Regulation in the Reagan era: New procedures, new results

Following the lead of recent predecessors who established limited presidential control of regulatory rulemaking by federal agencies, President Reagan promulgated Executive Order 12291 in February 1981. He established a process by which the Executive Office of the President, acting through the Office of Management and Budget, would exert an unprecedented level of control over regulators. The keystone of presidential influence was the requirement that proposed regulations be submitted to OMB for approval, and that major regulations be accompanied by cost-benefit analyses. Centralized review was supplemented by appointments of Reagan loyalists to top decision-making positions. Critics objected that the review process was designed to prevent social regulations which would be costly to industry and that the process was shrouded in secrecy, imperiling due-process rights.^ The arrangement generated increased presidential influence at the expense of the influence of congressional committees and interest groups which theretofore dominated the bureaucracy\u27s attention. When opposition to OMB\u27s involvement in specific rulemakings coalesced, however, OMB disapproval of a regulation could be overcome.^ Reagan\u27s commitment to regulatory relief and OMB\u27s array of statutory power over agencies allowed Reagan\u27s aides to prevail over bureaucrats\u27 resistance. Agencies exhibited sensitivity toward industry\u27s compliance costs and often abandoned rulemakings entirely. OMB resistance delayed many regulations for months or years. With no alternative, agencies developed the capacity to perform regulatory analyses.^ Consistent with sociological exchange theory, the executive agencies, Congress, and the judiciary--though wary of the excesses of Reagan\u27s strategy--greeted the program with a measured response, evaluating its merits and mutual benefits and setting limits. The executive agencies refused to acquiesce when OMB directives threatened agencies\u27 core missions. While some members of Congress sought to terminate the review program, Congress instead extracted procedural concessions, and many legislators attempted to take advantage of OMB\u27s procedures to promote interests of various constituents. The judiciary, which had prescribed due-process protections for regulatory proceedings, exhibited tolerance of Reagan\u27s revised procedures as long as OMB\u27s implementation did not generate a clear statutory violation.^ The review process represents a restructuring of relationships between the president and the agencies and among the three branches.