Federal Court “Shall” Hear Challenge on EPA’s Failure to Assess Job-Loss Impact of its Rules

EPA-LogoSection 321(a) of the federal Clean Air Act (CAA), titled “Continuous Evaluation of Potential Loss or Shifts of Employment,” states plainly:

The Administrator shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provisions of this chapter and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.

The Environmental Protection Agency (EPA) has long treated this as yet another optional duty, which it may or may not perform at its discretion. Murray Energy Corporation and a number of other coal companies that have suffered substantial job losses due to environmental regulations disagree. The word “shall” in § 321(a), they argue, reflects that Congress required EPA to do this. Last March, these companies filed suit in the Northern District of West Virginia, seeking declaratory and injunctive relief. A June 6 WLF Legal Backgrounder by Vermont Law School Professor Mark Latham and Shook, Hardy & Bacon L.L.P. attorneys Victor Schwartz and Chris Appel, Is EPA Ignoring Clean Air Act Mandate to Analyze Impact of Regulations on Jobs?, described the suit and its arguments.

On September 16, Chief Judge John Preston Bailey rejected EPA’s specious argument that the agency is protected by sovereign immunity and allowed the suit to proceed. The plaintiffs sued under a section of the CAA which permits actions if EPA has failed to perform a non-discretionary duty. The court thus had to determine whether EPA had discretion to ignore § 321(a).

As Chief Judge Bailey noted, courts need not defer to federal agencies’ positions when determining jurisdiction. And Chief Judge Bailey certainly offered no deference. He cited extensive case law that supported Murray Energy’s argument that “shall” reflects a mandatory duty. As one court stated, “The word ‘shall’ does not convey discretion. It is not a leeway word, but a word of command.” EPA argued that § 321(a)’s lack of a “date-certain deadline” renders the provision discretionary. Chief Judge Bailey found that while that issue “was open to question,” relevant precedent dictated that the lack of a deadline was not “fatal to plaintiffs’ case.”  He added, “While EPA may have discretion as to the timing of such evaluations, it does not have the discretion to categorically refuse to conduct any such evaluations.”

In addition, Chief Judge Bailey refused to strike the plaintiffs’ request for injunctive relief.

Given the enormous implications of this case for EPA and for regulated entities, this decision marks, as the saying goes, merely the end of the beginning for Murray Energy Corp. v. McCarthy.

Also published by Forbes.com at WLF’s contributor site

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