Judicial Review of Regulatory Impact Analysis: Why Not the Best?

Abstract

Regulatory agencies often produce mediocre economic analysis to inform their decisions about major regulations. For this reason, Congress is considering proposals that would require regulatory agencies to conduct regulatory impact analysis and subject it to judicial review. For judicial review to work, judges must be able to verify agency compliance with quality standards even if they are not experts in the subject matter the agencies deal with. This article demonstrates that courts could effectively review the quality of agencies’ regulatory impact analysis if they were given more concrete statutory guidance on what a regulatory impact analysis must include and the stringency with which a court will review that analysis. We propose a regulatory reform that would accomplish this goal: amend the Administrative Procedure Act to specify the main elements a regulatory impact analysis must include and clarify the standard of review by implementing a requirement that agencies use the best available evidence in their analysis.

Keywords: regulatory impact analysis, judicial review, administrative procedure act, benefit-cost analysis, economic analysis