    [Senate Hearing 106-196]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 106-196

                                   FEDERALISM

    =======================================================================

                                    HEARINGS

                                   BEFORE THE

                                  COMMITTEE ON
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED SIXTH CONGRESS

                                 FIRST SESSION

                                   ----------

                                  MAY 5, 1999
                            THE STATE OF FEDERALISM

                                  MAY 6, 1999
                          FEDERALISM AND CRIME CONTROL

                                 JULY 14, 1999
               S. 1214--THE FEDERALISM ACCOUNTABILITY ACT OF 1999

                                   ----------

          Printed for the use of the Committee on Governmental Affairs

    159-454 cc                    WASHINGTON : 1999
    _______________________________________________________________________
    For sale by the Superintendent of Documents, Congressional Sales Office
             U.S. Government Printing Office, Washington, DC 20402

                       COMMITTEE ON GOVERNMENTAL AFFAIRS

                       FRED THOMPSON, Tennessee, Chairman
    WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
    TED STEVENS, Alaska                  CARL LEVIN, Michigan
    SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
    GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
    PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
    THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
    ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
    JUDD GREGG, New Hampshire
                 Hannah S. Sistare, Staff Director and Counsel
                          Paul R. Noe, Senior Counsel
          Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                      Lawrence B. Novey, Minority Counsel
                     Darla D. Cassell, Administrative Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Thompson............................................. 1, 57, 95
        Senator Lieberman............................................    13
        Senator Voinovich............................................16, 72
        Senator Edwards..............................................    32
        Senator Durbin...............................................    69
        Senator Roth.................................................   114
    Prepared statements:
        Senator Collins..............................................     2
        Senator Levin................................................ 2, 96
        Senator Lieberman............................................    58
        Senator Voinovich............................................    97

                                   WITNESSES
                             Wednesday, May 5, 1999

    Hon. Tommy G. Thompson, Governor, State of Wisconsin, and
      President, Council of State Governments........................     4
    Hon. Michael O. Leavitt, Governor, State of Utah, and Vice Chair,
      National Governors' Association................................     8
    Hon. Daniel T. Blue, Jr., Majority Leader, North Carolina House
      of Representatives, and President, National Conference of State
      Legislatures...................................................    21
    Hon. Clarence E. Anthony, Mayor, City of South Bay, Florida, and
      President, National League of Cities...........................    24
    John O. McGinnis, Professor of Law, Benjamin N. Cardozo Law
      School, Yeshiva University.....................................    37
    William A. Galston, Professor, School of Public Affairs,
      University of Maryland at College Park.........................    40

                             Thursday, May 6, 1999

    Hon. Edwin Meese III, Former Attorney General of the United
      States, Ronald Reagan Distinguished Fellow in Public Policy,
      The Heritage Foundation, and Chair, ABA Task Force on the
      Federalization of Criminal Law.................................    59
    Hon. Gilbert S. Merritt, Judge, U.S. Court of Appeals for the
      Sixth Circuit, Nashville, Tennessee............................    64
    Hon. John M. Dorso, Majority Leader, North Dakota House of
      Representatives, on behalf of the National Conference of State
      Legislatures...................................................    80
    Gerald B. Lefcourt, Immediate Past President and Chair,
      Legislative Committee, National Association of Criminal Defense
      Lawyers........................................................    82
    John S. Baker, Jr., Dr. Dale E. Bennett Professor of Law,
      Louisiana State University Law Center..........................    85

                            Wednesday, July 14, 1999

    Hon. John T. Spotila, Administrator, Office of Information and
      Regulatory Affairs, Office of Management and Budget............    98
    Randolph D. Moss, Acting Assistant Attorney General, Office of
      Legal Counsel, U.S. Department of Justice......................   101
    Hon. Thomas R. Carper, Governor, State of Delaware, and Chairman,
      National Governors' Association................................   115
    Hon. John M. Dorso, Majority Leader, North Dakota House of
      Representatives, on behalf of the National Conference of State
      Legislatures...................................................   121
    Alexander G. Fekete, Mayor, Pembroke Pines, Florida, on behalf of
      the National League of Cities..................................   125
    Ernest Gellhorn, Professor of Law, George Mason University.......   130
    Caleb E. Nelson, Associate Professor of Law, University of
      Virginia School of Law.........................................   132
    Rena Steinzor, Associate Professor, University of Maryland School
      of Law.........................................................   134

                         Alphabetical List of Witnesses

    Anthony, Hon. Clarence E.:
        Testimony....................................................    24
        Prepared statement...........................................   171
    Baker, Jr., John S.:
        Testimony....................................................    85
        Prepared statement, May 6, 1999..............................   266
        Prepared statement, July 14, 1999............................   409
    Blue, Jr., Hon. Daniel T.:
        Testimony....................................................    21
        Prepared statement...........................................   163
    Carper, Hon. Thomas R.:
        Testimony....................................................   115
        Prepared statement...........................................   306
    Dorso, Hon. John M.:
        Testimony, May 6, 1999.......................................    80
        Prepared statement, May 6, 1999..............................   251
        Testimony, July 14, 1999.....................................   121
        Prepared statement, July 14, 1999............................   324
    Fekete, Alexander G.:
        Testimony....................................................   125
        Prepared statement...........................................   340
    Galston, William A.:
        Testimony....................................................    40
        Prepared statement...........................................   195
    Gellhorn, Ernest:
        Testimony....................................................   130
        Prepared statement...........................................   355
    Leavitt, Hon. Michael O.:
        Testimony....................................................     8
        Prepared statement...........................................   153
    Lefcourt, Gerald B.:
        Testimony....................................................    82
        Prepared statement...........................................   260
    McGinnis, John O.:
        Testimony....................................................    37
        Prepared statement...........................................   180
    Meese III, Hon. Edwin:
        Testimony....................................................    59
        Prepared statement...........................................   239
    Merritt, Hon. Gilbert S.:
        Testimony....................................................    64
        Prepared statement...........................................   247
    Moss, Randolph D.:
        Testimony....................................................   101
        Prepared statement...........................................   296
    Nelson, Caleb E.:
        Testimony....................................................   132
        Prepared statement...........................................   365
    Spotila, Hon. John T.:
        Testimony....................................................    98
        Prepared statement...........................................   291
    Steinzor, Rena:
        Testimony....................................................   134
        Prepared statement...........................................   381
    Thompson, Hon. Tommy G.:
        Testimony....................................................     4
        Prepared statement...........................................   143

                                    Appendix
                             Wednesday, May 5, 1999

    Copy of S. 1214..................................................   198
    Letter dated May 4, 1999, from Donald R. Arbuckle, Acting
      Administrator and Deputy Administrator, Office of Information
      and Regulatory Affairs, to L. Nye Stevens, Director, Federal
      Management and Workforce Issues, General Government Division
      U.S. General Accounting Office.................................   212
    Chart entitled ``Federal, State, & Local Taxes Collected Per
      Person,'' submitted by Chairman Thompson.......................   214
    Adam D. Thierer, Walker Fellow in Economic Policy, The Heritage
      Foundation, prepared statement with an enclosure of the
      ``Backgrounder,'' dated January 27, 1999.......................   215

                            Wednesday, July 14, 1999

    Letter dated July 14, 1999 to Chairman Thompson from Peter C.
      Hildreth, Director of Securities, State of New Hampshire,
      President, North American Securities Administrators
      Association, Inc., with an attachment..........................   390
    GAO report from L. Nye Stevens, Director, Federal Management and
      Workforce Issues, General Government Division, entitled
      ``Federalism: Comments on S. 1214--The Federalism
      Accountability Act of 1999,'' July 14, 1999, GAO/T-GGD-99-143..   394
    Shelley H. Metzenbaum, Ph.D., Visiting Professor at the
      University of Maryland School of Public Affairs, prepared
      statement......................................................   421
    Vicki C. Jackson, Professor of Law, Georgetown University Law
      Center, prepared statement.....................................   425

                            THE STATE OF FEDERALISM

                                  ----------

                             WEDNESDAY, MAY 5, 1999

                                           U.S. Senate,
                             Committee on Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:12 a.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Fred
    Thompson, Chairman of the Committee, presiding.
        Present: Senators Thompson, Collins, Voinovich, Lieberman,
    Levin, and Edwards.

