The Life and Times of Executive Order 12866

October 10, 2018

The Birth – What its arrival meant to Executive Branch agencies.

Perhaps most importantly, the issuance of a new Executive Order (E.O.) clearly indicated that White House oversight of the rulemaking process was here to stay. Many had challenged the legal authority for oversight and the political wisdom behind E.O. 12291, E.O. 12866’s predecessor. In addition, there were many problems with the implementation of E.O. 12291, including disputes, delays, and a lack of openness. The agencies and the Office of Management and Budget (OMB) were not working well together. But a new Administration and a different party were in control when E.O. 12866 was adopted, making it clear that oversight was not going away.

Generally, from the Executive Branch agencies’ perspective, the new E.O. addressed many of the existing problems or concerns. Unlike E.O. 12291, a draft of E.O. 12866 was circulated to and reviewed by the agencies before the final version was adopted. This helped make the results more acceptable.

And good changes were made. For example, E.O. 12866 eliminated review of non-significant rules—an unnecessary, burdensome process. The E.O. 12291 requirement that benefits outweigh costs was replaced with a more reasonable and appropriate requirement that benefits must justify the rule’s costs. Confusing issues were also clarified and holes plugged (e.g., the agencies could not make up new names for a document to avoid review; any action intended to lead to a rule having the force and effect of law was reviewable by OMB).

There was a concerted effort by senior officials to show that the rulemaking process was going to be a team effort—in other words, OMB would work together with the agencies. This was another very positive step that led to better relationships and results.

Finally, although there were still some fuzzy “control” issues, they generally did not turn out to be serious problems. For example, under E.O. 12866, OMB makes the final decision on the significance of the rulemaking and whether they will get to review it; and, in reality, the agencies cannot issue documents until OMB “approves” them; the president can resolve disputes, but that is not an everyday solution.

The Lifetime – Accomplishments.

I would note four significant accomplishments under E.O. 12866.

First, it has led to more acceptance of centralized oversight of regulation. Indeed, I am sure there were many agency officials who stopped what they thought were “bad” rules from getting out of the agency by noting they would never get through OMB review.

The second point is that OMB, in cooperation with the agencies and the public, developed excellent regulatory analysis guidance (Circular A-4). The document is especially helpful to non-economists, because it was so well-written. In my experience, it has resulted in better analyses by the economists and better oversight by officials involved in the review and approval process. One special improvement has been the identification and development of more and better alternatives. This, in turn, has improved the development of agency reactions to problems. The decision makers have been offered more, and perhaps better, alternatives to fix problems that have been identified.

Third, there has also been an increased emphasis on retrospective reviews. That has led to some improved approaches to this very valuable and important, but very costly and time-consuming, responsibility.

Finally, the semi-annual Unified Agenda of Regulatory and Deregulatory Actions, a carry-over from E.O. 12291, has been a valuable management tool for some agencies. It is a useful list of everything the agency is working on in the rulemaking arena. Some agencies have used it to help prepare monthly, public status reports of significant rulemakings, which can be used for management purposes. Senior officials can be more effectively involved in decision making and ensure that timely action is taken. The public can more easily follow the rulemakings in which they are interested. Congressional committees can track the progress of rulemakings in which they are interested. And foreign governments can be informed of potential rulemakings where they would like to suggest cooperation in the development of regulations to address common problems.

The Anniversary – Lessons learned.

There are many lessons learned over the life of E.O. 12866. Some are good and are identified above—e. g., the value of including the agencies in the development of executive orders; the use of good, uniform guidance for regulatory analyses; the use of agendas and their benefits for management, oversight, regulatory cooperation, and openness. Other lessons—discussed below—illustrate how good intentions can cause problems.

One lesson involves retrospective reviews of existing rules. They are very important. Every agency should examine its rules to ensure they are doing what was intended. But the reviews need to be conducted in a reasonable and organized manner. Resources are limited and some reviews need a significant amount of time. Nevertheless, special, presidentially required reviews have been ordered over extremely short time periods. They have had limited value and adversely affected the resources and time required for organized and effective reviews.

Another example involves the Unified Agenda. Because of political concerns about the number of rulemakings on the Agenda, in some administrations, the process has been abused. Even though many of the rulemakings were responding to statutory mandates, simply updating rules, rescinding requirements, etc., actions were taken to “hide” some of the entries; those administrations literally moved from openness to “hidden agendas.”

In addition, implementation problems remain. For example, there have been delays in the OMB review of rulemaking documents. Both sides may be at fault, since OMB might not start the review for 60 (or more) days after submission or an agency might be very slow in responding to OMB questions. Another problem is that some agencies still have bad relationships with OMB. It may be due more to personalities than institutions, but it needs attention.

**This commentary reflects the views of the author, and does not represent an official position of the Federal government, the GW Regulatory Studies Center, or the George Washington University.**