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[Senate Hearing 114-552]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-552

                AN EXAMINATION OF PROPOSED ENVIRONMENTAL
           REGULATION'S IMPACTS ON AMERICA'S SMALL BUSINESSES

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 19, 2015

                               __________

    Printed for the Committee on Small Business and Entrepreneurship
    
    
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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                    ONE HUNDRED FOURTEENTH CONGRESS

                              ----------                              
                   DAVID VITTER, Louisiana, Chairman
             JEANNE SHAHEEN, New Hampshire, Ranking Member
JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
RAND PAUL, Kentucky                  HEIDI HEITKAMP, North Dakota
TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
KELLY AYOTTE, New Hampshire          GARY C. PETERS, Michigan
MICHAEL B. ENZI, Wyoming
                  Zak Baig, Republican Staff Director
                 Ann Jacobs, Democratic Staff Director
                           
                           
                           
                           
                           C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana..     1
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........     2
Ernst, Hon. Joni, a U.S. Senator from Iowa.......................    20

                               Witnesses
                                Panel 1:

Maresca, Charles, Director of Interagency Affairs, Small Business 
  Administration, Office of Advocacy, Washington, DC.............     4

                                Panel 2:

Dougherty Maulsby, Darcy, Fifth-Generation Iowa Farmer, Dougherty 
  Farm, Lake City, IA............................................    21
Noel, Karl Randall, President, Reve Inc., Laplace, LA............    27
Milito, Hon. Elizabeth, Senior Executive Counsel, National 
  Federation of Independent Business, Washington, DC.............    40
Bulis, Benjamin, President, American Fly Fishing Trade 
  Association, Bozeman, MT.......................................    48

          Alphabetical Listing and Appendix Material Submitted

American Sustainable Business Council
    Statement....................................................    81
Bulis, Benjamin
    Testimony....................................................    48
    Prepared statement...........................................    50
City of Baltimore Council Bill 14-0185R
    Resolution Introduced and Adopted September 8, 2014..........    83
Dougherty Maulsby, Darcy
    Testimony....................................................    21
    Prepared statement...........................................    24
EPA
    Summary of the Discretionary Small Entity Outreach for 
      Planned Proposed Revised Definition of ``Waters of the 
      United States''............................................    85
    Summary of the Small Entities Outreach Meeting on the 
      Proposed Rule for Redefining Waters of the United States 
      under the Clean Water Act, October 15, 2014................    99
Ernst, Hon. Joni
    Testimony....................................................    20
Latino Business Council
    Opinion by Ruben Guerra......................................   111
Maresca, Charles
    Testimony....................................................     4
    Prepared statement...........................................     6
Markey, Hon. Edward J.
    Advocacy Waters of the United States Contacts: Small 
      Businesses and their Representatives.......................    62
Milito, Hon. Elizabeth
    Testimony....................................................    40
    Prepared statement...........................................    42
National Farmers Union
    Letter Dated September 22, 2014..............................   113
National Federation of Independent Business
    Jurisdictional Comments......................................    66
    RFA Comments.................................................    75
National Wildlife Federation
    Letter Dated May 18, 2015....................................   124
Noel, Karl Randall
    Testimony....................................................    27
    Prepared statement...........................................    29
Shaheen, Hon. Jeanne
    Testimony....................................................     2
Small Business Owners Favor Regulations to Protect Clean Water
    Phone Poll Dated July 2014...................................   132
Vitter, Hon. David
    Opening statement............................................     1

 
                       AN EXAMINATION OF PROPOSED
    ENVIRONMENTAL REGULATION'S IMPACTS ON AMERICA'S SMALL BUSINESSES

                              ----------                              

                         TUESDAY, MAY 19, 2015

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:02 p.m., in 
Room 428A, Russell Senate Office Building, Hon. David Vitter, 
Chairman of the Committee, presiding.
    Present: Senators Vitter, Fischer, Gardner, Ernst, Ayotte, 
Shaheen, Markey, and Booker.

 OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chairman Vitter. Good afternoon, everyone, and we will call 
the committee to order.
    Welcome to the Senate Committee on Small Business and 
Entrepreneurship's hearing assessing the economic and 
regulatory impacts of the EPA and the Army Corps of Engineers' 
proposed rule to redefine the term ``waters of the United 
States,'' which will be finalized in the near future.
    The purpose of this hearing is to examine the impact that 
the proposal will have on small businesses as well as the 
agencies' egregious circumvention of the very regulatory 
process set in place to protect small businesses. Specifically, 
the EPA and the Corps have publicly concluded that the proposed 
rule will not have any significant impact on a substantial 
number of small entities, and they also concluded that the 
proposal will have no direct impacts on small entities.
    Now, I think this is flat out outrageous, that the 
administration would pretend that the proposal would not have a 
substantial and a direct impact on small businesses. It is so 
outrageous, in fact, that I will soon introduce a Sense of the 
Senate Resolution condemning the administration's circumvention 
of this important process and will hold a vote on that 
resolution in this committee.
    Regarding the content of the rule, the sweeping language in 
the proposal represents a direct threat to private property 
rights. By expanding the types and numbers of water bodies 
subject to federal control, these agencies will further expand 
their authority enormously to tell home owners, small 
businesses, and others what they can do on their own property.
    This provides an opening for the federal government to 
increase its role yet again, and dramatically, in local land 
use planning and decisions. State and local zoning commissions 
will see their rules displaced by Washington bureaucrats who do 
not truly understand the implications of the policy changes 
they will be pushing forward with. This will lead to costly 
litigation and expand the ability of radical environmental 
groups to sue land owners over how they manage and use their 
own property. Additionally, the rule as proposed will have a 
significant negative impact on agriculture, and particularly 
smaller family farms.
    On October 1, 2014, the Office of Advocacy, an independent 
office of the SBA, sent a letter to the EPA and the Army Corps 
that was highly critical of their finding that the proposal 
will not have any significant impact on a substantial number of 
small entities. The Office of Advocacy's role is to represent 
small entities in the federal rulemaking process. In fiscal 
year 2014, it achieved regulatory cost savings to small 
businesses of more than $4.8 billion. A substantial part of 
these savings--in fact, the great majority, $4.6 billion--arose 
from changes to proposed EPA regulations.
    In its October letter, Advocacy unequivocally stated, and I 
quote, ``Advocacy believes that EPA and the Corps have 
improperly certified the proposed rule under the Regulatory 
Flexibility Act 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,'' close quote. As we know, EPA has 
completely ignored that input.
    Under the Regulatory Flexibility Act, when an agency finds 
that a proposed rule will have a significant economic impact on 
a substantial number of small entities, it must evaluate the 
impact, consider alternatives, and in the case of EPA, convene 
a Small Business Advocacy Review Panel to consider the input of 
the Office of Advocacy and the small business community. But, 
by certifying that the rule will not have that impact, which is 
clearly just not the case, the EPA and the Corps effectively 
shut down this process mandated by law.
    As Chair of the Small Business Committee, I am committed to 
ensuring that we do not allow that sort of action to proceed 
unchecked. That is why we are having this hearing. That is why 
we are going to have this resolution, which I will be 
introducing soon and certainly hope can gain bipartisan support 
in this committee and in the Senate overall.
    Now, I turn to our distinguished Ranking Member, Senator 
Shaheen, for her opening comments.

  OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, A 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Shaheen. Thank you, Mr. Chairman.
    Good afternoon, everyone. Welcome to today's hearing. I 
want to begin by thanking both panels who are here to testify.
    As the Chairman noted, today, we are discussing the impact 
of environmental regulations on small business, and 
specifically, we are going to focus on the joint efforts by the 
Environmental Protection Agency and the Corps of Engineers to 
amend their definition of Waters of the United States. This 
term is integral to clarifying which bodies of water will be 
covered under the Clean Water Act.
    I am pleased that on our first panel, we will have Mr. 
Maresca, who is the Director of Interagency Affairs with the 
Office of Advocacy of the Small Business Administration, 
testifying. You will bring an important voice to this 
afternoon's hearing, given the role the Office of Advocacy has 
representing the interests of small businesses in the federal 
rulemaking process.
    In addition, I think it is beneficial that our second panel 
will provide small business perspectives across a variety of 
diverse industries, including agriculture, home building, and 
outdoor recreation.
    I am disappointed that we do not have officials from the 
two relevant federal agencies who are charged with promulgating 
this rule joining us today. I believe that in order for there 
to be a meaningful and constructive conversation about the 
proposed rule's impact on small businesses, we need to have all 
parties who are part of this rulemaking process participating 
in the discussion.
    I hope that today's hearing is not about attacking the 
Clean Water Act or obstructing the efforts of the federal 
government to make regulatory decisions. This hearing should 
focus on whether the agencies responsible for promulgating this 
rule, the Environmental Protection Agency and the U.S. Army 
Corps of Engineers, complied with their statutory requirements 
to ensure that small businesses are considered in the 
rulemaking process.
    As we all know, the EPA and the Corps of Engineers 
determined that the rule would not have a significant impact on 
small businesses, and I am disappointed that they are not here 
to answer questions and tell us how they arrived at their 
conclusions.
    It is my sincere hope that moving forward this Committee 
can work together in a bipartisan manner to effectively 
communicate the interests of small businesses with federal 
agencies charged with crafting federal regulations.
    So, thank you, Mr. Chairman, and I look forward to hearing 
from today's witnesses.
    Chairman Vitter. Thank you very much, Senator Shaheen.
    And, just for the record, let me point out that we would 
have welcomed the EPA and the Corps to be here, and it is my 
understanding that the Minority staff reached out to them about 
that and were basically told that they were not going to be 
coming. So, that underscores, I think, the frustration of many 
of us with their decision and with the tone and the attitude 
they have taken in making this certification, which I think--I 
am just speaking for myself--is just flat out contrary to a 
whole, whole lot of evidence.
    Okay. At this point, I would like to introduce our first 
witness, Charles Maresca, Director of Interagency Affairs at 
the Small Business Administration's Office of Advocacy. Mr. 
Maresca will be the lone witness on the federal panel because 
of what I just said. He leads Advocacy's efforts to monitor 
federal agencies' compliance with the Regulatory Flexibility 
Act, and, of course, that is what we are talking about with 
regard to this proposed waters of the United States rule today.
    Welcome, Mr. Maresca.

