This post was originally published by Legal Planet. Reprinted with permission.
As you’ve probably heard, the Biden administration has proposed aggressive new targets for greenhouse gas emissions from new vehicles. That’s great news. One really important aspect of the proposal relates to the justification for the proposal rather than the proposal itself. Following a recent trend, the justification is based on the factors specified by Congress rather than on a purely economic analysis. That may not sound like much, but it’s a really big deal. Among other things, this will shift influence on the regulatory process somewhat away from economists and toward lawyers.
Since 1981, presidential directives have required federal agencies to produce a cost-benefit analysis of proposed regulations. The directives have also told agencies to select regulations that maximize the extent to which benefits exceed costs, except where a statute forbids this. Under this approach, statutory authority is relevant only when it happens to get in the way of doing the right thing economically. No wonder that some have heralded the rise of the “cost-benefit state.”
As illustrated by the current proposal, that economist-dominated approach seems to be losing its grip in favor of one where law and lawyers play a current role. The proposal does contain an extensive discussion of costs and benefits, keyed to the lengthy “Regulatory Impact Analysis” prepared by the agency. According to the agency, the new standards for cars and light trucks (primarily SUVs) would avoid nearly 10 billion tons of CO2 emissions, save the average consumer $12,000 over the lifetime of the vehicle, and have benefits that would exceed costs by at least $1 trillion.
But when it comes to the rationale for the proposal, the proposal shifts away from cost-benefit analysis. Here’s what the proposal says:
“We monetize benefits of the proposed standards and evaluate other costs in part to enable a comparison of costs and benefits pursuant to EO 12866, but we recognize there are benefits that we are currently unable to fully quantify. EPA’s practice has been to set standards to achieve improved air quality consistent with CAA section 202, and not to rely on cost-benefit calculations, with their uncertainties and limitations, as identifying the appropriate standards.”
Similar approaches have been taken in other recent regulations, such as limits on mercury emissions from power plants. Earlier, the Trump administration had justified some of its key proposals as being required by statutory language and argued that the costs and benefits weren’t relevant. Why is this happening?
Part of the reason may be that, for very different reasons, cost-benefit analysis has become unattractive at both ends of the political spectrum. Progressives are frustrated that it marginalizes consideration of social justice and subordinates environmental benefits to dollar accounting. Conservatives have found that cost-benefit analysis actually justifies a wide range of regulations, frustrating their “small government” impulses.
Another reason may relate to shifts in administrative law and statutory interpretation. Overall, the U.S. Supreme Court seems more interested in limiting agency leeway than in making policy judgments. The Court has thrown shade on the Chevron doctrine, which gave agencies extra leeway in interpreting statutes. In most cases, it has focused purely on statutory language and shied away from considering the broader purposes of laws, which again tends to narrow the agency’s ability to engage in open-ended balancing of costs and benefits. Last year, the Court threw out former President Obama’s Clean Power Plan without a mention of the plan’s overwhelmingly positive cost-benefit analysis.
I have always been concerned about displacing the policy judgments that Congress has put into law in favor of a standard of economic efficiency based only on executive fiat. Viewing statutes as blanket authority for open-ended agency policy judgments is questionable as a matter of separation of powers. It also goes too far in supplanting democracy in narrow technocratic judgments, rather than keeping a balance between expertise and accountability. It is heartening to see EPA paying more attention to Congress’s directions rather than trying to fit all regulatory decisions into a single methodology.
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Daniel Farber | April 19, 2023
As you’ve probably heard, the Biden administration has proposed aggressive new targets for greenhouse gas emissions from new vehicles. That’s great news. One really important aspect of the proposal relates to the justification for the proposal rather than the proposal itself. Following a recent trend, the justification is based on the factors specified by Congress rather than on a purely economic analysis. That may not sound like much, but it’s a really big deal. Among other things, this will shift influence on the regulatory process somewhat away from economists and toward lawyers.
