A bipartisan group in the Senate is working on a large package to reform the rulemaking process. Negotiations are ongoing but the New York Times reported last week that the package is likely to require agencies to engage in additional cost-benefit analysis that would be subject to judicial review.
The big question is whether the new cost-benefit provisions in the proposed legislation are designed to encourage good policymaking or merely to provide new tools to kill controversial rules. This is a critical issue, as the provisions would apply to rulemaking across the entire federal government.
We don’t have the final legislative language yet, but we have a strong clue to what it will likely be. Last October, the Senate Homeland Security and Government Affairs Committee approved a cost-benefit analysis bill that seems likely to be included in the working group’s proposal (this was one of four rulemaking reform bills approved by the Committee, which I detailed here).
The bill would greatly expand the number of cost-benefit analyses that are subject to judicial review (currently, most such analyses are reviewed only by the Office of Management and Budget). As my prior work suggests, there are good reasons to be skeptical of judicial review of cost-benefit analysis.
The bill is not nearly as extreme as some of the prior legislation detailed in my account, but it contains some broad and troubling provisions. For instance, the bill requires agencies to design rules “to impose the least burden on society” (which sounds skewed in favor of deregulatory rules) and to “base decisions on the best reasonably obtainable . . . information.” These standards might sound reasonable in the abstract, but in practice they may be abused by opportunistic litigants and ideological courts, assuming that agencies won’t start to nix issuing rules on controversial subjects to begin with.
My account of the SEC’s experience with judicial review of cost-benefit analysis is a harbinger of what would happen on a much broader scale were the bill to become law. The result would be to choke bad and good regulations alike.
This post expresses the author’s personal views alone.