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

Abstract

Regulatory agencies often produce mediocre economic analysis to accompany major regulations, and they often fail to explain how the analysis influenced their decisions. One reasonable hypothesis for this deficiency is that the enforcement mechanism – review within the executive branch by OIRA – is relatively weak. For this reason, Congress is considering proposals that would require regulatory impact analysis and subject agency analysis to judicial review. Judicial review provides a potentially stronger enforcement mechanism, but critics argue that judges lack the relevant expertise to assess economic analysis and that they could impose their own policy views regardless of the law. For judicial review to work, judges need to be able to verify agency compliance even though they are not experts in the subject matter the agencies deal with. This article summarizes empirical research on the current quality of regulatory impact analysis, assesses whether courts are capable of reviewing the quality and use of regulatory impact analysis, and explores whether courts should receive more concrete statutory guidance than the current “arbitrary and capricious” standard provides.