                 OPENING STATEMENT OF CHAIRMAN THOMPSON

        Chairman Thompson. Let us come to order, please. Gentlemen,
    thank you for coming. I apologize for being a little late. I
    picked a bad morning to have a meeting downtown this morning.
        I know that you have limited time before you have to
    depart. I will ask the Committee Members to refrain from making
    opening statements and let the witnesses testify, and then we
    will have an opportunity to make opening statements. I would
    like to insert opening statements from Senators Collins, Levin,
    and myself, into the record.
        [The prepared opening statements of Senators Thompson,
    Collins, and Levin follows:]
                PREPARED OPENING STATEMENT OF CHAIRMAN THOMPSON
        The issue the Committee is discussing today is at the heart of our
    Democracy. Federalism is the principle that some matters are best
    handled by State or local government and other matters should be
    addressed at the Federal level. Federalism helps clarify what
    government should be doing and where it should be done. The Framers of
    our Constitution strongly believed that government closest to the
    people works best. The chief architect of our Constitution, James
    Madison, said ``The powers delegated by the proposed Constitution to
    the Federal Government are few and defined. Those which are to remain
    in the State governments are numerous and indefinite.''
        The Framers had good reason to limit the power of the Federal
    Government. The diffusion of power between the Federal Government
    versus State and local government, as well as among the different
    States, can lead to healthy competition. States will compete for
    citizens business, taxes and talent. Citizens can vote with their feet
    to choose among different government services. This will lead
    governments to strive to provide better services, lower taxes, and a
    higher quality of life tailored to the values and needs of the
    community.
        But we have strayed far from the federalist vision of the Framers.
    As Justice O'Connor noted, ``The Federal Government undertakes
    activities today that would have been unimaginable to the Framers in
    two senses: First, because the Framers would not have conceived that
    any government would conduct such activities, and second, because the
    Framers would not have believed that the Federal Government, rather
    than the States, would assume such responsibilities.'' Indeed, some
    proponents of Big Government view federalism as an historical relic.
    The consequences of this drift are regrettable. The Federal Government
    seems to many to be irresponsive, wasteful, and corrupt. Public
    cynicism toward government has risen to alarming levels. Some citizens
    feel that their right to vote, a right that came at a very high price,
    has lost its meaning.
        Reviving federalism would mean that many important decisions that
    affect people's lives would be made closer to home. Government as a
    whole could be more efficient, effective and accountable. Despite the
    many obstacles, there is hope that federalism is reascendant in the
    historical dialogue. The Supreme Court has breathed new life into
    federalist doctrines. Congress has taken some important steps to return
    authority to the States. And many State and local officials and the
    people they serve are rightly demanding a voice in the debate.
    Ultimately, that uniquely American quest may be the greatest hope for
    success.

                 PREPARED OPENING STATEMENT OF SENATOR COLLINS
        Mr. Chairman, I commend you for holding these hearings on the State
    of Federalism. My hope is that these hearings will be an important
    first step that will help restore the vital principles that serve as
    the basis of our constitutional form of government. Clearly, the
    Federal Government has been a positive force for change in our society
    over the past 30 years, especially in areas such as environmental
    protection and civil rights. It will continue to do so in the future.
    However, I have become increasingly concerned that the Federal
    Government's role in our society has expanded far beyond what the
    constitutional Framers intended. Moreover, this expansion has
    continually encroached on the traditional prerogatives of State and
    local governments.
        The United States Constitution established the basic federalist
    principles that are the framework for the distribution of power among
    Federal, State and local governments. Under the Constitution, the
    Federal Government's proper role is to assume responsibility for broad
    national issues that directly impact the Nation as a whole, such as
    defense and the regulation of commerce between the States. As we all
    know but far too often forget, the Tenth Amendment to the Constitution
    reserves most other powers to State and local governments. The
    constitutional Framers wisely understood that, by virtue of their
    proximity to the people, State and local governments are in by far the
    best position to evaluate and respond to the needs of their communities
    and citizens.
        Unfortunately, Congress and unaccountable Federal agencies too
    often have undermined these critical federalist principles through
    well-meaning but ultimately counterproductive legislation and
    regulations. I am particularly concerned about Federal laws and
    regulations that ``preempt''--or nullify--traditional State and local
    laws. Without the ability to manage their affairs free of unwarranted
    Federal intrusion, State and local officials cannot craft workable
    programs that balance the competing interests of all citizens and at
    reasonable costs.
        Reversing the trend towards greater Federal control will require
    increasing vigilance by those of us who strongly support federalist
    principles. For example, last year the Clinton Administration
    introduced Executive Order 13083, which revoked a Reagan Administration
    Executive Order on federalism and would have granted the Federal
    Government unlimited policymaking authority over the States. Mr.
    Chairman, I eagerly cosponsored your Sense of the Senate Resolution--
    which was adopted by unanimous consent--demanding that the President
    revoke his Executive Order. In August of last year, President Clinton
    thankfully withdrew this unwise Executive Order.
        I again commend you Mr. Chairman for directing the public's
    attention to this key issue. As a result of these hearings, I hope we
    can identify other useful steps that will advance the goal of restoring
    the proper role played by the Federal Government in the lives of our
    citizens. Such steps will hopefully deter Congress and Federal agencies
    from unnecessarily preempting State and local authority and restore the
    balance between Federal and State power that is called for in our
    Constitution. Thank you, Mr. Chairman.

                  PREPARED OPENING STATEMENT OF SENATOR LEVIN
        Mr. Chairman, thank you for calling these hearings on the State of
    Federalism. It is, as always, a timely and important issue.
        We know from our Constitution, from our history books and from our
    experience that the relationship between the Federal Government and
    State, local, and tribal governments is one of balance and equilibrium,
    a partnership. Alexander Hamilton wrote in Federalist Paper No. 31 that
    ``it is to be hoped'' that the American people ``will always take care
    to preserve the constitutional equilibrium between the general (that
    is, Federal) and the State governments.''
        That's the foundation upon which we must look at the operations of
    our laws and programs today. How are we doing in preserving the
    delicate balance, the equilibrium and partnership between the Federal
    Government and State, local, and tribal governments?
        Many of us in the Senate can appreciate this issue from both sides.
    We have served as either governors, mayors, or State legislators before
    coming to the Senate. I had the privilege of serving as the President
    of the Detroit City Council for a number of years before being elected
    to the Senate. And from that perspective, I know how important the
    Federal-State relationship is.
        That relationship is affected most directly when we at the Federal
    level preempt State law, either explicitly or implied. If we do it
    explicitly, then we have to be sure we are not upending the equilibrium
    of the Federal-State relationship. We need to evaluate whether the
    Federal preemption is not only useful or beneficial, but whether it's
    necessary. There are times when most of us have voted to affirmatively
    preempt State laws, and we did so out of the belief that it was the
    right thing to do for the benefit of the American people. We have done
    that with respect to our clean air and clean water standards that know
    no geographic boundaries; we have done that with regulating trucks and
    vehicles that drive through any and all States in our Nation; we have
    done that in the area of communication. I supported those laws and
    those decisions to preempt.
        But all too often we in Congress don't even address the issue of
    preemption when we legislate. We are silent about our intentions, and
    that silence requires both the Federal and the State and local
    agencies--and oftentimes the courts--to read the tea leaves, so to
    speak, to determine whether or not we in Congress intended to preempt
    State law. I think in those situations, the State and local governments
    should have the benefit of the doubt and the presumption should be that
    if Congress doesn't explicitly preempt, it does not intend to preempt.
    That's why for several Congresses I have introduced a bill to direct
    the courts not to find preemption if the statute doesn't explicitly
    require it. I hope we can make progress on that bill this Congress.
        I believe that Federal preemption of State, local or tribal law
    should be an affirmative, eyes-open action, and not one that we happen
    to fall into because a court has found an implication somewhere in the
    legislative history.
        For example, I am an original cosponsor of the Feinstein-Levin-
    Bryan bill, S. 678, which would protect consumers against ``title
    washing'' of automobiles. This bill was drafted in close coordination
    with a number of State attorney generals, including the Michigan
    Attorney General. We've included a very specific provision about how
    the bill would interact with State laws and regulations. We recognized
    in drafting the ``title washing'' bill that States including Michigan
    and California already have tough consumer laws on this subject and--in
    this case, as is often true, they provided an excellent model for
    Federal standards.
        I also introduced legislation to deter deceptive sweepstakes
    mailings, and I co-sponsored a bill on the same subject with Senator
    Collins. We've been careful not to inhibit the States from having their
    own, more protective laws and to delineate the extent to which we're
    preserving States' authority. We want to augment, not supersede, their
    efforts. We want a floor in our Federal laws for consumer protection in
    this instance, not a ceiling.
        With respect to the impact of Federal regulations on State and
    local government, Senator Thompson and I have introduced the Regulatory
    Improvement Act, S. 746, which requires cost-benefit analysis and risk
    assessment of major rules and that agencies seek the opinions and
    experience of State and local governments when regulating in areas
    where they would be affected. I appreciate the support of the State and
    local organizations for this bill. As those organizations know, S. 746
    specifically requires Federal agencies, in the rulemaking process, to
    consider alternatives that will provide flexibility for State and local
    governments. S. 746 also fosters openness and public participation. I
    believe the bill is just the type of bill that promotes partnership and
    maximizes the use of everyone's resources.
        I look forward to hearing the testimony of our witnesses today,
    both the elected officials and the learned scholars who can give us a
    context of where we've been and where we're likely to be going. It is
    always good to hear from the representatives of our States, counties,
    and cities, and discuss how we can work together to make things better
    for all our citizens, throughout our Nation.

        Chairman Thompson. I will go ahead and recognize our first
    panel. We are pleased to have with us today the Hon. Tommy
    Thompson, Governor of the State of Wisconsin and President of
    the Council of State Governments. He will be followed by the
    Hon. Michael Leavitt, Governor of the State of Utah and Vice
    Chair of the National Governors' Association. We are pleased
    that you would be here with us today, two of our more
    outstanding governors. I could think of no one who could better
    help us wade through these issues than you two gentlemen. We
    know it is an inconvenience for you, but we sincerely
    appreciate your being here with us today.
        Without further ado, if you have opening comments that you
    would like to make, please do so, and we will put any prepared
    statement that you have into the record. Governor Thompson.

