Air Date: Week of March 23, 2001

Transcript

CURWOOD: It's Living on Earth. I'm Steve Curwood. If you've ever tried to start a small business in this country, chances are you've heard of the federal government's Small Business Administration. The SBA helps entrepreneurs borrow money for everything from rent payments to new equipment. But according to lawsuits filed by two environmental groups, SBA loans worth millions of dollars in the Washington, D.C., area and elsewhere are encouraging sprawl. From Washington, Tom Lalley reports.

LALLEY: Small businesses are the backbone of many communities in the Washington, D.C. area. And together, they're a powerful political force. So when Friends of the Earth and the Forest Conservation Council sued the Small Business Administration, or SBA, small business leaders leapt at the chance to defend the source of about $12 billion annually in small business loans. The suit asked that SBA stop making loans that contribute to sprawl.

ALFRED: Well, I saw the lawsuit as frivolous...

LALLEY: Harry Alfred is the president and CEO of the National Black Chamber of Commerce. Members of his organization rely heavily on SBA loans.

ALFRED: They're cutting off the tap for business revitalization and business growth. It's crazy. It is crazy and that's why we're going to fight this thing with all of our resources.

LALLEY: At a conference for budding small business people in Washington, D.C., Alfred and other speakers detail the nuts and bolts of how to get a business started. That includes taking advantage of SBA loans. To Alfred, small businesses are beautiful, whether they're in the heart of the city or in a strip mall at the edge of town.

ALFRED: Development should not be perceived as bad growth. What's wrong with growth? Growth is good, if it's proper and if it's manageable.

LALLEY: But to others, small businesses are a problem if they're located in sprawl. Some environmentalists say sprawl leads to reduced open space, increased traffic and auto pollution, and development that impacts water, air quality, and ecosystems. So the suit asks that SBA focus its loans in urban areas and away from undeveloped land. The legal hook for doing that is a federal law called the National Environmental Policy Act, or NEPA. Among other things, NEPA requires federal agencies to assess the environmental impacts of their actions, and then consider less environmentally harmful options. The law has mostly been used for large public works projects like highways and dams. It's never been applied to controlled sprawl. But John Talberth, a lawyer with the Forest Conservation Council, says the law covers SBA loans as well.

TALBERTH: The law is very clear in this regard, and I think the agency is aware that the law requires this. They just simply haven't been implementing the law at all.

LALLEY: SBA won't say whether or not it's complying with NEPA. Eric Benderson is the assistant general counsel for litigation for SBA.

BENDERSON: I'd rather leave that to the litigation.

LALLEY: Benderson says he can't say whether SBA is following the law, because, he says, one person's sprawl is another person's progress. It can also be hard to tell which loans might cause sprawl. For instance, SBA rarely gives loans to housing developers. But SBA does give loans to cabinetmakers hired by housing developers. So, does the cabinet maker contribute to sprawl? Another problem is that SBA doesn't employ environmental experts who can assess the agency's impacts, and Benderson worries that if SBA turns a loan applicant down over sprawl, that applicant might have good cause to sue SBA.

BENDERSON: It's kind of hard for SBA to set itself up as the final arbiter on what urban sprawl is, you know, in terms of clean air. And therefore, for us to come in at this point and say "Well, wait a minute, you know, we don't think you should develop it there, we think you should develop it five miles down," those aren't questions that SBA has really expertise in. So, it's a very kind of elusive issue, easier said than done.

LALLEY: But it's not as elusive for others who point to the fact that many parts of the federal government routinely do environmental assessments to comply with NEPA, including some agencies that give out loans, like the U.S. Economic Development Agency and the Department of Housing and Urban Development. James Kunsler is the author of Home From Nowhere and an outspoken critic of sprawl. He says the federal government needs to acknowledge the role it plays in creating sprawl.

KUNSLER: Between the regulations and the amount of real estate that's controlled by the government, there are really huge impacts on our everyday environment. The government needs to get signals from somewhere that it's doing things the wrong way. You know, this is the form of an official notification through the courts that the citizens are unhappy with the way that the government is doing something.

LALLEY: Friends of the Earth and the Forest Conservation Council are sending that signal to other federal agencies, as well. They filed two more suits, one against the U.S. Army Corps of Engineers, whom they say give too many permits for sprawl development that destroys streams and wetlands in the D.C. area. They've also sued the Government Services Administration, which builds and leases property for federal workers. Again, John Talberth.

TALBERTH: Forest Conservation Council and Friends of the Earth, as part of our program, are undertaking a review of all the urban growth and development programs of all federal agencies. And we found a widespread pattern of violation of the National Environmental Policy Act.

LALLEY: Friends of the Earth and the Forest Conservation Council are now engaged in talks with SBA to settle the case out of court. If that happens, it could entail requiring SBA to come up with smart growth guidelines for their loans. For Living on Earth, I'm Tom Lalley in Washington, D.C