President Biden began his term with a flurry of executive actions advancing the Environmental, Social, and Governance ("ESG") policy goals of his administration. A president can create cohesive policy without involving the legislature by directing federal agencies to implement the administration's goals. The Biden administration prioritizes ESG issues as a policy cornerstone, evidenced by President Biden issuing several executive orders to agencies on the administration's ESG initiatives. One example is an executive order that requires agencies to consider the "social cost of carbon" in federal agency decisions, an interim metric meant to quantify the costs to society from burning of fossil fueling for a particular source.
Recently, we predicted that states may push back against President Biden's use of executive power to advance his administration's policies, and that the judicial system would play a key role in defining the scope of that authority. In a recent lawsuit brought by several states, a Louisiana federal district judge issued a temporary injunction preventing agencies from implementing the social cost of carbon metric. Generally, the states raised several issues challenging the order, including whether the social cost of carbon metric should be subject to notice and comment rulemaking and if the order exceeded congressional authority by basing policy on global considerations.
The Biden Administration decided to appeal the decision, so the opinion is not a death knell to the social cost of carbon metric. However, it does expose the susceptibility of policy-making through executive action to legal challenges that, even if unsuccessful, could significant delay the implementation of policy.
Additionally, it creates uncertainty for businesses over the ever-changing ESG landscape and what policies and goals apply to and affect their operations.