STATEMENT OF CHARLES MARESCA, DIRECTOR OF INTERAGENCY AFFAIRS, 
     OFFICE OF ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Maresca. Thank you, Chairman Vitter, Ranking Member 
Shaheen, members of the committee. I am honored to be here this 
afternoon to present testimony to you on behalf of the Office 
of Advocacy of the U.S. Small Business Administration regarding 
the Environmental Protection Agency and the Army Corps of 
Engineers' proposed rule on the definition of waters of the 
United States under the Clean Water Act.
    Advocacy is an independent office within the SBA that 
speaks on behalf of the small business community before federal 
agencies, Congress, and the White House. The views in my 
testimony do not necessarily reflect the views of the 
administration or the SBA and this statement has not been 
circulated to the Office of Management and Budget for 
clearance.
    And, I ask that my complete testimony be entered into the 
record. It includes a detailed background on Advocacy's work 
with this proposed rule, but I will just summarize my thoughts 
in these remarks.
    Chairman Vitter. Without objection, that will be entered 
into the record.
    Mr. Maresca. As Director of Interagency Affairs in the SBA 
Office of Advocacy, I manage a team of attorneys that works 
with the federal government agencies during the rulemaking 
process to reduce the regulatory burdens on small businesses 
and oversee the requirements of the Regulatory Flexibility Act. 
The RFA requires federal agencies to consider the effects of 
their proposed rules on small businesses and other small 
entities, including small government jurisdictions and small 
nonprofits.
    The Clean Water Act was enacted in 1972 to restore and 
maintain the integrity of the nation's waters. The Act requires 
a permit in order to discharge pollutants, dredged, or fill 
materials into any body of water deemed to be a water of the 
United States. The courts have left much uncertainty regarding 
what constitutes a water of the United States. This uncertainty 
makes it difficult for small entities to know which waters are 
subject to Clean Water Act jurisdiction and permitting.
    To address this uncertainty, the EPA and the Corps have 
proposed a rule which would revise the regulatory definition of 
waters of the United States and would apply to all sections of 
the Clean Water Act. Advocacy has been engaged with EPA, the 
Corps, and small entities on this issue from its inception, 
including holding roundtable discussions in Washington, D.C., 
and Los Angeles, California, in July and August of 2014. In 
addition, the Office participated in two small entity meetings 
held by EPA and the Corps in 2011 and 2014.
    Advocacy has met with and spoken to numerous individuals, 
small entities concerned about the effects of this rule over 
the last four years. These small entities represent many 
different industries, including but not limited to agriculture, 
real estate, home builders, cattlemen, farmers, and the mining 
industry. Feedback from these small entities has remained 
consistent. Small businesses believe that the rule as proposed 
by EPA and the Corps is an expansion of jurisdiction and will 
increase costs to small businesses.
    On October 1, 2014, the Office of Advocacy sent a letter to 
EPA and the Corps expressing our concerns with their RFA 
compliance. Advocacy believes, first, the rule will impose 
direct costs on small businesses. Second, these costs will have 
a significant economic impact on those small businesses. And, 
third, the agencies incorrectly certified the rule and should 
have conducted a SBREFA panel.
    In conclusion, Advocacy and small businesses are concerned 
about the rule as proposed. The rule will have a direct and 
potential costly impact on small businesses. Advocacy has 
advised the agencies to withdraw the rule and conduct the 
SBREFA panel prior to promulgating any final rule on this 
issue.
    I would be happy to answer any questions you might have. 
Thank you.
    [The prepared statement of Mr. Maresca follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Vitter. Thank you very much, and we will start 
those questions.
    Mr. Maresca, you stated in your testimony that EPA and the 
Corps should have certified that the proposal will have that 
significant economic impact on a substantial number of small 
business entities and, therefore, they should have convened an 
SBAR panel. Can you please explain how that panel process helps 
protect the interests of small businesses?
    Mr. Maresca. Yes, Senator. The requirement of a panel that 
is in the RFA for EPA requires that they convene a meeting with 
small entity representatives. The panel consists of--would 
consist of EPA, Advocacy, and OMB. We would hear--they would 
present to those small entities any data that they had 
collected in support of the rule that they were proposing and 
they would suggest to the small entity representatives a number 
of regulatory alternatives, including a preferred option, in 
most cases, and the small entity representatives would have 
been given an opportunity to comment on all of those 
alternatives and to suggest ways that the rule could be--could 
mitigate the costs.
    Chairman Vitter. So, just to clarify and make sure I 
understand, it is significant in at least two senses. Number 
one, the agencies would have to present their factual evidence 
and basis for this rulemaking, proposed rulemaking. And, number 
two, they would have to present alternatives, correct?
    Mr. Maresca. That is correct. That is the point of the 
SBREFA panels.
    Chairman Vitter. Okay. Your testimony also states that the 
agencies incorrectly used a standard from 1986, a standard that 
has been abrogated by the U.S. Supreme Court, to find that the 
rule will not expand the jurisdiction of the Clean Water Act 
and, therefore, not affect small businesses. However, in their 
economic analysis, the EPA and the Corps used the more recent 
and correct standard to show that the rule could expand the 
jurisdiction of the Clean Water Act. It seems like they are 
trying to have it both ways and use whatever standard is 
convenient at the time. Can you provide some additional detail 
on how the use of an incorrect baseline obscures what the real 
impacts of their proposal might be?
    Mr. Maresca. Well, we believe that the impact of the rule 
is the change in practices that small businesses would have to 
begin. The way that agencies measure the costs of their rules 
in any regulatory analysis is governed by--generally governed 
by OMB Circular A-4, which tells them to use the world as it 
is, and the world as it is right now for waters of the United 
States is the EPA guidance from 2008. And, this rule would--the 
rule, as proposed, would expand the jurisdiction as compared to 
that guidance.
    Chairman Vitter. Okay. As we have discussed, the EPA and 
the Corps through this fraudulent certification are avoiding 
conducting this RFA analysis, including holding the SBAR panel. 
In your expert opinion, could the underlying RFA law be 
modified or strengthened to prevent this in the future?
    Mr. Maresca. Senator, the problem with this rule as 
proposed is the misapplication of case law and the choice--the 
incorrect choice of a baseline. I am not sure how to--how we 
would amend the RFA to approach that, those problems. However, 
we do think that the RFA could be improved in the area of 
indirect effects and we would be happy to work with you on 
that.
    Chairman Vitter. Could this improper action under federal 
law be the basis for future litigation challenging the rule?
    Mr. Maresca. Certain parts of the RFA are judicially 
reviewable, and an incorrect certification is one of the--could 
be a basis for a complaint in federal court.
    Chairman Vitter. Okay. Thank you. I will turn to Senator 
Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    I just wanted to clarify that it is my understanding, as 
well, that we asked both the EPA and the Army Corps to be 
present at today's hearing and that they were not able to do 
so, they said, for scheduling reasons. So I wonder, Mr. 
Maresca, if you could talk about why neither of those agencies 
seems to feel--or said that there was no need to appoint a 
Small Business Advocacy Review Panel. What was the reasoning 
for that?
    Mr. Maresca. The reasoning, as stated, is that the costs 
that are imposed by the rule are indirect and there is case law 
on the point that whether an agency needs to consider the 
indirect effects of a rule. We believe that the case law was 
misapplied. They also based their certification on the choice--
on whether there was an expansion of jurisdiction or not. As 
compared with the 1986 rule, there is not. As compared with the 
2008 guidance, there is.
    Senator Shaheen. Right. I understand that, and I know that 
you pointed that out in the letter. What was the response when 
you did that? Because it would seem that it might be prudent to 
err on the side of, given the discrepancies in the statutes, to 
err on the side of making sure that they had responded to any 
potential small business concerns.
    Mr. Maresca. Senator, we would agree with that. In their 
own economic analysis, EPA points out that there are, in fact, 
costs to this rule.
    Senator Shaheen. As I have talked to representatives from 
small business, I have heard from some people who feel like 
there will be a significant impact because of this proposed 
rule. There are others who feel like they support it. There are 
others who feel like it does not really make any difference. 
So, I am sure you heard those different perspectives, and can 
you explain how Advocacy weighted those diverse perspectives as 
you were trying to make recommendations and consider the 
position?
    Mr. Maresca. Senator, the statute requires us to do 
outreach to small businesses, and we have done an extraordinary 
amount of outreach on this rule, and we have heard from many, 
many small businesses in every industry that we have talked to 
that there are costs to this rule. We have examined EPA's 
numbers as they are in their own economic analysis and we 
conclude, along with EPA, that there are costs. We do not know 
at this moment how expensive those costs are. We do know that, 
according to EPA's own figures, the cost for a Section 404 
permitting, for example, will increase by $50 million, and we 
think that is at least $50 million, and there are many, many 
other costs that have not been counted.
    Senator Shaheen. So, when you were looking at the 
determination of impact, it was the cost issue that you were 
weighing as opposed to anything else that might be affecting 
small businesses?
    Mr. Maresca. That is typically what we look at, is the 
cost. The RFA does require us to look at ways to mitigate, to 
examine with the agencies ways to mitigate the cost of the rule 
in order to achieve the same regulatory objective.
    Senator Shaheen. And, did you do that? Did you--when you 
brought those concerns about cost to the attention of the 
agencies, what was their response and did you have any 
discussions about potential mitigation to address those?
    Mr. Maresca. Senator, in the several meetings that we have 
had with EPA, with the small entity representatives, with small 
business stakeholders, that has been brought up. I would 
suggest the response of EPA is this proposed rule. But, there 
has been--there is no--if there had been a SBREFA panel, there 
would have been a presentation of alternatives and there could 
have been a consideration of whether those alternatives--which 
of those alternatives would mitigate the cost to small entities 
the best.
    Senator Shaheen. So, basically, they said, we do not need 
to appoint a panel because we do not think there are any costs 
involved.
    Mr. Maresca. That is correct.
    Senator Shaheen. Okay. Thank you, Mr. Chairman.
    Chairman Vitter. As we go to Senator Ernst, I just want to 
clarify something. A couple of times, Senator Shaheen asked 
about their response. In terms of your written letter strongly 
objecting to their certification, has there been any direct 
written response?
    Mr. Maresca. No, Senator, there has not been a written 
response. That is not unusual. The statute requires that EPA 
respond in writing to our written comments, so we do expect 
there will be a written response, but there is not one at this 
point.
    Chairman Vitter. There has not been to date?
    Mr. Maresca. No.
    Chairman Vitter. Is there any assurance that they are going 
to do that, even before they come up with this proposed rule?
    Mr. Maresca. It would--as I say, it would be unusual for an 
agency to respond in writing to our comment letters before they 
issue a final rule.
    Chairman Vitter. Okay. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair, and thank you, Mr. 
Maresca, for being here today.
    It is greatly concerning. I wish we would have had the 
Corps members and the EPA representatives here. Very early this 
year, I sent a letter to the EPA Administrator and asked her to 
come to Iowa. I would love to have her in Iowa with some of her 
leadership just to show her the impact on small businesses, 
manufacturers and members of our agriculture community, when it 
comes to waters of the United States. I have yet to hear back 
from the EPA, which I thought was--at least they could have 
responded to me. So, very disappointed that they are not able 
to join us and give their perspective on this particular rule.
    I am also concerned--you mentioned that the EPA, because 
they are not direct costs, just maybe indirect costs, they did 
not feel the need to look at this any further. That is deeply 
troubling to me because there are so many times that we talk 
through the implications of legislation or rules and 
regulations and what are those secondary and tertiary effects 
that will hurt our small businesses. So, disappointed to hear 
that.
    But, in addition to the work here in the Small Business 
Committee, I also sit on Homeland Security and Governmental 
Affairs, and one of the subcommittees that I sit on also 
focuses on regulatory reform. And, through that particular 
subcommittee we have done a few hearings on the regulatory 
