Why It Matters

The Trump administration has made sweeping changes to how the federal government creates new rules. A recent Congressional Research Service report examines what these changes mean for cost-benefit analysis, the process agencies use to weigh the costs and benefits of new regulations.

The key change: Executive Order 14192 introduced a "ten-for-one rule." For every new regulation, agencies must eliminate at least 10 existing regulations to offset the costs. The order also ultimately sets a regulatory budget: the total cost of all new rules must be significantly less than zero. These are major departures from how the government has operated for decades.

The stakes are high. These new rules could make it much harder for agencies to justify regulations with long-term payoffs, like environmental or climate protections, because their benefits may not show up immediately.

The Big Picture

Cost-benefit analysis in federal rulemaking didn't come from law. The Administrative Procedure Act of 1946 established the basic rules for how agencies create regulations, but it didn't require cost-benefit analysis. That requirement came later, through executive orders.

In 1993, President Bill Clinton issued Executive Order 12866, which created the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB). OIRA became the central overseer of agency rulemaking. The order required agencies to analyze costs and benefits for major rules, those with an annual economic impact of $100 million or more.

This framework stayed largely the same for over 30 years.

The Biden shift

In 2023, the Biden administration changed how agencies should calculate the value of future costs and benefits. Specifically, it lowered the discount rates used in these calculations. Lower discount rates make future benefits look larger, which makes it easier for agencies to justify rules with long-term benefits.

Trump's overhaul

In 2025, President Trump reversed the Biden changes. He reinstated the original guidance from 2003. But he went further.

Executive Order 14215 extended cost-benefit review requirements to independent regulatory agencies, like the Federal Reserve Board and the Federal Communications Commission. Historically, these agencies were exempt because Congress designed them to operate independently of the President and OMB. That exemption is now gone.

The new rules also require agencies to use new accounting methods for regulatory costs, adjusting expenses to 2024 dollars using a seven percent discount rate. As of June 16, OMB had not yet set the cost caps for fiscal year 2026.

The Bottom Line

These executive orders stack multiple barriers on top of each other, making it harder to create new regulations. The legal status of extending requirements to independent agencies is still uncertain. And the real-world impact of the zero-or-negative regulatory budget will depend on how OMB enforces it.

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