Volume 141, No. 4 covering the 1st Session of the 104th Congress (1995 - 1996) was published by the Congressional Record.
The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“STATEMENT OF THE CHAIRMAN ON THE REPORTING BY THE GOVERNMENTAL AFFAIRS COMMITTEE OF S. 1--UNFUNDED MANDATE REFORM ACT OF 1995” mentioning the Environmental Protection Agency was published in the Senate section on pages S646-S653 on Jan. 9, 1995.
The publication is reproduced in full below:
STATEMENT OF THE CHAIRMAN ON THE REPORTING BY THE GOVERNMENTAL AFFAIRS
COMMITTEE OF S. 1--UNFUNDED MANDATE REFORM ACT OF 1995
Mr. ROTH. Mr. President, this morning the Governmental Affairs Committee, by a vote of 9 to 4, reported S. 1, the Unfunded Mandate Reform Act of 1995. Because of the great importance of this legislation to the State and local governments of this country, the bill is expected to be taken up by the Senate this week. Therefore, no official report of the committee will be filed on this legislation. To do so would delay the start of the bill's consideration. When a report is to be filed, each Member is entitled to a minimum of 3 days to prepare additional views. After it is filed, printed, and made available, the bill must lay over for 2 days before it may be considered.
Therefore, I am publishing instead a statement of the chairman on S. 1, which contains the very information, such as a legislative history and a section-by-section analysis, that would have been included in the report to accompany the legislation, had one been filed. Much of this is similar to the official committee report that was filed on the bill last year, when the committee reported S. 993, the predecessor of S. 1.
There being no objection, the material was ordered to be printed in the Record, as follows:
Statement of the Chairman, Senate Committee on Governmental Affairs, on
S. 1--Unfunded Mandate Reform Act of 1995
i. purpose
The purpose of S. 1--the ``Unfunded Mandate Reform Act of 1995''--is to strengthen the partnership between Federal, State, local and tribal governments by ensuring that the impact of legislative and regulatory proposals on those governments are given full consideration in Congress and the Executive Branch before they are acted upon. S.1 accomplishes this objective through the following major provisions: a majority point of order in the Senate to lie against Federal mandates without authorized funding to State, local and tribal governments; a requirement that the Congressional Budget Office (CBO) estimate the cost of Federal mandates to State, local and tribal governments as well as to the private sector; a requirement that Federal agencies establish a process to allow State, local and tribal governments greater input into the regulatory process; and, a requirement that agencies analyze the costs and benefits to State, local, and tribal governments of major regulations that include federal mandates.
ii. background
On October 27, 1993, State and local officials from all over the Nation came to Washington and declared that day as
``National Unfunded Mandates Day.'' These officials conveyed a powerful message to Congress and the Clinton Administration that unfunded Federal mandates imposed unreasonable fiscal burdens on their budgets, limited their flexibility to address more pressing local problems, forced local tax increases and service cutbacks, and hampered their ability to govern effectively.
The Committee on Governmental Affairs heard that message, and on November 3rd scheduled a Full Committee hearing on the issue. Witnesses from all levels of State and local government, from big cities on down to small townships, testified at the hearing on how unfunded Federal mandates adversely affected their ability to govern and set priorities. Mayor Greg Lashutka of Columbus, Ohio summed up the problems best when he said: ``Others have called it
[unfunded Federal mandates] spending without representation. Across this country, mayors and city councils and county commissioners have no vote on whether these mandated spending programs are appropriate for our cities. Yet, we are forced to cut other budget items or raise taxes or utility bills to pay for them because we must balance our budget at our level.''
Mayor Ed Rendell of Philadelphia, Pennsylvania was more emphatic: ``What is happening is we are getting killed. In most instances, we can't raise taxes. Many townships are at the virtual legal cap that their State government puts on them, or in my case in Philadelphia I took over a city that had a $500 million cumulative deficit that had raised four basic taxes 19 times in the 11 years prior to my becoming mayor. We have driven out 30 percent of our tax base in that time. I can't raise taxes, not because I want to get reelected or because it is politically feasible to say that, but because that would destroy what is left of our base, and our base isn't good enough.''
Further, Mayor Rendell noted how Federal mandates forced undesirable tradeoffs against tackling more needy local problems: ``So when you pass a mandate down to us and we have to pay for it, the police force goes down, the firefighting force goes down. Recreation departments are in disrepair. Our rec centers are in disrepair because our capital budget is being sopped up by Federal mandates, by the need to pay for Federal mandates.''
Susan Ritter, County Auditor, Renville County, North Dakota, and David Worhatch, Township Trustee, Hudson, Ohio gave their perspective of how Federal mandates negatively impact the smallest of governments with a description of some specific examples. Ms. Ritter noted that the town of Sherwood, with a population of 286, will have to spend one half of its annual budget on testing its water supply. Mr. Worhatch noted how well-intentioned Federal mandates can have unintended consequences at a township-level that thwart the original purpose of the mandate. He pointed to strict regulations that could force the closure of a local landfill. That closure could lead to greater midnight dumping--an undesirable result.
The Federal-State-local relationship is a complicated one. It is a blurry line between where one level of government's responsibility ends and another begins. Local officials decry unfunded State mandates as much as they do unfunded Federal ones. State officials then tell local officials that those mandates aren't theirs, but rather that they come from the Federal government and that States are just the conduit. The Federal government officials sometimes accuse State and local governments of falling down on their share of responsibilities when using Federal aid to carry out a Federal program. Likewise, State and local governments say that the regulations that go with accepting that aid are too onerous, and getting more so. They blame Federal agencies for promulgating burdensome and inflexible regulations. The agencies say that it is not their fault and claim that they are only carrying out the will of Congress in implementing statutes. Congress asserts that agencies have the statutory authority to allow State and local governments more leeway and flexibility in regulation and that therefore the responsibility lies there. What is lost in the debate is need for all levels of government to work together in a constructive fashion to provide the best possible delivery of services to the American people in the most cost-effective fashion. Vice President Gore's National Performance Review recognizes this fundamental issue in its report--``Strengthening the Partnership in Intergovernmental Service Delivery.'' The report notes:
``Americans increasingly feel that public institutions and programs aren't working. In fact, serious social and economic problems seem to be getting worse. The percentage of low-birth-weight babies, the number of single teens having babies, and arrest rapes for juveniles committing violent crimes are rising; the percentage of children graduating from high school is falling; welfare rolls and prison populations are swelling; median incomes for families with children are falling; more than half of children in female-headed households are poor; and 37 million Americans have no basic health care or not enough.''
``Why? At least part of the answer lies in an increasingly hidebound and paralyzed intergovernmental process.''
The report goes on to explain how the 140 Federal programs designed to help families and children are administered by 10 departments and 2 independent agencies. Fifteen percent of them are directly administered by the Federal government, 40 percent by States, and the remaining 40 percent by local, private or public groups.