      TESTIMONY OF HON. TOMMY G. THOMPSON,\1\ GOVERNOR, STATE OF
         WISCONSIN, AND PRESIDENT, COUNCIL OF STATE GOVERNMENTS

        Governor Thompson. Thank you so very much, Mr. Chairman. It
    is a delight for me, coming from Wisconsin, to address this
    august body and to address Chairman Thompson as Chairman. I
    like that very much.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Governor Thompson appears in the
    Appendix on page 143.
    ---------------------------------------------------------------------------
        Chairman Thompson. I have been trying to claim
    relationship, but nobody will believe me.
        Governor Thompson. You have done an outstanding job, and
    Senator Collins and, of course, Senator Voinovich, who left the
    ranks of being a governor and now is an outstanding U.S.
    Senator. It is always a pleasure to see my good friend, George,
    again.
        Of course, we are all very sympathetic and saddened by the
    two individuals that died in Armenia yesterday, late last
    evening, as well as the terrible tornadoes in the Midwest, in
    Kansas and Oklahoma. But it is a pleasure for both Governor
    Leavitt and myself to have this privilege to address this
    august Committee on a very important issue of federalism. Mr.
    Chairman, federalism and devolution, as you well know,
    represent a cornerstone of our Nation's underlying democratic
    principles, and you, Mr. Chairman, have led the fight in this
    and we applaud you from the State level.
        The Tenth Amendment to the Constitution of the United
    States recognizes the uniqueness that continues to exist and
    thrive at each and every State in America. More importantly,
    the Tenth Amendment acknowledges that the States have the
    authority as well as the ability to minister to their own
    needs. When our forefathers debated how our Nation would be
    governed, they devised a clear set of principles that defined
    the roles as well as the responsibilities of the Federal
    Government and State Governments. Yet, over time, adherence to
    those principles have suddenly eroded.
        Recently, a shift from the ``Washington knows best''
    attitude ushered in the first change in the majority in the
    U.S. House of Representatives, and along with the distinguished
    Chairman and other U.S. Senators, formed a partnership called
    the new-found federalism. A strong component that helped fuel
    the shift of power can be directly attributable to a platform
    that clearly emphasized a return of power as well as control to
    the State level. After the elections in 1994 and then after the
    elections in 1996, it somehow slowed down. The discussion of
    devolution did not appear as often as it did in 1994 and 1995,
    but we were able to get some legislation passed, which was led
    by you, Senator Thompson, and, of course, urged on at that time
    by Governor Voinovich.
        To this end, Mr. Chairman, it is with a sense of optimism
    for reform and historical gravity that I address this august
    body. I strongly commend you for your appreciation and
    attention to the issue of federalism, for when granted the
    power and the flexibility, States and local governments have
    proven to be the innovators of the ideas and reforms that are
    improving the lives of all Americans.
        Throughout our history, State and local governments have
    acted as the laboratories of democracy. State and local
    governments continually amaze us with innovation and decisive
    action when they are allowed to flourish unfettered by
    excessive Federal restraint.
        It is critical, then, that we closely examine the
    relationship and responsibilities respective to our governing
    bodies and review the impact Federal restrictions have on the
    States' ability to govern effectively. More importantly, as we
    enter a new millennium, we must reinvigorate the partnerships
    among the Federal, State, and local governments to ensure the
    American people are the benefactors of a strong united effort
    to address and solve the problems that face our great country.
        As President of the Council of State Governments, I speak
    to you today on behalf of an organization whose individual
    members are involved daily in conducting the people's business
    at the State level. CSG is comprised of State leaders from all
    50 States and U.S. territories, representing all three branches
    of government. CSG's membership is the living embodiment of the
    vibrancy of American federalism. CSG has consistently been a
    strong proponent of the federalist model.
        Our commitment to sharing those principles was
    reinvigorated at a summit convened in November 1997, following
    the enactment of the very far-reaching Unfunded Mandates Reform
    Act of 1995. At the prompting of Governor Michael Leavitt, the
    meeting, held in conjunction with the American Legislative
    Exchange Council, the National Conference of State
    Legislatures, and the National Governors' Association, was
    convened to recommend State reaction to the historic devolution
    of shifting responsibilities from the Federal to the State
    Governments. Then, as now, States faced a variety of challenges
    and opportunity as they approach varying degrees of Federal
    restriction.
        The summit produced an 11-point plan aimed at improving
    balance and greater accountability to that State and Federal
    partnership. I have attached a copy of the 11 points advocated
    at the conclusion of that meeting to my written testimony, but
    I would like to quickly summarize those objectives and provide
    a few brief examples of how Federal restrictions and
    interference is impacting our ability to institute positive
    reform in our respective States.
        The principles voted on and passed at that meeting include
    asking Congress to limit and clarify Federal preemption of
    State law and Federal regulations imposed upon States,
    streamline block grant funding, and simplify the financial
    reporting requirements. I could never understand who reads all
    of these reports that you ask us to send to you. I am sure that
    there is somebody out here that does.
        Chairman Thompson. Senator Lieberman reads most of them for
    us.
        Governor Thompson. I am sure you do.
        Senator Lieberman. Actually, they are behind us.
        Governor Thompson. Just like I do as Governor, all the
    reports that come to me.
        As Governor of the State of Wisconsin, I have dealt with a
    wide variety of Federal restrictions that prevent my State from
    reaching its full potential and advancing the best interests of
    our citizens. From welfare reform to health care, States like
    my own of Wisconsin have become America's laboratories of
    reform, instituting dozens of innovative initiatives that have
    made our programs models for the Nation.
        Yet, I have had to travel to Washington, as most governors
    do, to solicit on bended knee the permission to implement
    landmark reforms. I am not alone. My experience and the
    experiences of other State leaders have made the boundaries of
    the devolution debate clearer today than ever before. Time and
    time again, we have developed and passed legislation to deal
    with our unique problems, only to be rebuffed by the Federal
    Government. Let me briefly describe some more recent issues to
    illustrate the frustration at the State level.
        The integrity of the 1996 welfare reform agreement is
    threatened by attempts by some people in Congress--nobody on
    this Committee, I am happy to be able to announce--and the
    administration to reduce the funding and to restrict the
    flexibility of welfare-related programs, including the
    temporary assistance for needy families, more commonly referred
    to as the TANF block grant. In 1996, Congress, the governors,
    and the administration entered into an historic welfare reform
    agreement. In exchange for assuming the risk involved with
    accepting the primary responsibility for transforming the
    welfare system from one of dependency to self-sufficiency,
    governors agreed to 5 years of guaranteed funding, along with
    new flexibility to administer Federal programs. In my own State
    of Wisconsin, we reduced the welfare caseload by over 91
    percent.
        Any attempt to change welfare reform-related programs or
    the funding, to me, is a serious violation of that commitment
    and of the Personal Responsibility and Work Opportunity
    Reconciliation Act of 1996, and certainly would undermine the
    States' welfare reform efforts. In Wisconsin and throughout
    America, welfare reform has demonstrated that States can best
    solve the problems when given the flexibility and support.
    Congress gave the States the freedom to design their own
    welfare replacement programs, as well as the block grants to
    support them. As a result, hundreds of thousands of families
    are climbing out of poverty and pursuing their piece of the
    American dream.
        Then 3 weeks ago, 3 years after the act was passed, the
    Department of Health and Welfare in Washington passed the rules
    saying a lot of the things we are doing are just not proper.
    Even though we were moving and doing things, the rules reduced
    our flexibility, 3 years after a lot of us had already had the
    act up and running.
        CSG and the Nation's Governors urge Congress and the
    administration to reject any proposals that reduce the funding
    or restrict the flexibility for welfare-related programs.
        But I would like to compliment you, Senator, and all of the
    Members on this Committee because much has been accomplished
    since the 1997 meeting, but much more remains to be done. I was
    very happy yesterday with our bipartisan meeting, in which you
    were there, Senator Thompson and Senator Voinovich. I thought
    it was a wonderful bipartisan meeting in which we were able to
    put our case on the table and you responded, I think, very
    eloquently.
        So already in the 106th session of Congress, the House has
    passed H.R. 350, the Mandates Information Act, H.R. 409, the
    Federal Financial Assistance Improvement Act, and H.R. 439, the
    Paperwork Reduction Act.
        The Mandates Information Act clarifies the point of order
    provision of the Unfunded Mandates Reform Act, applying the
    orders to any cut or cap in entitlement programs, such as
    Medicaid, food stamps, and child nutrition, unless States are
    given new or expanded flexibility to manage the cut or cap.
        The Federal Financial Assistance Improvement Act will
    require the Office of Management and Budget to develop uniform
    common rules for 75 cross-cutting regulations, and under this
    legislation, OMB must also develop electronic filing and
    management of grants to reduce the paperwork.
        Just 2 weeks ago, this very Committee held hearings on S.
    746, the Regulatory Improvement Act. The Council of State
    Governments believes that S. 746, cosponsored by at least three
    Members of this Committee, is a very good move in the right
    direction. It will provide needed consultation with State and
    local officials when Federal agencies promulgate new
    regulations and will require risk assessments and cost-benefit
    estimates for such regulations.
        Additional proposals and ideas that are circulating that
    may further impact the current state of federalism, on March
    10, 1999, the ``Big 7'' State and local organization principals
    signed a letter that was forwarded to Congress in support of
    the Regulatory Right-to-Know Act of 1999. By calling for an
    annual report to Congress by the President and the Office of
    Management and Budget, which analyzes the impact of Federal
    rules on Federal, State, and local governments, this bill
    encourages the open communication between the Federal agencies,
    State and local governments, the public, and Congress regarding
    Federal regulatory priorities.
        As you know, Mr. Chairman, the staff of the ``Big 7'' State
    and local organizations have also been collaborating with staff
    members of this Committee in an attempt to fashion legislation
    to protect and to reiterate the partnership between Federal,
    State, and local units of government. CSG believes that it is
    important to bring such legislation to fruition, and among the
    principles we would like to see embodied in such legislation
    would be prior consultation with State and local elected and
    appointed leaders in drafting the Federal legislation, the
    regulations, and the Executive Orders with an inter-
    governmental impact.
        Federalism partnership legislation should provide a Federal
    assessment through federalism impact statements and provide a
    form of judicial review for enforcement. Ultimately, CSG
    believes a true federalist partnership must reflect the
    intentions of the Tenth Amendment, whereby States were granted
    deference when the Constitution failed to explicitly empower
    the Federal Government.
        So, as State leaders concluded in the 1997 conference on
    federalism, in order for our country to be an innovator at home
    and leader abroad in the 21st Century, I believe it is
    imperative that our unique Federal partnership devise improved
    divisions of labor and achieve strategic inter-governmental
    restructuring best suited to the changing public policy
    circumstances that confront us.
        The States have shown, with the limited experimentation
    that the Federal Government has allowed, that we can manage
    complex problems, we can put our ideas to work, and we can do
    this, reconnecting the American people with their government.
        Devolution will have a profoundly positive impact on the
    delivery of government programs and services as the States
    compete with one another to devise the best system. Its impact
    on the political process, however, will be equally profound,
    nothing less than a restoration of the American people's
    confidence in their government.
        So, again, I thank you for this opportunity to speak with
    you today and I look forward to our ensuing conversation.
        Chairman Thompson. Thank you very much, Governor. Governor
    Leavitt.

