Happy Birthday, Executive Order 12866!

American politics and policies have changed a lot over the course of the last 25 years. We’ve elected four presidents with dramatically different philosophies and styles—from Bill Clinton to George W. Bush to Barack Obama and now Donald Trump. On regulatory matters, Presidents Obama and Trump couldn’t be more opposite, with the former issuing more major regulations during his tenure than any prior president and the latter issuing fewer even than Ronald Reagan.

[View photos and videos from our Celebrating 25 Years of E.O. 12866 event]

Something in Common?

There is one thing, however, that all these presidents have in common—a set of principles and procedures that guides the development of new regulations. They all rely on Executive Order 12866, which President Clinton signed 25 years ago this week. E.O. 12866 directs agencies to issue regulations only as required by law or to meet a “compelling public need,” and to “assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.” It also requires the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) to review and coordinate significant regulatory actions.

This bipartisanship is striking not only because the last four presidents have held such different regulatory philosophies, but because executive orders are so easy to revoke. They exist solely at the prerogative of a president; they don’t need support from congress, nor do they require public input. Presidents can issue them with the stroke of a pen, and their successors can revoke them just as easily. In fact, presidential transition teams will conduct reviews of previous executive orders with an eye to eliminating those seen as inconsistent with the new president’s policies.

Early Precedent

So, what accounts for E.O. 12866’s staying power? For one thing, it incorporated nonpartisan principles that previous presidents had endorsed. President Carter (building on precedent set by Presidents Nixon and Ford before him) ordered agencies to analyze the impact of new regulations and to minimize their burdens, but he did not formalize a mechanism for ensuring compliance. In 1981, President Reagan created that oversight mechanism; through Executive Order 12291, he gave OIRA (newly established by the Paperwork Reduction Act of 1980) responsibility for reviewing draft regulations to ensure their benefits exceeded their costs.

Reagan’s order remained in effect through the George H. W. Bush administration, but presidential oversight of regulatory agency actions through OIRA review was contentious, especially among Democratic members of Congress and their supporters. When President Clinton was elected, many thought (hoped!) he would abandon both OIRA oversight and Reagan’s requirements for benefit-cost analysis.

He did not.

Clinton’s Order

Instead, after 8 months of deliberation and inter-agency consultation, Clinton replaced E.O. 12291 with E.O. 12866. Its principles and procedures were very similar to its predecessor’s but had some differences. Procedurally, E.O. 12866 limited OIRA review to “significant” regulatory actions (those that raise novel legal or policy issues, affect other agencies’ actions, have large budget impacts, or have annual private sector impacts of $100 million) and created a Regulatory Working Group of agency regulatory policy officers. Analytically, it required agencies first to identify a “compelling public need, such as material failures of private markets” before regulating, and then to proceed if a regulation’s expected benefits “justified” (rather than “outweighed”) costs.