Whether these programs, as well as many other Federal programs, work or not hinges on the ability of Federal, State and local to work together as partners in carrying the
[[Page S647]] program's responsibilities. When that coordination breaks down, the whole program suffers and program's objectives, be they improved environmental protection, reduced crime, better education, etc., fall short.
State and local officials emphasized in the Committee's hearings of November 3, 1993, April 28, 1994, and January 5, 1995, that over the last decade the Federal government has not treated them as partners in the providing of effective governmental services to the American people, but rather as agents or extensions of the Federal bureaucracy. In their view this lack of coordination and cooperation has not only effected the provision of services as a local level but also carriers with it the penalty of high costs, costs that they then pass on to local citizens.
A. The cost of Federal mandates to State and local governments
There has been substantial debate on the actual costs of Federal mandates as well as on their indirect costs and benefits. Suffice it to say that almost all participants in the debate would conclude that there is not complete data on the aggregate cost of Federal mandates to State and local governments. So there is a need to develop a baseline of what the aggregate cost of Federal mandates is to State and local budgets.
Notwithstanding the difficulty in preparing reliable cost estimates, the Committee believes that a strengthened and more thorough analytical process applied to legislation and regulation that impacts State, local and tribal governments is not only worthwhile, but achievable. There have been good faith efforts made in the past to measure the cost impacts of Federal intergovernmental mandates.
The Advisory Commission on Intergovernmental Relations'
(ACIR) 1993 report ``Federal Regulation of State and Local Governments: The Mixed Record of the 1980s'' examined the procedures by which Congress measures the impact of legislation on State and local governments. Since 1981, the Congressional Budget Office (CBO) has been preparing cost estimates on major legislation reported by Committee that is expected to have an annual cost to State and local governments in excess of $200 million. According to CBO, on average roughly 10 to 20 reported bills per year exceed to
$200 million threshold. These figures translate to between 2 and 4 percent of the total number of bills reported out of Committee. CBO estimates that about 11 percent of all bills reported out of Committee each year have some cost impact on State and local governments. A breakout on a year-by-year basis between 1983 and 1988 is shown below.
TABLE 5-5.--STATE AND LOCAL COST ESTIMATES PREPARED BY CBO, 1983-88
----------------------------------------------------------------------------------------------------------------Estimates prepared 1983 1984 1985 1986 1987 1988 Total Average
----------------------------------------------------------------------------------------------------------------
For bill approved by committee.................. 483 554 367 465 393 559 2,821 470
Other....................... 90 87 166 125 138 127 733 122
-----------------------------------------------------------------------------------
Total................. 573 641 533 590 531 686 3,554 592
===================================================================================
Estimates with no state/ local cost................. 496 584 488 543 448 598 3,157 526
Percent..................... 87 91 92 92 84 87 89 89
Estimates with some cost.... 77 57 45 47 83 73 382 64
Percent..................... 13 9 8 8 16 11 11 11
Estimates with impact above
$200 million............... 24 6 14 8 22 15 89 15
Percent of total............ 4 1 3 1 4 2 3 3
Percent of bills with some cost....................... 31 11 31 17 26 21 23 23
----------------------------------------------------------------------------------------------------------------
Source.--Congressional Budget Office Bill Estimates Tracking System, in Theresa A. Gullo, ``Estimating the
Impact of Federal Legislation on State and Local Governments,'' in Michael Fix and Daphne A. Kenyon, eds.,
``Coping with Mandates: What Are the Alternatives?'' (Washington, DC: Urban Institute Press, 1990), p. 43.
The Committee also asked CBO to provide it with more recent cost estimates and to examine the number of bills that cross a $100 million annual threshold. In 1991, CBO scored 5 bills to cost State and local governments in excess of $100 million apiece. Another 8 bills had significant costs to State and local governments, but fell under the $100 million threshold. Further, CBO determined that for another 6 pieces of legislation for which they were unable to come up with specific estimates--5 bills would probably fall under the
$100 million mark, one would probably exceed that total.
In testimony before the Committee on April 28, 1994, Dr. Robert Reischauer, Director of CBO, noted that preparing thorough and reliable State and local cost estimates is not easy. He presented the following reasons for the difficulty CBO sometimes has in preparing the estimates: Preparing the estimates requires the use of many different methodologies; the estimating process does not always yield firm estimates. Further, completing the estimates does take time--time that may not be readily available in the normal legislative process; and, legislative language may lack the detail necessary to estimate the costs.
Dr. Reischauer further stated that these constraints apply even more so to the preparation of cost estimates on private sector mandates. The Committee does believe that part of CBO's difficulty in performing these estimates lies in CBO not having adequate resources to conduct the estimates. Therefore, S. 1 authorizes an increase in funding for CBO of
$4.5 million for each of Fiscal Years 1996 through 2002. CBO's budget currently stands at just over $23 million.
Federal environmental mandates head the list of areas that State and local officials have claimed to be most burdensome. A closer look at two of the studies done on the cost to State and local governments of compliance with environmental statutes does indicate these costs appear to be rising. A 1990 EPA study (prepared in conjunction with the Environmental Law Institute) ``Environmental Investments: The Cost of a Clean Environment,'' estimates that total costs of environmental mandates (from all levels of government) to State and local governments will rise (in constant 1986 dollars) from $22.2 billion in 1987 to $37.1 billion by the year 2000--a real increase of 67 percent. According to the Vice President's National Performance Review report on the EPA, this figure when adjusted for inflation reaches close to
$44 billion on an annual basis by the year 2000. EPA estimates that costs to local government will increase the most (70 percent) while the impact on State governments is less (48 percent), but still significant. Over the 13 year span, the average real increase in costs to State and local governments translates to 5.2 percent on an annual basis. A table is included as follows:
TABLE I-2.--TOTAL ANNUALIZED COSTS OF ENVIRONMENTAL MANDATES BY FUNDING
SOURCES, 1972-2000
[In millions of 1986 dollars]
------------------------------------------------------------------------
Funding source 1972 1980 1987 1995 2000
------------------------------------------------------------------------
Environmental
Protection Agency.... $978 $4,574 $6,578 $9,161 $10,409
Other Federal Agencies 87 1,932 2,649 7,970 11,670
State Government...... 1,542 2,230 3,025 3,911 4,476
Local Government...... 7,673 12,857 19,162 27,913 32,577
Private............... 16,201 36,376 53,696 76,101 88,772
-------------------------------------------------
Total........... 26,481 57,969 85,290 125,056 147,904
------------------------------------------------------------------------
Source.--U.S. Environmental Protection Agency, ``Environmental
Investments: The Cost of a Clean Environment'' (Washington, DC: U.S.
Environmental Protection Agency, 1990) selected data from pp. 8-49 through 8-51. These estimates use a mid-range discount rate of 7 percent and include funding to meet EPA's air, water, land, chemicals,
and multi-media regulations.
