On the Costs and Benefits of Aggressive Judicial Review of Agency Action

In this essay, the author undertakes three tasks. The first is to describe some of the difficulties of defining benefits in the setting of judicial review of administrative action. The second task is to offer reasons, though tentative and largely anecdotal ones, for an affirmative answer to the question whether aggressive judicial review has produced net benefits. At the very least, the author suggests, aggressive judicial review has had significant benefits in many settings. The third and final task is to outline some proposals by which to increase the benefits, and decrease the risks, of an aggressive judicial posture in administrative law

Lead as a tracer for automotive particulates: projecting the sulfate air quality impact of oxidation catalyst-equipped cars in Los Angeles

An analysis of the fate of lead in the Los Angeles Basin is used to evaluate an emissions to air quality model for automotive exhaust particulates. The dispersion model is then applied to projecting the annual average sulfate air quality impact of direct sulfuric acid mist emissions from oxidation catalyst-equipped cars of the 1975 model type. Estimates are given of the incremental sulfate contributions from three model years of oxidation catalyst-equipped cars burning a relatively low sulfur gasoline, and from roughly ten model years of 1975-type autos burning gasoline of sulfur content equal to that of the entire 1974 Southern California gasoline pool. In the latter case, sulfate concentrations in portions of downtown Los Angeles in 1985 could be elevated by roughly two thirds above present average sulfate values

Sludge and Ordeals

Is there an argument for behaviorally informed deregulation? In 2015, the United States government imposed 9.78 billion hours of paperwork burdens on the American people. Many of these hours are best categorized as “sludge,” understood as friction, reducing access to important licenses, programs, and benefits. Because of the sheer costs of sludge, rational people are effectively denied life-changing goods and services. The problem is compounded by the existence of behavioral biases, including inertia, present bias, and unrealistic optimism. A serious deregulatory effort should be undertaken to reduce sludge through automatic enrollment, greatly simplified forms, and reminders. At the same time, sludge can promote legitimate goals. First, it can protect program integrity, which means that policymakers might have to make difficult tradeoffs between (1) granting benefits to people who are not entitled to them and (2) denying benefits to people who are entitled to them. Second, it can overcome impulsivity, recklessness, and self-control problems. Third, it can prevent intrusions on privacy. Fourth, it can serve as a rationing device, ensuring that benefits go to people who most need them. Fifth, it can help public officials to acquire valuable information, which they can use for important purposes. In most cases, however, these defenses of sludge turn out to be far more attractive in principle than in practice. For sludge, a form of cost-benefit analysis is essential, and it will often demonstrate the need for a neglected form of deregulation: sludge reduction. For both public and private institutions, “Sludge Audits” should become routine, and they should provide a foundation for behaviorally informed deregulation. Various suggestions are offered for new action by the Office of Information and Regulatory Affairs, which oversees the Paperwork Reduction Act; for courts; and for Congress

Cost and Performance of Automotive Emission Control Technologies

The problem at hand is to investigate the near-term commercial feasibility of a wide range of automotive emission control technologies. The central issues can best be explained in terms of the emission control characteristics of each technology and their costs. Governmentally established emission control standards may be viewed as constraints on the use of a given vehicle and engine design. Either the technology meets the standard in use or it will not be sold. Emission control technologies that show promise of near-term manufacturability will be identified. Then, without presuming what future emission standards will be, the emission characteristics of example vehicle-engine combinations will be listed. Technologies that are acceptable, given a specified emission standard, can then be identified by a process of elimination. The approach to identifying the relevant costs associated with a given technology is not as clear cut. One would like to think that the most basic question governing the adoption of a given feasible technology is, "Will it be purchased by the public?" The second part of this paper will discuss the impact of pollution control technology on the economic decisions facing the new car customer. The cost considered by the rational new car consumer involves more than first cost. Other important factors include maintenance, operating expenses, resale value, and financing charges. Since resale value and financing charges are highly time dependent, it is possible that a new car purchaser's decision on which technology to buy may depend on how long he plans to keep the car. A cost annualization procedure will thus be developed which considers these factors

Is OSHA Unconstitutional'