      TESTIMONY OF HON. MICHAEL O. LEAVITT,\1\ GOVERNOR, STATE OF
         UTAH, AND VICE CHAIR, NATIONAL GOVERNORS' ASSOCIATION

        Governor Leavitt. Thank you, Mr. Chairman. I appreciate the
    opportunity to appear before you on behalf of the National
    Governors' Association.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Governor Leavitt appears in the
    Appendix on page 153.
    ---------------------------------------------------------------------------
        Federalism and the partnership between ourselves and the
    National Government is obviously a top priority of ours. We
    have witnessed over the course of the past several years
    substantial progress and we want to acknowledge that. We have
    made major progress in moving from a micro-managed
    relationship, often imposing a lot of Federal bureaucratic
    rules, to one that moves toward performance goals and we think
    that is a very positive outcome.
        Congress has given us the Safe Drinking Water Act. We
    stopped the wholesale passage of unfunded mandates, reduced
    Federal micromanagement. It has given us block grants in
    welfare and transportation and child health care, etc.
        We celebrated recently in our State the success of our
    children's health insurance plan. With some flexibility that
    the Congress gave to us, we were able to develop our own plan
    and not use Medicaid. We are able to provide health care, as a
    result, to twice as many children and provide them with the
    same health insurance plan that my children have as the
    Governor of the State, twice as many as we would if we were
    under Medicaid simply by giving us flexibility, and I think it
    is a grand example of the way we can work together to provide
    more efficiency and innovation.
        This revolution has often been referred to as the
    devolution revolution. Regrettably, the magnitude, I fear, of
    this undertaking has been exaggerated at times. A lot of the
    devolution initiatives have been better in theory than they
    have been in practice. A lot of the initiatives have been
    limited in their benefit by imposing a lot of new burdens on
    States as conditions of funding.
        There is a new problem emerging. We, for years, focused on
    the area of the unfunded mandates. Today, my major purpose is
    to point out to you that in place of the unfunded mandates, the
    new trend is one of preemption, where the States are having
    their innovation and their capacity and flexibility withdrawn
    in a different way.
        When we were dealing with unfunded mandates, the National
    Government was compelling the State to do something. With the
    preemption, they are preventing us from doing what we need to
    do. Both have the same effect. Both move us away from the basic
    federalist proposition that our founders developed. Much of
    this is being done, I might add, in the name of globalization
    and a movement into the knowledge age.
        I would like to suggest that we, as a people, are blessed
    with what could be the perfect form of government for the
    information age. The world is beginning to work like a group of
    network PCs. We continue to move forward as a Nation as though
    we are trying to form ourselves into a giant mainframe.
        I would like to suggest that that metaphor, whether it is
    affected by unfunded mandates or by preemption, is the same.
    The mantra for the 21st Century must be central coordination
    but local control. We need to think of ourselves as a group of
    networked PCs. It is the power of the network. It is the power
    of the innovation that is set forward, the multiple that is
    created by a set of central capacities with everyone having the
    capacity to innovate on their own that makes this a powerful
    system. We may have the perfect form of government for the
    information age.
        Once State authority is taken away, it is very seldom
    returned. Today, I would like to suggest on behalf of the
    National Governors' Association a series of five principles
    that we believe will well suit us as we move into the next
    millennium.
        The first one is that the principles of bipartisanship must
    be followed by elected officials at every level.
        Second, that the partnership between the State and the
    National Government has to be based on early consultation on
    anything that would affect the States. That is an element of
    cooperation in the development of this system of networked PCs.
        The third is that a legislative proposal's impact on
    federalism needs to be transparent and fully disclosed before
    the decisions are made. We have found over time that on many
    occasions, that the regulations we have to deal with are either
    imposed by the bureaucracy later or by intent language that was
    never part of the debate as we go through developing and
    writing legislation.
        The fourth principle would be that this partnership needs
    to be based on an interdependent nature of our government, and
    that demands an attitude of the highest respect, but also a
    deference toward State and local laws and procedures that are
    closest to the people. That is the spirit of the Tenth
    Amendment. If it was not specifically reserved to the National
    Government, the power of the people would be respected and the
    States.
        The last one would be that these elements of our
    partnership should have some means of enforcement.
        Now, in my formal testimony, I point to a number of
    different examples of legislation that you are dealing with
    that we believe would move this forward. I will point to one
    today, and that is the Mandates Information Act, H.R. 350 or S.
    427. The bill would clarify that the point of order provision
    of the Unfunded Mandates Act also applies to any cap or cut in
    an entitlement program. The States are deeply concerned that
    programs such as Medicaid, food stamps, and child nutrition
    will be adversely affected unless the States are given new or
    expanded flexibility to manage any kind of cut or cap. There
    are several others that I have mentioned.
        I will just summarize by saying our message to you and also
    to the President is we need to move forward with an enforceable
    federalism partnership between State elected officials and
    elected officials at the National Government, all levels, and
    we invite you to join us in reviving this working partnership.
    Thank you, Mr. Chairman.
        Chairman Thompson. Governor, thank you very much.
        Sitting here listening to you gentlemen, it occurred to me
    again that we could not have two more representative people in
    this country to talk about this issue. You have both been
    innovators in your own States and obviously not only know what
    you are talking about, but you have put it into effect and
    shown what can be done at the State level when given the
    opportunity.
        First of all, Governor Leavitt, I appreciate your pointing
    out something that I think is hitting home to so many of us
    here and that is that we are going from having made some
    progress in the devolution stage of things to running into
    additional problems with regard to the preemption stage of
    things. Of course, we have legislation that we are discussing
    right now, as Governor Thompson indicated, that hopefully will
    address that, so that at least we take the time to consider the
    ramifications of what we are doing and face up to it, and
    second, make sure that if we are preempting the States, that we
    acknowledge that and give the courts some guidance as to what
    we are doing.
        Staying on the devolution part for a minute that we are all
    proud of, the many things that have happened there, Governor
    Thompson, of course, is known far and wide for his innovation
    with regard to welfare reform in his State. You mentioned the
    Safe Drinking Water Act, health care, the Unfunded Mandates
    Act, all of those things. I am wondering what your assessment
    is as to how we are doing on the devolution side of things.
        We know we have some problems. You mentioned, Governor
    Thompson, the issue you have with regard to welfare. I would
    like to know a little bit more about that in your State, the
    Federal interpretations there. The Unfunded Mandates Act, you
    mentioned, Governor Leavitt, still has interpretations with
    regard to how the Medicaid situation will operate in your
    State.
        We have also seen that we give lip service to things--the
    President's Executive Order on federalism. The GAO found that
    for over 11,000 rules issued between April 1996 and December
    1998, the agencies that are conducting federalism assessments
    for only 5 rules, 5 out of 11,000. Of course, it calls for
    federalism assessments to be made when federalism issues are
    involved.
        So we have a lot of press conferences and give a lot of lip
    service, but the real question is, how are we really doing?
    Obviously, we have made some progress we are proud of, but how
    is it working? What are your accomplishments? What have been
    your accomplishments? What are your concerns? Where do we go
    from here, with the block grant situation, moving more and more
    to that. How is that working? Give us your assessment on how
    devolution is working so far, an overview, obviously, in your
    State. Governor Thompson.
        Governor Thompson. Thank you very much, Mr. Chairman.
    Devolution in regards to the TANF Act is working, evidenced by
    the number of people that have been moved off welfare in States
    all across America, from Maine to California to Florida to
    Washington.
        The problem that we are running into right now is that the
    Department has issued some rules, and when you have a complete
    reduction in the cases like we have in Wisconsin--we are now
    down from 100,000 families down to 8,500 families, and those
    families, 80 percent are in one county, 70 percent are
    minorities, two-thirds of those individuals have some kind of
    drug or alcohol problem or a combination of both, 50 percent do
    not have a high school education, and 40 percent have never
    worked. So they are really the hardest to place.
        We are spending a lot more money on individual cases, but
    the reduction, the total reduction, in order to maintain our
    effort, because we have reduced it by so much, we have to waste
    a lot of money just on those individual cases to satisfy the
    requirements, whereas I would like to be able to take some of
    that TANF money and use that money to help some people that are
    just off of welfare, to be able to continue to monitor them,
    continue to encourage them to work, continue to improve their
    education so that they can get better jobs and so on.
        But because the maintenance efforts are so restricted under
    the rules, we cannot have that. Some things that we put out
    there that we used to get maintenance effort credit for, the
    rules that have come down now, 3 years after the act was
    passed, do not allow us to have that maintenance of effort. So
    we are getting penalized because we were innovators and doing
    the right thing, we thought, but now the Federal Government
    comes in and takes it away. They gave it to us on one hand,
    take it away from us with the second hand.
        So devolution is working in welfare reform completely, but
    now the rules, or the preemption that you and Governor Leavitt
    have talked about, has taken back some of that flexibility and
    that is what concerns me a great deal.
        Chairman Thompson. And it really seems like it happens
    under the radar screen. We have the big announcements, about
    welfare reform, but then you say 3 years later, the rules are
    still coming that dictate----
        Governor Thompson. The first time the rules came out, the
    rules were not out for 3 years.
        Chairman Thompson. Three years?
        Governor Thompson. Three years. It is after the fact. We
    have gone so far down the road, and we have been encouraged to
    do that by indications from the department.
        Chairman Thompson. Sometimes, do you find the rules are
    inconsistent with what you believe to be the intent of the
    legislation?
        Governor Thompson. Absolutely, and inconsistent from what
    we have been led to believe is the position of the Department.
    But once the rules are finalized, they have taken away the
    flexibility and have taken away the opportunity for us to
    continue a program that we had been given the green light, a
    tacit green light, by the Department, and that to me flies in
    the face of what you wanted as the Chairman of this Committee
    and as a member of the Senate when you passed the TANF Act.
        Chairman Thompson. Governor Leavitt.
        Governor Leavitt. Governor Thompson has responded, I think,
    with some wonderful specifics. If I could address your question
    in a more historic way, more dealing with the history of this
    issue, obviously, federalism is based on the idea that there
    would be healthy tensions between the States and the National
    Government, that both would have tools that would enable us to
    represent our interests.
        I would like to suggest to you that a major part of this
    problem is the States have been really rendered anemic in our
    capacity to do our constitutional duty. We were historically
    given four tools to represent the interests of the States and
    the people against the power of the National Government, as a
    protection.
        The first was the Tenth Amendment. No one would dispute, I
    believe, the fact that over the course of the last 50 or 60
    years, the Tenth Amendment has been emaciated by the Federal
    courts and that our capacity to use the Tenth Amendment, until
    recently, has simply gone unnoticed by the Federal courts.
        The second was the direct election of the U.S. Senate. Now,
    I would not advocate that we go back to the legislatures
    appointing them, but I think we would all agree that the day
    that the States gave that up, we gave up a powerful tool to be
    able to call our representatives back to say to them, we do not
    like what is going on. You are not representing our interests
    directly. Therefore, a lot has changed. We have lost that tool.
        The third was the amendment process. The amendment process
    looked good on paper, but the reality is, the capacity to amend
    the Constitution of the United States to rebalance this
    national power simply is very lopsided because all the power to
    do that resides with the National Government.
        The fourth one was the will of the people. The founders, I
    believe, knew that there was a need on the part of people to be
    governed closest to them. The devolution, if you will,
    revolution was about people saying, we desire to have more
    power at the local government level. You do not hear it spoken
    of very much and there is a natural creep that will occur by
    the Federal Government and the States literally being rendered
    anemic. Because of our tools now being gone, we will inevitably
    be overrun by the National Government and the kind of
    bureaucracy that Governor Thompson speaks of.
        That is the reason we come today to appeal to you that we
    need to have enforceable federalism. Without it, it is
    inevitable. Whether it is preemption or whether it is mandates,
    the effect will be the same.
        Chairman Thompson. Thank you very much.
        I know you have to leave shortly. I thought my time was
    running a little short here and I checked and found out that
    staff is taking care of you and cutting my time back, so be it.
        Senator Lieberman.

