Cost-benefit default principles

Michigan Law Review

Volumn 99, Issue 7, 2001, Pages 1651-1716

  Sunstein, Cass R ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0013065024     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: 10.2307/1290477     Document Type: Article

References (331)

1. Ala. Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 1979).
2. Am. Trucking Ass'n v. EPA, 175 F.3d 1027, 1052 (D.C. Cir. 1999).
3. Michigan v. EPA, 213 F.3d 663, 678 (D.C. Cir. 2000).
4. Whitman v. Am. Trucking Ass'n, 121 S. Ct. 903, 921 (2001) (Breyer, J., concurring in part and concurring in the judgment).
5. Am. Dental Ass'n v. Martin, 984 F.2d 823, 827 (7th Cir. 1993).
6. See Robert W. Hahn, The Economics of Airline Safety and Security, 20 HARV. J.L. & PUB. POL'Y 791, at 793 (1997).
7. Grand Canyon Air Tour Coalition v. FAA, 154 F.3d 455 (D.C. Cir. 1998).
8. Am. Water Works v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994).
9. See Symposium, Risk-Risk Analysis, 8 J. RISK & UNCERTAINTY 5 (1994).
10. Compare Michigan v. EPA, 213 F.3d 663, 678 (D.C. Cir. 2000) (finding cost a permissible factor for the agency to consider under a similar statute), with Lead Indus. Ass'n v. EPA, 647 F.2d 1130 (D.C. Cir. 1980) (finding cost an irrelevant factor under provisions governing national ambient air quality standards).
11. See Competitive Enter. Inst. v. NHTSA, 956 F.2d 321 (D.C. Cir. 1992).
12. 29 U.S.C. § 655(b)(5) (1994).
13. Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490 (1981).
14. See ROBERT V. PERCIVAL ET AL., ENVIRONMENTAL REGULATION 425 (3rd ed. 2000). I discuss below the important decision in Whitman v. American Trucking Association, 531 U.S. 457 (2001), forbidding the EPA from seeking costs in issuing noticed air quality standards.
15. Hence, for example, different agencies have come up with different dollar figures by which to value statistical lives; this is a central part of agency-made common law of cost-benefit analysis. See the table in Matthew D. Adler & Eric A. Posner, Implementing Cost-Benefit Analysis When Preferences Are Distorted, 29 J. LEGAL STUD. 1105, 1146 (2000). There are also striking variations in agency selection of discount rate, that is, the treatment of costs and benefits (such as lives saved) in the future. See Comment, Judicial Review of Discount Rates Used in Regulatory Cost-Benefit Analysis, 65 U. CHI. L. REV. 1333, 1364-69 (1998) (documenting variations ranging from 2% to 10%). These issues are treated below.
16. Hence, for example, different agencies have come up with different dollar figures by which to value statistical lives; this is a central part of agency-made common law of cost- benefit analysis. See the table in Matthew D. Adler & Eric A. Posner, Implementing Cost- Benefit Analysis When Preferences Are Distorted, 29 J. LEGAL STUD. 1105, 1146 (2000). There are also striking variations in agency selection of discount rate, that is, the treatment of costs and benefits (such as lives saved) in the future. See Comment, Judicial Review of Discount Rates Used in Regulatory Cost-Benefit Analysis, 65 U. CHI. L. REV. 1333, 1364-69 (1998) (documenting variations ranging from 2% to 10%). These issues are treated below.
17. See, e.g., Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991) (striking down agency regulation of asbestos under statute calling for cost-benefit balancing).
18. It is important to see that many federal agencies do not comply with the apparent requirements of cost-benefit balancing in existing executive orders. Robert Hahn has shown that compliance is episodic and that a great deal needs to be done to systematize the process. See Robert W. Hahn et al., Empirical Analysis: Assessing Regulatory Impact Analysis: The Failure of Agencies To Comply With Executive Order 12,866, 23 HARV J.L. & PUB. POL'Y 859 (2000). Here, as elsewhere, there is a large difference between law on the books and law in the world. I do not attempt here to address the important issue of how to ensure compliance with principles that call for attention to costs and benefits. But judicial review of agency action can serve as a partial corrective, ensuring that in the egregious cases, agency action will be held invalid for failure to comply with the principles. This point is discussed at several places below.
19. Within Congress, see, for example, 5 U.S.C. § 1535 (1994); within the executive branch, see infra note 20.
20. For discussion, see Lisa Heinzerling, Regulatory Costs of Mythic Proportions, 107 YALE L.J. 1981 (1998); Symposium, Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives, 29 J. LEGAL STUD. 837 (2000).
21. For discussion, see Lisa Heinzerling, Regulatory Costs of Mythic Proportions, 107 YALE L.J. 1981 (1998); Symposium, Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives, 29 J. LEGAL STUD. 837 (2000).
22. See Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993).
23. For a range of perspectives, see Symposium, supra note 19.
24. See Bruce A. Ackerman & Richard B. Stewart, Reforming Environmental Law, 13 COLUM. J. ENVTL. L. 171 (1988).
25. 42 U.S.C. § 7409(b) (1994).
