Cost-Benefit and Other Analysis Requirements in the Rulemaking Process

Curtis W. Copeland
Specialist in American National Government

Regulatory analytical requirements (e.g., cost-benefit and cost-effectiveness analysis) have been established incrementally during the last 40 to 50 years through a series of presidential and congressional initiatives. The current set of requirements includes Executive Order 12866 and OMB Circular A-4, the Regulatory Flexibility Act (RFA), and the Unfunded Mandates Reform Act (UMRA). These requirements vary in terms of the agencies and rules they cover, and the types of analyses that are required. The most extensive and broadly applicable of the requirements are in Executive Order 12866 and OMB Circular A-4, but they do not apply to independent regulatory agencies. The statutes that provide rulemaking authority to independent regulatory agencies often require them to “consider” regulatory costs and benefits, but do not specifically require cost-benefit analysis. An Office of Management and Budget report indicated that independent regulatory agencies did not estimate both costs and benefits for any of the major rules they issued in FY2010. Cabinet departments and other agencies estimated monetary costs and benefits for some, but not all, of their rules.

A number of bills have been introduced in the 112th Congress that would codify and expand the executive order’s requirements for cost-benefit analysis (S. 602, H.R. 1281, S. 1219, and H.R. 2204); apply the executive order’s principles to independent regulatory agencies (S. 358); require cost-benefit analysis for certain agencies’ rules (H.R. 1840, H.R. 2175, H.R. 2308, and S. 1292); or improve the implementation of the RFA and UMRA (S. 474, S. 1030, H.R. 527, S. 817, S. 1189, and H.R. 373). Enactment of some or all of these bills would add to the existing incrementally developed patchwork of analytical requirements, and some would significantly increase the number of rules for which analyses would be required.

Congress could decide to keep the existing analytical framework in place, or could enact one or more of these reform proposals. Another more comprehensive approach could be to consolidate all of the analytical requirements in one place, and perhaps expand those requirements to include more agencies or rules, or to require different types of analysis. To do so, or to simply cover independent regulatory agencies by the executive order, the President could arguably amend Executive Order 12866 and OMB Circular A-4, or Congress could enact legislation. Any such changes must be cognizant of the state of existing law in this area, and the resources and data required for agencies to carry out the analyses.


Date of Report: August 30, 2011
Number of Pages: 43
Order Number: R41974
Price: $29.95

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