The City of Columbus, Ohio also noted a trend in rising costs for city compliance with Federal environmental mandates in its study: ``Environmental Legislation: The Increasing Costs of Regulatory Compliance to the City of Columbus.'' The City examined its cost of compliance with 13 Federal environmental and health statutes and concluded that its cost of compliance with those statutes would rise from $62.1 million in 1991 to $107.4 million in 1995 (in 1991 constant dollars), a 73 percent increase. The City estimates that its share of the total city budget going to pay for these mandates will increase from 10.6 percent to 18.3 percent over that timeframe. These calculations were based on an unchanging total city budget between 1991 and 1995; assuming a 3 percent annual real growth rate in the budget reveals a lesser increase from 10.6 percent to 16.1 percent.
In addition to environmental requirements, State and local officials cite other Federal requirements as burdensome and costly: compliance with the Americans with Disabilities Act and the Motor Voter Registration Act; complying with the administrative requirements that go with implementing many Federal programs; meeting Federal criminal justice and educational program requirements. While all these programs clearly carry with them costs to State and local governments, they can have benefits both to society as a whole--a fact that State and local officials concede. It is the aggregate impact of all Federal mandates that has spurred the calls for mandate reform and relief. However, to truly reach a better understanding of the Federal mandates debate, it is necessary to look at the Federal funding picture.
B. Federal aid to State and local governments
It is readily apparent that Federal discretionary aid to State and local governments both to implement Federal policies and directives as well as to comply with them saw a sharp drop in the 1980s before rising again in the early 1990s--although in real terms Federal aid is still significantly below its earlier levels.
An examination of Census Bureau data on sources of State and local government revenue shows a decreasing Federal role in funding to State and local governments. In 1979, the Federal government's contribution to State and local government revenues reached 18.6 percent. By 1989, the Federal share of the State and local revenue pie had steadily shrank to 13.2 percent before edging [[Page S648]] up to 14.3 percent in 1991--the latest year that data is available (see accompanying chart).
The Federal Government's contribution to State and local government revenues\1\ (1970-1991)
Percent of State and local government revenue
Year:
1970.............................................................14.6
1971.............................................................15.8
1972.............................................................16.4
1973.............................................................18.0
1974.............................................................17.6
1975.............................................................17.8
1976.............................................................18.3
1977.............................................................18.5
1978.............................................................18.7
1979.............................................................18.6
1980.............................................................18.4
1981.............................................................17.8
1982.............................................................15.9
1983.............................................................15.2
1984.............................................................14.9
1985.............................................................14.7
1986.............................................................14.4
1987.............................................................13.6
1988.............................................................13.3
1989.............................................................13.2
1990.............................................................13.3
1991.............................................................14.3
\1\U.S. Census Bureau--Government Finances Series, 1970-1991. Chart tabulated by Staff of Senate Committee on Governmental Affairs.
A closer look at patterns in Federal discretionary grants-in-aid programs during the 1980s confirms the finding that the Federal government lessened its financial support of State and local governments. According to the Federal Funds Information Service (FFIS), between 1981 and 1990 Federal discretionary funding to State and local governments rose from $47.5 billion to $51.6 billion, a nominal increase of 8.6. percent. However, this figure when adjusted for inflation (using the GDP Price Deflator) tells a much different story: Federal aid dropped 28 percent over the decade--a 3.1 percent real decline on an annual average basis.
A number of significant Federal aid programs to State and local governments experienced sharp cuts and, in some cases, outright elimination during the decade. In 1986, the Administration and Congress agreed to terminate the general revenue sharing program--a program that provided approximately $4.5 billion annually to local governments and allowed them broad discretion on how to spend the funds. Since its inception in 1972, general revenue sharing had provided approximately $83 billion to State and local governments. Funding for Urban Development Action Grants, another significant program, was also terminated within this timeframe.
Between 1981 and 1990, funding for numerous Federal-State-local government grant programs was substantially trimmed, among them: Economic Development Assistance (47.5 percent--decrease is in nominal dollars), Community Development Block Grants (21.1 percent), Mass Transit (30.2 percent), Refugee Assistance (38.4 percent), and Low-Income Home Energy Assistance (17.6 percent). These cuts were partially offset by increases in funding in other areas--primarily in housing and health and human services programs.
The early 1990s saw a resurgence in funding for Federal-State-local discretionary aid programs. Funding rose from
$51.6 billion in 1990 to $67.4 billion in 1993, a nominal increase of 30.6 percent and an inflation-adjusted average annual gain of 5.6 percent. This growth was driven primarily by expansions in funding for Head Start, Highway Funding, and Compensatory Education. Still, even with this recent growth, between 1980 and 1993 discretionary funding declined 18.2 percent in real dollars--an average annual real decrease of 1.4 percent.
In simple terms, over the last decade or so, State and local governments have gotten less of the Federal carrot and more of the Federal stick. The Committee has responded to State and local officials' calls for change, and has reported out bipartisan mandate reform legislation.
III. LEGISLATIVE HISTORY
In the 103rd Congress, eight bills were introduced and referred to the Committee that addressed, at least in part, the subject of Federal mandates on State and local governments. Bill sponsors included: S. 480--Levin; S. 563--Moseley-Braun; S. 648--Gregg; S. 993--Kempthorne; S. 1188--Coverdell; S. 1592--Dorgan; S. 1604--Glenn; and, S. 1606--Sasser. Several major concepts were contained in most of the bills, among them: analysis of the costs of legislation and regulation on State and local governments; a prohibition or restriction on new Federal mandates without funding; and, points of order enforcement. Senator Kempthorne's legislation, the original S. 993--the ``Community Regulatory Relief Act of 1993''--had the strongest support, with more than 50 cosponsors. After two hearings and extensive meetings and discussions with State and local government organizations, the Administration, Senators and their staff, and the public interest community, the Committee crafted a legislative proposal that drew from many of the provisions of the eight bills, as well as incorporating several new provisions.
On June 16, the Committee marked up and reported out S. 993 with an amendment and an amendment to the title. Chairman Glenn offered a substitute bill to the original Kempthorne Bill, titled the ``Federal Mandate Accountability and Reform Act of 1994'', which passed by unanimous voice vote. Several other amendments offered by members of the Committee were also adopted, including an amendment by Senator Dorgan to include the private sector under the CBO and Committee mandate cost analysis requirements of Title I of S. 993, and a Glenn amendment to allow CBO to waive the private sector cost analysis if CBO cannot make a ``reasonable estimate'' of the bill's cost.
S. 993 as amended and reported by the Committee was considered by the Senate on October 6, 1994, without a time agreement. After some debate and the introduction of several additional amendments to the bill, the Senate proceeded to other items without taking any votes. The Senate adjourned without further consideration of S. 993.
In the 104th Congress, Senator Kempthorne introduced S. 1--the ``Unfunded Mandate Reform Act of 1995''--on January 4, 1995, and the bill was concurrently referred both to the Governmental Affairs Committee. On January 5, the Governmental Affairs Committee held a joint hearing on the bill with the Budget Committee. On January 9, the Governmental Affairs Committee voted to report the bill, S. 1, by a vote of 9-4 after adopting an amendment by Senator Glenn and two by Senator Levin. Voting ``aye'' were Senators Roth, Stevens, Cohen, Thompson, Cochran, Grassley, Smith, Glenn, and Nunn (with Senators McCain and Dorgan voting
``aye'' by proxy). Voting ``nay'' were Senators Levin, Pryor, Lieberman, and Akaka.
