Supreme Court Ruling on GHGs Equals Brighter Future for Manufacturers | Commentary

In all the coverage of last week’s Supreme Court ruling limiting the EPA’s authority to regulate greenhouse gases, the lasting importance of the Court’s decision for manufacturers and our economy was somewhat overlooked. That’s not surprising given that the court’s decision striking down the EPA’s regulation is the first real setback to the Agency’s pursuit of aggressive climate change regulations under the Clean Air Act, a law that long predates today’s intense discussion of climate change.

In short, the court found that the EPA overstepped its bounds when it interpreted parts of the Clean Air Act in a way that would eventually require thousands of additional factories, businesses, and even public buildings to acquire permits based solely on their greenhouse gas emissions, rather than the conventional pollutants covered by the law such as sulfur dioxide and lead. When doing so, the EPA indicated that it would drastically reduce the GHG thresholds in the coming years, meaning that a vastly larger number of businesses would have to confront GHG permitting hurdles, an outcome Congress had never intended.

The EPA’s interpretation presented a major threat to manufacturers trying to grow and many small businesses simply trying to maintain their day to day operations. Few sectors had as much to lose as the U.S. chemical industry which today has announced over $100 billion in investments in new plants, factory restarts and expansions that are projected to create and support nearly 370,000 new jobs. For this reason, the American Chemistry Council appealed to the courts to rein in the EPA.

A far-reaching, time-consuming permitting program at the EPA would have put our nation’s manufacturing renaissance, driven by U.S. chemical producers, in jeopardy, but our industry’s stake in the outcome did not stop there.

Thousands of our downstream customers who rely on chemical products as raw materials for countless consumer goods would have surpassed the EPA’s future GHG permitting thresholds. They would have had to comply with a new expensive and onerous regulatory process or risk being shut down.

Half of ACC’s members are small and medium sized businesses that rarely if ever trigger the permitting thresholds in the Act. Even some large chemical factories do not meet the Clean Air Act thresholds for conventional pollutants. The EPA’s interpretation would have forced thousands of additional facilities to jump through unwarranted regulatory hoops.

Numerous permits are already required of industrial energy consumers and manufacturers due to several different federal and state environmental statutes. These permits currently can take years to secure because of inefficiencies and bureaucratic roadblocks at the EPA and within state governments, as well as lengthy and expensive challenges by environmental groups that have become the norm. Expanding the GHG permitting program in the future, and bringing into the mix thousands of additional businesses and facilities applying for them, would have been a logistical catastrophe leaving many businesses in limbo while costs add up, financing windows close, investments go down, and jobs go unfilled. Even President Obama acknowledged in his State of the Union that permit backlogs were putting chemical industry investments at risk.

Finally, and no less important than the economic effects, there is the need to keep the EPA and this (or any) administration honest. As the Supreme Court made clear, the Agency’s interpretation of the Clean Air Act went far beyond the intent of Congress and clearly violated the separation of powers envisioned by our nation’s Founders. Failing to challenge the EPA’s interpretation of key provisions of the law would be akin to giving the agency a blank check during a weekend in Vegas.

It would have been far easier for EPA to recognize its overreach during the original rulemaking process five years ago where ACC had offered the very same arguments that the Supreme Court validated last week. Unfortunately, it took several years, lengthy litigation, delays to economic development, and the nation’s highest court to force the EPA to see the error in its ways. The good news is that the court has produced a solution that is better for U.S. manufacturers, continues to protect the environment, and enables the EPA to execute its congressionally granted authorities.

So while others continue the political debate about who won and lost because of the court’s decision, manufacturers and our customers can get back to work knowing that the prospects for the future are much brighter.

Cal Dooley is president & CEO of the American Chemistry Council.