[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
 WILL EPA'S `WATERS OF THE UNITED STATES' RULE DROWN SMALL BUSINESSES?

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                              MAY 29, 2014

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 113-071
              Available via the GPO Website: www.fdsys.gov

                                 ______

                   U.S. GOVERNMENT PRINTING OFFICE 
88-042                     WASHINGTON : 2014
____________________________________________________________________________ 
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                      BLAINE LUETKEMEYER, Missouri
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                   JAIME HERRERA BEUTLER, Washington
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                       DAVID SCHWEIKERT, Arizona
                       KERRY BENTIVOLIO, Michigan
                        CHRIS COLLINS, New York
                        TOM RICE, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                        BRAD SCHNEIDER, Illinois
                          RON BARBER, Arizona
                    ANN McLANE KUSTER, New Hampshire
                        PATRICK MURPHY, Florida

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Sam Graves..................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Jack Field, Owner, Lazy JF Cattle, Yakima, WA, testifying on 
  behalf of the National Cattlemen's Beef Association and 
  Washington Cattlemen's Association.............................     3
Mr. Alan Parks, Vice President, Memphis Stone and Gravel Co., 
  Memphis, TN, testifying on behalf of the National Stone, Sand 
  and Gravel Association.........................................     5
Mr. Tom Woods, President, Woods Custom Homes, Blue Springs, MO, 
  testifying on behalf of the National Association of Home 
  Builders.......................................................     7
Mr. William Buzbee, Professor of Law, Director, Emory 
  Environmental and Natural Resources Law Program, Emory Law 
  School, Atlanta, GA............................................     9

                                APPENDIX

Prepared Statements:
    Hon. Blaine Luetkemeyer......................................    32
    Mr. Jack Field, Owner, Lazy JF Cattle, Yakima, WA, testifying 
      on behalf of the National Cattlemen's Beef Association and 
      Washington Cattlemen's Association.........................    34
    Mr. Alan Parks, Vice President, Memphis Stone and Gravel Co., 
      Memphis, TN, testifying on behalf of the National Stone, 
      Sand and Gravel Association................................    39
    Mr. Tom Woods, President, Woods Custom Homes, Blue Springs, 
      MO, testifying on behalf of the National Association of 
      Home Builders..............................................    47
    Mr. William Buzbee, Professor of Law, Director, Emory 
      Environmental and Natural Resources Law Program, Emory Law 
      School, Atlanta, GA........................................    56
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    American Public Gas Association (APGA).......................    64
    American Road & Transportation Builders Association (ARTBA)..    68
    National Agricultural Aviation Association (NAAA)............    72
    National Federation of Independent Business (NFIB)...........    75
    National Wildlife Federation (NWF)...........................    83
    Responsible Industry for a Sound Environment (RISE)..........    85
    Trout Unlimited..............................................    88
    United Ag....................................................    91


 WILL EPA'S `WATERS OF THE UNITED STATES' RULE DROWN SMALL BUSINESSES?

                              ----------                              


                         THURSDAY, MAY 29, 2014

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:00 p.m., in Room 
2360, Rayburn House Office Building. Hon. Sam Graves [chairman 
of the Committee] presiding.
    Present: Representatives Graves, Chabot, King, Luetkemeyer, 
Tipton, Herrera Beutler, Huelskamp, Schweikert, Bentivolio, 
Collins, Rice, Velazquez, Schrader, Chu, and Payne.
    Chairman GRAVES. Good afternoon, everyone. We will call the 
hearing to order. I want to thank our witnesses for being here.
    In my four years as chairman, the Committee on Small 
Business has held more than 20 hearings examining the effects 
of regulations on small businesses and the economy. However, 
few regulations examined at these previous hearings are as 
expansive and potentially damaging to small businesses as the 
recently proposed ``Waters of the United States'' rule. This 
rule as currently drafted could extend the regulatory reach of 
the Clean Water Act to thousands of small streams, ditches, 
ponds, and other isolated waters, some of which have very 
little or no connection to traditionally navigable waterways.
    The agency claims that the proposed rule will increase 
clarity as to which waters are subjected to the Clean Water Act 
jurisdiction. However, this proposed rule creates more 
confusion, not less. Terms like neighboring, floodplain, 
riparian an area, tributary, and significant nexus are vaguely 
defined and fail to clarify where the Clean Water jurisdiction 
will end.
    Under this proposed rule, farmers, ranchers, home builders, 
and a variety of other small businesses could find their lands 
and livelihoods subject to the Clean Water Act jurisdiction for 
the very first time. And the burdens of this regulatory regime 
extend beyond the need to obtain federal permits and will also 
require costly and time-consuming mitigation activities and 
project modifications. While this proposed rule clearly has 
significant consequences for small businesses, the EPA and Army 
Corps of Engineers failed to assess those impacts. Had the 
agencies conducted research and gotten input from small 
businesses as required by the Regulatory Flexibility Act, 
perhaps they would have identified and fixed some of the 
problems with the rule before it was proposed. This rule 
threatens to drown small businesses in unnecessary regulatory 
requirements, and for that reason, I hope the EPA and the Corps 
will withdraw the rule and conduct the required small business 
impact analysis and outreach before proceeding.
    And again, I want to thank all of our witnesses for being 
here, each one of you. We look forward to your testimony, and I 
now yield to Ranking Member Velazquez for her opening 
statement.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Since its establishment in 1970, the Environmental 
Protection Agency has been vital to protecting public health 
and safety. Over the last 40 years, a series of laws passed by 
Congress have placed greater responsibility on the agency for 
ensuring the water we drink and the air we breathe is safe and 
not a threat to human health. Most of us, including many on 
both sides of the aisle, likely agree that the goals of the 
EPA, protecting our health and environment, should be a 
priority. Reducing pollution and environmental risk is not only 
important to public health, but carries important economic 
benefits as well. However, as the EPA carries out its vital 
mission, it must always be mindful of how new rules and 
regulations impact our nation's small businesses.
    One of the EPA's primary responsibilities is the 
enforcement of the Clean Water Act, whose implementation is 
shared in part with the Army Corps of Engineers. Through these 
steps and the implementation of the act, Americans are 
healthier, our waterways are being remediated, and as a result, 
many industries are seeing greater opportunities. In light of 
this, it is clear that no small business wants our water supply 
to be compromised. In fact, we have heard time and again in 
this committee, how entrepreneurs are pioneering many of the 
clean technologies that are reducing pollution. Still, when we 
talk about regulations, the truth of the matter is that such 
rules almost always impact small firms.
    Today, we will examine one such regulation--the EPA and 
Army Corps' proposed rule redefining which waters are subject 
to the Clean Water Act. Under this proposal, new bodies of 
water will become subject to the act, while others will be 
excluded. Additionally, steps are taken to preserve further 
exemptions for normal farming and ranching activities, such as 
irrigation and the runoff of stormwater, activities that are 
often undertaken by small firms.
    Regardless, these changes will result in winners and 
losers, and unfortunately, some small businesses, particularly 
those involved in construction and agriculture, will likely be 
subject to greater regulatory costs. It is important to note, 
however, that there are many sectors also dominated by small 
businesses which will benefit. This includes companies engaged 
in recreation, tourism, hunting, fishing, and boating. For 
those companies, their livelihood is often tied to clean water. 
This rule also brings with it water economic benefits, making 
our drinking water safer and providing farms with clean water 
to irrigate their crops. Unbalanced, it appears that there will 
be small businesses on both sides of this issue.
    Regardless, small businesses need a rule that works for 
everyone, not just a few. With this in mind, it is concerning 
that no regulatory flexibility analysis was performed. While 
the agency certified this proposed rule would not have a 
significant economic impact on a substantial number of small 
entities, it provided no justification for this finding. Such 
agency indifference is something that this committee is all too 
familiar with. Similarly, the EPA's analysis found that there 
was no need to conduct a small business advocacy review panel, 
a special requirement for the EPA.
    During today's hearing, I am interested in witnesses' 
perspectives on the agency's rationale for not taking these 
steps. These issues are not new to this committee. It is 
critical that as new rules are developed, small business 
interests must be balanced against our desire to preserve the 
environment. Central to this is making sure small firms have 
the ability to provide input and make substantive comments 
throughout the regulatory process.
    Today, I hope to hear very clearly how EPA concluded or did 
not conduct outreach to small firms. I want to know what is 
working and what is not, and most of all, how the process can 
be improved. Such steps are critical, especially as we continue 
to consider changes to the Regulatory Flexibility Act. As with 
most regulatory matters, there are small businesses on both 
sides of this issue, and given this, it is important that we 
hear from them. The reality is that small firms and their job 
creating potential are central to our economy as is a clean and 
healthy environment. Balancing these two goals has never been 
more important and more difficult, and I look forward to 
today's hearing to gain insight into these very matters.
    With that, I thank our witnesses for their participation, 
and I yield back the balance of my time. Thank you, Mr. 
Chairman.
    Chairman GRAVES. If any other Committee members have an 
opening statement prepared, I would ask that you submit it so 
we can include it in the record.
    I would also like to take just a minute to explain the 
lights. There are five minutes for testimony, and when it comes 
down to one minute, the yellow light will come up. And we ask 
that you try to adhere to it, but if you go over, we are not 
going to stop you.
    And with that, we will start with introductions. And our 
first witness is Jack Field. He is the owner of a small 
commercial cattle operation, the Lazy JF Cattle Company in 
Yakima, Washington. Mr. Field also serves as the executive vice 
president of the Washington Cattlemen's Association, and in 
that role he works with livestock producers and educates them 
about state and federal water quality regulations. Mr. Field is 
also a member of the National Cattlemen's Beef Association, and 
he is testifying today on behalf of both organizations. Thanks 
for being here and coming all this way. And we look forward to 
your testimony.

 STATEMENTS OF JACK FIELD, OWNER, LAZY JF CATTLE COMPANY; ALAN 
 PARKS, VICE PRESIDENT, MEMPHIS STONE AND GRAVEL COMPANY; TOM 
WOODS, PRESIDENT WOODS CUSTOM HOMES; WILLIAM BUZBEE, PROFESSOR, 
 EMORY ENVIRONMENTAL AND NATURAL RESOURCES LAW PROGRAM, EMORY 
                           LAW SCHOOL

                    STATEMENT OF JACK FIELD

    Mr. FIELD. Thank you, Mr. Chair.
    Good afternoon. My name is Jack Field. I am a cattle 
rancher from Yakima, Washington, and the executive vice 
president of the Washington Cattlemen's Association. WCA is an 
affiliate of the National Cattlemen's Beef Association of which 
I am also a member.
    Thank you to the chairman and ranking member for allowing 
me to testify today on the impacts of the EPA and Army Corps' 
proposed expanded definitions of waters of the United States. I 
will also provide my concerns with the interpretive role that 
was promulgated alongside this proposal.
    I own and manage 120 head of cattle, which is about the 
average number of cattle for a rancher in the U.S., which means 
the average producer falls under what the law considers a small 
business. My cattle drink from tanks which I pump from a stream 
so I can protect potential bull trout habitat. They also water 
from irrigation ditches, ponds, creeks, seeps, and puddles that 
they find. It is important to me and my operation to have clean 
water.
    The cattle industry prides itself on being good stewards of 
our country's natural resources. We maintain open spaces, and 
provide wildlife habitat. We also provide the country with 
those juicy ribeyes we love to throw on the grill on summer 
days like today.
    To provide these important functions, cattlemen must be 
able to operate without excessive federal burdens like the one 
we are discussing today. As a producer and the head of a state 
association, I can tell you after reading this proposal, it has 
the potential to negatively impact every aspect of my operation 
by dictating land use activities in Washington State from 2,600 
miles away. After reading the proposal, I can say one thing is 
clear--this proposal is not clear.
    There are undefined terms and phrases throughout the rule. 
The proposal would include ditches as waters of the U.S. if a 
regulator can distinguish a bed, a bank, and an ordinary high 
water mark. The proposal would also make everything within a 
floodplain and a riparian area a water by considering them 
adjacent waters. The result could be to eliminate the use of my 
entire summer pasture which is located wholly in a floodplain.
    As you can see looking on the screen, I have a ditch 
running through my pasture. Cattle utilize this for drinking. 
In my judgment, this could easily qualify as a water of the 
U.S., opening me and my ranch up to significant liability. Not 
only could I be required to obtain a 404 permit for grazing 
cows in the pasture, but making it a federal water there are 
now considerations under the National Environmental Policy Act 
(NEPA) and the Endangered Species Act due to the federal 
decision-making in granting and denying a permit.
    There also is a citizens' supervision under section 505 of 
the Clean Water Act that would keep me up at night. Instead of 
improving water quality, it is my belief, and the belief of 
both WCA and NCBA that this proposal will decrease water 
quality by discouraging conservation. I recently--next 
picture--completed a voluntary project which you can see here. 
I installed a fence that creates a riparian pasture so I can 
manage grazing that occurs within the riparian area, which also 
protects water quality. If this proposal and the interpretive 
rule I enforced when I started this project, I would not have 
completed it due to the significant legal liability the 
proposal created. If I implemented a conservation practice that 
is not on this prescriptive list of 56 practices outlined as 
part of the interpretive rule, I could fall outside of the 
exemption and be subject to a 404 dredge and fill program. 
While this may not have been the intent, this was the result of 
the proposal.
    The fence in the picture was cost-shared with local dollars 
from my conservation district, which does not meet the 
strenuous NRCS standards due to wider post spacing and reduced 
numbers of wires and stays. I would not go through the hassle 
of obtaining the 404 permit for such a small project like this. 
The total fence was roughly a quarter mile with an approximate 
cost of $1,400. My estimate in looking at this, with NRCS 
standards, it would cost me additionally another $300 per 
quarter mile. That may not sound like a lot, but when you 
expand that over several hundreds of acres and the fencing that 
goes with that, it adds up. And on a small operation like mine, 
every dollar counts.
    Future conservation projects will not be implemented if 
this interpretive rule and the definitions are allowed to move 
forward. I could not afford to be at risk of being in violation 
of the Clean Water Act with violations and fines that could add 
up to $37,000 day and the risk of potential criminal sanctions. 
I want to do my part for the environment, but I cannot if it 
would jeopardize my entire operation.
    This did not have to be the result. All the agencies had to 
do was to engage stakeholders early in the process, incorporate 
our suggestions, and we would be much further along in crafting 
a rule that actually clarifies the scope of the Clean Water Act 
jurisdiction. Despite what EPA is saying, they did not have a 
meaningful dialogue with the small business community. There 
was zero outreach to the agricultural community before the rule 
was proposed and before the interpretive rule went into effect. 
What we are left with now is a proposal that does not work for 
small businesses, does not work for cattle ranchers, and does 
not work for the environment.
    I would ask that the agencies ditch the rule. I believe we 
can do a lot better than this. Thank you.
    Chairman GRAVES. Thank you, Mr. Field.
    I am trying to decide if we try to go through one more 
witness. We will go through one more witness. Unfortunately, we 
have had a series of votes called.
    Our next witness is Alan Parks. He is the vice president of 
Memphis Stone and Gravel Company, which is a locally owned and 
operated aggregate supplier in Memphis, Tennessee and North 
Mississippi. As vice president, Mr. Parks is involved in all 
phases of the company's development of sand and gravel 
resources, including permitting and environmental compliance, 
and he has a degree in mining engineering. He previously worked 
for the Tennessee Department of Environment and Conservation. 
Mr. Parks is testifying on behalf of the National Stone, Sand, 
and Gravel Association. Thanks for being here.

                    STATEMENT OF ALAN PARKS

    Mr. PARKS. Chairman Graves and members of the Committee, 
thank you for inviting me to testify on behalf of the National 
Stone, Sand, and Gravel Association.
    My name is Alan Parks, and I am vice president of Memphis 
Stone and Gravel Company, which was started in 1910 and remains 
a family-owned business. We have eight active mining facilities 
in Tennessee and Mississippi.
    There are more than 10,000 construction aggregate 
operations nationwide. Of particular relevance to this hearing, 
70 percent of our members are considered small business.
    Aggregates are the chief ingredient in asphalt pavement and 
concrete, and used in nearly all building construction. As the 
industry that provides essential construction materials, we are 
deeply concerned by EPA's expansion of the Clean Water Act. 
This would cause further harm to an industry that has seen 
production drop by 39 percent since 2006.
    The companies in our industry remove resources from the 
ground, then process them into usable construction products. We 
do not use or discharge any hazardous chemicals. After we 
recover these resources, we return the land to other productive 
uses, such as farm land and recreational lakes.
    While stone, sand, and gravel resources may seem to be 
everywhere, these materials must meet strict technical 
guidelines to make our roads and infrastructure safe and 
durable. Unlike other businesses, we cannot simply choose where 
we operate. We are limited to where natural forces have 
deposited these materials. Because high quality aggregate 
deposits were often created by water, they are often located 
near water. Water management is a significant issue for any 
company in our industry.
    EPA claims this rule is needed because so many waters are 
unprotected. We believe that is not the case. Before breaking 
ground on any project, we evaluate whether we are affecting 
jurisdictional water, which requires consultation with the 
Corps and state officials. There is an extensive review of all 
of our projects to ensure compliance with local, state, and 
federal rules governing how we can or cannot affect land and 
water resources.
    While there are many inefficiencies in the current 
regulatory system, adding vague terms and undefined concepts to 
an already complicated program is not the way to improve the 
process. For example, EPA states groundwater is excluded from 
this rule, but the rule also says that shallow subsurface 
connections are included. Does this mean that water that fills 
our pits is jurisdictional?
    From Memphis Stone and Gravel Company's point of view, it 
would be a rare event not to encounter shallow groundwater in 
sand and gravel deposits. Will a separate permit be required 
for reclaiming the pit and returning it to another beneficial 
use? These are just some of the many questions this rule poses 
but does not answer.
    Having a clear jurisdictional determination for each site 
is critical to the aggregates industry. These decisions impact 
the planning, financing, construction, and operating of our 
facilities. Because the Clean Water Act dredge and fill permit 
and the corresponding states' 401 certification process is so 
long and costly for a small company like ours, we attempt to 
avoid jurisdictional areas.
    Now under the proposed revisions, many previously 
nonjurisdictional areas could be considered jurisdictional. It 
will make nearly any area we try to access require additional 
permits.
    The delay caused by multiple surveys, reports, and 
additional authorizations will add significant new costs during 
the permitting process, which could lead to abandoning projects 
once considered viable. One NSSGA member calculated that to do 
the additional mitigation of a stream required under this rule 
would be more than $100,000. This is just one site and one 
project in our industry.
    We make business decisions to buy or lease properties for 
15 to 30 years in advance of our operations. A change in what 
is considered jurisdictional can have a significant impact on 
our material reserves, which will affect the life of our 
facilities and delay the startup of new sites. If it is 
determined that development of a site will take too long or 
cost too much to acquire permits or perform mitigation, we will 
not move forward. That means a whole host of economic activity 
in a community will not occur.
    Given that infrastructure investment is essential to 
economic recovery and growth, any change in the way land use is 
regulated places additional burden on the aggregates industry. 
This is a serious change in the rules that dictate how we can 
or cannot conduct business.
    NSSGA appreciates this opportunity to speak on this matter. 
Thank you, Mr. Chairman. I will be happy to respond to any 
questions.
    Chairman GRAVES. Thank you, Mr. Parks.
    And with that, we will break. We have got a 15-minute vote 
and four five-minute votes at this point, so we should not be 
too terribly long. But I would ask everybody to stay and come 
back. But I apologize for this. The ranking member and I do not 
get to make the schedule on voting, unfortunately. But we will 
be back shortly.
    So the Committee is in recess.
    [Recess]
    Chairman GRAVES. All right. We will go ahead and call the 
hearing back to order.
    Our next witness is going to be Tom Woods, who is a home 
builder with more than 40 years experience in the home building 
industry. He is the president of Woods Custom Homes, a building 
company based in Blue Springs, Missouri, in my district. Tom 
serves as the 2014 first vice chairman of the Board of the 
National Association of Home Builders and is testifying on 
behalf of that association.
    Tom, thanks for being here today. I look forward to your 
testimony.

                     STATEMENT OF TOM WOODS

    Mr. WOODS. Chairman Graves and members of the Subcommittee, 
I appreciate this opportunity to testify today. My name is Tom 
Woods, and I am the president of Woods Custom Homes based in 
Blue Springs, Missouri, and NAHB's 2014 first vice chairman of 
the board.
    Since its inception, the Clean Water Act has made 
significant strides in improving the quality of our water 
resources. Home builders have a vested interest in the 
protection of our water resources. Home building is one of the 
most regulated activities in this country, and as a small 
business owner, I can tell you that the key to a successful 
regulatory regime is consistency, predictability, timeliness, 
while focusing on protecting true aquatic resources. When it 
comes to the Clean Water Act, we get none of that.
    For years, landowners and regulators alike have been 
frustrated with the confusion over what are ``Waters of the 
United States.'' When the EPA and Army Corps proposed this most 
recent rule, we hoped it would finally provide clarity and 
certainty. Unfortunately, the rule falls well short of that 
goal.
    The rule establishes broader definitions of existing 
regulatory categories, such as tributaries, and seeks to 
regulate new areas that are not currently federally regulated, 
such as adjacent non-wetlands, riparian areas, floodplains, and 
other waters.
    The agencies intentionally created overly broad terms so 
they have the authority to interpret them. Under this rule, the 
federal government would regulate roadside ditches or water 
features that may flow, only after a heavy rainfall.
    I am a businessman. I need to know the rules. I can't play 
a guessing game of ``is it federally jurisdictional?'' But 
that's just what this proposal would force me to do.
    Builders would face new, costly delays just waiting for the 
agencies to determine if a road ditch is a ``Water of the 
United States.'' The only winners are the lawyers, as this rule 
will certainly lead to increased litigation.
    My business has already been a victim of permitting delays. 
For one of my building projects, I was entangled in the Army 
Corps permitting process for over two years.
    These delays will only increase as the agencies work to 
extend federal protections to smaller waters.
    While many aspects of the Clean Water Act are vague, it is 
clear that Congress intended to create a partnership between 
the federal agencies and the state governments to protect our 
nation's water resources. There is a point where federal 
authority ends and state authority begins. Unfortunately, 
defining that point has proven incredibly difficult.
    States have adequately regulated their own waters and 
wetlands for years. As a former mayor, I have a firsthand 
understanding of the lengths that the states and local 
governments go in order to protect their waters. The agencies 
have bypassed the safeguards of the Regulatory Flexibility Act 
by failing to consider the true economic costs on small 
business. Since the agencies failed to hold a small business 
panel, it is clear that they are not interested in hearing from 
small businesses like mine. Unfortunately, all too often the 
EPA completely ignore the RFA requirements. The agency's 
economic analysis of the proposed rule failed to consider the 
economic impact on small businesses and is therefore fatally 
flawed.
    According to economist Dr. David Sunding, ``the errors and 
omissions in EPA's study are so severe as to render it 
virtually meaningless.'' That should give us all pause.
    It is clear that the EPA should withdraw the economic 
analysis and prepare a more thorough and accurate analysis. Any 
final rule should provide understandable definitions and 
preserve the partnership between all levels of government, 
while also considering the impacts on small businesses. All are 
sorely lacking here. I request that the agency start over and 
develop a more meaningful and balanced rule that respects the 
spirit of the RFA.
    Thank you for the opportunity to testify today.
    Ms. VELAZQUEZ. Mr. Chairman, it is my pleasure to introduce 
Professor William Buzbee. Professor Buzbee is a professor of 
law at Emory University School of Law, where he is also the 
director of the Environmental and Natural Resources law 
program. He will next be joining the faculty of Georgetown Law 
Center. Before becoming a professor, he counseled industry, 
municipalities, and governmental authorities about environment 
law, pollution control, and land use issues. Professor Buzbee 
has written extensively about related issues with a focus on 
regulatory federalism. Welcome.

