In the News

EPA has been quietly working on some serious changes to the guidelines it uses to conduct cost-benefit analysis. Tweaks to the powerful but low-profile Guidelines for Preparing Economic Analyses could have major impacts on the environment. The Guidelines is little known outside of EPA, but is used in the design of every major environmental regulation.

“The fact that he’s not a stereotype is definitely a good thing, both for public health and the environment and for businesses,” says Michael Livermore, executive director of the Institute for Policy Integrity at New York University’s School of Law. “If you fit him in the stereotype, he’s either going to be bad for business or bad for the environment, and that’s not a choice we want to have to make. He’s going to be looking to make sure we achieve our environmental public health goals in a way that gives companies maximum flexibility to achieve our social goals at the lowest possible costs.”

Judge Sonia Sotomayor’s paper trail on the environment is slim, but one decision has drawn praise from environmentalists, and some concerns from business. In Riverkeeper v. EPA, Sotomayor wrote the opinion for the court of appeals. She found that the Clean Water Act prohibited EPA from conducting cost-benefit analysis when deciding whether to impose regulations at power plants that would protect fish, but have high costs for utility companies.

OMB and its regulatory review office are walking a fine line on transparency, said Michael Livermore, executive director of New York University’s Institute for Policy Integrity. “It’s a good thing to have the public being able to be responsive to these kinds of interagency discussions,” Livermore said. But if agencies had to take full responsibility for anything they said, it could have a “chilling effect,” he added.

Sunstein is well known for his academic writings, which touch on everything from constitutional law to behavioral economics. His appointment to director of the Office of Information and Regulatory Affairs (OIRA) is a harbinger of the administration’s commitments—yes, we need to grow the economy, but sound economics need not conflict with smart regulation.

The Institute for Policy Integrity, on the other hand, endorses Professor Sunstein to head OIRA, arguing that cost-benefit analysis, if done in an unbiased way, could be used to support progressive environmental and public safety regulations.

And in the midst of a severe economic downturn, [Livermore] says, “it’s going to be essential to have a strong cost-benefit analysis in support of any regulation as a way of selling it to the American public. If I were a President who wanted to have a strong environmental agenda, the last thing I would do is say ‘We’re not going to look at the costs of these regulations, we’re just going to do them. “

Sunstein knows “you have to understand the consequences between difficult choices,” said Revesz. “He’ll be focused on making the choice that maximizes social welfare as opposed to some ideological predisposition.”

Michael Livermore, an expert on regulatory policy at New York University’s School of Law, says revoking that executive order carried an important symbolic message: “Whatever you thought you knew about regulatory policy—things are going to be different.”

This is a step that the Obama administration is taking, saying ‘We want to allow that process to work without political interference,’ and I really think that’s the signal that they’re sending right now,” Livermore said.