Reforming Regulatory Impact Analysis: A Briefing on a New Report
Summary
Over the past two decades, considerable debate has emerged about the merits of using cost-benefit analysis to analyze environmental and safety regulations. A new report – Reforming Regulatory Impact Analysis – was released March 31 by Resources for the Future, and draws on a wide spectrum of economic, legal, and administrative expertise to develop constructive suggestions for improving federal regulatory impact analyses (RIAs).
The report is co-edited by RFF Senior Fellows Winston Harrington and Richard Morgenstern with Lisa Heinzerling, a professor at Georgetown University Law School (on leave) and a prominent critic of cost-benefit analysis. In the concluding chapter, the editors seek some common ground in offering recommendations for improving both the content of RIAs and the process by which they are developed and reviewed. They provide 14 concrete suggestions covering five areas:
- technical quality of the analyses;
- relevance to the agency decision-making process;
- transparency of the analyses;
- treatment of new scientific findings; and
- balance in both the analyses and the associated processes, including the treatment of distributional consequences.
The report is based on three case studies:
The Clean Air Interstate Rule, promulgated by EPA in 2005, which is intended to reduce power plant emissions of sulfur dioxide and nitrogen oxides that travel across state lines.
The Clean Air Mercury Rule, also announced by EPA in 2005, designed to permanently cap and reduce mercury emissions from coal-fired power plants.
The Cooling Water Intake Rule (Phase II), issued by EPA in 2004, seeks to control surface water used as a coolant in electrical power plant generators.
Each case study is accompanied by critiques from both a proponent and skeptic of CBA that include a discussion of possible complementary or substitute analyses that could have been performed. The three contributors skeptical of cost-benefit analysis (all professors or law) are: Douglas Kysar, Yale Law School; Catherine O’Neill, Seattle University Law School; and Wendy Wagner, University of Texas Law School. The three authors favoring cost-benefit analysis (all economists) are: Nathaniel Keohane, originally Yale University, now Environmental Defense Fund; Alan Krupnick, RFF; and Scott Farrow, University of Maryland.
The reports concluding recommendations are solely those of the editors.
Agenda, Audio, and Video
