Presidential Executive Order 12291 (Ronald Reagan, 1981)
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Executive Order 12291: Federal Regulation was a presidential executive order issued by President Ronald Reagan (R) in 1981 that required executive agencies to perform a cost-benefit analysis for all major rules and centralized the regulatory review process by directing the Office of Management and Budget (OMB) to serve as a central clearinghouse for the review of agency regulations. The order aimed "to reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and insure well-reasoned regulations," according to the stated purpose. E.O. 12291 was revoked in 1993 by President Bill Clinton (D), who issued a modified regulatory review program under E.O. 12866.[1]
Background
- See also: Regulatory review
President Ronald Reagan (R) campaigned on a pledge to reduce the volume of government regulations that he considered to have a negative impact on the nation's economic growth. Reagan's oft-cited campaign phrase, "Government is not the solution to our problem, government is the problem," reflected this vision.[2]
Reagan initiated his regulatory reform agenda shortly after taking office by announcing the establishment of the Presidential Task Force on Regulatory Relief on January 22, 1981. The task force aimed to "review pending regulations, study past regulations with an eye toward revising them, and recommend appropriate legislative remedies," according to Reagan's remarks. After establishing the task force, Reagan implemented his regulatory review framework by issuing E.O. 12291 on February 17, 1981.[1][3]
E.O. 12291
- See also: Executive Order 12498
E.O. 12291 required federal executive agencies to perform a cost-benefit analysis for each major rule, develop a regulatory impact analysis (RIA), and submit each major rule and accompanying RIA to of the Office of Management and Budget (OMB) for review. The Office of Information and Regulatory Affairs (OIRA) within the OMB served as a central authority for regulatory review within the executive branch. The order also established procedures for the retrospective regulatory review of existing major rules and required that agencies submit all proposed rules to the OMB director for review prior to publication in the Federal Register. Under the order, the OMB director was authorized to carry out a number of oversight duties "subject to the direction of the Task Force." The order applied to federal executive agencies but did not extend to independent federal agencies—agencies established outside of the Executive Office of the President or the 15 executive departments with appointed officials who cannot be removed by the president except for cause.[1][4][5]
Reagan later issued E.O. 12498 in 1985, which aimed to complement the regulatory provisions established under E.O. 12291 by requiring federal agencies subject to the order to submit annual regulatory programs to the OMB for review prior to initiating the rulemaking process. He discussed his motivation for issuing E.O. 12291 and E.O. 12498 during a message to Congress in September 1988:[6]
| “ | When I took office I set in motion a plan to improve and rationalize the regulatory activity of Federal agencies. The program was designed to ensure full analysis of possible regulatory impacts, to bring about greater coordination within the government, and to increase public information about and participation in the process. To enhance presidential oversight, I issued Executive orders directing regulatory agencies to justify their exercise of regulatory discretion, demonstrate the likely benefits and costs of individual regulations, and better inform the public of their plans and activities.[6][7] | ” |
Reaction
Politicians and economic analysts at the time expressed mixed reactions to E.O. 12291. Supporters of the order claimed that the cost-benefit analysis provisions served to ward off the implementation of harmful regulations by preventing regulations with costs exceeding benefits from taking effect. "The notion is that if you examine the consequences of your actions you get better decision making," said Murray L. Weidenbaum, then-chairman of the Council of Economic Advisers, according to The New York Times.[4][8]
Opponents of the order argued that cost-benefit analysis could not be applied to examine unquantifiable regulatory factors, such as assigning a value to human life or measuring environmental impacts. "It is very dangerous to think we can quantify the way we make policy judgments. We don't know how to measure the true cost of health or disease," former Congressman Henry A. Waxman (D-Calif.) told The New York Times. "It will be a political tool rather than a regulatory tool," he added.[4][9][8]
Impact
The Competitive Enterprise Institute, a self-described free-market group, examined the impact of E.O. 12291 in terms of the number of pages published in the Federal Register after the order took effect:
