Federal Courts’ Attacks On Biden and EPA Climate Regulations Have Huge Implications for NJ And Murphy DEP CO2 Emission Proposal

US Supreme Court Reviewing EPA Authority Under the Clean Air Act

Federal District Court Just Imposed An Injunction On Use of The Social Cost Of Carbon

Parallel Legal Issues Make Murphy DEP CO2 Proposal Highly Vulnerable To Challenge

A federal judge in the Louisiana District Court recently imposed a temporary injunction on the Biden administration’s implementation of the “Social Cost of Carbon”, for details, see the Washington Post story:

• Court ruling on social cost of carbon upends Biden’s climate plans

That District Court action follows a decision last fall by the US Supreme Court to review EPA’s authority to regulate greenhouse gas emissions under the Clean Air Act, see:

• Supreme Court to weigh EPA authority to regulate greenhouse pollutants

Both federal court actions have huge legal implications for the Murphy DEP’s proposed CO2 emissions rule.

On January 28, 2022, I wrote to DEP Commissioner LaTourette to raise some of these issues and warn of the legal vulnerability of the DEP’s CO2 emissions proposal.

I urged the Commissioner to withdraw the proposal and re-propose a stronger and more legally defensible rule.

Today, I learned of the US District Court’s injunction on implementation of the federal Social Cost of Carbon (SCC).

Administratively, the SCC actually grew out of Clinton Executive Order 12866 regarding economic review of federal rule proposals by the Office of Management And Budget (OMB). Ironically, the origin and role of the SCC is closely related to the industry friendly methodology of cost benefit analysis (read the Biden OMB legal brief appealing the District Court’s injunction).

The OMB brief makes it very clear that the Court’s injunction amounts to regulatory monkey-wrenching (ironically delaying not only regulations, but approvals of major oil, gas and transportation projects. And news media failed to note that a Trump Executive Order also prohibited implementation of the SCC).

But here’s why the Biden administration is legally correct and ultimately will prevail on this issue in federal court, but that may take years (OMB brief):

The DEP CO2 rule proposal uses the same federal Social Cost of Carbon methodology to evaluate the economic impacts of the proposal (at page 79 – emphasis mine):

The DEP proposal also is influenced by Gov. Murphy’s Executive Orders (at page 4):

[Update: The DEP’s assertion of “an overall strategy” and reliance on the Global Warming Response Act is likely to trigger similar legal attacks that the Obama EPA’s interpretation of the federal Clean Air Act’s “best system of emission reduction” did. ~~~ end update]

Unfortunately, the DEP proposal was very poorly drafted and failed to make the non-binding nature of the Gov.’s Executive Orders and the Social Cost of carbon absolutely bullet proof clear. Lack of clarity invites legal mischief.

Worse,  as I wrote on January 28, 2022, the DEP proposal actual mis-represented the legal basis of the proposal, giving the aspirational and voluntary goals of the Global Warming Response Act regulatory teeth the Act does not have (instead of relying on the DEP’s historic legal position, first asserted back in 2004, to rely on the authority of the NJ Air Pollution Control Act to regulate GHG emissions). This is not just a lack of clarity and poor writing, this a fatal legal error.

Thus, there are shared complex legal, methodological, and administrative aspects of the NJ DEP CO2 rule and the EPA regulatory authority issue before the US Supreme Court and the District Court’s injunction on the SCC and implied related Executive Order authorities.

On a policy level, strategically, to the extent that federal EPA rules are delayed or struck down by activist right wing pro-corporate federal courts (or vetoed and/or defunded by a likely Republican Congress in ’23 or rolled back by a Republican President in ’25), that only ramps up the need for stronger State and local government actions.

In this political and legal context, the NJ DEP proposal is likely to invite litigation, regardless of the merits (and I think the DEP proposal is vulnerable to legal challenge).

A legal challenge could block implementation of DEP CO2 emissions rules for years. Worse, an adverse Court decision could set back DEP regulation of GHG emissions for a decade, or require legislative amendments unlikely to pass in the current political environment.

We can not accept those risks and delays, particularly given how weak the DEP proposal is. It’s just not worth it. Common sense strategy requires that the proposal be withdrawn and re-proposed to avoid these litigation traps and remedy legal flaws.

To re-emphasize the importance of these issues, I wrote another warning letter to DEP Commissioner LaTourette and Senator Bob Smith, again urging Commissioner LaTourette to withdraw the proposal and re-proposed a stronger and more legally defensible rule, see:

Dear Commissioner LaTourette and Senator Smith:

In a recent email to you (January 28, 2022), I outlined serious legal flaws with the basis for the Department’s proposed CO2 emission rules and urged you to withdraw the proposal, not respond on the record to public comments, and re-propose a legally defensible and more stringent rule.

Since then, the US District Court in Louisiana imposed a preliminary injunction on the federal government’s implementation of “the Social Cost of Carbon” (SCC), see:

https://www.washingtonpost.com/context/preliminary-injunction-in-louisiana-v-biden/84688797-f037-432a-a881-8cd087140285/?itid=lk_inline_manual_4

The Biden Administration has appealed the injunction, see brief filed by Office Of Information and Regulatory Affairs (OIRA):

https://context-cdn.washingtonpost.com/notes/prod/default/documents/a695d39a-e9b9-4c37-a280-d98b11822902/note/b86162aa-96da-40e3-a988-25cce44f6755.#page=1

The Department’s proposed CO2 emissions rules, among other things, applies the federal Social Cost of Carbon (SCC).

While I understand that the Department’s application of the SCC is NOT a legal or technical basis for the rule proposal and is limited to analyzing the economic impacts of the proposal, the inclusion of the SCC provides further litigation risk (beyond the legal flaws and litigation risks I outlined in my prior note).

The federal litigation also involved various Executive Orders and how they are implemented in the administrative and regulatory processes.

The Department’s proposed CO2 rule, again while not a legal basis for the proposal, includes consideration of various Executive Orders issued by Gov. Murphy.

Thus, while there are significant differences, the federal litigation parallels NJ State law issues with respect to the Department’s CO2 proposal, some of which I raised in my prior note.

I bring this matter to your attention with the intent of avoiding damaging litigation and supporting the strongest possible legal and technical regulatory proposal to reduce GHG emissions as deeply and quickly as feasible.

Therefore, given this federal litigation on the SCC – in addition to other pending legal challenges of EPA authority to regulate GHG emissions – I must reiterate my prior recommendation to withdraw the Department’s CO2 proposal and re-propose a stronger and more legally defensible rule.

I am available to elaboraste or provide additional information. I look forward to your timely and favorable reply

Respectfully,

Bill Wolfe