Supreme Court Has Two Chances to Protect Small Business
Small businesses are counting on the Supreme Court this month. In two cases, the justices can either subject millions of job creators to reams of red tape and costly lawsuits, or they can reach the right decisions, keeping the engine of the American economy running at full steam.
The first case is County of Maui, Hawaii v. Hawaii Wildlife Fund, which the justices will hear on Wednesday. It centers on a dangerous and invalid expansion of federal power, foisted on small businesses by the liberal Ninth Circuit Court of Appeals.
The Ninth Circuit tried to unilaterally rewrite the Clean Water Act, ignoring the clear will of Congress. When Congress passed the law in the 1970s, lawmakers created a permitting process to regulate companies building in wetlands and limiting the discharge of pollutants into navigable waters. The system was straightforward and focused on the companies most responsible for pollution.
Yet the Ninth Circuit interpreted the Clean Water Act in radically different way. It declared that the law’s permitting requirements also cover activities that might affect the environment indirectly through underground aquifers. But Congress expressly refused to regulate this area, and even the Obama administration disavowed regulatory authority over groundwater. Importantly, aquifers are already regulated at the state level.
If the Ninth Circuit’s decision stands, ranchers, farmers, energy prospectors, and other companies operating in completely dry areas will suffer the consequences of over-regulation.
The costs alone could discourage businesses from building new facilities or making common-sense improvements to their lands. The fee system can run into the tens of thousands of dollars for the application, with similar or even larger sums due every year after that. The permitting system would also restrict how owners can use their land. Even something as simple as installing a septic tank could trigger cost-prohibitive federal permitting requirements for the smallest of companies.
Given Congress’ intent and the clear text of the Clean Water Act, the Supreme Court should roll back this overreach instead of extending it across the nation. Likewise, the justices should side with common sense in Comcast Corp. v. The National Association of African American Owned Media, scheduled for arguments on Nov. 13.
Here again, the case involves a troubling decision from the liberal Ninth Circuit, this one pertaining to racial discrimination. All parties involved agree that discrimination is wrong and already illegal. The Ninth Circuit, however, ruled that businesses can be sued for racial discrimination -- even if such discrimination wasn’t the motivating factor in their actions.
This flies in the face of decades of judicial reasoning, and it threatens small businesses with frivolous lawsuits. If this precedent stands, people will allege discrimination far more frequently, regardless of whether business owners acted inappropriately. Businesses would have a strong incentive to settle meritless claims rather than waste untold time and money on a months- or even years-long trial. The harm to job creation and economic growth would simply be massive.
The Ninth Circuit’s strange reasoning also contradicts the history of anti-discrimination laws enacted by Congress. Time and again, lawmakers made it clear that people can’t sue for harms caused by discrimination unless it was the decisive factor. The Ninth Circuit rejected this history, inviting lawsuits that will damage job creators who never acted in a racist way.
At the National Federation of Independent Business, we know these cases affect our members. Our typical member employs 10 people and reports gross sales of about $500,000 a year, meaning they’re neither able to deal with the regulatory costs of the first case nor the litigation costs of the second.
We urge the Supreme Court to reach the right decision in both. The law is clear, and so are the stakes for millions of small businesses.