By: Ronald Reagan
Date: February 17, 1981
Source: Reagan, Ronald. "Proclamation and Executive Orders dated February 17, 1981." Available online at ; website home page: http://www.reagan.utexas.edu (accessed June 9, 2003). Contains full text of Executive Order 12291.
About the Author: Ronald Reagan (1911–) was born in Tampico, Illinois. After graduating from Eureka College, Reagan worked as a sports broadcaster for a Davenport, Iowa radio station. In 1937, while covering spring training in California, Reagan signed a contract with Warner Brothers, a movie studio. Reagan eventually starred in over fifty films. In 1964, he retired from acting and was elected governor of California. In 1980, Reagan was elected president (served 1981–1989). After serving two terms, he retired to his ranch in California.
In 1787, the Constitutional Convention at Philadelphia implemented a revolutionary political concept, federalism. Under this concept, more than one level of government exists within the same territory, and each maintains real autonomy over some decision-making. Prior to this time, most political theorists believed that federalism was impossible to achieve because competing sovereigns would eventually battle against each other until one reigned supreme. The Constitutional Convention was convened to reform the Articles of Confederation, the first American charter of government that vested sovereignty within the individual thirteen states. Among the Articles' many problems were that states were too weak to solve their boundary disputes, prevent their neighbors from imposing tariffs on interstate commerce, or financially support the Confederation. In the end, the constitutional delegates scrapped the Articles, creating the first modern federal state with the drafting of the Constitution. The Constitution, while providing for a strong national government, granted states the power to tax,borrow money, pass their own laws, establish their own courts, charter banks, and administer elections.
In the twentieth century, state autonomy came under increasing attack by the federal government. In 1913, the Sixteenth Amendment gave Congress the power to levy income taxes. During the Great Depression, President Franklin Roosevelt (served 1933–1945) broadly expanded federal jurisdiction. With millions of Americans living hand-to-mouth, state governments were unable to cope with the situation. Under the New Deal initiatives, Roosevelt centralized authority in Washington, D.C., by forcing states to cede authority in return for job programs, welfare to mothers with dependent children, and social security to the aged. In the 1960s, President Lyndon Johnson's (served 1963–1969) War on Poverty promoted federally subsidized vocational education, job training, food stamps, Medicare, and Medicaid. The election of President Reagan (served 1981–1989) in 1980 marked the resurgence of conservatism, concluding that after forty years "big government" had failed to effectively deal with poverty and other social ills.
In 1981, President Ronald Reagan was elected on his promise to "curb the size and influence of the federal establishment" because "the federal government is not part of the solution, but part of the problem." Instead of empowering Americans, big government had become unsympathetic and unresponsive, its regulations overly burdensome. The president attempted to redefine federalism through Reaganomics.
In 1981, Congress passed the largest tax cut in history, partially offset by $39 billion in cuts to food stamps, job training, health services, and other entitlement programs. Instead of using the saved revenue to reduce the national debt, the money was plowed into defense. By 1986, the budget deficit soared to a record $220 billion. The Reagan administration also eliminated many federal regulations affecting the workplace, health care, consumer protection, the environment, and banking—which played a part in the Savings and Loan crisis.
In October 1987, President Reagan issued Executive Order No. 12612, limiting the power of the federal government by stressing adherence to the original intentions of the founding fathers. Nevertheless, after two terms in office, Reagan failed to reduce the size or scope of government. In 1994, for the first time in forty years, the Republicans controlled Congress. Following in Reagan's footsteps, conservatives had successfully campaigned on the issue of reducing the federal government. Two years later, President Bill Clinton (served 1993–2001) declared that "the era of big government is over." Clinton supported welfare reform, giving states greater control in administering the program, and signed legislation preventing the federal government from imposing unfunded mandates on the states. However, in 1998, Clinton issued Executive Order No. 13088, revoking Reagan's earlier order and granting the federal bureaucracy broad powers to intervene in state affairs. Under tremendous political pressure, Clinton withdrew the order a few months later.
Primary Source: Executive Order 12291 [excerpt]
SYNOPSIS: Two days after his inauguration, President Reagan authorized a committee to propose ways of reducing economic and social regulations. On February 17, 1981, Reagan launched his conservative agenda by issuing Executive Order No. 12291, requiring all proposed regulations to be subject to review and cost-benefit analysis prior to approval. By 1983, the number of new proposed regulations declined by one-third.
By the authority vested in me as President by the Constitution and laws of the United States of America, and in order to reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and insure well-reasoned regulations, it is hereby ordered as follows:
Sec. 2. General Requirements. In promulgating new regulations, reviewing existing regulations, and developing legislative proposals concerning regulation, all agencies, to the extent permitted by law, shall adhere to the following requirements:
- Administrative decisions shall be based on adequate information concerning the need for and consequences of proposed government action;
- Regulatory action shall not be undertaken unless the potential benefits to society from the regulation outweigh the potential costs to society;
- Regulatory objectives shall be chosen to maximize the net benefits to society;
- Among alternative approaches to any given regulatory objective, the alternative involving the least net cost to society shall be chosen; and
- Agencies shall set regulatory priorities with the aim of maximizing the aggregate net benefits to society, taking into account the condition of the particular industries affected by regulations, the condition of the national economy, and other regulatory actions contemplated for the future.
