President Reagan’s Executive Order 12291 in 1981 directed agencies to regulate only if the economic benefits outweigh the costs of such regulation. EO 12866, signed by President Bill Clinton in 1993, replaced the Reagan order while preserving its essence by asserting that the American people deserve regulations for which the benefits justify the costs. EO 12866 remained in place across later administrations, including the first Trump administration and the Biden administration, and has been formally endorsed by the current administration.

Economic analysis of new regulations—with benefit–cost analysis (BCA) as the core—has served several purposes. Some proponents early in the Reagan administration saw it as a tool to fight the regulatory state, while others—especially later in the 1980s—saw it as essential for good government and wise management of regulatory authority to ensure it does more good than harm. During the Clinton administration, many officials saw it similarly, although some may have viewed it more as a way of providing information to the public than as an essential element of regulatory decision making. In any case, the administrations of five presidents generally respected EO 12866, with its directive that benefits must justify costs, leading regulatory agencies and the Office of Management and Budget (OMB) to develop and issue detailed analyses of the economic effects of regulatory decisions for many major rules. These efforts have provided a basic decision framework for policymakers and important information to Congress, the judiciary, and the public, while also offering a principled structure for interested parties to comment on and critique proposed regulations.

Replacing BCA

While the current Trump administration has left EO 12866 in effect, it has adopted new policies that substantially alter its application and impact. Trump signed EO 14192 in January 2025, requiring agencies to “repeal” 10 existing rules for each new one and ensure that the cost savings from the repealed rules more than offset the estimated costs of the new rule. This requirement effectively replaces a benefit–cost test for evaluating new rules with a more limited, stripped-down comparison of costs and cost savings.

Trump’s subsequent EO 14219, signed in February 2025, also requires agencies to identify and repeal “unlawful” rules—that is, rules or portions of rules that the implementing agencies determine exceed their authority under existing statutes—without regard to standard procedures (including a BCA) for withdrawing the rules. This order provides a crucial new instrument for the Trump administration’s dismantling of the federal regulatory system.

An October 2025 memo from a senior OMB official, Jeffrey Clark, reinforces EO 14219 by short-circuiting the agency’s normal regulatory review process. It drops regulatory analysis requirements and adopts a presumptive 14-day review period for “facially unlawful rules” and a 28-day review period for other “deregulatory rules,” stating that “where the rule is inconsistent with the ‘single, best meaning’ of the statute under [the 2024 Supreme Court decision in] Loper Bright, direct repeal under the [Administrative Procedure Act]‘s ‘good cause’ exception is appropriate.” This more circumscribed review of deregulatory actions matters because OMB is a key entity in the executive branch tasked with independently assessing the economic merits of draft regulations, and such assessments are essential for both informed decisions by senior policymakers and public accountability.

This January, in a final rule limiting nitrogen oxide emissions from gas turbines, the US Environmental Protection Agency declared that it would not be providing quantified and monetized estimates of health benefits, a substantial departure from EPA practice over the last 30 years. The health benefits section of the rule only presents a qualitative discussion of possible health effects. The EPA explained that while committed to its core mission of protecting human health and the environment, it would not be monetizing benefits given the uncertainties in the benefits estimates. The agency pointed out several sources of uncertainty, including uncertainties in concentration-response functions, air quality modeling, and valuation of premature mortality. While the EPA’s science advisory panels have, in past years, supported the agency’s approaches to uncertainty in quantifying and monetizing health effects, the EPA now intends to investigate its past approach and seek peer review “prior to estimating these impacts in a regulatory analysis even for informational purposes.”

Failure to quantify and monetize the estimated health and mortality effects of regulations will have the effect of making consideration of health impacts less prominent in any policy evaluation.

The result is an EPA cost analysis that reports small monetized costs and cost savings to businesses without any corresponding quantified information on the health benefits forgone (such as premature mortality, hospitalizations, etc.) with the adoption of the less stringent final rule. This decision effectively excludes the use of BCA for a core set of EPA rules where the agency has statutory authority, and BCA has shown that the benefits of regulation substantially outweigh the costs. This is another blow to BCA and the Executive Order 12866 process.

These actions mean that regulatory policymakers and the public will generally lack detailed analysis of risks to the environment, public health, and safety that may result from the Trump administration’s deregulatory program. Admittedly, earlier administrations did not always adhere to the basic principles of the Reagan and Clinton orders. Those orders contain an inherent tension between the development of high-quality policy-neutral analysis to inform policy and the OMB’s role in advancing the president’s priorities. Where the estimated benefits do not justify the costs of a priority rule—or the cost savings do not cover the lost benefits of a deregulatory rule—the presidential priority may trump the development of high-quality analysis. Thus, given their self-interest in defending priority rules, administrations have issued regulations without adequate BCA. In addition, the Biden administration modified OMB economic analysis guidelines to support its social justice initiatives. The recent Trump administration actions, however, go beyond those bad precedents by undermining the essential role of the oversight and analysis functions established by EO 12291 and EO 12866. These actions may pave the way for future administration rulemakings without consideration or estimation of regulatory costs (or the lost benefits from deregulatory rules).

Restoring BCA

We hope for restoration of regulatory review processes that move the federal government toward an efficiency-based framework for decision making. In the interim, we should do more to protect public understanding about the effects of regulatory decisions—a necessity for public accountability for regulatory policy.

One approach would be for Congress to authorize a congressional agency (such as the Congressional Budget Office or the Government Accountability Office) to estimate the economic effects of major regulations issued by executive branch agencies, including regulatory actions that repeal all or part of existing regulations. A variation of this approach would be for a congressional agency to support genuinely independent and nonpartisan research estimating the benefits and costs of major regulatory and deregulatory actions. The now defunct AEI–Brookings Joint Center for Regulatory Studies is an example of an organization that did such work; no doubt, others would appear (or reappear) if such work were solicited.

Of course, these approaches only address the right-to-know role of regulation BCA. Developing third-party research could also help remedy the self-interest issues with the OMB- and agency-centered analysis framework embedded in the Reagan/​Clinton executive orders. By themselves, though, they will not restore a data-driven decision framework for evaluating regulatory actions within the Executive Branch.

Readings:

• Clark, Jeffrey B., 2025, “Streamlining the Review of Deregulatory Actions,” Memorandum M‑25–36, Office of Management and Budget, October 21.
• Dudley, Susan E., 2025, “DOGE Is Dead, But Deregulation Is Just Getting Started,” Regulatory Review, Penn Program on Regulation, December 9.
• Farber, Daniel, 2025, “The Case Against Rollback Exceptionalism,” Regulatory Review, Penn Program on Regulation, December 8.
• Kniesner, Thomas J., and W. Kip Viscusi, 2025, “Deregulation Based on Good Sludge,” Regulation 48(4): 50–51.
• Shapiro, Stuart, 2025, “Another Blow Against Benefit–Cost Analysis,” Regulatory Review, Penn Program on Regulation, December 10.