July 12, 2018

Statutory Rulemaking Considerations and Judicial Review of Regulatory Impact Analysis

  • Reeve Bull

    Research Chief, Administrative Conference of the United States
  • Jerry Ellig

    Senior Research Fellow
Key materials

Congress is currently considering whether to require regulatory agencies to conduct the basic elements of regulatory impact analysis—analysis of the problem the agency seeks to solve, development of alternative solutions, and estimation of the benefits and costs of alternatives—before adopting major regulations. Legislators are also considering whether to make this analysis subject to judicial review. We examine the effects of economic analysis requirements already on the books on courts’ and agencies’ behavior. Our review of 33 cases in which federal appeals courts assessed the quality of the economic analysis accompanying a regulation finds that courts scrutinize agencies’ economic analysis much more closely when the relevant statute either calls for the selection of a particular regulatory alternative identified by the economic analysis or provides a detailed list of economic costs and benefits the agency must consider. Our econometric analysis using a sample of 130 economically significant regulations from executive branch agencies finds that agencies tend to produce higher-quality analysis and offer more extensive claims of how the analysis affected decisions when the statute authorizing the regulation provides more specific guidance on the economic factors the agency must consider. Some aspects of agency economic analysis are also higher quality when a federal appeals court previously evaluated the agency’s economic analysis for a similar regulation issued under the same or a predecessor statute. Taken together, these results suggest that agencies are more likely to produce high-quality economic analysis and use it in decisions when Congress specifies the economic factors to be considered and allows courts to review the quality of the agency’s analysis.