Federal Judge Rules That EPA Must Account for Job Losses of Its Regulations

In a 17th October ruling, U.S. District Court Judge John Bailey sided with Murray Energy and held that the Clean Air Act requires the EPA to perform continuing evaluations of job losses due to the agency's regulations.

To date, the agency has estimated the employment impacts of its rules by using a model that assumes 1.5 jobs are created for every $1 million spent on regulatory compliance. The underlying premise of this model is that jobs created in pollution control will always outpace job losses in the regulated industry. Of course, this is a ridiculous assumption. For starters, it sheds no light on actual job losses caused by EPA rules; rather, job losses are merely assumed to be less than job gains. More broadly, EPA’s employment model fails to pass the sniff test: it is absurd to think that spending infinite resources on regulatory compliance will forever lead to job gains.

If it stands, Judge Bailey’s ruling means that the agency has a responsibility to actually tally job losses caused by its regulations (rather than relying on dubious economic modeling to wish away the actual job losses). Importantly, these analyses must occur on a sector-by-sector basis, so every industry subject to a rulemaking may compel the agency to estimate the impact of the rule on employment.

EPA has not yet decided whether it will try to appeal Judge Bailey’s ruling before the U.S. Court of Appeals for the Fourth Circuit.