                  STATEMENT OF WILLIAM BUZBEE

    Mr. BUZBEE. Thank you very much. And thank you to all the 
members of the Committee.
    I am pleased to accept the invitation to testify before the 
Committee. I think I was invited to testify due to my 
expertise, not as a partisan or representative of any 
organization, so what I will try to do is provide a little bit 
of context about what is going on with these proposed 
regulations and offer a few comments about the legality and 
logic of the regulations.
    I should add that this is not my first involvement with the 
question of what is waters of the United States. Earlier, I 
represented a bipartisan group of former EPA administrators 
before the Supreme Court in the Rapanos case. They are aligned 
with the George W. Bush administration in trying to uphold the 
longstanding protections of the regulations about waters of the 
United States, and then subsequently, I testified at a few 
hearings about the very confusing ruling that emerged.
    I will make five main points in my testimony. First, 
although people have focused on wetlands protections, it is 
important to understand that what is a water of the United 
States is a lynchpin of the whole Clean Water Act, including 
pollution discharges from industry, oil, and other sorts of 
spills and water concerns.
    Second, there have been some comments about these 
regulations questioning if they are legal in response to what 
the Supreme Court has done in three major cases, and I will 
show that they are. In addition, there have been persistent 
claims, and we have heard some today, that the regulatory 
claims here are too broad. And I will show how these proposed 
regulations actually cut back on EPA and the Army Corps' 
jurisdiction. Very importantly, the regulations here are linked 
to a massive survey of peer reviewed science on wetlands. In an 
era when people think agencies should respect sound science and 
peer reviewed science, it is important to acknowledge that is 
the underpinning of this regulation. And then lastly, I will 
show how the regulations here reduce a commerce-linked 
rationale that long has been an underpinning of federal power.
    So first, again, it is important to understand the Clean 
Water Act. Waters of the United States is the entire root of 
federal power here. So if you are concerned about industrial 
discharges into America's waters, industrial discharges into 
what might be a dry riverbed in the southwest and what would 
happen during a heavy rain flow, that is as much a concern as 
is wetlands filling. It is important to keep that in mind. And 
certainly given the importance of fishing industries, the use 
of waters for drinking water, municipal uses and the like, 
protecting waters is of critical importance across the entire 
nation. Businesses are on all sides of this issue.
    Second, this point about people's claim that this is an 
illegal grab of power beyond what the Supreme Court has 
allowed, this is clearly incorrect. Six Supreme Court justices 
in the Rapanos case agreed that EPA and the Army Corps, by 
regulation, could clarify what counts as a water of the United 
States. And then earlier in a case called Riverside Bayview 
Homes, a unanimous Supreme Court also talked about this being 
an area appropriate for rulemaking authority. There is no doubt 
this is something where authority exists. People may skirmish 
over what the appropriate bounds are, but is there room for 
rulemaking here? The answer is absolutely.
    Point three. These people have failed to acknowledge that 
in these regulations for the first time the Army Corps and EPA 
have very explicitly carved out jurisdiction saying they will 
no longer assert jurisdiction in several areas. I will not list 
them off in depth because of the limited time, but it includes 
waste treatment systems, prior converted crop land, ditches 
that are upland and do not contribute flow to other waters, and 
really, if you look through these, several of them seem to be a 
direct answer to some previous testimony, which will have 
talked about efforts to regulate puddles and meaningless things 
like gutters and birdfeeders. They have clearly said that they 
are not reaching out to the outermost limits.
    Point four has to do with the peer reviewed science. I am 
sure it is great reading for all of us, but there is a 300 some 
odd page science report that goes through all of the peer 
reviewed science on why you should protect waters, and the 
proposed regulations here tie in very directly. And so again 
that is an important change now in these regulations, really 
hinging federal jurisdiction to that science.
    Now, point five, in my last few seconds, is there was a 
longstanding regulation 328.3(a) or (a)(3), I am sorry, that 
allowed the federal government to assert jurisdiction over 
disputed waters if they could show the harm or the use of 
waters was linked to commerce and industry. And EPA and the 
Army Corps have deleted that provision, and so they now are no 
longer asserting that. At this point, under these regulations, 
all jurisdictions are hinged to what the science shows about 
the need to protect waters.
    So I will stop there. Thank you very much, members.
    Chairman GRAVES. Thank you very much. We are going to start 
our questions with Mr. Tipton.
    Is Jamie here?
    Mr. Huelskamp?
    Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate moving 
to the front of the line here. That kind of surprised me a 
little bit.
    Gentlemen, thanks for your testimony. I apologize for Mr. 
Field coming and winning the award for traveling the furthest 
distance, oftentimes coming from halfway across the country. I 
wish I were further away from the regulators in Washington, but 
I appreciate your description of what actually happens on a 
ranch and what you fear these proposed regulations might do for 
you. It certainly is a vast overreach and certainly being in 
agriculture myself, I am worried about what happens, whether it 
is dry stream beds, backyard ponds. You know, we wish we 
actually had road ditches with water in them, but my 
understanding of the rule would mean that they would have a 
regulatory nexus from Washington to interfere with those as 
well and creating that regulatory uncertainty in these vast 
overreaches is creating some problems.
    I wish, for Mr. Field and Mr. Parks, if you would describe 
a little further what changes you believe you might have to 
make. And again, that is the difficulty, is the regulatory 
uncertainty, because this is not the first time there has been 
a proposal to strike the word ``navigable'' and say, hey, that 
does not count anymore, even though that is certainly the 
intention of Congress. So if you will describe a little bit 
more specifically what you think you might have to do and the 
cost of doing those in the future.
    Mr. FIELD. Absolutely. Thank you very much, Congressman.
    The biggest question, as you have highlighted, is being 
asked to explain hypothetically what will happen when I cannot 
clearly tell you what the rule means is very difficult, but I 
will do my very best.
    The biggest challenge--and I reference this list--this is a 
list of the 56 preapproved practices that EPA has deemed are 
not going to create a discharge if an individual--and these are 
related to farming and agricultural activities--if an 
individual executes those as prescribed by NRCS.
    So just for my example, and we talked a little bit earlier 
about fencing or prescribed grazing. Clearly, it would create 
additional expense and burden on my operation to have to go 
through and create NRCS approved grazing plans to ensure that 
in areas where I have a riparian pasture, if I have a fence 
that touches that riparian area, meaning if it floods at any 
time of the year and then that water drains back into a 
tributary, which the EPA may deem has connectivity under their 
broad definition of authority, I then, if I am not grazing, in 
accordance to my NRCS approved plan, could be found out of 
compliance. Thus, being required to obtain a 404 permit for 
cattle grazing in a riparian area.
    Hearing the good gentleman to my right speak about the 
challenges they have in obtaining permits for constructing 
homes, I have no expectation whatsoever to do that. I am a 
small--extremely small business. I have got 55 momma cows. That 
is one truckload. I cannot afford an attorney or an 
environmental consultant. I would like to think I am a fairly 
intelligent individual being able to read the law, but I cannot 
honestly tell you what the expense would mean to my operation 
in terms of compliance with the environmental regulation.
    I want clean water. I drink the same water that my 
neighbors down the stream do. I want good, clean groundwater. I 
want good, clean surface water. But in my opinion, the best way 
we get there is through local decisions, and that happens at 
the local level and the state and county.
    Mr. HUELSKAMP. Thank you, Mr. Field.
    Mr. Parks?
    Mr. PARKS. If I can sum this up in three words, I would say 
cost, delay, and uncertainty. Those are going to be the big 
three things that come out of this.
    I believe that increased regulated area is going to be 
significant. I think one concern that we have is we have 
developed a level of competency over the years understanding 
how to play this game, and now the rules are going to change 
significantly. So there is going to be a pretty significant 
learning curve for that, both for the regulated community, as 
well as those that are in charge of regulating. That causes 
delay, and there is a cost to that.
    We make substantial investments on these natural resources. 
We lease those many years down the road, and we are concerned 
that because jurisdictional determinations are subject to 
review every five years, what is going to happen to deposits 
that we had banked on mining that are now going to be off 
limits? So there is a lot of uncertainty that exists with this, 
and it creates the potential for a much, much broader regulated 
area.
    Mr. HUELSKAMP. Mr. Parks, one last quick follow-up as far 
as planning ahead. How many years out do you make purchases in 
order to secure those deposits? I mean, certainly more than 
five years?
    Mr. PARKS. Absolutely. It is not uncommon typically in a 15 
to 30 year range is what most of our leases' terms are.
    Mr. HUELSKAMP. Thank you, Mr. Chairman. I yield back.
    Chairman GRAVES. Ranking Member Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Professor Buzbee, you indicated in your testimony that 
while some small businesses have come out against the proposed 
rule, there are business interests on both sides. Can you 
explain why the split?
    Mr. BUZBEE. Yes. Based on past, if you kind of track who 
has supported changes, who has testified, and who has 
participated in some of the Supreme Court cases, there are very 
substantial interests linked to hunting and fishing as one 
area, and then there is also commercial fishing on a large 
scale, which is very much dependent on rivers and their 
tributaries. In addition, recreational interests are a huge 
business in the United States, and they very much depend on 
this.
    While not first level small business, municipal uses of the 
waters that we are trying to protect through the Clean Water 
Act has a direct effect on many businesses who depend on safe 
and good water for their businesses. So if you have looked 
historically, the reason why there has been--there was for 
about 30 years--really bipartisan support across party lines 
was that people realized it was both environmentally and good 
business to have improved clean waters.
    Ms. VELAZQUEZ. It appears the main fear of many is that the 
proposed rule would broaden the scope of the Clean Water Act 
and that there would be limitless claims of federal power. Is 
this an accurate criticism of the proposed rule?
    Mr. BUZBEE. No, it is not. It is not an accurate 
description. As I said, first, there is for the first time an 
explicit carve-out of a number of areas plus very importantly 
there is the explicit deletion of this longstanding commerce 
link grounds for jurisdiction. And then there are also several 
other grounds that have long been explicit in the Clean Water 
Act, and they remain.
    Very importantly here is what the EPA and the Corps have 
done is they set three categories. They have some areas they 
call jurisdictional. Then they have others and they talk about 
them by category. And then they have others that still require 
case by case analysis for a significant nexus. And so while I 
do think there are concerns with delay, any time you have a 
case specific judgment it also gives people the chance, whether 
they are building houses or working on a cattle ranch, to argue 
about whether an area deserves protection.
    Ms. VELAZQUEZ. Thank you.
    Mr. Field, you indicated that there was zero outreach to 
the agriculture community before the rule was proposed and that 
you were told to ``wait and see.'' Why do you think there was 
this reluctance from EPA to have input from those stakeholders?
    Mr. FIELD. Thank you.
    I cannot answer why EPA failed to reach out. However, it is 
clear to see the result. We are experiencing it right now.
    Just if I may answer a follow-up to the professor's comment 
regarding the section 505 of the Clean Water Act, I would argue 
adamantly that the citizen supervision is by far anything but 
clear. Having the opportunity as we drive down the road to 
simply pick up the phone and contact EPA and say, ``I question 
an activity that is occurring. I think there is a discharge.'' 
Click. That is an anonymous call. We, as land owners, the 
target of the call, never have an opportunity to know who is 
making the call, who is making the claim, and I have seen this 
happen in Washington State where the citizens--the opportunity 
to make anonymous calls leads to countless inspections, follow-
up, and does nothing in terms of protecting water quality, but 
causing a continuous do-loop.
    But back to your point, in terms of outreach, it is beyond 
frustrating as to why EPA did not reach out. I know in 
February, at the National Cattlemen's Annual Meeting, EPA was 
asked that very question, and they were told to wait and see 
what the proposal looked like.
    Ms. VELAZQUEZ. So now that you have this forum, you have 
the opportunity to tell me and the committee what the number 
one concern or complaint is that you have regarding the 
proposed rule?
    Mr. FIELD. The absolute vagueness. It is a dramatic 
overreach, in my opinion, of what the original intent was. And 
the idea that simply having again to show a bed, a bank, and an 
ordinary high water mark, then being able to make the deem that 
it is adjacent, that is limitless.
    Ms. VELAZQUEZ. Thank you.
    Mr. Woods, in your testimony, you point to an economist who 
found that EPA's cost-benefit analysis was flawed because it 
used a time period in which there was low construction activity 
as its baseline. During the time, construction spending was 24 
percent below that of the previous two years. Can you give us a 
sense of what the true cost would be if the analysis had used a 
period that was more reflective of the construction industry?
    Mr. WOODS. I can only give you a guesstimate, I guess, I 
would say. If you look at 2009-2010, yes, they are 24 percent 
behind 2007-2008. However, remember, 2008 was the absolute 
cliff. Construction overall dropped by 80 percent. So if you 
take that as a number, you can assume that there would be five 
times the permits if we were able to get back to normal 
construction. So if there were five times the permits, there 
would be at least a minimum of five times the cost, and I see 
very little benefit whatsoever. That is the other flaw in the 
thing. There will be cost, and in my estimation, no benefit.
    And if I might, the other problem you have here when you 
say a cost benefit and the way I think their method is flawed, 
because your real cost, not only the physical cost of hiring 
the attorneys and the consultants to go through this process, 
but your real cost in the construction industry is in the time 
because houses have very short time periods. They have very 
short commitments on loans and appraisals and those kinds of 
things, and if you stretch it out, those commitments are 
usually only six months.
    Ms. VELAZQUEZ. Okay.
    Mr. WOODS. If you stretch it out, you just lost those 
sales.
    Ms. VELAZQUEZ. Thank you. Thank you for your answer.
    Professor Buzbee, one other concern that has been expressed 
is how the proposed rule will affect their businesses, and 
among those is the fear that the new rule will be subject to 
lawsuits. My question to you is what safeguards are there in 
the act that will prevent businesses being subject to a 
lawsuit?
    Mr. BUZBEE. Well, first, the most important thing is first 
that you have an Army Corps of Engineers that making 
jurisdictional determinations does react with alacrity and 
reviews and gives people prompt feedback. That is essential. 
Citizen suits are actually very hard to bring, and that is 
actually only when people go into the courts. Whether phone 
tips or something like that would be a different issue. And so 
in the end they would have to basically show that there was a 
violation and convince a court and show that they were harmed 
by it, and that is difficult. And I think for that reason there 
are not as many--you do not hear about a lot of section 404 
water-related--waters of the United States-related citizen-
litigation suits.
    Ms. VELAZQUEZ. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman GRAVES. Mr. Tipton?
    Mr. TIPTON. Thank you, Mr. Chairman. I would like to thank 
our panel for taking the time to be here.
    I have to tell you, gentlemen, I think this is the greatest 
water grab that we have seen by the federal government in the 
history of the United States. The overreach of the EPA in terms 
of being able to control.
    Mr. Field, you are out of the west?
    Mr. FIELD. Yes, sir.
    Mr. TIPTON. This is a private property right in the west?
    Mr. FIELD. Absolutely correct.
    Mr. TIPTON. You have state law in the west. We have 
priority-based systems, and we are now seeing the federal 
government trying to be able to step in to be able to regulate 
virtually all of the waters of the United States.
    When you read through this, ``Traditional navigable waters, 
interstate waters and wetlands, territorial seas, impoundments 
of the first three categories in tributaries, tributaries of 
the first four categories, waters and wetlands adjacent to the 
first five categories and other waters.''
    Does that sound like everything to you, Mr. Field?
    Mr. FIELD. It sounds to me, once that drop falls out of the 
sky, it is under EPA's jurisdiction.
    Mr. TIPTON. It is going to be under the EPA's jurisdiction.
    You were just talking about the ditch that you diverted off 
the stream to be able to get water to your cattle, to be able 
to irrigate, I assume, some of your fields so that you can 
actually grow hay, some feed for the cattle. How is this going 
to impact your business?
    Mr. FIELD. I honestly cannot tell you that. That is why I 
am here, sir. The picture that we had is an irrigation ditch. 
There is about an acre foot of water that flows through that to 
a few of my neighbors right now, and the question I have and 
the sincere fear is the riparian pasture that is between that 
irrigation ditch and the tributary that flows to a water of the 
U.S. and the question of am I in violation of the Clean Water 
Act? I subject myself to more liability today by putting the 
pictures on the screen and talking than I can afford to pay.
    Mr. TIPTON. Now, do you have ever sense if the EPA is 
allowed to be able to move forward with these rules, it is no 
longer your land, no longer your property, no longer your 
water; that it is now owned by the federal government and it 
will be controlled out of Washington?
    Mr. FIELD. That is most certainly a concern I think that is 
shared by every private landowner. And an additional fear that 
I have, and in speaking with Mr. Parks that I think would be 
equitable on other natural resource industries, is the concern 
that this rule, if it goes forward unchanged and unamended, 
that it may have a chilling impact on landowners who may not be 
directly involved. I lease all of my property for grazing. This 
may have a chilling impact and a landowner might say, ``Boy, 
Jack, I would love to help you out and lease some pasture, but 
I am afraid your activity brings too much liability under the 
Clean Water Act. Go maybe try the neighbor.''
    Mr. TIPTON. Yes, I think, you know, because I think we can 
agree, everybody in this room is an environmentalist. We all 
like clean air and we all like clean water. You were describing 
for us an effort that you had made in terms of being able to 
put in some conservation. Now, if these rules move forward, if 
the overreach of the federal government is put into place, you 
are not going to be able to afford, nor would you be willing to 
move into those conservation areas. Is that correct?
    Mr. FIELD. Well, you are absolutely correct. I would 
certainly not partner with NRCS or my conservation district. I 
would try to do what I can at a much slower pace just on my own 
because--and do not get me wrong. The NRCS standards are 
excellent. They work perfectly. But I do not need to implement 
those practices exactly to the standard. I can get by with a 
three strand high tensile fence that I can build in a much 
faster time than a four or five strand barbed wire fence that 
delivers the exact same benefits at a much lower cost. And 
again, in my operation, I have got to try to spread the dollar 
just as everybody else on this panel as far as we can.
    Mr. TIPTON. And, you know, just for the point of clarity, I 
happen to view our farm and ranch community as part of our 
national defense. We certainly need to be able to feed this 
country. Did you state, and did I write this down correctly, 
there was zero outreach by the EPA to the ag community. Is that 
correct?
    Mr. FIELD. Yes, sir. Questions were made in February 
requesting for meaningful dialogue and input, and again, being 
told to wait and see. And that is, unfortunately, not a very 
productive means of promulgating rule, and especially something 
that will be this effective.
    Mr. TIPTON. So an agency that says you will follow the 
rules does not follow its own rules when it comes to being able 
to reach out and find out what the business impacts are going 
to be.
    Mr. Parks, would you like to comment on that?
    Mr. PARKS. Yes, sir. I would.
    Fortunately, our company is a member of a great trade 
association who made us aware of these developments and keeps 
us informed and in the loop. The Home Builders Association, 
National Cattlemen's Association, that is the type of--you 
know, that is why we are members of these associations. By and 
large, we do not have the management and the support staff to 
stay engaged with these types of issues. I would say for the 
most part the small business community has a cursory 
understanding of what is being proposed at best, and most folks 
have no idea the enormity that these changes could bring to the 
regulated community.
    Mr. TIPTON. I see I am out of time. Gentlemen, I thank you 
for your comments, and I share your concerns over this 
overreach by the government and the EPA.
    Chairman GRAVES. Mr. Schrader?
    Mr. SCHRADER. Thank you, Mr. Chairman.
    Well, I guess I find Professor Buzbee's testimony on his 
five points actually pretty incredulous. I respect his previous 
experience and expertise, but the idea that this is a simple 
definition of waters of the United States, we have heard from 
people that live, work, and try and build our great country and 
the economy that that is not the case. This is a vast 
expansion. As a matter of fact, it is not legally responsive 
even to the courts.
    Let us go back to the Supreme Court decision, Professor 
Buzbee. That was supposed to be about navigable rivers or have 
some juxtaposition or nexus to navigable rivers. CWA does not 
include every bloody water in the United States of America. It 
is supposed to be dealing with those rivers that actually have 
some nexus to navigability. Otherwise, to the good gentleman 
from Colorado's point, it becomes a grab of private property 
throughout the United States of America. That is not what the 
CWA was all about.
    I think the fact that this is actually not a broad 
interpretation is ludicrous. We have 56 different exceptions, 
and I bet Mr. Field, are you competent every single exception 
that they are going to come up with is listed right there? Are 
there going to be some others you are going to run up against?
    Mr. FIELD. You are absolutely correct. This is, again, the 
list, if you follow the 56 preapproved NRCS practices by the 
letter you would be exempt. But if you, again, my fence. Not 
having a NRCS plan, it does not meet the standard, I do not 
fall under----
    Mr. SCHRADER. Well, and I think that is unfortunately going 
to be the case for everybody. The commerce caused a deletion 
almost is a direct contravention from the plurality's decision 
of the Supreme Court. You are supposed to still take the 
navigability piece into consideration. Even Justice Kennedy 
talks about significant nexus in his decision. There is none of 
that. None of that with EPA. We are on primary, secondary, 
tertiary, quaternary, septuagenarian relationships to 
navigability here. This is ludicrous. I mean, I do not think 
anybody in a straight face can say that this is anything but a 
huge grab of jurisdictional power at the end of the day.
    Let us talk about peer reviewed research here. I guess I am 
a little concerned about how committed the EPA was as they 
developed this rule to coming up with the accepted peer 
reviewed research when their own EPA draft study, 
``Connectivity of Streams to Wetlands to Downstream Waters: A 
Review and Synthesis of the Scientific Evidence,'' was sent to 
the EPA's Science Advisory Board to begin review on the same 
day they sent their final rule to OMB. If you are talking about 
peer reviewed science and actually watching science, they did 
not follow their own gosh darn science. That is an indictment 
that I think is beyond the pale here. All I know is that back 
in Oregon we have a lot of federal land, just like every 
western state legislator here. And we have a tough time dealing 
with all the federal rules on a regular basis. And what we are 
seeing here is unfortunately more rules, more regulations.
    I think Mr. Parks summed it up nicely, ``More cost, more 
delay, more uncertainty.'' Even if it does not go to a 
lawsuit--you know, Professor Buzbee, not every dang small 
businessman has a lawyer in their pocket that they have on 
retainer that they can fight these things. The threat of 
someone driving down the highway, seeing a practice and they 
are worried about it, all of a sudden you have got EPA or in my 
state DEQ coming in and investigating you, that costs a 
business money. This is an abomination.
    Thank you, Mr. Chairman. I yield back.
    Chairman GRAVES. Mr. Schweikert?
    Mr. SCHWEIKERT. Thank you, Mr. Chairman.
    We did a little workgroup about a month ago with a number 
of lawyers who basically work in this area, environmental law, 
and we set sort of a game theory. We read through the rule and 
basically turned to those who it was within their specialty and 
said, ``Take it to an extreme. Take it to--maximize the 
language.''
    And so, Professor, I was going to ask for your help on a 
couple things that still echo in my mind. A river that only 
once every 100 years--let me back up. A wash that only on 
occasion contributes to a navigable stream. Does that wash fall 
under these rules?
    Mr. BUZBEE. I think the way they have set them up, they are 
proposing to look by different regions to figure out, but if an 
area is a dry riverbed in an area that is, say, Arizona, an 
area that tends to be dry that has major rain torrents that 
come down and during those times water is carried on----
    Mr. SCHWEIKERT. It would fall under?
    Mr. BUZBEE. I believe that it would fall under for those 
instances.
    Mr. SCHWEIKERT. Okay, so, because I remember sitting 
through a meeting on this, lordy, 15, 20 years ago, where the 
salt riverbed, which we damned up before statehood, so it has 
basically been dry for 100 years except for that 100-year flood 
that we had a few years--actually, back in the 1980s. And at 
that time, EPA wanted to designate that as a navigable river. 
So the wash that goes behind my property, my home, so I have a 
property, a big wash under it, when we get our 14 inches of 
rain a year, which comes on a Tuesday--no, it really does--and 
that would contribute to that dry salt riverbed, and that dry 
salt riverbed once every 100 years or so contributes down to 
the Colorado, would fall under the rule. Right?
    Mr. BUZBEE. I do not know about if there is a time limit. I 
am not aware. I mean, you are saying once every 100 years. I do 
not know. My guess is that would be because they seem to be 
talking more about with periodic rainfalls that would be heavy 
that would flow.
    Mr. SCHWEIKERT. So now we are into the definition of 
periodic, ultimately.
    And my concern is also in this rule there is also some 
cleanup of the language of, we will call it, ``citizen 
litigation.'' You know, the ability. And before speaking to one 
of the minority members you said, ``Well, you do not think this 
happens often.'' I, literally, in Arizona, have multiple law 
firms that literally their sole practice is suing the Forest 
Service. And that is how they make their money.
    Now, a lot of the suing is actually all about we will sue 
and get a settlement, and that is how we enforce policy. So 
under this, could I get sued for the dry wash behind my house 
that contributes to the dry salt riverbed that contributes 
eventually to the Colorado River once every 100 years?
    Mr. BUZBEE. Under the Clean Water Act, you would have to 
show that you had discharged a pollutant into the river from a 
point source, which would mean either industrial discharges, or 
if you went in and, say, built a concrete pier blocking it, 
then there would be a possibility of liability if it was 
jurisdictional. But you can only sue if you have that and there 
is an advance notice requirement. So they would have to give 
you an advance notice, and the state, and the fed----
    Mr. SCHWEIKERT. But in that same concept, so in my 
property, I go out and dig and plant some desert trees, and I 
use the appropriate fertilizers for my area. Haven't I just now 
walked over that line?
    Mr. BUZBEE. As far as I know, I am not aware of that from 
what I read. I am not clear if there would be. I cannot see one 
in that.
    Mr. SCHWEIKERT. Okay. When we modeled it and actually read 
it through line by line, and look, that may not be the intent, 
but my great fear is as we have seen over and over and over and 
over, when we end up--we create these--the government creates 
these rules and then over the next 10 years, 15 years, 20 
years, litigation after litigation after litigation, expansion, 
expansion, expansion, all of a sudden I am not allowed to plant 
a desert tree in the back of my property because there is a 
wash. And I know that sounds absurd, but I can model you 
through the language and show you how that reads in there.
    And with that, I yield back, Mr. Chairman.
    Chairman GRAVES. Ms. Chu?
    Ms. CHU. Yes, Professor Buzbee, there has been a 
representation that nearly every drop of water that falls would 
be regulated by the federal government and that even if not 
every drop of water is regulated, any place that water collects 
will be including all manmade bodies of water, ponds, ditches, 
floodplains, and even standing water in potholes. And yet, from 
what I read, the actual increase of jurisdiction would be three 
percent, which does not sound like every body of water that is 
out there. So could you please clarify that?
    Mr. BUZBEE. Yes. I agree. Your read is consistent with 
mine, that there is a clarification of the grounds for 
jurisdiction, but I do not see a substantial increase, and 
because of these explicit carve-outs that are now part of the 
proposed regulations, areas that previously had been raised as 
a kind of parade of horribles of extensive regulation, I do not 
think you would find them. And so, for example, there was a 
mention earlier that just by having cattle grazing, that that 
would create a need for a section 404 permit. I am not aware of 
any basis for that.
    Ms. CHU. Is three percent a correct number do you think?
    Mr. BUZBEE. I have not looked at that. I have seen other 
people have estimated three percent, but I have not, myself, 
tried to figure out across the country the percentage.
    Ms. CHU. From what I read, 117 million Americans who 
consume water from public systems that rely on seasonal or 
intermittent water sources would have greater protection of 
their drinking water. Is that true?
    Mr. BUZBEE. Yes, it is. The science does show more and more 
that protecting rivers, riverbeds, and the buffers around them, 
especially, is critically important to maintaining water 
quality, both for human use, as well as fisheries and other 
purposes. And so especially for municipalities that depend on 
water from flowing rivers, maintaining the purity of that water 
is extremely important.
    Ms. CHU. Now, it is my understanding that the EPA is, in 
proposing these regulations, is actually trying to limit the 
pollution in our drinking water and therefore, they have define 
which waters may be subject to these kinds of pollutants and 
also carry pollutants downstream. Could you elaborate on that 
point and help us understand how the definition of waters 
facilitates the main goal of protecting constituents from 
pollution?
    Mr. BUZBEE. Sure. As you can read in the very extensive 
proposed regulation, a lot of the focus is trying to track, 
based on peer reviewed science, how pollutants move through 
waters from areas where the waters collect and then essentially 
move from tributaries into larger navigable-in -fact, waters, 
or traditionally navigable waters. And so basically, they found 
that both wetlands and tributaries do tremendous work, 
essentially functioning for free and reducing pollutants so 
what eventually goes into the larger water bodies is 
substantially cleansed by the process itself. And so in that 
respect it is critically important to maintain the purity of 
water.
    Ms. CHU. And then in your testimony you said that several 
categories of waters are exempted from the rule. For example, 
waste water treatment systems, prior converted cropland, and 
several sorts of ditches. Could you tell us how and why these 
exemptions were made and why they are necessary?
    Mr. BUZBEE. There has been, I think, in some cases these 
were kind of in actual enforcement practices were largely 
followed, but there have been a lot of claims of excessive 
claims of jurisdiction. So looking at their explanation, the 
view was it was time not to leave them open to debate but just 
to make crystal clear these would not be jurisdictional, and 
that would remove them from any debate and argument. People 
would not be able to later say, oh, there was a significant 
nexus. No, these are removed from federal power.
    Mr. FIELD. Congresswoman, if I may, just to one question. 
You had done an excellent job of highlighting the problem with 
