ABSTRACT
The use of economic methods to evaluate the benefits and costs of new regulations in the areas of health and the environment has expanded dramatically over the past several decades in the United States and is now quite entrenched in the federal regulatory process. In 1981, one of the first actions of the Reagan administration was the issuance of an executive order (EO 12291) that required that “major” regulations—including those with an effect on the economy of $100 million or more— undergo a “regulatory impact analysis” (RIA). Thus, in most federal agencies, a major rule could not be proposed in the Federal Register until a cost–benefit analysis (CBA) had been prepared and submitted to the Office of Management and Budget (OMB) for review and approval. Executive orders by subsequent administrations, most notably President Clinton's EO 12866, put greater attention on ensuring an efficient OMB vetting process and a heightened focus on the nonquantitative consequences of major rules. Nevertheless, Clinton's executive order left in place the key components of regulatory benefit and cost estimation and OMB review. This order continues to govern regulatory review today. 1