                 OPENING STATEMENT OF SENATOR LIEBERMAN

        Senator Lieberman. Thanks, Mr. Chairman.
        Let me first, if I may, as a matter of process--you
    referenced to a GAO study on the implementation of the
    federalism, Executive Order No. 12612. At GAO's request, OMB
    has prepared a letter providing GAO with its views on that
    ongoing study and the folks at OMB have asked me to request
    that this letter be placed in the record, also, which I would
    like like to do at this time.\1\
    ---------------------------------------------------------------------------
        \1\ The letter dated May 4, 1999, from the Office of Management and
    Budget appears in the Appendix on page 212.
    ---------------------------------------------------------------------------
        Chairman Thompson. It will be made a part of the record.
        Senator Lieberman. Thanks, Mr. Chairman. Thanks very much
    for convening this hearing. Thanks to Governor Thompson and
    Governor Leavitt for being here. Two very thoughtful opening
    statements.
        I appreciate that the hearings are being convened, because
    they do give us a chance to step back and consider in a broader
    context some of the judgments we naturally make on an ad hoc
    basis as we consider the whole range of legislation. We
    sometimes explicitly debate federalism questions by that name,
    using terms like preemption. For instance, in product liability
    debates and the Internet sales tax moratorium, which we were
    involved in together, at least on the discussion stage,
    Governor Leavitt, there is a lot of focus on the
    appropriateness of preemption. In other cases, of course, we do
    it but we do not talk about it. It is implicit. So this is a
    very important opportunity that these hearings give us to look
    at the big picture.
        There is a third panel here of scholars, Professor Galston
    and Professor McGinnis, that I thought provided very good
    overviews which are helpful as we go through this. Professor
    Galston's paper points out historically in this century that
    you might say we have gone through two different periods. One
    was when for reasons of history, and you might say necessity,
    the power of the Federal Government grew, most notably the
    great depression of the 1930's when the problem went beyond the
    capacity of the States and localities to handle, and then, of
    course, the Second World War.
        But in the more recent decades, though it may not look like
    it from the State level--and I came here after 16 years in
    State Government, 10 years as a State Senator and then 6 years
    as Attorney General--that the trend has been much more in the
    direction of the devolution revolution, but there is this
    tension that I think the Framers not only foresaw but intended.
        Your metaphor, Governor Leavitt, of not making this a
    mainframe but keeping it a network of PCs is a good one. I
    suppose on the other end, the other extreme that we should
    avoid, is to break the network, that is, to not just have
    millions of PCs out there operating on their own because of the
    weakness of the National Government.
        On the question of preemption and inappropriately intruding
    on the role of the States and local governments, last Congress,
    as you know, we considered so-called takings legislation, which
    I thought posed a direct threat to the ability of local
    governments to exercise their authority in the area of zoning
    and land use planning. In States like mine, our local
    governments are working very hard and are very proud of and
    very protective of that authority, and right now, for instance,
    there is a heavy emphasis put on acquisition by the local
    governments, and State, of open space land. I was privileged to
    join with the Chairman in working to defeat this legislation.
        But in other instances, deciding whether Congress should
    prevent State and local governments from acting becomes, at
    least for me, a more difficult question. This goes directly to
    something that Professor McGinnis and Professor Galston talk
    about in their papers, which is the intention of the Framers in
    creating the Federal system to protect continental free trade,
    that it is on a continental-wide basis, national trade.
        Professor Galston in his statement urges us to be open to
    the possibility that economic and technological changes of our
    day, such as telecommunications, the Internet, interstate
    banking, may require a reconsideration of some of the
    established Federal-State relations in certain areas.
        This is a very complex question, but with the opportunity
    to step back and look at the big picture, I wonder if you have
    any suggestions about how we should weigh our varying
    responsibilities, Federal and State, for doing what the Framers
    clearly intended us to do, which is to maintain not only a
    continental market but a free market, as it were, while at the
    same time not encroaching on the appropriate areas of
    responsibility for State and local governments. I am thinking
    here specifically of the area of commerce, interstate commerce.
    Does either one want to take a shot at that? Governor Leavitt.
        Governor Leavitt. I actually do have some thoughts about
    that, Senator. I think that you have identified what may be the
    challenge of this generation of governance. We are approaching
    what I think is the new frontier of federalism. We may have to
    reinvent federalism, given the fact that we are now in a time
    when borders have less constructive meaning than they did
    before. We are having to find new ways of creating checks and
    balances in a Nation that has relied on borders that have
    defined us, and we no longer may have that option.
        I would like to suggest one way that that can occur best.
    Aristotle used to speak a lot about the golden mean, which he
    defined as being the place between two vices, the natural
    tension between them. That is the basis of our federalism.
        I still believe that the place that you are referring to is
    that golden mean between them and it can only be found if both
    the States and the National Government have the capacity to
    resist one another in their effort to find it. The big problem
    we have right now and the reason we are drifting toward a
    mainframe type of government as opposed to a group of network
    PCs that really characterizes the information era is that the
    States are anemic. We do not have the capacity to resist the
    National Government. We are essentially told what we will do in
    almost every case, and the only resistance we have is to come
    to places like this and talk.
        As we try to pioneer this new frontier of federalism, we
    have to find ways for the States to be able to resist the
    Federal Government, to find those places, or we will end up
    with a system of government that will not be consistent with
    our point.
        Senator Lieberman. Thank you.
        Governor Thompson. Senator, if I could just add something
    very quickly, something that has really bothered me and I think
    it is starting to really concern a lot of people, I know it has
    Governor Leavitt, who has been a leader in this, but the fact
    of the new telecommunications, the new Internet commerce that
    is developing, there is the tremendous impact that is going to
    adversely impact the States. That is, as this new commerce is
    developing, the sales taxes that States are going to receive
    are going to diminish and it is going to get worse. The only
    people that can really help us are you.
        We are so fearful of the situation where we may end up
    being like the European common community, where the States in
    Europe have to go to the Federal Government to get all their
    revenue and you have to fund us because you have taken away our
    sales tax resources. I do not think you want that. We do not
    want it, and are very concerned about that. So we need some way
    to be able to communicate with you that we have to redevelop
    this federalism.
        The second point I would like to make is that we also have
    to do something as it relates to the administrative agencies,
    because I like dealing with you and I can usually convince you
    to go part way with the position of the States, but once it
    leaves your hands and goes over to a department, to some
    bureaucrat there that is going to promulgate the rules, like
    they have in TANF, we are left out. We have no recourse
    whatsoever. So we need some sort of assurance, some sort of
    protection under this new commerce and under the administrative
    agencies to be able to get our views out there and to be able
    to have an equal voice somehow with the Federal Government.
        Chairman Thompson. Gentlemen, the clock has run on our
    vote, I think. If we do not leave right now, I do not think we
    are going to be able to vote.
        Senator Lieberman. Thanks for your very thoughtful
    responses.
        Chairman Thompson. I know that Senator Voinovich and
    Senator Collins are going to be back, if you would bear with
    us. I know you have to leave early.
        Senator Levin. Could I find out when they do have to leave?
    In terms of my return, I would be interested. What is your
    schedule?
        Governor Leavitt. Regrettably, Senator, I will have to
    depart soon.
        Chairman Thompson. I think we were talking about 10
    o'clock.
        Senator Levin. This is deja vu from yesterday for me, I am
    afraid. Usually, deja vu goes back a few years, but this does
    not.
        Governor Thompson. As Yogi Berra says, deja vu has got to
    be repeated all over again.
        Chairman Thompson. Whichever Senator returns first will
    reconvene.
        Governor Thompson. Thank you very much.
        Chairman Thompson. Thank you very much. I guess I will not
    get a chance to go over my chart with you, but I put that up
    there for your benefit, so just absorb that and use it in
    whatever way you might want to.\1\
    ---------------------------------------------------------------------------
        \1\ The Chart entitled ``Federal, State, & Local Taxes Collected
    Per Person,'' submitted by Chairman Thompson appears in the Appendix on
    page 214.
    ---------------------------------------------------------------------------
        Governor Thompson. Thank you, Senator.
        [Recess.]

