NEW ORLEANS – A federal appeals court has revived a Biden administration effort to account for potential damage from greenhouse gas emissions when creating rules for polluting industries.
A Louisiana-based federal judge had blocked the so-called “ social cost of carbon ” policy last month, saying it would bring costly regulatory burdens and drive up energy prices. But a panel of three 5th U.S. Circuit Court of Appeals judges in New Orleans unanimously stayed the lower court in a ruling dated Wednesday, meaning the administration can continue using the policy while the case goes on.
The panel said any regulatory burdens the policy might bring are speculative at this point and that Louisiana and other states challenging the policy therefore had no standing to sue.
The social cost of carbon attempts to put a dollar value on damage caused by every additional ton of greenhouse gases emitted into the atmosphere. That cost estimate would be used to shape future rules for oil and gas drilling, automobiles, and other industries, and a higher estimate could justify more stringent rules.
President Joe Biden on his first day in office issued an order that restored the cost estimate to about $51 per ton of carbon dioxide emissions after the Trump administration had reduced the figure to about $7 or less per ton. Former President Donald Trump’s estimate included only damage felt in the U.S. versus the global damage captured in higher estimates that were previously used under the Obama administration.
Republicans and business groups have questioned the accuracy of the complex economic models used to derive the cost estimate. They argue that an emphasis on future climate damage would hobble the economy, particularly the energy industry.
The carbon cost estimate had not yet been used very much under Biden, but is being considered in a pending environmental review of oil and gas lease sales in western states. Those sales and other energy-related actions were delayed by the administration in response to the Feb. 11 ruling that struck down its social cost of carbon policy.
But the appeals court said U.S. District Judge James David Cain, a Trump appointee in Louisiana's Western district, had gone “outside the authority of the federal courts” in ordering the Biden administration “to comply with prior administrations' policies on regulatory analysis absent a specific agency action to review..."
Republican attorneys general led by Louisiana’s Jeff Landry had challenged the policy. The other states whose officials sued are Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia and Wyoming.
The panel that ruled Wednesday included judges Leslie Southwick, appointed by President George W. Bush, and James Graves and Gregg Costa, both appointed by President Barack Obama.
A spokeswoman with the U.S. Department of the Interior said the administration was reviewing the decision.
Landry's office said the decision would be appealed to the full 17-member 5th Circuit.
“We strongly disagree with the 5th Circuit's opinion that we lack standing in Biden's latest attempt to inject the federal government into the everyday lives of Americans,” the statement said.
The White House has been preparing to update its climate damage price tag and it's expected to increase, perhaps dramatically.
Economist Steve Rose said the circuit court ruling does not resolve questions about the reliability of the complex models used to determine damages.
“The uncertainty is of course a significant issue, because this kind of modelling is going to model the globe for multiple centuries,” said Rose, a senior economist at the Electric Power Research Institute, a non-profit organization whose membership includes many utilities.
But Max Sarinsky, a professor at the New York University School of Law, said accounting for future damages from emissions is key to the administration attempt to weigh climate impacts of actions such as the pending oil and gas lease sale.
“These numbers are important,” Sarinsky said. “They provide a useful tool for the government to develop cost effective policies that will reduce greenhouse gas emissions.”
The ruling was welcomed by environmental groups.
Earthjustice senior attorney Hana Vizcarra said the ruling “puts the government back on track to address and assess climate change.”
“This commonsense decision simply allows the government to continue its usual consideration of the costs of climate damage, but we need a lot more than that from the Biden administration,” Kassie Siegel, director of the Center for Biological Diversity’s Climate Law Institute, said in an emailed statement.
Brown reported from Billings, Montana. Daly reported from Washington.