Federal Court Orders EPA to Evaluate Job Losses from Air Regulations

by Eversheds Sutherland (US) LLP
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Sutherland Asbill & Brennan LLP

On October 17, the U.S. District Court for the Northern District of West Virginia ruled in favor of Murray Energy Corporation (Murray) in its section 321 suit against the U.S. Environmental Protection Agency (EPA). The court ordered that EPA must evaluate the job loss consequences of its air pollution regulations and must file a schedule for this evaluation by October 31, 2016. Specifically, Clean Air Act (CAA) § 321 requires EPA to “conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provision of [the CAA] and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.”

Murray argued that EPA’s enforcement of the CAA combined with the agency’s refusal to conduct section 321 evaluations was irreparably harming the coal industry and those it employs. EPA argued that section 321 does not impose a non-discretionary duty on EPA, that Murray lacked standing, and that EPA has already complied with section 321. The court rejected EPA’s arguments on all counts.

The court admonished EPA for its argument that it is under no obligation to fulfill its requirement by a certain date, and that section 321 is thus a discretionary duty not subject to suit. The court cited the U.S. Supreme Court’s statement in Bennett v. Spear that “[i]t is rudimentary administrative law that discretion as to the substance of the ultimate decision does not confer discretion to ignore the required procedures of decisionmaking.” The court quoted the U.S. Court of Appeals for the Second Circuit, stating that “[n]o discernible purpose is served by creating [a] bureaucratic twilight zone, in which many of the Act’s purposes might become subject to evasion.” It then affirmed its Spring 2015 decision that Murray’s allegations that EPA’s actions have essentially forced the company to discontinue the use of coal were fairly traceable to EPA’s failure to conduct the evaluations required under section 321. Finally, the court cited a chain of legislative and agency history in strongly criticizing EPA for claiming its existing regulatory impact analyses are equivalent to fulfilling its statutory duty under section 321.

The court clarified that the job evaluations required by section 321 are intended to alert the public and the Congress of the actual impacts of EPA’s air regulations. The court likened the CAA section 321 requirement to the Supreme Court’s holding in EPA v. Nat’l Crushed Stone Ass’n which interpreted a similar provision of the Clean Water Act. The Supreme Court found that job loss evaluations under the Clean Water Act would alert Congress of any need for remedial legislation. The court also quoted decisions from the Second Circuit and several district courts rejecting past EPA arguments that lack of a date-certain deadline meant that the duty at issue was discretionary. 

Recent decisions elsewhere have signaled judicial interest in holding EPA more accountable for the impacts of its regulations. The Fifth Circuit recently held in Texas v. EPA that EPA failed to show or consider the detrimental effects on grid reliability of a recent final action. Judge Brett Kavanaugh of the D.C. Circuit, in his dissent in Mingo Logan Coal Co. v. EPA, said that EPA failed to consider costs in its cost-benefit analysis for a recent final action.

EPA has responded that it will likely appeal this week’s decision to the Fourth Circuit. The agency has also stated that section 321 imposes no obligation that EPA modify its regulations as a result of the information revealed in a section 321 evaluation. In the meantime, EPA must file with the court by October 31 a schedule of its plans to comply with section 321 and conduct evaluations of job consequences on the coal industry resulting from its air regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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