Jump to main content.

2.3. Executive Order 12291

Quick Links

Tell me About



Geographic Area


Table of Contents

powered by Google

In 1981 President Reagan issued Executive Order 12291 "Federal Regulation" requiring that federal agencies conduct a Regulatory Impact Analysis (RIA) of proposed major regulations. Major rules included those having an annual effect on the economy of $100 million or greater, those causing significant increases in costs or prices, and those having important adverse effects on competition, investment, productivity, employment or the international competitive position of firms in the United States. Benefits of proposed regulations were to be quantified to the extent that was feasible.

Agencies were instructed to (1) provide information on the need for and consequences of proposed regulations; (2) initiate regulatory actions only when the anticipated benefits exceeded the anticipated costs; (3) choose the regulatory alternative that maximized net benefits; and (4) establish regulatory priorities with the objective of maximizing net benefits after accounting for the economic condition of the affected industry, the national economy and anticipated future regulatory actions. The second, third and fourth requirements were operative only to the extent allowed by the governing statute. Agencies could be exempted from the order if the regulation were a response to an emergency situation, in which case an RIA could follow later. Also exempted were regulations where the preparation of an RIA would conflict with a statutory or court-ordered deadline.

Each federal executive agency must publish in October and April each year an agenda of proposed regulations under development and existing rules being reviewed under sunset provisions of the order. The Director of the Office of Management and Budget was vested with authority to designate any proposed rule as "major" and hence subject to the RIA requirements. Further, the order directs OMB to review the substance of completed RIAs prior to issuance of final regulations by executive agencies.

OMB issued guidance in June 1981 to assist agencies in the preparation of RIAs. The guidance arguably goes beyond the requirements of the executive order in calling for agencies to estimte the benefits, costs, and the net benefits of all major regulatory alternatives. OMB guidance has been updated periodically, most recently in a report entitled "Economic Analysis of Regulations" issued in 1996 .

Local Navigation

Jump to main content.