26. See, e.g., 33 U.S.C. § 1311(b)(1)(A); 42 U.S.C. §§ 7411(a)(1), 7412(d)(2), 7475(a)(4), 7502(c)(1) (1994).
27. See ECONOMIC ANALYSIS AT EPA 455-56 (Richard D. Morgenstern ed., 1997) [hereinafter ECONOMIC ANALYSIS]; Paul Portnoy, Air Pollution Policy, in PUBLIC POLICIES FOR ENVIRONMENTAL PROTECTION 77, 101-105 (Paul R. Portnoy & Robert Stavins eds., 2000).
28. See ECONOMIC ANALYSIS, supra note 25, at 455-56.
29. Portnoy, supra note 25, at 102-03.
30. Id. at 109.
31. Id. at 113 (showing a benefit-cost ratio of three to one).
32. Office of Management and Budget, Reports to Congress on the Costs and Benefits of Federal Regulations, available at http://www.whitehouse.gov/omb/inforeg/index.html (last visited Aug. 7, 2001) [hereinafter OMB Reports].
33. For a valuable overview, see Robert W. Hahn, Regulatory Reform: What Do The Government's Own Numbers Tell Us?, in RISKS, COSTS, AND LIVES SAVED (Robert W. Hahn ed., 1996).
34. Office of Management and Budget, Charts for Report to Congress on the Costs and Benefits of Federal Regulations (2000), available at http://www.whitehouse.gov/omb/inforeg/ 2000fedreg-report.pdf [hereinafter 2000 OMB Report Charts], tbl. 4.
35. Id.
36. See id.
37. See id., tbl. 5.
38. This is the theme of STEPHEN BREYER, BREAKING THE VICIOUS CIRCLE (1993).
39. Thomas D. Hopkins, The Costs of Federal Regulation, 2 J. REG. AND SOC. COSTS 5, 25 tbl. 2 (1992).
40. Paul R. Portney & Robert N. Stavins, Regulatory Review of Environmental Policy, 8 J. RISK AND UNCERTAINTY 111, 119 n.1 (1994).
41. OMB 2000 Report Charts, supra note 32, tbl. 12.
42. Id.
43. Id.
44. Id.
45. On the problem of incoherent regulation, see Cass R. Sunstein et al., Predictably Incoherent Judgments, STAN. L. REV. (forthcoming 2002).
46. Tammy O. Tengs et al., Five Hundred Life-Saving Interventions and Their Cost-Effectiveness, 15 RISK ANALYSIS 369 (1995).
47. See JOHN GRAHAM & JONATHAN WIENER, RISK VS. RISK (1995).
48. See, e.g., A. DENNY ELLERMAN ET AL., MARKETS FOR CLEAN AIR (2000); Robert Stavins, Market-Based Environmental Policies, in PUBLIC POLICIES FOR ENVIRONMENTAL PROTECTION, supra note 25, at 31, 35-55.
49. See, e.g., A. DENNY ELLERMAN ET AL., MARKETS FOR CLEAN AIR (2000); Robert Stavins, Market-Based Environmental Policies, in PUBLIC POLICIES FOR ENVIRONMENTAL PROTECTION, supra note 25, at 31, 35-55.
50. For many examples, see ECONOMIC ANALYSIS, supra note 25.
51. See id.
52. See id. at 458.
53. Id. at 458.
54. Id. at 49-86, 131-169.
55. Id. at 458.
56. See Hahn, supra note 17.
57. For a general challenge to quantification, see Heinzerling, supra note 19.
58. See Adler & Posner, supra note 15.
59. Many of these points are pressed in ELIZABETH ANDERSON, VALUE IN ETHICS AND ECONOMICS (1993).
60. I attempt to develop this point in Cass R. Sunstein, Cognition and Cost-Benefit Analysis, 29 J. LEGAL STUD. 1059 (2000). In the same vein, see Allan Gibbard, Risk and Value, in VALUES AT RISK 94-112 (Douglas MacLean ed., 1986).
61. I attempt to develop this point in Cass R. Sunstein, Cognition and Cost-Benefit Analysis, 29 J. LEGAL STUD. 1059 (2000). In the same vein, see Allan Gibbard, Risk and Value, in VALUES AT RISK 94-112 (Douglas MacLean ed., 1986).
62. See DIETRICH DORNER, THE LOGIC OF FAILURE (1997).
63. Id.
64. Amos Tversky & Daniel Kahneman, Judgment under Uncertainty: Heuristics and Biases, in JUDGMENT UNDER UNCERTAINTY: HEURISTICS AND BIASES 3, 11 (Daniel Kahneman, Paul Slovic, and Amos Tversky eds., 1982); Roger G. Noll & James E. Krier, Some Implications of Cognitive Psychology for Risk Regulation, 19 J. LEGAL STUD. 747 (1990).
65. Amos Tversky & Daniel Kahneman, Judgment under Uncertainty: Heuristics and Biases, in JUDGMENT UNDER UNCERTAINTY: HEURISTICS AND BIASES 3, 11 (Daniel Kahneman, Paul Slovic, and Amos Tversky eds., 1982); Roger G. Noll & James E. Krier, Some Implications of Cognitive Psychology for Risk Regulation, 19 J. LEGAL STUD. 747 (1990).