this rule when you asked Professor Buzbee if in his opinion 
this rule would only yield three percent of additional 
regulation. The problem is I can bring my attorney and they 
will argue the opposite saying, no, I do not think it is three 
percent; I think it is 10 percent. It is not clear to us what 
truly is going to be the regulated water under this rule.
    And the other question, in terms of a carve-out on a waste 
treatment plant, they are regulated under the National 
Pollution Discharge Permit. That is NDPES. That is a point-
source polluter. That is apples and oranges. In this 
discussion, we are talking about non-point.
    Ms. CHU. Well, I still have another question, so if I could 
continue with Professor Buzbee.
    Mr. FIELD. Excuse me.
    Ms. CHU. In your testimony, you explained that what appears 
to be a vague language of the law will actually allow 
regulators to provide case by case decisions following site-
specific inspections. Can you explain how the law's reliance on 
case by case analysis will actually allow regulators to adhere 
more closely to the intent of the Clean Water Act?
    Mr. BUZBEE. Sure, I would be happy to.
    This is partly the outgrowth of Justice Kennedy's opinion 
in the Rapanos case when he called for a significant nexus 
analysis so you would not be regulating marginal, insignificant 
waters. And so the Army Corps and EPA, in proposing this 
regulation, have basically tried to figure out what by category 
does need to be regulated and then carve-out certain areas, 
these are ones that need case-by-case analysis. And so those 
ones, it is not clear until you look in particular context. 
They have sought comment. I assume the colleagues here at the 
table will provide comments that would analyze by different 
regions why certain areas might be more likely to be 
jurisdictional or not. That is something they sought.
    Ms. CHU. Thank you. I yield back.
    Chairman GRAVES. Mr. Collins?
    Mr. COLLINS. Thank you, Mr. Chairman. And I want to start 
by thanking Mr. Schrader for his excellent summary of the 
issues that we are bringing. Mr. Schrader and I cosponsored a 
letter to the administrator of the EPA, as well as the 
secretary of the Department of Army that was signed by 231 
members of Congress. It is not easy to get members to sign such 
letters, let alone 231 letters on a bipartisan way, including 
the chairman of every committee in Congress.
    So when Professor Buzbee speaks about the impact or what he 
would suggest is not, as I agree with Mr. Schrader, the 
greatest expansion land grab, power grab that has ever occurred 
in the history of the EPA. And certainly, I think our testimony 
from Mr. Field, Mr. Parks, and Mr. Woods confirms that.
    So for the record, I would like to point out to Professor 
Buzbee, not to nitpick, but I think it is important, Professor, 
when you were questioned by Ms. Chu about certain issues, let 
me reiterate how you responded. ``I am not aware. As far as I 
know. A possibility. I do not know. My guess is. I believe 
that.''
    Those were your words, Professor. So when we talk about 
uncertainty, and I hear our farmers, and Mr. Schrader and I 
were asked to lead this letter by the Farm Bureau, our farmers, 
which grow the food that feed Americans and actually feed many 
around the world, are scared to death of this overreach and 
what it might mean. And again, it goes back to uncertainty. It 
goes back to the fact that outreach was not made to small 
business, to the farming community and the like. Frankly, the 
rule needs to be returned. That is what Mr. Schrader and I and 
229 other members of Congress have simply asked at this point. 
They got too far out ahead as has been pointed out. 2008, 2009, 
2010. It is fundamentally flawed as a beginning data point. And 
the fact that we have not done a true economic analysis is, I 
think, a reasonable request that we have made. Simply return 
the rule. Let us take this off the fast track that it is on. 
Let us get back to regular order. Let us do what we should be 
doing with the Farm Bureau, the Home Builders, the construction 
trades. We are not making a mountain out of a mole hill.
    And my other concern, and maybe I will just ask for a brief 
comment, are the economy and jobs. We have an economy that is 
sputtering, that has lost steam. Our kids are graduating. They 
do not have the jobs. We need to grow our way out of the 
deficits and debt problem that we have and just, you know, Mr. 
Field, the simple kind of question, does a rule like this--
because I certainly believe it is another hindrance in growing 
our economy. Uncertainty brings lack of investment. Certainly, 
I would like your opinion.
    Mr. FIELD. You have just hit the nail on the head, sir. The 
lack of clarity on this rule, regardless of the industry you 
are involved in, not knowing, not being able to tell your 
lender with certainty that the activity you are about to enter 
into is not going to carry the potential legal liability of a 
violation of the Clean Water Act or the ability to have the 
citizens suit provision of section 505, it is unthinkable.
    Mr. COLLINS. Uncertainty means lack of investment.
    Mr. Parks?
    Mr. PARKS. Yes. Just to add to what Mr. Field indicated. 
Most of our holdings, I would say roughly 80 percent, are 
leased. These issues affect private landowners. It is not just 
Memphis Stone and Gravel Company. So the bottom line is if we 
are able--if the rules require more area subject to regulation, 
then that certainly can limit the amount of resources that we 
can recover. And that translates into cost and value to the 
property owner, as well as us.
    Mr. COLLINS. Mr. Woods?
    Mr. WOODS. Yes. It is going to have a devastating effect. I 
will give you an example.
    One of my subdivisions in Mr. Graves's district has over 
800 units. If it were built out, it would be subject to this. 
It is, in fact, the one that I mentioned took two and a half 
years and several hundreds of thousands of dollars to get the 
permit in the first place under the old rule. I would not go 
forward with getting it under the new rule. But if you take 
that and just extrapolate it, every house or every unit by our 
standards means about 3.7 jobs. You know, if you look at the 
tax bills and burdens and what they generate, it is in the 
thousands of dollars to the municipality and the state and 
federal government, and that is just one subdivision. I am not 
the big developer in Kansas City. I am just one of the medium-
size guys, but you would have to take that number and add it 
and then go across the country and say how many are there. You 
are talking millions of jobs that will be lost simply because 
we cannot get the permits.
    Mr. COLLINS. Thank you all very much.
    Real quick, Mr. Parks. Our time is expired.
    Mr. PARKS. Congressman, if I could just add that our 
biggest customers are DOTs. Mississippi Department of 
Transportation, Tennessee Department of Transportation. They 
have to deal with the same issues that we as industry have to 
deal with in determining what is jurisdiction and getting 
permits to do what they do.
    Mr. COLLINS. All right. Thank you.
    Thank you all very much. I yield back, Mr. Chairman.
    Chairman GRAVES. Mr. Payne?
    Mr. PAYNE. Thank you, Mr. Chairman, and to the ranking 
member. I appreciate everyone's testimony today.
    Mr. Field, in your testimony, you mentioned that for 
business and moral reasons you protect the quality of water 
around your ranch.
    Mr. FIELD. Yes, sir.
    Mr. PAYNE. That is very admirable. However, in my home 
district, which takes in Newark, New Jersey and surrounding 
communities, we have the Passaic River, which was a place where 
a lot of industry was created in the 1800s and 1900s, and 
really drove a lot of the industrial revolution around cities. 
Newark is the third oldest city in the country. But it became a 
dumping ground. Agent Orange was produced in Newark, New 
Jersey, and a lot of issues that we still have with the river 
come from the toxins and those type of different agents. So do 
you really think that we can rely on moral integrity of 
businesses to not pollute our nation's waters? I mean, everyone 
is, you know, and I commend you, and it is around your ranch 
and that is important to you because that is where you are, but 
do you think we can rely on businesses not to pollute or follow 
your example?
    Mr. FIELD. Well, that is an excellent question, 
Congressman, and I certainly understand your concerns where you 
sit. And you also bring up an excellent point. Effectively, 
what I would recommend, I think the best decision for your 
problem is--the solution will be found locally in New Jersey, 
not by me in Washington State saying, well, I think the best 
way to clean up your reach of river, the local decisions. 
Nobody on this panel is saying we do not think we need to be 
able to regulate and protect water quality. When I go out to 
the tap to get a drink of water, I want to make sure it is 
safe. I want to make sure you and your family have safe water. 
But I do not believe creating a rule that does not clearly 
define, and as one that will be covered under the regulation, I 
need to know clearly is this jurisdictional? Is this not? Just 
what it means.
    But to your point, in terms of being able to address your 
water quality issues, I absolutely think that solutions can be 
found locally, watershed by watershed. The most effective way 
to address the issue on your river is to get the local--all the 
stakeholders together, whether it be a total maximum daily 
load, to be able to get everybody there that is on the water 
body, identify what the issue is, and collaboratively come up 
with a solution. If there is buy-in from everybody, you can 
certainly address the issue.
    Mr. PAYNE. Yes, and that is a very good point. The key 
there is buy-in. But, you know, as I stated, you protect the 
water around your ranch. A lot of these larger industries, the 
people that are involved in that business, do not live in that 
community, so it does not matter very much to them what their 
water quality is in that area. So my concern, and what we are 
trying to do, is make sure that we can make sure that everyone 
has the same opportunity in their community to have safe 
drinking water.
    Mr. FIELD. Are these all nonpoint facilities or are these 
point source facilities as well as nonpoint? Because I am a 
nonpoint. I am a nonpermitted facility right now. If you are 
talking about a chemical manufacturer, that is a point source. 
If they are permitted to discharge whatever their discharge is 
into a water body, they are regulated right now under EPA, and 
I am not sure if you are delegated, but you may have a state 
authority regulating that as well. But there is regulation, and 
if they violate the numbers in terms of their permit, that is 
most certainly something that can be penalized. But it is a 
little difficult if we are talking about the applicability of 
point source regulation to nonpoint operations as well.
    Mr. PAYNE. Well, I mean, you know, and that is quite true, 
but what we find is people tend to like to cut corners, and 
even though they are regulated, there are situations where we 
find that they have not followed the rules. So that is the 
actual important piece of that.
    According to the EPA, over 117 million people drink from 
water systems in areas that currently lack full and clear 
protection under the law. Do you think it would be fair to 
exempt the polluter from the Clean Water Act, which would force 
them--force the community to pay for the clean-up of its water 
supply? I would like to ask Professor Buzbee--the whole panel, 
please.
    Mr. BUZBEE. I think that the need for clear prohibition, so 
people know what to do so they are not disadvantaged. Then 
business has been shown again and again. So having clear rules, 
I think everyone at the table here would agree, clear rules are 
important, but it is important not to rely on just self-
policing, but that does tend to be a recipe for disaster.
    Mr. PAYNE. Okay. And my time is up, but quickly, if you 
could each give a quick brief answer.
    Mr. Woods?
    Mr. WOODS. I am not sure that I have the expertise to 
address your problem directly. As an old mayor, I believe that 
the best people to deal with it in the community are those 
people in the local community. They have the best knowledge of 
it, and I think that they can come up with the best solution, 
quite frankly.
    Mr. PAYNE. Thank you, sir.
    Mr. PARKS. Congressman, if I may, all of our projects 
require extensive site review. We open it up at the local 
level. There are tremendous opportunities for public 
participation. Most of our projects are governed by site-
specific conditional use permits where conditions can be 
imposed on that at the local level. Both of our states, 
Mississippi and Tennessee, are authorized to implement the 
federal NPDS programs.
    And with regard to water pollution in general, our 
company--the companies in our industry, and I would suggest 
probably to most industries--you cannot just allow water to 
discharge off your site uncontrolled. There is an extensive 
framework that is there already. How you manage any waters that 
leave your site, whether it be processed water or stormwater, 
we have to develop a pretty extensive stormwater prevention 
plan for every one of our projects that details exactly how we 
will manage stormwater runoff before it can impact anything. 
And those sites are open for inspection. They are inspected by 
state and federal regulators.
    Mr. PAYNE. All right. Thank you.
    And Mr. Field, I have gone way over my time so I will yield 
back to the chair. Thank you.
    Chairman GRAVES. Mr. Luetkemeyer?
    Mr. LUETKEMEYER. Thank you, Mr. Chair.
    It is interesting that we are discussing this rule today 
because I know the chairman and I fought this battle a couple, 
three years ago. Whenever the various powers that be and tried 
to do the same thing with--I am going to take the word 
``navigable'' out of the Clean Water Act. And here we are again 
today back in the same situation.
    And so I know Mr. Buzbee, with his comments, indicated that 
we have had the Clean Water Act basically in force, and with 
the EPA, the authority to make rules for over 30 years, and I 
think we have seen probably some good things come from out of 
that from the standpoint we have much better clean water today, 
but as we see over those few years, the last number of years, 
bureaucracy tends to expand its limits or expand its authority, 
and it seems that we are in this process now.
    If you look at what is going on with the administration, 
this is the biggest fear why we are looking at this rule in 
this light is the tremendous fear of overreach. And I think 
that the gentleman from Oregon and the gentleman from New York 
behind me here, both were very articulate in explaining the 
concerns that they have, the amount of overreach here from the 
standpoint that there is this fear that it continues to be that 
this administration will overreach bureaucratically. Every time 
there is a rule or regulation, it goes one step beyond what 
their intent is, and therefore, it impacts our business 
community in a very negative way.
    And I appreciate all of you being here today. I think if 
this rule goes forward, I see no way that it does not wind up 
in the Supreme Court, because this is something that is going 
to impact all three of the business people before us today in a 
way that is going to drive you either to have an extreme amount 
of cost or drive you completely out of business.
    And so I guess my question to each one of the three of you 
to begin with is Mr. Field, if this thing goes forward, are you 
going to be able to stay in business?
    Mr. FIELD. I honestly do not know. It would depend on 
whether or not EPA would determine the parcels that I graze to 
be within their jurisdiction or not, and I cannot honestly 
answer that. I am sorry.
    Mr. LUETKEMEYER. Mr. Parks?
    Mr. PARKS. Well, the question may be at what cost will we 
stay in business? I mean, there are limits. I mean, assuming 
that the cost increases can be supported, perhaps. But, you 
know, who is to know? There is a limit on what we can absorb. 
What it will definitely do is reduce the amount of resources 
that we can recover and will make permitting a much more 
complicated endeavor. And as a small company, we try to manage 
as much of that in-house as possible. We try to avoid going to 
consultants because that is a cost that we cannot afford to 
bear because that is a tradeoff.
    Mr. LUETKEMEYER. Mr. Woods, I think you kind of already 
answered that before, but do you want to get on the record one 
more time? Get one more hammer at this?
    Mr. WOODS. I would, if you do not mind. Quite frankly----
    Mr. LUETKEMEYER. Push your button, please.
    Mr. WOODS. I am sorry.
    Quite frankly, I doubt that we would stay in business, and 
I doubt that most builders and small developers would stay in 
business. You have to remember one thing. The costs that are 
incurred are before you can do anything, so there is not a 
return until you get the delineation of whether you are 
involved or not involved, and that does not mean that your 
plans are going to be accepted.
    Mr. LUETKEMEYER. There is a huge capital outlay here before 
you ever get one cent of return on your investment, and it all 
has to be recovered at some point, hopefully from the sale of 
your property.
    Mr. WOODS. And I think we do not understand small business. 
For the most part, small business is mom and pop, and it is mom 
and pop making a living for their family so that the kids can 
go to college. And if you have got a decision to make between 
spending $200,000 to see if you might be able to develop a 
small piece of ground and come up with a plan that might then, 
two, three, four, five years later get a permit, I can tell you 
the kids' college or the dental bill is going to win out.
    Mr. LUETKEMEYER. One of the things that concerns me, it 
seems like this is a solution in search of a problem from the 
standpoint that what are we trying to solve here?
    Professor Buzbee, can you tell me what we are trying to 
solve by the expansion of this rule to go as far as these 
gentlemen think it is going to go? Where is the problem that we 
are solving when you impact jobs at this level that they are 
talking about today?
    Mr. BUZBEE. I guess, first, it is important to remember the 
Clean Water Act is not limitless in its reach, and so you do 
have to show that something is a tributary wetland, adjacent 
wetland.
    Mr. LUETKEMEYER. These gentlemen have all testified here 
today that they believe if they interpret this to the lengths 
at which you can go, at which attorneys will stretch the law, 
which has been the case time and time again, especially with 
this administration, this is where we are headed. So where is 
the problem that this is trying to solve?
    Mr. BUZBEE. My sense here is that this is inaccurate; that 
people will be able to build, and people that can build will 
continue to have thriving cattle businesses. Not everything 
needs to be put in a tributary or a wash or a river or a 
wetland. There is plenty of land where businesses can thrive. 
The Clean Water Act is really about where you put these things 
and where you discharge pollutants.
    Mr. LUETKEMEYER. Well, Professor, I appreciate you living 
in a utopian society. Unfortunately, these three gentlemen do 
not live there. They live in the real world, and they have 
explained how the impact of this is going to be in the real 
world on real people on real jobs and real livelihoods, and 
that is what this Committee is all about today.
    Mr. Chairman, I yield back.
    Chairman GRAVES. Mr. Bentivolio?
    Mr. BENTIVOLIO. Thank you very much, Mr. Chairman.
    I would like to thank the chairman for holding this 
important hearing, and I would also like to thank the witnesses 
for taking part today and helping to enlighten us about the new 
waters of the United States rule.
    When I read your testimonies, it made me wonder if the EPA 
purposefully makes vague and controversial rules simply so that 
bureaucrats over there can see their office in newspaper 
headlines.
    Just a few weeks ago, I held a hearing in my district about 
the impact of federal regulations on small businesses in 
Michigan. Mr. Woods, one of those who testified, was Richard 
Kligman of Superb Custom Homes out of Plymouth, Michigan. He, 
too, brought the waters of the United States rule and concluded 
it this way--these federal consultations related to the Clean 
Water Act are just another layer of red tape that the federal 
government has placed on small businesses, and it is doubtful 
the agencies will be equipped.
    This nonsense has to stop, Mr. Chairman. Everyone here 
wants to protect the environment, but we also want to help 
people in our country succeed and prosper. I do not think that 
those are mutually exclusive so long as the EPA is proposing 
rules that are easily understood and make common sense. 
Unfortunately, this time it does not seem to.
    But I would like to go one step further. Mr. Chairman, you 
know, I went to--my wife said we had to replace the water 
closet in our bathroom, and so I went to her favorite hardware 
store and tried to find a water closet, a toilet, that would 
just take enough water, you know, and they said, ``No, I am 
sorry. The only toilets we can see now are regulated to how 
much water can be flushed down at a time.'' And I asked the 
salesman why that is. He says, ``Well, we have to conserve 
water.'' And I said, ``Well, you know, I live on a farm. We 
have a well and a septic. I recycle all my water. You know, 
that is how it works.''
    The government has this ``one size fits all.'' I also have 
a pond on my farm, and I have been recently notified after this 
hearing that the EPA is really concerned about the toxins in 
the pond. Well, you know, we live on a dirt road in the 
country, and all the ditches on the dirt road somehow, you 
know, there is about 60 acres, feeds my pond, which then drains 
about two miles further downstream into some--I think it is the 
Rouge River eventually. But why am I suddenly responsible for 
the toxins that run off the road into my pond? Right? So do I 
have to--is the EPA going to regulate ditches like that and how 
they run into ponds?
    I understand some of these concerns, but I have made those 
arrangements on my own without the EPA. I built berms made of 
gravel. And that naturally cleans up. Sand and gravel naturally 
cleans up the toxins that were reaching my pond. So I am 
wondering, do I have to get EPA requirements and permits to do 
that? Or is that something I can do on my own because that is 
probably the wisest thing for me to do? Why do I have to have a 
government regulator telling me what I have to do for every 
single facet of my life?
    Mr. Parks, should I ask a question now? Sorry, I do not 
like the EPA. As far as I am concerned, China needs the EPA. So 
if we can send 15,000 employees to China for five years, I 
think we would all be better off.
    Mr. PARKS. Well, I would say ditto, but we do have to work 
with these folks, so I am not going to go there. But you do hit 
the nail on the head. As I read through the definitions, it is 
hard for us to see what would not be jurisdictional, or 
potentially could be interpreted that way. And that is really 
the problem. It opens a lot of things up to interpretations. 
Even exclusions are not clear. One part removes artificial 
ponds created by dyking dry land, yet a tributary can be a 
manmade pond or a ditch. So which is it? I mean, we create a 
lot of ditches. We create a lot of basins, a lot of ponds, that 
can sit there for 10, 20, 30 years before we are ready to close 
them down. And so it is a big question for us. Are we creating 
all this jurisdictional area through our business processes?
    Mr. BENTIVOLIO. Thank you very much. I think I have done my 
ranting. Thank you very much, Mr. Chairman. I appreciate it. 
Thank you.
    Chairman GRAVES. Mr. King?
    Mr. KING. Thank you, Mr. Chairman. I thank the witnesses 
for your testimony.
    I have a little bit of reminiscing I went through as I 
listened to some of this, too, but I wanted to turn to 
Professor Buzbee first and ask this question. We have got the 
issue out here of significant nexus, but there is another term 
that is back in the dusty reaches of my mind called ``waters 
hydrologically connected to.'' And I would ask Professor Buzbee 
are you familiar with the term? And would you define that for 
this Committee, please?
    Mr. BUZBEE. The exact term I am not sure, but I think what 
you are probably referring to is in the case Riverside Bayview 
Homes. A unanimous Supreme Court upheld jurisdiction for waters 
that essentially were wetlands near other waters and part of 
the grounds for that was the importance of taking into account 
hydrologic connections and the importance that they serve.
    Mr. KING. But what is a hydrologic connection?
    Mr. BUZBEE. A hydrologic connection in that case and 
subsequent cases and the new regulations as I understand it has 
to do with essentially whether water is moving from one place 
into another which they look at through several different kind 
of functional analyses.
    Mr. KING. Stagnant water would not be hydrologically 
connected?
    Mr. BUZBEE. I am sorry; I missed it.
    Mr. KING. Stagnant water would not be hydrologically 
connected?
    Mr. BUZBEE. If the water is truly isolated so it is not 
flowing, no, it would not be.
    Mr. KING. I see. So then it would not be necessarily the 
flows; it would be the connection. So if you had two ponds and 
a conduit between them, say a small--just a stagnant stream, 
but as long as you could say, float a small boat, that would be 
hydrologically connected?
    Mr. BUZBEE. I do not believe so. I do not think that is 
correct. The way they walk about it, they look at different 
regions. I think what you would be describing would be what 
appears to be an isolated water and then the question is 
whether that, because of its----
    Mr. KING. But if it is two ponds and there is a very small, 
nonflowing stream between the two of those, would those ponds 
be hydrologically connected?
    Mr. BUZBEE. The way hydrologically connected worked is I 
think they were ultimately talking about ultimately connecting 
to navigable waters or navigable-in-fact waters.
    Mr. KING. Yes. Yes. And I agree with that definition. And I 
bring this up in part of this discussion about significant 
nexus. I think I will do this. I will tell the narrative.
    Back in about 1994--first, I would let the Committee know 
that I have spent my life in soil conservation, water quality. 
I built more terraces probably than anybody in Congress or 
waterways or any kind of retention ponds you want to describe. 
It has been my life. And I remember walking into my 
construction office one night in about 1994 and there sat a 
farmer. And he said, ``Did you see this DNR rule that they have 
published for comment?'' And I read the rule and it said, 
``These 115 streams are proposed to be protected streams. These 
streams, to their geographical boundaries and ``waters 
hydrologically connected to them.'' And I went straight up in 
the air because I believe in property rights, and I oppose 
property takings by government or anybody else. At that time it 
was a Fifth Amendment property rights issue before Kelo and 
went straight to Cherokee, Iowa, for the public comment 
hearing. And I asked them the question, ``Define it for me, 
hydrologically connected.'' They said, ``Well, we cannot.'' 
Then I said, ``Then take it out of the rule.'' ``Well, we 
cannot.'' ``How can you tell me you cannot define it and you 
cannot take it out? Then if you cannot define it, you cannot 
tell me why it is there.''
    Then the next night the hearing was in Algona, Iowa, and 
that was two hours up there and they saw me coming and said 
only one question per customer. Well, you can imagine that I 
did not walk away from that microphone until I had asked a lot 
of them. Subsequent to that I ran for the Iowa Senate because I 
had been boxed out of a hearing as a witness. They would not 
really let me testify to the answer to this.
    So this goes pretty deep to me. And when I see the language 
here that we are dealing with and the stretch of the rules--I 
know how rules get stretched, and I have lived it, and so have 
a lot of the members of this Committee. We are dealing with the 
traditional navigable waters of the United States. That goes 
back to 1948--or excuse me, 1848, when the Corps of Engineers 
was granted the authority to remove the debris from the 
navigable waters. Now we get added to that, the definition has 
been expanded through litigation and some statute, but it also 
now includes interstate waters and wetlands, the territorial 
seas, impoundments of the first three categories and 
tributaries, tributaries of the first four categories, and 
number six, waters and wetlands adjacent to the first five. But 
the language of ``other waters,'' which is all these categories 
that I have described, including riparian areas, floodplain, 
tributaries, significant nexus. When I see that language that 
says ``significant nexus,'' that is the 2014 term that 
substituted for ``waters hydrologically connected to.'' And how 
will they define hydrologically connected to? It is real 
simple. It is whenever two water molecules touch each other you 
can make the argument that they are hydrologically connected. 
You can argue the case law that is out there and how it is 
being interpreted, but in the end, if two water molecules 
touch, it is hydrologically connected. If you take a piece of 
nice, good, well moistened, freshly rained upon Iowa black 
soil, it is about 25 percent moisture today. Water molecules 
touch. They go all the way up through streams that water your 
cattle and all the way up to these homes that you are 
developing, and all the way into everybody's property in the 
United States only by the stretch of the definitions that are 
put in these rules.
    And I would just pose one final question quickly to 
Professor Buzbee, and that is do you believe that if the 
federal government regulates the complete usage of property 
away from our property owners--whether it is the ranchers, 
whether it is developers--if they regulate the utilization of 
that property away and render it without value to the owner, is 
that a takings under the constitution?
    Mr. BUZBEE. I think if you are phrasing it like the Lucas 
case by the Supreme Court that a 100 percent taking of all use 
would be a taking under that precedent.
    Mr. KING. Useless to the owner for the purposes of----
    Mr. BUZBEE. I think it is rendering it without value 
actually was the way it talked about it. So, again, it is more 
complicated than the subsequent cases.
    Mr. KING. We are close to a yes though, and I will settle 
for that. And I appreciate all your testimony, and I yield back 
to the Chairman. Thank you.
    Chairman GRAVES. I have a question for Mr. Woods.
    In your testimony, you stated that any waters or wetlands 
within a floodplain can be subject to the Clean Water Act. I 
was just curious--or Clean Water Act jurisdiction--how that is 
going to affect your industry, your business. What impact is 
that going to have?
    Mr. WOODS. I will speak to it relative to the Midwest and 
the Plains States, wherever you want to put us. As you well, 
now, if you are in Independence, Missouri, Blue Springs, 
Missouri, you are close to the Missouri River. You are close to 
the Little Blue and the Big Blue and the Caw. And we have got 
tons of what has been called for years ``bottom ground.'' Your 
first problem is you cannot get yourself too far away from a 
floodplain or a wetlands.
    The second problem that you have in that definition, and 
that is the one that probably bothers me more, in too many 
cases the maps that are used and have been used to delineate 
these nexus are erroneous. We have seen situations, one 
specific situation in Riverside, Missouri, where the floodplain 
was halfway up the hill. It is not where the creek is. Now, I 
defy you to put a floodplain halfway up a hill and not in the 
creek. And it took us almost two and a half years to get a 
determination and a change in the flood map. We had to go in 
and prove that the water did not usually run across the hill 
halfway up; it usually ran at the creek.
    So those are the kinds of problems you are going to run 
into, is it is not that it is truly a floodplain or it is not 
that it is truly a wetlands.
    The case that I pointed out here, the very first thing we 
did in the subdivision that I am talking about in Independence, 
Missouri, just to put it into perspective, is we had 
consultants come in and walk our site. It is almost 500 acres. 
It is a bottom land field, but it is not a floodplain. And 
actually it had been prior converted, which I just find out now 
may have changed. But it had been farmed for 150 years. There 
were none there. There were none found. And yet we still ended 
up subject to because we were close enough; we were adjacent to 
some things. We felt it best that we move forward, try to move 
forward in a very positive way. I thought we were being wise. 
We brought everybody out, let them tour the site and tried to 
put in place the very best practices and show off, and as I was 
told by the city engineer in Independence, we were justly 
rewarded for our good deeds. Two and a half years and $250,000 
later we got a permit. That is what concerns me the most.
    Chairman GRAVES. Well, and you mention, too, and there are 
some carve-outs as has been pointed out by Professor Buzbee. 
However, it also states ``adjacent to jurisdictional waters.'' 
And that is what concerns me as much as anything else.
    And in closing, I want to kind of build on what Mr. 
Luetkemeyer said as well. We fought this before. Removing the 
term ``navigable'' out of the Clean Water Act. And we fought it 
under two different majorities. And it failed Congress. This 
failed the people's house by folks that are voted on by 
constituents. And now here we are fighting it coming at it from 
the regulatory standpoint by individuals who are not elected, 
who are not responsible to anyone, and that is the most 
frustrating part. The will of the people was done, and this was 
defeated. And now here we are going through this process under 
agency proposed rulemaking, and it is frustrating.
    But all of this testimony has showed us that the waters of 
the United States or this proposed rule is going to have a 
significant impact on small businesses. And the EPA and the 
Corps failed to do the assessments that they were supposed to 
do under the Regulatory Flexibility Act. And that is another 
thing that bothers me as much as anything else because when 
agencies fail to comply with the RFA, the result is always 
poorly crafted regulations, and it is going to impose a lot of 
unnecessary and costly burdens on small business, and this is 
going to be the case. We are going to be closely monitoring 
this and the development of this rule, and we are going to be 
engaging all of the agencies until they come in full compliance 
with the RFA.
    And with that, I would ask unanimous consent that all 
members have five legislative days to submit statements and 
supporting materials for the record. Without objection that is 
so ordered.
    And with that, I appreciate all of you coming in and your 
testimony. The hearing is adjourned.
    [Whereupon, at 3:41 p.m., the Committee was adjourned.]