IV. SECTION-BY-SECTION ANALYSIS
S. 1 sets up a legislative and regulatory framework that is based on three relatively simple concepts:
To better understand the impact of Federal mandates on State, local and tribal governments, and on the private sector, before policymakers act in either the Congress or the Executive Branch.
To ensure that the needs and views of State and local governments are given full consideration before the Congress or the Executive Branch imposes new Federal mandates without funding.
To establish a point of order in the Congress against unfunded federal mandates on State, local and tribal governments.
A more detailed description of the most important provisions in the bill follows below.
Section 1. Short Title
This section identifies the short title as the ``Unfunded Mandate Reform Act of 1995.''
Section 2. Purposes
This section establishes the purposes of the Act.
Section 3. Definitions
This section breaks the definition of Federal mandates into two components: Federal intergovernmental mandates and Federal private sector mandates.
The section amends the Congressional Budget and Impoundment Control Act of 1974, by adding several new definitions. It stipulates that a ``Federal intergovernmental mandate'' means any legislation, or a provision therein, or regulation that imposes a legally binding duty on State, local or tribal governments. This would include legislation or regulation that seeks to eliminate or reduce the authorization of appropriations of Federal financial assistance to State, local and tribal governments should they not comply with that legislation's or regulation's duties. The subsection also provides that legislation or regulation would be considered a Federal intergovernmental mandate if it sought to reduce or eliminate an existing authorization of appropriations for the purposes of complying with some previously imposed duty. The Committee believes that if the Federal Government imposes legally binding duties on State, local or tribal governments, and provides financial assistance to them to carry out or comply with those duties, then S. 1's provisions should apply if the Federal government subsequently reduces the authorization of that aid, while continuing to keep the existing duties in place. Exempted from the provisions of this subsection is legislation or regulation that authorizes or implements a voluntary discretionary aid program to State, local and tribal governments that has requirements or conditions of participation specific to that program.
Included, as part of the definition of Federal intergovernmental mandates, are Federal entitlement programs that provide $500 million or more annually to State, local or tribal governments. This would currently include nine large Federal entitlement programs, seven of which are either exempt from sequestration or subject to a special rule under the Budget Act. The nine are: Medicaid; AFDC; Child Nutrition; Food Stamps; Social Security Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and, Child Support Enforcement. Any legislation or regulation would be considered a Federal intergovernmental mandate if it: (a) increases the stringency of State, local or tribal government participation in any one of these nine programs, or (b) caps or decreases the Federal government's responsibility to provide funds to State, local or tribal governments to implement the program, including a shifting of costs from the Federal government to those governments. The legislation or regulation would not be considered a Federal intergovernmental [[Page S649]] mandate if it allows those governments the flexibility to amend their specific programmatic or financial responsibilities within the program while still remaining eligible to participate in that program. In addition to the nine previously-mentioned programs, also included are any new Federal-State-local entitlement programs (above the $500 million threshold) that may be created after the enactment of this Act. The Committee has included this provision in the legislation because of its concern over past and possible future shifting of the costs of entitlement programs by the Federal government onto State governments.
``Federal private sector mandate'' is defined to include any legislation, or a provision therein, that imposes a legally binding duty on the private sector.
``Direct costs'' is defined to mean aggregate estimated amounts that State, local and tribal governments, and the private sector will have to spend in order to comply with a Federal mandate. Direct costs of Federal mandates are net costs; estimated savings will be subtracted from total costs. Further, direct costs do not include costs that State, local and tribal governments and the private sector currently incur or will incur to implement the requirements of existing Federal law or regulation. In addition, the direct costs of a Federal mandate must not include costs being borne by those governments and the private sector as the result of carrying out a State or local government mandate. Finally, the Committee intends that direct costs be calculated on the assumption that State, local and tribal governments and the private sector are in compliance with relevant codes and standards of practice established by recognized professional organizations or trade associations.
``Private sector'' is defined to cover all persons or entities in the United States except for State, local or tribal governments. It includes individuals, partnerships, associations, corporations, and educational and nonprofit institutions.
Independent regulatory agencies are excluded from the definition of a Federal ``agency''. The definition of ``small government'' is made consistent with existing Federal law which classifies a government as small if its population is less than 50,000. ``Tribal government'' is defined according to existing law.
Section 4. Exclusions
The Committee believes that several types of unfunded mandates should be properly excluded from the requirements of this Act. These include Federal legislation or regulation that: enforces constitutional rights of individuals; establishes or enforces statutory rights to prohibit discrimination on the basis of race, religion, gender, national origin, or handicapped or disability status; requires compliance with Federal auditing and accounting procedures; provides emergency relief assistance or is designated as emergency legislation; and, is necessary for national security or ratification or implementation of international treaties.
A number of these exemptions are standard in many pieces of legislation in order to recognize the domain of the President in foreign affairs and as Commander-in-Chief as well as to ensure that Congress' and the Executive Branch's hands are not tied with procedural requirements in times of national emergencies. Further, the Committee thinks that Federal auditing, accounting and other similar requirements designed to protect Federal funds from potential waste, fraud, and abuse should be exempt from the Act.
The Committee recognizes the special circumstances and history surrounding the enactment and enforcement of Federal civil rights laws. During the middle part of the 20th century, the arguments of those who opposed the national, uniform extension of basic equal rights, protection, and opportunity to all individuals were based on a States rights philosophy. With the passage of the Civil Rights Acts of 1957 and 1964 and the Voting Rights Act of 1965, Congress rejected that argument out of hand as designed to thwart equal opportunity and to protect discriminatory, unjust and unfair practices in the treatment of individuals in certain parts of the country. The Committee therefore exempts Federal civil rights laws from the requirements of this Act.
Section 5. Agency Assistance
Under this section, the Committee intends for Federal agencies to provide information, technical assistance, and other assistance to the Congressional Budget Office (CBO) as CBO might need and reasonably request that might be helpful in preparing the legislation cost estimates as required by Title I. Through the implementation of various Presidential Executive Orders over the last decade, agencies have developed a wealth of expertise and data on the cost of legislation and regulation on State, local and tribal government and the private sector. CBO should be able to tap into that expertise in a useful and timely manner. Other Congressional support agencies may also have developed information on cost estimates and the estimating process which might be helpful to CBO in performing its duties. CBO should not attempt to duplicate analytical work already being done by the other support agencies, but rather use as needed that information.