66. See George F. Loewenstein et al., Risk As Feelings, 127 PSYCHOL. BULL. 267 (2001).
67. See Cass R. Sunstein, The Arithmetic of Arsenic (Aug. 2001) (unpublished manuscript), available at http://www.aei.brookings.org [hereinafter Sunstein, Arsenic].
68. See Timur Kuran & Cass R. Sunstein, Availability Cascades and Risk Regulation, 51 STAN. L. REV. 683 (1999).
69. See id.
70. See ECONOMIC ANALYSIS, supra note 25, at 455-76.
71. Tenn. Valley Auth. v. Hill, 437 U.S. 153 (1978).
72. See Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993).
73. 21 U.S.C. § 376(b)(5)(B) (1994).
74. Public Citizen v. Young, 831 F.2d 1108 (D.C. Cir. 1987).
75. Id.
76. 42 U.S.C. § 7409(b) (1994).
77. Lead Indus. Ass'n v. EPA, 647 F.2d 1130 (D.C. Cir. 1980); see also Union Elec. Co. v. EPA, 427 U.S. 246 (1976) (holding that EPA may not consider economic and technological feasibility when approving or disapproving a state implementation plan). The Supreme Court vindicated the standard in Whitman v. American Trucking Association, 121 S. Ct. 503 (2001). See infra Part III.
78. Indus. Union Dep't, AFL-CIO v. Am. Petroleum Inst., 448 U.S. 607 (1980); Int'l Union, UAW v. OSHA, 37 F.3d 665 (D.C. Cir. 1994).
79. American Trucking Association v. EPA, 175 F.3d 1027 (D.C. Cir. 1999), appears to endorse this view for regulation of air pollutants, on the theory that an interpretation that would allow the EPA to pick any point it chooses would violate the nondelegation doctrine.
80. See GRAHAM & WIENER, supra note 45.
81. 42 U.S.C. § 7429 (a)(2) (1994); 42 U.S.C. § 300g-1(b)(4)(B) (1994) (Safe Drinking Water Act).
82. 42 U.S.C. § 7411(a)(1) (1994).
83. See Am. Petroleum Inst. v. EPA, 52 F.3d 1113 (D.C. Cir. 1995) (recognizing this point but also holding that EPA had unlawfully elevated these "consideration" factors).
84. 42 U.S.C. § 7545(k)(1) (1994).
85. 42 U.S.C. § 7521(a)(3)(A) (1994).
86. 42 U.S.C. § 7545 (c)(2)(c) (1994).
87. Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991).
88. See, e.g., 29 U.S.C. § 655(b)(5) (1994) ("feasible"); 42 U.S.C. § 7521 (a)(3)(A) (1994) ("will be available"); 42 U.S.C. § 7412(d)(2) (1994) ("achievable"); 42 U.S.C. § 7411 (a)(1) (1994) ("has been adequately demonstrated").
89. See Nat'l Lime Ass'n v. EPA, 233 F.3d 625 (D.C. Cir. 2000); AFL-CIO v. OSHA, 965 F.2d 962, 980 (11th Cir. 1992); Am. Textile Mfrs. Inst., Inc. v. Donovan, 432 U.S. 490, 508-09 (1981).
90. 42 U.S.C. § 7429(a)(2) (1994); 42 U.S.C. § 300g-1(b)(4)(B) (1994) (Safe Drinking Water Act).
91. 15 U.S.C. § 2605 (a) (1994).
92. 7 U.S.C. § 136a(a) (1994).
93. 42 U.S.C. § 300g-1(b)(3) (1994).
94. 42 U.S.C. § 300g-1(b)(6) (1994).
95. See Cass R. Sunstein, Congress, Constitutional Moments, and the Cost-Benefit State, 48 STAN. L. REV. 247 (1996).
96. 5 U.S.C. § 1535 (1994).
97. See, e.g., Treasury and General Government Appropriations Act, Pub. L. 105-61, § 625, 111 Stat. 1272 (1998); Omnibus Consolidated and Emergency Supplemental Appropriations Act, Pub. L. 105-277, § 638(a), 112 Stat. 2681 (1999).
98. 467 U.S. 837 (1994).
99. Id. at 842.
100. Am. Trucking Ass'n v. EPA, 175 F.3d 1027, 1052 (D.C. Cir. 1999); see supra text accompanying note 2 (quoting the lower court).
101. See, e.g., Coalition on Sensible Transp., Inc. v. Dole, 826 F.2d 60 (D.C. Cir. 1987).
102. This principle appears to underlie American Trucking, 175 F.3d 1027.
103. See Michigan v. EPA, 213 F. 3d 663, 667-79 (D.C. Cir. 2000).
104. See Natural Res. Def. Council v. EPA, 824 F.2d 1146 (D.C. Cir. 1987).
105. See Competitive Enter. Inst. v. NHTSA, 956 F.2d 321 (D.C. Cir. 1992).
106. 613 F.2d 947 (D.C. Cir. 1979).
