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Introduction
An agency that fails to adequately consider the costs and benefits of its proposed regulatory changes increasingly places its rules at risk upon judicial review. Over the last couple of decades, courts have begun to expect agencies to use regulatory analysis techniques like cost-benefit analysis to justify their regulatory choices. This development poses particularly acute risks for the independent regulatory agencies, because their draft regulations are not reviewed by the Office of Information and Regulatory Affairs (OIRA), the White House experts on cost-benefit analysis who are responsible for executive branch regulatory review. Independent regulatory agencies are taking various steps to improve their regulatory analysis, but none have fully opted in to OIRA’s regulatory review, likely because they expect that OIRA review portends the end of their ability to make independent decisions.
But what if it did not? A recent agreement about tax regulations disrupted the conventional understanding about OIRA review, showing that it is not onesize-fits-all and can instead be tailored to suit the unique features of an agency. “Bespoke” clothing is tailor-made rather than mass-produced. Bespoke regulatory review, fit to the particulars of each independent regulatory agency, could help remedy regulatory analysis deficiencies at independent regulatory agencies, while also addressing the long-standing legal and political stalemate of OIRA’s review of independent regulatory agencies. In Presidential Administration, Elena Kagan described the “energy” and “dynamic charge” that the President can inject into the policymaking process to solve problems. Bespoke regulatory review, which is an extension of current practice, offers a way to channel this energy to improve regulatory analysis and, therefore, decisions.
Part II summarizes the increased court scrutiny of agency regulatory analysis; a feature of the last two decades. Part III explains why this poses acute risks for the independent regulatory agencies, which do not undergo OIRA review. Part IV shows the flaws of current proposals that call for OIRA’s review of independent regulatory agencies. Part V offers the idea of bespoke regulatory review, bilateral memoranda of agreement between OIRA and the independent regulatory agencies, and explains how and why it could work.