A U.S. district court on Feb. 11 issued a preliminary injunction against the Biden administration's estimates for the social cost of greenhouse gas emissions, a metric that federal agencies use to justify regulations and permitting decisions for energy producers and other climate-sensitive industries.
The ruling, which prohibits federal agencies from relying upon any social cost of greenhouse gases that is based on global effects, is expected to be appealed to a higher court. It follows a Jan. 27 ruling by the U.S. Court of Appeals for the D.C. Circuit invalidating an offshore oil and gas lease auction because the U.S. Department of the Interior failed to consider the foreign consumption of U.S. oil and gas when calculating the sales' emissions.
The district court decision is yet another setback to President Joe Biden's climate ambitions, which have encountered resistance in Congress.
On his first day in office, Biden issued an executive order reestablishing an interagency working group to calculate the social cost of different greenhouse gases — a group that former President Donald Trump disbanded. As part of the order, Biden directed the working group to publish interim per-ton social costs for carbon dioxide, nitrous oxide and methane emissions to help agencies determine the costs and benefits of climate-relevant actions.
In April 2021, a group of 10 states, led by Louisiana, filed a legal challenge against Biden's cost calculations in Louisiana v. Biden (No. 2:21-CV-01074). The plaintiffs said the estimates violated the Administrative Procedure Act because they did not undergo the necessary notice-and-comment process. The states also said Biden and the interagency working group lacked the authority to enforce the cost estimates, and that the federal government acted beyond its congressional powers by factoring global considerations into figures for the social cost of greenhouse gas emissions.
On Feb. 11, Judge James Cain with the U.S. District Court for the Western District of Louisiana granted the states' motion for preliminary injunction in its entirety.
Cain said Biden's January 2021 executive order contradicted Congress' legislative intent on rulemaking by mandating consideration of global effects. The judge also said the president violated the major questions doctrine because Biden "lacks power to promulgate fundamentally transformative legislative rules in areas of vast political, social and economic importance."
Cain enjoined the Biden administration from relying on the interagency working group's "work product" and ordered federal agencies to revert to the Trump administration's cost estimates. The judge also prohibited agencies from relying upon any social cost of greenhouse gases that is based on global effects and does not utilize discount rates of 3%-7%.
The ability of federal agencies to take major regulatory actions
"Today's decision is exciting news, particularly with our Supreme Court case ... looming on the horizon," West Virginia Attorney General Patrick Morrisey said in a Feb. 11 statement. "Our office will continue to protect our economy and our way of life from unelected bureaucrats who want to dictate energy policy, even when it means taking our fight against federal overreach to the highest court in the nation."
West Virginia was among the states joining Louisiana in its challenge against Biden's calculations on the social cost of greenhouse gas emissions. The other plaintiffs were Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas and Wyoming.
The order dealt another blow to Biden's efforts to slash carbon dioxide emissions. The president has been struggling to advance through Congress his Build Back Better agenda, which would provide about $550 billion to address climate change. The administration is likely to appeal the Feb. 11 court decision to a federal appeals court.
Under Trump, the social cost of carbon dioxide plummeted from $53 per metric ton to as low as $1, using a standard discount rate of 3%. This change underpinned Trump's Affordable Clean Energy rule, which significantly weakened emission requirements for power plants, along with less stringent energy efficiency standards and other environmental policy changes.
The Biden administration's interim cost for carbon-dioxide emissions was $51 per metric ton for 2020, with a standard 3% discount rate, rising to $56 in 2025. The group is expected to issue its first update in February 2022, widely expected to push the social cost for carbon past $100 per metric ton.
At least 13 states use the interagency group's social cost of carbon, and a number of other countries use similar estimates.