Three Thoughts on the Stay Denial in West Virginia v. EPA

Today the Supreme Court denied the application for a stay in West Virginia v. EPA, a challenge to an EPA rule regulating power-plant emissions of carbon dioxide. You can read Amy Howe’s summary for SCOTUSBlog here. There was one noted dissent from the denial (Justice Thomas), and one justice not participating (Justice Alito). Justice Kavanaugh wrote a statement respecting the denial of the stay, joined by Justice Gorsuch. The main point of the statement was to say that the challengers were likely to win on the merits, but no stay was needed because there was no irreparable injury, since “compliance work” would not need to start for another eight months. In the meantime, Justice Kavanaugh said, the lower court litigation was proceeding apace.

Three thoughts:

1. It is a good development that the Court is reaching the merits less often in emergency docket orders. As Justice Barrett previously noted, litigants use “the emergency docket to force the Court to give a merits preview in cases that it would be unlikely to take—and to do so on a short fuse without benefit of full briefing and oral argument.” (Shadow docket critics, time for Bayesian updating!) Avoiding the merits on a stay application fits with an emerging body of literature on stays, including Rachel Bayefsky, Administrative Stays: Power and Procedure, 97 NOTRE DAME L. REV. 1941 (2022); and Jill Wieber Lens, Stays of Injunctive Relief Pending Appeal: Why the Merits Should Not Matter, 43 FLA. ST. U. L. REV. 1319 (2016).
2. Given that welcome trend, it is a little surprising to have a statement that reaches out to unnecessarily express a view of the merits—especially since Justice Kavanaugh’s statement could have made the very same point about irreparable injury without expressing a merits prediction.
3. The statement’s reference to “compliance work” points to a very big question about compliance costs and irreparable injury that will come to the Court sooner rather than later. It may be that compliance costs for the EPA rule are massive and existential for the regulated entities—I have not followed the litigation in the D.C. Circuit and express no view on that. If so, they could count as irreparable injury (a ruinous choice in the style of Ex Parte Young). But the mere fact that compliance work is necessary is not enough to show irreparable injury for a stay or preliminary injunction. That, at least, is the traditional view: routine compliance costs do not count as irreparable injury. But over the last decade, the Fifth and Sixth Circuits have adopted a different position, creating a circuit split. Their position is emptying the irreparable injury requirement of any meaning in challenges to government regulation, and it is exacerbating the trend to collapse the four-factor preliminary injunction test into just the merits. I discuss this in The Purpose of the Preliminary Injunction. Here is an excerpt from that article on compliance costs:

On this instrumental account of the status quo, the court should be looking for dislocations of its remedial authority. In the Delaware Court of Chancery’s words, “the purpose of a preliminary injunction is to preserve the status quo so that the court can hold a trial, make findings of fact, render conclusions of law, and issue a remedy.”[1] The preliminary injunction, Judge Stephanos Bibas aptly wrote, is “designed to protect the court’s ability to see the case through.”[2]Judges are not engaged in a zero-tolerance prevention of all costs to the plaintiff. Prevention of all harm is, of course, not what avoiding irreparable injury means. But that conceptual slippage is easier if courts frame the question only in terms of protecting the plaintiff, and not also in terms of protecting the court.

That conceptual slippage is not hypothetical. The Fifth and Sixth Circuits have created a split with other circuits because they now count modest compliance costs as irreparable injury.[3] In the Fifth Circuit, spurred on by the appellate court’s instruction that “the key inquiry is ‘not so much the magnitude but the irreparability,’”[4] district courts have started regularly finding irreparable injury in the routine costs of complying with government regulations. Massage-therapy vocational schools said compliance would “impact the[ir] bottom line,” even though the court admitted any such cost “hardly seems catastrophic” and its “magnitude . . . is debatable.”[5] Gun owners showed irreparable injury with compliance costs of “anywhere from $30 to $65.”[6] Adult website operators established irreparable injury with “ongoing, non-recoverable compliance costs” that were “more than de minimis”—”even,” the district court said, where it “does not consider evidence of the costs credible.”[7] And when a district court found that an association of vocational schools had produced evidence of compliance costs that was “nebulous and conclusory,” the Fifth Circuit reversed, systematically insisting that there was irreparable injury from every form of compliance costs asserted by the plaintiff, including inter alia record-keeping and staff training.[8]

There is no good justification for this trend. Regardless of whether they are recoverable from the state, routine compliance costs should not count as irreparable injury,[9] for they are just part of the ordinary friction of social life.[10]Combined with heightened judicial polarization and forum-shopping, this lax approach to irreparable injury hamstrings the federal government’s ability to act. Yet irreparable injury is vulnerable to this conceptual creep because of its plaintiff-focused framing. Irreparable injury does not encourage judicial humility; the status quo does.[11]

[1]          In re COVID-Related Restrictions on Religious Servs., 285 A.3d 1205, 1228 (Del. Ch. 2022).

