In Business Roundtable v. S.E.C., the D.C. Circuit struck down the SEC’s proxy access rule. The court held that the SEC’s failure to perform an adequate cost-benefit analysis amounted to an arbitrary and capricious rulemaking that was not in accordance with law. The decision may be one of the most significant administrative law cases in a generation. If the D.C. Circuit adheres to its reasoning, federal agencies will no longer be able to satisfy their obligation to perform cost-benefit analyses by performing the sort of pro-forma analyses that they have been performing since the early 1980s when opponents of the regulatory state first started demanding cost-benefit analyses. Instead, they will have to perform serious cost-benefit analyses that can survive what appears to be a heightened form of hard-look scrutiny approaching de novo review.
This note will explore the implications of the Business Roundtable decision by considering its application to rulemaking under the most important financial reform legislation since the Great Depression—the Dodd-Frank Act. This note surveys the impact that Business Roundtable will have on the gamut of political and private actors. In order to shore up their rules against court challenges, agencies will have to increase the number and quality of the economists on their staffs. This will increase the cost of rulemaking and reduce the range of rules that will pass through the new cost-benefit filters. It will result in a wide range of strategic behaviors on the part of private litigants and political actors since it raises the stakes for cost-benefit analysis mandates in statutes and executive orders.