The Iconic Executive Order 12291: The Precedent for the Preservation of Critical Executive Orders and Centralized Regulatory Review

 

Editors Note: See a Library of relevant articles compiled from five decades of intense debate which lead to The 50th Anniversary of Centralized Regulatory Review.  The importance of examining current developments in centralized regulatory review relative to its precursors is discussed in this post and A European View on Executive Order 12291.

 

In this age represented by a near gatling gun approach to the issuance of Executive Orders the academic community is to be complimented for devoting increasingly greater attention to the institutional standing of well-reasoned, peer reviewed Presidential instruments, including both Executive Orders and Proclamations, that stand the test of time. In doing so they might help quell the current state of chaos in the administrative state, see Administrative Law in a Time of Chaos

The administrative state has been subjected to many Executive Orders but only a small number have had a stabilizing impact comparable to that of Executive Order 12291 which addressed the then very vocal and competing demands by members of Congress and a wide array of stakeholders for either more regulation or less regulation and whose time tested decision process would be administered by the newly created OIRA; its current bipartisan derivative prevails in part as Executive Order 12866. Executive Order 12291 was in part an outgrowth of the inability of Congress to pass legislation which would control an ever increasing regulatory burden that contributed to rampant inflation. OMB was more interested in the passage of the Paperwork Reduction Act than it was in legislation that would, in its mind, limit its flexibility in overseeing the administrative state.

Consequently notwithstanding our tendency to ignore history centralized regulatory review did not begin with Executive Order 12866 although fortunately it did provide for its timely continuation with bipartisan support even though there was considerable opposition within the Executive Branch. Executive Order 12291’s landmark achievement was to require that regulatory agencies perform benefit/cost analyses of regulations and to submit them to OMB for review. All regulatory actions taken by subsequent Administrations built upon these two building blocks which were previously developed over a twenty year period by four Presidential Administrations.

The essence of Executive Order 12291 was to give legitimacy to, and increase the jurisdiction of, the best of the various time tested centralized regulatory review processes developed and implemented by four prior Presidential Administrations—another step towards bipartisanship in establishing centralized regulatory review.

Time Magazine has concluded that Executive Order 12291 is one of “9 Executive Orders Which Changed American History”. 

Consequently Executive Order 12866 stands on a formidable foundation and this foundation may have to be called into play should the executive order be the subject of a serious challenge since both executive orders are intrinsically linked. An additional protection would arise if Executive Order 12866 were designated as a “critical” Executive Order pursuant to the public vetting outlined below.

Below are the views of leading scholars in the field of administrative law on Executive Order 12291:

Second, and more innovatively, his [Reagan] Administration issued the now-iconic Executive Order 12291” Jerry Louis Mashaw, David Berke, “Presidential Administration in a Regime of Separated Powers,” Yale Journal of Regulation, Vol 35, 2018.

“In a meeting sponsored by the Federalist Society Professor David Vladek of Georgetown University law school made two observations, one of which was that the Reagan Executive Order 12291, which instituted government-wide centralized regulatory review is, along with the APA, one of the two most influential documents of the regulatory state.” (OIRA Watch) (2017)

Arguably, the most important legal document of the last 30 years that hardly anyone in America knows about was Executive Order No. 12,291, the Reagan executive order that created the modern system of White House oversight of federal regulatory policy making. The Role of the White House in Regulatory Policy Making; Peter Shane (2011)

‘To date, the cost-benefit revolution has had three defining moments…. The first moment, and by far the most important, came from Ronald Reagan in 1981, when he signed Executive Order 12291, with the most boring imaginable title: Federal Regulation.” Sunstein Cost Benefit Revolution

Executive Order 12291 has become an institution because it did not overreach; it never claimed to displace the authority of an agency to make the final call on the substance of a rule. Equally, if not more importantly, the administrative processes used to implement the Order were time tested and refined before they were implemented on a government-wide basis as a result of a decade of experience gained through the Quality of Life Review initiated in 1971 which focused on EPA. Nonetheless a bridge to be crossed is the application of the executive order to independent agencies.

The policies and processes inherent in Executive Order 12291 were initially implemented by the first office in OMB dedicated solely to regulatory review and oversight—the Office of Regulatory and Information Policy. The aforementioned office was a functioning unit that pre-dated OIRA which upon morphing into OIRA (Office of Information and Regulatory Affairs) ensured that Executive Order 12291 did not migrate to the Executive Order graveyard. Not only is the sustainability of an Executive Order as dependent upon it is implementation as it is on its design but its shelf life is frequently enhanced by the presence of bipartisan sponsorship as was the case when the President included the passage of the Paperwork Reduction Act, which created OIRA, into his State of the Union address.

What is needed is for the academic and stakeholder communities to research those factors which lead to the institutionalization of a select number of executive orders. An emphasis could be placed on those executive actions that have made a permanent change in governmental operations comparable to those resulting from the promulgation of Executive Order 12291. Hopefully the resultant work product would establish a quality norm for future executive actions.  Adherence to accepted norms could provide a filter to be used prior to the issuance of an executive order which revokes existing executive orders as was the case with Executive Order 13497:

Executive Order 13258 of February 26, 2002, and Executive Order 13422 of January 18, 2007, concerning regulatory planning and review, which amended Executive Order 12866 of September 30, 1993, are revoked.

One might wonder why Executive Order 12291’s progeny did not suffer a similar fate given the fact that the two aforementioned executive orders were minimal expansions of the base program. One answer might be that Executive Order 12291’s progeny were bipartisan.

Those interested in a detailed review of actions that lead to the institutionalization of Executive Order 12291 should read a paper titled Beyond Structure and Process: The Early Institutionalization of Regulatory Review by Professor Andrew Rudalevige.

