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Oct. 19, 2021 by Amy Sinden

The Shaky Legal and Policy Foundations of Cost-Benefit Orthodoxy in Environmental Law

This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.

In the actual work of crafting the regulatory safeguards that protect our environment and health, cost-benefit analysis has been largely ineffectual and irrelevant. Indeed, its ineffectiveness has been so profound as to prompt even its most ardent practitioners and proponents to question whether it has any impact on agency decisions at all. Meanwhile, it plays at best a minor role in the legal standards that actually govern agency decision-making. Despite all this, a certain cost-benefit orthodoxy has become remarkably entrenched in environmental policy circles. Especially in an era when so many progressive ideas are in ascendance, why does the idea of regulatory review based on CBA, first brought to us half a century ago by the two Ronalds—Ronald Coase and Ronald Reagan—have such staying power?

Decades ago, political scientist Charles Lindblom observed that proponents of what he called “the synoptic ideal”—the idea that we can comprehensively assess the pros and cons of every conceivable alternative and choose the optimum—inevitably talk as though this approach is the only rational decision-making process. That tendency is …

Oct. 14, 2021 by James Goodwin
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This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.

Over the last 40 years, the U.S. regulatory system has played an increasingly influential role in redefining our political and economic relationships in fundamentally neoliberal terms. A key but often overlooked institutional force behind this development is the peculiar form of cost-benefit analysis that now predominates in regulatory practice. Building a new regulatory system befitting our vision of a post-neoliberal America requires a formal rejection of prevailing cost-benefit analysis in favor of a radically different approach—one that invites public participation, permits open and fair contestation of competing values at the heart of policy debates, and recognizes and honors our social interdependencies.

The predominant form of cost-benefit analysis—one embraced by neoliberals—finds its theoretical underpinning in the controversial ideology of welfare economics …

Oct. 11, 2021 by Melissa Lutrell, Jorge Roman-Romero
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This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.

Cost-benefit analysis (CBA) is inherently classist, racist, and ableist. Since these are foundational problems with CBA, and are not simply issues with its implementation, they can never be fixed by mere methodological improvements. Instead, the ongoing modernization of centralized regulatory analyses must focus on "moving beyond" CBA, and not on fixing it or improving it. Thus, in implementing President Biden's memorandum on Modernizing Regulatory Review (the Biden Memorandum), the Office of Management and Budget (OMB) should make explicit that regulatory review no longer requires CBA, even—as will be true in the typical case—when regulatory review does demand economic analysis as part of a holistic, multi-factor regulatory impact analysis.

The Biden memorandum endorses a series of goals that are not premised in the …

Sept. 30, 2021 by Lisa Heinzerling
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This post was originally published on LPE Blog and is part of a symposium on the future of cost-benefit analysis. Reprinted with permission.

President Biden has made climate change and racial justice central themes of his presidency. No doubt with these problems in mind, he has signaled a desire to rethink the process and substance of White House review of agencies' regulatory actions. On his very first day in office, Biden ordered administrative agencies to ensure that this review does not squelch regulatory initiatives nor brush aside "racial justice, environmental stewardship, human dignity, equity, and the interests of future generations." At the same time, however, Biden reaffirmed the "basic principles" of a Clinton-era executive order on White House regulatory review, subjecting agencies' major rules to a cost-benefit test.

These twin inclinations – toward acting boldly on climate change and racial justice, and toward judging regulation using cost-benefit …

Aug. 17, 2021 by Sidney Shapiro, Melissa Lutrell
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The surging COVID-19 delta variant is sending thousands of people to the hospital, killing others, and straining several states' hospital systems to their breaking point. The climate crisis is hurting people, communities and countries as we write this piece, with apocalyptic wildfires, crippling droughts and raging floodwaters. Systemic racism continues unabated, leading to vast economic and environmental injustices. It's beyond time for urgent action, but to get there, the federal government must reform the opaque, biased method it uses to evaluate our nation's public health, economic and environmental protections.

The day President Joe Biden took office, he ordered executive branch agencies to evaluate and reform the regulatory review process to “ensure swift and effective Federal action” to address the urgent problems we currently face. The administration is unlikely to live up to this goal unless the White House addresses …

July 21, 2021 by James Goodwin
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The Biden administration's Environmental Protection Agency (EPA) is currently seeking public input on its efforts to revamp an important Clean Air Act program called the Risk Management Plan (RMP) rule for facilities that produce, store, or use large amounts of dangerous chemicals. It is meant to prevent catastrophes — like the 2017 Arkema explosion in Crosby, Texas — which not only put human lives and health in danger (especially for the communities of color that are disproportionately overrepresented in the shadows of these facilities), but also cause costly disruption for local economies.