| “ | Nevertheless, the order’s results were dramatic ... Federal Register pages skyrocketed during the 1970s after the creation of several new federal agencies, peaking at 73,258 in 1980. By 1986, five years into the Reagan presidency, the number of Federal Register pages had declined to a low of 44,812— a 28,446-page drop. Meanwhile, the number of rules issued each year peaked at 7,745 in 1980. They declined during the Reagan administration to as low as 4,589.[4][7] | ” |
A report by the Congressional Research Service (CRS) examined the impact of E.O. 12291 in terms of the number of rules reviewed by OIRA:[10]
| “ | In practical effect, the impact of the Reagan orders on agency regulatory activities was immediate and substantial. Under the order, OIRA reviewed over 2,000 regulations per year and returned multiple rules for agency reconsideration. The practical effect of this rigorous review process was to sensitize agencies to the regulatory agenda of the Reagan Administration, largely resulting in the enactment of regulations that reflected the goals of the Administration.[10][7] | ” |
The CRS report also identified the growth in opposition to E.O. 12291 in the years following its implementation that contributed to President Clinton's revocation of the order in 1993:[10]
| “ | Not surprisingly, this review process generated criticism and controversy. In particular, the review scheme was seen by some as having a distinct anti-regulatory bias, leading to charges that the orders constituted an unlawful transfer of authority from the agencies to OMB; that the review process was too secretive and subject to influence by private interests; that OMB lacked the resources or expertise to properly assess submitted regulations; and that the required cost-benefit analysis did not take into account the unquantifiable social benefits of certain types of regulations.11 Additionally, E.O. 12,291 was criticized on the grounds that it allowed OIRA to delay indefinitely rules under review, unless a countervailing statutory deadline or court order mandated promulgation.[10][7] | ” |
Provisions
Regulatory guidelines
The order established the following general guidelines for agencies to consider before proposing regulatory action:[1]
| “ | (a) Administrative decisions shall be based on adequate information concerning the need for and consequences of proposed government action; (b) Regulatory action shall not be undertaken unless the potential benefits to society from the regulation outweigh the potential costs to society; |
” |
Regulatory impact analysis and review
E.O. 12291 required agencies to prepare a regulatory impact analysis (RIA) for any proposed major rules and submit the RIA to the director of the OMB for review. The order instituted associated timelines for submission and review, depending on the nature of the rule. Agencies were required to submit all other proposed rules to the OMB director at least 10 days prior to publication.[1]
The order called for agencies to include the following information in each RIA:
| “ | (d) To permit each proposed major rule to be analyzed in light of the requirements stated in Section 2 of this Order, each preliminary and final Regulatory Impact Analysis shall contain the following information: (1) A, description of the potential benefits of the rule, including any beneficial effects that cannot be quantified in monetary terms, and the identification of those likely to receive the benefits; |
” |
Agencies were not permitted to publish proposed rules in the Federal Register until the OMB director had completed the review. Various timelines were established for the completion of the OMB review depending on the nature of the rule. If the OMB director returned to the agency with feedback on a proposed rule, the agency was required to respond to the feedback and incorporate the OMB comments along with the agency's response into the rulemaking file before publishing the proposed rule in the Federal Register. For major rules, agencies were required to publish the RIA along with the proposed rule and make the RIA available to the public. Agencies were also required to implement retrospective regulatory review by reviewing existing major regulations and submitting associated RIAs to the OMB director for review.[1]
Regulatory review
- See also: Regulatory review
Before an agency could approve a major final rule, the agency was required to demonstrate that the rule was within its authority and consistent with congressional intent. These determinations were required to be included a memorandum of law alongside the published final rule in Federal Register. Agencies were also required to explain the factual conclusions supported in the agency record that served as the basis of the rule, including relevant public comments and input from affected parties.[1]
