Environmental Valuation by US Regulatory Agencies: Adequacy Challenges and Judicial Review
Posted: 18 Sep 2019
Date Written: September 9, 2019
US regulatory agencies frequently use cost-benefit analysis (‘CBA’) in their decision-making, and several such CBAs have been challenged in court. This paper argues that in cases involving the valuation of environmental benefits, substantive judicial review of agency CBAs is, and should be, less deferential than most commentators would suggest. Direct challenges to agency CBAs can take two forms. First, a court may be asked to review whether the agency was authorised to rely on a CBA (if it did) or whether it was required to (if it did not). Second, the challenge may be directed at the adequacy of the CBA itself. The literature so far has mostly concentrated on the first category of cases; this paper focuses on the second. Several scholars favour a deferential standard of judicial review, primarily on the basis that CBA involves technical questions which agency experts, as opposed to generalist judges, are more qualified to answer. Since CBA typically involves monetisation of costs and benefits and environmental benefits are notoriously hard to quantify, the argument for judicial deference would appear to be even stronger in the context of environmental regulation. Based on a review of US appellate court decisions involving valuation of environmental benefits, I argue that the difficulties inherent in such valuation are not only technical or methodological – the kind that experts are arguably better equipped to address. Before dealing with methodological questions, i.e. how benefits are to be measured, the valuer must first determine which benefits are relevant – a determination which involves value judgments, questions of policy and statutory purpose. As an empirical matter, I show that courts do in fact engage with these questions in the judicial review of CBA. As a normative matter, based on an evaluation of the case law and the nature of questions at issue, I argue that this is how it should be.
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