A 'Cost-Benefit State'? Reports of Its Birth Have Been Greatly Exaggerated
25 Pages Posted: 16 Nov 2016 Last revised: 16 Sep 2017
Date Written: October 31, 2016
In a spate recent cases (Michigan v. EPA, EME Homer City v. EPA, and Entergy v. Riverkeeper), the Supreme Court has been widely viewed as abruptly changing course in its treatment of cost-benefit analysis (CBA) in environmental decision making. Professor Cass Sunstein heralded the Michigan case as “a rifle shot ringing in the Cost-Benefit State.” In fact, these cases represent less of a change in course than is commonly believed. And they fall far short of endorsing Professor Sunstein’s vision of the Cost-Benefit State — in which agencies would operate under a presumption favoring formal CBA. Riverkeeper and Homer City did not so much eliminate the Court’s previously emerging anti-cost presumption as narrow and perhaps more clearly define it. The term “cost-benefit analysis” can refer to a broad range of decisionmaking techniques and an even longer list of methods involve agencies “considering costs” in one way or another. Those cases indicate that the presumption no longer applies to cost consideration that takes the form of informal CBA or feasibility analysis. But they do nothing to disturb the anti-cost presumption as applicable to other cost consideration tools. Indeed, the Riverkeeper majority’s disclaimer against “more rigorous” forms of CBA in conjunction with Justice Breyer’s detailed critique of formal CBA in concurrence can be read to at least gesture in the direction of a continuing presumption against formal CBA. In Michigan, the Court said that EPA should have considered costs in the face of an ambiguous statute and arguably suggested that this principle is generalizable because linked to fundamental administrative law doctrines requiring rationality in agency decision making. But it also made very clear that “[i]t will be up to the agency to decide... how to account for cost,” and both the majority and the dissent included an explicit disclaimer of formal CBA. Thus, it is not entirely clear that Michigan articulated a pro-cost presumption at all, but to the extent it did, it’s a presumption that is broadly applicable to a whole range of tools outside formal CBA, and can arguably read to exclude or at least de-emphasize formal CBA. This is a long way indeed from the Cost-Benefit State.
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