Codifying the Cost-Benefit State

Abstract

Almost fifty years of presidential direction and agency practice, combined with ten years of increasing encouragement from the Supreme Court, suggest that the cost-benefit state has not only arrived, but is well past its introductory season. Benefit-cost balancing is now a dominant paradigm in administrative law for evaluating federal agencies’ exercise of delegated regulatory discretion. In response to increased scrutiny upon judicial review, agencies have taken steps to firm up their benefit-cost analyses. Still, despite multiple Executive Orders and supplementary guidance, neither executive nor legislative action has produced a clear set of justiciable standards against which courts can evaluate agency analyses for adequacy.

Some agencies have recently initiated rulemakings to codify their own analytical procedures under particular laws. While this statute-by-statute interpretive approach may be useful, it is unlikely to provide consistency across government or broadly-applicable tools for courts to use in varying regulatory domains. The time might be right to develop judicially-enforceable, government-wide standards for the use of benefit-cost analysis in rulemaking.

Others have examined theories of judicial authority to require and to review agency benefit-cost balancing in rulemaking. In this article we focus instead on the executive’s authority to write a cross-government “rule-on-rules” to govern regulatory analysis, including benefit-cost analysis and the courts’ authority to enforce such a rule. While such a rule would probably lack direct statutory authorization under current law, we offer the example of the Council on Environmental Quality (CEQ) regulations, which govern agencies’ use of Environmental Impact Statements, to illustrate how the absence of express statutory authority is not necessarily fatal to the project, particularly when it promises to produce tools that judges will find useful in carrying out their Article III responsibilities.

In Section I, we review the rise of the cost-benefit state as a result of its development in the executive branch and its treatment by the courts. In Section II, we examine theories of judicial authority to require benefit-cost analysis (BCA). Section III describes a nascent efforts by one agency to codify its own use of BCA, presents the question of whether a broader, cross-cutting “rule-on-rules” that lacks clear statutory authority would be judicially enforceable, and describes the CEQ analog as a potential precedent. In Section IV, we review the constitutional authorities that might support a cross-cutting BCA rule, and present two theories to support judicial enforcement of such a rule.

Keywords: administrative law, benefit-cost analysis, cost-benefit analysis, regulation, executive order, NEPA, nondelegation, non-delegation