                 OPENING STATEMENT OF SENATOR VOINOVICH

        Senator Voinovich [presiding]. We will reconvene the
    hearing. The other Senators will be back in a couple of
    minutes. One of the real challenges of being a new Senator is
    figuring out how you can get to the floor in the fastest
    fashion without getting lost.
        We were in the question period and Governor Thompson had to
    leave. Governor Leavitt, in terms of preemption legislation,
    what are you most concerned about in terms of preemption that
    is going on right now on the Federal level?
        Governor Leavitt. Senator, may I say that, I think, for the
    most part, it is the trend and the practice generally that
    concerns me. There is a momentum about a willingness to do it.
    It is in taxation authority of local government. We saw that
    potential with the Internet Tax Freedom Act. Gratefully, it was
    mitigated substantially from its original form. It is in the
    area of utilities, in the area of education--it is a new trend.
        Frankly, I think it is based on--we have talked about
    unfunded mandates. That is a philosophy of compelling State and
    local governments to do things. In many cases, preemptions are
    a desire to prevent State and local governments, but both of
    them have the same. Those are some of the categories I would
    point to.
        Senator Voinovich. I know that many people are in support
    of Senator Thompson's preemption legislation. How do you think
    that would have made a difference in terms of the issue of this
    Internet taxation problem, or Internet Tax Freedom Act?
        Governor Leavitt. It very clearly impacts the States'
    capacity to provide for our basic services. If the States lose
    the capacity to tax, the States lose the capacity to govern.
        Initially, the original legislation that was proposed would
    have literally withdrawn all local taxation authority and then
    would have, by legislation, given back minor pieces. I think
    under Senator Thompson's proposal, that could have never
    reached serious consideration in the Congress because the
    States would have been able to ask their friends in Congress to
    be able to impose the teeth of the law and it would have given
    us a means by which we could have pushed back. The tension, the
    healthy tension, the checks and balances that were intended by
    our system would have been provided. The mantra needs to be
    enforceable federalism.
        Senator Voinovich. In other words, if the preemption
    legislation had been in effect, the people that drafted the
    Internet Tax Freedom Act and the committee that reported it
    would have been really forced at least to look at the issue of
    preemption----
        Governor Leavitt. That is correct.
        Senator Voinovich [continuing]. Probably something that did
    not occur to them until after they were off and running.
        Governor Leavitt. Plus the consultation, I think, would
    have been part of pointing that out.
        Senator Voinovich. One of the things in which I am
    interested, and I hate to get into specifics, but there is some
    difference of opinion among some of the Committee Members in
    terms of whether a rule of construction--a legislative piece
    that says the presumption is that this legislation was not
    meant to preempt, or regulation was not meant to preempt,
    unless it said so explicitly, would be adequate without having
    a point of order. Would you like to comment on that?
        Governor Leavitt. I am not able to comment on the
    parliamentary throw-weight of the provision, but I can say that
    all the construction provision is a reflection of the Tenth
    Amendment. It is a statutory acknowledgement that the National
    Government has a limited role and that unless it is an
    enumerated responsibility of the National Government, it should
    be left with the States and the people. That was a condition of
    our Constitution in writing. It is part of the Constitution and
    we ought not to blanch at all in having Federal legislation
    that acknowledges and gives it its full due.
        Senator Voinovich. The administration, as you know, last
    year changed their federalism Executive Order and then backed
    off from the changes. Could you bring us up to date on just
    where that is in terms of the White House and negotiations
    between the State and local government organizations?
        Governor Leavitt. The White House did propose a new
    federalism Executive Order that was deeply alarming to the
    States because it--well, first of all, it removed all reference
    to the Tenth Amendment and would have made substantial changes
    in the interaction between States and the Federal Government.
    By retracting it, they set into place a new process where they
    are working right now with the Big 7 to determine if changes
    are needed to the existing federalism Executive Order. They
    believe that there are changes necessary. The States and local
    governments would argue that there are no changes needed to the
    existing federalism Executive Order. There are no changes that
    are imminent, but there is an ongoing discussion between the
    Big 7 and the White House.
        Senator Voinovich. Do you think anything is going to be
    done prior to the President's term of office ending?
        Governor Leavitt. That is unknown to me, but again, I would
    say that the position of the States and the National Government
    is that the burden needs to be placed on why it needs to be
    changed. We see very little reason for us to make any
    substantial change in the existing federalism Executive Order
    that has served us since the Reagan administration.
        Senator Voinovich. I, for the life of me, cannot
    understand, with all the problems that they have, why they are
    bothering with this issue, particularly when there is such a
    unified opinion among State and local government officials that
    it ought to remain as is. That deals with this problem, because
    it talks about Federal agencies and the way they ought to
    approach things, does it not? If the Federal agencies were
    familiar with the current federalism Executive Order and
    honored it, some of the things that this legislation proposes
    to deal with might not be problems.
        Governor Leavitt. The current federalism Executive Order,
    if it were honored, does essentially what the construction rule
    that you spoke of earlier would do for legislation. It
    indicates that unless there is a clear, enumerated
    responsibility of the National Government, the National
    Government does not have a role and ought to honor the
    prerogative of the States and local governments. The amended
    order, as it was proposed, would have reversed that completely.
        Again, it is a matter of where the presumption is. Their
    proposed order would have reversed the presumption. I would
    argue that, over time, Congress has reversed the presumption.
    That is the reason that there is a need for this legislation,
    because it would formally reverse the presumption again to be
    what was consistent with that of the founders, which is the
    Tenth Amendment. Unless it is a specific enumerated power, it
    belongs to the States and the people.
        Senator Voinovich. I think one of the things that would
    help me, and I think Members of the Committee, would be to have
    your Big 7 organization come up with some of the most
    potentially onerous preemptions that are being considered
    currently and also to perhaps share with us some regulations
    that either have passed or are being anticipated that highlight
    why this kind of legislation is needed, because so often, when
    you do not have specific examples of it, you do not understand
    the problem.
        Governor Leavitt. Senator, that is something we would be
    happy to inventory and provide.
        Senator Voinovich. The other thing that I am interested in
    is the unfunded mandates relief legislation, and for the most
    part, it is working in Congress. However, it was also supposed
    to deal with regulations in the various departments. I think
    where those regulations were over $100 million, it required
    consultation with State and local government people. Would you
    like to comment on how that is working?
        Governor Leavitt. Well, it is not. We heard earlier from
    Senator Thompson that in the last 11,000 Federal orders, only 5
    have had federalism assessments, only 5. So it is clear to me
    that provision of the law is being essentially ignored.
        Senator Voinovich. I might suggest that perhaps the State
    and local government coalition convey that to the President and
    to the administration. I think so often what happens, as you
    can well imagine, being a governor, is there are a lot of
    things that are scurrying around in agencies that you are
    responsible for, but it never gets to the top. People stop you
    and say, ``Gee, did you know this,'' and you look at them and
    say, ``I do not know anything about it.''
        I think perhaps part of the problem is that, too often, we
    do not get that message to the White House and share the
    concern about, for example, Donna Shalala and the new
    regulations on the TANF legislation and how we think it would
    restrict the ability of States and remove some of the
    flexibility that we have had to do some innovative things that
    have really made a difference for the people that are receiving
    welfare in our respective States and have helped take them off
    the rolls.
        Governor Leavitt. Senator, I think you make a very valid
    point, in that there is in any government a culture, and it
    takes a long time for the culture to be changed. We have gone
    through a period of more than 35 years where the culture of
    federalism has essentially been squeezed out.
        The legislation we are talking about, the whole idea of a
    devolution revolution, was really about the process of
    beginning to reinstill federalism as a meaningful part of the
    culture of our government. It is a mindset. It is something
    that you carry in your mind and in your heart, not just on the
    statutes. It is a desire to have things conducted at the local
    level where they can be. We have operated with a default to the
    opposite. All roads have tipped to Washington.
        Until we are able to instill in the hearts and minds of the
    bureaucracy, and then have enough capacity for the States to
    formally resist, that will continue, and that is why the
    efforts that you are making and others on this Committee are so
    deeply appreciated by those of us in States and local
    governments, and I would argue by the people of this country,
    because there is an innate desire on the part of people to
    govern themselves. This culture of federalism that has been
    squeezed out of our government is in direct confrontation with
    that idea.
        Senator Voinovich. The preemption legislation, in my way of
    characterization, would be a defensive effort. We have had
    great success with devolution of the welfare system and I do
    not think Congress fully appreciates what States have done with
    Medicaid.
        I know in our State, 2 years ago, our Medicaid costs were
    less than they were the year before, for the first time in 25
    years, and the Federal Government is saving a great deal of
    money because of that. That is because of waivers and the
    elimination of the Boren Amendment.
        But I think that some of that information ought to be made
    known to the members of the Senate, because, again, the Boren
    Amendment meant nothing and we got it changed, but States and
    local governments should be really emphasizing how much money
    the Federal Government is saving because of what we have done
    in Medicaid.
        Governor Leavitt. We did not even get started on Medicaid
    the way we should have. There has been progress, but Medicaid
    remains one of the most inefficient, wasteful things that the
    National Government does. It is a great thing to be able to
    take care of the health care needs of the poor, but if the
    Federal Government would turn Medicaid over to the States and
    allow us to manage it in the way we have welfare, we would be
    talking about hundreds of billions of dollars of savings over
    time.
        I referenced earlier the child health insurance plan in our
    State that we were able to implement and not be required to use
    Medicaid. I do not know if you were here, Senator, but we are
    able to cover in our State twice as many children, double the
    number of children, and give them the same health plan that the
    Governor of our State has for his children than if we were
    forced to use Medicaid.
        We could do the same thing for the working poor. If the
    National Government would give the State of Utah a waiver that
    would allow us to manage our Medicaid program, we could begin
    covering the lives of the working poor. Today, there are many
    in our State who work hard but do not have health insurance
    because they cannot afford it. The recipe for having health
    care in our State is oftentimes not to work, and that is wrong.
        Senator Voinovich. I think, again, you should be pointing
    out to the members of the Senate and Congress about how the
    CHIP program that the governors fought to have flexibility for
    has allowed you to do this. In our State, in Ohio--we are going
    to 200 percent of poverty and the people who are
    participating--it is still a Medicaid program because we have
    had some good experience with it, but the fact is, they are
    paying part of it now. I think we are reducing some of the
    benefits a little bit. But because of the CHIP program, we have
    had the flexibility.
        So I would just suggest that as often as you can, you ought
    to highlight how this devolution is, indeed, helping the
    Federal Government with their financial problems and also how
    it is helping you to do a better job in taking care of our
    respective customers, because so often, as I am sure the
    Chairman knows, the stuff is all on pieces of paper and if you
    do not have the examples of it, then you just kind of take it
    for granted.
        Governor Leavitt. Thank you for the opportunity to do it
    today.
        Senator Voinovich. I yield to the Chairman, and I
    understand you have a plane to catch.
        Chairman Thompson [presiding]. Yes, Governor, you have
    already stayed past the time which you indicated that you
    could, and we appreciate that very sincerely. I am not going to
    detain you any longer.
        Governor Leavitt. Mr. Chairman, may I present both of you
    with a copy of a report that has been done by the Big 7 of the
    seven State and local organizations entitled ``Governance in
    the Digital Age, The Impact of the Global Economy, Information
    Technology and Economic Deregulation on State and Local
    Government.'' It is a series of reports that we are putting out
    that I think you would find very helpful in your
    discussions.\1\
    ---------------------------------------------------------------------------
        \1\ The publication submitted by Governor Leavitt is retained in
    the files of the Committee.
    ---------------------------------------------------------------------------
        Chairman Thompson. Very good. We will make both of those a
    part of the record.
        Governor Leavitt. Thank you.
        Chairman Thompson. Thank you very much, Governor. We
    sincerely appreciate your being here.
        I would like to turn now to our second panel. The first
    witness will be the Hon. Daniel Blue, Jr., the senior Majority
    Leader for the North Carolina House of Representatives and the
    President of the National Conference of State Legislatures.
        Our second and final witness on this panel will be the Hon.
    Clarence Anthony, the Mayor of South Bay, Florida, and the
    President of the National League of Cities.
        We appreciate you traveling here today, gentlemen, to share
    your testimony with us. Representative Blue, would you like to
    begin, please, sir?