climate that we have right now, and one of the recurring themes 
I have heard about and we have discussed seems to be the trend 
of these federal agencies going around the necessary and 
appropriate economic and cost analysis--cost/benefit analysis.
    And, as an independent office within the SBA, can you speak 
a little more about these issues as it pertains to the federal 
agencies and them trying to circumvent what I see as a 
specified process. Can you speak to that?
    Mr. Maresca. Certainly, Senator. In general, we find the 
agencies are very good at complying with the Regulatory 
Flexibility Act. We have worked with the agencies to train them 
in how to do that since 2003. And, in fact, EPA is one of our 
model agencies. So, when they make these kinds of judgments, it 
seems it is unusual. But, when they do, there are costs 
involved, and the RFA requires that they, in this case, convene 
a SBREFA panel.
    Senator Ernst. Very good. Do you think that in this case, 
they did take any public comment into judgment? Did they look 
at those, do you believe? Have they indicated any of that to 
you?
    Mr. Maresca. Well, they have--they also convened several 
roundtables and participated in stakeholder events. The 
outcome, again, is this rule that does have significant 
economic impact on small business.
    Senator Ernst. Very good. Thank you.
    Thank you, Mr. Chair.
    Chairman Vitter. Sure. Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, very much.
    Welcome, sir.
    Mr. Maresca. Thank you.
    Senator Markey. Thank you for being here. Clean water is 
important to everyone. Eighty percent of small business owners, 
a clear majority, favor the rules, clarifications in wetlands 
protection set forth in the Clean Water rule, and EPA and Army 
Corps of Engineers have spent years engaging in a transparent 
rulemaking process. The agencies have met with stakeholder 
small businesses, received over one million comments, held over 
400 outreach meetings, used important time and resources, and 
above all, important taxpayer dollars, and are now just weeks 
away from producing a final Clean Water rule that will protect 
our nation's vulnerable waterways and drinking water for 117 
million Americans.
    But, what you are saying is the agency should put the 
brakes on the implementation of this economically critical and 
scientifically rigorous rule before the public has even had a 
chance to see the finished product. A decision like that would 
disrupt and prolong the rulemaking and forces the agencies to 
go back and solicit input from stakeholders they have already 
consulted, consider factors they have already considered, and 
then propose the rule all over again.
    Has your office considered the impact on small businesses 
of delaying the rulemaking and prolonging the uncertainty for 
small businesses about what will be regulated under the Clean 
Water Act?
    Mr. Maresca. Yes, Senator. Those are concerns of our 
office. The main concern that we have is compliance with the 
Regulatory Flexibility Act. Every rule that EPA produces has to 
comply with the RFA, and in this instance, it did not--they did 
not comply with the RFA. And, so we--and, so, our job at 
Advocacy is to speak for small businesses in that instance.
    Senator Markey. Well, in the Environment and Public Works 
Committee, we heard testimony from the New Belgium Brewery on 
behalf of the businesses around the country that rely on clean 
water for the success of their business. How does the Office of 
Advocacy take the needs of those companies into effect?
    Mr. Maresca. Senator, we take the needs of every small 
business that we possibly can into account. Again, our 
statutory obligation is to get federal agencies to comply with 
the Regulatory Flexibility Act, and in this instance, EPA 
should have convened a SBREFA panel.
    Senator Markey. Well, the EPA has estimated that waste from 
mountaintop removal coal mining has buried between 1,200 and 
2,000 miles of Appalachian streams. This mining practice has in 
some communities been linked to contamination of water 
supplies, endangered wildlife, and threatened public health, 
all so that much of the coal produced from the Appalachian 
region can be exported to other countries in the world to 
increase profits for the coal companies.
    By opposing the Clean Water rule, coal companies are 
continuing their assault on the administration's actions to 
protect the public health and the environment from mountaintop 
removal mining. Fossil fuel companies have also threatened 
legal challenges to the rule before it has even been issued.
    Will you please tell the committee the groups and 
associations that your office met with or which groups 
encouraged the Office of Advocacy to submit your comments about 
the Clean Water rule.
    Mr. Maresca. Senator, we met with small businesses in every 
industry that we could find. They all said that there were 
going to be costs to this rule.
    Senator Markey. Will you submit to the committee the 
companies that you met with, just so that we can have an 
understanding of who it was that was seeking to lobby you on 
this issue?
    Mr. Maresca. We would be happy to do that.
    Senator Markey. Okay. That would be very helpful.
    A delay in the Clean Water rule would provide confusion, 
not clarity, for small businesses and add to the delay of 
important infrastructure projects and will create jobs--that 
will create jobs and grow our economy. What would you say to an 
unemployed iron worker, laborer, or American driver that just 
crossed a near-crumbling bridge or pothole about the delay in 
the final Clean Water rule?
    Mr. Maresca. Senator, the point of the Regulatory 
Flexibility Act is to create an environment for small 
businesses to thrive and grow and provide more jobs, 
ultimately, and our job is to ensure that the federal agencies 
comply with the requirements of the statute.
    Senator Markey. How many public meetings should an agency 
have to hold on a proposed rule, in your opinion?
    Mr. Maresca. Senator, I would say that probably varies with 
the impact of the rule. But, in this instance, EPA should have 
convened a SBREFA panel.
    Senator Markey. Is 400 outreach meetings insufficient to 
solicit input on a proposed rule?
    Mr. Maresca. Senator, in none of those outreach meetings, 
to my knowledge, did EPA present regulatory alternatives or 
preferred options. In none of them did they present the data on 
which they were basing the rule.
    Senator Markey. And, finally, are you aware that OMB 
reviewed the proposed rule and made the determination that the 
proposed rule would not have significant impact on small 
businesses? Are you aware of that?
    Mr. Maresca. Senator, it is our statutory obligation to 
speak on behalf of small businesses when it comes to issues 
under the Regulatory Flexibility Act. In our opinion, EPA 
should have convened a SBREFA panel because this rule will have 
impacts.
    Senator Markey. I think that we should let the EPA do its 
job. I think delaying the Clean Water rules makes no sense. 
Small business owners need clarity, not confusion. That is what 
your recommendations are going to create and we are just going 
to repeat the same process and, I think, come to the same 
conclusions.
    Thank you, Mr. Chairman.
    Chairman Vitter. Thank you.
    Senator Shaheen. Mr. Chairman, can I just ask that when we 
receive the list from the Office of Advocacy about the 
businesses you met with, that that be shared with all of the 
members of the committee?
    Chairman Vitter. Certainly. Of course. Without objection.
    Senator Shaheen. Thank you.
    Chairman Vitter. And, now we will go to Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman. Thank you for 
holding this hearing, and to Ranking Member Shaheen, thank you, 
as well, and to Mr. Maresca, thank you for being here.
    I, unfortunately, came in later to the discussion on waters 
of the United States, but I do want to stress one of the 
challenges that we have in Colorado. Of course, we are unique 
among the states. We are the only state in the country that 
distributes our water rights the way we do, through a court 
system. We are entirely unique in that in the lower 48 states, 
all of the water flows out of Colorado. No water flows into 
Colorado.
    In conversations with the EPA Administrator, Gina McCarthy, 
at a hearing last year in the Energy and Commerce Committee, I 
asked point blank if she was familiar with Colorado water law 
and her response back was she is not familiar with Colorado 
water law. And, I think the challenges--just one of the many 
challenges that we face, that this rule would apply to rivers 
that are intermittent flow. Two-thirds of Colorado waterways 
are intermittent flow, and yet waters of the United States 
would still affect and impact every single one of them, even 
though they do not have water in them year-round.
    In meetings with Colorado water districts, whether it is 
Northern Colorado Water Conservancy Districts, whether it is 
Denver Water, Colorado Springs Utilities, or the Colorado Farm 
Bureau, every one of them is concerned about the federalization 
of every molecule of water in the State of Colorado, and so I 
think you are right to make sure and demand that these hearings 
proceed in terms of understanding all that the waters of the 
United States rule would do to small businesses, particularly 
in light of the way a state like Colorado manages its water 
rights.
    I wanted to shift focus a little bit to the Endangered 
Species Act. A few years ago, the Small Business 
Administration's Office of Advocacy submitted comments to the 
Fish and Wildlife Service on a proposed rule on designation of 
critical habitat for the New Mexico jumping mouse. The Office 
of Advocacy expressed several concerns about listing the mouse 
under the Endangered Species Act and stated that the 
designation would impose direct costs on the nation's small 
businesses.
    As we have seen in Colorado, we have got the Gunnison and 
greater sage grouse. The Gunnison was just listed. I believe 
there is litigation coming forward from Governor Hickenlooper 
in the state. We have challenges with the lesser prairie 
chicken and, of course, the Preble jumping mouse.
    Just yesterday, the administration announced proposed 
updates to the implementation of the Endangered Species Act, 
which, it is my understanding, are intended to give states a 
greater voice in the listing determinations. How can the Office 
of Advocacy further insert themselves into this type of policy 
making, since small businesses are our nation's job creators?
    Mr. Maresca. Well, with regard--thank you, Senator. With 
regard to the Endangered Species Act, we believe that Fish and 
Wildlife Service could do a better job in considering the 
impacts, not of the listing, necessarily, but of the critical 
habitat designations, and we have been working with that agency 
over many, many different CHDs.
    Senator Gardner. So, how would you improve the critical 
habitat designation? Does that mean taking into account, for 
instance, in the greater sage grouse, the 11 states, would that 
suggestion say, take a look at the large land area that would 
be involved and then doing an economic analysis of the impact 
that land area would have for critical habitat?
    Mr. Maresca. We believe that Fish and Wildlife could take 
better account of the economic analysis. They have broad 
authority to exclude certain parts of an initial CHD, and we 
have been working with the agency on that.
    Senator Gardner. And, your concern about critical habitat, 
of course, is because that land then is taken out of either 
production value or recreational interest activities. Is that 
why, primarily?
    Mr. Maresca. That would be the impact. That would be the 
impact. The point of the Regulatory Flexibility Act is not to 
avoid the outcomes that another statute might require, but that 
whatever regulatory option an agency considers, it considered 
that with the least impact on small businesses.
    Senator Gardner. Okay. Under the Regulatory Flexibility 
Act, do you believe that we are right now properly evaluating 
listings prior--excuse me, that we are taking actions and 
considering them properly under the RFA prior to ESD listing?
    Mr. Maresca. Prior to the listing?
    Senator Gardner. Yes.
    Mr. Maresca. Uh----
    Senator Gardner. And how could we improve that process so 
that Fish and Wildlife Service does this----
    Mr. Maresca. We believe that post-listing, prior to the 
critical habitat designation, improvements could be made.
    Senator Gardner. What kind of improvements?
    Mr. Maresca. Improvements in how Fish and Wildlife 
considers the economic impact and takes that into account.
    Senator Gardner. What would that improvement--what would 
that consideration look like in how they take it into account?
    Mr. Maresca. It would probably--it would--Senator, I 
believe it would take a combined effort by our office and Fish 
and Wildlife to come up with a system that would actually 
accomplish that.
    Senator Gardner. Thank you.
    Thanks, Mr. Chairman.
    Chairman Vitter. Thank you.
    And, before we go on to our second panel, I just wanted to 
follow up on Senator Markey's thoughts. Mr. Maresca, in the 
Regulatory Flexibility Act, is there sort of an ``ends 
justifies the means'' section that says, you know, if the rule 
is really, really good, we do not have to worry about following 
the law, or if we consult stakeholders in a different way, we 
do not have to worry about convening this sort of panel?
    Mr. Maresca. Senator, there is no exception to the 
requirement of convening a panel, at least not without 
consulting with the Chief Counsel for Advocacy. Under a section 
of the RFA, it could be waived, but that is only under 
extraordinary circumstances.
    Chairman Vitter. Okay. Thank you.
    Senator Shaheen, anything else?
    Senator Shaheen. No further questions.
    Chairman Vitter. Great. Thank you very much, Mr. Maresca.
    We will move on to our second panel, and as the second 
panel gets seated, I will invite Senator Ernst to recognize and 
introduce Mrs. Maulsby on the second panel.

