Obstacles Biden may face in changing their approach to climate cost-benefit analysis ”Yale Climate Connections
A shift by the Biden administration from a cost-benefit analysis to a cost-effectiveness analysis could allow President Biden to pursue more aggressive climate action. But such a change would also face administrative and legal challenges. While President Biden could act unilaterally to change cost-benefit analysis practices, political resistance given a tightly divided House and Senate could still be an obstacle, especially during the upcoming midterm election campaign.
This complementary article to Part 1, which focuses on economic issues, explores the legal and administrative obstacles to such a change.
Does cost-effectiveness analysis have a chance?
Suppose, for the sake of discussion, the Biden administration decides to reform current cost-benefit analysis (CBA) practices to allow for more ambitious climate policy. Then what ?
The answers largely depend on the administration’s willingness – or lack of it – to fight both publicly, against fierce opponents in court, and in private, against the inertia of the administrative state. .
Likely legal challenges…
Many conservatives already oppose the current social cost of carbon framework, as evidenced by a recent lawsuit by 13 Republican attorneys general challenging the Biden administration’s interim reinstatement of the Obama-era social cost of carbon.
The lawsuit, led by Missouri attorney general and US Senate candidate Eric Schmitt, argued that the Biden administration wielded “essentially legislative power” to set the social cost of greenhouse gases. The complaint also alleged that the social cost of calculating carbon was “arbitrary and capricious”, ie insufficiently supported by reasoned justifications.
The lawsuit was dismissed by U.S. District Judge Audrey Flessig in the Eastern District of Missouri on procedural rather than the merits of state AG’s claims. Adopting a cost-effective approach by the administration would likely face similar challenges, so it is worth considering how the AG’s claims might apply to judicial review of such a change.
The first claim, that President Biden wields “essentially legislative power,” seems very unlikely to succeed. The executive branch has a long and largely bipartisan role in performing cost-benefit analyzes in all major federal regulations proposed through the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget. . The OIRA was created by a series of executive orders beginning with President Reagan and continuing to this day. Its practices have been refined by the Democratic and Republican administrations. If it were beyond the presidential authority to carry out a cost-benefit analysis of federal regulations, the courts probably would have done so already, but in any event, they would have to overturn a wide range of executive actions. for a long time.
The second claim – that federal agencies’ use of cost-benefit or cost-effectiveness analysis to assess the climate impacts of policy decisions is “arbitrary and capricious” – may be a more serious obstacle. Under the Administrative Procedure Act, many actions of federal agencies must be supported by adequate reasoning, and courts often review agency actions to determine whether they meet the arbitrary and capricious standard. (However, courts have generally tended to give a great deal of deference to the policy decisions of agencies.)
The transition to cost-effectiveness analysis would likely be subject to legal challenge. In some cases, courts have ruled that environmental laws require a cost-benefit analysis, but those cases involved agency actions under specific laws of Congress rather than taken through a unilateral executive authority. At the same time, courts are generally reluctant to view agency decision-making processes as arbitrary and capricious, unless there is no rational connection between the facts under consideration and the conclusions drawn. But even so, there is a small chance that a court will find that a shift from cost-benefit analysis to cost-effectiveness analysis is not sufficiently well-reasoned and therefore arbitrary, or is against it. on the grounds that it conflicts with legal requirements for cost-effectiveness. benefit analysis.
… and repression of the agency of the executive branch
As mentioned above, OIRA was created by decree to oversee the cost-benefit analysis of key regulations under the executive branch. This origin means that the president has the power to change the agency’s mandate, which means that President Biden can mandate the OIRA to implement a business case in the climate context.
However, it should be noted that attempts at reform of OIRA by Presidents Clinton and Obama have largely failed. The two Democratic presidents had tried to restrict the agency’s authority over executive agencies like the EPA: discrimination and concerns about health, safety and the environment.
In practice, OIRA staff often bypassed these requirements. As some experts say, OIRA “has stubbornly clung to its mission of cost reduction, justifying its oversight function of the federal bureaucracy by referring to the pervasive belief that agencies will systematically over-regulate.”
These kinds of entrenched staff attitudes can be hard to change, so President Biden’s attempts to reform the agency’s cost-benefit analysis approach could face an uphill battle, even from within. . Shifting to cost-effectiveness analysis in the climate context would mean revising or abandoning decades of established agency guidance, expertise and practices, and implementing a new paradigm of policy review more or less from within. zero. It would be an imposing hill for any administration to climb, especially in a tight coming midterm election year.
Switching from cost-benefit analysis to cost-effectiveness analysis would not be easy, nor would it happen overnight. OIRA and other cost-benefit decision-making centers in the administrative state are firmly entrenched in their practices, dating back to the earliest controversies over examining “quality of life” under the Reagan administration. But if the Biden administration is serious about tackling the limits of traditional climate economics and implementing a framework that supports more ambitious climate action, it may need to give serious thought to trying, forgive the cliché here, to teach these old dogs new tricks.
Lexi Smith is a third year student at Yale Law School. She studied environmental science and public policy as an undergraduate at Harvard, and worked as an advisor to the mayor of Boston on climate policy before enrolling in law school.