Under the Occupational Safety and Health Act, the Secretary of Labor is authorized to issue whatever standards are "reasonably necessary or appropriate" to provide safe or healthful places of employment. More than any other provision in federal regulatory law, this language is subject to a plausible nondelegation challenge, because it seems to ask the Secretary to choose among a wide array of "intelligible principles" for standard-setting. The constitutional challenge raises serious and unresolved questions for both regulatory policy and administrative law. In answering those questions, courts have three principal alternatives. The most aggressive approach would be to invalidate the statute in the hopes of encouraging, for the first time, sustained legislative deliberation about the proper content of occupational safety and health policy. The most modest approach, rooted in the Avoidance Canon, would be to construe the statutory language to produce floors and ceilings on agency action; that approach would require the Secretary to ban significant risks while forbidding the Secretary from regulating trivial or de minimis risks and also requiring the Secretary to show that any regulations are "feasible." The third and preferable approach, also rooted in the Avoidance Canon, would be to construe the statute so as to require the agency to engage in a form of cost-benefit balancing. Such a construction would have the advantage of promoting greater transparency and accountability at the agency level. At the same time, it would raise difficult questions about the precise nature of such balancing in the context of occupational safety policy and also about legal constraints on agency assessment of both costs and benefits. Because of the distinctive nature of workplace safety, the best approach would give the agency considerable flexibility on questions of valuation while also permitting serious attention to distributional factors.

Willingness to Pay vs. Welfare

Economists often analyze questions of law and policy by reference to the criterion of private willingness to pay (WTP), with the belief that people's WTP for a good is an accurate proxy for the welfare that they would obtain from that good. For two reasons, the proxy is crude. The first problem is that people may not pay for all of the benefits they receive, and in such cases, use of WTP may lead in unfortunate directions, even or especially if welfare is our lodestar. The second and more fundamental problem is that people may be willing to pay for goods whose acquisition does not improve their welfare. People typically choose on the basis of their "affective forecasting," and their affective forecasts can lead them to make bad blunders. Sometimes people overestimate the welfare effects of both losses and gains. These points have many implications for law and policy. In particular, juries are probably offering greatly inflated dollar awards for hedonic damages, and the outcome of cost-benefit analyses, based on WTP, may not capture welfare, suitably defined.

The Complex Climate Change Incentives of China and the United States

It is increasingly clear that the world would be better off with an international agreement to control greenhouse gas emissions. What remains poorly understood is that the likely costs and benefits of emissions controls are highly variable across nations. Most important, prominent projection suggest that the world's leading emitters--the United States and China'have weak incentives to participate in an agreement that would be optimal from the standpoint of the world. The first problem is that any significant emissions effort would probably be exceedingly expensive for both nations. The second problem is that on prominent projections, the United States and China are unlikely to be the most serious losers from climate change. There are two ways to eliminate the resulting obstacle to an international agreement. The first is through altering the perceived cost-benefit analysis for both countries. The second is through an understanding that both nations, and the United States in particular, are under a moral obligation not to inflict serious harm on the highly vulnerable citizens of Africa, India, and elsewhere. Existing proposals for unilateral action on the part of the United States seem to stem from an unruly mixture of confusion, hope, and a sense of moral obligation. There are also interesting differences between the situations of the two leading emitters: Because China is much poorer and has much lower per capita emissions, it is especially difficult to interest China in taking aggressive steps to reduce its emissions.

Cost-Benefit Analysis Without Analyzing Costs or Benefits: Reasonable Accommodation, Balancing, and Stigmatic Harms

Is an accommodation "reasonable" under the Americans with Disabilities Act, if and only if the benefits are roughly proportional to the costs? How should benefits and costs be assesse?' Should courts ask about how much disabled employees are willing to pay to obtain the accommodation, or instead how much they would have to be paid not to have the accommodation? How should stigmatic or expressive harms be valued? This essay, written for a symposium on the work of Judge Richard A. Posner, engages these questions in a discussion of an important opinion in which Judge Posner denied accommodations involving the lowering of a sink in a kitchenette and a request for telecommuting. The problem with the analysis in that opinion is that it does not seriously analyze either costs or benefits. A general lesson is that while cost-benefit balancing can helpfully discipline unreliable intuitions about the effects of requested accommodations, it can also incorporate those intuitions. Another lesson is that stigmatic harms and daily humiliations deserve serious attention as part of the inquiry into which accommodations are reasonable, and that the removal of those harms and humiliations can create real benefits. Adequate cost-benefit analyses must attempt to measure and include those benefits.

Two Conceptions of Irreversible Environmental Harm

The concept of "irreversibility" plays a large role in the theory and practice of environmental protection. Indeed, the concept is explicit in some statements of the Precautionary Principle. But the idea of irreversibility remains poorly defined. Because time is linear, any loss is, in a sense, irreversible. On one approach, drawn from environmental economics, irreversibility might be understood as a reference to the value associated with taking precautionary steps that maintain flexibility for an uncertain future ("option value"). On another approach, drawn from environmental ethics, irreversibility might be understood to refer to the qualitatively distinctive nature of certain environmental harms, a point that raises a claim about incommensurability. The two conceptions fit different problems. For example, the idea of option value best fits the problem of climate change; the idea of qualitatively distinctive harms best fits the problem of extinction of endangered species. These ideas can be applied to a wide assortment of environmental problems.