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High Court Bolsters Cost-Benefit Test

WASHINGTON — The cost-benefit analysis test that House Republicans, in particular, have been urging the Federal Communications Commission to apply to any new regulations got strong support from a recent Supreme Court decision.

That was one of a couple of relevant takeaways from Michigan vs. EPA, in which the court ruled that the Environmental Protection Agency had not sufficiently taken into account the cost of new regulations on coal plants versus their benefits.

Another takeaway from the case came in the dissent by Justice Clarence Thomas, who suggested that the High Court might historically have been giving federal agencies, such as the FCC, too much deference — the so-called Chevron deference to agency expertise.

In a commentary for the Mt. Vernon Register-News, Cass Sunstein, a Harvard Law School professor who, as administrator of the Office of Information and Regulatory Affairs, headed up an Obama Administration effort to get executive agencies to produce plans for applying cost-benefit analyses of their regulations, welcomed what he said was the court’s ringing endorsement of that analysis.

The FCC and other independent agencies did not have to comply with the president’s executive order, though Sunstein at the time favored having the FCC volunteer to offer up a plan.

In his op-ed, Sunstein said many of the rules promulgated by the FCC and other independent agencies such as the Federal Trade Commission and the Consumer Product Safety Commission — “very expensive” ones, he hastened to add — “have not been accompanied by careful cost-benefit analysis.”

A five-justice majority concluded in the Michigan case that a provision in the Clean Air Act that required the EPA to regulate power plants when “appropriate and necessary” was unreasonable because it didn’t consider costs. Even dissenting Justice Elena Kagan agreed that unless Congress directs otherwise, “an agency must take costs into account in some manner before imposing significant regulatory burdens,” Sunstein noted.

“The cost-benefit state has arrived,” Sunstein wrote.