This post is part of a series on Judge Brett Kavanaugh's nomination to the U.S. Supreme Court.
If Judge Brett Kavanaugh's Supreme Court confirmation process goes as quickly and affirmingly as his supporters hope, one of the cases he'll hear on his first day on the bench will invite him to consider an imponderable question: Whether it's possible to put a dollar value on an endangered species.
Weyerhaeuser v. U.S. Fish and Wildlife Service will raise an important and long-controversial aspect of environmental law: the use of cost-benefit analysis in agency decision-making. The Court may well be able to decide this case without diving into the most contentious aspects of the long-running cost-benefit debate. Still, it could provide an opportunity for a glimpse into how a new justice would approach a set of issues that, while seemingly technical, are central to deciding the stringency of environmental safeguards.
The case involves timber giant Weyerhaeuser Corporation, an unassuming but endangered amphibian called the dusky gopher frog, and a parcel of forested land in Louisiana. Weyerhaeuser conducts logging operations on that parcel of land and is challenging the U.S. Fish and Wildlife Service's (FWS) decision to include it within the frog's designated "critical habitat," a decision that turned in part on a cost-benefit analysis that the company claims showed enormous costs with no benefits in return. The company (and a bunch of property rights advocates weighing in with amicus briefs) say the courts should review that decision and determine whether it was an "abuse of discretion."
FWS (and a list of environmental groups, academics, and other amici supporting it) argue that the decision fell squarely within the discretion of the agency and is not subject to being second-guessed by a court. (You can read the amicus brief I and others filed on behalf of a group of economists and other academics supporting the agency's decision on CPR's website.)
Putting aside the larger issue of whether the agency's decision is subject to court review, the cost-benefit analysis FWS did and how it's being portrayed is interesting because it provides a window into some of the fault lines that divide academics and policymakers on the issue of whether such analyses are useful in environmental decision-making more generally.
Weyerhaeuser and the property rights crowd treat cost-benefit analysis as a mathematical formula, in which all relevant variables can be quantified and monetized to produce an objective and definitive answer. Indeed, so strong is their conviction that such mathematical precision is attainable, there's no room in their vision for relevant variables that might be unquantifiable or unmonetizable. The only things that count are what you can count. The Fish and Wildlife Service and its supporters, on the other hand, stress that when it comes to endangered species and ecological health, many of the relevant values are simply unquantifiable.
We don't exactly know where a future Justice Kavanaugh would come down on this divide, but we can make some guesses. Interestingly, and perhaps surprisingly, the late Justice Antonin Scalia demonstrated a certain appreciation for some of the nuance of the environmentalist point of view on these questions. For reasons I'll lay out below, I suspect a Justice Kavanaugh would be more likely than Scalia would have been to adopt wholesale the kind of hardline stance we're seeing the property rights crowd take in Weyerhaeuser.
Weyerhaeuser and friends portrayed the cost-benefit analysis in this case as showing $32 million in costs in return for zero benefits. But when you dive into the relevant documents, it quickly becomes apparent that portrayal leaves out crucial aspects of the analysis. The analysis didn't find that the benefits were zero – far from it. It did find, however, that the benefits of designating this piece of land as critical habitat could not be quantified and were best described in biological terms. Those potential benefits were substantial, not least because the piece of land at issue included rare ecological elements necessary for gopher frogs to breed.
Even if the benefits are hard to calculate, you might still expect that the costs of critical habitat designation would be easier to quantify. But in this instance, FWS couldn't quantify them, either. It turns out that such designation doesn't automatically result in regulatory restrictions on a property owner's use of land; they can still use it and extract value from it. In fact, because of the way the Endangered Species Act is written, regulatory restrictions only get imposed if the landowner pursues a development plan that requires a federal permit. Even then, landowners are usually able to work out a deal with FWS that lets them go forward with minimal restrictions. Because of this, predicting whether significant regulatory restrictions will be imposed on some particular parcel of critical habitat requires predicting the future – not only with respect to human behavior and the decisions the landowners might make, but with respect to how a whole set of complicated scientific and legal questions may ultimately get resolved.
In the end, the analysts in this case were unable to attach any particular dollar figure to the costs of declaring that piece of land in Louisiana to be critical habitat. The best they could do was to come up with three possible "scenarios" of how future events might unfold. These scenarios ranged in cost from $0 to $32 million, and while the analysts were unable to attach any numerical probabilities to each one, there are a whole bunch of reasons to think that the $0 scenario is the most likely. The result was that, unlike a math problem, the cost-benefit analysis in this case was simply inconclusive, and the Fish and Wildlife Service's discretionary decision to go ahead and include the land in the frog's critical habitat was reasonable.
How would Kavanaugh view this case? We can't know for sure, but one of his D.C. Circuit Court opinions provides some tea leaves. White Stallion Energy Center v. EPA involved a challenge to a high-profile EPA rule setting standards for emissions of mercury and other toxic air pollutants from coal-fired power plants. The D.C. Circuit panel largely upheld the rule, but Kavanaugh wrote a dissent arguing that EPA should have considered a cost-benefit analysis in deciding whether to issue the regulation. The case subsequently made its way to the Supreme Court, where Justice Scalia wrote the majority opinion, largely – but not entirely – agreeing with Kavanaugh.
