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 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, when SEPAs have substantive provisions, and when states devote more resources to environmental protection, and they fall disproportionately on pollution-intensive sectors and small firms. In sum, local environmental regulations can erode local agglomerations, adversely affecting local small business growth.