Federal appeals court reverses 'social cost of carbon' ruling

A federal appeals court has overturned a lower court ruling that blocked the Biden administration’s “social cost of carbon” policy, reviving the controversial government cost calculation of damages from greenhouse gas emissions.

A three-judge panel with the 5th U.S. Circuit Court of Appeals in New Orleans unanimously stayed this week a ruling by U.S. District Judge James Cain Jr. last month that struck down the social cost of carbon policy.

Cain, who was appointed by former President Donald Trump, granted a request by Louisiana Attorney General Jeff Landry and 10 other states for a preliminary injunction against Biden Executive Order 13990, which directed federal agencies to consider the social cost of carbon for virtually all federal actions.

The executive order established a working group of federal appointees to establish a damage value, or social cost, based on global environmental damages from climate changes. The measure required federal agencies to apply the figures to regulatory actions and other decisions for most federal agencies, including the Departments of Interior, Commerce, Energy, Agriculture, Transportation, Environmental Protections, Defense, Homeland Security, Health and Human Services and the U.S. Treasury.

Landry argued the executive order is a backdoor attempt to take over numerous industries and Louisiana is particularly impacted because of the state’s leadership in domestic energy production.

“Biden’s executive order was an attempt by the government to take over and tax the people based on winners and losers chosen by the government,” Landry said.

The appeals ruling Wednesday, however, nullifies the preliminary injunction and allows the Biden administration to continue using the policy as the case proceeds. The three-judge panel argued Louisiana and other states have no standing to sue because the regulatory burdens of the policy are not yet realized, The Associated Press reported.

“The plaintiff states’ claimed injury is ‘increased regulatory burdens’ that may result from the consideration of (the social cost of greenhouse gasses), and the Interim Estimates specifically,” wrote Judges Leslie Southwick, a George W. Bush appointee, and James Graves Jr. and Gregg Costa, both Barack Obama appointees, according to Politico. “This injury, however, hardly meets the standards for [constitutional] standing because it is, at this point, merely hypothetical.”

The panel found Cain acted “outside the authority of the federal courts” when he ordered the Biden administration “to comply with prior administrations’ policies on regulatory analysis absent a specific agency action to review,” according to The AP.

Under the Biden and Obama administrations, the social cost of carbon policy applied about $51 per ton of carbon emissions based on worldwide damages, while the Trump administration reduced the calculation to $7 per ton based on domestic damages. The Biden administration is now working through a process to recalibrate that figure and it is expected to significantly increase.

At least one major rule regarding emissions from heavy-duty trucks was published without the cost of carbon calculation, and another decision on oil-and-gas lease sales in western states was delayed by the Biden administration while the injunction was in place, according to media reports.

“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,” Landry press secretary Cory Dennis wrote in an email to Politico. "We will petition for a rehearing en banc and will continue to stand up against this Administration’s vast overreach."