posted on 07.08.14

On June 23, the U.S. Supreme Court allowed the Environmental Protection Agency (EPA) to regulate greenhouse gas (GHG) emissions from stationary sources, such as manufacturing plants, but struck down its “Tailoring Rule” and rejected its attempt to regulate emissions from millions of manufacturing and other facilities.

“Today is a victory for the integrity of our regulatory process and rational limits on executive power,” said NAM Senior Vice President and General Counsel Linda Kelly. “The Supreme Court agreed with the NAM that the EPA may not regulate the entire economy by requiring burdensome new permits for millions of small and medium-sized manufacturers, schools, hospitals, office buildings, churches, warehouses, and other buildings.

The NAM’s Manufacturers’ Center for Legal Action led a coalition of more than 20 industry associations in challenging the regulations. It is very rare to convince the Supreme Court to hear a case, let alone rule in our favor, but our petition was accepted for review.

The ruling is particularly important for small and medium-sized manufacturers. Their operations would have been subjected to long and expensive permitting requirements as the EPA expanded the regulation to smaller companies, but that option is no longer available to the agency.

Before embarking on its expansive suite of regulations, the EPA regulated about 300 large projects per year through its preconstruction permitting program. It sought to expand this authority to 6 million buildings, including virtually every manufacturer in the United States. The Supreme Court’s decision reined in this regulation, using an argument the NAM coalition has been making for four years.

It also rejected the EPA’s attempt to validate its regulatory overreach by rewriting unambiguous statutory terms, an effort that would have subjected many manufacturers to citizen suits to halt operations and to impose civil penalties of $37,500 per day of violation.

The EPA, however, is considering further GHG regulations for new and existing power plants and will attempt to expand its efforts further in the future. Manufacturers encourage the agency to heed the warning of the Supreme Court that it may not “bring about an enormous and transformative expansion in the EPA’s regulatory authority without clear congressional authorization,” according to its ruling.

Our substantial victory is a testament to how hard work and perseverance can help manufacturers ultimately secure some degree of relief in the judicial branch from regulatory overreach of all kinds.

Click here for the NAM press statement and here for our summary of the case.

This government update provided in partnership with the National Association of Manufacturers.