Federal Agencies Need To Address 'Controversial' Social Cost Of Carbon In NEPA Cost-Benefit Analysis

A federal district court in Colorado recently issued a decision faulting federal agencies for failing to calculate the social cost of greenhouse gas (GHG) emissions on the basis that such a calculation was not feasible. The court reasoned that it was arbitrary and capricious for the agencies to proclaim the benefits of a project while ignoring the costs. This opinion may impose additional obligations on federal agencies to analyze the cost of GHG emissions in evaluating the impacts of a proposed action on the environment.

In High Country Conservation Advocates v. U.S. Forest Service, No. 13-cv-01723-RBJ (D. Colo. June 27, 2014), a group of plaintiffs brought suit against the Forest Service, Bureau of Land Management, and Department of the Interior challenging the issuance of lease modifications that enabled and expanded coal mining exploration on federal land in Colorado. The agencies prepared an environmental impact statement (EIS) pursuant to the National Environmental Policy Act (NEPA) to analyze the impacts of a proposed decision to authorize the lease modifications. In the EIS, the agencies stated that there might be impacts from GHGs resulting from mine operations and from combustion of the coal produced. Though the agencies were able to quantify the amount of potential emissions, they did not discuss the impacts of the emissions. Instead, they claimed such an analysis was not feasible. The plaintiffs argued otherwise.

The court held that the agencies were obligated to calculate the cost of the action for two reasons. First, the court concluded that a social cost of carbon protocol was available to the agencies that would allow them to measure the GHG impact of the proposed action. Though the agencies claimed that this was a "controversial" tool, the court believed it was reasonable to use because it was...