Since at least the beginning of the Reagan administration, federal regulations have been subjected to cost-benefit analysis, or CBA. Nevertheless, despite its use over several decades, CBA remains highly controversial among interest groups, academics and lawmakers. At times, Congress determines through statutory language whether CBA should be performed. In many instances, however, legislation is silent. Where express congressional direction is absent, administrative agencies, and courts reviewing challenges to regulations, must determine whether CBA is permissible and how it may be applied.
In this context, the recent U.S. Supreme Court decision in Entergy Corp. v. Riverkeeper Inc. provides insight into how the Supreme Court views use of CBA. In Riverkeeper , the Supreme Court examined the holding of the 2nd U.S. Circuit Court of Appeals that the Environmental Protection Agency is not permitted to use CBA in determining the content of regulations promulgated under Section 316(b) of the Clean Water Act. The court reversed the judgment of the 2nd Circuit on the ground that the EPA’s decision to employ a form of CBA was a permissible interpretation of Section 316(b). The majority opinion expressed considerable deference to the EPA’s decision to consider the results of CBA, while the concurring opinion and particularly the dissenting opinion were more critical of the usefulness of CBA.
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