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In brief...
In honor of its 33rd birthday, we look at attempts to modify Executive Order 12866 over the years and the philosophy and principles that have made it so durable.
Thirty-three years ago, President Bill Clinton signed Executive Order (EO) 12866, “Regulatory Planning and Review.” At the time, some observers were disappointed that it retained features from its Reagan-issued predecessor, EO 12291 (1981), notably continuing the Office of Information and Regulatory Affairs’ (OIRA’s) executive review of new regulations, and requirements for regulatory impact analysis. But, as the lead author of the order, then OIRA Administrator Sally Katzen said years later, “had centralized review and the use of economic analysis not existed, it would have had to be invented.”
Since executive orders can be revoked as easily as they are written, few observers would have predicted in 1993 that a Democratic president’s framework for regulatory oversight would govern the administrative state well into the twenty-first century. Yet, here we are, after more than three decades and six presidential administrations of widely varying policy agendas, EO 12866 still guides rulemaking today.
That doesn’t mean intervening presidents have not attempted to modify, amend, or supplement it. They have, but for the most part, their modifications have not endured. They have also ignored it when politically expedient, but that’s a story for another day. This commentary examines the founding philosophy and principles behind EO 12866 that has made it so durable and then briefly reviews the less-durable attempts to amend it over the years.
The Regulatory Philosophy: Restraint and Evidence
Why has EO 12866 survived for so long? I believe one answer lies in Section 1(a), which articulates a timeless “Statement of Regulatory Philosophy” grounded in humility, analytical discipline, and respect for individual liberty.
It begins with a call for institutional restraint:
Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people.
This opening premise establishes an important presumption. In a free society, private ordering, voluntary cooperation, and decentralized decision-making should be the norm. Federal coercion through regulation is justified in limited circumstances—such as an externality, information asymmetry, or public goods problem—that cannot be addressed through private action or existing institutions.
The Philosophy goes on to say that, in deciding whether and how to regulate, agencies should evaluate all available alternatives, “including the alternative of not regulating.” They should anticipate quantifiable and qualitative benefits and costs, and select regulatory approaches that “maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach.”
Translating Philosophy into Practice: The Twelve Principles
If Section 1(a) provides the intellectual compass, Section 1(b) provides the map. Its twelve “Principles of Regulation” translate the philosophy of restraint, evidence-based analysis, and net benefit maximization into practical agency directives.
The Principles elaborate on the importance of identifying and assessing the significance of the specific market or institutional failure being addressed, and examining whether existing rules caused or contributed to the problem. They instruct agencies to consider alternative approaches to meeting the identified problem, and discourage prescriptive command-and-control regulations in favor of alternative forms, such as performance standards, economic incentives or information disclosure that are more likely to preserve flexibility and private innovation. They encourage analytical rigor, directing agencies to regulate only upon a reasoned determination that anticipated benefits justify costs, using the best reasonably obtainable scientific, technical, and economic evidence.
Modifications and Supplements to EO 12866
Every few years, a new administration has attempted to tweak the machinery of EO 12866, either by amending it directly or by supplementing it with additional orders. Without exception, direct amendments have been rescinded by the subsequent president, while some supplements have remained.
President George W. Bush amended EO 12866 twice. In February 2002, EO 13258 shifted the formal dispute resolution role from the Vice President to the Chief of Staff. This was a minor procedural change, reflecting the fact that Vice President Cheney’s focus was on homeland security and not regulation. Five years later, EO 13422 introduced more substantive changes. It required agencies to identify a specific market failure before initiating a regulation (reordering language in the original), encouraged agencies to consider using formal rulemaking procedures through trial-like procedures, mandated that agency Regulatory Policy Officers be presidential appointees, and extended OIRA review to significant guidance documents.
These modifications proved short-lived. Within days of taking office in January 2009, President Barack Obama issued EO 13497, revoking both of President Bush’s amendments and restoring the original 1993 text in full.
President Obama issued several regulatory directives of his own but without amending the foundational order itself. EO 13563 (2011) explicitly reaffirmed EO 12866 and added supplementary emphasis on retrospective review, public participation, and qualitative values. EO 13579 (2011) encouraged independent regulatory agencies to comply with E.O. 13563’s provisions for public participation and directed them to plan for periodic review of their existing regulations. E.O. 13610 (2012) further emphasized retrospective review, encouraging agencies “not to impose unjustified regulatory requirements.”
While campaigning in 2016, President Donald Trump said his policies would reduce regulations by 70%, but he did not amend EO 12866 (nor did he rescind Obama’s regulatory orders). Instead, through EO 13771 (2017), he overlaid a regulatory budgeting requirement that agencies rescind two rule for every one issued on top of the EO 12866 requirements for OIRA review and regulatory analysis.
On his first day in office, President Joe Biden revoked Trump’s regulatory budgeting framework and other orders via EO 13992 (2021). Two years later, Biden’s EO 14094 (2023) made the first formal textual revisions to EO 12866 since Bush’s failed attempt. While affirming the role for OIRA review, he changed the order to increase the annual monetary threshold for economically significant rules from $100 million to $200 million (indexed to GDP), narrow the standard for OIRA review of novel legal or policy issues, and broaden public engagement in OIRA meetings under Section 6(b)(4).
On the first day of his second term, Trump rescinded Biden’s amendments and associated changes to regulatory analysis guidelines, returning EO 12866 to its original language. He has since used executive orders at an unprecedented rate to shape regulatory policy, including subjecting independent regulatory agencies to EO 12866, but he has not altered that foundational order.
Looking Ahead: A Foundation for the Future
Thirty-three years after its signing, EO 12866 continues to serve as an anchor in an often turbulent administrative state. Presidents will inevitably (and legitimately) continue to test new oversight mechanisms and propose revisions to suit their policy agendas. But the history of the past three decades suggests that structural tinkering and partisan directives fade, while the principles of analytical rigor, transparency, and public accountability remain vital.
As EO 12866’s primary author, Sally Katzen, has said:
The virtues of analysis—as robust as needed, commensurate with the significance of the decision being made—are, to me, self-evident: the regulator must think through, with all available data and in a systematic and disciplined way, all the intended and unintended consequences of a proposed rule. An end product that reflects such informed consideration will necessarily be better than one that does not.
By tethering regulatory policy to clear evidence of a compelling need and demanding that the benefits to the American public justify the burdens imposed, EO 12866 created a principled consensus that transcends political divides. That balanced framework is just as essential today as it was in 1993.