Sec. 3. Regulatory Impact Analysis and Review.
- In order to implement Section 2 of this Order, each agency shall, in connection with every major rule, prepare, and to the extent permitted by law consider, a Regulatory Impact Analysis. Such Analyses may be combined with any Regulatory Flexibility Analyses performed under 5 U.S.C. 603 and 604.
- Each agency shall initially determine whether a rule it intends to propose or to issue is a major rule, provided that, the Director, subject to the direction of the Task Force, shall have authority, in accordance with Sections 1(b) and 2 of this Order, to prescribe criteria for making such determinations, to order a rule to be treated as a major rule, and to require any set of related rules to be considered together as a major rule.
- Except as provided in Section 8 of this Order, agencies shall prepare Regulatory Impact Analyses of major rules and transmit them, along with all notices of proposed rulemaking and all final rules, to the Director as follows:
- If no notice of proposed rulemaking is to be published for a proposed major rule that is not an emergency rule, the agency shall prepare only a final Regulatory Impact Analysis, which shall be transmitted, along with the proposed rule, to the Director at least 60 days prior to the publication of the major rule as a final rule;
- With respect to all other major rules, the agency shall prepare a preliminary Regulatory Impact Analysis, which shall be transmitted, along with a notice of proposed rulemaking, to the Director at least 60 days prior to the publication of a notice of proposed rulemaking, and a final Regulatory Impact Analysis, which shall be transmitted along with the final rule at least 30 days prior to the publication of the major rule as a final rule;
- For all rules other than major rules, agencies shall submit to the Director, at least 10 days prior to publication, every notice of proposed rulemaking and final rule.
- To permit each proposed major rule to be analyzed in light of the requirements stated in Section 2 of this Order, each preliminary and final Regulatory Impact Analysis shall contain the following information:
- A description of the potential benefits of the rule, including any beneficial effects that cannot be quantified in monetary terms, and the identification of those likely to receive the benefits;
- A description of the potential costs of the rule, including any adverse effects that cannot be quantified in monetary terms, and the identification of those likely to bear the costs;
- A determination of the potential net benefits of the rule, including an evaluation of effects that cannot be quantified in monetary terms;
- A description of alternative approaches that could substantially achieve the same regulatory goal at lower cost, together with an analysis of this potential benefit and costs and a brief explanation of the legal reasons why such alternatives, if proposed, could not be adopted; and
- Unless covered by the decription required under paragraph (4) of this subsection, an explanation of any legal reasons why the rule cannot be based on the requirements set forth in Section 2 of this Order.
- The Director, subject to the direction of the Task Force, which shall resolve any issues raised under this Order or ensure that they are presented to the President, is authorized to review any preliminary or final Regulatory Impact Analysis, notice of proposed rulemaking, or final rule based on the requirements of this Order.
- The Director shall be deemed to have concluded review unless the Director advises an agency to the contrary under subsection (f) of this Section:
- Within 60 days of a submission under subsection (c)(1) or a submission of a preliminary Regulatory Impact Analysis or notice of proposed rulemaking under subsection (c)(2);
- Within 30 days of the submission of a final Regulatory Impact Analysis and a final rule under subsection (c)(2); and
- Within 10 days of the submission of a notice of proposed rulemaking or final rule under subsection (c)(3).
- Upon the request of the Director, an agency shall consult with the Director concerning the review of a preliminary Regulatory Impact Analysis or notice of proposed rulemaking under this Order, and shall, subject to Section 8(a)(2) of this Order, refrain from publishing its preliminary Regulatory Impact Analysis or notice of proposed rulemaking until such review is concluded.
- Upon receiving notice that the Director intends to submit views with respect to any final Regulatory Impact Analysis or final rule, the agency shall, subject to Section 8(a)(2) of this Order, refrain from publishing its final Regulatory Impact Analysis or final rule until the agency has responded to the Director's views, and incorporated those views and the agency's response in the rulemaking file.
- Nothing in this subsection shall be construed to as displacing the agencies' responsibilities delegated by law.
- For every rule for which an agency publishes a notice of proposed rulemaking, the agency shall include in its notice:
- A brief statement setting forth the agency's initial determination whether the proposed rule is a major rule, together with the reasons underlying that determination; and
- For each proposed major rule, a brief summary of the agency's preliminary Regulatory Impact Analysis.
- Agencies shall make their preliminary and final Regulatory Impact Analyses available to the public.
- Agencies shall initiate reviews of currently effective rules in accordance with the purposes of this Order, and perform Regulatory Impact Analyses of currently effective major rules. The Director, subject to the direction of the Task Force, may designate currently effective rules for review in accordance with this Order, and establish schedules for reviews and Analyses under this Order.
Sec. 4. Regulatory Review. Before approving any final major rule, each agency shall:
- Make a determination that the regulation is clearly within the authority delegated by law and consistent with congressional intent, and include in the Federal Register at the time of promulgation a memorandum of law supporting that determination.
