We study how state environmental review laws (SEPAs) shape local business activity. Using a stacked, border-pair event design around staggered SEPAs, we compare adjacent counties on either side of state lines. SEPA-side border counties experience slower post-adoption establishment and employment growth that cumulates into persistent level losses over two decades, with no mirror-image gains across the border and no broad underperformance in state interiors. Effects are strongest for SEPA-treated counties that border large metro areas or counties with substantial financial industries as well as when SEPAs have more economic bite. The SEPA-induced reduction in business growth falls most on pollution-intensive sectors and entirely among small firms. Overall, our findings suggest that local environmental regulations can erode local agglomerations, adversely affecting local small business growth.