107. Id. at 955.
108. Ala. Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979).
109. Id. at 360.
110. Id. at 360 n.89.
111. Id. at 360.
112. Public Citizen v. Young, 831 F.2d 1108 (D.C. Cir. 1987).
113. 753 F.2d 120 (D.C. Cir. 1985).
114. 49 U.S.C. § 303(c) (1994).
115. Public Citizen, 831 F.2d at 130. The case is expressly understood in this way in Coalition on Sensible Transportation, Inc. v. Dole, 826 F.2d 60, 63 (D.C. Cir. 1987).
116. See, e.g., Envtl. Def. Fund, Inc. v. EPA, 82 F3d 451 (D.C. Cir. 1996); Sierra Club v. EPA, 992 F.2d 337, 343-45 (D.C. Cir. 1993); Ohio v. EPA, 997 F.2d 1520, 1535 (D.C. Cir. 1993) (suggesting that "the literal meaning of a statute need not be followed where the precise terms lead to absurd or futile results, or where failure to allow a de minimis exemption is contrary to the primary legislative goal"); Public Citizen v. FTC, 869 F.2d 1541, 1556-57 (D.C. Cir. 1989).
117. 448 U.S. 607 (1980).
118. 29 U.S.C. § 655(b)(5) (1994).
119. 29 U.S.C. § 652(8) (1994).
120. Benzene Case, 448 U.S. at 688 (Marshall, J., dissenting).
121. Benzene Case, 448 U.S. at 617.
122. Id.
123. 452 U.S. 490 (1981).
124. Id. at 496.
125. See infra Part VI.A.
126. 217 F.3d 861 (D.C. Cir. 2000).
127. Id. at 865.
128. Id.
129. Id. at 867.
130. Id.
131. Cf. Bruce A. Ackerman & William T. Hassler, CLEAN COAL/DIRTY AIR (1981) (discussing alliance between environmentalists and eastern coal companies).
132. See, e.g., Symposium, supra note 9.
133. See supra note 11.
134. See ALAN MCHUGHEN, PANDORA'S PICNIC BASKET 201-29, 232-237 (2000).
135. 175 F.3d 1027, 1051 (D.C. Cir. 1999).
136. Id. at 1051-52.
137. 42 U.S.C. § 7408(a)(2) (1994).
138. 175 F.3d at 1052.
139. Id.
140. 956 F.2d321 (D.C. Cir. 1992).
141. Id. at 324.
142. Competitive Enter. Inst. v. NHTSA, 45 F.3d 481, 484-86 (D.C. Cir. 1995).
143. 42 U.S.C. § 300g-1(b) (1994).
144. 42 U.S.C. § 300g-1(b)(4) (1994).
145. 42 U.S.C. § 300g-1(b)(4) (1994).
146. 42 U.S.C. § 300g-1(b)(7)(A) (1994).
147. Am. Water Works Ass'n v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994).
148. Id. at 1270-71.
149. Id. at 1271.
150. Id.
151. 154 F.3d 455 (D.C. Cir. 1998).
152. Id. at 475.
153. Id.
154. Id.
155. Careful readers will notice that whether this conclusion is necessary to prevent the statute from being self-defeating depends on how the statute's purposes are characterized: if the purpose is to reduce noise for those visiting the Grand Canyon, an interpretation that would ignore the interests of the air tour industry would not be self-defeating at all. Unfortunately there is no simple purpose to be "found" behind this statute.
156. This is how the case is read in Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).
157. 159 F.3d 616 (D.C. Cir. 1998).
158. Id. at 623.
159. Id. at 619-20.
160. 213 F.3d 663 (D.C. Cir. 2000).
161. 42 U.S.C. § 7410(a)(2)(D)(i)(I) (1994).
162. 213 F.3d at 675.
163. Id. at 678.
164. Id. at 677.
165. Id. at 678.
166. Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490 (1981).
167. Id. at 677.
168. Id. at 678.
169. See supra text accompanying notes 141-146.
170. See CASS R. SUNSTEIN, ONE CASE AT A TIME: JUDICIAL MINIMALISM ON THE SUPREME COURT, at 229-31 (1999) (discussing reasons for allowing agencies, but not courts, to depart from text in unanticipated cases).
171. See supra note 83; see also supra notes 99, 113, 140 and accompanying text.
172. For a general discussion, see D. Bruce La Pierre, Technology-Forcing and Federal Environmental Protection Statutes, 62 IOWA L. REV. 771 (1977).
173. 824 F.2d 1146 (D.C. Cir. 1987).
174. See 42 U.S.C. § 7412 (1994) (amending 42 U.S.C. § 7412 (1982)).
175. 42 U.S.C. § 7412(b)(1)(B) (1982), amended by 42 U.S.C. § 7412(f)(2)(A) (1994).
176. Natural Res. Def. Council v. EPA, 824 F.2d 1146, 1153 (D.C. Cir. 1987).
177. Id.
178. Id. at 1150-51.
179. 937 F.2d 641 (D.C. Cir. 1991).
180. 42 U.S.C. 7475 (1994).
