Cost-Benefit Analysis and the Judicial Role

52 Pages Posted: 11 Feb 2017 Last revised: 20 Jul 2018

See all articles by Jonathan S. Masur

Jonathan S. Masur

University of Chicago - Law School

Eric A. Posner

University of Chicago - Law School

Date Written: February 7, 2017

Abstract

The two most vilified cases in administrative law are Business Roundtable v. SEC and Corrosion Proof Fittings v. EPA. In Business Roundtable, the D.C. Circuit struck down the SEC’s proxy access rule because the agency’s cost-benefit analysis of the regulation, in the court’s view, was defective. In Corrosion Proof Fittings, the Fifth Circuit struck down an EPA regulation of asbestos products on the same grounds. Nearly all scholars who have written about these cases have condemned them. We argue that the courts acted properly. The regulators’ cost-benefit analyses were defective, seriously so; and the courts were right to require the agencies to show that their regulations passed an adequate cost-benefit analysis. We further argue that the trajectory of law and policy is consistent with our view. Corrosion Proof Fittings and Business Roundtable are harbingers rather than errors — harbingers of an era of enhanced judicial review of CBA.

Keywords: cost-benefit analysis, benefit-cost analysis, regulation, deregulation, Michigan v. EPA, Corrosion Proof Fittings, Business Roundtable, judicial review

Suggested Citation

Masur, Jonathan S. and Posner, Eric A., Cost-Benefit Analysis and the Judicial Role (February 7, 2017). University of Chicago Law Review, Vol. 85, No. 4 (2018); University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 794; U of Chicago, Public Law Working Paper No. 614. Available at SSRN: https://ssrn.com/abstract=2915063

Jonathan S. Masur (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773.702.5188 (Phone)

HOME PAGE: http://www.law.uchicago.edu/faculty/masur/

Eric A. Posner

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0425 (Phone)
773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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