Henry Brick
Apr 28, 2016 - 10:30am

How EPA is Smothering 5 Small Businesses

Former Executive Director, Communications & Strategy

Our country’s small businesses aren’t wanting for challenges. Capital and talented workers are hard to come by, technology is advancing more and more quickly, our nation’s tax code and health care system are a mess, and the economy can’t seem to sustain any sort of real momentum. It’s hard enough for entrepreneurs to simply stay in business, let alone expand and create jobs.

So why on earth do environmental regulators seem on hell-bent on making their jobs even harder?

The Environmental Protection Agency has in recent years proposed and in some cases finalized a flurry of onerous new regulations that aren’t merely sticking a thorn in the sides of small companies, they’re downright driving them out of business. It’s not merely one or two sectors that have been clobbered by the new rules, either. It’s everyone from farmers to manufacturers to energy producers to construction companies. Nor are the ripple effects limited to certain areas of the country; the federal agency’s wrath is being felt by small businesses from coast to coast.


The agency’s Waters of the United States (WOTUS) rule, for instance, is threatening agricultural business owners like Jack Field, a cattle rancher in Yakima, Washington. A second-generation rancher, Field currently leases pastures from local landowners to run his 120 cattle, but under WOTUS – which vastly expands the definition of federally protected water and gives federal regulators unprecedented authority over local land use – that leasing model may not be sustainable. From our earlier story:

Under the rule… the agency can claim jurisdiction over any “waters” that are deemed to be adjacent to streams, wetlands and creeks, essentially stripping away broad regulatory power from states  and local jurisdictions. In the process, the EPA has opened landowners and ranchers up to a host of new permitting requirements, as well as potentially devastating fines and lawsuits.

“For the price of a postage stamp, someone who disagrees with eating red meat could now throw me into court, where I will have to spend time and money proving that I am not violating the Clean Water Act,” Field told the House Small Business Committee at a hearing last year. “I don't think this is what anyone had in mind when Congress passed the Clean Water Act.”

With the added liability, it’s not surprising that landowners who have leased Field their property in the past have expressed concerns about his operations moving forward.

“It may very well end up that landlords decide that my cattle grazing activity now has too high a risk profile under this new rule, and they may no longer want to rent the land to me,” Field said in an interview. “If that’s the case, and I can’t find somewhere to run my cattle, I’ll have to get rid of them that’s just the way it works. I’m not sure what we would do then.”

Read the rest of Field’s story here.

On the other side of the country, Drew Greenblatt had been planning an expansion of his small manufacturing company, Marlin Steel, based in Baltimore, Md. However, EPA’s new ozone rules threaten to throw a wrench in those plans, under which Greenblatt was expecting to expand his manufacturing space by 53 percent and hire 15 new workers, as our earlier story explained:

[Under new ozone rules], many of the manufacturing and industrial firms that Marlin Steel counts as customers will see their regulatory compliance costs skyrocket as communities are forced to lower pollution levels even further than they already have (ozone levels have already dropped by a third since 1980). Every dollar spent complying with the new rules is one less dollar those manufacturers have to invest back into their firms and purchase new machinery.

Only when those manufacturers are expanding and investing in new machines do they need more steel containers (like the ones Greenblatt sells) to move goods from machine to machine within their factories. Thus, only when they're expanding does Marlin Steel have customers.

Several longtime clients have already told Greenblatt that the EPA’s new ozone rules will put a freeze on any expansion or investment plans they had in the works.

“My clients are going to clamp down, and my phone is going to stop ringing” Greenblatt said. “When they hit pause, we have to hit pause, too, and as a result, we’re simply not going to be able to expand and hire as much as we had planned.”

Read the rest of Greenblatt’s story here.

Moving to the Midwest, John Cooper, a former mechanic in the Marine Corps, has spent the past fifteen years working for Ameren, an energy utility company in the Midwest, moving up the ladder from a laborer back in 2000 to the plant’s supervisor today. However, another cumbersome EPA regulation has put his and the rest of the plant’s workers’ jobs in serious jeopardy:

Last year, Ameren announced plans to close the Meramec site, the smallest of the company’s remaining coal-powered plants, by 2022. While the company has cited a number of factors that played into the decision, executives acknowledged that the Environmental Protection Agency’s new, much more strict carbon emission limits for power plants -- which had been proposed one month before Ameren’s announcement -- made it “clearer” the facility would have to close. In fact, the site may be shuttered even sooner depending on how the rules are implemented.