My CPR colleagues contributed to a timely new policy brief explaining how the EPA must be particularly attentive to the new and unique threats posed by climate change as it goes about revamping its RMP rule to prevent "double disasters" that will become increasingly common unless chemical facilities are forced to take preventative action. They presented the …

June 9, 2021 by James Goodwin
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In addition to cleaning up our environment, the U.S. Environmental Protection Agency (EPA) must also clean up the mess the Trump administration left behind.

The Biden EPA recently took an important step in this direction by finalizing its plan to rescind a Trump-era rule that would drastically overhaul how it analyzes the rules it develops to implement the Clean Air Act. If implemented, Trump's "benefits-busting" rule would have sabotaged the effective and timely implementation of this popular and essential law, which protects the public from dangerous pollution that worsens asthma and causes other diseases. The rescission is slated to take effect next week.

On June 9, the EPA held a public hearing to gather feedback on rescinding the rule, which CPR has been tracking for several years. CPR Member Scholars Rebecca Bratspies and Amy Sinden joined me in testifying in support.

A New and Better Approach …

May 21, 2021 by Daniel Farber
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This post was originally published on Legal Planet. Republished with permission.

In its closing days, the Trump administration issued a rule designed to tilt EPA's cost-benefit analysis of air pollution regulations in favor of industry. Recently, the agency rescinded the rule. The rescission was no surprise, given that the criticisms of the Trump rule by economists as well as environmentalists. EPA's explanation for the rescission was illuminating, however. It sheds some important light on how the agency views the role of cost-benefit analysis in its decisions.

The Trump rule contained an industry wish list of provisions, all of them designed to make regulation more difficult. At the time, the provision that got the most attention related to co-benefits. Co-benefits are the beneficial side effects of a regulation. For example, a regulation designed to reduce mercury emissions from power plants also cut emissions of fine particulates, thereby saving …

March 24, 2021 by James Goodwin
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In a little-noticed move on Day One, President Joe Biden issued a memo designed to institute a more progressive process for developing new regulations. Such an effort is essential, given that timely, effective regulations will play a key role in achieving Biden-Harris administration's policy agenda. To succeed, however, it must also tackle the conservative philosophy that guides our government's rulemaking process.

Biden's memo focuses on the mechanics of the rulemaking process, and especially two institutions that heavily influence regulatory decisions: centralized, White House review of proposed rules and economics-focused assessments of them. President Reagan and his successors have issued a string of executive orders to govern these institutions. Biden's memo addresses flaws in the current iteration, Executive Order 12866 (along with some other, related orders). Fixing these flaws is necessary to create a more progressive regulatory system that better protects people and the planet.

A flawed foundation …

March 23, 2021 by James Goodwin, Sidney Shapiro
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This op-ed originally ran in The Regulatory Review. Reprinted with permission.

To paraphrase French economist Thomas Piketty, the task of evaluating new regulations is too important to leave to just economists. Yet, since the 1980s, White House-supervised regulatory impact analysis has privileged economic efficiency as the primary and often only legitimate objective of federal regulation. The regulatory reform initiative launched by President Joseph R. Biden on his first day in office creates an opportunity to reorient regulatory analysis in ways that both reformers and the public support.

Legal and policy experts object to hyper-technical regulatory analysis, and new public opinion polling indicates that voters agree.

Far from a monolithic concept, cost-benefit analysis encompasses a wide range of approaches and techniques, all with their own theoretical underpinnings and ethical commitments. Indeed, the current version of cost-benefit analysis is grounded in the conservative discipline of welfare economics and seeks …

CPR HOMEPAGE
More on CPR's Work & Scholars.
Oct. 19, 2021

The Shaky Legal and Policy Foundations of Cost-Benefit Orthodoxy in Environmental Law

Oct. 14, 2021

A Post-Neoliberal Regulatory Analysis for a Post-Neoliberal World

Oct. 11, 2021

Modernizing Regulatory Review Beyond Cost-Benefit Analysis

Sept. 30, 2021

Climate Change, Racial Justice, and Cost-Benefit Analysis

Aug. 17, 2021

The Hill Op-ed: Regulatory Analysis Is Too Important to Be Left to the Economists

July 21, 2021

Biden Said He Wants to 'Modernize Regulatory Review.' The EPA's Chemical Disaster Rule is a Great Place to Start.

June 9, 2021

CPR Scholars and Staff Back EPA's Plan to Eliminate Trump 'Benefits-Busting' Rule