The Supreme Court on Thursday allowed the Biden administration, for now, to use a higher estimate for the societal cost of rising greenhouse gases when federal agencies draft regulations.
The federal government uses the estimate in all sorts of rulemaking, including new drilling permits and assessing the costs for crop losses and flood risks.
The estimates are something of a political football. After the Trump administration lowered the cost estimate from that set in the Obama administration, President Biden’s administration increased it. Republican-led states went to court.
A federal district judge in Louisiana ruled for the states and said the estimates could not be used. But a panel of the U.S. Court of Appeals for the 5th Circuit disagreed and put the judge’s order on hold. The Supreme Court’s action Thursday keeps that ruling in place.
Louisiana’s lawyers called the estimates “a power grab designed to manipulate America’s entire federal regulatory apparatus through speculative costs and benefits so that the Administration can impose its preferred policy outcomes on every sector of the American economy.”
But the Biden administration responded that they had been used for years. It told the Supreme Court that the district judge’s ruling was wrong but also premature. The states should not be allowed to sue before an agency even implements a rule using the new cost estimates, Solicitor General Elizabeth B. Prelogar wrote, because they have not been harmed.
Beyond that, the district judge’s order was delaying the government’s work, she said. “The district court’s sweeping injunction threatens irreparable harm across the Executive Branch,” she wrote. “While it was in effect, the injunction delayed or stopped work involving rules, grants, leases, permits, and other projects. Even some internal discussions were halted to avoid running afoul of the injunction’s prohibition on ‘relying upon’ the interim estimates ‘in any manner.’”
As is common in emergency orders, the Supreme Court gave no reason for rejecting Louisiana’s request.
The order means the Biden administration can continue to consider the economic cost of climate change as it writes new rules and strengthens existing ones.
For the administration, calculating the real-world cost of climate change — and factoring that cost into its leasing decisions and infrastructure projects — is a crucial tool to meet its emissions-reduction targets.
With sweeping climate legislation stalled in Congress and a forthcoming Supreme Court decision threatening the Environmental Protection Agency’s ability to regulate greenhouse gas emissions, the social cost of carbon has become a key way for the federal government to write stronger environmental rules.
The cost the government assigns to damage caused by global warming has changed over time. Under President Barack Obama, the government estimated that each ton of carbon dioxide released into the atmosphere would cause $37 in societal damage.
The Trump administration argued that the cost should be significantly lower, concluding that the risks from burning fossil fuels amounted to between $1 and $7 per ton. That change made it easier for Trump officials to defend weakening environmental protections because they could claim that carbon pollution would scarcely affect the economy.
When Biden became president, he restored the Obama-era cost calculation, adjusting it for inflation and setting it at $51. However, that approach is temporary. In an executive order issued last year, Biden directed an interagency working group to update the government’s cost-benefit analysis, incorporating the latest scientific research.
The case is Louisiana v. Biden.