On February 11, 2022, Judge James D. Cain, Jr., of the Western District of Louisiana, granted a motion by plaintiff states—a coalition of 10 attorneys general—to enjoin the federal government’s use of the Social Cost of Carbon (SCC) in all ongoing federal environmental policymaking. Exact definitions of the SCC have varied over the years and depending upon who you ask. The Trump administration defined the SCC as a metric that estimates the monetary value of impacts associated with marginal changes in CO2 emissions in a given year. On the other hand, the Biden administration defines the SCC as the monetary value of the net harm to society associated with adding a small amount of greenhouse gas (GHG) to the atmosphere in a given year. Either way, a higher estimate of the SCC will make a more stringent environmental regulation seem more cost-beneficial and will assign a greater negative impact to a facility that emits GHGs.
During the Obama administration, the SCC was valued at $51 per ton of CO2 emitted, $1,500 per ton of CH4 emitted, and $18,000 per ton of N2O emitted. President Trump issued an executive order requiring agencies to rescind the Obama-era SCC, and under Trump the SCC’s value was $7 per ton of CO2 emitted, $184 per ton of CH4 emitted, and $2,820 per ton of N2O emitted. The Biden administration’s interim SCC values simply adopt those of the Obama administration, so there is reason to suspect the Biden administration believes these numbers are outdated and will increase the SCC’s dollar value in the near future—perhaps significantly. In fact, Section 5(b)(ii)(B) of Executive Order 13990 states the Interagency Working Group (IWG)—the group reshaping the SCC at the Biden administration’s direction—“shall . . . publish a final SCC, SCN, and SCM by no later than January 2022.” It’s February, and we’re still waiting on those numbers. Additional background on these topics, litigation over the SCC’s use in environmental policymaking, and the Government Accountability Office’s recent investigations into the SCC are available in an article I recently published with the Georgetown Environmental Law Review.
All of this taken into account, the court’s injunction is important news. But just how long can the injunction last? On February 19, the federal government filed a motion for a stay of the injunction pending appeal, requesting the court rule on this motion by February 28. If the court does not grant the government’s stay motion by that time, the government says it will seek relief from the Fifth Circuit.
If the district court’s preliminary injunction stands, several cabinet agencies may be required to adjust (or even halt) various ongoing environmental rulemaking efforts and policy initiatives. According to the Biden administration’s stay motion, this includes 21 rules in development at the U.S. Department of Energy, 5 at the Environmental Protection Agency, 9 at the Department of Transportation, and 3 at the Department of the Interior. The stay motion also suggests that Judge Cain’s order could halt the administration’s efforts to issue drilling permits for oil and gas development. In sum, the district court’s ruling has hamstrung the administrative state’s ability to incorporate the Biden administration’s interim (and final) SCC values into all ongoing federal environmental policymaking. To quote the federal government’s memorandum in support of its motion for stay pending appeal, “the consequences of this injunction are dramatic.”
The court’s order also enjoins the Biden administration from using 1) any work product of the IWG; 2) Section 5 of E.O. 13990 (Section 7 of which revoked the Trump administration executive order on the SCC); 3) global costs—instead of domestic—in calculating SCC values; and 4) those SCC estimates which do not use discount rates of 3 and 7 percent or comport with Office of Management and Budget’s Circular A-4. This circular assists regulatory analysis across the federal government, but specifically in the Office of Information and Regulatory Affairs, which would have to evaluate each of the aforementioned environmental regulations.
We will soon find out whether the district court grants the federal government’s motion for a stay pending appeal, and, if not, if the federal government follows through on its promise to seek relief from the Fifth Circuit. Shortly after the administration filed its stay motion, the plaintiff states filed a short memorandum with the court saying they “oppose the stay motion and will file in the ordinary course a separate brief opposing that motion.”
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