Journal Article

Cost-Benefit Analysis and the Judicial Role

Posner, Eric A., Masur, Jonathan S.

2018

Overview

The two most vilified cases in administrative law areBusiness Roundtable v Securities and Exchange CommissionandCorrosion Proof Fittings v Environmental Protection Agency. InBusiness Roundtable, the DC 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. InCorrosion 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 FittingsandBusiness Roundtableare harbingers rather than errors—harbingers of an era of enhanced judicial review of cost-benefit analysis.

• Publisher: students of The University of Chicago Law School,University of Chicago, acting on behalf of the University of Chicago Law Review
• Subject: Administrative law / Corrosion / Cost benefit analysis / Federal court decisions / Judicial review / Judicial reviews / Regulatory agencies / Studies / United States. Securities and Exchange Commission