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Environment & Energy Report

Court’s Ruling Against Trump Elevates Debate on Climate Metric

July 20, 2020, 10:00 AM

A federal district judge’s decision striking down the Trump administration’s rollback of methane emissions standards could fuel other litigation over an obscure tool used to study the impacts of climate change.

California Judge Yvonne Gonzalez Rogers last week rebuked the Bureau of Land Management for eliminating Obama-era restrictions on releases of the potent greenhouse gas from oil and gas infrastructure on public and tribal lands.

Her opinion included a detailed assault on how the land agency used a metric called the social cost of methane, calling the approach “riddled with flaws.”

Industry advocates say the judge improperly substituted her own judgment instead of deferring to the agency. But legal scholars expect litigants to use the decision to push for enhanced climate analysis in other federal decisions.

“This decision will certainly be important as we work through litigation in other contexts,” said Hana Vizcarra, a staff attorney at Harvard Law School’s Environmental and Energy Law Program.

Global vs. Domestic Costs

The social cost of methane and its cousin, the social cost of carbon, assign a dollar amount to the on-the-ground impacts of greenhouse gas emissions. Obama administration officials in 2016 used the metric, recommended by an interagency working group of experts, to conclude that the benefits of slashing methane emissions outweighed the costs.

But upon taking office, President Donald Trump issued an executive order adopting a new approach for calculating the cost of greenhouse gas emissions. The Bureau of Land Management scaled back the methane rule, relying in part on the new climate metric that drastically changed the cost-benefit analysis.

The new version narrowed the projection of the costs of climate change by looking only at domestic impacts, not global impacts.

Gonzalez Rogers rejected the narrower metric, noting that “focusing solely on domestic effects has been soundly rejected by economists as improper and unsupported by science.”

Holland & Hart LLP partner Kelly Johnson said the ruling shows that “just because something’s withdrawn, doesn’t mean it’s not the best science anymore.”

According to a recent Government Accountability Office report, the Trump administration’s estimate of the social cost of greenhouse gases is seven times lower than what the Obama administration used, thanks to the domestic-only approach and the incorporation of different discount rates.

Critics of the domestic-only analysis say it ignores how the U.S. and the rest of the world are interconnected, including through trade, geopolitical security, Americans living abroad, and U.S. business interests around the world.

Proponents of narrowing the calculation say the approach properly focuses an agency’s analysis on impacts on U.S. soil, rather than making American government and industry shoulder full accountability for a global issue.

“The court envisions a domestic solution to a global problem,” said King & Spalding LLP partner Marcella Burke, an Interior Department official during the Trump administration.

The Bureau of Land Management and oil and gas advocates said they disagree with the court’s ruling. Western Energy Alliance President Kathleen Sgamma said “this is an example where the judge is substituting her judgment for that of the agency’s on a very technical issue that typically receives the greatest level of deference from the courts.”

Powerful Warning

But the decision serves as a powerful warning to other agencies seeking to justify rollbacks by using a domestic-only metric to study the social costs of greenhouse gases, said Jason A. Schwartz, legal director for New York University’s Institute for Policy Integrity. The group filed an amicus brief supporting challenges to the Trump administration’s methane rollback.

“No administration can change what the best science or the best economics is by fiat,” he said, paraphrasing the opinion. “You can’t cherry-pick which aspects of a model or which recommendations from a scientific body or literature you want, and then ignore the rest.”

Similar debates over the social cost of greenhouse gases—or about proper cost-benefit analysis more generally—are cropping up in litigation over the Trump administration’s decisions to undercut Obama-era targets for vehicle emissions, and constrain how the Environmental Protection Agency weighs the collateral benefits of air pollution rules.

“It doesn’t bode well for some of their other rulemakings,” Vizcarra said of the Trump administration.

District court decisions don’t create binding precedent for other courts, but they can be persuasive.

Implications for Other Cases

What’s less clear, Vizcarra said, is whether the ruling will help climate advocates force agencies to use the social cost of carbon in the first place. The California court’s frustrations stemmed from the fact that the Obama administration used one approach, and the Trump administration used a very different one without adequate justification, she said.

Johnson, the Holland & Hart lawyer, said the social cost of carbon is more appropriate for broad rulemakings, rather than individual project approvals.

And Baker & Hostetler LLP attorney Mark S. Barron pointed to district court decisions that have rejected environmentalists’ push for the Bureau of Land Management to use the climate metric in oil and gas leasing decisions.

A federal district court, for example, last year rejected arguments that the agency should have conducted a cost-benefit analysis, including using the social cost of carbon, before approving oil and gas development in Colorado’s North Fork Valley.

Environmental groups have also repeatedly demanded that the Federal Energy Regulatory Commission use the metric when analyzing the impacts of natural gas pipelines. Federal judges so far haven’t required FERC to use it, but they have ordered the agency to better explain its decision not to.

But Schwartz said the language in this week’s methane decision is still useful in cases pushing for that analysis. The opinion says the National Environmental Policy Act requires agencies to explain the significance of emissions, rather than simply tallying greenhouse gases, he said.

“An agency can’t ignore a scientifically robust tool to assess actual environmental impacts when that tool exists,” he said.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Anna Yukhananov at ayukhananov@bloombergindustry.com

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