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Fifth Circuit: Biden administration can quantify costs of harmful emissions

Red states’ "generalized grievance" against the Biden administration's climate change cost metric is not enough to strike it down, a three-judge panel ruled.

(CN) — The Biden administration can factor the social cost of greenhouse gas emissions into environmental regulations and oil and gas leases, the Fifth Circuit ruled late Wednesday, staying an injunction that blocked it from using the metric.

First adopted in the late 2000s by the administration of President George W. Bush, the metric combines climate science and economics to put a price on the damage done by greenhouse gas emissions and the benefits of reducing them.

President Donald Trump, in 2017, disbanded an advisory board called the Interagency Working Group that President Barack Obama had formed in 2009 to develop a method for quantifying the costs of emissions, and cut the government’s estimate of carbon dioxide's social costs to around $8 per metric ton.

Following his presidential campaign in which he promised to spearhead a clean energy revolution and put the U.S. on track for net-zero emissions by 2050, President Joe Biden reinstituted the working group, which rolled out interim rules in February 2021 that raised the social cost of emissions back to the same levels they were under Obama in 2016 – $51 for the release of a metric ton of CO2 and $1,500 and $18,000 for that amount of methane and nitrous oxide.

Led by Louisiana, a group of Republican-controlled states promptly sued Biden and several federal agencies and officials over the interim regulations.

They claimed lumping in these social costs would increase their regulatory burdens, as they would have to include them when, for example, coming up with state plans to reduce air pollution in compliance with Environmental Protection Agency regulations.

They also argued the metric would artificially increase the cost estimates of the government’s sale of oil and gas leases on federal lands, which would reduce the number of leased parcels and hurt their budgets as 50% of revenues from such leases go to the state in which they are located under the Mineral Leasing Act.

U.S. District Judge James Cain, a Trump appointee, sided with the states and issued an injunction Feb. 11, blocking the government from using the metric.

In response, the Biden administration froze all new federal leases and permits for oil and gas drilling and asked the Fifth Circuit to intervene.

A three-judge panel of the New Orleans-based appellate court stayed the injunction Wednesday in a unanimous unsigned opinion.

The panel found the red states lack standing because their claims amount only to a “generalized grievance” of how the Biden administration is considering the social costs of greenhouse gas emissions, and they have not identified any agency action or regulation factoring in these costs that has harmed them.

“The preliminary injunction halts the president’s directive to agencies in how to make agency decisions, before they even make those decisions,” states the nine-page order, issued by U.S. Circuit Judges Gregg Costa and James Graves, both Obama appointees, and Leslie Southwick, a George W. Bush appointee. (Emphasis in original.)

Environmentalists praised the ruling but urged the White House to address the climate crisis with more urgency.

"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,” said attorney Kassie Siegel, director of the Center for Biological Diversity's Climate Law Institute.

“When it comes to the climate, Biden can't continue business as usual. He has to meet this international crisis with bold executive action that speeds the transition to renewable energy and away from dangerous fossil fuels."

Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia and Wyoming joined Louisiana in the challenge.

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