Louisiana Loses Social-Cost-of-Carbon Lawsuit in the Fifth Circuit (Again)

Today a unanimous panel of the U.S. Court of Appeals for the Fifth Circuit dismissed a red-state challenge to the Biden Administration’s interim Social Cost of Carbon estimates due to a lack of Article III standing. This is not a surprise. While a district court had initially enjoined the Biden Administration’s use of these estimates (in a tortured legal opinion), this decision was stayed by a different Fifth Circuit panel last year (and the Supreme Court refused to intervene). A similar challenge was also rejected on standing grounds by the U.S. Court of Appeals for the Eighth Circuit.

Judge Wiener wrote for the unanimous panel, joined by Judges Higginson and Wilson. Judge Wiener’s relatively brief opinion begins:

On January 20, 2021, the Biden Administration issued an executive order that re-established an interagency working group (“Working Group”) to formulate guidance on the “social cost of greenhouse gases.” That order directed the Working Group to publish dollar estimates quantifying changes in carbon, methane, and nitrous oxide emissions (collectively, “greenhouse gases”) for consideration by federal agencies when policymaking. The Working Group has since published “Interim Estimates” based largely on the findings of its predecessor working group.

The Plaintiffs-Appellees States (“Plaintiffs”) challenge E.O. 13990 and the Interim Estimates as procedurally invalid, arbitrary and capricious, inconsistent with various agency-specific statutes, and ultra vires. They obtained a preliminary injunction in the district court. Defendants-Appellants (“Defendants”) appealed, and a panel of this court stayed the injunction.

We now dismiss this action because Plaintiffs have failed to meet their burden to prove standing. Plaintiffs’ allegations of “injury in fact” rely on a chain of hypotheticals: federal agencies may (or may not) premise their actions on the Interim Estimates in a manner that may (or may not) burden the States. Such injuries do not flow from the Interim Estimates but instead from potential future regulations, i.e., final rules that are subject to their own legislated avenues of scrutiny, dialogue, and judicial review on an appropriately developed record.

For reasons that Judge Wiener explains, it is difficult to demosntrate Article III injury from an Exeuctive Order until that order results in a specific agency action that harms the plaintiff.

Plaintiffs here allege that fiscal, procedural, and sovereignty-related harms might arise from regulations molded by the Interim Estimates. Although any one of these would satisfy “injury in fact,” we conclude that the allegations here fail to do so. At the core of our conclusion is this: E.O. 13990 does not require any action from federal agencies. Agencies are neither punished nor rewarded for their treatment of the Interim Estimates. Agencies must exercise discretion in conducting their cost-benefit analyses and deciding to use the Interim Estimates as “appropriate and consistent with applicable law.” Since nothing in E.O. 13990 requires States to implement the Interim Estimates, Plaintiffs rely on harms wrought by regulations that may result from the Interim Estimates. It is well accepted that the mere “possibility of regulation” fails to satisfy injury in fact. . . .

We find no “injury in fact” here, because Plaintiffs’ alleged harms “rel[y] on a highly attenuated chain of possibilities.” A federal agency must factor the Interim Estimates into its deliberations on a rule that harms the States. The actual rulemaking considerations of a federal agency are not determinable in advance. Rather, an agency’s reliance on the Interim Estimates when crafting a future regulation is mere conjecture. Although we have found standing when the economic costs of a challenged policy were imminent and measurable,  the Interim Estimates are not certain to spawn the alleged harms. A panoply of reasons can underlie a regulation, and agencies are required to dictate and publicly report such reasons. It is through this process that we know that neither of Plaintiffs’ specific examples of injurious regulation were brought about by the Interim Estimates: In both instances, the relevant agencies reported that their decisions were not premised on those Estimates. The alleged harms would have occurred with or without the Interim Estimates. . . .

We conclude that Plaintiffs have not established standing here, which ends our analysis. Plaintiffs contemplate harms that are several steps removed from—and are not guaranteed by—the challenged Executive Order or the Interim Estimates. The states cannot do away with their alleged parade of horribles in a single swipe at the duly elected executive. Although the “case-by-case approach that this requires is understandably frustrating [to plaintiffs],” this remains the “the traditional, and remains the normal, mode of operation of the courts.”

This opinion is clear, direct, and correct. If states (or anyone else) is to challenge the Biden Administration’s Social Cost of Carbon estimates, they will have to challenge a discrete agency action that relied upon these estimates. They cannot challenge the estimates independently of an actual agency action that affects them.

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