      TESTIMONY OF HON. DANIEL T. BLUE, JR.,\1\ MAJORITY LEADER,
        NORTH CAROLINA HOUSE OF REPRESENTATIVES, AND PRESIDENT,
               NATIONAL CONFERENCE OF STATE LEGISLATURES

        Mr. Blue. Thank you very much, Mr. Chairman. Good morning
    to you and Senator Voinovich.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Blue appears in the Appendix on
    page 163.
    ---------------------------------------------------------------------------
        As stated, I am serving this year as President of the
    National Conference of State Legislatures and it is in that
    capacity that I appear before you today representing the 50
    States as well as the commonwealths and territories. I also
    appear today, Mr. Chairman and Senator Voinovich, on behalf of
    the Big 7 organizations. As you know, we have over the last
    several years had close consultation with you on many issues,
    and, in fact, over the last couple of days, have consulted over
    many common issues.
        In response to that, or with respect to that, we have
    basically favored six bills that are pending before the
    Congress now. Some of them have been alluded to by Governor
    Thompson and Governor Leavitt a little bit earlier. This
    morning, I want to limit my discussion to the last of the six
    bills that we talked about in the written submission that I
    made to you, and that is the Government Partnership Act. We
    think that passage of that is important because it deals with
    the problem of Federal preemption of State and local law, and
    NCSL and the Big 7 truly believe that that is the most vexing
    of our current problems in dealing with State-Federal
    relations.
        I want to, before I give the reasoning, state that there
    are three things that we are trying to do in the legislation
    that we are supporting. We are calling for legislation that
    deals with the problem of preemption of State law by doing the
    following three things:
        The first is that it would provide the Congress with more
    information and better information about the preemptive effect
    of proposed legislation before that legislation is enacted.
        Second, it would establish a process for making it much
    clearer to agencies and the Federal courts as to what the
    Congressional intention is when legislation is enacted and
    especially what that Congressional intention is with respect to
    the area of preemption.
        Third, we think that there needs to be some procedural
    aspect that allows you to know when proposed legislation has
    the effect of preempting State or local authority.
        Let me just hit a few high points because we think that
    preemption, as we have experienced it over the past several
    decades, is a direct threat to our constitutional system of
    federalism, and the problem is two-fold.
        First, let me say that it results from the propensity of
    the Congress, of the courts, and Federal agencies to preempt
    State law without carefully thinking about what the impact is
    and how it may affect State and local governments and their
    ability to participate in this Federal system.
        But second, and I think more pervasively, it results from
    Federal agencies and the courts in entering into this field of
    implied preemption, where there is no clear indication as to
    what the Congress may have meant. As you know, there has been a
    whole body of law, case law, that has developed on this
    doctrine of implied preemption. So we think that there needs
    clearly to be some procedure that makes clear what Congress
    means when it enacts laws and makes clear whether it intends to
    preempt the field so that State legislatures will know that we
    are forbidden from entering into those areas.
        The cumulative effect of all of this Federal preemption in
    both regards, one, when there is simply not sufficient
    information, or at least not sufficient thought as to what the
    ramifications are, and second, not the direct Congressional
    preemption but with Federal agencies and with the courts, we
    think that it has reduced the effectiveness of State and local
    governments. We simply have too many policy options taken away
    from us.
        As you know, the benefit of the concept of federalism, as
    Governor Leavitt talked about from the Tenth Amendment, is it
    gives us the opportunity as State and local governments to
    experiment, to figure out specific solutions for specific
    problems and to adjust those as things change. We can deal with
    them much more rapidly than you can at the national level. Our
    agencies are better suited to deal with them more quickly and
    deal with their unique nature. So we think that the ability to
    test something in one jurisdiction is what makes it basically
    our ability to make this system work as well as it does.
        In our own organization, that is, in the National
    Conference of State Legislatures, we have two major committees,
    one, the Assembly on Federal Issues, the other, the Assembly on
    State Issues. The Assembly on State Issues essentially deals
    with ideas that have started in one State or one locality and
    it sort of works its way through the marketplace of ideas with
    legislative bodies around the country. We constantly borrow or
    appropriate each others' ideas that work, ideas that are unique
    to a specific State, a best practices approach. I think what we
    are coming to find is that there is an inability to always use
    these best practices because some preemptive effort, quite
    frankly, limits our ability to be creative.
        One would argue that we have a .900 batting average when it
    comes to stopping some of these bills over the last decade or
    two that may have been preemptive, but the cumulative effect of
    all of that, even if you have a .900 batting average every
    year, is at the end of a decade, you still have had 10 areas
    preempted. Slowly but surely, that takes away the ability of
    those of us at State and local government to be as effective as
    we could.
        Let me suggest that the harm done is perhaps even more
    considerable than I am alluding to, because, again, I talk
    about the slowness and the sluggishness of the process by its
    very nature when you have preempted us at the State level and
    decide to transfer power up to the Federal level to deal with a
    broad range of issues.
        Two other things and I will close, because I think that I
    want you to understand clearly that I grew up in the American
    style and NCSL is not challenging the ability of the Federal
    Government to preempt or the wisdom of the Supremacy Clause. I
    happen to agree with it totally. It would not matter if I did
    not. But the point is that we are not challenging or
    questioning the wisdom of preemption.
        What we are simply saying is that where there is a direct
    conflict, as articulated by the Congress, or even a direct
    conflict as you ran into in Gibbons v. Ogden, we cannot
    challenge whether you have taken away the States' ability to
    operate in that area. But where there is not a direct conflict
    between State and Federal law, when there is not a clear
    articulation of the intent of Congress to take away our ability
    to act in an area, we propose that there ought not be any
    presumption of preemption or there not be any preemption
    allowed.
        What we need to do, to reiterate the three points that I
    raised earlier, is have legislation that says, before Congress
    will preempt State law, it will be well-informed about the
    implications, it knows fully what the implications are to State
    and local government, so that there is a discussion about it,
    some consideration of the Tenth Amendment, some consideration
    of the roles that we play in this Federal system.
        Second, that the internal process that you develop through
    this legislation would make it clear to the agencies and the
    courts when you intend to preempt, again, wiping out the field
    of implied preemption, which has become so pervasive in the
    whole area of preemption.
        And third, by giving guidance to the courts and to the
    agencies by simply saying with a strict rule of construction,
    when we have not said as the U.S. Congress that we intend to
    preempt, then there is an irrefutable presumption that there is
    no preemption. As a practical matter, I think that really goes
    to the heart of the problem, because, again, if you review the
    case law closely, you will find that it is only in the implied
    preemption cases where we are vastly losing our ability to deal
    with the issues facing the people of our various States and our
    various localities.
        So if, in fact, this Senate and the Congress takes action
    along those three lines, we think that it will address the very
    serious flaws that we see in the current approach on
    preemption.
        I want to thank you, Mr. Chairman, and you, Senator
    Voinovich, for giving us an audience from the standpoint of the
    NCSL and the Big 7 to talk about these issues that have been
    vexing and perplexing issues to us, at least during my tenure
    in the legislature, which covers about 2 decades. I think that
    if you enact this kind of legislation you will strengthen the
    hands of State and local government, and you will also
    strengthen the hands of the Congress, especially as it relates
    to the courts and to the Federal agencies, because your
    intention as you enact legislation will be specific and clear
    and will give them direction as to how they ought to proceed.
        I thank you for giving me the opportunity to testify before
    you today.
        Chairman Thompson. Thank you very much, Representative
    Blue. I sincerely appreciate that.
        We will now call on Mayor Anthony. I am going to overlook
    the fact that Mayor Anthony's son, on behalf of the University
    of Florida, beat the University of Tennessee, back a couple of
    years ago practically single-handed. He reminded me of that
    yesterday. I am going to overlook that fact and welcome him
    here today. Mayor Anthony, I appreciate your being here.