181. Natural Res. Def. Council, 937 F.2d at 643.
182. Id. at 645.
183. Int'l Union, UAW v. OSHA, 938 F.2d 1310 (D.C. Cir. 1991).
184. Id.
185. Int'l Union, UAW v. OSHA, 37 F.3d 665 (D.C. Cir. 1994).
186. See Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).
187. 947 F.2d 1201 (5th Cir. 1991).
188. 15 U.S.C. §§ 2601-2692 (1994).
189. The term appears no less than thirty-five times in thirty-three pages of the statute. See William H. Rodgers, Jr., The Lesson of the Owls and the Crows, 4 J. LAND USE & ENVTL. L. 377, 379 (1989); see, e.g., 15 U.S.C. §§ 2605(a) (1994); 15 U.S.C. 2605(e)(2)(B) (1994).
190. Corrosion Proof Fitting, 947 F.2d at 1205-07.
191. Id. at 1216.
192. Id. at 1222.
193. Id. at 1223.
194. See also Am. Dental Ass'n v. Martin, 984 F.2d 823, 825-26 (7th Cir. 1993) (upholding OSHA regulations designed to protect against hepatitis and AIDS, and noting that the "rule's implicit valuation of a life is high - about $4 million - but not so astronomical, certainly by regulatory standards, as to call the rationality of the rule seriously into question, especially when we consider that neither Hepatitis B nor AIDS is a disease of old people") (citation omitted).
195. 121 S. Ct. 903 (2001).
196. 42 U.S.C. 7409(b)(1) (1994).
197. Whitman, 121 S. Ct. at 910.
198. Id. at 921.
199. Id. at 910.
200. Id.
201. See also FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000).
202. Whitman, 121 S. Ct. at 921.
203. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984).
204. See id.
205. See, e.g., id.; Babbitt v. Sweet Home, 515 U.S. 687 (1995); Young v. Cmty. Nutrition Inst., 476 U.S. 974 (1986).
206. Whitman, 121 S. Ct. at 908-909.
207. Id. at 921.
208. For discussion from different perspectives, see WILLIAM ESKRIDGE, DYNAMIC STATUTORY INTERPRETATION (1994); Cass R. Sunstein, Interpreting Statutes in the Regulatory State, 103 HARV. L. REV. 405, 420-135 (1989).
209. For discussion from different perspectives, see WILLIAM ESKRIDGE, DYNAMIC STATUTORY INTERPRETATION (1994); Cass R. Sunstein, Interpreting Statutes in the Regulatory State, 103 HARV. L. REV. 405, 420-135 (1989).
210. Michigan v. EPA, 213 F.3d 663, 678 (D.C. Cir. 2000).
211. See H.L.A. HART, THE CONCEPT OF LAW (1961).
212. See Riggs v. Palmer, 22 N.E. 188 (1889).
213. See INTERPRETING STATUTES (D. Neil MacCormick et al. eds., 1991).
214. Ala. Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 1979).
215. Am. Trucking Ass'n v. EPA, 175 F.3d 1027, 1052 (D.C. Cir. 1999).
216. Chem. Mfrs. Ass'n v. Natural Res. Def. Council, 470 U.S. 116, 126 (1985).
217. See Am. Water Works Ass'n v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994); Am. Trucking Ass'n, 175 F.3d at 1052 .
218. I do not explore here the choice between "intention-mimicking" and "intention-eliciting" default rules, a choice well elaborated in the law of contract. See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87 (1989). In the area of statutory construction, it might be thought that courts should do what they think Congress would have done, if it had made provision on the point (a suggestion that supports the cost-benefit default rules) - and that if courts are unsure what Congress would have done, they should choose a rule that will encourage Congress to be more clear in the future (a suggestion that might argue against some of the default rules, on the ground that without them, Congress will be led to be clearer in the future). For detailed discussion, see Einer Elhauge (2000) (unpublished manuscripts, on file with author).
219. See INTERPRETING STATUTES, supra note 207.
220. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208-09 (1988).
221. See Cass R. Sunstein, Nondelegation Canons, 67 U. CHI. L. REV. 315 (2000).
222. Compare the controversial suggestion in RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW (5th ed. 1998), that the common law embodies principles of economic efficiency. I am suggesting a more modest point - not that courts are pursuing efficiency economically defined, but that they are converging on a less sectarian, more modest set of ideas, allowing agencies to move in directions that can be seen as sensible from a wide variety of standpoints.
223. See Am. Water Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994).
224. For a powerful attack on unduly complex canons of construction and a plea for simplicity, see Adrian Vermeule, Interpretive Choice, 75 N.Y.U. L. REV. 74 (2000). I do not deal here with the objection that the cost-benefit default principles make statutory interpretation too unruly. As they operate in the cases, the principles seem reasonably straightforward and do not produce undue complexity. But it is easy to imagine a situation in which these default principles coexisted with a number of others, thus making decisions unnecessarily complex.
225. Of course there is no avoiding "regulation." What is ordinarily described as "opposition to regulation" is in reality no such thing, but approval of that form of regulation that is embodied in principles of contract, tort, and property law. Nonregulation is not a possibility, short of anarchy. I use the terminology of "regulation" and "antiregulation" to conform to common usage. The real opposition is to specific kinds and forms of regulation.
