Released March 09, 2022 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--What the energy gods give, they also can take back.
Oil & Gas interests, Republican lawmakers and climate change doubters cheered a ruling early last month that stopped the Biden administration from factoring its "social cost of greenhouse gas emissions" into federal regulatory decisions.
On its first day in office, the Biden administration had restored a $51 per-ton fee on greenhouse gas (GHG) emissions for projects seeking federal approval. The Obama administration first implemented that $51 per-ton fee, relying on the analytic work of its Interagency Working Group on the Social Cost of Greenhouse Gases (IWG). But President Donald Trump subsequently cut it back sharply, to between $1 per ton and $7 per ton.
In restoring the $51 per-ton fee on GHG emissions, Biden's day one Executive Order (EO) 13990 stated, "It is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account. Doing so facilitates sound decision-making, recognizes the breadth of climate impacts, and supports the international leadership of the United States on climate issues."
The IWG's calculation of the social cost of GHGs included "changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services. An accurate social cost is essential for agencies to accurately determine the social benefits of reducing greenhouse gas emissions when conducting cost-benefit analyses of regulatory and other actions."
The social costs of GHGs attempted to account for negative effects of climate change, including droughts, wildfires and extreme weather, that have grown more frequent and intense as the atmospheric concentration of carbon increased in recent years.
A higher GHG fee presumably would reduce GHG emissions, or even reduce the number of hydrocarbon projects approved. Fewer emissions from those hydrocarbon projects would lower the damage to life and property from global climate change. Further, when GHGs are reduced, other companion pollutants would be reduced, lowering a proposed hydrocarbon project's negative effect on human health. That could be shown in fewer trips to the hospital for respiratory ailments or heart disease. Qualitatively, the sum of avoided climate change-related impacts and human-health impacts would be counted as "benefits," against which the costs of regulation or remediation can be weighed. Regulatory agencies are supposed to weigh benefits against costs in their decisions. A dramatically higher tally of benefits could be used to justify the higher costs of remediation for specific projects.
Ten Republican governors sued in federal court last April, alleging the executive order failed to follow the Administrative Procedure Act, which requires public notice and comment for major federal undertakings. Further, they alleged the president could not act unilaterally on such a sweeping matter; Congress needed to pass a bill to apply a social cost of carbon to federal rule-making. Finally, the GOP plaintiffs complained against the executive order's scope--that it included the worldwide effects of U.S. GHG emissions.
The Republican plaintiffs won. In his February 11 decision in the case, State of Louisiana et al. versus Joseph R. Biden Jr, et al., Judge James Cain of the U.S. District Court for the Western District of Louisiana granted a preliminary injunction barring the Biden administration from using the work of the IWG in federal rulemakings.
There was joy in the oil and gas community, the Republican party and those who doubted the existence of climate change.
The good feelings were short-lived. In a detailed February 19 statement to that judge, Dominic Mancini with the Office of Management and Budget (OMB) said the preliminary injunction would cause chaos across the federal government as it would force federal agencies to immediately halt work on at least 38 proposed rules and decisions. Cain's ruling also conflicted with orders from a federal court in California as well as compliance with the National Environmental Policies Act (NEPA). The Justice Department indicated it would appeal the ruling by Cain, a Trump appointee.
"The cumulative burden of the Preliminary Injunction is quite significant. Regulatory impact analyses and analyses in support of other agency actions are often very complex and time-intensive studies that agencies can spend months developing and refining," Mancini wrote.
One cluster of projects that was stopped in its tracks by the court order was proposed oil and gas lease sales on federal lands, which were scheduled to be finalized around the time of Cain's ruling. Suddenly, the "energy dominance" crowd was outraged, but it criticized the administration, not the judge.
Ironically, in seeking to prevent the Biden administration from applying a $51 per-ton social cost of GHGs, GOP plaintiffs argued that such a high cost would impede oil and gas production. Now they were angry that proposed lease sales were halted.
The Biden administration said it could not proceed with those leases as long as the judge's order stood. In blasting the administration's delay in leasing federal lands, U.S. Senator John Barrasso (Wyo.), ranking minority member of the Senate Energy and Natural Resources Committee, said, "Even in the face of a global energy crisis, historic inflation, and skyrocketing gasoline prices, the Biden administration continues to crush U.S. energy production."
At the time of Cain's ruling, the Department of the Interior was finalizing a decision to auction about 179,001 acres of public lands in Wyoming to oil and gas drillers. Separate lease auctions were scheduled for public lands in Montana, Utah, and New Mexico. It was not clear if offshore lease applications were affected by the judge's ruling.
An official at the American Petroleum Institute (API) added that the delay "not only violates (the Biden administration's) statutory obligations, but also complicates efforts to address rising energy costs and ensure our European allies have a stable supply of energy."
In an interview with CNBC, Michael Freeman, a senior attorney at Earthjustice, said Cain's ruling was "deeply flawed and contained numerous legal and factual errors," and that the government's decision to delay new leases was unintended fallout.
"Louisiana, and the oil and gas industry, have tripped over their own feet in trying to force the federal government to rush full speed ahead with irresponsible oil and gas development," he added.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: LinkedIn.