                            A P P E N D I X


    Opening Statement: Congressman Blain Luetkemeyer (R-MO-3)

    I appreciate the opportunity today to examine the impacts 
of the proposed ``Waters of the US'' rule on our nation's small 
businesses. This proposed rule will vastly expand federal 
jurisdiction over our nation's waters and represents one of the 
most expansive federal land grabs in history. It will extend 
federal regulations to a whole host of waters that the CWA was 
never intended to apply to including ditches, ponds, and 
seasonally wet puddles.

    If finalized, this rule will stall development, cost jobs, 
and put a plethora of activities and decision-making under the 
heavy hand of federal regulation. With the stroke of a pen 
bureaucrats in Washington can do immense damage to our economy 
and, unfortunately, this appears to be just another example of 
this overreaching administration putting the federal regulatory 
train into overdrive while disregarding the impact their 
actions have on the lives of hard working Americans.

    Similar proposals have been defeated numerous times in 
Congress but their failure seems to only embolden this 
administration to expand its power through rulemaking. As with 
any policy of such vast impact, the American people deserve to 
have their voices heard through their elected representatives. 
Moreover, entities that will be affected have a right to be at 
the table to have their concerns addressed.

    Despite claims to the contrary, this proposed rule will 
establish broader, convoluted definitions of regulatory 
categories that will create even more uncertainty for our 
nation's small businesses. Under the definition regulators will 
be given far-reaching authority to subjectively apply 
jurisdiction over all types of waters. This gives little 
confidence to small businesses trying to stay within the law.

    One thing is clear from the proposal; this rule will 
drastically increase the number and types of activities that 
are subject to CWA permitting. Obtaining such permits often 
require expertise, time, and resource that many small 
businesses simply don't have. Permitting will in turn trigger 
additional review requirements under laws including the 
National Environmental Policy Act (NEPA) and the Endangered 
Species Act (ESA). Faced with these onerous and prohibitive 
costs small businesses will be forced to decide whether to 
spend massive amounts of money on permitting, drastically alter 
their activities, or close-up shop.

    As our economy struggles to regain its footing, small 
businesses will provide the engine that drive job creation and 
economic growth. It is frustrating that proposals like these 
threaten the very growth that our nation needs. Industries such 
as home building, farming, and energy exploration have been 
bright spots in our economic recovery and the proposed rule 
puts them directly in the cross hairs of the federal regulatory 
regime.

    I look forward to receiving testimony from our witnesses to 
illustrate the potential impact this proposed rule will have on 
their respective businesses and industries.
                           Testimony

                               Jack Field


                   Owner, Lazy JF Cattle Co.

                        with regards to

 Will EPA's `Waters of the United States' Rule Drown Small Businesses?


                        submitted to the

             United States House of Representatives

                  Committee on Small Business

              Representative Sam Graves, Chairman

                          submitted by

                         Mr. Jack Field

               Washington Cattlemen's Association

             National Cattlemen's Beef Association

                          May 29, 2014

                         Washington, DC
    Good afternoon, my name is Jack Field. I am a cattle 
rancher from Yakima, Washington and the Executive Vice 
President of the Washington Cattlemen's Association. WCA is an 
affiliate of the National Cattlemen's Beef Association of which 
I am also a member. Thank you to the Chairman and Ranking 
Member for allowing me to testify today on the impacts of the 
Environmental Protection Agency and the U.S. Army Corps of 
Engineers' proposed expanded definition of ``waters of the 
United States.'' I will also provide my concerns with the USDA-
Natural Resources Conservation Service (NRCS) interpretive rule 
that was promulgated alongside this proposal.

    First and foremost, the cattle industry prides itself on 
being good stewards of our country's natural resources. We 
maintain open spaces, healthy rangelands, provide wildlife 
habitat and provide the country with those juicy ribeyes we all 
love to throw on the grill on summer days like today. But to 
provide all these important functions, cattlemen must be able 
to operate without excessive federal burdens, like the one we 
are discussing today. I don't think the negative impacts of 
this definition can be overstated. As a producer and the head 
of a state association, I can tell you that after reading the 
proposal rule it has the potential to impact every aspect of my 
operation and others like it by dictating land use activities 
in Washington state from 2,687 miles away. I would also feel 
confident in saying that I believe it will actually have a 
detrimental impact on water quality.

    After reading the proposal I can say that one thing is 
clear, the proposed definition is not clear. If the agencies' 
goal was actually to provide clarity than they have missed the 
mark completely, making the status quo worse, not better. The 
proposal would include ditches as Water of the U.S. if a 
regulator can distinguish a bed, bank, and ordinary high water 
mark. The proposal also would make everything within a 
floodplain and a riparian area a federal water by considering 
them ``adjacent waters.'' The result could be to eliminate the 
use of my summer pasture, which is located wholly in a 
floodplain. I will show you what I think it could mean for my 
ranch and other small businesses like it.

    In total I own and manage 55 cow/calf pairs and 10 
replacements, or 120 total head of cattle, which is the average 
number of head for a cattle rancher in the U.S. There are some 
bigger and some smaller, but I'm about your average size, which 
means the average cattle producer in the U.S. falls well under 
what the law considers a ``small business.'' We clearly manage 
the landscape and must utilize it to raise our animals. My 
cattle drink from tanks which I pump from a stream so I can 
protect potential bull trout habitat, they also water from 
irrigation ditches, ponds, creeks, seeps and puddles that they 
find. Therefore it is important to me and my operation to have 
clean water. Protecting the quality of the water I need for my 
cows does not require the federal government's oversight. 
Myself, for profitability and moral reasons, and the state of 
Washington do a pretty darn good job.

    You can see in the first attached picture I have a small 
stream running through my pasture that my cattle utilize for 
drinking water. It is my judgment, based on the language of the 
proposal that this could easily qualify as a water of the U.S., 
opening me and my ranch up to significant liability. Not only 
could I be required to get a 404 permit for grazing my cows in 
the pasture, but by making it a federal water there are now 
considerations under the National Environmental Policy Act, or 
NEPA, and the Endangered Species Act due to the federal 
decision-making in granting or denying a permit. There is also 
the citizen suit provision under Sec. 505 of the Clean Water 
Act that would keep me up at night. For the price of a postage 
stamp someone who disagrees with eating red meat could throw me 
into court where I will have to spend time and money proving 
that I am not violating the Clean Water Act. I don't think this 
is what anyone had in mind when Congress passed the Clean Water 
Act.

    Instead of improving water quality, it is my belief, the 
belief of the Washington Cattlemen's Association, and the 
belief of the National Cattlemen's Beef Association that this 
proposal will decrease the quality of our water because it 
would discourage ranchers like myself from implementing 
conservation practices that are designed to protect water 
quality. As an example, I recently completed a project that you 
can see in the second attached picture that creates a riparian 
pasture so I can manage the grazing that occurs within the 
riparian area. The fence has allowed me to better manage my 
forage and to protect water quality. I voluntarily installed 
the fence, not because I had to, but because I thought it would 
be good for the environment. If this proposal and the NRCS-EPA-
Corps Interpretive Rule were in force when I started this 
project I would not have completed it due to the significant 
legal liability they have created.

    The Washington Cattlemen's Association and the National 
Cattlemen's Beef Association believe some presumptions have 
been created by the NRCS interpretive rule. First, that cattle 
grazing is a discharge activity subjecting me to legal 
liability if it occurs in a water of the U.S. I have never 
heard of the federal government declaring cattle to be either a 
point source or to create a fill activity under the Clean Water 
Act, but that' exactly what they've done. Second, if I 
implement a conservation practice that is not on the 
prescriptive list of 56 NRCS practices, or not done to the NRCS 
standard, it could now fall outside the statutory exemption for 
normal farming and ranching. The result is that if I do not 
follow the exact specifications for NRCS' prescribed grazing 
standard on my operation, I am no longer exempted from the 404 
dredge and fill program. While this might not have been the 
agencies' intent, it was the result. The fence that I put up in 
the attached picture was done with cost-shared dollars from the 
local conservation district. It was not required to meet the 
more strenuous NRCS standard for fencing and I would not have 
engaged in the project had it been a requirement. You can see 
in this picture that the posts are spaced further apart than 
NRCS specs require, and do not have the required number of 
wires. Both those requirements add costs. The entire project 
cost approximately $1,400. Had I been required to install a 
fence meeting the NRCS standard and specifications it would 
have cost me an additional $300, for a quarter mile fence. 
While that may not seem like a lot, if you expand that over 
hundreds of acres it can really add up to a lot of money. And 
for small business like mine, $300 does matter. Future 
conservation projects will not be implemented if this 
interpretive rule and proposed definition are allowed to move 
forward. I could not afford to risk being in violation of the 
Clean Water Act with fines of $37,500 per day and possible 
criminal sanctions to put in a project. I also would not go 
through the hassle and high cost of getting a 404 permit to 
complete this small project. I want to do my part for the 
environment, but I can't if it would jeopardize my entire 
operation. This is why the National Cattlemen's Beef 
Association and the Washington Cattlemen's Association are 
asking the agencies to withdraw the Interpretive Rule.

    This didn't have to be the result; all the agencies had to 
do was engage stakeholders early on in the process, incorporate 
our suggestions and we would be much farther along in crafting 
a rule that actually would clarify the scope of Clean Water Act 
jurisdiction. We are particularly concerned with the lack of 
outreach with the small business community, contrary to the 
Regulatory Flexibility Act. Being the owner of a small business 
myself in the cattle industry and knowing the detrimental 
impact this regulation will have on my operation, it is 
appalling the agencies could assert that this regulation will 
not have a ``significant economic impact on a substantial 
number of small entities.'' It is clear to me that the rule's 
primary impact will be on small landowners across the country. 
The agencies should have conducted a robust and thorough 
analysis of the impact, but is clear from the certification 
that they have not completed this important step in developing 
the regulation.

    There was also zero outreach to the agriculture community 
before the rule was proposed and before the interpretive rule 
went into effect. Despite what the EPA is saying, they did not 
have a meaningful dialogue with the small business community as 
a whole. Even when cattle producers asked the head of the 
office of water at our February meeting in Nashville about the 
proposal, all we were told was to ``wait and see what the 
proposal says.'' Well we were forced to wait instead of having 
input and this is what we got, a proposal that doesn't work for 
small businesses, doesn't work for cattle ranchers, and doesn't 
work for the environment.
[GRAPHIC] [TIFF OMITTED] T8042.001

[GRAPHIC] [TIFF OMITTED] T8042.002

    Chairman Graves and members of the Committee, thank you for 
inviting me to testify on behalf of the National Stone, Sand & 
Gravel Association (NSSGA) at this hearing: ``Will EPA's 
`Waters of the United States Rule' Drown Small Businesses?''

