Executive orders issued by presidents since Reagan have required federal agencies to submit cost-benefit analyses of major regulatory actions to the Office of Management and Budget (OMB), even in circumstances where an agency may not consider costs in taking a regulatory action. In addition, agencies, where permitted or required by statute, often justify regulatory actions based on part on analysis of their costs and benefits. For at least two decades, agencies have recognized that cost-benefit analysis of actions that affect emissions of greenhouse gases requires estimates of the costs associated with climate impacts of such emissions. Under the Bush and Obama Administrations, regulators from a variety of federal agencies developed guidelines for estimating the “social cost of carbon,” or SCC, for purposes of such analysis. The Trump Administration, however, directed agencies to disregard those guidelines. When the Biden Administration took office, President Biden reestablished the Interagency Working Group that had developed the earlier guidelines and directed the Working Group to (1) develop a new set of SCC estimates using the best available scientific and economic analysis, and (2) promptly establish interim estimates to serve as guidelines for agency cost-benefit analysis pending the development of a final set of estimates. The Working Group reissued the pre-Trump SCC estimates on an interim basis, and OMB directed agencies to use those estimates in submitting cost-benefit analyses of major regulatory actions for review under Executive Order 12866, which provides for OMB review of regulatory actions.
The State of Louisiana, together with a handful of other states, sued President Biden, the Working Group, and a host of federal agencies seeking an injunction against any reliance on the interim estimates for any purpose. They alleged that the estimates were issued without the notice-and-comment rulemaking procedures generally required by the Administrative Procedure Act (APA) when an agency issues a rule with legally binding effect; that the estimates are arbitrary and capricious; and that, by considering global costs of greenhouse gas emissions, the estimates violate laws that the states claim limit agencies to considering domestic effects of their actions. The federal government argued that the states lack standing; that their claims are not ripe and may only be raised in the context of a challenge to an agency action that is actually based on some challenged aspect of the estimates; that the issuance of the estimates does not constitute “final agency action” that is reviewable under the APA; and that the states’ legal challenges lack merit. Nonetheless, a district court issued an extraordinarily broad preliminary injunction prohibiting agencies from using the working groups’ SCC estimates in any way and prohibiting the Working Group from continuing its work as directed by the President.
The federal government appealed to the Fifth Circuit and obtained a stay of the district court’s preliminary injunction. In the merits briefing, the federal government focused on its standing, ripeness, and final agency action arguments, as well as challenges to the scope of the injunction; it also argued that the states’ substantive challenges to the SCC estimates were not likely to succeed on the merits.
Public Citizen submitted a brief as amicus curiae supporting the government. The brief addresses the states’ claim that the SCC estimates had to be issued through notice-and-comment rulemaking. It explains that the APA requirement of notice-and-comment rulemaking is inapplicable because the estimates do not purport to have the force of law. The regulatory review process does not alter the substantive statutory requirements that officials must obey in exercising regulatory authority delegated by Congress. Although OMB chose to use notice-and-comment procedures in issuing guidelines for regulatory review, the APA did not require it to do. And under the APA, OMB’s choice to use notice-and-comment rulemaking to issue guidelines does not require use of notice-and-comment to modify them.