Thomas M. Sullivan
Vice President, Small Business Policy, U.S. Chamber of Commerce

Published

July 12, 2023

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Updates:

For the latest on the Kentucky v. EPA case, visit this page.

  • On May 25, the Supreme Court decided Sackett v. EPA. The ruling was a complete victory.  The Court adopted the narrow reading of “waters of the United States” that the Chamber Litigation Center advocated in amicus briefs (at the cert and merits stage), holding that the term includes basically only streams, oceans, rivers, and lakes, and the wetlands that are visually indistinguishable from them.  This decision is an important step in removing some permitting barriers by clarifying and limiting the scope of “waters of the United States” and provides long overdue relief for companies and landowners across our nation.  After Sackett, there is no doubt that the Biden Administration’s most recent rule interpreting “waters of the United States” is unlawful.     
  • On May 11, the U.S. Court of Appeals for the 6th Circuit granted the Chamber’s request for relief halting enforcement of the new unlawful Waters of the United States rule during our appeal. Under the court’s temporary injunction, the EPA and the Army cannot enforce the rule within Kentucky, and against members of the Kentucky Chamber of Commerce, the U.S. Chamber of Commerce, and other business groups that challenged the rule.The rule is halted in 26 other states due to similar court decisions.
  • The appellate court noted that several of the plaintiffs’ members had attested to projects that would be affected by the rule. For example, a member of the Kentucky Chamber of Commerce stated that three projects are likely to be affected, and that fees associated with one project are expected to rise by more than 75%.  The court noted that if members “don’t take steps to maintain compliance, they risk significant fines and imprisonment.”

What is WOTUS?

Earlier this year, a new rule called Waters of the United States (WOTUS), was issued by the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers. The rule changed what types of activities and bodies of water fall under federal jurisdiction and require federal permits for farmers, home builders, and other landowners and businesses with plans to use their property.

The details: The WOTUS rule uses vague terms to define millions of acres of water and land features including ponds, farms, and backyards. Landowners, businesses, and farmers will likely need to hire consultants and experts to figure out whether they need permits to use their land—and may face severe penalties if they are wrong.

The state of play: The WOTUS rule is the latest iteration of several changes to the rules and regulations around waters of the U.S. that different Administrations have put forward over the past decade.

  • In the courts:  The U.S. Chamber of Commerce, the Kentucky Chamber of Commerce, and other associations filed a lawsuit in the U.S. District Court for the Eastern District of Kentucky against the WOTUS rule. The rule is also being challenged in several other lawsuits brought by states, farmers and landowners, and business groups. 
  • In Congress: Both the House and Senate passed a resolution to overturn the WOTUS rule in March. (The U.S. Chamber issued Key Vote! alert letters to the House and Senate prior to their votes.) The resolution was vetoed by President Biden and a House vote recently fell short of overriding that veto.

Why it matters: The WOTUS rule could affect projects in the pipeline for businesses large and small that work in agriculture, property development, mining, construction, energy, utilities, forestry, transportation, and landscaping.

It is a step backwards for promoting certainty and clarity in these regulations and would cause companies and property owners to delay or change plans completely. This is costly for all companies, but especially for small businesses that do not have consultants or regulatory experts on staff. Any major adjustments needed due to the new WOTUS rule could lead to projects becoming unprofitable or not going forward at all.

The U.S. Chamber’s lawsuit in Kentucky specifically challenged how agencies ignored the U.S. Chamber’s advice to appropriately consider impacts on small businesses while developing the WOTUS rule. A study from the U.S. Chamber of Commerce Foundation shows that U.S. businesses shoulder $1.9 trillion in annual regulatory compliance costs. For small businesses with 50 or fewer employees, the costs are nearly 20% higher than the average for all firms.  

Our take: The WOTUS rule is unlawful, and the U.S. Chamber supports the resolution that was introduced in the House to invalidate the rule. At a time when we need to rebuild our nation’s infrastructure, new regulations that make permitting slower and more expensive will be detrimental to the investments that the government has made in improving our roads and bridges.

“While the Administration has laid out ambitious climate and infrastructure goals, they will not be achievable with this Waters of the United States rule, which creates needless uncertainty and endless red tape and requires businesses of all sizes to navigate an expensive and time-consuming permitting process,” said Marty Durbin, Senior Vice President of Policy at the U.S. Chamber.

Additionally, the agencies chose to move forward with the new rule despite an impending Supreme Court ruling in the Sackett v. EPA case, which is expected to provide crucial guidance on the meaning of “waters of the United States.” The Administration should have waited to hear from the Supreme Court before issuing confusing, burdensome new regulations that are likely to be rendered out of date by the Court’s impending decision.

Natalie Kaddas, Chair of the U.S. Chamber’s Small Business Council, sent a letter to House Committee on Small Business Chairman Roger Williams and Ranking Member Nydia Velázquez explaining how the WOTUS rule does not comply with important legal requirements that require small business input on regulations of this kind. The letter included specific recommendations on how to prevent federal agencies from ignoring small business in future rulemakings.

The bottom line: This regulation is an example of how federal agencies ignore their obligation to consider and act on recommendations and information from small businesses when issuing federal regulations. 

About the authors

Thomas M. Sullivan

Thomas M. Sullivan

Thomas M. Sullivan is vice president of small business policy at the U.S. Chamber of Commerce. Working with chambers of commerce and the U.S. Chamber’s nationwide network, Sullivan harnesses the views of small businesses and translates that grassroots power into federal policies that bolster free enterprise and reward entrepreneurship. He runs the U.S.

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