226. After Lochner v. New York, 198 U.S. 45 (1905).
227. See RICHARD ELLIOT BENEDICT, OZONE DIPLOMACY 63 (1991); COST-BENEFIT ANALYSIS AT EPA 77-83, 131-64 (Richard D. Morgenstern ed., 1997).
228. See RICHARD ELLIOT BENEDICT, OZONE DIPLOMACY 63 (1991); COST-BENEFIT ANALYSIS AT EPA 77-83, 131-64 (Richard D. Morgenstern ed., 1997).
229. Ala. Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 1979).
230. As plausible examples, see Monsanto Co. v. Kennedy, 613 F.2d 947 (D.C. Cir. 1979); Alabama Power, 636 F.2d 323; Chemical Manufacturers Association v. EPA, 217 F.3d 861 (D.C. Cir. 2000), discussed supra Part II.D.3.
231. Public Citizen v. Young, 831 F.2d 1108 (D.C. Cir. 1987).
232. Id. at 1111.
233. See supra text accompanying notes 121-126.
234. Chem. Mfrs. Ass'n, 217 F.3d at 865-67.
235. Am. Trucking Ass'n v. EPA, 175 F.3d 1027, 1052 (D.C. Cir. 1999).
236. See Cass R. Sunstein, Health-Health Tradeoffs, 63 U. CHI. L. REV. 1533 (1996).
237. See, e.g., ELIZABETH ANDERSON, VALUE IN ETHICS AND ECONOMICS (1993).
238. For intriguing psychological evidence, see Philip Tetlock, Taboo Tradeoffs (2000) (unpublished manuscript, on file with author). It might well be that the refusal to balance costs and benefits is an overgeneralization of a sound moral posture in ordinary life. In deciding whether to break a promise, or to betray a friend, we do not ordinarily balance costs against benefits, at least not in any simple or direct sense. There is a general understanding that some tradeoffs are indeed "taboo," in the sense that certain reasons for action are blocked, not merely outweighed. I speculate that the opposition to cost-benefit analysis, in government policy, is an overgeneralization of moral commitments that work well in the private domain. See JONATHAN BARON, JUDGMENT MISGUIDED (1998).
239. For intriguing psychological evidence, see Philip Tetlock, Taboo Tradeoffs (2000) (unpublished manuscript, on file with author). It might well be that the refusal to balance costs and benefits is an overgeneralization of a sound moral posture in ordinary life. In deciding whether to break a promise, or to betray a friend, we do not ordinarily balance costs against benefits, at least not in any simple or direct sense. There is a general understanding that some tradeoffs are indeed "taboo," in the sense that certain reasons for action are blocked, not merely outweighed. I speculate that the opposition to cost-benefit analysis, in government policy, is an overgeneralization of moral commitments that work well in the private domain. See JONATHAN BARON, JUDGMENT MISGUIDED (1998).
240. See Matthew D. Adler & Eric A. Posner, Rethinking Cost-Benefit Analysis, 109 YALE L.J. 165 (1999) (arguing that cost-benefit analysis is only a decision procedure).
241. See supra Parts II F, II G.
242. See STEPHEN G. BREYER ET AL., ADMINISTRATIVE LAW AND REGULATORY POLICY (4th ed. 1999).
243. EEOC v Arabian Am. Oil Co., 499 U.S. 244, 248 (1991).
244. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208-09 (1988).
245. Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trade Council, 485 U.S. 568 (1988).
246. See ANTONIN SCALIA, A MATTER OF INTERPRETATION (1997) (defending canons if and only if they are vindicated by tradition).
247. Evidence to this effect comes from International Union, UAW v. OSHA, 37 F.3d 665 (D.C. Cir. 1994) (upholding agency decision not to make cost-benefit analysis the basis for decision under a statute that, in the court's view, would have allowed the agency to perform cost-benefit analysis).
248. Not that there was no challenge to the agency's decision under Chevron Step Two in International Union, UAW v. OSHA, 37 F.3d 665, though the court's reasoning suggests that the challenge would have failed.
249. This is the apparent holding of Chemical Manufacturers Association v. EPA, 217 F.3d 861, 866-67 (D.C. Cir. 2000), which held that the agency is not permitted, under Step Two, to impose a regulation that has no environmental benefits.
250. This appears to be the court's holding about the benefits of ground-level ozone in American Trucking Association v. EPA, 175 F.3d 1027 (D.C. Cir. 1999).
251. But see id. (upholding a significant risk/feasibility reading of the Occupational Safety and Health Act, notwithstanding a previous decision suggesting that cost-benefit balancing would have been a permissible reading).
252. 42 U.S.C. § 7409(b) (1994).
253. Whitman v. Am. Trucking Ass'n, 121 S. Ct. 903 (2001).
254. See 42 U.S.C. § 7410 (1994); Portney, supra note 25.
255. I do not believe that they are, for reasons given in Lead Industries Association v. EPA, 647 F.2d 1130 (D.C. Cir. 1980), and followed in American Trucking Association, 175 F.3d 1027.
