Congress and Cost-Benefit Analysis
- Author(s):
- Caroline Cecot
- Posted:
- 2-2022
- Law & Economics #:
- 22-03
- Availability:
- Full text (most recent) on SSRN
ABSTRACT:
There's a longstanding consensus around the use of cost-benefit analysis (CBA) to inform federal agency risk-management decision making. Executive orders going back to President Reagan require agencies to conduct CBA, and agencies often exercise their statutory discretion to use CBA to help determine the appropriate stringency of regulations. Courts, too, increasingly appreciate that agency regulation requires at least some assessment of the expected costs and benefits, and they examine agency CBAs to ensure that agencies disclose and explain their scientific and policy choices. Congress's role in this CBA consensus, however, has been understudied, minimized, and often misunderstood.
This Article analyzes Congress's record on CBA over time. The analysis reveals some important and sometimes counterintuitive trends. In contexts where competing tradeoffs are most salient, such as public health crises, the legislative record suggests that Congress values the neutral and expertise-forcing substantive constraint of CBA. Similarly, the record reveals that CBA's substantive constraints are especially valuable to Congress for agencies controlled by the President. And it has often imposed CBA requirements for federal funding decisions, where agencies must make decisions on how to allocate scarce federal financial resources among competing projects.
These findings have implications for the future of the CBA consensus, in which Congress might become a central player. The current CBA consensus is at risk from all fronts. Presidential support for CBA might evaporate, especially in light of the tool's role in restraining the Trump Administration from implementing some of its preferred policies. In addition, more than half of the justices of the Supreme Court of the United States have signaled their willingness to reconsider the constitutional contours of the nondelegation doctrine, which could call into question the validity of the broad statutory language that currently supports some agency use of CBA. And an increasing number of scholars are questioning the legitimacy of searching judicial review of agency decision making.
In the traditional narrative, Congress is at best ambivalent about agency CBA and might potentially reinforce its demise. The examination of the congressional record, however, reveals a more complicated relationship between Congress and CBA. In many cases, Congress appears to trade off some of its control in exchange for application of agency expertise revealed through CBA. The examination also helps explain why Congress has failed to pass statutes such as the Regulatory Accountability Act or has failed to extend CBA requirements to independent agencies. In light of Congress's record to date, the Article proposes congressional actions that might be more successful in protecting the future of the CBA consensus.