Zero Zone, Inc. v. United States Department of Energy

The Seventh Circuit Court of Appeals upheld the United States Department of Energy’s (DOE’s) energy efficiency standards for commercial refrigeration equipment, including DOE’s analysis of the standards’ environmental benefits based on the Social Cost of Carbon (SCC). The court concluded that DOE had “acted in a manner worthy of our deference.” The court found that the analytical model upon which the standards were based and DOE’s cost-benefit analysis were supported by substantial evidence and not arbitrary and capricious. The court also said that DOE’s cost-benefit analysis was within its statutory authority. With respect to environmental benefits and the SCC, the court rejected the petitioners’ argument that the Energy Policy and Conservation Act did not permit consideration of environmental factors and also the petitioners’ contention that DOE’s calculation of the SCC was “irredeemably flawed.” The court also rejected arguments that DOE had improperly considered long-term environmental benefits such as carbon reductions but not long-term costs such as worker displacement and that DOE arbitrarily considered global benefits but only national costs.