 OPENING STATEMENT OF HON. JONI ERNST, A U.S. SENATOR FROM IOWA

    Senator Ernst. Yes. Thank you, Mr. Chairman, very much.
    As the second panel is getting settled, I will go ahead and 
start off by thanking all of you for joining us here today. It 
is good to have you with us.
    I do appreciate your testimony and attention to this 
important widespread economic and regulatory issue. The EPA's 
proposed expanded definition of waters of the United States, or 
as we fondly call it, WOTUS, will add unnecessary bureaucratic 
red tape for our producers in the agriculture and small 
business communities.
    The EPA has stated that the rule has been crafted with the 
intentions of creating clarity and increasing efficiency for 
key stakeholders. However, in reality, the proposed rule has 
only expanded confusion and uncertainty as to how far the 
jurisdiction of the Clean Water Act reaches.
    It is incredibly important that before this rule is 
finalized, we stop it from having any negative consequences on 
our producers and businesses. And, if the EPA still fails to 
listen to the many voices raising concerns, including those of 
many of you in this room today, then we should all come 
together and oppose this rule.
    Today, it is my great pleasure to introduce one of those 
voices. Darcy Maulsby is a fifth-generation corn and soybean 
farmer and small business owner from Lake City, Iowa. Her work, 
both on the farm and in owning a communications and marketing 
business, has given her a unique opportunity to engage local, 
national, and world leaders to promote the benefits of 
agriculture to our economy. Mrs. Maulsby has used her skills in 
journalism and mass communications to reach untold audiences, 
promoting the importance of improving production and 
conservation practices and life in rural America.
    Mrs. Maulsby, Darcy, it is always good to have a fellow 
Iowan in Washington, and thank you very much for testifying 
today. Your words are going to be very important for this 
panel. I will not be able to stay for questions, but I will 
submit those for the record.
    And, just so everybody knows, they did have quite an 
episode a few weeks ago with a tornado that came through Lake 
City, and so, Darcy, we appreciate the extra effort that it 
took for you to come and be with us today, so thank you very 
much, and thanks to everybody on the panel, as well.
    Thank you.
    Chairman Vitter. Thank you, Senator, and let me just round 
out the introductions.
    Randy Noel is President of Reve Incorporated, a custom home 
building company based in La Place, Louisiana.
    Elizabeth Milito is Senior Executive Counsel with the 
National Federation of Independent Business' Small Business 
Legal Center in Washington, D.C.
    And, Benjamin Bulis is President of the American Fly 
Fishing Trade Association on Bozeman, Montana.
    Welcome to all of you. We look forward to your testimony in 
the order in which you have been introduced. Ms. Maulsby.

