Supreme Court Remains Skeptical of the 'Cost-Benefit State'

by Amy Sinden | September 26, 2016

Originally published on RegBlog by CPR Member Scholar Amy Sinden.

In the wake of the U.S. Supreme Court's opinion in Michigan v. EPA last term, a number of commentators have revived talk of something called the "Cost Benefit State." It is supposed to be a good thing, although it makes some of us shudder. The phrase was originally coined by Cass Sunstein in a 2002 book by that name. It describes a supposedly utopian government in which agencies and courts apply to all regulatory decision-making a formal cost-benefit analysis (CBA) grounded in welfare economics.

Sunstein and other eager proponents of CBA have seized on language in the Michigan case that, in the course of striking down the U.S. Environmental Protection Agency's (EPA) mercury rule, gestured toward the existence of a presumption favoring the consideration of costs in regulatory decision-making. Sunstein heralded the opinion as a "rifle shot" ringing in the arrival of the Cost-Benefit State. And John Graham and Paul Noe, in a recent RegBlog essay, echoed that sentiment, congratulating the Court on reversing its earlier anti-CBA presumption.

Indeed, in the midst of all of this hoopla, the casual observer might be forgiven for assuming that the Toxic Substances Control Act reform legislation signed into law by President Barack Obama last month is ...

Heinzerling Calls Out Misleading Cost Claims on Environmental Regulations

by Brian Gumm | April 21, 2016
Lisa Heinzerling, a Center for Progressive Reform Member Scholar and Georgetown University Professor of Law, published a piece this week on The Conversation that explores the ongoing political debate over environmental regulations.  In particular, Heinzerling calls out the often misleading claims about the costs of safeguards that protect our air, water, health, and wild places:  Specifically, the [2010 Small Business Administration regulatory costs] study misinterpreted a World Bank database and drew unsupportable conclusions from it. The study also included the ...

18th Straight OMB Annual Report in a Row Finds Total Regulatory Net Benefits

by James Goodwin | March 15, 2016
Over the weekend, the White House Office of Management and Budget (OMB) released the final draft of its annual report on the costs and benefits of federal regulation, which purports to provide a reasonably complete picture of the total impact that federal regulations have on the U.S. economy. This year’s final report finds that federal regulations generated total benefits in the range of $216 billion to $812 billion (in 2001 dollars; in 2010 dollars, the range recalculates to $261 billion ...

Steinzor to Senate Subcommittee: What's the Cost of Preventing an Asthma Attack?

by Erin Kesler | October 21, 2015
This morning, CPR Member Scholar and University of Maryland School of Law professor Rena Steinzor testified before the U.S. Senate Committee on Environment and Public Works Subcommittee on Superfund, Waste and Regulatory Oversight for a hearing focused on, "Oversight of Regulatory Impact Analysis for the U.S. Environmental Protection Agency Regulations."  In her testimony, Steinzor noted the limitations of "Regulatory Impact Analysis," or RIA, which agencies are mandated to conduct on all rules they finalize and measures the rules' "costs and benefits."  When measuring the costs and benefits of EPA rules ...

Supreme Court's Mercury Decision Did Not Usher in Sunstein's 'Cost-Benefit State'

by Amy Sinden | July 13, 2015
In Michigan v. EPA, handed down two weeks ago, the Supreme Court waded into the decades-long debate over the use of cost-benefit analysis (CBA) in agency rulemaking.   The decision struck down EPA’s limits on mercury emissions from power plants for the agency’s failure to consider costs, and so appears, superficially at least, like a win for the pro-CBA camp.  Indeed, Professor Cass Sunstein of Harvard—President Obama’s former “regulatory czar” and one of CBA’s most prominent cheerleaders—has been crowing about the ...

You Can Be for Cost-Benefit Analysis or You Can Be for Regulatory Budgeting, But You Can’t be for Both

by James Goodwin | June 22, 2015
For decades, so-called regulatory “reformers” have backed up their sales pitches with the same basic promise:  Their goal is not to stop regulation per se but to promote smarter ones.  This promise, of course, was always a hollow one.  But it gave their myriad reform proposals—always involving some set of convoluted procedural or analytical requirements designed to surreptitiously sabotage the rulemaking process—some shred of legitimacy, while insulating the proponents against any public backlash that might follow from such cynical attacks ...

