Executive Order 12866 in the United States requires benefit-cost analysis for any new regulation that is "economically significant," which is defined as having "an annual effect on the economy of $100 million or more or adversely affect[ing] in a material way the economy, a sector of the economy, productivity, competition, [or] jobs," or creating an inconsistency with other law, or any of several other conditions.  The Order established a "regulatory philosophy" and several "principles for regulation," among them requirements to explicitly identify the problem to be addressed, determine whether existing regulations created or contributed to the problem, assess alternatives to direct regulation, and design regulations in the most cost-effective manner.  § 1(a) summarizes this regulatory philosophy as follows:
Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people.

Agencies were directed to fulfill these requirements though economic analysis, most notably the preparation of Regulatory Impact Analyses (RIAs).  Regulations within this definition are colloquially termed "economically significant."

Executive Order 12866

Scope 
Though the term "effect" is crucial for determining the likelihood that a rule is economically significant, the term was not internally defined. Rather, all interpretative determinations critical to implementation were delegated to the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB).

Procedure 
Executive Order 12866 provides for a centralized review conducted on behalf of the President by OIRA (the same agency directed by Congress to implement the Paperwork Reduction Act). This alignment of Executive and statutory functions enhances the efficiency of Executive office oversight because virtually every rule contains information collection requirements.

Under Executive Order 12866, the procedure for determining whether a draft rule is significant (and thus subject to OIRA review) or economically significant (and thus subject to the requirement to prepare a Regulatory Impact Analysis), begins with agencies preparing entries to the semi-annual Unified Regulatory Agenda, which OIRA reviews before publication in the Federal Register, along with each agency’s Regulatory Plan.  Agencies are required to engage in prior consultation with both private and public stakeholders before drafting notices of proposed rulemaking, and ensuring that they have at least 60 days for public comment.

Agencies are required to provide to OIRA comprehensive lists of planned regulatory actions, including agencies’ provisional determinations of whether each action is significant.  Drafts of significant regulatory actions must be transmitted to OIRA for review, along with assessments of their potential costs and benefits.  For economically significant regulatory actions, agencies also must provide OIRA with a Regulatory Impact Analysis.  After OIRA review is completed and each draft proposed or final rule is published in the Federal Register, agencies are required to make all analyses public and “[i]dentify for the public, in a complete, clear, and simple manner, the substantive changes between the draft submitted to OIRA for review and the action subsequently announced; and... those changes in the regulatory action that were made at the suggestion or recommendation of OIRA."

OIRA may return a draft rule to an agency "for further consideration of some or all of its provisions," accompanying any return with "a written explanation... setting forth the pertinent provision of [Executive Order 12866] on which OIRA is relying."

The reach of Executive Order 12286 was extended in 2011 to require agencies to conduct retrospective reviews of existing regulations.

Regulatory Impact Analyses under Circular A-4 
Regulatory Impact Analyses are governed by guidance issued by OMB, OMB Circular A-4.  Circular A-4 requires agencies to clearly identify why regulation is needed, consider a reasonable number of alternative regulatory approaches, and for each alternative conduct a rigorous and objective benefit-cost analysis. OIRA reviews RIA’s for transparency, utility, and objectivity.

Judicial review 
Executive Order 12866 concludes with a statement “This Executive order is intended only to improve the internal management of the Federal Government and does not create any right or benefit, substantive or procedural, enforceable at law or equity by a party against the United States, its agencies or instrumentalities, its officers or employees, or any other person.”  Enforcement of the Order occurs during a public comment period after the agency receives public comments, and before the agency publishes a final rule.  Notices of Executive Order reviews are not published—an interested member of the public has to watch OMB’s web site daily to see when the agency submits a rule for review.  OMB receives comments and will conduct meetings (with agency representatives present) to conduct reviews.  These are not entirely satisfactory, since the final rule remains unpublished, and members of the public can only comment on the rule as proposed in an NPRM.  Nonetheless, OMB does block or require further changes to a handful of rules every year.