STATEMENT OF DARCY DOUGHERTY MAULSBY, FIFTH-GENERATION FARMER, 
                 DOUGHERTY FARM, LAKE CITY, IA

    Mrs. Maulsby. Well, good afternoon. I am Darcy Maulsby, a 
fifth-generation farmer and small business owner from Lake 
City. Let me begin by thanking you, Chairman Vitter, Ranking 
Member Shaheen, and members of the committee for allowing me 
the opportunity to share my story with you today. I especially 
want to thank my home state Senator for inviting me to testify. 
Thank you, Senator Ernst--even though she has left the room--
for this opportunity and the warm introduction.
    Our farm is located in west central Iowa. This is a 
beautiful area where the fields are mainly flat or gently 
rolling and are filled with rich black soil. While this soil is 
extremely productive, it also needs proper management and 
drainage to protect the health of our corn and our soybean 
crops.
    My family and farmers all across Iowa are investing in 
conservation practices that prevent nutrient runoff and 
safeguard water quality. Ever since my ancestors settled in 
Calhoun County in the 1880s, my family has adopted a variety of 
conservation practices to protect our precious natural 
resources. We have installed grass waterways to slow the flow 
of water and keep soil in place. We also use conservation 
tillage to leave cornstalks and soybean stubble in the fields 
over the winter to protect soil from water and wind erosion and 
to control surface runoff.
    We have taken some big steps to implement conservation 
efforts, but one thing we cannot control is Mother Nature. Just 
over a week ago, on Mother's Day, an EF-1 tornado ripped 
through our area. Less than an hour later, a second storm 
blasted our farm with hail and dumped more than an inch-and-a-
half of rain in a matter of minutes. This created some fairly 
large ponds in some of our fields, since the heavy clay soils 
just could not drain that water fast enough. The ponds are 
temporary, though, and they disappeared in a few days.
    Across my area and much of Iowa, it is not uncommon for 
puddles and ponds to appear after a heavy rain in areas that 
are otherwise dry most of the year. Expanding EPA's regulatory 
authority under the Clean Water Act to include these and 
similar areas will have many negative consequences for my farm 
business. Not only will this rule affect my operation 
personally, but it will have dramatic and far-reaching 
potential and costly economic implications on farmers and 
ranchers all across the United States.
    One of the biggest problems with this rule is the 
uncertainty that it creates. I look around my family farm and I 
wonder what areas would be under EPA's jurisdiction. There are 
many features on farmland that contain or carry water only when 
it rains. Farmers and ranchers consider these areas to be land, 
not water that could be regulated by the EPA. If this agency 
can regulate every body of water on my farm, including those 
that are dry most of the time, then there are effectively no 
limits to the agency's regulatory reach.
    The regulation of these areas means that any activity, 
including everyday farming activities, could be a violation of 
the Clean Water Act, triggering heavy penalties, criminal 
fines, and possibly resulting in jail time. Not only would we 
be subject to enforcement from the EPA and the Corps, but also 
civil lawsuits from those who do not understand agriculture and 
belong to organizations who are opposed to our way of life.
    I am also concerned about how the rule will hinder the 
ability to keep our farm competitive, profitable, and 
sustainable. Tens of thousands of dollars to obtain permits 
along with fees for both lawyers and technical consultants is 
beyond the means of most farmers and ranchers and creates an 
undue burden for most farms, which are largely family owned 
operations. These permits may take months to more than two 
years to obtain. Having to wait to obtain a permit would hinder 
our ability to operate and do what we know is best for our 
land. As a result, the proposed rule puts EPA into the business 
of regulating whether, when, and how a farmer's crops may be 
grown and protected.
    Perhaps the largest cost of this rule is not being allowed 
to apply crop nutrients and crop protection products in and 
around these EPA-controlled areas. We have always worked to be 
good stewards of our land and want to prepare now for a 
sustainable future for our farm. If we cannot do the right 
things for our land and our crops when the job needs to be 
done, farming and ranching will be much more costly and more 
difficult.
    I am also concerned about how permitting delays would hold 
up conservation efforts on our farm and farms nationwide. We 
have already experienced this on my farm when we applied for a 
permit for a drainage improvement. In this case, the permitting 
process was not completed in a timely manner due to delays from 
an agency. This cost us valuable time and hindered our ability 
to enhance our land, and it complicated the process of 
completing routine field work.
    We are continually implementing voluntary conservation 
efforts using our own time, energy, and money. The only thing 
that is clear and certain is that this rule will make it more 
difficult for farm families like mine to make changes in the 
land that will benefit the environment. Working with farmers 
collaboratively is a productive way to improve water quality, 
not more regulations.
    Ultimately, this rule will have a negative impact on the 
productivity and profitability of small farming businesses all 
across the country, those one percent of Americans who grow the 
food, fuel, and fiber for this country and the world.
    As a fifth-generation farmer, I truly care about the legacy 
my family will leave behind. I urge you to think about the 
legacy that will be left behind if this harmful rule is 
implemented. This rule should be repealed in full to protect 
the livelihood and way of life for my family and farm families 
all across this great land. Thank you.
    [The prepared statement of Mrs. Maulsby follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Vitter. Thank you very much, Mrs. Maulsby.
    And now, we will hear from Mr. Randy Noel. Welcome.

   STATEMENT OF KARL RANDALL ``RANDY'' NOEL, PRESIDENT, REVE 
  INCORPORATED, LA PLACE, LOUISIANA, AND THIRD VICE CHAIRMAN, 
             NATIONAL ASSOCIATION OF HOME BUILDERS

    Mr. Noel. Thank you, Chairman Vitter and Ranking Member 
Shaheen, for the opportunity to address you today. I am a home 
builder in La Place, Louisiana, which is just west of New 
Orleans, and I am also the NAHB, the National Association of 
Home Builders, 2015 Third Vice Chairman, and I represent about 
140,000 people.
    Home building is one of the most regulated activities in 
the country, and as a small business owner, I can tell you from 
30 years of home building experience what it will take to make 
a good rule. It needs to be consistent for all the citizens. It 
needs to be predictable to assure compliance. And, it needs to 
be timely to serve our citizens efficiently. Most important, it 
needs to focus on protecting true wetlands and streams.
    The proposed rule does none of that. For decades, 
landowners and regulators alike have been frustrated by 
confusion over the definition of waters of the United States. 
When EPA and the Army Corps of Engineers proposed this rule, we 
were actually optimistic that it would finally provide clarity 
and certainty. Unfortunately, the proposed rule falls far short 
of that. In a word, it is a mess.
    Instead of clarity, it provides broader definitions of 
existing regulatory categories, such as tributaries, and it 
seeks to regulate new areas that are not currently federally 
regulated, such as adjacent non-wetlands, riparian areas, flood 
plains, and other waters. It appears that the agencies have 
intentionally created overly broad terms so that they would 
have the authority to interpret them any way they would like.
    This rule is so extreme that the federal government would 
actually regulate roadside ditches, or water features that may 
flow only after a heavy rainfall. This rule would leave me 
playing a guessing game of whether my land requires a permit or 
not. That does not work.
    I am a small business owner. I need to know the rules, not 
have to guess at them. And, because of the vague definitions, 
builders would face new, costly delays just waiting for the 
agencies to determine if a roadside ditch is a water of the 
United States.
    My business has already been a victim of a costly 
permitting system. I have been forced to walk away from 
building projects due to excessive permitting and mitigation 
costs. The only winners with the proposed rule would be 
lawyers, because this rule would certainly lead to increased 
litigation.
    I think it is important to note that this proposed rule 
also destroys a key component of the Clean Water Act. The Act 
intended to create a partnership between the federal agencies 
and state governments to protect our nation's water resources. 
Congress correctly recognized that there is a point where 
federal authority ends and state authority begins. The 
agencies' solution is to federalize nearly every water feature.
    States have effectively regulated their own waters and 
wetlands for years. My home State of Louisiana is a perfect 
example of a state that has gone to great lengths in order to 
protect its waters. Louisiana already has multiple laws on the 
books designed to protect our state water resources.
    The agencies also failed to consider the rule's impact on 
small businesses by ignoring, as you pointed out earlier, the 
Regulatory Flexibility Act. Since the agencies failed to 
convene a small business panel, it is clear that they are not 
interested in hearing from small businesses like mine.
    Unfortunately, the EPA completely ignores RFA requirements 
all the time. This is not something unique to this particular 
rule. In the 19 years since the small business panel 
requirement has existed, the EPA has convened approximately 47 
panels. Just last year, the EPA reviewed 51 significant rules. 
It defies belief that in one year, EPA reviewed more 
regulations than the total number of SBREFA panels held over 19 
years. This illustrates how reluctant some agencies are to 
comply with the law.
    And, the agencies' economic analysis of the proposed rule 
is so full of errors that one noted economist said the study 
was virtually meaningless. That should give us all pause.
    I called this a mess, and it is, but we can start to fix 
the mess. The EPA should withdraw the economic analysis and 
prepare a more thorough and accurate analysis. The RFA's legal 
requirements should be followed. And, any final rule should 
provide easily understood definitions and preserve the 
partnership between all levels of government.
    Let us get the agencies to withdraw the rule. Fix this 
mess. Provide the clarity we all need on what constitutes a 
water of the United States.
    Thank you again for the opportunity to testify.
    [The prepared statement of Mr. Noel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Vitter. Thank you very much, Mr. Noel.
    Now, we will hear from Elizabeth Milito with NFIB. Welcome.