OIRA's Fuzzy Math on Coal Ash: A Billion Here, a Billion There

by Rena Steinzor | July 13, 2010
This post was written by CPR President Rena Steinzor and Michael Patoka, a student at the University of Maryland School of Law and research assistant to Steinzor. Last October, the EPA proposed to regulate, for the first time, the toxic coal ash that sits in massive landfills and ponds next to coal-fired power plants across the nation. The 140 million tons of ash generated every year threaten to contaminate groundwater and cause catastrophic spills, like the 1-billion-gallon release that devastated ...

The State of the Cost-Benefit State: What We Can Expect from Sunstein, 'Nudge,' and OMB on Regulatory Impact Analysis

by Douglas Kysar | February 05, 2010
This week the White House Office of Management and Budget (OMB) released its annual report to Congress on the costs and benefits of federal regulatory programs. For the policy wonks among us, the most intriguing part was a section on recommendations for reform of the OMB regulatory review process. Here we find hints of what might result from President Obama’s long-awaited overhaul of the executive order on regulatory impact analysis. Cass Sunstein – an eminent legal scholar and now head ...

CPR's Comments on OMB's Draft Report on Costs and Benefits of Regulations: Why More of the Same?

by Amy Sinden | November 05, 2009
Cass Sunstein had barely begun settling in to his new position as Administrator of OMB’s Office of Regulatory Affairs (OIRA) in September, when OIRA released a draft of OMB’s 2009 Report to Congress on the Benefits and Costs of Federal Regulations. Today marks the deadline for submitting comments to OMB on the draft, and I joined CPR President Rena Steinzor and Policy Analyst James Goodwin in submitting comments. We read this year’s report with interest, curious to see how the ...

NRC Report on Hidden Costs of Energy Production and Use is Admirable, but Limited

by James Goodwin | November 04, 2009
Last month the National Research Council (NRC) released Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. Properly understood, the NRC report is an admirable attempt to bring the consequences of energy use into sharp focus by putting those consequences into terms that are readily understandable by the general public. The NRC recognizes that the report is limited because it was unable to quantify and monetize all the impacts of energy production and use, thereby significantly understating their ...

New CPR Papers on Dysfunctional Regulatory Agencies, Costs of Delayed Regulations, and Moving Beyond Cost-Benefit Analysis

by Matthew Freeman | October 30, 2009
One of the great political communications successes of the past 30 years has been the right wing’s relentless assault on the American regulatory system. Think of the words and images that have come to be associated with “regulation” in that time: red tape, bureaucrats, green eye shades, piles of paper stretching to the ceiling, and more. And the approach has worked – remarkably well, in fact, given the compelling imagery on the other side of the ledger:  children left to play in unregulated ...

National Security Spending Doesn't Have to Clear Cost-Benefit Test, Obama Administration Confirms. But Health Regulations?

by James Goodwin | September 25, 2009
Issues of national security have always enjoyed a free pass when it comes to the use of cost-benefit analysis (CBA) as the primary form of making decisions.  For example, no military official or politician interested in keeping his job would ever dare publicly question whether the additional money spent on extra armor for tanks to keep soldiers safer could be put to better use somewhere else. There are plenty of reasons why we are willing to accord national security decisions ...

'Curiouser and Curiouser!' Cried Alice ... A Tale of Regulatory Policy in the Obama Administration

by Sidney Shapiro | July 30, 2009
Like Alice's adventure, the development of regulatory oversight in the Obama administration is becoming "curiouser and curiouser." President Obama selected Cass Sunstein to be the head of the Office of Information and Regulatory Affairs (OIRA), a curious choice since Sunstein, although one of the country’s most distinguished academics, is in favor of extending the use of cost-benefit analysis, a position so popular with the business community that the Wall Street Journal endorsed his nomination. Sunstein's confirmation hearing was uneventful, probably ...

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