256. From this it follows that the Supreme Court properly rejected the plea for cost-consciousness in American Trucking Association, 175 F.3d 1027, not by rejecting cost-benefit default rules, but by invoking the clarity of the statutory text and the fact that taken as a whole, the system for implementing national ambient air quality standards is far from cost-blind. Of course this is not a claim that as a matter of policy, the current system is optimal. For discussion, see MARC K. LANDY ET AL., THE ENVIRONMENTAL PROTECTION AGENCY: ASKING THE WRONG QUESTIONS (2d ed. 1996).
257. See the discussion of exclusionary reasons in JOSEPH RAZ, THE MORALITY OF FREEDOM (1986).
258. See Richard H. Pildes, Why Rights Are Not Trumps, 27 J. LEGAL STUD. 725 (1999).
259. 16 U.S.C. §§ 1531-44 (1994).
260. Tenn. Valley Auth. v. Hill, 437 U.S. 153 (1978).
261. Id. at 162.
262. Id. at 166 (Powell, J., dissenting).
263. See PERCIVAL ET AL., supra note 14, at 1085-1089.
264. In the wake of Tennessee Valley Authority v. Hill, 437 U.S. 153, Congress amended section 7 of the Act to establish a special committee, known as the "God Squad," to make exemptions, and thus to permit action to go forward under extraordinary circumstances. In the decades since the amendment, no wholesale exemption has ever been granted.
265. See Office of Management and Budget, Report to Congress on the Costs and Benefits of Federal Regulations (2000), available at http://www.whitehouse.gov/omb/inforeg/ 2000fedreg-report.pdf; see also Adler & Posner, supra note 15 (discussing agency practice).
266. Office of Management and Budget, Economic Analysis of Federal Regulations Under Executive Order 12,866 (Jan. 11, 1996), available at http://www.whitehouse.gov/omb/ inforeg/riaguide.html.
267. March Sadowitz & John D. Graham, A Survey of Residual Cancer Risks Permitted by Health, Safety and Environmental Policy, 6 RISKS 17 (1995).
268. Id.
269. See Indus. Union Dep't, AFL-CIO v. Am. Petroleum Inst., 448 U.S. 607, 665 (1980).
270. See id.
271. 52 Fed Reg 46,168, 46,234 (Dec. 4, 1987) (to be codified at 29 C.F.R. pts. 1910 & 1926).
272. See ROBERT V. PERCIVAL ET AL., ENVIRONMENTAL REGULATION 440 (3d ed. 2000).
273. Agency attention to the size of the exposed population is strongly urged in JAMES T. HAMILTON & W. KIP VISCUSI, CALCULATING RISKS (1999).
274. Id.
275. See 29 U.S.C. § 655 (b) (5)
276. This is the direction suggested in American Trucking Association v. EPA, 175 F.3d 1027, 1039-1040 (D.C. Cir. 1999). On some of the complexities, see Sunstein, Arsenic, supra note 62.
277. See HAMILTON & VISCUSI, supra note 265.
278. See Sadowitz & Graham, supra note 259.
279. Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490 (1981).
280. Id.
281. For evidence, see Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991) (invalidating asbestos ban).
282. See, e.g., id.; Aqua Slide N' Dive Corp. v. Consumer Prod. Comm'n, 569 F.2d 831 (5th Cir. 1978).
283. See, e.g., United Steelworkers of Am. v. Marshall, 647 F2d 1189 (5th Cir. 1980); Bldg. and Constr. Trades Dept. v. OSHA, 838 F.2d 1258 (D.C. Cir. 1988); Nat'l Cottonseed Prods. Ass'n v. Brock, 825 F.2d 482 (D.C. Cir. 1987).
284. Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).
285. Most notably the National Environmental Policy Act. See Stryker's Bay Neighborhood Council v. Karlen, 444 U.S. 223 (1980).
286. See Am. Petroleum Inst. v. EPA, 52 F.3d 1113, 1119-1120 (D.C. Cir. 1995) (holding that the factors that follow the "taking into consideration" language must be treated as secondary).
287. See Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991).
288. For an overview, see Richard Pildes & Cass R. Sunstein, Reinventing the Regulatory State, 62 U. CHI. L. REV. 1 (1995).
289. This approach is challenged in many places. See, e.g., ELIZABETH ANDERSON, VALUE IN ETHICS AND ECONOMICS (1993).
290. SEE MARKETS, MORTALITY, AND WORK (1998).
291. See W. KIP VlSCUSI, FATAL TRADEOFFS (1992).
292. See Adler & Posner, supra note 15. EPA is generally using a number of $4.8 million per statistical life saved. See SECTION 812 RETROSPECTIVE (1997).
293. I borrowed this from Matthew D. Adler and Eric A. Posner, supra note 15.
294. INNOVATIVE STRATEGIES GROUP, ENVIRONMENTAL PROTECTION AGENCY, REGULATORY IMPACT ANALYSIS, OZONE AND PARTICULATES (1998).
