Gregory E. Wannier
Deputy Director

As the complex group of cases challenging EPA greenhouse gas regulations moves forward in DC Circuits, opponents of these regulations have voiced concerns that rules due to take effect in January 2011 may severely harm their economies before they have a chance to be overturned in court.  To avoid this, three different groups of petitioners moved on September 15 to stay all or part of EPA’s regulations.  Two motions, one from a coalition headed by the Coalition for Responsible Regulation (CRR), and one filed solely by the State of Texas, want to stay all regulations.  The third motion, from a coalition headed by the National Association of Manufacturers (NAM), asks only to stay the portion of the rules that would allow greenhouse gas regulation of stationary sources (including manufacturing plants).[1] EPA filed a response on October 28, 2010.[2]

In requesting a stay of defendants’ activities, petitioners must show four things: 1) that they are likely to prevail on the merits of the case; 2) that they will suffer irreparable injury if defendants are allowed to pursue their activities during litigation; 3) that enforcing this stay will not hurt other interested parties; and 4) that a stay is in the public interest.[3] The DC Circuit has noted that “If the arguments for one factor are particularly strong, an injunction may issue even if the arguments in other areas are rather weak.”[4] This blog has already given a preliminary analysis of the merits of these challenges, though it is worth noting that the movers here “by a clear showing, carr[y] the burden of persuasion.”[5]

Petitioners claim irreparable injury by discussing a wide range of potential harms.  NAM points to business losses from carbon requirements and an expensive permitting process, as well as concerns with uncertainty for small emitters protected by the Tailoring Rule.  CRR echoes these economic concerns, while Texas focuses more on administrative harms (lost right to implement its own regulatory program, and administrative costs imposed).  All three complain that, permits will be immediately required, they will be impossible acquire at the outset, which could cause a de facto moratorium on construction work.

In arguing that a stay will not harm other parties, petitioners argue that a mere delay could not harm EPA’s regulatory purpose.  CRR and NAM particularly point out that because the benefits of permits were not quantified, there can be no loss of benefits; and Texas says that, “subject to judicial review,” other states are free to revise their own laws to comply with these regulations.  NAM goes on to argue that there will be no lost “immediate” environmental benefit, and indeed there could be a loss if carbon “leakage” sends manufacturing to more carbon intensive countries.  NAM also emphasizes that the Tailpipe Rule as applied to vehicles could stay in place, achieving EPA goals.

Finally, petitioners argue that a stay is in the public interest in many ways.  CRR argues that it is necessary to give Congress time to speak on the matter.  NAM agrees, and adds its previous points that enforcement would harm the economy and possibly lead to carbon leakage.  And Texas emphasizes the need for regulatory certainty before beginning actual regulation.

After responding to the merits of petitioners’ claims, EPA turns first to irreparable injury.  Its response is thorough, and follows six main lines of argument in challenging a finding of irreparable injury:

  1. Economic loss, even if real, cannot be considered irreparable harm;
  2. The chain of causation leading to economic stagnation is exaggerated, based on faulty predictions, and speculative (you cannot get an injunction for speculative harms).
  3. EPA regulations decrease, and do not increase, regulatory uncertainty by establishing rules;
  4. PSD and Title V permit costs are regulatory burdens, which cannot be irreparable harm;
  5. Permit availability concerns are mostly false: EPA’s implementation process is eminently workable and there will be no de facto construction ban.  Texas’ implementation concerns would be due to Texas’ own irresponsible actions, so cannot be blamed on the EPA; and
  6. Texas has no sovereign right not to regulate greenhouse gases, so there is no federalism concern.

EPA’s responses to the harm to other interested parties, and public interest, are interrelated.  EPA first mentions environmental harms that will result with any delay of implementation, pointing to its endangerment finding and Mass v. EPA to argue that its failure to quantify damages does not mean there are none.  EPA then points out specifically that the Vehicle Rule has been partially implemented (including in California), and relied upon by the auto industry, and so staying that rule would particularly harm other parties.

The DC Circuit’s decision will be influenced by how convincing it finds the respective arguments about the certainty and severity of harms caused by EPA regulations to business and the economy.  EPA’s point that merely economic harms cannot qualify will strengthen its case, but permanent closure of factories and loss of economic activity would still be relevant to any decision.  EPA’s arguments around permit costs and availability are more convincing: EPA’s structure for issuing permits provides a federal backstop that states may opt into if their own plans are delayed.  States may opt not to use this backstop, but any argument focusing on political eventualities would seem to violate DC Circuit Rules against preventing speculative damages.  EPA’s arguments look the strongest against a stay of the Vehicle Rule, particularly since one petitioner group agrees with them.  They look the weakest when they minimize the economic upheaval these regulations may bring as companies adhere to new BACT standards, though the point about “purely economic harms” not qualifying as irreparable injury will help.

Looking forward, petitioners will have until November 8 to reply to these responses, before a decision likely in late November or December probably at the latest (any stay must be issued before January 2, 2011 to prevent all agency action).

[1] Petitioners’ Motion for Partial Stay of EPA’s Greenhouse Gas Regulations, D.C. Cir. (Sep. 15, 2010); State of Texas’s Motion for Stay of EPA’s Endangerment Finding, Timing Rule and Tailpipe Rule, D.C. Cir. (Sep. 15, 2010);

State of Texas’s Motion for a Stay of EPA’s Greenhouse Gas Tailoring Rule, D.C. Cir. (Sep. 15, 2010); Motion for Stay, D.C. Cir. Doc: 1266030 (Sep. 15, 2010).

[2] EPA’s Response to Motions to Stay, D.C. Cir. (Oct. 28, 2010).

[3] Nken v. Holder, 129 S. Ct. 1749, 1757 (2009); see also Serono Laboratories, Inc. v. Shalala, 158 F.3d 1313, 1318 (D.C. Cir. 1998) (relied upon by NAM et al.).

[4] CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir.1995); see also Serono Laboratories, Inc. v. Shalala, 158 F.3d 1313, 1318 (D.C. Cir. 1998) (Relied on by Texas).

[5] Mazurek v. Armstrong, 520 U.S. 968, 972 (1997).

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