Title I--Legislative Accountability and Reform
Section 101. Legislative mandate accountability and reform
This section amends title IV of the Congressional Budget and Impoundment Control Act of 1974 by creating a new section 408 on Legislative Mandate Accountability and Reform. Subsection (a) establishes procedures and requirements for Committee reports accompanying legislation that imposes a Federal mandate. It requires a committee, when it orders reported legislation containing Federal mandates, to promptly provide the reported bill to CBO so that it can be scored. The Committee is concerned that the CBO scoring process not unnecessarily impede or slow the legislative process. With this view in mind, the Committee would urge the relevant authorizing committees to work closely with CBO during the committee process to ensure that legislation containing federal mandates, as well as possible related amendments to be offered in markup, be scored in a timely fashion.
The committee report shall include: an identification and description of Federal mandates in the bill, including an estimate of their expected direct costs to State, local and tribal governments and the private sector, and a qualitative assessment of the costs and benefits of the Federal mandates, including their anticipated costs and benefits to human health and safety and protection of the natural environment. If a mandate affects both the public and the private sectors, and it is intended that the Federal Government pay the public sector costs, the report should also state what effect, if any, this would have on any competitive balance between government and privately owned business.
Some Federal mandates will affect both the public and private sectors in similar, and in some cases nearly identical, ways. For example, the costs of compliance with minimum wage laws or environmental standards for landfill operations or municipal waste incinceration are incurred by both sectors. There has been some concern expressed that subsidization of the public sector in these cases could create a competitive advantage for activities owned by State, local or tribal governments in those areas where they compete with the private sector. In any instance where this might be the case, Congress should be aware of that impact and the effect on the continuing ability of private enterprises to remain viable, and carefully consider whether the granting of a competitive advantage to the public sector is fair and appropriate.
For Federal intergovernmental mandates, Committee reports must also contain a statement of the amount, if any, of increased authorization of Federal financial assistance to fund the costs of the intergovernmental mandates.
This section also requires the authorizing Committee to state in the report whether it intends the Federal intergovernmental mandate to be funded or not. There may be occasions when a Committee decides that it is entirely appropriate that State, local or tribal governments should bear the cost of a mandate without receiving Federal aid. If so, the Committee report should state this and give an explanation for it. Likewise, the Committee report must state the extent to which the reported legislation preempts State, local or tribal law, and, if so, explain the reasons why. To the maximum extent possible, this intention to preempt should also be clear in the statutory language.
Also set out in this section are procedures to ensure that the Committee publishes the CBO cost estimate, either in the Committee report or in the Congressional Record prior to floor consideration of the legislation.
Duties of the Director
New section 408(b) of the Congressional Budget and Impoundment Control Act requires that the Director of CBO analyze and prepare a statement on all bills reported by committees of the Senate or House of Representatives other than appropriations committees. This subsection stipulates, first, that the Director of CBO must estimate whether all direct costs of Federal intergovernmental mandates in the bill will equal or exceed a threshold of $50,000,000 annually. If the Director estimates that the direct costs will be below this threshold, the Director must state this fact in his statement on the bill, and must briefly explain the estimate. (Although this provision requires only a determination by CBO that the threshold will not be equalled or exceeded, if, in cases below the threshold, the Director actually estimates the amount of direct costs, the Committee expects that he will include that estimate in his explanatory statement.) If the Director estimates that the direct costs will equal or exceed the threshold, the Director must so state and provide an explanation, and must also prepare the required estimates.
In estimating whether the threshold will be equalled or exceeded, the director must consider direct costs in the year when the Federal intergovernmental mandate will first be effective, plus each of the succeeding four fiscal years. In some cases, the new duties or conditions that constitute the mandate will not become effective against State, local and tribal governments when the statute becomes effective, but will become effective when the implementing regulations become effective. In such cases, the Director must consider direct costs in the first fiscal year when the regulations are to become effective, and each of the next four fiscal years.
The $50,000,000 threshold in this legislation for Federal intergovernmental mandates is [[Page S650]] significantly lower than the threshold of $200,000,000 in the State and Local Cost Estimate Act of 1981 (2 U.S.C. 403(c)). The threshold in the 1981 Act also included a test of whether the proposed legislation is likely to have an exceptional fiscal consequence for a geographic region or a level of government. The Committee believes that, in the context of this present legislation, applying a threshold for specific geographic regions or levels of government would be too subjective or too complex. However, the significantly lowered threshold of S. 1 should provide an extra margin of protection for particular geographic regions or levels of government affected by Federal intergovernmental mandates.
If the Director determines that the direct costs of the Federal intergovernmental mandates will equal or exceed the threshold, he must make the required additional estimates and place them in the statement. These additional estimates may be summarized as follows:
An estimate of the total amount of direct costs of the Federal intergovernmental mandates. This is an aggregate amount, broken out on an annual basis over the 5-year period.
An estimate of any increase in the bill in authorization of appropriations for Federal financial assistance programs usable by the State, local, and tribal governments for activities subject to the Federal intergovernmental mandates.
The amount of increase in authorization of appropriations would be calculated, as the sum of the increased budget authority of any Federal grant assistance, plus the increased subsidy amount of any loan guarantees or direct loans.
The Director of CBO must also estimate first whether all direct costs of Federal private sector mandates in the bill will equal or exceed a threshold of $200,000,000 annually. In making this estimate, the Director must consider direct costs in the year when the Federal private sector mandate will first be effective, plus each of the succeeding four fiscal years. In some cases, the new duties or conditions that constitute the mandate will not become effective for the private sector when the statute becomes effective, but will become effective when the implementing regulations become effective. In such cases, the Director must consider direct costs in the first fiscal year when the regulations become effective, and each of the next four fiscal years. If the Director estimates that the direct costs will equal or exceed the threshold, the Director must so state and provide an explanation, and must also prepare the required estimates. These additional estimates may be summarized as follows:
An estimate of the total amount of direct costs of the Federal private sector mandates. This is an aggregate amount, broke out annually over the 5-year period.
An estimate of any increase in the bill in authorization of appropriations for Federal financial assistance programs usable by the private sector for activities subject to the Federal private sector mandates.
If the Director determines that it is not feasible for him to make a reasonable estimate that would be required with respect to Federal private sector mandates, the Director shall not make the estimate, but shall report in the statement that the reasonable estimate cannot be reasonably made. No corresponding section applies for Federal intergovernmental mandates.
If the Director estimates that the direct costs of a Federal mandate will be below the specified threshold, the Director must state this fact in his statement on the bill, and must briefly explain the estimate. (Although this provision requires only a determination from CBO of whether the threshold will or will not be exceeded, if, in cases below the threshold, the Director actually estimates the amount of direct costs, the Committee expects that he will include this estimate in his explanatory statement.)
Point of order in the Senate
This section provides that a point of order lies against any bill or joint resolution reported by a committee that contains a Federal mandate, but does not contain a CBO estimate of the mandate's direct costs. A point of order would also lie against any bill, joint resolution, amendment, motion, or conference report that increased the costs of a Federal intergovernmental mandate by an amount that caused the $50,000,000 threshold to be exceeded, unless that same amount were fully funded to State, local and tribal governments.
Such action would have to specify that the funding of the mandate's full costs would be by way of; (1) an increase in entitlement spending with a resulting increase in the Federal budget deficit, (2) an increase in direct spending paid for by an increase in tax receipts, or (3) an increase in the authorization of appropriations.