   STATEMENT OF ELIZABETH MILITO, SENIOR EXECUTIVE COUNSEL, 
          NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    Ms. Milito. Thank you very much, Chairman Vitter and 
Ranking Member Shaheen, for inviting me to participate in the 
hearing today.
    The National Federation of Independent Business is very 
appreciative of the committee's interest in this rule and your 
examination of what we believe was a failure by two federal 
agencies to comply with the Regulatory Flexibility Act. I would 
like to commend the work that SBA's Office of Advocacy has done 
on this rule and I would also like to especially thank Mrs. 
Maulsby and Mr. Noel for coming here and making the trip here 
to Washington to testify today.
    The agencies have proposed to change the Clean Water Act's 
definition for waters of the United States. Though 
traditionally limited to navigable waters and adjacent waters, 
this new proposal would classify land as waters of the United 
States if, at any point during the year, they have any water 
overflow. The new rule would bring seasonal streams, ponds, 
ditches, depressions in fields, and large puddles into the 
Clean Water Act's jurisdiction.
    What does this mean for a small business owner? Well, if 
EPA and the Army Corps assert jurisdiction over your land, it 
will be essentially impossible, or at least tremendously 
expensive, to do anything with your land. This means you will 
not be allowed to alter land formations, which prevents land 
owners from digging or excavating on their properties or even 
laying gravel.
    While it is possible to obtain a special permit to begin 
using portions of land covered by the Clean Water Act, these 
permits are extremely expensive. Clean Water Act permits can 
cost tens of thousands of dollars, if not more. A major U.S. 
Supreme Court decision from 2006 cited the average cost at 
$270,000. And, there are inevitably long waits for permit 
processing with no guarantee that your permit will be approved. 
But, proceeding without a permit could be ruinous. The 
penalties for violations of the Clean Water Act can be up to 
$37,500 per day.
    NFIB and other small business stakeholders firmly believe 
that the agencies did not adequately consider the impact of 
this proposed rule on small businesses and, therefore, failed 
to meet their legal obligations under the RFA.
    EPA and the Corps is alleging that since there is a simple 
definition change, there are no major costs directly imposed on 
small businesses. But, as I have already noted, there are 
certainly costs directly imposed on small businesses through 
the permit process and other compliance requirements. In 
addition, the proposed rule makes it clear that many waters 
will need to be determined on a case-by-case basis, therefore 
providing little, if any, additional certainty. While 
multinational corporations with tremendous capital resources 
can obviously afford the permitting costs, most small 
businesses cannot. Usually, their only option is to swallow 
their losses and forego any development plans.
    In addition to the direct economic consequences on small 
businesses, the proposed rule will also have indirect adverse 
impacts on firms. Even in the absence of an affirmative 
assertion of Clean Water Act jurisdiction, landowners are going 
to be more hesitant to engage in development projects or make 
other economically beneficial uses of their property if the 
proposed rule is allowed.
    Landowners are aware that federal agencies have taken an 
aggressive posture in making jurisdictional assertions in 
recent years. NFIB already receives questions and concerns from 
small business owners who are worried about whether or not the 
agencies have jurisdiction over their land, and we expect to 
hear from many more concerned individuals if the rule is 
finalized. Indeed, under the proposed rule, a landowner may 
have legitimate cause for concern if at any point during the 
year, as Mrs. Maulsby indicated, any amount of water rests or 
flows over a property.
    And, contrary to the agency's assertions, the proposed rule 
will do little or nothing to make Clean Water Act jurisdiction 
clearer or more certain for property owners. The reality is 
that landowners will have to seek out experts and legal 
counsel, which gets costly very quickly, before developing on 
any segment of land that occasionally has water overflow. And, 
the only way to have real clarity is to seek a formal 
jurisdictional determination from the agencies, which is going 
to cost even more money and lead to even more delays, delays 
which might cause a bank to pull financing on a project.
    In short, this proposed rule will be a boon for 
environmental consultants, and potentially lawyers, too, but it 
is going to be a bust for small businesses.
    In closing, I would like to underscore NFIB's frustration 
with the agencies' disregard for their statutory obligation 
under the RFA. We believe the agencies should acknowledge that 
the proposed rule will have a significant economic impact on a 
substantial number of small businesses. Withdraw the proposed 
rule and propose a new rule only after they have performed an 
initial Regulatory Flexibility Act analysis and convened a 
Small Business Advocacy Review Panel.
    Thank you again for the opportunity today. We remain eager 
to work with members of the committee on this issue. Thank you.
    [The prepared statement of Ms. Milito follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Vitter. Thank you, Ms. Milito.
    And now, we will hear from Benjamin Bulis with the American 
Fly Fishing Trade Association. Welcome.