    My name is Alan Parks and I am Vice President of Memphis 
Stone and Gravel Company, of Memphis, Tennessee, where I have 
worked for almost 15 years on permitting and environmental 
compliance. Additionally, I direct the company's exploration 
drilling activity, long range mining, and reclamation work. I 
am a registered professional geologist in the State of 
Tennessee and have degree in mining engineering. My prior 
occupation was working as a geologist for the Tennessee 
Department of Environment and Conservation.

    NSSGA is the world's largest mining association by product 
volume. NSSGA member companies represent more than 90% of the 
crushed stone and 70% of the sand and gravel consumed annually 
in the U.S., and there are more than 10,000 aggregates 
operations in the U.S. Of particular relevance to this hearing, 
70% of NSSGA members are considered small businesses, and many 
are located in rural areas.

    Memphis Stone and Gravel Company was started in 1910 and 
remains a family-owned business. We have eight active mining 
facilities in Tennessee and Mississippi. Memphis Stone and 
Gravel Company has a long history of providing aggregates for 
the betterment of the nation. To assist with the war effort in 
1942, Memphis Stone and Gravel Company was the prime contractor 
for Halls Air Force Base and Murfreesboro artillery ranges. We 
have won national and local awards for conservation, community 
service, and safety.

    Like all aggregates operations, Memphis Stone and Gravel 
Company is regulated by numerous entities including the city, 
county, and state governments, and federal agencies including 
the EPA, the Mine Safety and Health Administration, and the 
U.S. Army Corps of Engineers. Before we begin operations we 
must obtain permits to construct and operate our facilities. 
After we start operations, our facilities are routinely 
monitored to ensure we are operating in a safe and 
environmentally responsible manner. A safe and healthy 
environment in which to work is good business, and in the best 
interest of the employees. We work hard to make sure this 
happens.

    Aggregates are the chief ingredient in asphalt pavement and 
concrete, and are used in nearly all residential, commercial, 
and industrial building construction and in most public works 
projects, including roads, highways, bridges, dams, and 
airports. Aggregates are used for many environmental purposes 
including: treating drinking water and in sewage treatment 
plants, for erosion control and in cleaning air emissions from 
power plants. While Americans take for granted this essential 
natural material, they are imperative for construction. Unlike 
other businesses, we cannot simply choose where we operate. We 
are limited to where natural forces have deposited the 
materials we mine. There are also competing land uses that can 
affect the feasibility of any project.

    Through its economic, social and environmental 
contributions, aggregates production helps to create 
sustainable communities and is essential to the quality of life 
Americans enjoy. Aggregates are a high-volume, low-cost 
product. Due to high product transportation costs, proximity to 
market is critical; thus 70% of our nation's counties are home 
to an aggregates operation. Generally, once aggregates are 
transported outside a 25-mile limit, the cost of the material 
can increase 30% to 100%, in addition to creating environmental 
and transportation concerns. Because so much of our material is 
used in public projects, any cost increases are ultimately 
borne by the taxpayer.

    As the industry that provides that basic material for 
everything from the roads on which we drive to purifying the 
water we drink. NSSGA members are deeply concerned that EPA's 
proposed rule will stifle our industry at a time when we are 
just now recovering from the economic downturn. The aggregates 
industry removes materials from the ground, then crushes and 
processes them. Hazardous chemicals are not used or discharged 
during removal or processing of aggregates. When aggregates 
producers are finished using the stone, sand or gravel in an 
area, they pay to return the land to other productive uses, 
such as residential and business communities, farm land, parks, 
or nature preserves.

    Over the past eight years, the aggregates industry has 
experienced the most severe recession in its history. This 
expansion of jurisdiction will have a severe impact on industry 
by increasing the costs and delays of the regulatory process, 
causing further harm to an industry that has been production 
drop by 39% since 2006. While stone, sand and gravel resources 
may seem to be ubiquitous, construction materials must meet 
strict technical guidelines to make durable roads and other 
public works projects. Because many aggregate deposits were 
created by water, they are often located near water. The 
availability of future sources of high quality aggregates is a 
significant problem in many areas of the country and permitting 
issues has made the problem worse.

    NSSGA members pride themselves on meeting or exceeding 
compliance with all pertinent environmental laws and 
regulations, and emphasize sustainable practices. Memphis Stone 
and Gravel Company pays very close attention to our resources, 
particularly water. Careful design of our plants ensures we 
maximize the recycling of precipitation and reuse of all of our 
water supplies. Additionally, we operate most of our facilities 
as a no-discharge system, keeping all process water on-site and 
requiring no hazardous chemicals in our production process.

    EPA claims this rule change is needed because so many 
waters are unprotected, but that is not true: states and local 
governments have rules that effectively manage these resources. 
For example, states and many municipalities regulate any 
potential negative impacts to storm water run-off and require 
detailed storm water pollution prevention plans. These plans 
are required for every project, both during construction and 
operations. States and local governments are best-suited to 
make land use decisions and balance economic and environmental 
benefits, which is what Congress intended. While EPA states 
groundwater is excluded from this rule, the rule also says that 
``shallow subsurface connections'' are included. Does this mean 
the water that fills our pits is jurisdiction? It would be a 
rare event to NOT encounter shallow, unconfined or perched 
groundwater in sand and gravel deposits that we typically mine. 
Will a separate permit be required for reclaiming the it and 
returning it to another, beneficial use? These are just some of 
the many questions this rule poses, but does not answer. And, 
that in many ways underscores the problem with the proposed 
rule, the uncertainty of the scope of jurisdiction.

    EPA contends the purpose of the proposed rule is to 
eliminate the time and resources allocated to make site-
specific review of determinations. Before breaking ground, we 
always evaluate whether we are affecting jurisdictional water, 
which requires consultation with the Corps and sometimes hiring 
a consultant. Yet EPA doesn't provide any set criteria on what 
a ``significant nexus'' is, so the inclusion ``other waters'' 
will require additional time for determinations to be made. The 
delay caused by multiple consultations, surveys, reports, and 
individual watershed permits processed will add significant new 
costs during the permitting process, which could lead to 
abandoning projects once considered viable.

    The aggregates industry requires large land areas to 
process and remove the extensive quantities of material needed 
for public works projects. Memphis Stone and Gravel Company can 
use up to 25 acres a year per site. This proposed rule could 
effectively place many areas ``off limits'' due to cost of new 
permits and/or the mitigation required to off-set losses to now 
regulated streams.

    Having a clear jurisdictional determination for each site 
is critical to the aggregates industry. These decisions impact 
the planning, financing, constructing and operating aggregates 
facilities. Because the Clean Water Act 404 ``dredge and fill'' 
permitting process and the corresponding states' 401 
Certification process is so long and costly for a small company 
like Memphis Stone and Gravel Company, we attempt to avoid 
jurisdictional areas. Now, under the proposed revisions, many 
previously non-jurisdictional areas like floodplains, wet 
weather conveyances, upland headwaters, ephemeral streams or 
any riparian area could be considered jurisdictional. It will 
make nearly any area we try to access regulated and in need of 
additional permits.

    Even obtaining a jurisdictional determination can be a 
significant undertaking for a small company like ours. As a 
small company we attempt to do many of the jurisdictional 
determinations and other permitting in-house. However, Memphis 
Stone and Gravel Company will from time to time seek a 
consultant to help us obtain the required information for 
submission, because of time constraints. While jurisdictional 
determinations are good for five years, as an industry we make 
business decisions to buy or lease properties to extract 
aggregates for very long terms, 15 to 30 years is not uncommon 
for Memphis Stone and Gravel Company. The companies in our 
industry are very concerned that past understandings of what 
would be jurisdictional will now be subject to view. A change 
in what is considered jurisdictional can have significant 
impacts on our material reserves, which will affect the life of 
our facilities and delay the start-up of new sites. Ultimately 
this change will disrupt the supply of aggregates to our 
biggest customers, government agencies; thus affecting highway 
programs, airports, and municipal projects.

    There is much inefficiency in the current regulatory 
system; however, adding vague terms and undefined concepts to 
an already complicated program is not the way to fix the 
problem. In some cases this rule could have a negative effect 
on the environment and safety. Ditches without maintenance can 
degrade and lead to increased erosion and sediment problems.

    EPA should undertake a full evaluation of the effects this 
rule will have on small businesses via a Small Business 
Advocacy Review (SBRFA) Panel. The proposed rule will put small 
businesses at risk of fines of up to $37,500 per day if a 
permit is required and not obtained, which could wipe out a 
small business that does not realize a permit is needed for 
work far from ``navigable'' water. We agree wholeheartedly with 
Chairman Graves that EPA is required to comply with the 
Regulatory Flexibility Act and get input from affected small 
businesses before proposing a rule. EPA claims this rule is 
based on sound science, but the Science Advisory Board, the 
group of independent scientists reviewing it, are still not 
near completion; in fact they have raised serious questions EPA 
has not answered.

    EPA's economic analysis of this rule does not accurately 
show what businesses like ours will end up paying if this rule 
is finalized. It is not even close. One NSSGA member calculated 
that to do the additional mitigation of a stream required under 
this rule would be more than $100,000; this is just for one 
site in our industry. This is more than EPA has estimated the 
stream mitigation costs are for entire states in its economic 
analysis. For our business, time is money. Any new requirements 
lead to a long learning curve for both the regulators and the 
regulated. Just getting a jurisdictional determination can take 
momths--permits can take years; how much longer will it take to 
break ground with so many vague and undefined terms in this 
rule?

    The proposed rule has no clear line on what is ``in'' and 
what is ``out,'' making it very difficult for our industry and 
other businesses to plan new projects and make hiring 
decisions. If it is determined development of a site will take 
too long or cost too much in permitting or mitigation, we won't 
move forward. That means a whole host of economic activity in a 
community will not occur--all of this in the name of protecting 
a ditch or farm pond.

    Taken further, a significant cut in aggregates production 
could lead to a shortage of construction aggregate, raising the 
costs of concrete and hot mix asphalt products for state and 
federal road building and repair, and commercial and 
residential construction. NSSGA estimates that material prices 
could escalate from 80% up to 180%. As material costs increase, 
supply becomes limited, which will further reduce growth and 
employment opportunities in our industry. Increases in costs of 
our materials for public works would be borne by taxpayers, and 
delay road repairs and other crucial projects. Given that 
infrastructure investment is essential to economic recovery and 
growth, any change in the way land use is regulated places 
additional burden on the aggregates industry that is 
unwarranted and would adversely impact aggregates supply and 
vitally important American jobs.

    NSSGA appreciates this opportunity to speak on the 
devastating effects of a broad expansion of Clean Water Act 
jurisdiction on the aggregates industry. Thank you, Mr. 
Chairman, and I will be happy to respond to any questions.

    Attachments: NSSGA Clean Water Act Expansion

    [GRAPHIC] [TIFF OMITTED] T8042.003
    
    [GRAPHIC] [TIFF OMITTED] T8042.004
    
                         Testimony of Tom Woods


                    First Vice Chairman of the Board


                 National Association of Home Builders


                               Before the


                 United States House of Representatives


                        Small Business Committee


Hearing on ``Will EPA's `Waters of the United States' Rule Drown Small 
                              Businesses''


                              May 29, 2014


    Chairman Graves, Ranking Member Velazquez, members of the 
subcommittee, on behalf of the more than 140,000 members of the 
National Association of Home Builders (NAHB), I appreciate the 
opportunity to testify today. My name is Tom Woods and I am the 
president of Woods Custom Homes, a building company based in 
Blue Springs, Missouri, and NAHB's 2014 First Vice Chairman of 
the Board.

    NAHB members are involved in the home building, remodeling, 
multifamily construction, land development, property 
management, and light commercial construction industries. Our 
industry is largely dominated by small businesses, with our 
average builder member employing 11 employees. Since the 
Association's inception in 1942, NAHB's primary goal has been 
to ensure that housing is a national priority and that all 
Americans have access to safe, decent and affordable housing, 
whether they choose to buy or rent a home.

    Recognizing the need for a clean environment and the 
benefits that it brings to communities, residents, and 
potential home buyers, NAHB members have a vested interest in 
preserving and protecting our nation's land and water 
resources. Since its inception in 1972, the Clean Water Act 
(CWA) has helped to make significant strides in improving the 
quality of our water resources and our lives. As environmental 
stewards, the nation's home builders construct neighborhoods 
and help create thriving communities while maintaining, 
protecting, and enhancing our natural resources. Under the CWA, 
home builders must often obtain and comply with section 402 and 
404 permits to complete their projects. For businesses 
navigating federal bureaucracies, what is most important to our 
compliance efforts is a regulatory scheme that is consistent, 
predictable, timely, and focused on protecting true aquatic 
resources. Unfortunately, this is becoming a more elusive goal.

    As a leader of my industry, I have a unique understanding 
of how the federal government's regulatory process impacts 
businesses in the real-world. Additional regulations make it 
more difficult for me to provide homes at a price point that is 
affordable to working families--a reality that affects both 
renters and prospective buyers.

    The home building industry would benefit from smarter and 
more sensible regulation. According to a study completed by 
NAHB, government regulations accounts for up to 25% of the 
price of a single-family home. Nearly two-thirds of this impact 
is due to regulations that affect the developer of the lot, 
with the rest due to regulations that are imposed on the 
builder during construction.\1\ The regulatory requirements we 
face as builders do not just come from the federal government. 
As the former Mayor of Blue Springs, Missouri, I believe a key 
component of effective regulation is ensuring that local, state 
and federal agencies are cooperating, where possible, to 
streamline permitting requirements and are respecting the 
appropriate responsibilities of each level of government. 
Importantly, more sensible regulation will translate into job 
growth in the construction industry.
---------------------------------------------------------------------------
    \1\ Survey conducted by Paul Emrath, National Association of Home 
Builders, ``How Government Regulation Affects the Price of a New 
Home,'' 2011

---------------------------------------------------------------------------
    ``Waters of the United States'' Proposed Rule:

    On April 21, 2014, the Environmental Protection Agency and 
U.S. Army Corps of Engineers (``the agencies'') proposed a rule 
redefining the scope of waters protected under the CWA. For 
years, landowners and regulators alike have been frustrated 
with the continued uncertainty over the scope of federal 
jurisdiction over ``Waters of the United States.'' By improving 
the CWA's implementation, removing redundancy, and further 
clarifying jurisdictional authority, the agencies are hoping 
they can do an even better job at facilitating compliance while 
protecting and improving the aquatic environment.

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

    Addressing the Impacts on Small Entities

    The agencies completely ignore the impact this proposed 
rule will have on small entities. They claim ``...(t)hat fewer 
waters will be subject to the CWA under the proposed rule than 
are subject to regulation under the existing regulations; this 
action will not affect small entities to a greater degree than 
the existing regulations.''

    This is not accurate. In reality, the proposed rule 
establishes broader definitions of existing regulatory 
categories, such as tributaries, and regulates new areas that 
are not jurisdictional under current regulations, such as 
adjacent non-wetlands, riparian areas, floodplains, and other 
waters.

    The agencies intentionally created overly broad terms so 
they have the authority to interpret them as they see fit in 
the field, including stepping in where they may think a state 
has not gone far enough. These new definitions will include 
substantial additions, such as a first time inclusion of 
ditches, conveyances and other water features that may flow, if 
at all, only after a heavy rainfall. Unless proper mapping is 
provided by the agencies it may be impossible for a home 
builder to independently identify what is jurisdictional.

    In addition, the proposal suggests that ``neighboring'' 
could include any wet feature within a ``floodplain.'' As I am 
sure you are aware, floodplains can extend for miles from 
traditional navigable waters, yet the agencies can now claim 
that those features, miles away, can be considered neighboring. 
This is a far cry from what Congress intended to be covered by 
the CWA. For any small business trying to comply with the law, 
the last thing it needs is a set of new, vague and convoluted 
definitions that only provide another layer of uncertainty.

    These definitions will leave home builders in a constant 
state of confusion. As a small business owner, this 
unpredictability will make it difficult for my business to 
comply and grow. The agencies suggest that the rule provides 
clarity; however all it does is produce more questions. 
Unfortunately, we have to rely on the agencies and costly 
consultants for answers.

    Regulatory Flexibility Act

    These changes have far reaching implications and will alter 
the way we conduct business. Recognizing that small businesses 
are frequently disproportionately impacted by federal 
regulations, Congress enacted, more than 30 years ago, the 
Regulatory Flexibility Act (RFA). The agencies are legally 
required to assess the true impacts this rule will have on 
small businesses under the RFA.

    The RFA requires federal agencies to consider the effect of 
their actions on small entities, including small businesses, 
small non-profit enterprises, and small local governments.\2\ 
When an agency issues a rulemaking proposal, the RFA requires 
the agency to ``prepare and make available for public comment 
an initial regulatory flexibility analysis. Such analysis shall 
describe the impact of the proposed rule on small entities.'' 
\3\
---------------------------------------------------------------------------
    \2\ 5 U.S.C. 601-612.
    \3\ 5 U.S.C. 603(a).

    The RFA states that an initial regulatory flexibility 
analysis (IRFA) shall address the reasons that an agency is 
considering the action; the objectives and legal basis of the 
rule; the type and number of small entities to which the rule 
will apply; the projected reporting, recordkeeping, and other 
compliance requirements of the proposed rule; and all federal 
rules that may duplicate, overlap, or conflict with the 
proposed rule. The agency must also provide a description of 
any significant alternatives to the proposed rule which 
accomplish the stated objectives of applicable statutes which 
minimize any significant economic impact of the proposed rule 
on small entities.\4\
---------------------------------------------------------------------------
    \4\ 5 U.S.C. 603(c).

    Section 605 of the RFA allows an agency, in lieu of 
preparing an IRFA, to certify that a rule is not expected to 
have a significant economic impact on a substantial number of 
small entities. If the head of the agency makes such a 
certification, the agency must publish the certification in the 
Federal Register along with a statement providing the factual 
basis for the certification.\5\
---------------------------------------------------------------------------
    \5\ 5 U.S.C. 605.

    While the original Congressional intent and subsequent 
additions and enhancements to the RFA are to be lauded, the 
reality is that far too often agencies either view compliance 
with the Act as little more than a procedural ``check-the-box'' 
---------------------------------------------------------------------------
exercise or they artfully avoid compliance by other means.

    In this instance, the agencies have bypassed the safeguards 
of the RFA by certifying the proposed rule. NAHB believes that 
the agencies should have conducted an IRFA to truly assess the 
impact this rule will have on small business entities. A more 
thorough analysis of the proposed requirements would have 
revealed the disproportionate burdens that this rule places on 
small residential home builders. I take issue with the fact 
that the agencies have not considered these consequences.

    Small Businesses Regulatory Enforcement Fairness Act 
Requirements

    Under the 1996 amendments to the RFA, known as the Small 
Businesses Regulatory Enforcement Fairness Act (SBREFA),\6\ if 
the Occupational Safety and Health Administration (OSHA) or 
Environmental Protection Agency (EPA) prepares an IRFA, they 
must first notify the Chief Counsel for Advocacy of the Small 
Business Administration (``Advocacy'') and provide Advocacy 
with information on the potential impacts of the proposed 
regulation on small entities. Advocacy must then identify 
individual representatives of affected small entities for the 
purpose of obtaining advice and recommendations about the 
potential impacts of the proposed rule. The agency must convene 
a review panel made up of representatives from the agency, 
Advocacy, and the Office of Management and Budget to review the 
materials the agency has prepared, collect advice and 
recommendations from the small entity representatives (SERs), 
and issue a report of the panel's findings. Following this 
process, the agency shall modify the proposed rule, the IRFA, 
or the decision on whether an IRFA is required if the panel 
report warrants any changes.\7\
---------------------------------------------------------------------------
    \6\ 5 U.S.C. 609.
    \7\ 5 U.S.C. 609(b) (1) through (6).

    In the 18 years since the RFA was amended by SBREFA to 
include the panel requirement, EPA has convened approximately 
43 panels. According to a report issues by the Congressional 
Research Service (CRS), EPA issued nearly the same number of 
significant regulations during the first Obama 
Administration.\8\ It defies belief that so few EPA regulations 
have met the threshold under SBREFA and these numbers 
illustrate how reluctant some agencies are to comply with the 
law.
---------------------------------------------------------------------------
    \8\ The Congressional Research Service examined 45 regulations it 
characterized as satisfying OMB's ``significance'' threshold of $100 
million annual effect on the U.S. economy in a report addressing the 
rate of issuing regulations during the first Obama Administration. 
Regulations: Too Much, Too Little, or On Track?, http://www.fas.org/
sgp/crs/misc/R41561.pdf (last visited Mar. 5, 2013).

    It was very surprising to me that the agencies decided to 
certify the rule, thereby completely bypassing the RFA process. 
The agencies are not interested in hearing from the regulated 
community. Their only objective is to move this regulation 
closer to the finish line. For a rule of this magnitude, the 
small business voice must be heard and the agencies have failed 
---------------------------------------------------------------------------
to provide that platform.

    Ensuring Compliance with Small Entity Feedback Requirements

    While section 611 of the RFA provides for judicial review 
of some of the act's provisions, it does not permit judicial 
review of section 609(b), which contains the panel 
requirement.\9\ NAHB believes that the RFA should be amended to 
include judicial review of the panel requirement to ensure the 
agencies adhere to the law. If the RFA allowed judicial review 
of section 609(b), agencies would feel more pressure to comply 
by convening a meaningful panel of SERs that can thoughtfully 
and substantively advise the agency, as Congress intended. 
Knowing that its decision whether to convene a panel could 
result in a judicial remand of a regulation presents a strong 
incentive to agencies to conduct a panel at the early stages in 
rule development. Without a judicial backstop or other 
enforcement mechanism, there is no way to compel the agency to 
implement a clear congressional directive. When agencies evade 
their responsibility to convene review panels, they remove 
small business input entirely from the equation.
---------------------------------------------------------------------------
    \9\ Section 611(a)(1) states: ``For any rule subject to this 
chapter, a small entity that is adversely affected or aggrieved by 
final agency action is entitled to judicial review of agency compliance 
with the requirements of sections 601, 604, 605(b), 608(b), and 610 in 
accordance with chapter 7. Agency compliance with sections 607 and 
609(a) shall be judicially reviewable in connection with judicial 
review of section 604.''

---------------------------------------------------------------------------
    Acknowledging the True Costs to Small Entities

    Not only did the agencies fail to perform the required RFA 
analysis to determine the proposal's economic impacts on small 
businesses, the agencies' economic analysis of the proposal is 
fatally flawed.

    The Agencies' Flawed Cost-Benefit Analysis

    The Environmental Protection Agency's (EPA Economic 
Analysis of Proposed Revised Definition of Waters of the United 
States (analysis) fails to provide a reasonable assessment of 
costs and benefits as required by Executive Order 12866. 
Economist Dr. David Sunding, the Thomas J. Graff Professor at 
the University of California-Berkeley's College of Natural 
Resources, has identified several major flaws with the 
analysis.

