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Executive Order 12866
Its objectives, the President stated, are "to enhance planning and coordination with respect to both new and existing regulations; to reaffirm the primacy of Federal agencies in the decision-making process; to restore the integrity and legitimacy of regulatory review and oversight; and to make the process more accessible and open to the public." (1)
All executive branch agencies, except for the independent regulatory agencies(2), are subject to E.O. 12866. Before a regulation can go on the books, they must:
- Assess the general economic costs and benefits of all regulatory proposals;
- For every "major" rule(3), complete a Regulatory Impact Analysis (RIA) that describes the costs and benefits of the proposed rule and alternative approaches, and justifies the chosen approach;
- Submit all "major" proposed and final rules to OMB for review(4);
- Wait until OMB completes its review and grants approval before publishing proposed and final rules;
- Submit an annual plan to OMB in order to establish regulatory priorities and improve coordination of the Administration's regulatory program. This requirement also applies to the independent agencies; and
- Periodically review existing rules.
E.O. 12866 also established new guidelines for OMB, which had come under heavy criticism during the Reagan and Bush administrations for being a largely unaccountable body that was permitted to operate in secret.
In response to these concerns, E.O. 12866 set up a 90-day period for OMB review of proposed rules, and created a mechanism for the timely resolution of disputes between OMB and agency heads(5). New public disclosure requirements were also put in place mandating that all documents exchanged between OMB and the agency during a regulatory review be made available to the public at the conclusion of the rulemaking.
In addition, the E.O. spelled out a process for meetings between OMB officials and people outside the executive branch regarding pending reviews: records must be kept of the meetings, agency representatives are to be invited to attend the meetings, and all written communications must be placed in the public docket and given to the agency.
Notes
1. This statement reflects concerns raised over the Reagan executive orders and other prior executive branch activity in which it was alleged that OMB used its review authority to improperly undermine agency rulemaking.
2. Economic regulation (e.g., restrictions on pricing and output decisions) is most often administered by what are referred to as "independent" agencies, such as the Federal Communications Commission, the Interstate Commerce Commission, and the Federal Reserve System, whose members are appointed by the President, but not removable without good cause.
3. A "major" rule is any rule that will have an impact of $100 million or more or that OMB designates as major.
4. Reagan's E.O. 12291 required that all rules (about 2,200 regulations per year) be reviewed by OMB — even those with costs under $100 million. The Clinton Administration believed that greater value would be added if OMB, with a staff of less than 40 professionals, narrowed its focus to the most important rules (about 500 regulations per year).
5. Reagan's executive order contained no strict limit on reviews; some reviews had dragged on for years without resolution.