- Make a determination that the factual conclusions upon which the rule is based have substantial support in the agency record, viewed as a whole, with full attention to public comments in general and the comments
of persons directly affected by the rule in particular.
Sec. 7. Pending Regulations.
- To the extent necessary to permit reconsideration in accordance with this Order, agencies shall, except as provided in Section 8 of this Order, suspend or postpone the effective dates of all major rules that they have promulgated in final form as of the date of this Order, but that have not yet become effective, excluding:
- Major rules that cannot legally be postponed or suspended;
- Major rules that, for good cause, ought to become effective as final rules without reconsideration. Agencies shall prepare, in accordance with Section 3 of this Order, a final Regulatory Impact Analysis for each major rule that they suspend or postpone.
- Agencies shall report to the Director no later than 15 days prior to the effective date of any rule that the agency has promulgated in final form as of the date of this Order, and that has not yet become effective, and that will not be reconsidered under subsection (a) of this Section:
- That the rule is excepted from reconsideration under subsection (a), including a brief statement of the legal or other reasons for that determination; or
- That the rule is not a major rule.
- The Director, subject to the direction of the Task Force, is authorized, to the extent permitted by law, to:
- Require reconsideration, in accordance with this Order, of any major rule that an agency has issued in final form as of the date of this Order and that has not become effective; and
- Designate a rule that an agency has issued in final form as of the date of this Order and that has not yet become effective as a major rule in accordance with Section 1(b) of this Order.
- Agencies may, in accordance with the Administrative Procedure Act and other applicable statutes, permit major rules that they have issued in final form as of the date of this Order, and that have not yet become effective, to take effect as interim rules while they are being reconsidered in accordance with this Order, provided that, agencies shall report to the Director, no later than 15 days before any such rule is proposed to take effect as an interim rule, that the rule should appropriately take effect as an interim rule while the rule is under reconsideration.
- Except as provided in Section 8 of this Order, agencies shall, to the extent permitted by law, refrain from promulgating as a final rule any proposed major rule that has been published or issued as of the date of this Order until a final Regulatory Impact Analysis, in accordance with Section 3 of this Order, has been prepared for the proposed major rule.
- Agencies shall report to the Director, no later than 30 days prior to promulgating as a final rule any proposed rule that the agency has published or issued as of the date of this Order and that has not been considered under the terms of this Order:
- That the rule cannot legally be considered in accordance with this Order, together with a brief explanation of the legal reasons barring such consideration; or
- That the rule is not a major rule, in which case the agency shall submit to the Director a copy of the proposed rule.
- The Director, subject to the direction of the Task Force, is authorized, to the extent permitted by law, to:
- Require consideration, in accordance with this Order, of any proposed major rule that the agency has published or issued as of the date of this Order; and
- Designate a proposed rule that an agency has published or issued as of the date of this Order, as a major rule in accordance with Section 1(b) of this Order.
- The Director shall be deemed to have determined that an agency's report to the Director under subsections (b), (d), or (f) of this Section is consistent with the purposes of this Order, unless the Director advises the agency to the contrary:
- Within 15 days of its report, in the case of any report under subsections (b) or (d); or
- Within 30 days of its report, in the case of any report under subsection (f).
- This Section does not supersede the President's Memorandum of January 29, 1981, entitled "Postponement of Pending Regulations", which shall remain in effect until March 30, 1981.
- In complying with this Section, agencies shall comply with all applicable provisions of the Administrative Procedure Act, and with any other procedural requirements made applicable to the agencies by other statutes.
Sec. 8. Exemptions.
- The procedures prescribed by this Order shall not apply to:
- Any regulation that responds to an emergency situation, provided that, any such regulation shall be reported to the Director as soon as is practicable, the agency shall publish in the Federal Register a statement of the reasons why it is impracticable for the agency to follow the procedures of this Order with respect to such a rule, and the agency shall prepare and transmit as soon as is practicable a Regulatory Impact Analysis of any such major rule; and
- Any regulation for which consideration or reconsideration under the terms of this Order would conflict with deadlines imposed by statute or by judicial order, provided that, any such regulation shall be reported to the Director together with a brief explanation of the conflict, the agency shall publish in the Federal Register a statement of the reasons why it is impracticable for the agency to follow the procedures of this Order with respect to such a rule, and the agency, in consultation with the Director, shall adhere to the requirements of this Order to the extent permitted by statutory or judicial deadlines.
- The Director, subject to the direction of the Task Force, may, in accordance with the purposes of this Order, exempt any class or category of regulations from any or all requirements of this Order.
Sec. 9. Judicial Review. This Order is intended only to improve the internal management of the Federal government, and is not intended to create any right or benefit, substantive or procedural, enforceable at law by a party against the United States, its agencies, its officers or any person. The determinations made by agencies under Section 4 of this Order, and any Regulatory Impact Analyses for any rule, shall be made part of the whole record of agency action in connection with the rule.
Sec. 10. Revocations. Executive Orders No. 12044, as amended, and No. 12174 are revoked.
Ronald Reagan The White House, February 17, 1981.
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