The delineation of a quality norm for Executive Orders would in large part rest on the shoulders of OIRA hopefully working off of the recommendations of federal agencies and the academic and stakeholder communities. The aforementioned quality norm would be a key determinant as to whether an existing executive order is critical and therefore subject to a rebuttable presumption against revocation as explained below in The Ask.

In order to fulfill this mission the path breaking accomplishments of OIRA and its predecessor organizations over a half century will have to attract the attention of the Appropriation Committees and the Director of OMB. More specifically the fact that OIRA is working at a staff level of 50% of the level it had when it was established nearly forty years ago may make it impossible for OIRA to undertake an additional program initiative until which time it receives a series of multi-year funding increases designated specifically for OIRA. Merit based budgeting would most certainly support the aforementioned action.

The Ask:   That stakeholders request their respective regulatory agencies issue a RFI (Request for Information) which solicits the views of the public on the appropriate measures to be used to:

(1) identify critical executive orders

A critical executive order is one that has traits similar to that of Executive Order 12291. The identification process will be heavily dependent on the use of the aforementioned quality norm as a filter.

This is the database (08 21 ’18) to be subjected to analysis and encompasses the Executive Orders issued by the following Administrations:

Trump              82

Obama           276

Bush               291

Clinton            260

900+ Executive Orders have been issued during the past four decades; which ones are the keepers? In essence conduct a retrospective review of Executive Orders in addition to a retrospective review of regulations but in this instance be focused on the preservation of an instrument not its demise. Experience suggests that it might be advantageous for outside groups to participate in such a review and that the aforementioned review should be conducted outside the Presidential election cycle.

(2)  develop a program to institutionalize the aforementioned executive orders

In doing so give full recognition that the resultant actions cannot be judicially reviewable and must preserve the right of the President to act in a timely manner as is the case with Executive Order 12291 and its progeny.

Jim Tozzi   Senior Fellow, Center for the Study of the Administrative State

August  2018

 

Reference Documents

Season of Spoils

OMB Congressional Testimony

Centralized Oversight of the Regulatory State

Presidential Management of Agency Rulemaking

Jawboning Administrative Agencies

Executive Orders 12291 and 12498: Usurpation of Legislative Power?

A Quiet Shift of Power

Library of Key Publications

 

 

3 comments. Leave a Reply

  1. CRE

    CRE appreciates the overwhelming number of emails we have received on this post.

    The most frequent response:

    Great stuff!

    The second most frequent response:

    I am or planning to cite it.

    The next most frequent response:

    Not providing adequate funding to OIRA is penny wise and pound foolish.

  2. Stan Meiburg

    The post raises an interesting point: should we seek additional protection for Executive Orders that have stood, as you describe, “the test of time”?

    To start at first principles, to even entertain the question you have to ask whether Executive Orders such as E.O. 12291 violate the separation of powers and usurp Congressional authority under the Constitution. I believe the answer to that question, that they do not, is settled law.

    That then leads to the second question: What distinguishes those orders that deserve preservation from those that do not. The post suggests that deserving EO’s are those that are well reasoned, reduce “chaos” in the operation of the administrative state, demonstrate their value across administrations, and not overreach by displacing the statutory authority of Executive Branch agencies. This post is focused almost exclusively on 12291; notably, it does not object in principle to the revocation of EO 13258 and 13422. The post suggest a screening process to determine which of the 900+ executive orders “are the keepers”. To make them “keepers” would presumably follow one of two paths: an acknowledgment across the political spectrum that the keeper EOs deserve continued life, or legislative action.

    The principles outlined in the post are all admirable. The vitality of the argument is weakened, however, if you tie it only to orders that provide “regulatory relief”. For example, would the same arguments apply to E.O. 12898 on Environmental Justice?

    It is possible to argue that the greatest problems with 12291 have not occurred with its principles but rather in its implementation. Specifically, there are three enduring problems with EO 12291.

    First, there is the well known tendency in regulatory matters to utilize high estimates of cost and low estimates of benefits. The self interest in such actions is obvious. This does argue for the retention of truly neutral competence in OIRA, but it will always be difficult as OIRA will never be able to apply the level of resources (both technical and political) to such arguments that self-interested regulatory parties can apply.

    Second, and more subtly, there is the tendency of traditional cost-benefit analyses to discount effects over too short time frames. Climate change and the debate about the cost of carbon are perfect examples of this. If you have consequences of actions whose worst manifestations are truly catastrophic, not easily reversed, somewhat episodic in their occurrence (e.g., extreme weather), and tied in their effects to actions of other nations that are influenced but not determined by US action, how do you account for this in traditional discount rate analysis?

    Finally, and even more subtly, there is the question of quantifying benefits that are not easily quantifiable, such as the valuation of ecosystem services. Economists are working on this, but we’re not seeing these values incorporated in traditional EO 12291 analyses.

    Moreover, in the current Administration, EO 12291 is being damaged by a priori insistence that only certain benefits be counted and others should be dismissed (e.g., the recent proposal that there are no air pollution impacts of criteria pollutants below the level of the ambient standards). The Administration’s attacks on the use of independent science findings in considering regulatory actions are further evidence of a one-sided view with regard to costs and benefits.

    So while there is value in an assessment of the corpus of Executive Orders, if this is seen as only an effort to preserve regulatory relief and undermine statutory and agency authority, rather than as an effort to protect development of sound regulatory policy, there will be stormy weather ahead. Not a reason to not do it, but a reason to be mindful of the importance of even-handedness.

    • CRE

      Dr. Meiburg served as the Deputy Administrator of EPA and prior to that position as a long time career employee of EPA. His comments are well taken. If the readers ascertain an emphasis on regulatory relief over other objectives that is a correct interpretation although the attainment of other objectives fits within the framework so outlined.

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