Resource-based strategies in law and Positive Political Theory: cost-benefit analysis and the like.

• Author: Tiller, Emerson H.

INTRODUCTION

In addition to the good that often inures to the public from the use of cost-benefit analysis and other like instruments by policymakers, a more insidious nature to these decision-making instruments exists--that nature is the ideological, often partisan, control of public policy. The political control exercised through cost-benefit analysis and similar strategy-laden instruments allows one or more policymakers to force a competing policymaker to expend valuable, and limited, resources. Indeed, the imposition of these instruments by a controlling political coalition can compromise greatly, or even prevent, policies desired by a competing policymaking institution. Resource-based strategies are available to Congress through legislation and agency design, to the President through executive orders, and to the judiciary through doctrine and other instruments of legal reasoning. Such strategies can be exercised horizontally through separated-powers games or vertically (upstream and downstream) in court-agency hierarchies.

While the notion of decision costs and limited resources as constraints on law and policymaking have found their way into recent legal analyses, (1) few scholars have described the broader political control strategies available to institutions using a resource-based approach. Positive Political Theory (PPT) offers a framework for thinking about resource-based strategies, and the implications that result are profound. Below, I solidify the current understanding of resource-based strategies from the PPT approach. I then incorporate recent insights from Jason Johnston and others to round out a more complete PPT of resource-based strategies. I conclude with suggestions for further research and improvements in resource-based PPT.

1. POSITIVE POLITICAL THEORY AND RESOURCE-BASED STRATEGIES

   In analyzing public policies, the various models and theories that pose as PPT (2) typically invite an analysis off (1) the partisan shifts and alignments among political and judicial institutions (usually through elections or appointments); (3) (2) the rules of the game for interaction among policymakers (such as judicial review, bicameralism, and congressional committee systems); (4) and (3) the decision resources of the various political institutions (agency budget or judicial time and staffing, for example). (5) For the most part, PPT has attempted to explain policy change as some combination of these factors, with the role of decision resources playing an increasingly prominent role in the literature. (6)

   PPT works from two levels of analysis--strategic action and strategic design. Strategic action analysis takes the rules of the game as given and predicts the behavior of the players. That predicted behavior often changes with partisan shifts in the institutions themselves. The action is often the strategic location of policy by an initiating actor within a policy space accessible to various other policymaking institutions, but unlikely to be overruled by these other players given the policy preference alignments among the various institutions. For example, a court or agency may choose a policy that would be unacceptable to the median member of Congress, but which may be safe from congressional override because the congressional committee with policy jurisdiction favors that policy over the likely alternative desired by the median congressional member and, thus, would not let an override bill reach the floor for a vote. (7) Strategic action analysis is typically informative in looking at particular regulations, legal cases, or pieces of legislation. (8)

   By contrast, the main focus of strategic design analysis is on how an institution is constructed to foster a series of policy outcomes consistent with the policy preferences of the designer. (9) Individual legal cases or pieces of legislation are not the focal point, although ultimately they may be explained in part by the change in the design of a policy institution. Instead of taking the rules of the game as given, strategic design analysis explains why the rules of the game get changed, and how those changes benefit particular political interests. (10) The strategic design explanations routinely are rooted in an understanding of the partisan alignments among the various institutions--with one or two institutions attempting to control a politically unaligned competing institution. (11)

   Whether it be strategic action or strategic design analysis, the role of decision costs generally is implicated as it fosters policy control. This is especially true when institutions foist instruments such as cost-benefit analysis and the like upon competing institutions. Consider below the implications of resource-based strategies from "downstream" and "upstream" PPT frameworks.

2. DOWNSTREAM RESOURCE-BASED STRATEGIES

   PPT has said much about principal-agent relationships and political control. Congressional control of agencies and higher court control of lower courts are two standout examples in the literature. Both strategic action and strategic design principal-agent models have incorporated the notion of cost-imposition as part of the control mechanisms used by the principal over the agent.

   1. Congress-Agency

      Pablo Spiller and I recently developed a principal-agent model of congressional control over agencies that focused on resource-based strategies. (12) We modeled the ability of Congress to control regulatory policy by structuring agencies with varying degrees of decision costs based on their alignment with Congress. (13) We applied our model to the proposed Comprehensive Regulatory Reform Act of 1995, sponsored by then Senate Majority Leader Robert Dole, as an example of how Congress could create decision costs for agencies in order to control their output. (14) The political context of that legislative proposal was well documented:

      In short, the election of a Republican majority to Congress in 1994 brought about efforts to limit Clinton-controlled agencies that were issuing, or anticipated to issue, liberal regulatory policies. Dole's bill, had it been enacted, would have imposed significant decision costs on agencies attempting to promulgate major new rules. Among other things, the bill required that agencies conduct cost-benefit analyses to demonstrate that the benefits of imposing a new regulation would outweigh the costs. The Dole bill provided that, except in the very rare cases where legislation specifically ruled them out, government agencies would have to justify regulations by using strict, monetized cost-benefit analyses. In the case of employee safety standards, for example, Occupational Safety and Health Administration (OSHA) would have to determine whether the benefits of eliminating a work hazard outweighed the costs for the employer or the general public. Because many public health and environmental threats are difficult to quantify, the effect would have been to substantially delay, if not eliminate, agency action on many public policy objectives. Critics pointed out that the measure would be expensive and bureaucratic and would require cumbersome and costly additional studies before new regulations could be imposed. Moreover, once an agency demonstrated cost effectiveness, it would also be required to show that the proposed regulation is the least cost means of achieving the desired result. This would reduce the number of agency initiatives and make some policy changes too costly to attempt. (15) This resource-based strategy of cost-benefit analysis is, of course, dependent upon a judiciary that will enforce the decision costs through thorough review. (16) We modeled the courts as policy seekers, (17) meaning that judicial enforcement was greatly dependent upon a politically willing judiciary. Thus, political alignment between Congress and the judiciary was a critical component of the resource-based strategy. (18)

      We also noted that Congress has the choice to focus its response on a single agency, or it may take "a broader stroke at control." (19) Congress may, for example, find that most agencies are in line with congressional will. In such a case, attention to individual wayward agencies (or policies from them) would be more efficient than broad sweeping proposals that would impose costs on all agencies. When, however, the political control of Congress is different from that of agencies (as when the President and Congress are of different parties) broad structural mechanisms affecting all agencies, such as a cost-benefit analysis requirement for all agency rules, may provide Congress with more efficient control.

   2. Courts-Agency

      Resource-based strategies that more directly emanate from the courts, as principals, in controlling agency behavior also can be examined through the PPT lens. Consider the ability of a federal court to control agency policy. Courts have several instruments with which they can review and reverse administrative agency decisions. Some instruments focus on the agency's interpretation of its governing statutes (statutory interpretation) while others relate to the agency's process of making decisions (process review). In statutory interpretation, the court asks itself whether the agency, in setting a particular policy, correctly interpreted specific words of the statute as intended by Congress. If not, then the policy is void and agency enforcement is precluded. With process review the court may determine whether the agency adequately considered all the relevant evidence or regulatory alternatives presented by interested parties in the agency's decisionmaking processes, made a decision logically consistent with the evidence, fully explained the basis of its decision, or made a decision consistent with previous agency decisions so as not to be "arbitrary and capricious." (20) In short, the essence of this instrument is to attack the reasoning processes of the regulator and force it to spend more of its resources...