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Last month, the U.S. Environmental Protection Agency (EPA) released what is almost certainly the best regulatory analysis it has performed in over 40 years. (To be clear, though, the bar for these analyses is pretty low.) More importantly, it provides President Biden with new impetus to finally follow through with the long overdue implementation of his administration’s “Modernizing Regulatory Review” memorandum.

What does President Joe Biden believe on regulatory policy? It is striking that after 20 months of his administration, we still do not know. Unfortunately, rather than shed light on this crucial issue, September 29th's Senate confirmation hearing to consider the nomination of law professor Richard Revesz as the next administrator of the White House Office of Information and Regulatory Affairs (OIRA) is likely to raise more uncertainty.

Since 1981, cost-benefit analysis has been at the core of the rulemaking process. The Office of Information and Regulatory Affairs (OIRA), the so-called “regulatory czar” in the White House, must approve every significant regulation based on a review of its cost-benefit analysis. But cost-benefit analysis has had a major blind spot. It embodies techniques for analyzing possible harmful outcomes when the probability of those outcomes can be quantified with reasonable confidence. When those probabilities cannot be quantified (“deep uncertainty”), the analytic path is more difficult. This issue is especially important in the context of climate change, given the potential for tipping points to produce disastrous outcomes.

Should regulators take into account harm to people in other countries? What about harm to future generations? Should we give special attention when the disadvantaged are harmed? These questions are central to climate policy and some other important environmental issues. I’ll use cost-benefit analysis as a framework for discussing these issues. You probably don’t need my help in thinking about the ethical issues, so instead I’ll focus on legal and economic considerations.

Soon after Trump took office, Republicans used the Congressional Review Act (CRA) to overturn sixteen Obama-era regulations. If they win control of the government in 2024, they'll undoubtedly do the same thing to Biden regulations. It behooves us, then, to understand the effect of these legislative interventions. A Ninth Circuit ruling last week in a case involving bear baiting, Safari Club v. Haaland sheds new light on this murky subject.

In describing cost-benefit analysis to students, I've often told them that the "cost" side of the equation is pretty simple. And it does seem simple: just get some engineers to figure out how industry can comply and run some spreadsheets of the costs. But this seemingly simple calculation turns out to be riddled with uncertainties, particularly when you're talking about regulating the energy industry. Those uncertainties need more attention in designing regulations.

Arguments and judicial reasoning in administrative law cases usually focus on the case at hand. Indeed, the Administrative Procedure Act (APA) commands that narrow focus. The APA does not give the courts any role in shaping the laws governing administrative agencies, for that is what Congress does. Instead, it gives the courts a modest, albeit difficult responsibility: They may determine whether a particular agency action is arbitrary and capricious or contrary to law. Therefore, parties challenging an agency rule they disapprove of generally argue that the agency has violated some restraint stated in the statute or exercised its discretion in an arbitrary way. But in the U.S. Supreme Court case heard last week about the scope of EPA's authority to regulate greenhouse gas emissions (West Virginia v. EPA), coal companies relied heavily on a "parade of horribles" argument — a listing of bad things that might happen in future cases if the Court upheld EPA's interpretation of the Clean Air Act in the case before the Court.

Imagine you're in the market for a new furnace. You decide to buy a more fuel-efficient system -- even though the price tag is higher -- because it will lower your monthly heating bills. Another selling point: The fuel-efficient furnace emits less carbon into the atmosphere -- a benefit you can't quite quantify but that you value nonetheless for its small salubrious effect on the planet. Policymakers go through a similar -- though much more complex -- process when implementing laws. But an obscure federal mandate known as cost-benefit analysis renders them unable to fully account for costs and benefits that are difficult to measure in dollars and cents, like the large-scale value to society of federal rules that protect public and environmental health. Despite its name, a true analysis of a rule's full benefits is impossible.

The Office of Information and Regulatory Affairs (OIRA) oversees government regulation across the federal government. Some portray it as a guardian of rationality, others as biased in favor of industry. Public information about OIRA is so limited that it's impossible to know one way or the other, due to the veil of secrecy that surrounds the place.