If the third alternative is used (authorization of appropriations), the specific appropriation bill that is expected to provide funding must be identified. The mandate legislation must also designate a responsible Federal agency that shall either: implement an appropriately less costly mandate if less than full funding is ultimately appropriated
(pursuant to criteria and procedures also provided in the mandate legislation), or declare such mandate to be ineffective. In other words, the authorizing committee should expect that unless it expressly plans otherwise, its mandate will be voided if the appropriations committee at any point in the future under-funds the mandate. Therefore, if a ``less money, less mandate'' alternative is both feasible and desired, it is incumbent upon the authorizing committee to specify how the agency shall implement that alternative.
Appropriations bills are not subject to a point of order under this section. If such a bill did seek to impose a federal mandate, it would likely be subject to the point of order that lies against legislating on an appropriations bill.
The Committee expects that during those instances when the Parliamentarian must rule on a point of order under this section, there may be occasions when there is a need for consultation regarding the applicability of this Act. This section provides that on all such questions that are not within the purview of either the House or Senate Budget Committee, it is the Senate Governmental Affairs Committee or House Government Reform and Oversight Committee that shall make the final determination. For example, on the question of whether a particular mandate is properly excluded from coverage of the Act as bill which enforces constitutional rights of individuals, the Governmental Affairs Committee would be the appropriate committee to consult. On a question regarding the particular cost of such a mandate, the Budget Committee would be the appropriate committee.
Section 102. Enforcement in the House of Representatives
This section specifies the procedures to be followed in the House of Representatives in enforcing the provisions of this Act.
Section 103. Assistance to committees and studies
This section requires the Director of CBO to consult with and assist committees of the Senate and the House of Representatives, at their request, in analyzing proposed legislation that may have a significant budgetary impact on State, local or tribal governments or a significant financial impact on the private sector. It provides for the assistance that committees will need for CBO to fulfill their obligations under the provisions of S. 1.
This section also states that CBO should set up a process to allow meaningful input from those knowledgeable, affected, and concerned about the Federal mandates in question. One possible way to establish this process is through the formation of advisory panels made up to relevant outside experts. The Committee leaves it to the discretion of the Director as to when and where it is appropriate to form an advisory panel; however, the Committee does encourage the Director to form these panels where feasible and helpful in performing the requisite studies. The membership of the panels should represent a fair balance of interests and constituencies, as well as include those expert in the areas of economic and budgetary analysis, but the Committee believes that when the Director convenes an advisory panel, he should appoint State, local or tribal officials (including their designated representatives) to the panels.
This section encourages authorizing committees to take a prospective look at the impact of Federal intergovernmental and private sector mandates before considering new legislation. It stipulates that committees should request that CBO undertake studies in the early part of each Congress of the potential budgetary and financial impact of Federal mandates in major legislation expected to be considered in that Congress.
Section 104. Authorization of appropriations
This paragraph authorizes appropriations for CBO of
$4,500,000 per year for FY 1996 through 2002. The Committee recognizes that additional resources and personnel are needed for CBO to fully perform its duties under this Act along with continuing to carry out its current responsibilities. The Committee understands that the current policy and practice at CBO is to rely on in-house personnel to conduct studies and cost estimates, rather than contracting these duties to outside entities. The Committee supports this policy and urges the Appropriations Committee, in funding this authorization, to increase CBO's authority to hire additional personnel in order to fulfill its new duties under this Act.
Section 105. Exercise of rulemaking powers
This section provides that the terms of title I are enacted as an exercise of the rulemaking power of the Senate and the House of Representatives, and that either house may change such rules at any time.
Section 106. Repeal of the State and Local Cost Estimate Act of 1981
This paragraph rescinds the provisions of the State and Local Cost Estimate Act of 1981.
Section 107. Effective date
Title I will take effect on January 1, 1996 and apply only to legislation introduced on or after that date. This is to give CBO the time to develop the proper methodologies and analytical techniques in order to develop a more thorough cost estimating process, as well as to give Congress opportunity to provide adequate resources to CBO in the annual appropriations process.
Title II--Regulatory Accountability and Reform
Section 201. Regulatory process
Under this section, agencies must assess the effects of their regulations on State, local and tribal governments, and the private sector, including resources available to
[[Page S651]] carry out Federal intergovernmental mandates contained in those regulations. In keeping with both statutory and regulatory objectives, agencies shall seek ways to minimize regulatory burdens that significantly effect State, local and tribal governments.
Subsection (b) requires agencies to develop an effective process to permit elected officials of those governments (or their designated representatives) to provide meaningful and timely input into the development of regulatory proposals that contain significant Federal intergovernmental mandates. This provision mirrors Section 1(b) of President Clinton's Executive Order 12875--``Enhancing the Intergovernmental Partnership''--which seeks to establish a closer partnership between Federal agencies and elected and other State, local and tribal officials in the regulatory process. The Committee expects agencies to fully and faithfully implement this section as well as the other provisions in the E.O. On January 11, 1994, OMB Director Leon Panetta and OIRA Administrator Sally Katzen issued guidance on the implementation of the E.O. Concerning Section 1 of the E.O., that guidance states, ``intergovernmental consultation should take place as early as possible, and preferably before publication of the notice of proposed rulemaking or other regulatory action proposing the mandate. Consultations may continue after publication of the regulatory action initiating the proposal, but in any event they must occur
`prior to the formal promulgation' in final form of the regulatory action `containing the proposed mandate.''' Early and extensive intergovernmental consultation can help promote the development of more cost-effective Federal regulation as well as help all the participants in the process reach a better understanding of the proper needs and responsibilities of each level of government in implementing or complying with a Federal requirement.
OMB's guidance also outlines with whom agencies should consult in State, local and tribal government. The Committee feels strongly that agencies should follow the OMB guidance concerning consultation with elected officials, including their representatives, from all levels of smaller governments because these officials are responsible for balancing the competing claims on the government's revenue base from many program responsibilities. The OMB guidance further discusses how Federal agencies should also confer with the designated representatives of elected officials as well as with program and financial officials from State, local and tribal governments. program officials clearly are able to offer information and guidance to their Federal counterparts on the likely effectiveness of any Federal regulatory proposal, while financial officials can offer important perspectives on their government's ability to pay for the mandate. In consulting with financial officials, Federal agencies should look to the applicable treasury, budget, tax-collection, or other financial officers in State, local and tribal governments.
Subsection (b) also states that the intergovernmental consultations should be consistent with the requirements established in existing Federal law governing the regulatory process. In particular, the Committee believes that agencies must ensure that the consultation process not subvert or violate in any way the public disclosure and sunshine provisions of existing law and Executive Order, including the Administrative Procedure Act.
