Supreme Court Clears Path For Federal Social Cost Of Greenhouse Gas Emissions

by Paul Ciampoli
APPA News Director
May 27, 2022

The U.S. Supreme Court on May 26 cleared the way for the Biden administration’s plan to set interim estimates for the social cost of greenhouse gas emissions (GHG) for federal agencies to use.

In March 2022, the U.S. Appeals Court for the Fifth Circuit reversed a federal judge’s decision to grant a motion for a preliminary injunction filed by 10 states that had argued that they will be harmed as a result of an early 2021 Biden administration move to set interim estimates for the social cost of GHG for federal agencies to use. Under the Biden administration, the value for carbon dioxide is about $51 per metric ton, under the prior administration the metric was $1 per ton.

Background

In April 2021, 10 states filed a complaint against the federal government seeking declaratory and injunctive relief as a result of Executive Order 13990 (EO 13990).

EO 13990 reinstated the Interagency Working Group on Social Costs of Greenhouse Gas Emissions. In addition, the Interagency Working Group (IWG) was directed to publish interim estimates for the social cost of carbon, nitrous oxide, and methane — collectively referred to as SC-GHG estimates — for agencies to use when monetizing the value of changes in greenhouse gas emissions resulting from regulations and other relevant agency actions.

The states that filed the complaint are Louisiana, Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia, and Wyoming.

A Louisiana-based federal judge agreed with the states and granted a motion for a preliminary injunction filed by the 10 states in February 2022.

In response, the federal government moved to stay the injunction pending appeal arguing, among other things, that the states lack standing, their claims are not ripe, and the interim estimates are not final agency action under the Administrative Procedures Act.

States File Appeal With Supreme Court

In April 2022, the states filed an application with the Supreme Court asking it to vacate the decision issued by the Appeals Court for the Fifth Circuit.

Among other things, the states said that if the Supreme Court did not vacate the Fifth Circuit’s stay order, the Executive Branch will continue using a “made-up, non-statutory metric to arbitrarily tip the scales toward its preferred policy outcome for every activity the federal government touches.”

In effect, the states argued, “that’s everything in modern American life: the SC-GHG estimates implicate rulemakings about the food chain; construction of roads, bridges, and housing; and all energy-related projects and permitting.”

The Supreme Court denied the application filed by the states in a one-sentence issued on May 26. With the states’ application rejected, federal agencies will be permitted to continue to use the interim SC-GHG estimates while the case is ongoing in the Fifth Circuit.

The IWG missed its deadline to issue final estimates for SC-GHGs per EO 13990 and it seems unlikely final estimates will be issued this summer.

On June 21, 2021, APPA in coordination with industry stakeholders submitted joint comments on the “Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990.”  In the comments we requested the IWG ensure the process to update the SC-GHGs is transparent and includes full public participation especially before draft recommendations are issued.

The Associations strongly encouraged the IWG to establish a process that factors in time for a full, robust peer review of any draft revised estimates. The IWG should be clear with the public that the SC-GHG estimates are imprecise, uncertain, and not designed for other applications, such as project level analyses, electricity planning and subsidy schemes and that the original social cost of carbon estimates were developed for use in benefit-cost analyses for regulatory actions. The comments recommended the IWG improve its major modeling assumptions/inputs and presentation of the estimates.

The groups recommended the IWG conduct a formal uncertainty analysis, consistent with the National Academies of Science (NAS) recommendations. Finally, we recommend the IWG develop its own modules to construct an analytic approach that provides a distinct analysis of the domestic costs and benefits, consistent with the NAS report.