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Abstract
This paper explores the role that the regulatory impact analyses (RIAs) that agencies are required to prepare for important proposed rules play in decisions by courts about whether these rules should be upheld when they are challenged after promulgation. Conventional wisdom among economists and other senior regulatory officials in federal agencies suggests that high-quality economic analysis can help a regulation survive such challenges, particularly when the agency explains how the analysis affected decisions. However, highlighting the economic analysis may also increase litigation risk by inviting court scrutiny of the RIA. Using a dataset of economically significant, prescriptive regulations proposed between 2008 and 2013, we put these conjectures to the test, studying the relationships between the quality of the RIA accompanying each rule, the agency’s claimed use of it in rulemaking decisions, and the likelihood the rule survives legal challenges. The regression results suggest that better RIAs are associated with lower likelihoods that the associated rules are later invalidated by courts, provided that the associated agency explains how it used the RIA in its decision-making. When the agency does not describe how the RIA was utilized, there is no correlation between the quality of analysis and the likelihood the regulation will be invalidated. An explanation of the RIA’s role in the agency’s decision also appears to increase the likelihood that the regulation will be invalidated by inviting an increased level of court scrutiny, and as a result, the quality of the RIA must be sufficiently high to offset this effect.