance.  The NFIB also notes that in 2002, the average CWA permit cost $270,000. 

“While multinational corporations with tremendous capital resources might be able to afford such costs, most small businesses are without recourse,” writes the NFIB.  “Usually, their only option is to swallow their losses and forgo any development plans.  Unfortunately, these small businesses suffer greatly because they have usually tied up much of their assets into their real estate investments and they can neither afford necessary permits nor legal representation to challenge improper jurisdictional assertions.”

Agencies already aggressive

Even absent the draft guidance, the NFIB says that federal agencies have taken an aggressive posture in making CWA jurisdiction decisions in recent years.  The draft guidance would mark a “dramatic shift toward an even more aggressive jurisdictional reach,” says the NFIB, which adds that “if any amount of water rests or flows over a property – at any point during the year – the owner may have cause for concern that the agency might assert CWA jurisdiction.”

If landowners do not pursue a jurisdictional ruling, says the NFIB, they must proceed at their own risk if they wish to use portions of their property that might be viewed as jurisdictional.  “And that is a risk most reasonable individuals would be unwilling to take,” writes the NFIB.  “Indeed, they face ruinous fines of up to $37,500 per day if they are mistaken.  And for this reason any property that might be viewed as containing a jurisdictional wetland will be greatly devalued.”

Finally, the NFIB states that it is not asking that the EPA abandon the rulemaking.  “We simply request that the Agency study this proposed rule’s impact on small businesses as required by law,” says the NFIB.

NFIB letter

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