Twelve States Challenge Legality and Constitutionality of Biden Administration’s Use of Social Cost of Carbon

In a lawsuit filed this week, 12 state attorneys general (AGs) are asking a federal district court in Missouri to place an “immediate and permanent” cease-and-desist order on federal agencies’ use, in rulemakings and other regulatory activities, of the Biden administration’s recently published interim estimates of the social cost of greenhouse gases (SC-GHG). The lawsuit is worth reading if only for its detailed explanation of why setting the social cost of greenhouse gases “is an inherently speculative, policy-laden, and indeterminate task, which involves attempting to predict such unknowable contingencies as future human migrations, international conflicts, and global catastrophes for hundreds of years into the future.”

The AGs also spotlight the one-sided (biased) character of federal agencies’ use of SC-GHG estimates. Agencies never look at the other side of the ledger—the social benefits of carbon-based energy. You know, small stuff like how the development and use of U.S. fossil energy resources “lift millions of people out of poverty, eliminate hunger, promote economic development and opportunity, create millions of jobs, enable innovation and entrepreneurship, encourage industry and manufacturing, promote America’s energy independence, and create the conditions for liberty to flourish.”

Thus, the Biden administration’s Interagency Working Group (IWG) on the social cost of greenhouse gases “failed to consider important aspects of the problem.” Such behavior is deemed arbitrary and capricious under D.C. Circuit Court of Appeals case law.

The AGs make three main legal arguments:

1. The Biden administration’s SC-GHG estimates injure the AGs’ respective states. The SC-GHG estimates implicitly require a “massive expansion” of federal regulation that would be ruinous to state economies and encroach on traditional state police-power regulation of agriculture, manufacturing, transportation, construction, and power generation.
2. President Biden’s executive order dictating the use of government-wide SC-GHG estimates in rulemakings violates the separation of powers. The directive is “quintessentially legislative” but has no discernible authority in either the Constitution or any statutory delegation from Congress.  
3. The IWG violated the Administrative Procedure Act not only by ignoring important aspects of the problem but also by failing to “provide any opportunity for notice and public comment before promulgating the Interim Values.”

My unsolicited advice to the AGs is to add two further points to their critique of the Biden administration’s SC-GHG program.

First, the administration not only failed to weigh and balance the evident economic and social benefits of carbon-based energy against the speculative social costs of carbon, it also gave short shrift to the evident agricultural benefits of carbon dioxide (CO2) emissions. The IWG uses three models to calculate the social cost of greenhouses gases. Two of the models (abbreviated DICE and PAGE) ignore the abundantly documented agricultural benefits of atmospheric CO2 fertilization. Those models are structurally biased and therefore are unfit to justify regulatory decisions.

Second, the IWG’s assessment of climate change risks is not only speculative, but implausible. As University of Colorado Professor Roger Pielke, Jr. shows, four of the five baseline emission trajectories from which the IWG calculates the social cost of carbon dioxide assume levels of CO2 emissions that probably could not be achieved even if all nations “made it a policy goal to burn as much coal as possible over the coming centuries.”

Missouri Attorney General Eric Schmidt is leading the 12-state coalition challenging the Biden administration’s SC-GHG. He is joined by the AGs of Arkansas, Arizona, Indiana, Kansas, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Tennessee, and Utah. The following excerpts from Schmidt’s press release provide additional information about the lawsuit:

The lawsuit, which challenges President Biden’s Executive Order 13990, titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” alleges that the Biden Administration did not have the authority to issue binding numbers for the “social costs of greenhouse gases” to be used in federal regulations, and that the potential stringency of federal regulations that could come from this executive order will stifle manufacturing, harm agriculture, and have serious economic impact across the country.

The lawsuit notes that the interagency working group’s interim values, assuming similar rates of emission between 2019 and 2020 in the United States and a discount rate of 3 percent, place the social cost of carbon dioxide, methane, and nitrous oxide at approximately $9.5 trillion per year—$269 billion for carbon dioxide, $990 billion for methane, and $8.24 trillion for nitrous oxide.

The suit states, “In practice, President Biden’s order directs federal agencies to use this enormous figure to justify an equally enormous expansion of federal regulatory power that will intrude into every aspect of Americans’ lives—from their cars, to their refrigerators and homes, to their grocery and electric bills. If the Executive Order stands, it will inflict hundreds of billions or trillions of dollars of damage to the U.S. economy for decades to come. It will destroy jobs, stifle energy production, strangle America’s energy independence, suppress agriculture, deter innovation, and impoverish working families.”

In arguing that President Biden’s administration did not have the authority to enact this executive order … the lawsuit points to several reasons, including that the executive order did not have statutory authorization to create the working group, nor did the working group have statutory authority to set values for the social costs of carbon, methane, and nitrous oxide that “shall be used by regulatory agencies administering statutes pursuant to statutory delegation of authority enacted by [C]ongress.”

Further, the lawsuit states that dictating binding values for the social costs of carbon, nitrous oxide, and methane is a legislative action “that the Constitution vests exclusively in Congress through the vesting clause of Article I, § 1 of the Constitution.” The President’s exercise of this legislative authority thus violates the separation of powers, the most fundamental bulwark of liberty.

The lawsuit also alleges that the Working Group violated the requirements of the Administrative Procedure Act. The lawsuit points to the fact that there was no public notice or opportunity for public comment before publishing interim estimates, and that the proper weight was not given to the positive benefits of “affordable and reliable domestic energy and agricultural production.”