The Biden administration may have dodged a blow this week in its effort to put a price tag on the cost of planet-warming emissions — but the legal fight is far from over.
For years, Republican-led states have tried — and failed — to stop the Biden administration from using interim estimates of the social cost of greenhouse gases that help federal agencies write stronger climate regulations.
On Tuesday, one round of their legal battle came to a close after the Supreme Court declined to review a decision that rejected the red states’ arguments on the grounds that agencies had not yet used the formulas in rulemaking at the time they filed their challenges.
Lower courts had ruled that the states could not show how they had been harmed. The Supreme Court, as it does in most cases it declines to hear, did not offer a reason for its rejection.
The justices “make it very clear that you can’t challenge these valuations in the abstract,” said Max Sarinsky, a senior attorney at the Institute for Policy Integrity. “You have to challenge them in their application.”
But Missouri or other GOP-led states are expected to return to court as the Biden administration finalizes more rules using the interim social cost estimates. And a new White House proposal to broaden use of the metric by applying it to a wider swath of government decisions is likely to spur another round of litigation.
“Every time that the administration uses the social cost of carbon, they open themselves up to a potential lawsuit by the state or other private parties on the basis that the social cost of carbon calculation is invalid,” said Devin Watkins, an attorney for the Competitive Enterprise Institute.
The estimates highlight the hidden costs of climate change by putting a price on a metric ton of emissions. For carbon, the Biden administration has used estimates of about $51 per metric ton. That figure is consistent with the estimate used under the Obama administration, adjusted for inflation. However, it is a sharp increase from the estimate for carbon used under former President Donald Trump — about $1 per metric ton.
Missouri’s petition wasn’t the first opportunity for the Supreme Court to weigh in on the social cost metric. The justices previously rejected an emergency plea led by Louisiana Attorney General Jeff Landry, a Republican, to stop the Biden administration from using the new formula. Missouri had followed up with a request for the justices to examine the merits of using the Biden metric.
But there are still options available for conservative opponents, said Watkins.
“Rather than directly challenge the social cost of carbon rule,” he said, “the parties will challenge a regulation derived from those rules and make the same argument.”
One of the arguments red states have raised against the Biden administration’s social cost metric is that it violates the “major questions” doctrine, which says that Congress must clearly authorize federal agencies to regulate matters of vast economic and political significance.
The legal claim has been popular among conservative litigants in the wake of the Supreme Court’s decision last year in West Virginia v. EPA, which struck down Obama-era power plant emissions rules on major questions grounds. The doctrine has since played a starring role in lawsuits on issues ranging from vehicle emissions standards to student loan forgiveness.
Sean Donahue, an attorney with the firm Donahue & Goldberg, said the Supreme Court’s decision not to take up Missouri’s fight over the social cost metric came as a relief.
“There have been times where it looked like the court’s eagerness to reach an issue was impelling it to overlook what might normally have been very serious reasons to not reach an issue,” he said. “In this case, the conventional litigation rules were applied.”
Donahue argued that the more often conservatives raise the “major questions mantra” in cases, the more likely it is that the claims will be rejected.
“The more parties try to apply it to a broader and broader universe of actions, the limits on the doctrine … are going to become more defined,” he said.
Future targets
Critics of Biden’s climate metric may have ample fodder for new legal challenges in the coming months, though their success in court will likely hinge on the ability to clearly demonstrate harm from agencies’ use of the estimates.
Not only is the Biden administration continuing to use the interim estimates in rulemaking, but an interagency working group is also in the process of finalizing updated values that could significantly alter how much the effects of climate change are expected to cost the nation.
EPA may face its own lawsuit over how it applies proposed updated estimates for the social cost of greenhouse gases. The agency sharply increased estimates from current values — putting the price of carbon at about $190 per metric ton. Those values may soon be finalized and make their way into EPA analyses.
Last month, the White House signaled for agencies to also consider using the social cost estimates in a wide range of applications — from National Environmental Policy Act reviews and budgeting to regulatory enforcement penalties and government procurements.
In its fact sheet, the White House noted that climate-related disasters are predicted to increase annual federal spending by $100 billion and decrease annual revenue by as much as $2 trillion by the end of the century.
The social cost of greenhouse gases “allows better comparisons to other costs and benefits of agency decisions that may also be presented in dollar figures,” the White House said in September.
“And because the SC-GHG [social cost of greenhouse gases] estimates the societal cost of the effects of various greenhouse gas pollutants emitted at distinct points in time,” the White House continued, “its use facilitates the comparison of alternative policies with different emissions profiles.”
Republicans in Congress have also targeted the social cost figures and the administration’s plans to use them more widely. West Virginia Sen. Shelley Moore Capito, the top Republican on the Environment and Public Works Committee, said last month that the administration’s “math doesn’t add up, and in fact, doesn’t exist.”
One government body, the Federal Acquisition Regulatory Council, has already been at work to implement some of this expanded climate analysis in major procurements. The council issued an advanced notice of proposed rulemaking in 2021 and could release a proposed regulation in the coming months, said Sarinsky of the Institute for Policy Integrity.
One unknown is how seriously different agencies will take the White House’s directive to account for climate costs in decisionmaking, since agencies are not required to take action, Sarinsky added.
“If these states want to challenge those [estimates] in the abstract,” he said, “they’ll run up against all the same hurdles” as they faced at the Supreme Court.
Correction: An earlier version of the story incorrectly said the Federal Acquisition Regulatory Council would release a final rule in the coming months.