    According to Dr. Sunding, the analysis relies on a flawed 
methodology for estimating the extent of newly jurisdictional 
waters and thereby underestimating the incremental wetland 
acreage that will be impacted, excludes several important types 
of costs, and uses a flawed benefits methodology. In fact, he 
stated that ``the errors and omissions in EPA's study are so 
severe as to render it virtually meaningless.'' For example, 
one of the many problems that he acknowledged was the 
unreliable data sample the EPA used in the analysis:

          ``The analysis uses FY 2009/2010 as the baseline year 
        to estimate impacts. FY 2009/2010 was a period of 
        significant contraction in the housing market due to 
        the financial crisis. Construction spending during 
        these two fiscal years was 24% below that of the 
        previous two-year period. In statistical terms, this is 
        an issue of sample selection, where due to exogenous 
        events the sample selected for the analysis is not 
        representative of the overall population. The report 
        bases its finding on a period of extremely low 
        construction activity, which will result in 
        artificially-low number of applications and affected 
        acreage. Even if the percent increase in added permits 
        is correct, using the number or permits issued in 2010 
        as a baseline is very likely a significant 
        underestimation of the affected acreage in years not 
        subject to a crisis in the building sector.'' \10\
---------------------------------------------------------------------------
    \10\ David Sunding, ``Review of 2014 EPA Economic Analysis of 
Proposed Revised Definition of Waters of the United States,'' 2014

    In addition, EPA's calculation of incremental costs is 
deficient. EPA's analysis excludes several important types of 
costs, such as costs associated with permitting delays, impact 
avoidance and minimization. Also, EPA's analysis of Section 404 
costs relies on permitting cost data that are nearly 20 years 
---------------------------------------------------------------------------
old and are not adjusted for inflation.

    Finally, EPA uses a flawed methodology for its calculation 
of benefits. EPA's analysis adopts an all or nothing approach 
to assessing benefits by assuming that all wetlands affected by 
the rule's definitional change would be filled. On the flip 
side, they make the assumption that the rule would preserve or 
mitigate land if federal jurisdiction is extended by the rule. 
These unrealistic assumptions contribute to an inflated 
benefits calculation.

    It is clear that the EPA should withdraw the economic 
analysis and prepare an adequate study of this major change to 
the CWA. Yet again, the agencies are painting an inaccurate 
picture of how this regulation will impact small businesses.

    Costs to the Home Building Industry

    Home building is a complex and highly regulated industry. 
As costs, regulatory burdens, and delays increase, the small 
businesses that make up a majority of the industry must adapt. 
This can include paying higher prices for land or purchasing 
smaller parcels, redrawing development or house plans, and/or 
completing mitigation. All of these adaptations must be 
financed by the builder and ultimately arrive in the market as 
a combination of higher prices for the consumers and lower 
output for the industry. As output declines and jobs are lost, 
other sectors that buy from or sell to the construction 
industry also contract and lose jobs. Builders and developers, 
already crippled by the economic downturn, cannot depend upon 
the future home buying public to absorb the multitude of costs 
associated with overregulation.

    Because compliance costs for regulations are often incurred 
prior to home sales, builders and developers have to 
essentially finance these additional carrying costs until the 
property is sold. Because of the increased price, it may take 
longer for the home to be sold. Carrying these additional costs 
only adds more risk to an already risky business, yet is one of 
the difficult realities that home builders face very day. This 
proposed rule only adds to the headwinds that our industry 
faces.

    Even moderate cost increases can have significant negative 
market impacts. This is of particular concern in the affordable 
housing sector where relatively small price increases can have 
an immediate impact on low to moderate income home buyers. Such 
buyers are more susceptible to being priced out of the market. 
As the price of the home increases, those who are on the verge 
of qualifying for a new home will no longer be able to afford 
this purchase. An analysis done by NAHB illustrates the number 
of households priced out of the market for a median priced new 
home due to a $1,000 price increase. Nationally, this price 
difference means that when a median new home price increases 
from $225,000 to $226,000, 232,447 households can no longer 
afford that home.

    The picture becomes more stark when you consider the time 
and cost to obtain a CWA section 404 permit. A 2002 study found 
that it takes an average of 788 days and $271,596 to obtain an 
individual permit and 313 days and $28,915 for a 
``streamlined'' nationwide permit. Over $1.7 billion is spent 
each year by the private and public sectors obtaining wetlands 
permits.\11\ Importantly, these ranges do not take into account 
the cost of mitigation, which can be exorbitant. When 
considering these excesses, it becomes clear that we need to 
fine a necessary balance between protecting our nation's water 
resources and allowing citizens to build and develop their 
land.
---------------------------------------------------------------------------
    \11\ David Sunding and David Zilberman, ``The Economics of 
Environmental Regulation by Licensing: An Assessment of Recent Changes 
to the Wetland Permitting Process,'' 2002

    Construction projects rely on efficient, timely, and 
consistent permitting procedures and review processes under CWA 
programs. Builders and developers are generally ill-equipped to 
make their own jurisdictional determinations and must hire 
outside consultants to secure necessary permits and approval. 
This takes time and money. Delays often lead to greater risks 
and higher costs, which many developers would rather avoid 
given tight budgets and timeframes. Onerous permitting 
liabilities could delay or eventually kill a real estate deal. 
If the rule is finalized in its current form, the ability to 
sell, build, expand, or retrofit structures or properties will 
suffer notable setbacks, including added cost and delays for 
---------------------------------------------------------------------------
development and investment.

    Oftentimes, home builders will be at the mercy of the 
agencies. Builders will have to request a jurisdictional 
determination from the agencies to ensure they are not 
disturbing land near an aggregated water. Consequently, an 
increase in the number of jurisdictional determination 
requests, across all industries, will result in greater 
permitting delays as the agencies are flooded with paperwork. 
My business has already been the victim of permitting delay. 
For one of my building projects, I was entangled in the Army 
Corps permitting process for over two years. These delays will 
only increase as the agencies work to extend federal 
protections to smaller waters.

    In addition, many federal statutes tie their approval/
consultation requirements to those of the CWA, i.e. if one has 
to obtain a CWA permit, he/she must also obtain other permits. 
If more areas are considered jurisdictional, more CWA permits 
will be required. More federal permitting actions will trigger 
additional statutory reviews--by agencies other than the 
permitting agency--under laws including the Endangered Species 
Act, National Historic Preservation Act, and National 
Environmental Policy Act. Project proponents do not have a seat 
at the table during these additional reviews, nor are 
consulting agencies bound by a specific time limit. Lengthened 
permitting times will include an increased number of meetings, 
formal and informal hearings, and appeals. These federal 
consultations are just another layer of red tape that the 
federal government has placed on small businesses and it is 
doubtful the agencies will be equipped to handle this inflow.

    While my industry is complex and multifaceted, it is not 
beyond the agencies' ability to adequately study and estimate 
realistic costs and burdens resulting from this proposal.

    Impacts on State and Local Governments

    While many aspects of the CWA are vague, it is clear that 
Congress intended to create a partnership between the federal 
agencies and state governments to protect our nation's water 
resources. Congress states in section 101 of the CWA that 
``[f]ederal agencies shall cooperate with state and local 
agencies to develop comprehensive solutions to prevent, reduce 
and eliminate pollution in concert with programs for managing 
water resource.'' Under this notion, there is a point where 
federal authority ends and state authority begins. The rule 
proposed by the agencies blatantly ignores this history of 
partnership and fails to recognize that there are limits on 
federal authority.

    States have adequately regulated their own waters and 
wetlands for years. States take their responsibilities to 
protect its natural resources seriously and do not need the 
federal government to assert jurisdiction. In fact, every state 
has the authority to exceed federal law, so long as there is a 
compelling reason. If you looked around the country you would 
find that many states are protecting their natural resources 
more aggressively than when the CWA was enacted. As a former 
Mayor, I am aware of this impact. I have a firsthand 
understanding of the lengths that state and local governments 
go to in order to protect their waters.

    In addition, if this rule is finalized it will slow down 
housing production which will have an adverse affect on state 
and local economies. Buyers of new homes and investors in 
rental properties add to the local tax base through business, 
income and real estate taxes, and new residents buy goods and 
services in the community. NAHB estimates the first-year 
economic impacts of building 100 typical single family homes to 
include $28 million in wage and business profits, $11.1 million 
in federal, state and local taxes, and 297 jobs. In the 
multifamily sector, the impacts of building 100 typical rental 
apartments include $10.8 million in wages and business profits, 
$4.2 million in federal, state and local taxes and 113 jobs.

    Conclusion:

    Congress, in crafting the RFA, clearly intended for federal 
agencies to carefully consider the proportional impacts of 
federal regulations on small businesses.

    It is the purpose of this Act to establish as a principle 
of regulatory issuance that agencies shall endeavor, consistent 
with the objectives of the rule and applicable statutes, to fit 
regulatory and informational requirements to the scale of the 
businesses, organizations, and governmental jurisdictions 
subject to regulations. To achieve this principal, agencies are 
required to solicit and consider flexible regulatory proposals 
and to explain the rationale for their actions to assure that 
such proposals are given serious consideration.

    Unfortunately, all too often the EPA has completely skirted 
these requirements. They clearly view RFA compliance as an 
optional step in the rulemaking process. This proposed rule 
will have a significant impact on small businesses nationwide, 
an important notion that the agencies choose to ignore. I am at 
a loss as to why the agencies refuse to give small businesses a 
seat at the table to discuss these impacts. I request that the 
agencies start over and develop a more meaningful and balanced 
rule that respects the spirit of the RFA.

    Thank you again for the opportunity to testify today.
                     Testimony of William W. Buzbee


                            Professor of Law


                            Emory Law School


                         Atlanta, Georgia 30322


                        Telephone: 404 727 6507


                      email: [email protected]


         Georgetown University Law Center (starting July 2014)


           600 New Jersey Avenue, N.W. Washington, D.C. 20001


                    email: [email protected]


           Before the United States House of Representatives


                      Committee on Small Business


                              May 29, 2014


Hearing on United States Environmental Protection Agency and Army Corps 
 of Engineers ``Waters of the United States'' Proposed Regulations as 
          Published in the Federal Register on April 21, 2014

    My name is William Buzbee. I am a Professor of Law at Emory 
University School of Law, where I am director of Emory's 
Environmental and Natural Resources Law Program. I am about to 
move to Washington where this summer I will be joining the 
faculty at the Georgetown University Law Center. I am also a 
member-scholar of the not-for-profit regulatory policy think-
tank the Center for Progressive Reform.

    I am pleased to accept this Committee's invitation to 
testify regarding the new proposed ``waters of the United 
States'' regulations published in the Federal Register by the 
Army Corps of Engineers (the Army Corps) and the United States 
Environmental Protection Agency (EPA) on April 21, 2014. As a 
professor asked to testify due to my expertise, not as a 
partisan, representative of any organization, I will seek to 
provide context leading to these proposed regulations, comment 
on the choices made by EPA and the Army Corps, and assess the 
legality and logic of the proposed regulations.

    My background and past involvement with the ``waters of the 
United States'' question:

    This is not my first involvement with the question of what 
is protected as a ``water of the United States'' under the CWA. 
As a result of my work on environmental law and federalism, I 
served as co-counsel for an unusual bipartisan amicus brief 
filed in United States v. Rapanos, 547 U.S. 715 (2006) 
(Rapanos). This brief was filed on behalf of a bipartisan group 
of four former Administrators of the United States 
Environmental Protection Agency (EPA). Those former US EPA 
Administrators included Russell Train, who served under 
Presidents Nixon and Ford, Douglas Costle, who served under 
President Carter, William Reilly, who served under the first 
President Bush, and Carol Browner, who served under President 
Clinton. Despite their different party backgrounds and years of 
service, all four shared the same views about the importance of 
retaining longstanding protections of America's waters. This 
bipartisan EPA Administrators' brief was aligned in Rapanos 
with George W. Bush Administration's arguments before the 
Supreme Court, several dozen states, many local governments, 
and an array of environmental groups as well as hunting and 
fishing interests. All asked the Supreme Court to uphold 
longstanding regulatory and statutory interpretations regarding 
what is protected as a ``water of the United States,'' 
emphasizing the centrality of the ``waters'' determination to 
all of the Clean Water Act. After all, although this question 
of what are protected ``waters'' is often discussed with a 
focus on wetlands and tributaries and especially dredging and 
filling restrictions long set by Section 404 of the Clean Water 
Act, the ``waters'' issue is the key jurisdictional hook for 
virtually all of the Clean Water Act. This includes, among 
other things, direct pollution industrial discharges under 
Section 402 of the Clean Water Act and its National Pollutant 
Discharge Elimination System (NPDES) program, as well as oil 
spill and water quality components of the Act.

    After the Court's splintered and confusing ruling in 
Rapanos, I testified during the summer of 2006 before the 
Fisheries, Wildlife, and Water subcommittee of the United 
States Senate Committee on Environment and Public Works about 
the implications of the Rapanos decision. Shortly thereafter, I 
testified at a December 2007 hearing of the Senate Committee on 
Environment and Public Works, also discussing the implications 
of these cases and regulatory and judicial developments since 
Rapanos. I also testified in 2008 at a House hearing held by 
the Committee on Transportation and Infrastructure regarding a 
proposed bill referred to as the Clean Water Restoration Act.

    Earlier in my legal career, I counseled industry, 
municipalities and governmental authorities, states and 
environmental groups about environmental law, pollution 
control, and land use issues under all of the major federal 
environmental laws, as well as state and local laws. As a 
scholar, I have written extensively about related issues, with 
a special focus in recent years on regulatory federalism, 
especially environmental laws and their frequent reliance on 
overlapping federal, state and local environmental roles. I 
have published books with Cornell and Cambridge University 
Presses, and Wolters Kluwer/Aspen. My publications have 
appeared in Stanford Law Review, Cornell Law Review, NYU Law 
Review, Michigan Law Review, University of Pennsylvania Law 
Review, and in an array of other journals and books. I have 
taught at Emory since 1993, but also visited at Columbia, 
Cornell, Georgetown and Illinois Law Schools. As mentioned 
above, I will be leaving Emory for Georgetown University Law 
Center in a few months.

    The purpose and logic of the new ``waters'' proposed 
regulations, in brief:

    These proposed regulations and a massive accompanying 
science report referenced and summarized in the Federal 
Register notice are an attempt to reduce uncertainties created 
by three Supreme Court decisions bearing on what sorts of 
``waters'' can be federally protected under the Clean Water 
Act. The two most important recent cases are the Supreme 
Court's decisions in Solid Waste Agency of Northern Cook County 
v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) (SWANCC) 
and United States v. Rapanos, 547 U.S. 715 (2006) (Rapanos). 
Judicial and regulatory treatments of these cases and the 
earlier related decision in United States v. Riverside Bayview 
Homes, 474 U.S. 121 (1985), have resulted in an increasingly 
confused body of law, creating both regulatory uncertainty and 
occasionally bold new assertions about reduced protections for 
previously jurisdictional ``waters of the United States.'' 
These cases, and resulting confusion, have increased regulatory 
transaction costs for everyone and reduced the protections 
afforded to America's waters. The proposed 2014 ``waters'' 
regulations are a logical and legally well justified means to 
bring clarity to the law and, to the extent permissible under 
the Supreme Court's recent decisions, restore protections long 
provided to America's waters during three decades of bipartisan 
agreement about when and why various sorts of waters should be 
protected. If finalized, they should greatly reduce legal 
uncertainty, regulatory skirmishing, and attendant litigation 
resulting from the uncertain intersection of these three 
important cases.

    I will make five main points in this testimony:

    First, I will explain very briefly how the question of what 
``waters'' are protected matters not just for wetlands and 
tributary protections, but for industrial discharges of 
pollution. Furthermore, the various types of waters protected 
perform many functions of importance to businesses and 
governments at all levels. Business, health, recreational, and 
environmental interests are all at stake here. Surely this 
Committee will hear from some business interests arguing 
against the proposal of the Army Corps and EPA, but business 
interests are undoubtedly on both sides of this issue, with 
hunting, fishing, boating, recreation, and tourism linked 
businesses especially dependent on protection of America's 
waters. And because pollution and filling of America's waters 
threaten low cost but high value wetlands functions and water 
used for agricultural purposes and for drinking water, and also 
water quality in drought prone areas, the despoiling or filling 
of America's waters would be immensely costly.

    Second, I will show how the regulatory choices reflected in 
these regulations are responsive to Supreme Court law and also 
the views of a majority of the Supreme Court, at least when it 
last addressed related questions.

    Third, these proposed regulations reveal that EPA and Army 
Corps have responded to criticisms of supposed limitless claims 
of federal power by retaining and solidifying exemptions.

    Fourth, and perhaps most importantly, the regulations link 
a massive survey of peer reviewed science of waters' functions 
with a tiered and nuanced approach. This approach answers 
criticism that the federal government is going too far and 
protecting areas of no value relevant to the Clean Water act. 
If critics can find flaws in the science or proposed regulatory 
categories, they can and should produce their own contrary 
support and call for correction in the now ongoing notice and 
comment regulatory process.

    Lastly, in the initial heated attacks on these proposed 
regulations, critics failed to note and credit a major change 
that removes the most expansive and least water-linked historic 
grounds for federal claims of jurisdiction. For decades, 
federal jurisdiction has existed for ``other waters'' of 
various sorts merely upon several sorts of showing that the 
harming activity or uses of the waters were linked to industry 
or commerce. This was, in effect, a commerce-linked sweep up 
provision. The new proposed regulations delete these 
longstanding grounds for protection, and if finalized would now 
link Clean Water Act jurisdiction to what the best peer 
reviewed science indicates deserves protection.

    Point I: The extent of federally protected waters matters 
to far more than just wetlands regulation and explains the 
longstanding federal bipartisan consensus

    The question of what ``waters'' are federally protected is 
not a matter that only concerns allegedly marginal waters that, 
as often presented by critics of the longstanding protective 
consensus, look more like land or involve the outermost reaches 
of wetlands protection. The question of what are protected 
``waters of the United States'' concerns the very linchpin of 
federal Clean Water Act jurisdiction. It does indeed supply the 
hook for Section 404 ``dredge and fill'' coverage, but also 
provides the jurisdictional prerequisite for Section 402's 
requirements of permits for industrial pollution discharges 
under the National Pollution Discharge Elimination System (or 
NPDES). It also underpins efforts to protect water quality, 
protect drinking water, provide habitat, and buffer against 
storm surges and flooding. Furthermore, since the 1970s and 
still today on the Supreme Court, the longstanding consensus 
has been to protect far more than just waters used in the 
literal sense for shipping-linked navigation. The Clean Water 
Act has been one of America's great success stories, helping to 
restore many of America's rivers from highly polluted 
conditions to water that often now is clean enough for fishing, 
recreation, and even drinking water. The Act also greatly 
reduced the pre-Clean Water Act tendency to see wetlands as 
worthless and appropriate for filling. Nevertheless, many parts 
of the country still suffer from degraded water quality, and 
threats to wetlands and tributaries still arise. Everyone may 
share a common interest in protecting water quality and 
wetlands' hugely valuable functioning. Nevertheless, the 
ability to pollute with impunity or convert for private gain a 
tributary or wetland into land for development or other 
commercial use can generate private wealth, even if others 
downstream are economic losers. Hence, despite a broad 
consensus that America's rivers, tributaries and wetlands 
should be protected, clashes over particular applications of 
the law are a near constant.

    Until the 2001 Supreme Court SWANCC case, the law and 
underlying regulations reflected a stable bipartisan consensus 
of almost thirty years that protection of America's waters 
through stable Part 328 regulations was good policy. However, 
SWANCC and the 2006 Rapanos case unsettled that longstanding 
bipartisan consensus, breeding legal uncertainty that the new 
Army Corps and EPA regulations seek to address. As suggested by 
a majority of Supreme Court justices in Rapanos, new 
regulations responding to these two cases and linking what are 
protected ``waters'' to sound science could reduce such 
uncertainty, both protecting waters that matter and reducing 
regulatory uncertainty that benefits no one.

    Point II: The new proposed ``waters of the United States'' 
regulations are an appropriate response to the Supreme Court's 
recent cases:

    Although both SWANCC and Rapanos unsettled the longstanding 
protective and bipartisan consensus about what ``waters'' were 
federally protected, both cases created considerable legal 
uncertainty that has led now to over a decade of disagreement 
and skirmishing before Congress, agencies, and the courts. 
However, a six justice majority in Rapanos embraced the role of 
expert regulation to clarify the appropriate line between land 
and water. This included Chief Justice Roberts, who bemoaned 
the lack of responsive clarifying regulations post-SWANCC, and 
Justice Kennedy, who penned a swing vote opinion that is widely 
viewed as the most authoritative Rapanos opinion. Justice 
Kennedy fleshed out how a ``significant nexus'' needs to be 
shown to federally protect some waters whose linkages to 
navigable waters and functioning makes them of possibly 
marginal importance; ``alone or in combination,'' the 
relationship with navigable waters much be more than 
``speculative or insubstantial.'' Rapanos, 547 U.S. at 780. 
Justice Kennedy explicitly recognized that many questions about 
what sorts of waters deserve protection could be addressed via 
categories set forth by regulation, although he also appeared 
to call for case-by-case determinations in other settings. The 
four dissenters, all of whom joined an opinion by Justice 
Stevens, would have affirmed the regulators' judgments attacked 
in Rapanos; they emphasized the importance of judicial 
deference to expert regulatory judgments about what waters 
should be protected. Thus, along with Chief Justice Roberts and 
Justice Kennedy, six justices embraced an ongoing role for 
regulation to bring clarity to the law. In addition, an earlier 
unanimous Supreme Court in Riverside Bayview Homes embraced 
deference to regulatory judgments about where to draw the line 
between land and water. There undoubtedly remains legitimate 
room for regulations to bring greater clarity to this body of 
law.

    The proposed regulations at issue in today's hearing 
respond directly and reasonably to these Supreme Court calls. 
They protect some waters by category, basing that judgment on a 
comprehensive review of peer reviewed science about the 
linkages, value and functions of such categories of waters. 
Some other types of waters are identified as possibly falling 
under federal jurisdiction, but the jurisdictional 
determination has to follow a water site-specific review to see 
if a ``significant nexus'' exists adequate to justify federal 
protection. Furthermore, the proposed regulations offer 
additional guidance about what ``significant nexus'' analysis 
should consider, building on Justice Kennedy's Rapanos language 
and providing additional guidance for what regulators and those 
seeking a jurisdictional determination should consider.

    Hence, by protecting some waters by category and others on 
a case-by-case basis if satisfying ``significant nexus'' 
analysis, and in all instances hinging such regulatory 
judgments to a comprehensive survey of peer reviewed science, 
the Army Corps and EPA have respected Supreme Court edicts and 
signals. Furthermore, these proposed regulations also show 
fealty to the Clean Water Act's explicit goal of protecting the 
``chemical, physical, and biological integrity'' of America's 
waters by reducing pollution discharges and requiring permits 
before discharging any pollutants into such waters, whether in 
the form of industrial pollution or fill.

    Point III: The proposed regulations make explicit several 
categories of activities or waters not subject to federal 
jurisdiction

    A persistent refrain in recent years and regarding the 
proposed regulations under discussion today is that the 
jurisdiction being claimed borders on the limitless. This is 
most evidently erroneous in the proposal's creation of both 
categorically protected waters and others that must be assessed 
on a case-by-case basis. However, the proposed regulations go 
further, in new Section 328.3(b) making explicit that several 
types of otherwise potentially debatable waters are not 
``waters of the United States.'' These include (with additional 
more precise language): waste treatment systems; prior 
converted cropland; several sorts of ditches that are upland or 
do not contribute flow to otherwise regulated waters; and 
several types of ``features'' such as artificially irrigated 
areas that would revert to upland without irrigation water, 
artificial lakes, ponds, pools and ornamental waters, 
construction-linked water-filled depressions, groundwater, and 
gullies, rills and non-wetland swales. Several of these 
exemptions appear to be in direct answer to criticisms in court 
briefs and congressional testimony that federal jurisdiction 
has bordered on the limitless.