Subsection (c)(1) has agencies establishing plans to inform, advice, involve and consult with small governments before implementing regulations that might significantly or uniquely affect those governments. The Committee believes that Federal agencies should undertake a special effort to ensure that officials from small governments have an opportunity for significant input into the regulatory process. According to the Census Bureau, small governments
(population below 50,000) make up 97 percent of all general purpose governments in the United States. A full 67 percent of all general purpose governments serve fewer than 2,500 people. Yet despite their prevalence, small governments have a relatively small presence in the Nation's Capital where Federal regulatory policies and decisions are made. It is the Committee's sense that Federal agencies have not always been aware of, or have adequately considered, small governments' capabilities in implementing certain regulatory requirements. This has resulted in the promulgation of regulations in certain cases that have not only over-burdened small governments to the point of widespread non-compliance, but in so doing fails to achieve those regulations' goals and objectives. The Committee believes that one way to achieve the twin goals of more cost-effective regulation and greater rates of compliance on significant regulations that impact small governments is for agencies to establish plans for outreach to small governments. Such plans might incorporate activities such as greater technical assistance to small governments; regional planning activities, conferences, and workshops; and establishment of small government advisory committees, or appointment of small government representatives on existing advisory committees. One good approach is embodied in the recommendations of the National Performance Review Report for the Environmental Protection Agency. The NPR EPA Report recommends that the agency convene a series of town meetings across the United States to discuss more flexible ways to achieve environmental protection.
Section 202. Statements to accompany significant regulatory actions
This section states that before a Federal agency promulgates any final rule or notice of proposed rulemaking that includes any intergovernmental mandate that is estimated to result in an annual aggregate expenditure of $100,000,000 or more by State, local or tribal governments, and the private sector, the agency must complete a written statement containing the following:
Estimates of the anticipated costs to State, local and tribal governments, and the private sector, of compliance with the mandate, including the availability of Federal funds to pay for those costs;
Future costs of Federal intergovernmental mandate not estimated above, including estimates of any disproportionate budgetary effects on any particular regions of the United States or on particular States, local governments, tribal governments, urban or rural or other types of communities;
A qualitative, and if possible, a quantitative assessment of costs and benefits anticipated from any Federal intergovernmental mandate, including enhancement of public health and safety and protection of the natural environment;
An estimate of the effect on the national economy of the mandate's impact on private sector costs;
A description and summary of input, comments, and concerns received from State, local and tribal government elected officials; and,
A summary of the agency's evaluation of those comments and concerns, and the agency's position supporting the need to issue the regulation containing the Federal intergovernmental mandates.
Subsection (b) requires agencies to summarizes their written statements and include that summary in the promulgation of the notice of proposed rulemaking and in the final rule. Subsection (c) states that preparation of the written statements may be done in conjunction with other analyses. This subsection ensures that agency actions be compatible with the regulatory planning and coordination provisions of the President's scheme for regulatory review as governed by Executive Order 12866--Regulatory Planning and Review.
The Committee believes that proper agency assessment of the impact of major regulations on State, local and tribal governments can lead to better and more cost-effective Federal regulation as well as reduce unreasonable burdens on smaller governments. The spirit and intent of this section is meant to be entirely consistent with the relevant portions of E.O. 12866. As part of its principles, the E.O. states,
``each agency shall assess the effects of Federal regulations on State, local, and tribal governments, including specifically the availability of resources to carry out those mandates, and seek to minimize those burdens that uniquely or significantly affect such governmental entities, consistent with achieving regulatory objectives. In addition, as appropriate, agencies shall seek to harmonize Federal regulatory actions with related State, local, and tribal regulatory and other governmental functions.'' The Committee strongly endorses these principles and supports their full implementation.
Section 203. Assistance to the Congressional Budget Office
This section requires the Director of the Office of Management and Budget to collect the written statements prepared by agencies under Section 202 and submit them on a timely basis to CBO. The reason for this section is that CBO may find useful agency assessments and analyses in performing the required cost estimates on legislation. As OMB already collects these assessments and related information from all agencies under Executive Order authority, it makes good sense that OMB also supply that information to CBO as a matter of routine.
Section 204. Pilot program on small government flexibility
This section requires OMB, in consultation with Federal agencies, to establish at least two pilot programs to test innovative and more flexible regulatory approaches that reduce reporting and compliance burdens on small governments while continuing to meet overall statutory goals and objectives.
The Committee believes that Federal agencies should experiment with some new and innovative approaches on regulations that affect small governments. Such a pilot program would embody some of the recommendations of the Vice President's National Performance Review. For example, the NPR report for the Environmental Protection Agency recommends that the agency establish a pilot project to assist a community in assessing its environmental and community health risks and how to direct resources to priority problems. The Committee's wish is that similar sorts of initiatives be tried by at least one other agency.
title iii--baseline study
Section 301. Baseline study of costs and benefits
This section establishes a Commission on Unfunded Federal Mandates.
Section 302. Report on unfunded Federal mandates by the Commission
This section provides that the Commission shall review the role and impact of unfunded Federal mandates in intergovernmental relations, and make recommendations to the President and Congress on how State and [[Page S652]] local governments can participate in meeting national objectives without the burden of such mandates. It shall also make recommendations on how to allow more flexibility in complying with mandates, reconcile conflicting mandates, terminate obsolete ones, and simply reporting and other requirements. The Commission shall first develop criteria for evaluating unfunded mandates, and then shall publish a preliminary report on its activities under this title within 9 months of the enactment of this Act. A final report shall be submitted within 3 months of the preliminary report.
Section 303. Membership
This section provides that the Commission shall be composed of 9 members--3 appointed by the Speaker of the House of Representatives (in consultation with the minority leader), 3 by the majority leader of the Senate (in consultation with the minority leader), and 3 by the President. No Member or employee of Congress may be a member of the Commission.
Section 304. Director and staff of commission; experts and consultants
This section provides for the appointment of the staff and Director of the Commission, without regard to certain Civil Service rules. It also grants the Commission the authority to hire on a temporary basis the services of experts and consultants for purposes of carrying out this title, as well as the right to receive detailees from Federal agencies on a reimbursable basis, if approved by the agency head.
Section 305. Powers of commission
This section provides the Commission with the authority to hold hearings, obtain official data, use the U.S. mails, acquire administrative support services from the General Services Administration, and contract for property and services.
Section 306. Termination
The Commission shall terminate 90 days after submitting its final report.
Section 307. Authorization of appropriations
This section authorizes the appropriation to Commission of
$1 million.
Section 308. Definition
This section defines the term ``unfunded federal mandate'', as used in title III.
title iv--judicial review
Section 401. Judicial review
This section provides that nothing under the Act shall be subject to judicial review, that no provisions of the Act shall be enforceable in an administrative or judicial action, and that no ruling or determination under the Act shall be considered by any court in determining the intent of Congress or for any other purpose.
v. regulatory impact statement
Paragraph 11(b) of Rule XXVI of the Standing Rules of the Senate requires Committee reports to evaluate the legislation's regulatory, paperwork, and privacy impact on individuals, businesses, and consumers.
