The Obama administration will not revisit a new rule based on its revised "social cost of carbon" estimate, setting the table for a potential legal challenge from industry groups who say the White House has assessed too high a monetary value for benefits from reducing carbon pollution.
At its core, the issue at hand is the Obama administration's update to the social cost of carbon -- a monetization of savings from reducing carbon pollution -- that's used in cost-benefit analyses when crafting new rules. Industry groups contend the higher estimate the administration is using will make it easier for federal agencies to justify more aggressive regulations. It's drawn lobbying attention in recent months from electric utility and oil firms, underscoring the perceived reach of the change.
Officially, the Energy Department denied a petition from the Landmark Legal Foundation, a conservative group, to reconsider a new standard for microwave ovens, it said in a notice to be published in Tuesday's Federal Register. The new social cost of carbon estimate was first revealed in the new federal microwave standards. DOE's denial of the petition establishes a right to challenge the decision in court.
If a court battle is to come to fruition on the social cost of carbon issue, it's likely several steps away -- ultimately, when the Environmental Protection Agency floats its forthcoming greenhouse gas emission rules for power plants. That's because, at the moment, industry groups petitioning the DOE to withdraw its social cost of carbon estimate lack legal standing on the microwave rule, according to an industry insider and administrative law experts.
Regardless, industry organizations will face an uphill battle, said Cary Coglianese, director of the Penn Program on Regulation at the University of Pennsylvania Law School.
"Is there enough there to go into court? Sure," he said. "It doesn't mean that they will win. The courts happen to be deferential to federal agencies."
Conservative and industry groups want to know more about the inputs and models used to arrive at the new figure, which raises the estimated benefits of reducing carbon pollution by 60 percent.
"This sort of raised people's attention. There was no rulemaking around this. This wasn't a public process," said Greg Bertelsen, director of energy and natural resources policy with the National Association of Manufacturers.
"When they increased the estimate by 60 percent — when you start to look at the rules that are coming down the road, it sort of highlighted the issue and I think people started to realize this will have a very major impact on some very influential rules," Bertelsen added.
The White House quietly released an update to the figure in May through an interagency working group that worked on the original 2010 social cost of carbon calculation. That working group adjusted the estimate, which draws from three peer-reviewed models, again in November to correct technical issues, according to DOE.
Industry groups have criticized that process. They say that while the agencies involved in the working group are known -- they range from executive White House offices to the EPA to the Treasury Department -- the representatives are not. Similarly, they contend too little is known about the models behind the new carbon cost.
The National Association of Manufacturers, American Petroleum Institute, American Chemistry Council and others have filed a petition asking DOE to withdraw the estimate on the basis that the process didn't meet transparency provisions of the Information Quality Act.
Concurrently, the White House Office of Management and Budget will review comments on the estimate -- those are due by the end of January.
But it's unlikely that the Obama administration will backpedal.
In its notice denying the petition, DOE said that the new social cost of carbon figure didn't affect the microwave rule.
"At the final rule stage, rather than change the outcome of DOE’s microwave oven standards, the updated May 2013 (social cost of carbon) values served only as an incremental increase in the benefits of the standards that DOE had already proposed adopting," said Kathleen Hogan, deputy assistant secretary for energy efficiency.
And many experts in the environmental community said the update was long overdue given new information about the impact greenhouse gas emissions has on climate change, including property damage caused by rising sea levels and agricultural losses from extreme weather linked climate change.
Supporters of the new figure also say that industry groups' claims that the rule was crafted out of sight isn't true.
"The administration's 'social cost of carbon' metric is neither new nor hidden; it has been used for over two years and received extensive public input," Laurie Johnson, chief economist with the Natural Resources Defense Council's climate and clean air program, said in a July entry on the environmental group's website. "Pages and pages of public comments have been submitted during open commenting periods for rules using the [social cost of carbon], ranging from fuel economy vehicle requirements to energy efficiency standards for our homes, buildings, and appliances."