295. See OMB, 1999 REPORT TO CONGRESS, at 40-43. A table, id. at 41, contains an illuminating summary: ESTIMATED COSTS AND BENEFITS OF OSHA RULES: PROSPECTIVE vs. RETROSPECTIVE Regulation Year Issued Estimated Costs Estimated Benefits Vinyl Chloride (a) 1974 Overestimated by a factor Not clear of four Cotton Dust (a) 1978 Overestimated by a factor Overestimated by more of three than a factor of two Lead (Secondary Smelters) 1978 Capital costs significantly Overestimated the underestimated importance of engineering controls in achieving benefits Ethylene Oxide (Hospitals) (a)1984 About right Not clear Formaldehyde (Metal 1987 Over by a factor of two Not clear Foundries) (although costs of engineering controls considerably underestimated) Grain Handling 1987 Not clear Not clear PSDI Power Presses (b) 1988 Underestimated costs, overestimated benefits, or both Powered Platforms (b) 1989 Underestimated costs, overestimated benefits, or both
296. See W. Kip Viscusi, Risk Equity, 29 J. LEGAL STUD. 843 (2000).
297. See STEPHEN G. BREYER ET AL., ADMINISTRATIVE LAW AND REGULATORY POLICY 30-31 (4th ed. 1999); Adler & Posner, supra note 15.
298. But see Robert H. Frank & Cass R. Sunstein, Cost-Benefit Analysis and Relative Position, 68 U. CHI. L. REV. 323 (2001) (urging inflation of these numbers).
299. See Viscusi, supra note 288 (documenting abuses of this kind).
300. See 66 Fed. Reg. 6976, at 7013-7017 (Jan. 22, 2001) (to be codified at 40 C.F.R. pts. 9, 141 & 142).
301. See the acknowledgement of the relevance of life-years in American Dental Association v. Martin, 984 F.2d 823, 827 (7th Cir. 1993).
302. See 66 Fed. Reg. 6976, at 7016 (Jan. 22, 2001) (to be codified at 40 C.F.R. pts. 9, 141 & 142).
303. Richard L. Revesz, Environmental Regulation, Cost-Benefit Analysis, and the Discounting of Human Lives, 99 COLUM. L. REV. 941 (1999).
304. See Frank & Sunstein, supra note 290.
305. See Viscusi, Risk Equity, supra note 288.
306. 947 F.2d 1201 (5th Cir. 1991).
307. See Michael B. Gerrard, Demons and Angels in Hazardous Waste Regulation, 92 NW. U. L. REV. 706, 742-43 (1998).
308. DEREK PARFIT, REASONS AND PERSONS 357 (1984).
309. Valuable treatments include Revesz, supra note 295; Comment, Judicial Review of Discount Rates Used in Regulatory Cost-Benefit Analysis, 65 U. CHI. L. REV. 1333 (1998).
310. Thomas O. McGarity, Some Thoughts on "Deossifying" the Rulemaking Process, 41 DUKE L.J. 1385 (1992).
311. I am therefore disagreeing with the endorsement of "hard look" review in the excellent Comment, supra note 15.
312. See OMB, Benefit-Cost Analysis of Federal Programs, 57 Fed Reg at 53,520 (1992).
313. See Appendix for details; see also Revesz, supra note 295, at 950.
314. See Comment, supra note 15, at 1336-37.
315. Id. at 1337.
316. See id. at 1341-1350; see also Appendix for excerpts from OMB's own account.
317. Id. at 1341-46.
318. As argued convincingly in Revesz, supra note 295.
319. See 66 Fed. Reg. 6976, at 7013 (Jan. 22, 2001) (to be codified at 40 C.F.R. pts. 9, 141 & 142).
320. See Revesz, supra 295; Jason Burnett & Robert W. Hahn, EPA's Arsenic Rule: The Benefits of the Standard Do Not Justify the Costs (2001) (unpublished manuscript, on file with author).
321. See Revesz, supra note 295, at 981-87.
322. See id.
323. Id. at 987-1009 (offering a qualified version of this view).
324. See DAVID W. PEARCE & R. KERRY TURNER, ECONOMICS OF NATURAL RESOURCES AND THE ENVIRONMENT 223-24 (1990).
325. Revesz, supra note 295, at 994.
326. Tyler Cowen & Derek Perfit, Against the Social Discount Rate, in JUSTICE BETWEEN AGE GROUPS AND GENERATIONS 144, 149 (Peter Laslett & James S. Fishkin eds., 1992).
327. For a good discussion, see DANIEL A. FARBER, ECO-PRAGMATISM (1999).
328. Corrosion Proof Fittings v. EPA, 947 F.2d 1201, 1218 (5th Cir. 1991).
329. Ohio v. U.S. Dep't of the Interior, 880 F.2d 432, 465 (D.C. Cir. 1989).
330. Of course there is no way of assessing consequences, or even identifying them, that is entirely neutral on evaluative questions. What I mean to suggest is that agreed-upon understandings can do the necessary work here. See the outline of the track record of cost-benefit analysis at EPA, supra notes 48-54.
331. See the account, supra notes 48-49 and accompanying text, of instances in which cost-benefit balancing spurred regulatory action.