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The last month was in Louisiana v. BidenA federal court in Texas ordered all federal agencies to stop relying on or considering the social cost of carbon estimates created by an Interagency Working Group, which was appointed by President Biden. As I explained in my post, this decision misapplied several administrative law doctrines.

The U.S. Court of Appeals Fifth Circuit panel granted a stay of injunction by the district court, pending appeal. The panel, which included Judges Southwick and Graves as well as Costa, explained in a short per curiam opinion why it was incorrect for the district court to prohibit agencies from using the IWG carbon cost estimates.

This opinion by the Fifth Circuit provides context and helps to understand why plaintiff states don’t have standing not to pursue their claims. However, they may be able to challenge agency actions that are based on social cost of carbon estimates. Below are the key portions.

The cost-benefit analysis is performed by federal agencies when they issue regulations or make other actions that have economically important effects. While this process has been used since the Carter Administration, but it began in the Nixon administration. Executive Order 12866 was issued by President Clinton in 1993. It mandates the prepublication process for economic-significant regulations. Exec. 12866. 12866 . . . States:[e]Every agency will evaluate the costs and benefits of proposed regulations. However, it is important to recognize that costs and benefits may not be easily quantified. Later administrations maintained EO 12866’s commitment to costbenefit analytics and strengthened them with additional directives, or guidelines, for regulatory analysis.

The 2003 Circular A-4 was issued by the Office of Management and Budget to guide agencies in the conduct of the cost-benefit analysis outlined in EO 12866. Look!OMB Circular No. A-4, September 17, 2003. Circular A-4 compliance is not required under any statute or regulation. It is also not binding on any agency.

Agency cost-benefit analysis must consider greenhouse gas emissions. The impact of these emissions on various factors like health, agriculture, and sea levels, can be quantified into dollar amounts per ton of gas emitted—i.e., the Social Cost of Greenhouse Gases (SC-GHG).

Obama created the Interagency Working Group in 2009 to ensure that SC-GHG is determined consistently. Based on peer-reviewed frameworks, the IWG created a method for quantifying GHG emissions to social cost estimates.

Trump in executive order 13783 disbanded IWG and the method it used to quantify SC-GHG. . . This order is still in effect. However, agencies will continue to “monetize changes in greenhouse gas emission resulting from regulation” according to Circular A-4. . . .

Biden, the President of the United States signed Executive Order 13990 in January 2021. He also reinstated IWG as his advisor on SC-GHG. . . .  In addition, the IWG received instructions to produce new SC-GHG estimates, and to publish interim estimates in 30 days. This is consistent with law. EO13990 states that agencies are required to use Interim estimates when conducting cost-benefit analyses in preparation for agency or regulatory action. In February 2021, the Interim Estimates were published by IWG. These Interim Estimates were published in February 2021. They are identical to the SC-GHG estimates of 2016, but adjusted for inflation.

In April 2021, the Plaintiff States sued the United States Government Defendants to challenge the Interim Estimates. According to them, the Interim Estimates will result in increased regulatory burdens on agencies that conduct cost-benefit studies. According to the Administrative Procedures Act, (APA), several lawsuits were brought by the Plaintiff States to challenge Interim Estimates. Plaintiff States claim rely solely on Interim Estimates’ broad usage. They are not challenging any regulation or action by agencies.

A preliminary injunction was issued by the District Court in February 2022 prohibiting the Government defendants from using any Interim Estimates in any form. The Government Defendants seek to suspend the injunction pending appeal. They claim that, among other reasons, Plaintiff States don’t have standing, that their claims do not ripe and that Interim Estimates should not be considered final agency action within the meaning of the APA. The Government Defendants made an overwhelming showing they were likely to prevail on merits and there is no balance in harms for the Government. We GRANT their motion. . . .

Because the Plaintiff States do not have standing, the Government Defendants will likely prevail on the merits. Plaintiff States claimed that the increased regulatory burdens that could result from SC-GHG or Interim Estimates may have caused an “increased injury”. However, this injury does not meet the requirements for Article III standing as it is merely hypothetical. . . . It is likely that the Government Defendants will also succeed in showing that Plaintiff States failed to fulfill their obligation on causation or redressability. It is difficult to trace the increase in regulatory burdens that the Plaintiff States will fear from the Interim Evaluations. This is because agencies look at a large number of factors when deciding whether or not to regulate. The Plaintiff States don’t challenge any specific regulation. . . .

They are not sufficient to satisfy the Plaintiff States. At this point, we do not discern any injury that would meet Article III. . . . Accordingly, the claims of Plaintiff States amount to a collective grievance about how current administration views SC-GHG. That does not conform to Article III standing. Lujan“, 504 U.S.A.[R]espondents chose
“Challenge a greater generalized level Government action” instead
It is rare to find “specifically identifiable government violations of law”,
ever appropriate for federal-court adjudication.” (citation omitted)).

The Government Defendants showed they would be permanently harmed if there is no stay. Preliminary injunction stops the President from directing agencies how to make decisions about agency matters before those decisions are made. Additionally, it orders agencies comply with an earlier administration’s guidance document that prescribes a specific approach to regulatory analysis. However, that document wasn’t mandated under any statute or regulation. The preliminary injunction sweeps broadly and prohibits reliance on § 5 of EO 13990, which creates the IWG, a group created to advise the President on policy questions in addition to creating the Interim Estimates. It’s unclear why the Plaintiff States object to the Interim Estimates and want to stop the President from creating the IWG. It effectively hinders agencies’ ability to consider SC-GHG according to the order the current administration is prioritizing within the legal limits. Federal courts are not authorized to issue a preliminary injunction directing the current administration to follow prior administrations policies regarding regulatory analysis, absent specific agency actions to review. Without a stay, we find that the Government Defendants have been irreparably damaged. . . .

Summarising, Plaintiff States claims stem from a generalized grievance regarding the use Interim estimates in cost-benefit analyses and agency action. However, their injury is not due to the Interim estimates. It stems from any future, speculative or unknown regulation which may increase burdens and could result from SC-GHG. Conclusion: The Government Defendants’ success rate on this appeal is shown by the standing inquiry. We also consider the other factors such as the public.
Favor granting a temporary injunction to stop interest

It’s possible for plaintiff states to request en banc appeal of the decision. This could be due in part to the Fifth Circuit’s relatively liberal panel. But this panel opinion isn’t unorthodox or “liberal”. This is an easy application of Article III’s standing requirements. Moreover, as  I detailed in my prior post on this litigation, standing is but one of multiple reasons the plaintiff states’ claims should have been dismissed.

I want to reiterate the fact that neither the Fifth Circuit opinion nor the IWG’s social cost of carbon estimates were reasonable or reliable. It also does not assume that the Biden Administration has the right climate policies. The Fifth Circuit instead looked at whether plaintiff states were bringing claims to federal courts that they can hear. And it succeeded.