The provision of the Clean Air Act at issue states that before issuing such a rule, EPA must make a finding that the rule is "appropriate and necessary." Finding that term "'open-ended,' 'ambiguous,' and 'inherently context-dependent,'" the D.C. Circuit panel majority rejected industry's argument that it required the agency to base its decision on a cost-benefit analysis. Kavanaugh took the opposite view, arguing, in a theme subsequently picked up by the Supreme Court, that "consideration of cost is commonly understood to be a central component of ordinary regulatory analysis, particularly in the context of health, safety, and environmental regulation."
But more interesting than Kavanaugh's treatment of the statutory interpretation issue here was his portrayal of the particular cost-benefit analysis EPA conducted. In a portrayal that is strikingly reminiscent of Weyerhaeuser's arguments in the gopher frog case, Kavanaugh bolstered his statutory construction argument by pointing to some of the figures in that cost-benefit analysis. I say "some of the figures" because Kavanaugh's description of EPA's analysis was noteworthy for what it left out. He cited EPA's cost figure in the opening paragraphs of his opinion, in a passage clearly crafted for shock value: "The problem here is that EPA did not even consider the costs. And the costs are huge, about $9.6 billion a year – that's billion with a b – by EPA's own calculation." It took him another nine pages to acknowledge that these costs were dwarfed by EPA's estimate of the rule's benefits: $37 to $90 billion. But he called the agency's benefits estimate "disputed," citing industry's view that only the $4 to $6 million (that's million with an m) in benefits attributable specifically to quantifiable reductions in mercury emissions should be counted.
So where did all the benefits go? Just as Weyerhaeuser portrayed the benefits of critical habitat designation as zero because the benefits can't be expressed in dollar terms, Kavanaugh offered a particularly blinkered view of EPA's cost-benefit analysis for the mercury rule. His suggestion that the benefits of that rule might be pared down to $4 to $6 million required two analytic moves that shed some light on how a Justice Kavanaugh would approach the cost-benefit debate.
The first involved turning a blind eye to the innumerable caveats that peppered EPA's analysis to the effect that "EPA was unable to quantify or monetize all of the health and environmental benefits associated with the final . . . rule and believes these unquantified benefits could be substantial." Indeed, the $4 million to $6 million figure represents the avoidance of an exceedingly narrow slice of the adverse health impacts associated with mercury emissions and entirely leaves out the myriad other toxic pollutants reduced by the rule.
Second, it required jettisoning entirely from the analysis the tens of billions of dollars in quantifiable health benefits attributable to the reductions in particulate matter pollution the rule would produce because, happily, any technology that reduces emissions of mercury and other toxics also reduces particulate matter.
The first move parallels rather closely Weyerhaeuser and friends' insistence that only the numbers count and their blithe dismissal of any values that can't be quantified. The second move cues up a grievance about EPA's counting of the "co-benefits" of particulate matter reductions that's been simmering among industry advocates and their right-wing allies for some years and to which Kavanaugh, as a Washington insider, was likely privy.
Both moves suggest that Kavanaugh's inclinations are likely to align him with the cost-benefit hard-liners. Interestingly, when the case got to the Supreme Court, Scalia picked up on and borrowed from a number of aspects of Kavanaugh's dissent, including the professed shock at the rule's $9 billion cost and the suggestion that the benefits might be as little as $4 million to $6 million. But Scalia's opinion also revealed his long-standing skepticism of the notion that environmental values can be expressed in dollar-and-cents terms. While he wrote that EPA should have considered regulatory costs as well as benefits before regulating power plant mercury emissions, he tempered that holding significantly by making clear that the EPA was not required to quantify every relevant value: "We need not and do not hold that the law unambiguously required the Agency . . . to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value."
Scalia's skepticism about formal cost-benefit analysis in the environmental context was long-standing, tracing all the way back to a 1987 law review article, and was also evident in the other opinions he authored for the Court on this topic. His disclaimer in Michigan v. EPA echoed a similar caveat he included in a 2009 opinion approving EPA's use of cost-benefit in a Clean Water Act rule. And in 2001, Scalia famously authored the Supreme Court's opinion in Whitman v. American Trucking, prohibiting EPA from balancing costs against benefits in setting the National Ambient Air Quality Standards. While he grounded that holding primarily in a classic, Scalia-style close reading of the statute, he also expressed a broader concern about the danger that in a cost-benefit accounting, environmental values will get crowded out by dollars and cents, worrying that "cost is . . . so full of potential for canceling the conclusions drawn from direct health effects."
Kavanaugh's D.C. Circuit Court opinion in Michigan, in contrast, reveals no similar tempering skepticism. If anything, he seems inclined to cherry-pick the evidence so as to justify quantification in cost-benefit analysis. In discussing President Obama's executive order on cost-benefit analysis, for example – a document that includes numerous caveats about the impossibility of quantifying certain values – Kavanaugh ignored those and instead chose to quote a passage that emphasizes quantification: "The Order directs each agency 'to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.'"
These are tea leaves to be sure. As of now, there are plenty of uncertainties, including whether Kavanaugh will make it to the high court at all, and if so, whether he'll make it there in time to weigh in on the fate of the dusky gopher frog. But they suggest, at least, a future justice who would be inclined to take a hardline, industry-friendly approach to cost-benefit analysis, one driven more by ideology than common sense.