Karen Sokol | April 18, 2023
On March 29, the United Nations (UN) General Assembly passed a landmark resolution asking the International Court of Justice (ICJ) for an advisory opinion on state obligations relating to climate change and the consequences of breaching them under several sources of international law, including the UN Charter, human rights treaties, and international customary law. The import of both the request and the opinion, however, is not just about Earth’s climate system and the extent of state obligations for protecting it; it is also about the potential for more equitable, just, and effective international governance.
Daniel Farber | April 17, 2023
On April 6, the Biden White House released proposed changes in the way the government does cost-benefit analysis (CBA). CBA has been a key part of rulemaking for 40 years. The proposal is very technical and low-key, but the upshot will be that efforts to reduce carbon emissions will get a leg up. In particular, the changes will support higher estimates of the harm done by each ton of carbon emissions (the “social cost of carbon” in economics lingo).
Kimberly Shields | April 17, 2023
Chester, Pennsylvania, located in Delaware County just southwest of Philadelphia, was founded in 1681, making it the oldest city in the state. Situated directly on the Delaware River, Chester was a manufacturing and industrial community for much of its history, though that activity began to decline starting in the 1950s. That legacy and other factors make the city of 32,000 potentially prone to a catastrophic toxic flooding event, now and in the future as the effects of climate change continue to intensify.
Sophie Loeb | April 12, 2023
On the 16th of every month, I dread it: opening my Duke Energy bill. After the shock of seeing our first electric bill of $182 back in October 2022, I knew we were in for a long winter. I thought I was imagining bills going up every month, but it’s not all in my head. In December 2022, Duke Energy rates where I live in Asheville, North Carolina, rose 10 percent due to increased fuel costs. I’m in a privileged position, but the price hike still hurts. But there is a better way.
Katlyn Schmitt | April 11, 2023
On April 10, the Maryland General Assembly passed the Private Well Safety Act (HB 11/SB 483) before it wrapped up the 2023 legislative session at midnight (Happy Sine Die!). With its passage, the Private Well Safety Act will provide roughly 830,000 Marylanders who get their drinking water from a private well with the necessary resources and information to monitor and safeguard their household drinking water and ultimately protect their and their family’s health.
Federico Holm, Katlyn Schmitt | April 10, 2023
The Maryland Senate has just one day left to pass a bill that would deliver greater energy savings for Marylanders through the EmPOWER program — the state’s energy efficiency and weatherization program. The bill would build on the success of the EmPOWER program by ensuring lower energy bills for low-wealth Marylanders, as well as greater public health and climate benefits that coincide with improved energy efficiency.
Kimberly Shields | April 3, 2023
In a recent post, my colleague M. Isabelle Chaudry provided readers with an overview of some of the toxic chemical threats facing the Delaware River basin in the northeastern United States. In this post, I dig deeper into the modern history of flooding in a region that will be home to 9 million people by 2030 and how this poses a growing risk of toxic floodwaters for families and communities in Pennsylvania, Delaware, New Jersey, and New York.
Sidney A. Shapiro | March 30, 2023
The American public has lost faith in expertise. The reason why, as author and national security expert Tom Nichols points out in his 2017 book The Death of Expertise, includes the transformation of the news industry into a 24-hour entertainment machine, the number of “low-information voters,” political leaders who traffic in “alternative facts,” and, as Nichols puts it, a “Google-fueled, Wikipedia-based, blog-sodden collapse of any division between professionals and lay people, students and teachers, knowers and wonderers — in other words between those of any achievement in an area and those with none at all.” Bill Araiza offers another important insight in his book, Rebuilding Expertise: Increasing legal and political efforts to oversee agencies have resulted in the deterioration of civil service expertise and, with it, of public faith in government. On the front end, these efforts send a message that expertise can’t be trusted. On the back end, when the government stumbles in carrying out its functions, the message is that experts are not so expert after all. What is missed, as Liz Fisher and I contend in our book, Administrative Competence, is that law and politics can hold agencies accountable and still facilitate their capacity to do their job. Araiza’s last chapter ably discusses how this can be done.