[2]          Delaware State Sportsmen’s Ass’n, Inc. v. Delaware Dep’t of Safety & Homeland Sec., No. 23-1633, 2024 WL 3406290, at *9 (3d Cir. July 15, 2024).

[3]          See Rest. L. Ctr. v. United States Dep’t of Lab., 66 F.4th 593, 597 (5th Cir. 2023) (noting that under Fifth Circuit precedent “the nonrecoverable costs of complying with a putatively invalid regulation typically constitute irreparable harm”); Commonwealth v. Biden, 57 F.4th 545, 556 (6th Cir. 2023) (rejecting the view of “some of our sister circuits . . . that compliance costs do not qualify as irreparable harm because they commonly result from new government regulation”).

[4]          Id. at 597 (quoting Texas v. EPA, 829 F.3d 405, 433-434 (5th Cir. 2016)). As recently as 2012, Fifth Circuit decisions would distinguish between magnitude and irreparability in order to make the exactly opposite and more sound point: large magnitude harms might not be irreparable. See Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262, 279 (5th Cir. 2012). The first use of the phrase was Canal Auth. of State of Fla. v. Callaway, 489 F.2d 567, 575 (5th Cir. 1974), which made the reasonable but distinct point that a plaintiff’s irreparable injury was not undercut by other, larger injuries in the world: “the irreparability of the threatened harm, which is preventable, is not diminished by comparison to the nationwide loss of trees caused by forest fires that the district court is powerless to prevent.” Id. at 576.

[5]          360 Degrees Educ., LLC v. U.S. Dep’t of Educ., No. 4:24-CV-00508-P, 2024 WL 3092459, at *7 (N.D. Tex. June 21, 2024).

[6]          Texas v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 700 F. Supp. 3d 556, 570 (S.D. Tex. 2023).

[7]          Free Speech Coal., Inc. v. Colmenero, 689 F. Supp. 3d 373, 414 (W.D. Tex. 2023), aff’d in part, vacated in part sub nom. Free Speech Coal., Inc. v. Paxton, 95 F.4th 263 (5th Cir. 2024), cert. granted sub nom. Free Speech Coal. v. Paxton, No. 23-1122, 2024 WL 3259690 (U.S. July 2, 2024).

[8]          Compare Career Colleges & Sch. of Texas v. United States Dep’t of Educ., 681 F. Supp. 3d 647, 655-661 (W.D. Tex. 2023) (Pitman, J.) with 98 F.4th 220, 234-239 (5th Cir. 2024). One could be forgiven for thinking the Court is playing whack-a-mole with this Havens Realtysuffused approach. Cf. Food & Drug Admin. v. All. for Hippocratic Med., 144 S. Ct. 1540, 1564 (2024) (“The medical associations respond that under Havens Realty Corp. v. Coleman, standing exists when an organization diverts its resources in response to a defendant’s actions. That is incorrect. Indeed, that theory would mean that all the organizations in America would have standing to challenge almost every federal policy that they dislike, provided they spend a single dollar opposing those policies.” (citation omitted)). For an instance of a district court in the Sixth Circuit finding irreparable injury from ordinary expenditures to prepare for a rule, see Monticello Banking Co. v. Consumer Fin. Prot. Bureau, No. 6:23-CV-00148-KKC, 2023 WL 5983829, at *2-3 (E.D. Ky. Sept. 14, 2023).

[9]          A. O. Smith Corp. v. F. T. C., 530 F.2d 515, 527 (3d Cir. 1976) (“Any time a corporation complies with a government regulation that requires corporation action, it spends money and loses profits; yet it could hardly be contended that proof of such an injury, alone, would satisfy the requisite for a preliminary injunction.”); Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 115 (2d Cir. 2005) (“[O]rdinary compliance costs are typically insufficient to constitute irreparable harm.”); Household Int’l, Inc. v. Eljer Indus., Inc., No. 13631, 1994 WL 469169, at *4 (Del. Ch. Aug. 12, 1994) (recognizing that some unrecoverable expenses are “hardly the type for which the injunction remedy was devised”); cf. Milan D. Smith, Jr., Only Where Justified: Toward Limits and Explanatory Requirements for Nationwide Injunctions, 95 Notre Dame L. Rev. 2013, 2034 (2020) (expressing skepticism of giving much weight to “[e]conomic harm only indirectly attributable to a challenged executive action”).

[10]        Cf. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922) (Holmes, J.) (“Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.”).

[11]        Cf. O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 1018 (10th Cir. 2004) (McConnell, J., concurring) (“Unless the district court self-consciously takes the nature of the injunction into account by applying a heightened standard [for injunctions that alter the status quo], the four factors likely will lead to an overconfident approach to preliminary relief.”); E. Brooks, supra note 8(comparing irreparable injury with judicial consideration of ultimate options and concluding that “[m]aximizing option value is a more constraining objective”).

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