S. 1 addresses Federal government process, not output. It will directly affect and change both the legislative and regulatory process. It will not have a direct regulatory impact on individuals, consumers, and businesses as these groups are not covered by the bill's requirements.
However, the implementation of S. 1 will likely have an indirect regulatory impact on these groups since a primary focus of the bill is to ensure that Congress assess the cost impact of new legislation on the private sector before acting. In so much as information on private sector costs of any particular bill or resolution may influence its outcome during the Congressional debate, it is possible that this bill may ease the regulatory impact on the private sector--both on individual pieces of legislation as well as overall. However, it is impossible at this time to determine with any specificity what that level of regulatory relief may be.
S. 1 does address the Federal regulatory process in three ways: (1) It requires agencies to estimate the costs to State, local and tribal governments of complying with major regulations that include Federal intergovernmental mandates;
(2) It compels agencies to set up a process to permit State, local and tribal officials to provide input into the development of significant regulatory proposals; and (3) It requires agencies to establish plans for outreach to small governments.
However, with the exception of the third provision, the bill will not impose new requirements for agencies to implement in the regulatory process that are not already required under Executive Orders 12866 and 12875. The bill merely codifies the major provisions of the E.O.s that pertain to smaller governments.
The legislation will have no impact on the privacy of individuals. Nor will it add additional paperwork burdens to businesses, consumers and individuals. To the extent that CBO and Federal agencies will need to collect more data and information from State, local and tribal governments and the private sector, as they conduct their requisite legislative and regulatory cost estimates, it is possible that those entities will face additional paperwork. However, although smaller governments are certainly encouraged to comply with agency and CBO requests for information, they are not bound to.
VI. CBO COST ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 9, 1995.Hon. William V. Roth,Chairman, Committee on Governmental Affairs, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1, the Unfunded Mandate Reform Act of 1995.
Enactment of S. 1 would not affect direct spending on receipts. Therefore, pay-as-you-go procedures would not apply to the bill.
If you wish further details on this estimate, we will be pleased to provide them.
Sincerely,
Robert D. Reischauer.
Enclosure.
Congressional Budget Office Cost Estimate--January 9, 1995
1. Bill number: S. 1.
2. Bill title: Unfunded Mandate Reform Act of 1995.
3. Bill status: As ordered reported by the Senate Committee on Governmental Affairs on January 9, 1995.
4. Bill purpose: S. 1 would require authorizing committees in the House and Senate to include in their reports on legislation a description and an estimate of the cost of any federal mandates in that legislation, along with an assessment of their anticipated benefits. Mandates are defined to include provisions that impose duties on states, localities, or Indian tribes (``intergovernmental mandates'') or on the private sector (``private sector mandates''). Mandates also would include provisions that reduce or eliminate any authorization of appropriations to assist state, local, and tribal governments or the private sector in complying with federal requirements, unless the requirements are correspondingly reduced. In addition, intergovernmental mandates would include changes in the conditions governing certain types of entitlement programs (for example, Medicaid). Conditions of federal assistance and duties arising from participation in most voluntary federal programs would not be considered mandates.
Committee reports would have to provide information on the amount of federal financial assistance that would be available to carry out any intergovernmental mandates in the legislation. In addition, committees would have to note whether the legislation preempts any state or local laws. The requirements of the bill would not apply to provisions that enforce the constitutional rights of individuals, that are necessary for national security, or that meet certain other conditions.
The Congressional Budget Office (CBO) would be required to provide committees with estimates of the direct cost of mandates in reported legislation other than appropriation bills. Specific estimates would be required for intergovernmental mandates costing $50 million or more and, if feasible, for private sector mandates costing $200 million or more in a particular year. (CBO currently prepares estimates of costs to states and localities of reported bills, but does not project costs imposed on Indian tribes or the private sector.) In addition, CBO would probably be asked to assist the Budget Committees by preparing estimates for amendments and at later stages of a bill's consideration. Also, at times other than when a bill is reported, when requested by Congressional committees, CBO would analyze proposed legislation likely to have a significant budgetary or financial impact on state, local, or tribal governments or on the private sector, and would prepare studies on proposed mandates. S. 1 would authorize the appropriations of $4.5 million to CBO for each of the fiscal years 1996-2002 to carry out the new requirements. These requirements would take effect on January 1, 1996, and would be permanent.
S. 1 would amend Senate rules to establish a point of order against any bill or joint resolution reported by an authorizing committee that lacks the necessary CBO statement or that results in direct costs (as defined in the bill) of
$50 million or more in a year to state, local, and tribal governments. The legislation would be in order if it provided funding to cover the direct costs incurred by such governments, or if it included an authorization of appropriations and identified the minimum amount that must be appropriated in order for the mandate to be effective, the specific bill that would provide the appropriation, and a federal agency responsible for implementing the mandate.
Finally, S. 1 would require executive branch agencies to take actions to ensure that state, local, and tribal concerns are fully considered in the process of promulgating regulations. These actions would include the preparation of estimates of the anticipated costs of regulations to state, localities, and Indian tribes, along with an assessment of the anticipated benefits. In addition, the bill would authorize the appropriation of $1 million, to be spent over fiscal years 1995 and 1996, for a temporary Commission on Unfunded Federal Mandates, which would recommend ways to reconcile, terminate, suspend, consolidate, or simplify federal mandates.
5. Estimated cost to the Federal Government:
------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------------------------------------------------------------------------
Congressional Budget Office:
Authorization of
Appropriations............. ..... 4.5 4.5 4.5 4.5 4.5
Estimated Outlays........... ..... 4.0 4.4 4.4 4.4 4.4
Commission on Unfunded Federal
Mandates:
Authorization of
Appropriations............. 1.0 ..... ..... ..... ..... .....
[[Page S653]]Estimated
Outlays.................... 0.4 0.6 ..... ..... ..... .....
Bill Total:
Authorization of
Appropriations............. 1.0 5.5 4.5 4.5 4.5 4.5
Estimated Outlays........... 0.4 4.6 4.4 4.4 4.4 4.4
------------------------------------------------------------------------
The costs of this bill fall within budget function 800.
Basis of estimate: CBO assumes that the specific amounts authorized will be appropriated and that spending will occur at historical rates.
We estimate that executive branch agencies would incur no significant additional costs in carrying out their responsibilities associated with the promulgation of regulations because most of these tasks are already required by Executive Orders 12875 and 12866.
6. Comparison with spending under current law: S. 1 would authorize additional appropriations of $4.5 million a year for the Congressional Budget Office beginning in 1996. CBO's 1995 appropriation is $23.2 million. If funding for current activities were to remain unchanged in 1996, and if the full additional amount authorized were appropriated, CBO's 1996 appropriation would total $27.7 million, an increase of 19 percent.
Because S. 1 would create the Commission on Unfunded Federal Mandates, there is no funding under current law for the commission.
7. Pay-as-you-go considerations: None.
8. Estimated cost to State and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: None.
11. Estimate prepared by: James Hearn.
12. Estimate approved by: Paul Van de Water, Assistant Director for Budget Analysis.
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