Suit Seeks SBA Reform on Urban Sprawl

Suit Seeks SBA Reform on Urban Sprawl

In a novel move designed to slow the nationwide spread of urban sprawl, two conservation groups are suing the U.S. Small Business Administration for allegedly violating federal environmental laws by not considering the impacts of its lending practices.

Lawyers for the Forest Conservation Council and Friends of the Earth filed the lawsuit on Thursday in Washington, DC Federal District Court.

While the lawsuit was specifically tailored to curb urban sprawl in the District of Columbia metropolitan area, its real intent is to pressure the Small Business Administration into adopting more environmentally sensitive lending policies nationwide, said the Forest Conservation Council's John Talberth.

"This is a whole new approach to combating urban sprawl," said Talberth, who noted that the environmentally devastating phenomenon is traditionally fought at the state and local level. "This is a unique approach that looks at the role of the federal government."

According to the two environmental groups, the Small Business Administration (SBA) is fueling urban sprawl by providing hundreds of millions of dollars for construction and expansion of businesses located in sprawling, low density suburbs without considering the consequences of those loans.

The groups maintain that the projects made possible through these loans are directly contributing to a host of environmental ills, such as air and water pollution, loss of prime farmland, loss of forest cover, congestion, noise, and increased infrastructure costs for local governments.

By filing the lawsuit, the environmental organizations hope to encourage the SBA to reform its lending practices to lessen the impacts of sprawl in the Washington area and elsewhere, Talberth said.

"Between 1997 and the present, the Small Business Administration provided $391 million in support to businesses in Washington's suburban periphery," Talberth said. "A significant portion of these funds were allocated to fast food restaurants, mini-marts, mall outlets, and other hallmarks of urban sprawl. We believe the SBA should be a partner in promoting smart growth, and not a prime contributor to chaotic, unplanned development."

Specifically, the lawsuit alleges that the Small Business Administration is violating the National Environmental Policy Act (NEPA) and its own regulations by failing to disclose and mitigate the effects of its lending programs on urban sprawl in the Greater Washington DC metropolitan area. The lawsuit seeks an immediate suspension of SBA loan decisions that are contributing to urban sprawl.

In their suit, the groups charge that the Small Business Administration routinely fails to examine the environmental consequences of its sprawl inducing decisions in the context of the NEPA process. An analysis of the environmental impacts of the Small Business Administration's actions is required under the federal statute and SBA's own regulations.

"According to information provided to us by SBA, it is clear that the agency has blatantly ignored its obligations under the National Environmental Policy Act," said Brian Dunkiel, Friends of the Earth's senior attorney.

"Each year, the DC Metro Area SBA offices make tens of millions of dollars in loan and loan guarantees without contemplating whether these decisions are contributing to a decline in the quality of the environment. Like any other federal agency, the SBA is subject to federal environmental laws that are in place to protect people and the environment," Dunkiel said.

The lawsuit asks the court to order the Small Business Administration to perform both site specific and programmatic environmental analyses of its loan decisions. The complaint also asks the court to enjoin the SBA from granting any more sprawl inducing loans until the agency is prepared to conduct the environmental analyses.

The environmental groups have called on the SBA to develop a set of smart growth guidelines that would be used to mitigate the environmental impacts of its future lending decisions. Under the National Environmental Policy Act, projects that detrimentally affect the environment are required to have such mitigation measures.

Talberth said these mitigation measures could take many forms. For example, a business might have to agree to implement energy and water conservation measures before it would become eligible to receive a SBA loan. Other mitigation measures might have the appearance of traditional zoning laws, whereby business development would be limited to an already impacted urban core area, Talberth added.

The lawsuit filed this week comes in the wake of a letter sent to the Small Business Administration last July, in which the two environmental groups asked the agency to comply with its obligations under federal environmental laws. The environmentalists also sat down with SBA officials in an attempt to reach an out of court agreement.

But neither of those approaches worked, said Dunkiel.

"SBA had the opportunity to voluntarily comply with its legal obligations and become an organization promoting smart growth," said Dunkiel. "Unfortunately, it is clear that court intervention will be required to ensure that SBA executes its programs in a way that appropriately considers how its actions contribute to sprawl and impact the environment."

According to Talberth, the groups are prepared to file additional lawsuits in other sprawl prone areas of the country in order to make their point.

"We are preparing other similar suits in different areas, but we're hoping we don't have to go that far," Talberth said. "We're hoping we can convince the federal government to revamp all of its programs that contribute to economic development so that they're consistent with the idea of promoting sustainability."

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