History

Origin of benefit-cost analysis -- President Ford's Executive Order 11821 and Council on Wage and Price Stability 

President Gerald Ford’s organized, comprehensive effort at regulatory reform, and to address inflationary impact of federal government activities and regulation, began with establishment of the Council on Wage and Price Stability (CWPS) in August 1974. The council was charged with monitoring the private sector economy, and reviewing government programs to determine their impact on inflation. In November 1974, President Ford issued Executive Order 11821, which established procedures for preparing Inflation Impact Statements, that required agencies to evaluate economic impact of regulatory proposals, specifically their effects on productivity and competition, and to submit those statements to CWPS for review.

President Reagan's Executive Order 12291 

Executive Order 12291 required OIRA review for regulations that "may [h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities."

Replacement by President Clinton: Executive Order 12866 

Executive Order 12866 (October 1993) replaced Executive Orders 12291 and 12498.

The key procedural difference between today’s Executive Order 12866 and the 1980s-era Executive Order 12291 is that, under Executive Order 12291, OIRA formally reviewed all draft proposed and final rules before signature by the relevant agency official and transmission to the Federal Register for publication, whereas under Executive Order 12866, OIRA formally reviews only those draft rules covered by § 3(f) (“significant regulatory action”). This distinction is significant, for during the 12.5 years in which Executive Order 12291 was in place, OIRA reviewed an average of 2,382 draft rules per year, but during the 24 years that Executive Order 12866 has been in force, OIRA has reviewed only 596 draft rules per year.  This 75% reduction in the scope of OIRA review undoubtedly enabled more focused attention, but it did so at the expense of incentivizing agencies to evade OIRA review by misclassifying draft rules below the threshold set in § 3(f).

Revisions by President George W. Bush -- Executive Orders 13258 and 13422 

President George W. Bush amended Executive Order 12866 in Executive Orders 13258 and 13422.   Executive Order 13272 is related, requiring consideration of small entities.

Revisions by President Obama -- Executive Order 13563 

Ten days after entering office, President Obama issued Executive Order 13497, which revoked President Bush's Executive Orders 13258 and 13422.  74 Fed. Reg. 6113 (Jan. 30, 2009).

In 2002, Cass Sunstein, who would later serve as President Obama's Administrator of the Office of Information and Regulatory Affairs, co-authored an article on a proposed replacement.

Executive Order 13563, Improving Regulation and Regulatory Review, was issued by President Barack Obama in 2011.  It reaffirms and amplifies the principles embodied in E.O. 12866 by encouraging agencies to coordinate their regulatory activities, and to consider regulatory approaches that reduce the burden of regulation while maintaining flexibility and freedom of choice for the public.  It directs agencies to, where feasible and appropriate, seek the views of those likely to be affected by a proposed rulemaking before a notice of proposed rulemaking is issued.  E.O 13563 requires agencies to quantify anticipated benefits and costs of proposed rulemakings as accurately as possible using the best available techniques, and to ensure that any scientific and technological information or processes used to support their regulatory actions are objective. 

To the extent feasible and permitted by law, E.O. 13563 also directs agencies to provide timely online access to the rulemaking docket for proposed and final rules, along with any relevant scientific and technical findings, on regulations.gov, and to afford the public the opportunity to comment on proposed regulations through the Internet.  With regard to existing regulations, E.O. 13563 instructs agencies to periodically review their significant regulations with the goal of making their regulatory programs more effective or less burdensome.

Trump revisions: Executive Orders 13771, 13777, 13891, 13892, and 13893

Executive Order 13771 
The provisions of Executive Orders 12866 and 13563 were significantly narrowed in some respects and expanded in others by Executive Orders 13771 and 13777.  Among the significant narrowing provisions are a more parsimonious description of the stated purposes of regulation. Whereas Executive Order 12866