Against Feasibility Analysis

Feasibility analysis, a method of evaluating government regulations, has emerged as the major alternative to cost-benefit analysis. Although regulatory agencies have used feasibility analysis (in some contexts called “technology-based” analysis) longer than cost-benefit analysis, feasibility analysis has received far less attention in the scholarly literature. In recent years, however, critics of cost-benefit analysis have offered feasibility analysis as a superior alternative. We advance the debate by uncovering the analytic structure of feasibility analysis and its normative premises, and then criticizing them. Our account builds on two examples of feasibility analysis, one conducted by OSHA and the other by EPA. We find that feasibility analysis leads to both underand over-regulation, and we conclude that it lacks a normative justification and should have no place in government regulation. Feasibility analysis, a method of evaluating government regulations, has emerged as the major alternative to cost-benefit analysis. A regulation satisfies feasibility analysis if it reduces a risk of harm to the maximum extent possible without having a major negative impact on the economy such as “widespread plant closings.” By contrast, a regulation satisfies cost-benefit analysis if it produces benefits (in terms of deaths, injuries, and other losses avoid) greater than the cost of compliance. Although agencies have used feasibility analysis (in some contexts, called “technology-based” analysis) longer than cost-benefit analysis, feasibility analysis has received far less attention in the scholarly literature. In recent years, however, critics of costbenefit analysis have offered feasibility analysis as a superior alternative. The dispute over these standards will carry over into the Obama administration, and for that reason a critical assessment of the feasibility standard is long overdue. When Congress authorizes agencies to regulate, it occasionally provides detailed instructions but more typically issues vague standards. These standards appear in numerous different formulations, but most statutes fall into two groups. In the first, Congress directs the agency to reduce a risk to the extent “feasible,” or to the “maximum” extent, with no mention of costs. For example, the Occupational Health and Safety Act requires the OHSA secretary to ensure “to the extent feasible” that exposure to hazards in the workplace does not harm workers’ 1 University of Chicago Law School. Thanks to Emily Buss, Adam Cox, Frank Easterbrook, Jake Gersen, Martha Nussbaum, Arden Rowell, Adam Samaha, David Weisbach, Adrian Vermeule, and participants at a workshop at the University of Chicago Law School for helpful comments, and to Charles Woodworth for excellent research assistance. 2 President Obama has nominated Cass Sunstein, a prominent defender of cost-benefit analysis, to head the Office of Information and Regulatory Affairs. See CASS SUNSTEIN, RISK AND REASON (2004). Two prominent critics, Liza Heinzerling and Chris Schroeder, have been appointed to positions in EPA and the Justice Department, respectively. Both Heinzerling and Schroeder have endorsed feasibility analysis. See Lisa Heinzerling, Statutory Interpretation in the Era of OIRA, 33 FORDHAM URB. L.J. 1097 (2006); Sidney A. Shapiro & Christopher H. Schroeder, Beyond Cost-Benefit Analysis: A Pragmatic Reorientation, 32 HARV. ENVTL. L. REV. 433 (2008).