FedSoc LiveBlog: The Future of Cost-Benefit Analysis in Environmental Policy

November 12th, 2009

Environmental Law: The Future of Cost-Benefit Analysis in Environmental Policy
Thursday, Nov. 12
2:00 p.m. – 3:30 p.m.
East and State Rooms

Hon. Susan E. Dudley, Director, George Washington University Regulatory Studies Center
Mr. Michael A. Livermore, Executive Director, New York University School of Law Institute for Policy Integrity
Mr. Daryl L. Joseffer, Partner, King & Spalding
Ms. Lisa E. Heinzerling, Senior Policy Counsel, Office of the Administrator, U.S. Environmental Protection Agency
Moderator: Hon. Stephen F. Williams, U.S. Court of Appeals, D.C. Circuit

Note: Ms. Heinzerling is not present.

Hon. Susan E. Dudley, The George Washington University Regulatory Studies Center

CBA is here to stay. President Obama has signaled that it will stay.

The question is not whether but how will it stay?

Statutory constraints and moral and institutional restraints already contribute

CBA is a transparent framework for avoiding that the “squeakiest wheel” wins (ie. lobbyists)

Obama Admin

1 The role of distributional effects has been a part of regulatory impact guidelines and will continue

Not just this generation against next, but the core of what’s best for this generation

2 Not going straight to central control, but nudging people toward making choices

3 We can frame choices to encourage people to do what’s best for them

Problem is: are people rational?

We can know what a person’s utility is if we observe their decisions

We should be cautious about allowing government analysis to decide the cost/benefit analysis for individuals in areas where individuals should be making their own analyses

More, after the jump

Ms. Lisa E. Heinzerling, US Environmental Protection Agency

Could not attend today.

Mr. Daryl L. Joseffer, King & Spalding

Cost-benefit analysis is just a matter of figuring out whether the benefits exceed the harms

For example, the higher costs of a better smoke detector

Legal landscape of CBA

-Congress tells an agency to do a CBA

-Congress tells an agency not to do a CBA (it has done that itself)

-More commonly, Congress will suggest a more flexible standard

Supreme Court decisions previously held that agencies were limited to the legislative language specifically

Riverkeep decision means that going forward agencies have freedom to do or not do one, but must provide defense if they choose not to use CBA

Mr. Michael A. Livermore, New York University School of Law Institute for Policy Integrity

There are several areas where CBA is likely to evolve

-Distributional effects of regulation, analyzing who’s winning and losing, not just looking at macro-effects

-Very difficult analytic task to look at who’s being affected, but manageable and will see growth

We will also likely see growth in behavioral economics, especially in the wake of the market meltdown

Perception of risk by individuals often differs from the attitudes of experts in fields

(Ex. Nuclear power—looking at expert counsel would suggest fewer regulations, but greenhouse gas emissions—expert counsel would suggest increased regulation)

There is a broad consensus that it’s a good idea to evaluate regulations

-In US, almost all analysis takes place before regulation, but growing support for retrospective analysis

CBA is not going anywhere, but there are lots of areas in which it will probably change in interesting ways

The Obama Admin will look to make an imprint in the process of regulatory

Pics after the jump