US judge strikes down Biden climate damage cost estimate

A federal judge on Friday blocked the Biden administration’s attempt to put greater emphasis on potential damage from greenhouse gas emissions when creating rules for polluting industries.

U.S. District Judge James Cain of the Western District of Louisiana sided with Republican attorneys general from energy producing states who said the administration’s action to raise the cost estimate of carbon emissions threatened to drive up energy costs while decreasing state revenues from energy production.

The judge issued an injunction that bars the Biden administration from using the higher cost estimate, which puts a dollar value on damages caused by every additional ton of greenhouse gases emitted into the atmosphere.

President Joe Biden on his first day in office restored the climate 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 damages felt in the U.S. versus the global damages captured in higher estimates that were previously used under the Obama administration.

The estimate would be used to shape future rules for oil and gas drilling, automobiles, and other industries. Using a higher cost estimate would help justify reductions in planet-warming emissions, by making the benefits more likely to outweigh the expenses of complying with new rules.

Known as the social cost of carbon, the damage figure uses economic models to capture impacts from rising sea levels, recurring droughts and other consequences of climate change. The $51 estimate was first established in 2016 and used to justify major rules such as the Clean Power Plan — former President Barack Obama’s signature effort to address climate change by tightening emissions standards from coal-fired power plants — and separate rules imposing tougher vehicle emission standards.

The Supreme Court blocked the Clean Power Plan before it ever took effect, and a more lenient rule imposed by the Trump administration was later thrown out by a federal appeals court.

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.

In Friday’s ruling, Cain wrote that using the climate damage figure in oil and gas lease reviews would “artificially increase the cost estimates of lease sales” and cause direct harm to energy producing states.

Economist Michael Greenstone, who helped establish the social cost of carbon while working in the Obama administration, said if the ruling stands, it would signal the U.S. is again unwilling to confront climate change.

“The social cost of carbon guides the stringency of climate policy,” said the University of Chicago professor. “Setting it to near-zero Trump administration levels effectively removes all the teeth from climate regulations.”

Republican attorneys general led by Louisiana’s Jeff Landry said the Biden administration’s revival of the higher estimate was illegal and exceeded its authority by basing the figure on global considerations. The other states whose officials sued are Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia and Wyoming.

Landry’s office issued a statement calling Cain’s ruling “a major win for nearly every aspect of Louisiana’s economy and culture.”

“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,” the statement said.

The White House referred questions to the Justice Department, which declined to comment.

Federal officials began developing climate damage cost estimates more than a decade ago after environmentalists successfully sued the government for not taking greenhouse gas emissions into account when setting vehicle mileage standards, said Max Sarinsky, a professor at the New York University School of Law.

Not fully accounting for carbon damages would skew any cost-benefit analysis of a proposed rule in favor of industry, he said, adding that the social cost of carbon had been “instrumental” in allowing agencies to accurately judge how their rules affect the climate.

“Without a proper valuation of climate impact, it would complicate agencies’ good faith efforts to make reasoned conclusions,” Sarinsky said.

A federal judge in Missouri last year had sided with the administration in a similar challenge from another group of Republican states. In that case, the judge said the Republicans lacked standing to bring their lawsuit because they had yet to suffer any harm under Biden’s order.

Friday’s ruling by Cain, a Trump appointee, follows a ruling by another Louisiana judge last summer that struck down a separate Biden attempt to address greenhouse gas emissions by suspending new oil and gas leases on federal lands and water. The judge in that case, U.S. District Judge Terry Doughty, is also a Trump appointee.

In a sign of the shifting politics on the issue, a federal judge in Washington rejected a lease sale in the Gulf of Mexico conducted largely in response to Doughty’s ruling.

U.S. District Judge Rudolph Contreras, an Obama appointee, threw out the lease sale, saying the administration did not adequately take into account its effect on greenhouse gas emissions.