    Point IV: The proposed regulations' link to a massive 
survey of peer-reviewed science about waters' connectivity, 
values and function answers responds to the most prevalent 
criticism of ``waters'' federal jurisdiction and puts all on 
notice

    Over the past decade, a common claim of critics of federal 
jurisdiction has been that waters--or sometimes lands--can and 
are claimed to be protected for no reason relevant to the Clean 
Water Act's purposes. And on this issue and in other battles 
over regulation, critics have called for ``sound science'' and 
``peer reviewed'' science to underpin regulatory judgments. The 
Army Corps and EPA have taken this to heart, for the first time 
pulling together a massive survey of peer reviewed publications 
about the connectivity, values, and functions of various types 
of waters. This report is, I believe, under review by the 
Science Advisory Board, and also has been made public for 
review and comment. In addition, the Corps and EPA in their 
proposed regulation's Federal Register notice explain how they 
interpret this report and the science in deciding what types of 
waters are categorically protected, subject case-by-case to 
``significant nexus'' analysis, or not protected.

    I am unclear what action, if any, this Committee might 
choose to take about these proposed regulations, but this 
pending notice and comment process and public vetting of the 
accompanying science report are providing a value open, 
transparent, and judicially challengeable process. If critics 
can point to flaws and identify better peer reviewed published 
science, they now have such an opportunity.

    Point V: The Army Corps and EPA in the proposed regulations 
have deleted the longstanding ``other waters'' commerce-linked 
sweep-up provision, thereby linking protections to science and 
limiting federal power

    In the proposed regulations, a longstanding additional 
grounds for federal jurisdiction has been deleted. This 
provision, the former Section 328.3(3) ``other waters'' 
paragraphs, provided federal jurisdiction to protect over a 
dozen sorts of waters upon a showing that their ``use, 
degradation or destruction . . . could affect interstate or 
foreign commerce'' or be used by ``interstate or foreign 
travelers'' for ``recreational or other purposes,'' for 
fishing-linked commerce, or for ``industrial purposes by 
industries in interstate commerce.'' This provision basically 
identified types of waters but made them protectable based on 
their commerce-linked uses or values. This regulation was 
consistent with longstanding understandings of the 1972 Clean 
Water Act amendments and the congressionally intended reach of 
federal power. However, both the SWANCC and Rapanos decisions 
raised questions about whether Clean Water Act jurisdiction 
could focus on a water's commercial or industrial uses or the 
impacts of a water's degradation without regard to the water's 
functions or links to navigable waters.

    I will not here opine on whether this section's deletion 
was legally necessary or prudent. I will, however, note that 
the Corps and EPA have decided to answer critics and eliminate 
uncertainty by deleting this section in favor of now linking 
all jurisdictional ``waters of the United States'' 
determinations to what the science shows. Since most pollution 
and filling activity is undoubtedly commercial and industrial 
in nature, and little today is not linked to interstate 
commerce, this regulatory deletion is a potentially significant 
concession. Again, the proposed regulations choose to link 
regulation to peer reviewed science and cut back on the 
broadest possible grounds for jurisdiction.

    Conclusion

    The legal uncertainty of recent years has benefitted no 
one. For those concerned about protection of America's waters, 
regulatory uncertainty has led to regulatory forbearance and 
some problematic or erroneous regulatory and judicial decisions 
leaving important waters unprotected. For those needing to make 
business decisions, regulatory uncertainty has also raised 
costs. By linking the ``waters of the United States'' question 
to peer reviewed science and clarifying which waters are 
subject to categorical or case-by-case protection and revealing 
the reasons for such judgments, the Corps and EPA have moved 
the law in the direction of certainty and clarity. Undoubtedly 
some will not like where they have chosen to draw their lines, 
but this is an area calling for difficult, expert regulatory 
judgments. There was a reason for the thirty years of 
bipartisan consensus in favor of broadly protecting America's 
waters. These proposed regulations, if finalized in a similar 
form, could perhaps once again bring clarity and stability to 
the law, while also respecting the protective mandates of the 
Clean Water Act.
Submitted Testimony of the American Public Gas Association to the House 
  Small Business Committee Hearing, ``Environmental Protection Agency 
   (EPA) and the U.S. Army Corps of Engineers (Corps) proposed rule 
   defining the scope of waters protected under the Clean Water Act''


    A Consumer Perspective

    On behalf of the American Public Gas Association (APGA), we 
appreciate this opportunity to submit testimony on the 
Environmental Protection Agency (EPA) and the U.S. Army Corps 
of Engineers (Corps) proposed rule defining the scope of waters 
protected under the Clean Water Act (CWA) (Docket ID No. EPA-
HQ-OW-2011-0880)

    APGA is the national association for publicly owned natural 
gas distribution systems. There are approximately 1,000 public 
gas systems in 37 states, and over 700 of these systems are 
APGA members. Publicly-owned gas systems are not-for-profit, 
retail distribution entities owned by, and accountable to, the 
citizens they serve. They include municipal gas distribution 
systems, public utility districts, county districts, and other 
public agencies that own and operate natural gas distribution 
facilities in their communities. Public gas systems' primary 
focus is on providing safe, reliable, and affordable service to 
their customers.

    At the most basic level, APGA represents the views of 
American natural gas consumers. Our members serve homeowners 
and small businesses, which rely on affordable natural gas to 
heat their homes, cook their meals, power their restaurants, 
schools and hospitals, and service businesses of all types.

    On March 25, 2014, the EPA and Corps (hereafter 
collectively, the Agencies) published a Notice of Proposed 
Rulemaking (NOPR) to clarify the scope of CWA regulation over 
America's streams and wetlands. APGA acknowledges that the CWA 
is fairly characterized as ``watershed'' legislation that is 
responsible for addressing successfully pollution in the waters 
of the United States,\1\ and applauds the Agencies for their 
work in that area. Our concern is that this proposed rule, 
while arguably well-intentioned, has been inadequately studied 
and, by appearing to broaden the Agencies' reach under the CWA, 
will increase, rather than diminish, regulatory uncertainty, to 
the detriment of APGA's members' operations. Of course, at the 
end of the day, if the NOPR is adopted as a final rule, its 
validity will be determined by the judicial system, unless 
Congress intervenes to make clear that it did not intend for 
the scope of CWA to reach to the limits to which the Agencies 
now want to take it.
---------------------------------------------------------------------------
    \1\ Solid Waste Agency of Northern Cook County v. U.S. Corps of 
Engineers, 531 U.S. 169, 175 (2001) (dissent) (``SWANCC'').

    APGA's stake in this debate is that the effort of the 
Agencies to extend their CWA jurisdiction, if implemented, 
would raise safety concerns as related to the ongoing operation 
and maintenance of natural gas distribution systems and inflict 
an unnecessary and unwarranted financial burden on APGA's 
members and their customers.\2\ In other words, the extension 
of federal jurisdiction to matters heretofore considered to be 
within the parameters of the States frequently has unintended 
consequences, and this is no exception. In addition, the 
downsides of enhanced jurisdictional reach are greatly 
heightened, if not accompanied by, sufficient increased funding 
to ensure timely action by the Agencies as it relates to CWA 
matters over which they exercise jurisdiction.
---------------------------------------------------------------------------
    \2\ The time and cost burden of the federal permitting process was 
noted in Rapanos, 547 U.S. at 721.

---------------------------------------------------------------------------
    Prejudges the Science

    There are certain aspects of the NOPR that APGA finds very 
troubling from the standpoint of fundamental administrative law 
principles. The need to broaden the scope under the proposed 
rule is based on EPA's draft scientific study on the 
connectivity of waters ``Connectivity of Streams and Wetlands 
to Downstream Waters: A Review and Synthesis of the Scientific 
Evidence.'' The EPA's Science Advisory Board panel is still in 
the process of peer-reviewing the draft connectivity report. At 
its December 2013 meeting, the panel identified significant 
deficiencies with the report. In addition, the Agencies base 
their analysis of ``significant nexus''--a key phrase in the 
judicial history of the reach of CWA jurisdiction \3\--on a 
yet-to-be finished literature review which fails to examine 
what connections are ``significant.'' The final report will be 
released during the comment period, which will not allow the 
affected parties adequate time to review and comment. Moreover, 
it does not appear that the Agencies intend to give the public 
an opportunity to review the final connectivity report as part 
of the WOTUS rulemaking. There are numerous places throughout 
the preamble to the proposed rule wherein the Agencies have 
asked the public to provide specific information regarding the 
proposed rule's scientific justifications. The purpose of the 
Science Advisory Board (SAB) review of the draft connectivity 
study was to evaluate the ``evolving scientific literature on 
connectivity of waters,'' and the public deserves the 
opportunity to comment on the conclusions of that review 
process.
---------------------------------------------------------------------------
    \3\ E.g., SWANCC, 531 U.S. at 167-68.

---------------------------------------------------------------------------
    Expanding the Scope

    The EPA and the Corps both assert that the scope of CWA 
jurisdiction is narrower under the proposed rule than under 
existing regulations, and that the proposed rule does not 
extend jurisdiction over any new types of waters. However, 
under the manner in which the proposed rule is constructed, 
there is essentially no limit to CWA federal jurisdiction. The 
proposed rule establishes broader definitions of existing 
regulatory categories, such as tributaries, and regulates new 
areas that are not jurisdictional under current regulations, 
such as adjacent non-wetlands. The Congressional Research 
Service found that the proposed rule expands the agencies' 
authority by proposing new definitions such as ``tributary'' 
and new categories of waters such as ``adjacent waters.'' 
Authority will be expanded over many new isolated waters 
through its ``significant nexus'' definition, which relies on a 
yet-to-be completed ``Connectivity of Streams and Wetlands to 
Downstream Waters'' report that fails to address the 
``significance'' of such connections.

    Impacts on APGA Members

    Due to the expansiveness of the proposed rule, the 
potential impact on public gas systems would be significant. 
The proposed rule increases the number of water features that 
would be subjected to federal permitting standards. These water 
features have been traditionally regulated at the local level. 
This system of shared responsibility, consistent with basic 
principles of federalism,\4\ has resulted in effective 
environmental protection without imposing unnecessary federal 
controls (or expanding federal dollars) where they are not 
needed. APGA believes that the Agencies should focus on 
maintaining a proper balance between Federal and State 
oversight of non-navigable waters wholly within State 
boundaries that do not affect interstate commerce.
---------------------------------------------------------------------------
    \4\ The CWA recognizes the ``primary responsibilities and rights of 
States to prevent, reduce and eliminate pollution,...'' Rapanos at 722-
23.

    In 2013 the Chambersburg municipal gas system in 
Chambersburg, PA had to cross the Conococheague Creek with a 
gas main. To minimize impact to the creek, it directionally 
bored six feet under the stream bed. Notwithstanding taking 
such steps to avoid any impact to the creek, Chambersburg was 
required to complete a CWA Section 404 stream crossing permit, 
which took seven months to obtain (and could have taken much 
longer). What this illustrates is that permitting on CWA waters 
is slow now, and if the Agencies are successful in extending 
their jurisdictional reach, acquiring such permits will be even 
slower and more widespread in the future. This will be 
especially so, if as appears to be the case, the Agencies are 
not seeking any, much less adequate, additional funding to 
support their widened authority. Bottom line, this will make 
operating safe and efficient natural gas distribution systems 
more difficult and more expensive, without any offsetting 
---------------------------------------------------------------------------
benefit.

    With the potential increase in the number of geographical 
features that would have to undergo a review and likely 
additional permitting. APGA's members are concerned with the 
impact the increased workload would have on the Agencies with 
respect to both the quickness of the review process and the 
quality of the review. Due to the nature of our business, 
timely review and issuance of permits are not only critical to 
maintain safety, but are also critical for maintaining a 
reliable and resilient system.

    APGA's members spend a significant amount of time and 
resources replacing and servicing their systems, such as 
updating cast iron gas mains and older steel gas mains and 
services. This work is for the safety of their residents, as 
well as to satisfy Federal and State regulations whose goal is 
public safety. They regularly cross ditches and dry creek beds 
and properties in flood plains and/or properties that may drain 
into storm water ditches. Delaying pipe replacements for months 
or years would negatively impact the safety of natural gas 
system consumers, with any offsetting benefits to the 
environment being either negligible or non-existent.

    Adversely Affects Jobs and Economic Growth:

    The Agencies state that the proposed rule will benefit 
businesses by increasing efficiency in determining coverage of 
the CWA. The reality, APGA believes, is that the proposed rule 
will subject far more activities to both federal and state CWA 
permitting requirements, NEPA analyses, mitigation 
requirements, and citizen lawsuits challenging the applications 
of new terms and provisions. The impact will be felt by our 
members and our member's customers, especially small businesses 
that are likely to be least able to absorb the costs. The 
potential adverse effect on economic activity and job creation 
in many sectors of the economy has been largely dismissed by 
the Agencies and certainly is not reflected in EPA's flawed 
economic analysis for the proposed rule. [CITES] Neither do the 
Agencies adequately address the effect on state and federal 
resources for permitting, oversight, and enforcement.

    The Economic Analysis suggests that the proposed rule will 
increase overall jurisdiction under the CWA by only 2.7 percent 
federalism.\5\ But the EPA arrives at this percentage using a 
flawed methodology that only accounts for the Section 404 
program, relies on figures extrapolated from statistics from 
2009-2010, and fails to consider waters and features that were 
not historically subjected to the CWA permitting process. 
Relying on these outdated data, the Agencies systematically and 
substantially underestimate the impact of the proposed rule's 
new definition.
---------------------------------------------------------------------------
    \5\ EPA and the Corps of Engineers prepared economic analysis 
``Economic Analysis of Proposed Revised Definition of Waters of the 
United States.''

---------------------------------------------------------------------------
    Conclusion

    APGA has the utmost respect for the CWA and the Agencies' 
actions thereunder to clean our nation's waters. We are 
expressing our reservations about the NOPR because of our 
concerns regarding regulatory uncertainty and the adverse 
impacts of such uncertainty as it relates to the hundreds of 
communities in this country that will be adversely impacted by 
expanding the scope of the CWA beyond what we believe Congress 
intended or the courts have sanctioned. Neither agency has 
outlined a clear path to implementing this rule so as to 
prevent unnecessary permit backlog on an already overtaxed 
review staff. The unintended consequences of such expanded 
jurisdiction will make operating a safe and efficient local 
natural gas distribution system less likely and more expensive, 
to the detriment of the millions of consumers served by such 
systems. For these reasons, we urge Congress to look very 
carefully at the NOPR that is the subject of this hearing.

    APGA appreciates the opportunity to submit testimony before 
the House Committee on Small Business on this critical natural 
gas and public interest issue. We stand ready to work with the 
Committee on these and all other natural gas issues.
      ARTBA - AMERICAN ROAD & TRANSPORTATION BUILDERS ASSOCIATION


 Will EPA's `Waters of the United States' Rule Drown Small Businesses?


                            Statement of the


               American Road and Transportation Builders


                              Association


                            Submitted to the


                 United States House of Representatives


                      Committee on Small Business


                              May 29, 2014


    On behalf of the American Road and Transportation Builders 
Association (ARTBA) and its more than 6,000 member firms and 
public agencies nationwide, the association would like to thank 
Chairman Graves and Ranking Member Velazquez for holding 
today's hearing, ``Will EPA's `Waters of the United States' 
Rule Drown Small Businesses?''

    ARTBA's membership includes public agencies and private 
firms and organizations that own, plan, design, supply and 
construct transportation projects throughout the country. 
ARTBA's largest membership division is our contractors 
division--a significant number of which are small businesses.

    Transportation construction is directly tied to the 
economic health and development of this country. According to 
Federal Highway Administration data, every $1 billion spent on 
highway and bridge improvements supports almost 28,000 jobs, 
many of which are in small businesses. Given these broad direct 
and indirect economic contributions, the impact on 
transportation development should be taken into account when 
analyzing new federal regulations.

    ARTBA members are directly involved with the federal 
wetlands permitting program and undertake a variety of 
construction-related activities under the Clean Water Act 
(CWA). ARTBA actively works to combine the complementary 
interests of improving our nation's transportation 
infrastructure with protecting essential water resources.

    One of the main reasons for the success of the CWA is the 
Act's clear recognition of a partnership between the federal 
and state levels of government in the area of protecting water 
resources. The lines of federal and state responsibility are 
set forth in Section 101(b) of the CWA:

          ``It is the policy of Congress to recognize, 
        preserve, and protect the primary responsibilities of 
        States to prevent, reduce, and eliminate pollution, to 
        plan the development and use (including restoration, 
        preservation and enhancement) of land and water 
        resources...'' \1\
---------------------------------------------------------------------------
    \1\ CWA Sec. 101(b).

    This structure of shared responsibility between federal and 
state governments allows states the essential flexibility they 
need to protect truly ecologically important and 
environmentally sensitive areas within their borders while, at 
the same time, making necessary improvements to their 
transportation infrastructure. The success of the federal-state 
partnership is backed by dramatic results. Prior to the 
inception of the CWA, from the 1950s to the 1970s, an average 
of 458,000 acres of wetlands were lost each year. Subsequent to 
the CWA's passage, from 1986-1997, the loss rate declined to 
58,600 acres per year and between 1998-2004 overall wetland 
areas increased at a rate of 32,000 acres per year.\2\
---------------------------------------------------------------------------
    \2\ Draft 2007 Report on the Environment: Science, USEPA, May 2007, 
available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=140917

    ARTBA supports the reasonable protection of environmentally 
sensitive wetlands with policies balancing preservation, 
economic realities, and public mobility requirements. Much of 
the current debate over federal jurisdiction, however, involves 
overly broad and ambiguous definitions of ``wetlands.'' Many 
states define wetlands as well other types of water resources 
and prescribe regulatory regimes that are appropriate to each 
body of water. However, the federal government often uses a 
one-size fits all approach essentially requiring water 
resources viewed by states as not being wetlands to be 
---------------------------------------------------------------------------
regulated as if they were wetlands under federal law.

    In its recently proposed rule regarding federal 
jurisdiction under the CWA, the U.S. Environmental Protection 
Agency (EPA) seeks to expand federal jurisdiction by stating, 
essentially, that all waters in the U.S. are ``connected,'' and 
therefore subject to federal regulation. Such a view of federal 
jurisdiction will increase the amount of instances in which 
permits would be required--regardless of ecological value or 
demonstrated need--for transportation improvements. While the 
benefit of additional wetlands permits in the transportation 
arena are in doubt, it is clear the new requirements would 
contribute to already lengthy delays in the project review and 
approval process. Further, in instances where the federal 
government declines to require a permit, the door would still 
be left open to unnecessary, time-consuming litigation 
initiated by project opponents.

    Over-inclusive views as to what constitutes a wetland are 
frequently used by anti-growth groups to stop desperately 
needed transportation improvements. For this reason, ARTBA has, 
and continues to, work towards a definition of ``wetlands'' 
that would be easily recognizable to both landowners and 
transportation planners and is consistent with the original 
scope of the CWA's jurisdiction. As an example of this, 
official ARTBA policy recommends defining a ``wetland'' as 
follows: ``If a land area is saturated with water at the 
surface during the normal growing season, has hydric soil and 
supports aquatic-type vegetation, it is a functioning 
wetland.''

    ARTBA is particularly concerned with the treatment of 
ditches under EPA's proposed rule. Roadside ditches are an 
essential part of the nation's transportation network and 
contribute to the public health and safety of the nation by 
dispersing water from roadways. While current regulations say 
nothing about ditches, EPA's expansive view of connectivity 
could be used to regulate all roadside ditches that have common 
characteristics, such as a channel or an ordinary high water 
mark. The purpose of roadside ditches is unique and distinct 
from the waters EPA seeks to connect. As such, ditches should 
not be regulated as traditional wetlands.

    In addition, the EPA proposal utilizes the concept of 
allowing for ``aggregation'' of the contributions of all 
similar waters ``within an entire watershed,'' making it far 
easier to establish a significant nexus between these small 
intrastate waters and newly expanded roster of traditional 
navigable waters. This novel concept results in a blanket 
jurisdictional determination for an entire class of waters 
within an entire watershed.

    Such an interpretation of jurisdiction will literally leave 
no transportation project untouched from federal wetlands 
jurisdiction regardless of its location, as there is no area in 
the United States not linked to at least one watershed. 
Further, ``connecting'' all waters in order to establish 
federal jurisdiction is exactly what the Supreme Court has, on 
multiple occasions, told the EPA it cannot do. Rather, EPA may 
assert jurisdiction over only those water bodies with a 
``significant'' connection to a traditionally navigable water. 
Instead of attempting to discern where there are truly 
``significant'' connections between water bodies, EPA 
``connects'' all of the waters of the United States and asserts 
essentially limitless jurisdiction. This completely eviscerates 
the federal/state partnership the CWA was founded on and leaves 
no wet area untouched by the possibility of federal regulation.

    It should also be noted that there has been recent 
bipartisan progress in the area of streamlining the project 
review and approval process for transportation projects. 
Members of both parties agree that transportation improvements 
can be built more quickly without sacrificing necessary 
environmental protections. The current surface transportation 
reauthorization law, the ``Moving Ahead for Progress in the 
21st Century'' (MAP-21) Act contained significant reforms to 
the project delivery process aimed at reducing delay. Recently, 
the Obama Administration released the ``Generating Renewal, 
Opportunity, and Work with Accelerated Mobility, Efficiency, 
and Rebuilding of Infrastructure and Communities throughout 
America'' (GROW AMERICA) reauthorization proposal which 
continues MAP-21's efforts at improving project delivery.

    If EPA's rule is finalized, the progress of MAP-21 and the 
potential progress of the project delivery reforms in GROW 
AMERICA would be jeopardized. Any reduction in delay gained 
from improvements to the project delivery process would likely 
be negated by the increased permitting requirements and 
opportunities for litigation caused by the rule's expansion of 
federal jurisdiction.

    ARTBA instead, has urged EPA on multiple occasions to 
establish clarity in CWA regulation by developing a 
classification system for wetlands based on their ecological 
value. This would allow increased protection for the most 
valuable wetlands while also creating flexibility for projects 
impacting wetlands that are considered to have little or no 
value. Also, there should be a ``de minimis'' level of impacts 
defined which would not require any permitting process to 
encompass instances where impacts to wetlands are so minor that 
they do not have any ecological effect. A ``de-minimis'' 
standard for impacts would be particularly helpful for 
transportation projects, as it could reduce needless paperwork, 
delay and regulatory requirements where a project's impacts do 
not rise to the level of having a significant effect on the 
environment.

    This committee should also note that there have been 
multiple legislative attempts in recent years to expand the 
jurisdiction of the CWA to include all ``waters of the United 
States.'' Each of these efforts have met with broad bipartisan 
opposition and none have resulted in new law or even a 
successful committee mark-up. It is clear that consensus among 
policymakers and affected stakeholders has not yet been reached 
regarding appropriate federal wetlands jurisdiction. This 
committee should direct EPA to take note of these developments 
and instead of seeking to ``connect'' all waters, work with the 
regulated community to identify those specific types of water 
bodies which are currently not being covered and craft more 
appropriate, targeted measures to protect them.

