Why Agencies Act: A Reassessment of the Ossification Critique of Judicial Review

Abstract

In many instances, an agency has to decide whether to devote its resources to address a problem that is within its statutory authority to regulate. Many scholars of "hard look" judicial review of agency regulation have asserted that such review raises the costs to agencies of regulating and thereby discourages agencies from regulating when they should. This article takes a closer look at that assertion by providing an overview of the rational incentives and non-rational influences on those within agencies to prefer taking action versus doing nothing.

In reviewing these influences the article notes that the costs and benefits of regulation to society differ greatly from the costs and benefits that the agency experiences when it regulates. In particular, it points out that evaluating the effect of judicial review on decisions whether to regulate must take into account all the influences on this decision. The article suggests that whether judicial review's discouragement of agency action is appropriate depends on the precise context of the environment in which the decision whether to regulate arises.

The article concludes by analyzing two notorious agency decisions to forego or abandon regulation, for which judicial review has been blamed for inappropriately discouraging agency action. Using the influence on agency propensities to act that the article identifies, it shows that the both the importance of judicial review and the propriety of its impact on the agency decisions not to regulate are much more complex than the simple picture of blame that critics of judicial review have attempted to draw.

Keywords: agency, regulation, ossification, action, inaction, judicial review

JEL Classification: K20, K23, K32