Oil & Gas interests, Republican lawmakers and climate change doubters cheered a ruling early last month that stopped the Biden administration from factoring its "social cost of greenhouse gas emissions" into federal regulatory decisions.
On its first day in office, the Biden administration had restored a $51 per-ton fee on greenhouse gas (GHG) emissions for projects seeking federal approval. The Obama administration first implemented that $51 per-ton fee, relying on the analytic work of its Interagency Working Group on the Social Cost of Greenhouse Gases (IWG). But President Donald Trump subsequently cut it back sharply, to between $1 per ton and $7 per ton.
In restoring the $51 per-ton fee on GHG emissions, Biden's day one Executive Order (EO) 13990 stated, "It is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account. Doing so facilitates sound decision-making, recognizes the breadth of climate impacts, and supports the international leadership of the United States on climate issues."
The IWG's calculation of the social cost of GHGs included "changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services. An accurate social cost is essential for agencies to accurately determine the social benefits of reducing greenhouse gas emissions when conducting cost-benefit analyses of regulatory and other actions."
The social costs of GHGs attempted to account for negative effects of climate change, including droughts, wildfires and extreme weather, that have grown more frequent and intense as the atmospheric concentration of carbon increased in recent years.
A higher GHG fee presumably would reduce GHG emissions, or even reduce the number of hydrocarbon projects approved. Fewer emissions from those hydrocarbon projects would lower the damage to life and property from global climate change. Further, when GHGs are reduced, other companion pollutants would be reduced, lowering a proposed hydrocarbon project's negative effect on human health. That could be shown in fewer trips to the hospital for respiratory ailments or heart disease. Qualitatively, the sum of avoided climate change-related impacts and human-health impacts would be counted as "benefits," against which the costs of regulation or remediation can be weighed. Regulatory agencies are supposed to weigh benefits against costs in their decisions. A dramatically higher tally of benefits could be used to justify the higher costs of remediation for specific projects.
Ten Republican governors sued in federal court last April, alleging the executive order failed to follow the Administrative Procedure Act, which requires public notice and comment for major federal undertakings. Further, they alleged the president could not act unilaterally on such a sweeping matter; Congress needed to pass a bill to apply a social cost of carbon to federal rule-making. Finally, the GOP plaintiffs complained against the executive order's scope--that it included the worldwide effects of U.S. GHG emissions.
The Republican plaintiffs won. In his February 11 decision in the case, State of Louisiana et al. versus Joseph R. Biden Jr, et al., Judge James Cain of the U.S. District Court for the Western District of Louisiana granted a preliminary injunction barring the Biden administration from using the work of the IWG in federal rulemakings.
There was joy in the oil and gas community, the Republican party and those who doubted the existence of climate change.
The good feelings were short-lived. In a detailed February 19 statement to that judge, Dominic Mancini with the Office of Management and Budget (OMB) said the preliminary injunction would cause chaos across the federal government as it would force federal agencies to immediately halt work on at least 38 proposed rules and decisions. Cain's ruling also conflicted with orders from a federal court in California as well as compliance with the National Environmental Policies Act (NEPA). The Justice Department indicated it would appeal the ruling by Cain, a Trump appointee.
"The cumulative burden of the Preliminary Injunction is quite significant. Regulatory impact analyses and analyses in support of other agency actions are often very complex and time-intensive studies that agencies can spend months developing and refining," Mancini wrote.
One cluster of projects that was stopped in its tracks by the court order was proposed oil and gas lease sales on federal lands, which were scheduled to be finalized around the time of Cain's ruling. Suddenly, the "energy dominance" crowd was outraged, but it criticized the administration, not the judge.
Ironically, in seeking to prevent the Biden administration from applying a $51 per-ton social cost of GHGs, GOP plaintiffs argued that such a high cost would impede oil and gas production. Now they were angry that proposed lease sales were halted.
The Biden administration said it could not proceed with those leases as long as the judge's order stood. In blasting the administration's delay in leasing federal lands, U.S. Senator John Barrasso (Wyo.), ranking minority member of the Senate Energy and Natural Resources Committee, said, "Even in the face of a global energy crisis, historic inflation, and skyrocketing gasoline prices, the Biden administration continues to crush U.S. energy production."
At the time of Cain's ruling, the Department of the Interior was finalizing a decision to auction about 179,001 acres of public lands in Wyoming to oil and gas drillers. Separate lease auctions were scheduled for public lands in Montana, Utah, and New Mexico. It was not clear if offshore lease applications were affected by the judge's ruling.
An official at the American Petroleum Institute (API) added that the delay "not only violates (the Biden administration's) statutory obligations, but also complicates efforts to address rising energy costs and ensure our European allies have a stable supply of energy."
In an interview with CNBC, Michael Freeman, a senior attorney at Earthjustice, said Cain's ruling was "deeply flawed and contained numerous legal and factual errors," and that the government's decision to delay new leases was unintended fallout.
"Louisiana, and the oil and gas industry, have tripped over their own feet in trying to force the federal government to rush full speed ahead with irresponsible oil and gas development," he added.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: LinkedIn.