 STATEMENT OF BENJAMIN BULIS, PRESIDENT, AMERICAN FLY FISHING 
                       TRADE ASSOCIATION

    Mr. Bulis. Thank you. Good afternoon, Mr. Chairman and 
members of the subcommittee. I appreciate the opportunity to 
provide testimony in support of the Clean Water Act today.
    I had the good fortune to be born and raised in the 
beautiful State of New Hampshire. I personally have fished in 
the United States and around the world, but the rivers and 
streams of New Hampshire will always stay close to my heart. 
Now, I have the great fortune to live in Bozeman, Montana, 
which one could argue is the epicenter of the fly fishing 
industry.
    AFFTA represents the business of fly fishing, which 
includes manufacturers, retailers, outfitters, and guides 
across the nation who all share the same bottom line, 
furthering the sport and industry of fly fishing. This cannot 
be accomplished without clean water and vibrant fisheries 
habitat. The formula that drives AFFTA is very simple. Access 
to healthy habitat creates recreational opportunity that drives 
economic activities and jobs.
    Our industry provides the waders, rods, guides, and boats 
that 47 million sportsmen and women utilize every time they 
step foot in their favorite piece of water. Their quality of 
experience, and, thus, our return sales to enhance those days, 
is dependent on access to clean water.
    I am here to express our support for the Army Corps of 
Engineers and the Environmental Protection Agency's efforts to 
restore protections for our nation's headwaters, streams, and 
wetlands under the Clean Water Act. Simply put, the draft clean 
water rule is well crafted and appropriate. It should be 
allowed to move through the federal rulemaking process with the 
support of Congress, and here is why.
    The small waters to which this important draft rule applies 
are the lifeblood for many of our country's prized fisheries. 
The health of these headwaters sets the tone and benefits for 
all waters downstream, supporting and creating even the 
backbone of our nation's marine resources. They flow into 
rivers, streams, and lakes that provide the foundation of our 
industry, thus eventually concluding the voyage in our oceans. 
Our industry's viability depends on intact watersheds, cold, 
clean rivers and streams, and healthy, fishable habitat.
    Given that fishing in America supports approximately 
828,000 jobs, results in nearly $50 billion annually in retail 
sales, and has an economic impact of about $115 billion every 
year, it stands to reason that the health of our nation's 
waters is vital to the continued success of our industry and to 
the health of America's economy.
    We urge you to allow the rulemaking process to continue 
unimpeded. Carefully review the final rule when it comes out 
and then determine what, if any, legislative action is 
warranted.
    We owe it to the more than one million Americans who took 
the time to comment on the proposal to allow the process to 
reach a conclusion. More than 80 percent of those who commented 
on the proposal were in favor of it. Such strong support for 
clean water and healthy watersheds is what our members 
experience every day as we interact with our customers across 
the nation.
    If we fail to protect our headwaters, streams, and 
wetlands, we may destroy the $200 billion annual economy of the 
hunting and fishing industry, as well as put 1.5 million people 
out of work. Of those 1.5 million jobs, many are located in 
rural areas with limited economic opportunity and few other 
employment options.
    In recent years, participation in fly fishing has grown. We 
are seeing robust interest in our sport and it is translating 
to our sales, to the numbers of employees we hire right here in 
America, and to the health of brick-and-mortar retailers all 
over the country.
    The fly fishing industry is the epitome of small business. 
The sustainable domestic industry is dependent on clean, 
fishable water.
    And, again, on behalf of my Association and our members, I 
appreciate the opportunity to testify today, and I would also 
like to thank the committee and staff for their dedication to 
our nation. Thank you.
    [The prepared statement of Mr. Bulis follows:]
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    Chairman Vitter. Thank you all very much. We will now go to 
questions.
    Let me start by asking each of you to respond, but as 
concisely as you can, and the question is this, not whether you 
are in favor of clean water, not whether you think the proposed 
rule is a good one, but whether you think the proposed rule 
would have a significant impact on a substantial number of 
small businesses, which is the small business issue we are 
talking about in terms of following the law. Could each of you 
respond, what you think about that.
    Mrs. Maulsby. Yes. From the farmers' standpoint, it would 
have a huge impact on not just my farm and farms across Iowa, 
but farms and ranches across the whole country. It is a very 
serious issue that we are all very concerned about.
    Chairman Vitter. Okay. Mr. Noel.
    Mr. Noel. Absolutely. We drain our neighborhood sometimes 
with roadside ditches and we have to put driveways over them. 
If we are forced to go get permits to put driveways in, it will 
obviously slow down the production of homes and houses for 
people.
    Chairman Vitter. All right. Ms. Milito.
    Ms. Milito. And, yes, I would agree that it will have a 
substantial impact, and I think the agencies' own 
administrative record also shows that it will, too. I mean, it 
is going to increase jurisdiction of the Clean Water Act by 
about three percent.
    Chairman Vitter. Okay. Mr. Bulis.
    Mr. Bulis. Yes. I think without this rule, it will have a 
significant impact on our industry. As I said, the 1.5 million 
jobs that are associated with the hunting and fishing industry, 
those could be at jeopardy.
    Chairman Vitter. Okay. I appreciate your answer to a 
different question, but let me restate my question. Do you 
think this proposed rule will have a significant impact on a 
substantial number of small businesses?
    Mr. Bulis. You know, I cannot speak for these other 
businesses. I can only speak for the fly fishing industry, and 
I am not sure how they would affect their businesses.
    Chairman Vitter. Okay. Ms. Maulsby, in general, how do you 
think the agricultural community has been engaged and their 
concerns have been incorporated into the substance of the 
proposed rule?
    Mrs. Maulsby. One thing that we were disappointed about was 
that there were no hearings held in Iowa, and we would--just 
like Senator Ernst said, we would love to have EPA come out, 
and lawmakers, too. Our farms are open for tours. We would love 
to have people come out and see what we are doing on our land 
for conservation, the steps we are taking to keep the land more 
sustainable, and it is not just me. I have got lots of friends 
and neighbors that feel the same way. So, we would love to have 
people come out and actually see what is going on with 
conservation on the ground.
    Chairman Vitter. Okay. Mrs. Maulsby and Mr. Noel, let me 
ask you this. You all have brought up situations like temporary 
standing water ponds and roadside ditches and small amounts of 
water that driveways may go over, drainage ditches. Now, I know 
in a lot of these meetings and conversations, EPA and the Corps 
say, oh, no, no, no. We are not talking about that. Is there 
anything we can point to and read in the proposed rule that 
makes that very clear?
    Mrs. Maulsby. No. That is the confusion. That is the 
uncertainty. There are no clear-cut answers to that type of 
information, and it is just that uncertainty that is so 
detrimental to the farm community and one of the things we are 
very concerned about with this proposed rule.
    Chairman Vitter. Mr. Noel.
    Mr. Noel. Yes, Senator Vitter. It is disconcerting when you 
ask the Army Corps of Engineers to come out and give you a 
determination, and they are on a sugarcane farm where they have 
rows, and they are low between, right, and that tells me that 
that is wetlands, jurisdictional. And, then another Army Corps 
of Engineers comes out to make a determination and does not say 
it is. So, there is--you cannot plan to do developments and 
homes, et cetera, based on how this rule is written. You will 
have to hire a consultant. You will have to have the Corps come 
out and make a determination, and it delays everything----
    Chairman Vitter. And, that determination----
    Mr. Noel [continuing]. Years.
    Chairman Vitter [continuing]. Could be different every 
time.
    Mr. Noel. Absolutely, and it just--there is no way to run a 
small business not knowing what the rules are.
    Chairman Vitter. Right.
    Mrs. Maulsby. Senator, I would add, too, that timing is 
everything in agriculture, and if you do not have the answers 
you need, your pests can get out of control quickly, your crop 
can be torn out right from under you if things cannot happen in 
a timely manner.
    Chairman Vitter. Sure.
    Mrs. Maulsby. So, it is a very big issue.
    Chairman Vitter. Okay. And, Ms. Milito, let me ask you. If 
an RFA process had been used, what could that have done 
positively in terms of avoiding some of these concerns?
    Ms. Milito. I think the consideration of less costly 
alternatives is the most important thing that the RFA process 
does and can do, as Mr. Maresca hit on. Thank you.
    Chairman Vitter. Okay. Thank you very much.
    I will turn to Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and thank you all 
very much for being here. Your testimony was very helpful.
    And, Mr. Bulis, I did not know until we got your biography 
that you are a New Hampshire native, and I appreciate your 
talking about fly fishing in New Hampshire. We think we have 
some great spots to do that. And, obviously, the outdoor 
industry is a very big economic contributor, not just to New 
Hampshire and Montana, but to the entire country. And, so, 
making sure that we have clean water that benefits everyone is 
very important.
    And, I am sure that all of you would agree with that. So, 
just to be clear, I do not assume that anybody here is 
suggesting that we should repeal the Clean Water Act. That is 
not what the concern is.
    So, let me go back. I thought, Mr. Noel, you were very 
helpful in terms of talking about the kinds of rules that would 
be helpful in providing some certainty for small businesses. As 
we all know, this is a proposed rule. It has not been finalized 
yet. And, so, in thinking about not just the process that was 
followed--I appreciate the concerns that have been raised about 
that, and I share some of those--but also in terms of trying to 
do a final rule that would provide more certainty for 
businesses, more understanding and clarity for businesses, 
would you talk a little bit more about that, Mr. Noel, and what 
you would like to see?
    Mr. Noel. Certainly. You know, there was not very much 
clarity before.
    Senator Shaheen. Right, which is part of the problem.
    Mr. Noel. Which is part of the problem. And, in the effort 
to clarify, they have grossly expanded it to cover areas that 
were, in our estimation, not determined to be waters of the 
United States, certainly like roadside ditches or ponds, 
temporary ponds.
    You know, with the work toward trying to come up with some 
very clear definitions, I mean, there was plant life, there was 
water on the soil, et cetera, that kind of led us in a 
direction to help do that. We thought they would be a little 
more specific for that as opposed to the rule that came out 
that said, basically, call us if you own a piece of land and we 
will tell you whether it is wetlands or not, based on whoever 
shows up that day.
    They need to define it in a way that any citizen that reads 
the rule can walk out there and say, yes, this is definitely 
wetlands. Where I live, it is clear what wetlands look like 
