Judge Endorses Use of the Social Cost of Carbon in NEPA Analysis

Posted on July 21st, 2014 by Akiko Shimizu

By Ellii Cho, Summer Legal Intern

smoke-238241_640In 2010, the U.S. government formed an interagency working group of scientific and economic experts to develop an estimate of the social cost of carbon (SCC). The SCC puts a dollar figure on the damages done or damages avoided for possible scenarios resulting in discrete amounts of carbon dioxide emission. Designed for use in federal rulemakings, the SCC aims to provide a consistent and defensible quantification of the economic impacts of climate change. For example, it is used to assess the climate impact of regulations such as fuel economy standards for cars or appliance efficiency standards. Although the SCC is intended to be comprehensive, some critics have argued that the 2015 estimate of $37 per metric ton of CO2 underestimates the damages by failing to consider all relevant and material data.

In the midst of the controversy surrounding the SCC’s accuracy, the U.S. District Court for the District of Colorado recently endorsed the use of the SCC in environmental analysis under the National Environmental Policy Act (NEPA). In High Country Conservation Advocates v. United States Forest Service[1], a group of non-profit environmental organizations sued several federal agencies that together issued a permit for on-the-ground coal exploration activities in the pristine Sunset Roadless Area in Colorado’s North Fork Valley. The permit allowed two coal companies to build six miles of roads and to clear vegetation for several drill pads. As required by NEPA, the agencies evaluated the environmental impact of the proposed activity by preparing an environmental impact statement (EIS). In a draft EIS, the agencies had used the SCC protocol to evaluate the greenhouse gas (GHG) impacts from the mining but decided to abandon it in the final EIS after an agency economist called the SCC “controversial.” The final EIS stated that an SCC analysis was impossible and only used the quantification of the benefits associated with the project while completely excluding the GHG-related costs. Plaintiffs challenged the agencies’ issuance of the permit, claiming that the agencies should have retained the SCC in the final EIS.

In a decision on June 27, 2014, Judge R. Brooke Jackson vacated the approval of the coal exploration plan and declared that the final EIS upon which the permit was granted was misleading. He concluded that the agencies’ explanation that an SCC analysis was impossible was inaccurate because the SCC protocol is, in fact, an available tool for the purpose of appraising project-specific GHG impacts. Judge Jackson further concluded that because the final EIS used the quantification of the benefits associated with the mine’s GHG emissions, the omission of the costs alone was arbitrary and capricious. This case is the first of its kind to consider a challenge to a permit for failing to include the SCC as part of an environmental impact analysis under NEPA, and it recognizes the SCC’s potential to facilitate informed decision-making.

Future implications of the High Country decision are clouded by two factors. First, it is unclear whether Judge Jackson still would have ruled against the permit had the defendant agencies omitted the SCC from the very beginning. Second, because High Country is a trial-level decision, it is persuasive but not binding on future cases seeking an SCC analysis under NEPA. From a broader perspective, however, it is possible that with continuing refinements of the SCC, High Country may be an important step for making the SCC an integral part of NEPA’s environmental impact analysis.



[1] High Country Conservation Advocates v. U.S. Forest Service, 2014 WL 2922751 (D. Colo. June 27, 2014)

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