NFIB Strikes Down EPA Regulations in the Supreme Court

Date: June 24, 2014

Small Business Spared From EPA Permitting Requirements for Greenhouse Gas Emissions

The Supreme Court’s decision in Utility Air Regulatory Group v. EPA was a mixed blessing for small business. Much of the coverage has emphasized the fact that the Supreme Court upheld regulation of greenhouse gas (GHGs) emissions from major industrial facilities under the Clean Air Act (CAA). To be sure the New York Times quotes NFIB Legal Center’s Executive Director, Karen Harned, in an article proclaiming: “Justices Uphold Emission Limits on Big Industry.” Yet the decision was a victory for small business because we succeeded in striking down regulatory provisions that would have imposed costly permitting requirements on many small businesses.

The bottom-line was that EPA was interpreting the CAA in a manner that would have potentially required hundreds of thousands of small entities—for example hotels, or fast-food restaurants—to install costly emission reduction technologies, or face the prospect of lawsuits. And the liabilities would have been huge: $37,500 per day for non-compliance. Writing for the majority, Justice Scalia noted that EPA’s approach to the CAA would have resulted in a radical expansion of the Agency’s regulatory powers. Whereas before only 15,000 entities were subject to CAA permitting requirements, EPA’s approach would—if fully enforced—have required about 6.1 million entities to acquire permits. As EPA acknowledged, most of them would have been smaller entities.

Of course, EPA recognized that it had a problem because it was clear that Congress never intended for the CAA to apply to small business. So to make EPA’s regulatory proposals seem more reasonable, EPA took the position that the Agency would essentially exempt small businesses from direct CAA permitting requirements. But EPA maintained that it might very well drop the exemption at some later date, and the Agency was explicitly reserving the right to regulate GHG emissions from small entities in the future. But, this promise not to regulate was disconcerting to NFIB because it came with zero assurance that the Agency wouldn’t change course immediately—as the Obama Administration has done numerous times when implementing its policies in other contexts. Accordingly, we decided to join with other concerned groups in challenging these regulations in court. And we succeeded in securing a decision that ties EPA’s hands.

Indeed the opinion makes clear that EPA cannot regulate small entities under the Clean Air Act—not now, not ever. That is a victory in our book. Of course we were displeased with the Court’s decision to uphold EPA regulation of GHGs from energy companies because that will contribute to rising energy costs—which has long been a major concern for small business. But, in focusing on what this case means for “big business,” the mainstream media has overlooked a significant win for small business in this case. To be sure, direct regulation would have truly crippled small companies. It would have brought building projects to a halt across the country over night, and would have forced countless companies to begin jumping through costly bureaucratic hoops to stay in business.

Read NFIB’s press release on the Supreme Court’s Utility Air Regulatory Group v. EPA decision.

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