Regulatory agendas
The order required agencies to publish a regulatory agenda every October and April. Agendas contained "proposed regulations that the agency has issued or expects to issue, and currently effective rules that are under agency review pursuant to this Order." These agendas could be incorporated into the regulatory flexibility agendas required under 5 U.S. Code § 602.[1]
The regulatory agendas were required to contain the following information:[1]
| “ | (1) A summary of the nature of each major rule being considered, the objectives and legal basis for the issuance of the rule, and an approximate schedule for completing action on any major rule for which the agency has issued a notice of proposed rulemaking; (2) The name and telephone number of a knowledgeable agency official for each item on the agenda; and |
” |
Role of the task force and the OMB
The order granted regulatory oversight authority to the director of the OMB, "subject to the direction of the Task Force." The OMB director, under the guidance of the task force, was authorized to determine the rules that qualified as major rules and issue uniform standards for the identification of major rules and the development of RIAs. The director could also request that an agency obtain and incorporate additional data in its evaluation of a rule, identify any duplicative or conflicting rules, and request an agency or inter-agency meeting to coordinate and minimize regulatory conflicts. Additionally, the director was authorized to waive certain requirements of the order when necessary, develop procedures for performing cost-benefit analyses, prepare recommendations for changes to agency statutes, and monitor agency compliance with the order.[1]
Pending regulations
The order required agencies to postpone any pending major rules that had not become effective as of the issuance of the order, with certain exceptions. Agencies were then required to submit RIAs for these rules. Certain rules were permitted to take effect as interim final rules if required by statute until the review by the OMB director could be completed. Agencies were required to submit a copy of all other pending proposed rules to the director before proceeding to issue final rules.[1]
Exemptions
E.O. 12291 included exemptions for emergency rules as well as regulations that were mandated by statute or judicial orders.[1]
Presidential administrations
George H.W. Bush
President George H.W. Bush (R) continued Reagan's regulatory approach under E.O. 12291 and E.O. 12498. Bush also established the Council on Competitiveness, chaired by the vice president, which supervised the OMB, offered regulatory feedback, and crafted new proposals.[11]
Bill Clinton
President Bill Clinton (D) eliminated the Council on Competitiveness and revoked Reagan's E.O. 12291 and E.O. 12498 in 1993. Clinton issued Executive Order 12866, which established a new regulatory framework designed "to reaffirm the primacy of Federal agencies in the regulatory decision-making process," according to the order. For more information about the regulatory framework under E.O. 12866, click here.[11][12][13]
See also
- Regulatory review
- U.S. Office of Information and Regulatory Affairs
- U.S. Office of Management and Budget
- Major rule
External links
- Executive Order 12291: Federal Regualtion" (1981)
- RegInfo.gov
- Regulations.gov
- Search Google News for this topic
Footnotes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 American Presidency Project, "Executive Order 12291—Federal Regulation," February 17, 1981
- ↑ Ronald Reagan Presidential Library and Museum, "The Reagan Presidency," accessed March 28, 2018
- ↑ The American Presidency Project, "Remarks Announcing the Establishment of the Presidential Task Force on Regulatory Relief," January 22, 1981
- ↑ 4.0 4.1 4.2 4.3 Competitive Enterprise Institute, "Channeling Reagan by Executive Order," July 14, 2016
- ↑ George Washington Law Review, "The Impact of Executive Order 13,422 on Presidential Oversight of Agency Administration," accessed March 29, 2018
- ↑ 6.0 6.1 The American Presidency Project, "Message to the Congress Reporting on Regulatory Reform," September 15, 1988
- ↑ 7.0 7.1 7.2 7.3 7.4 7.5 7.6 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ 8.0 8.1 The New York Times, "REAGAN ORDER ON COST-BENEFIT ANALYSIS STIRS ECONOMIC AND POLITICAL DEBATE," 1981
- ↑ The New Republic, "Obama’s Cost-Benefit Revolution," January 21, 2011
- ↑ 10.0 10.1 10.2 10.3 Congressional Research Service, "Presidential Review of Agency Rulemaking," April 5, 2005
- ↑ 11.0 11.1 Healy, M. Krotoszynski, R. Rogers, J. Last, First Initial. (2017). Administrative Law. New York, NY: Wolters Kluwer.
- ↑ Cite error: Invalid
<ref>tag; no text was provided for refs namedcon - ↑ Federal Register, "Executive Order 12866 of September 30, 1993," accessed March 28, 2018
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