    Finally, ARTBA is disheartened that EPA's proposed rule was 
published prior to the conclusion of efforts by the agency's 
own Science Advisory Board (SAB) to determine what constitutes 
a ``significant'' connection between water bodies. As ARTBA 
understood the process, the SAB's work should have been 
finalized before any regulatory efforts began. Given that EPA's 
rule has already been released, ARTBA is highly skeptical that 
any findings by the SAB will change a rule that has already 
been drafted. EPA should suspend its rulemaking efforts and 
start anew after the SAB findings have been finalized, allowing 
all members of the regulated community to have proper input 
into this conversation about where CWA jurisdiction begins and 
ends.

    ARTBA looks forward to continuing to work with the 
committee in order to continue continuing to protect the small 
businesses which improve and sustain our nation's 
infrastructure while addressing the future challenges of the 
CWA.

[GRAPHIC] [TIFF OMITTED] T8042.005

[GRAPHIC] [TIFF OMITTED] T8042.006

[GRAPHIC] [TIFF OMITTED] T8042.007

[GRAPHIC] [TIFF OMITTED] T8042.008

    The National Federation of Independent Business (NFIB) 
appreciates the opportunity to submit this statement for the 
record to the Committee on Small Business for the hearing 
entitled ``Will EPA's `Waters of the United States' Rule Drown 
Small Businesses?'' NFIB is the nation's leading small business 
advocacy organization representing over 350,000 small business 
owners across the country, and we appreciate the opportunity to 
provide our perspective on this issue. NFIB represents small 
businesses in every region and every industry in the country. 
Accordingly, NFIB has a unique insight into the concerns of the 
small business community, and can speak with authority on these 
concerns.

    NFIB applauds the Committee for having this hearing today. 
We note at the outset that the proposed rule to define ``waters 
of the United States'' under the Clean Water Act (CWA) was 
jointly submitted, by the Environmental Protection Agency and 
the U.S. Army Corps of Engineers (the Agencies), for 
publication in the Federal Register on April 21, 2014. In that 
publication, the Agencies certified that the proposed rule will 
not have a significant adverse impact on the small business 
community. But as explained in this statement, this 
certification is patently false. Moreover, it is contravened by 
the Agencies' administrative rulemaking record.

    Contrary to the Agencies' assertions, the proposed rule 
will have a tremendous, direct, and immediate effect on many 
small businesses across all sectors of the economy. NFIB is 
concerned that the proposed rule represents an unprecedented 
jurisdictional land-grab, which will affect the rights of 
private landowners--including many small businesses. As such, 
NFIB believes that the Agencies have, thus far, ignored their 
statutory obligations--under the Regulatory Flexibility Act 
(RFA) and the Small Business Regulatory Enforcement Fairness 
Act (SBREFA)--requiring the Agencies to seriously consider the 
economic impact of the proposed rule on the small business 
community.

    The Agencies Have Failed to Comply with the Regulatory 
Flexibility Act

    NFIB believes the Agencies have failed to meet their 
statutory obligations under the RFA and SBREFA. Accordingly, 
NFIB believes the Agencies should (1) acknowledge that the 
proposed rule will have a significant adverse impact on a 
substantial number of small businesses; (2) withdraw the 
proposed rule; and (3) wait to propose a new rule until the 
Agencies have considered less burdensome alternative 
interpretations of the pertinent CWA jurisdictional provisions. 
As such, we applaud the Committee for its recent letter asking 
the Agencies to withdraw the proposed rule on these grounds.

    The RFA and SBREFA Require the Agencies to Seriously 
Consider Economic Impacts

    The RFA and SBREFA were enacted to address an unfortunate 
reality: regulations usually impose disproportionate costs on 
small businesses. Accordingly, the RFA and SBREFA require that 
federal agencies must seriously consider whether a proposed 
regulation will have a significant adverse impact on a 
substantial number of small businesses before finalizing the 
rule. If an agency should determine that there will likely be 
significant adverse impacts, the agency is then required to 
consider less burdensome alternatives consistent with the 
language of the statute the agency has been charged with 
enforcing. Alternatively the agency might certify that there 
will be no significant adverse impact on the small business 
community, and forgo any further analysis.

    Unfortunately, we note that federal agencies are all too 
quick to certify that regulatory proposals will not impact 
small business, or that the impacts will not be significant. 
This is a serious problem and unfortunately courts typically 
rubberstamp these certifications so long as they are not 
``arbitrary or capricious.'' This is an extraordinary low bar 
for the certifying agency may explain why federal agencies all 
too often include conclusive language--with little or no 
analysis--certifying that proposed rules will not have 
significant adverse impacts.

    For this reason, NFIB submits that Congress should consider 
measures to put more teeth in the RFA and SBREFA. We note that 
the House of Representatives has already passed the Regulatory 
Flexibility Improvements Act (H.R. 2542). We believe the 
provisions in this legislation would have presented the 
Agencies from ignoring their requirements under the RFA.

    In any event, NFIB maintains that the current forms of the 
RFA and SBREFA should be understood as imposing an affirmative 
requirement to seriously consider the economic impact of the 
proposed regulation. Unfortunately, the Agencies appear to have 
given short-shrift to this requirement in the present case. In 
this instance, the Agencies have proposed a rule that will have 
clear significant economic impacts on many small businesses 
throughout the country, but the Agencies have certified that 
there will be no adverse impact. The Agencies base this 
certification on the errant assertion that the proposed rule 
will actually narrow the CWA's jurisdiction--an assertion that 
is plainly contradicted by the record.

    The proposed regulations will plainly expand the CWA's 
jurisdictional reach as a matter of law. And as a matter of 
fact, the Agencies acknowledge elsewhere in the record that the 
proposed regulation will result in at least a three percent 
increase in jurisdictional wetlands. NFIB believes the three 
percent estimate is far too conservative; however, in any 
event, it patently contradicts the Agencies' RFA certification 
that the rule will not hurt small business.

    The proposed rule will have direct adverse impacts on many 
small businesses

    The Agencies are pursuing a significant expansion of 
federal CWA jurisdiction, which will necessarily exert more 
government control over private properties--including many 
owned by small businesses. As a result, the proposed rule will 
have severe practical and financial implications for many. This 
is because a business owner cannot make economically beneficial 
uses of his or her land once it is considered a jurisdictional 
wetland. And if an owner proceeds with a project on a portion 
of land that might be considered a wetland, the owner faces the 
prospect of devastating fines--up to $37,500 per day.

    Consequently, most landowners--especially small 
businesses--will be forced into keeping their properties 
undeveloped. If the purported jurisdictional wetland covers the 
entire property, the owner may well be dined the opportunity to 
make any productive or economically beneficial use of the 
property. In some cases, it may be possible for the owner to 
obtain a permit to allow for development; however, there is no 
guarantee a permit will be issued. Moreover, for small business 
owners and individuals of modest means, such a permit is 
usually cost prohibitive. Indeed, the Supreme Court noted, in 
Rapanos v. United States, that the average CWA permit costs 
more than $270,000.

    While multinational corporations with tremendous capital 
resources might be able to afford such costs, most small 
businesses are without recourse. 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 can neither afford necessary permits, 
nor legal representation to challenge improper jurisdictional 
assertions--lawsuits challenge these assertions are fact 
intensive and extremely costly to litigate.

    The proposed rule will also have indirect adverse impacts 
on many small businesses

    Even in the absence of an affirmative assertion of CWA 
jurisdiction, landowners will be more hesitant to engage in 
development projects or to make other economically beneficial 
uses of their properties if the proposed rule is approved. 
Landowners are already aware that federal agencies have taken 
an aggressive posture in making jurisdictional assertions in 
recent years. And now that the Agencies have proposed this 
rule, it is apparent that they are taking an even more 
aggressive approach to jurisdictional issues--a signal that 
landowners can expect greater enforcement actions in the 
future.

    NFIB already receives questions and concerns from small 
business owners who are worried about whether the Agencies have 
jurisdiction over their properties. And we expect to hear from 
many more concerned individuals if the proposed rule is 
finalized. Indeed, under the proposed rule a landowner may have 
legitimate cause for concern if--at any point during the year--
any amount of water rests or flows over a property.

    And contrary to the Agencies' assertions, the proposed rule 
will do little or nothing to make CWA jurisdiction clearer for 
most properties. The reality is that landowners will have to 
seek out experts and legal counsel--which gets costly quickly--
before developing on any segment of land that occasionally has 
water overflow. And, the only way to have definitive clarity is 
to seek a formal jurisdictional determination from the 
Agencies, which costs more money and further delays development 
plans.

    Of course, in the absence of a formal jurisdictional 
assessment, property owners proceed at their own risk if they 
wish to use portions of their property that might be viewed as 
jurisdictional. Indeed, they face ruinous fines of up to 
$37,500 per day if they errantly begin filling in--or 
dredging--land that the Agencies believe is a jurisdictional 
wetland. And for this reason any property that might be viewed 
as containing a jurisdictional wetland will be greatly 
devalued. In addition, even if the property owner is found to 
be in the right, he or she may use all their assets fighting to 
prove this fact.

    The Proposed Regulation Radically Expands CWA Jurisdictions

    NFIB views the proposed rule as a jurisdictional land-grab. 
It should be remembered that the Agencies are not writing on a 
blank slate here. The Supreme Court has made clear that there 
are constitutional limits on the jurisdictional reach of the 
Clean Water Act. The Agencies have been repudiated for 
overreaching in the past, and will be again if the proposed 
regulation is understood as reaching beyond the constitutional 
limitations recognized in Rapanos.

    There are undoubtedly grounds for disputing how far CWA 
jurisdiction reaches on a case-by-case basis; however, there is 
no question that Rapanos set the outer-limits. The Agencies 
cannot exceed those limits any more than Congress could. And 
for several reasons, NFIB believes the proposed regulation go 
beyond what the Rapanos tests allow. NFIB views the proposed 
rule as a jurisdictional land grab. For the reasons set forth 
below, we maintain the proposed regulation are inconsistent 
Rapanos and should therefore be amended or abandoned entirely.

    This is not an exhaustive list of our legal concerns over 
the jurisdiction the Agencies propose to assert. NFIB will 
provide a more detailed explanation of these concerns in our 
formal comments to the Agencies. We will be sure to provide the 
Committee with those comments once they are filed.

    (1) The Proposed Regulation Lowers the Threshold for 
Proving Navigability

    The proposed regulation defines ``traditional navigable 
waters'' as any waters that are used for commerce or that could 
be used for commerce in the future. But the proposed regulation 
would effectively expand CWA jurisdiction by lowering the 
threshold for demonstrating the potential for navigable use in 
commerce. Specifically, the proposed regulation provides that 
the potential for commercial navigation ``can be demonstrated 
by current boating or canoe trips for recreation or other 
purposes.'' While the proposed regulation suggests that the 
Agencies' assessment must take into account physical 
characteristics of the waterway, it ultimately provides that 
the water will be viewed as ``traditional navigable waters'' if 
there is any evidence that a watercraft can navigate the 
waterway. This would seemingly justify the Agencies treating 
any waterway as ``traditional navigable water'' if any party 
can succeed in a single downstream trip--an approach that we 
think is far too easy to satisfy.

    (2) The Proposed Regulation Disregards Whether Interstate 
Waters are Navigable

    The proposed regulation inappropriately treats all 
interstate waters as ``waters of the United States,'' 
regardless of whether they are in fact navigable, or even 
``connect[ed] to such waters.'' But, the Supreme Court has made 
clear that jurisdiction may not be assumed in this manner. To 
assert jurisdiction, an agency must demonstrate that there is a 
connection to traditional interstate navigable waters. And the 
potential for commercial navigation must be proven in fact.

    (3) The Proposed Regulation Distorts Justice Kennedy's 
`Nexus Test'

    The proposed regulation expands CWA jurisdiction by 
distorting Justice Kennedy's ``significant nexus test,'' such 
that it will liberally justify jurisdictional assertions beyond 
what the test would allow for if properly applied. The result 
is an expansion of CWA jurisdiction. It does so in three ways. 
One way is that the proposed regulation misstates the 
significant nexus test by replacing the conjunctive word 
``and'' with the disjunctive word ``or,'' when listing the 
different factors to be considered in determining whether the 
subject wetland has a sufficient nexus to traditional navigable 
waters. The proposed regulation also seeks to lower the 
threshold for satisfying the significant nexus test by stating 
that the test will be satisfied if it can be demonstrated that 
the chemical, physical or biological effect on jurisdictional 
waters is more than ``speculative or insubstantial.'' Finally, 
the proposed regulation changes the significant nexus test by 
expanding the definition of ``region.''

    (4) The Proposed Regulation Asserts Jurisdiction Over 
Anything with a High Water Mark

    The proposed regulation provides that any ``natural, man-
altered, or man-made water body'' with an ordinary high water 
mark will be considered a tributary. This requires the Agencies 
to assert jurisdiction over practically any land over which 
water occasionally flows. But, both Rapanos tests rejects such 
an expansive interpretation of CWA jurisdiction.

    (5) The Proposed Regulation Places the Burden on the 
Landowner to Disprove Jurisdiction

    The most fundamental problem is that the proposed 
regulation operates so as to create a presumption of 
jurisdiction--a presumption that may not bear out in practice. 
This is highly problematic because the burden should not be on 
the landowner to disprove CWA jurisdiction. The burden should 
rest on the Agencies to prove the existence of a ``significant 
nexus'' in any given case.

    The small business community needs more time to comment on 
the proposed rule

    NFIB believes that because of the substantial increase in 
jurisdiction under the proposed rule and its technical nature, 
the small business community needs an additional 90 days to 
adequately comment on the proposed rule.

    Specifically, NFIB is attempting to reach out to its 
membership to understand the full impact of this rule. In order 
to do that, we have to first educate our membership on its 
scope. This will take substantial time to do satisfactorily. In 
addition, NFIB's Small Business Legal Center has filed a 
Freedom of Information Act request with the Agencies seeking 
information about how the Agencies determined they could 
certify the rule as not having a significant impact. We believe 
the NFIB Legal Center needs additional time to receive and 
review these materials, in order to properly comment on the 
certification.

    Only Congress can fix the CWA's jurisdictional pitfalls

    As Justice Alito noted in the Sackett v. EPA, the ``reach 
of the Clean Water Act is notoriously unclear.'' This is 
undoubtedly true. The Supreme Court has addressed CWA 
jurisdictional questions on three different occasions. But, the 
exact reach of the CWA remains a murky question--so much sot 
hat some legal scholars contend that the CWA is 
unconstitutionally vague because the regulated community cannot 
readily determine whether a given property is, or is not, a 
jurisdictional wetland.

    While it is commendable that the Agencies apparently seek 
to resolve some of the confusion over the jurisdictional reach 
of the CWA in the proposed regulation, our view is that only 
Congress can fix this problem. The proposed regulation would 
resolve the vast majority of jurisdictional disputes by 
applying categorical rules, which will result in expansive 
assertions of jurisdiction. But Rapanos makes clear that 
categorical assertions of jurisdiction must be rejected. It is 
simply beyond the authority of the Agencies to expand CWA 
jurisdiction through the rulemaking process in a manner that 
conflicts with the jurisdictional tests set forth in Rapanos 
and her progeny.

    Therefore, NFIB believes action by Congress is necessary to 
ultimately provide the type of clarification that would allow 
small business owners to operate without fear of unknowingly 
violating the CWA.

    Conclusion

    NFIB greatly appreciates the efforts of the Committee to 
hold the Agencies to account on its requirements under the RFA. 
The Committee has demonstrated great leadership in expressing 
to the Agencies the tremendous impact this rule will have on 
small businesses across America.

    Thank you again for the opportunity to provide this 
statement for the record. NFIB remains eager to work with 
members of the Committee to ensure that the Agencies operate 
within the bounds Congress clearly intended. We also look 
forward to working with the Committee to help ensure that the 
Agencies adhere to their responsibilities under the RFA in all 
of its current and future rulemakings.

[GRAPHIC] [TIFF OMITTED] T8042.009

[GRAPHIC] [TIFF OMITTED] T8042.010

[GRAPHIC] [TIFF OMITTED] T8042.011

[GRAPHIC] [TIFF OMITTED] T8042.012

[GRAPHIC] [TIFF OMITTED] T8042.013

    May 29, 2014

    The Honorable Sam Graves
    Chairman
    Small Business Committee
    U.S. House of Representatives
    Washington, DC 20515

    The Honorable Nydia M. Velazquez
    Ranking Member
    Small Business Committee
    U.S. House of Representatives
    Washington, DC 20515

    Dear Chairman Graves and Ranking Member Velazquez:

    On behalf of Trout Unlimited's (TU) 153,000 members 
nationwide, I am writing to provide testimony for your hearing 
today titled: ``Will EPA's Waters of the United States Rule 
Drown Small Business''? I ask that you please include our 
letter in the hearing record.

    The premise of the hearing appears to be that the recent 
Army Corps of Engineers and EPA proposal on defining the waters 
of the U.S. would, if finalized, be harmful to small 
businesses. TU strongly supports the proposed rule because it 
will clarify and strengthen the very foundation of the Clean 
Water Act's protections for important fish and wildlife 
habitat. Based on our long experience and the detailed economic 
analysis completed by the agencies and Office of Management and 
Budget for the proposal, we believe that many small businesses 
will benefit from the rule. We urge Committee to take a closer 
look at the proposal and discuss it with the many small 
businesses around the nation which rely upon health of the 
waters of the U.S. We urge the Committee to approach this topic 
with an eye towards making suggestions that will improve the 
rule. When you do, we believe you will find this proposal to be 
worthy of your support.

    The Clean Water Act is very valuable to TU. Our mission is 
to conserve, protect and restore North America's trout and 
salmon fisheries and their watersheds. Our volunteers and staff 
work with industry, farmers, and local, state and federal 
agencies around the nation to achieve this mission. On average, 
each TU volunteer chapter annually donates more than 1,000 
hours of volunteer time to stream and river restoration and 
youth education. The Act, and its splendid goal to ``restore 
and maintain the chemical, physical, and biological integrity 
of the nation's waters'' serves as the foundation to all of 
this work. Whether TU is working with farmers to restore small 
headwater streams in the Mississippi River watershed in 
Wisconsin, removing acidic pollution cause4d by abandoned mines 
in Colorado, or protecting the world famous salmon-producing 
watershed of Bristol Bay, Alaska--and its 14,000 jobs--the 
Clean Water Act is the safety net on which we rely.

    Unfortunately, the nation's clean water safety net is 
broken, and if you appreciate clean water and the Clean Water 
Act, then you will appreciate the agencies' efforts to resolve 
the law's most fundamental question: which waters are--and are 
not--covered by the Clean Water Act.

    Over the last decade, a series of Supreme Court decisions 
have weakened and confused these protections. The Army Corps 
and EPA proposal takes important steps to clarify and restore 
protections to intermittent and ephemeral streams that may only 
flow part of the year, as well as isolated wetlands. These 
intermittent and ephmeral streams provide habitat for spawning 
and juvenile trout, salmon, and other species, and protecting 
these streams means protecting the water quality of larger 
rivers downstream. Thus, sportsmen strongly support the 
reasonable efforts embodied in the proposed rule to clarify and 
restore the protection of the Clean Water Act to these bodies 
of water where we spend much of our time hunting and fishing.

    I hope that the Committee recognizes the fact that, because 
of the uncertainties caused by the Supreme Court cases, a 
rulemaking was sought by many business interests, as well as by 
Supreme Court Justice Roberts who presided over the Rapanos 
decision which necessitated clarity over the Clean Water Act's 
jurisdiction.

    I also urge the Committee to recognize that the proposal 
works to clarify what waters are not jurisdictional. The 
proposed rule and preamble reiterates all existing exemptions 
from Clean Water Act jurisdiction, including many farming, 
ranching, and forestry activities. These exemptions include 
activities associated with irrigation and drainage ditches, as 
well as sediment basins on construction sites. Moreover, for 
the first time, the proposed rule codifies specific exempted 
waters, including many upland drainage ditches, artificial 
lakes and stock watering ponds, and water filled areas created 
by construction activity.

    Small businesses lose when the water that communities rely 
on is polluted, or is at risk of being polluted. The very 
unfortunate chemical spill in the Elk River in West Virginia 
earlier this year makes this point crystal clear. During that 
event, thousands of West Virginians could not drink or utilize 
their waters. They could not fish in or recreate in their home 
waters.

    Conversely, small businesses win with clean water and 
healthy fish habitat. Hunting and fishing collectively 
represent a $200 billion a year economy, supporting 1.5 million 
jobs. These economic benefits are especially pronounced in 
rural areas, where money brought in during the hunting and 
fishing seasons can be enough to keep small businesses 
operational for the whole year. Through licenses, fees and 
excise taxes on sporting equipment, sportsmen also pay hundreds 
of millions of dollars each year for fish and wildlife 
management, habitat conservation, and public access. This 
economic engine runs on clean water.

    The prosperous connection between clean water and small 
business occurs across the nation many times over, but the 
guiding and outfitting business owned and operated by my friend 
Tim Linehan and his wife Joanne in Libby, Montana is a great 
example. Tim and his partners guide hundreds of anglers from 
around the U.S. who come to fish the beautiful Kootenai and 
Yaak rivers. Tim's business employs people in Libby directly, 
and the purchases he makes to keep the businesses running are 
made throughout Montana and across the nation in terms of 
fishing equipment and boats that he uses to run the business. 
Tim knows the value of clean water to his business and he is a 
passionate conservationist because of it. He is part of sport 
fishing business that yields an estimated $340 million dollars 
in Montana each year. It is the same story in many parts of 
U.S. Whether it is the sport fishing businesses associated with 
the outstanding fisheries of Missouri, the exciting steelhead 
fisheries of the rivers in northeastern Ohio, or the gold medal 
trout streams of Colorado, clean water and great fishing mean 
strong business opportunities.

    In January of 1991, I testified before this committee on a 
very similar issue, a proposal to revise and improve the Clean 
Water Act wetlands delineation manual used by these same 
agencies to define what were--and what were not--jurisdictional 
wetlands. I defended the Bush Administration's efforts to 
improve the manual so that it would be a better tool for 
scientifically defining wetlands and providing more certainty 
for regulated businesses. Many of the Small Business committee 
members who participated in the 1991 hearing complained about 
the agencies' proposal. They said that it was a federal land 
grab, and that it would lead to regulation of mud puddles and 
bird baths. Sound familiar? The agencies proposal that is 
before us today is not about--as it was not in 1991--a federal 
land grab, nor an effort to regulate bird baths. It is about a 
worthy effort to make a great law, the Clean Water Act, work 
better to protect the waters of the U.S.

    Now 40 years old, the Clean Water Act has come to a major 
crossroads. The agencies which Congress authorized to implement 
the Act, spurred by the Supreme Court itself and a wide range 
of stakeholders, have put forth a proposal that will help 
strengthen the very foundation of the law for years to come. As 
you scrutinize the proposal, we urge you and the Committee to 
strongly consider the views of sportsmen and women, and the 
many small businesses that they sustain with their purchases, 
and support the reasonable and science-based efforts of the 
Corps and EPA to clarify and restore the Act's jurisdictional 
coverage.

    Thank you for considering our views,

    Steve Moyer
    Vice President for Government Affairs
    Trout Unlimited

    [GRAPHIC] [TIFF OMITTED] T8042.014
    
    [GRAPHIC] [TIFF OMITTED] T8042.015
    
                                 