because we are surrounded by them in New Orleans and the South 
Louisiana area. But, the roadside ditches, flood plains, which 
we are also dealing with an Executive Order that expands the 
flood plains. And, so, it makes it very difficult to decide to 
buy a piece of land and develop when you have no idea what it 
is going to cost you to mitigate it, and the mitigation costs 
are not in the economic analysis, are significant.
    Senator Shaheen. And, Ms. Milito, can you share your 
thoughts about what would be helpful to small businesses in 
looking at any final rule and how, short of repealing what is 
being proposed, what would be helpful to small businesses in 
providing clarity?
    Ms. Milito. I think--Senator, thank you for the question, 
too, and going back to your point, too, about the Clean Water 
Act itself, yes, I am not here to say that members of NFIB do 
not like clean water. What they do not like, and what we do not 
like about this rule in particular, is the agencies', what I 
would say is kind of flagrant disregard for another law, 
another federal law, the Regulatory Flexibility Act, and what 
that law encompasses, and particularly the Small Business 
Advocacy Review Panel and the opportunity for the two agencies 
to hear from business owners, like Mr. Noel and like Mrs. 
Maulsby, in a very thoughtful and methodical way. So, not a big 
open forum where you have 100 business owners, but to hear 
specific, industry-specific things. So, to hear from the home 
builders with specific proposals.
    Senator Shaheen. And, I am not debating the process----
    Ms. Milito. Yes.
    Senator Shaheen [continuing]. And how that worked. I am 
trying to get a better sense from you of what you would like to 
see in terms of a final rule that would provide more clarity 
for businesses.
    Ms. Milito. And the jurisdictional issue, which NFIB 
addressed in a letter to the agency, too, which I would be very 
happy to provide the committee in addition to a separate letter 
we did on the RFA, I would be happy to do that, too. But, I 
will just----
    Senator Shaheen. That would be very----
    Ms. Milito. Yes, absolutely. That might be----
    Senator Shaheen [continuing]. Very appreciated, if you 
would----
    Ms. Milito. Yes.
    Senator Shaheen [continuing]. Share that, and I am sure the 
Chairman will share that with the members.
    Ms. Milito. Yes. Yes. Absolutely.
    Chairman Vitter. Sure. Absolutely. Without objection.
    [The information of Ms. Milito appears in the Appendix on 
page 66.]
    Ms. Milito. And, just going back, too, that we do feel, 
overall, there was an over-reach and going beyond what Congress 
intended with the Clean Water Act as far as what the agency's 
authority is.
    Senator Shaheen. So, your objection is really the proposed 
rule. It is not that it does not provide clarity, it is more 
that you think it expands what is under existing law and that--
--
    Ms. Milito. That is part of----
    Senator Shaheen [continuing]. NFIB does not like that.
    Ms. Milito. Our objection is partly with regards to the 
jurisdictional issue, but also with regards to the RFA 
analysis, or lack thereof, that was done by the agencies.
    Senator Shaheen. Okay. Thank you.
    Ms. Milito. Thank you.
    Senator Shaheen. That is helpful.
    And, Mr. Bulis, I am actually out of time, but I just 
wanted to give you the opportunity to comment. I assume--you 
talked very eloquently about the importance of our streams and 
rivers and to the outdoor industry. I assume that there are--we 
can continue to protect those waters and still come up with 
some rule that would do that, that could provide some clarity. 
Have you discussed that within your association and does that 
seem like something that is reasonable to expect?
    Mr. Bulis. Yes. I mean, we have discussed it, and I think 
the biggest thing we need to come up with is a balance, is a 
fair balance, where the--you know, we do not put our 
environment at risk, but we also do not put small business at 
risk. I think that is the most important thing.
    Senator Shaheen. That is a very good way to say it. Thank 
you. Thank you all.
    Chairman Vitter. Thank you. Absolutely.
    Senator Fischer.
    Senator Fischer. Thank you, Mr. Chairman, and welcome to 
all of you. It is such a pleasure to have you here today.
    Earlier this year, I was able to chair a field hearing in 
the State of Nebraska, in Lincoln, Nebraska, on waters of the 
U.S. and the impact on every Nebraskan that those proposed 
rules will have. We were very fortunate on one of the panels to 
have a home builder from the State of Nebraska, and he made a 
comment, Mr. Noel, that really brought this home to me, and, 
again, the impact that it has.
    In Nebraska, we have a broad, broad coalition of 
organizations, of people who are very, very concerned about the 
impact of these regulations, and I always smile and say, as a 
rancher, it is the usual suspects, people in agriculture who 
have deep concerns, but it is also home builders. It is cities, 
it is counties, the cost to taxpayers that these proposed rules 
are going to have. It is our natural resources districts, all 
of these folks have come together in opposition--in opposition 
to this overreach, I believe, by the federal government.
    But, the home builders said that, right now, 25 percent of 
the current cost of a new home is due to current regulations. 
That puts an American dream out of reach for most Americans. 
You know, it is an American dream to purchase a home, and we 
already are looking at 25 percent of the cost being due to 
regulations. What is going to be the impact of these proposed 
rules and more and more and more coming down from the federal 
government?
    Mr. Noel. Well, great question. We struggle now to get an 
entry home built for a first-time homebuyer because of the 
regulations that we deal with, and, you know, they come from a 
multitude of areas--local government, state government, and 
certainly federal government.
    If any--if this rule was to go into effect and we had to 
spend additional money to get jurisdictional issues taken care 
of, it surely would put the first-time buyer out of reach of a 
single-family home because of the----
    Senator Fischer. Yes. We are seeing more apartments built 
than homes.
    Mr. Noel. Right.
    Senator Fischer. You know, so we see the effect, I think, 
of regulations right now. But, that, to me, was very telling.
    Mr. Noel. Well, and home ownership has so many benefits to 
the community----
    Senator Fischer. Yes.
    Mr. Noel [continuing]. And to the American society, that to 
become a renter nation would not be what I think is in the best 
interest of the folks here.
    Senator Fischer. I agree.
    And, Mr. Bulis, when you talk about fly fishing, my brother 
was an avid fly fisherman. I am the Vice Chair of the 
Sportsman's Caucus here in the Senate. I happen to live in an 
area with pristine fly fishing, so it is not all in Montana or 
in New Hampshire. We have that in Nebraska, as well.
    But, I believe that current regulations that we have in 
place seem to be doing the job. That is why we have these 
pristine areas. It has been said earlier, no-one wants to 
change the strides that we have made under the Clean Water Act. 
I think what many of us are concerned about is just the 
overreach that we see here.
    And, when you mentioned the comments that had been received 
by the EPA, about a million comments, 58 percent of those 
comments, the substantive comments that were made, were opposed 
to the rule, and that comes from the EPA's own numbers. So, as 
people really drilled down on these proposed rules, they did 
have deep concerns with it.
    But, I guess, I would ask you, do you believe it is 
necessary that we continue to have those partnerships between 
the states and the federal government when we look at water 
quality and our water resources? You know, the Nebraska 
Department of Environmental Quality implements EPA rules now. 
That is a responsibility we have. And, I would also note that 
the water in Nebraska belongs to the people of Nebraska. It is 
a state resource. It is not a federal resource. It is a state 
resource. And, I think we manage it well. We manage it 
responsibly. I have a concern about that partnership and what 
would happen in the future and I just would like your views on 
that.
    Mr. Bulis. You have the concern with the federal government 
and the state partnership?
    Senator Fischer. Yes. Yes. In the future, if the rules with 
waters of the U.S. go forward.
    Mr. Bulis. I guess it is hard for me to comment on your 
particular state, but there are places across our country where 
we have some really bad water quality issues, Florida being one 
of them, from Lake Okeechobee discharges that are coming out of 
the Caloosahatchee and the Indian River lagoon, where we have 
members in those areas that, when the effluent water comes out 
of Lake Okeechobee, they have these huge blooms of algae that 
form, and there are signs that go up, do not touch the fish, do 
not go in the water.
    I mean, we have places in Chesapeake Bay where a large, or 
one of the contributing factors to the decline of striped bass 
is because of the forage fish that are not living in those 
areas anymore because of the water quality.
    You know, in the Gulf Coast, there are places that are 
coming from the Mississippi River with the effluence that is 
coming off and creating dead zones.
    So, I think that there is a real good--there has got to be 
a way that the states and the federal government work together 
to make sure that the water is the cleanest it possibly can be 
for our people and our environment and the businesses.
    Senator Fischer. And I appreciated your comments about 
striking a balance. Obviously, I believe in a more limited 
federal government, and I believe that a balance is necessary, 
and especially for our small businesses and our taxpayers and 
the burdens that we are going to see on taxpayers with these 
regulations. So, thank you. Thank you----
    Mr. Bulis. I agree with you, and I believe in the limited 
government reach, as well. I mean, in the State of Montana we 
had a reasonable and prudent speed limit, and now that is gone 
because of government.
    Senator Fischer. Thank you.
    Chairman Vitter. Thank you all very much. We really 
appreciate your being here. We really appreciate your 
testimony.
    As I mentioned, I will be following up on this issue with a 
resolution about the EPA and the Corps, in my opinion, 
flagrantly ignoring the Regulatory Flexibility Act. That Act is 
really important for small business. It is one of the core 
protections in the regulatory process for small business. It 
should be one of the things this committee is all about. So, 
following that law is really important. So, we will follow up 
on that.
    And, with regard to the substance of this rule, I just have 
a big concern, as many of you do, that there was lack of 
clarity. So, the agencies clarified all of that completely from 
their point of view, because if the question is, in the future, 
do the agencies have jurisdiction, the answer is going to be 
yes. You do not have to finish the sentence. You do not have to 
go on. You do not have to provide any details. The answer is 
yes. And, then, they will decide when and how to exercise it. 
Obviously, that is not clarity for you all, and I share that 
concern.
    Senator Shaheen, any closing thoughts?
    Senator Shaheen. Just thank you all very much for being 
here, and hopefully we will see a final rule that is proposed 
that strikes the balance that you suggested, Mr. Bulis, between 
protecting our water resources and making sure that small 
businesses are not adversely--too adversely affected. Thank 
you.
    Chairman Vitter. Thank you very much.
    With that, the hearing is adjourned.
    [Whereupon, at 3:26 p.m., the committee was adjourned.]

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