Cooper took notice.

“I have a real concern about the speed at which the changes being implemented by the Clean Power Plan will affect my work location and my life,” Cooper wrote in a comment submitted to the EPA after the agency first proposed the standards last year. “I understand environmental change is coming and I wholeheartedly accept that it is our generation’s responsibility to turn the corner on our lasting effects on the environment. However, you also need to understand that not only is our environment at stake but also the livelihoods of thousands of utility workers and the tax revenues these facilities provide.”

We're simply not going to be able to expand and hire as much as we had planned." 

Drew Greenblatt, President of Marlin Steel

His lone request to the EPA? “For myself and my family, I only ask that you be patient and understanding of our plight and please try to work with my company and the many others like us to help make this transition as painless possible,” Cooper wrote.

Instead, the agency has done precisely the opposite. Officials moved with reckless abandon to implement the new emissions standards, recently issuing a final rule without even taking into account sufficient input from the small business community, as is required by federal law.

Read the rest of Cooper’s story here.

Staying in America’s heartland, new EPA rules finalized late last year have clobbered small brick manufacturers across the country, pouring salt in the wounds of an industry that has already been struggling in recent years. The regulations will require brick makers to purchase and install expensive new equipment that regulators hope will slightly reduce their plants’ mercury output and emissions of so-called particulate matter – basically, a mix of dust, dirt, and smoke particles. The rules have pushed Davis Henry’s 60-person brick company in Selma, Ala. to the brink of closure:

“Our regulators are targeting an industry that has been absolutely crippled by the recession,” said Henry, noting that his company has already had to shut down one of its two brick kilns (a reflection of the downward trend across the brick industry, which is currently operating at less than 50 percent capacity). He pointed out that “a bank is not going to invest millions into a business for something that isn’t going to increase sales one bit and will instead drag down its profits."

Once the rules are finalized, Henry and other brickmakers will have three years to come up with a plan to comply. Henry, his brother and the rest of his management team are mulling their options. But as it stands now, the outlook appears bleak.

“The worst case scenario is that we can’t find a way to avoid these new requirements, a bank won’t give us a loan, and in three years’ time, if we haven’t sold the company, we would just have to cease operations,” he said. “I mean, that’s the worst case scenario: We would have to close the business.”

Read the rest of Henry’s story here.

Some 800 miles to the north, Janet Kaboth’s small brick business is facing a similar fate. Her 100-year-old company based in Alliance, Ohio, which has always made a concerted effort to hire workers who would likely have a difficult time finding employment elsewhere, could be on the hook for $5 million in upfront technology investments and as much as $1.5 million in additional operating costs every year moving forward. Kaboth elaborated:

“I would like to think that after almost 100 years of providing good employment, paying taxes, and being a responsible corporate entity that someone in our government could look at the cumulative effect of regulation compliance and help us,” she [told] Congress.

In Kaboth’s case, for EPA's rules alone, her 80-employee company would be required to purchase and install new equipment that would scrub some of the mercury and particulate matter emissions out of Whitacre Greer’s smokestacks. All told, the new systems will amount to a more than $4 million investment (equal to approximately a quarter of the company’s net worth) to scrub out only a few additional pounds of mercury – or for those counting, less than 1 percent of 1 percent of the amount of mercury currently embedded in American mouths.

“It’s not just that it’s a high cost,” she said. “It’s that it comes with so little benefit.” [...]

“It would be a shame, when you think about all the things we have gone through and all our company has survived over the past hundred years – recessions, wars, housing market crashes –  to be brought down by one regulation,” Kaboth said. “It just seems wrong. I don’t make the rules, though, so we’ll just have to do our best to keep surviving.”

Read the rest of Kaboth’s story here.

Unfortunately, these small business owners aren’t alone. The EPA’s regulatory machine has been steamrolling small companies in these and many other industries, and there’s no sign of it slowing down anytime soon. We have to pump the brakes on this overregulation and fundamentally reform the way federal rules are enacted, so that we help these small businesses grow and create jobs, rather than running them into the ground. 

About the Author

About the Author

Former Executive Director, Communications & Strategy

J.D. Harrison is the former Executive Director for Strategic Communications at the U.S. Chamber of Commerce.