    TESTIMONY OF HON. CLARENCE E. ANTHONY,\1\ MAYOR, CITY OF SOUTH
         BAY, FLORIDA, AND PRESIDENT, NATIONAL LEAGUE OF CITIES

        Mayor Anthony. Mr. Chairman, I feel more welcome now that
    you noted that point, and I will congratulate you and Tennessee
    for your year of champion reigning. It is a great opportunity.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mayor Anthony appears in the Appendix
    on page 171.
    ---------------------------------------------------------------------------
        Good morning, Mr. Chairman. For the record, my name is
    Clarence Anthony. I am Mayor of South Bay, Florida, and I am
    honored to serve as President of the National League of Cities,
    representing the Nation's towns and cities throughout our great
    country.
        I am here this morning with my colleague to discuss whether
    we can achieve a more effective partnership to benefit our
    mutual constituents. We want to begin by thanking you for
    convening a session yesterday to start this dialogue so that we
    can continue to understand where the fundamental changes may
    occur in regards to our relationship at the Federal, State, and
    local level. We are grateful to you for your recognition of the
    importance of this issue, not just to us, but to our citizens
    and to all Americans.
        The changes, both those ongoing and pending, in the
    Executive Branch, on the Hill, as well as by the regulatory
    agencies, could have long-term impacts on State and local
    governments, so we support fundamental changes in policy
    direction, many of which you have either authored or supported,
    to ensure more efficient and effective possible services to our
    citizens and taxpayers.
        At the time of our Framers, when we were discussing the
    issue and the fashion of the Federal system and federalism, it
    was clearly a long journey through the mud and swamp from the
    White House to the Capitol. But as we look at Federal policy
    and the changes, it is a matter of microseconds in regards to
    information and technology and the borders that we have to deal
    with as we deal with the relevant system of federalism that
    exists today.
        The most powerful trends affecting our future are
    international trade, deregulation, and information technology,
    and this morning, Governor Leavitt has already noted the report
    looking at the impact of global economy, deregulation, and
    information technology on the structure of State and local
    government. Yesterday, we had an opportunity to talk about what
    are the variables and what are the challenges that we are going
    to be facing, and clearly, we came up with some ideas that I
    think were revolutionary and will take some time to dialogue
    and to come to conclusion on.
        For that reason, this morning, we join the Nation's
    Governors as well as my colleague, Representative Dan Blue, in
    making clear our commitment to creating a more enduring
    governmental partnership. Let me make it clear that we support
    the Mandates Information Act, the Federal Financial Assistance
    Improvement Act, the Regulatory Improvement Act, and the
    Regulatory Right-To-Know Information Act. These are critical
    steps in this new information age to making a better process
    available for all decision makers, and we thank you, Mr.
    Chairman.
        These may seem like small steps, but they are critical and
    crucial to the future of our relationship on all the levels. We
    hold as our highest priority, not only in our association but
    amongst our Big 7 organization, a broader effort to redefine
    our intergovernmental partnership, and for that reason, we are
    pleased about your leadership on the Government Partnership Act
    of 1999, along with the crucial and critical assistance over
    the past few months from Senator Levin, and, of course, I often
    refer to him as former president of the National League of
    Cities, Senator Voinovich. This bill marks, we believe, one of
    the most important efforts to fundamentally rethink the nature
    and relationship of our Federal system.
        Our members overwhelmingly support legislation that
    requests that we halt the new trend of major preemption of a
    historical tradition of State and local governments and
    responsibility as one of, again, our top priorities.
        No issue in 1999 is more likely to affect the bottom line
    of local governments and local government budgets and services
    than preemption, and the rights of citizens in cities and towns
    across the Nation than Federal efforts to preempt those
    historical and traditional municipal authorities. This is an
    issue city leaders will confront in the Federal courts, the
    Congress, and the administration, and at independent Federal
    regulatory agencies.
        We believe the recent trend of Supreme Court decisions, the
    Safe Drinking Water Act, the Unfunded Mandates Reform Act, and
    the education FLEX legislation, demonstrate the possibilities
    of a more effective and efficient partnership. We note that at
    a time when it has become more difficult for the Congress to
    act on environmental legislation and the issues themselves have
    become increasingly complex, Congress unintentionally creates a
    greater role and authority for Federal agencies to set and
    direct Federal policy.
        As we look forward to the issues that will shape the next
    millennium, we think it is important to secure a system where
    we have a greater reason to work together. Whether the issue is
    tax reform or electronic commerce or electric utility
    deregulation, any Federal action can have enormous consequences
    on States and local governments.
        We are pleased that the model set by this Congress of
    consultation first, joint efforts to achieve bipartisan
    consensus, and action which provides for pre-assessment
    accountability and enforceability is a model for the future. So
    we recommend a few things.
        We recommend that the Committee consider the adoption of
    the pending set of federalism bills scheduled for markup next
    week. We recommend the introduction of the Government
    Partnership Act of 1999 to act as a follow-up to the Unfunded
    Mandates Reform Act of 1995. And, clearly, we are grateful for
    the leadership of the Chairman, Senator Voinovich, and other
    Members of the Committee, and we hope that we go back to the
    200 years in Philadelphia where the Framers clearly provided
    the responsibility of local government to serve the people, our
    constituents, and to help you to serve your constituents, as
    well.
        Mr. Chairman, we thank you for this opportunity.
        Chairman Thompson. Thank you very much.
        Sitting here listening to you, it occurs to me that while a
    lot of people point out that we are living in a more complex
    society with technology and so forth, the global economy, is
    pushing us away from federalism and inexorably so, that they
    overlook the fact that another change that is taking place in
    this country over the last couple of or 3 decades is the
    increase in the quality of our government at our State and
    local levels.
        At the State level, for example, we have more and more time
    devoted by the legislature. Some people do not think that is
    necessarily a good thing, but most people, when they look at
    the level of education, the level of time spent, the salaries
    and things, all of the indications that you might look at in
    terms of what kind of people you are getting into those areas,
    it is coming up all the time across the board.
        So there is much more capability in every sense of the word
    at the State and local level than we used to have, so
    therefore, a better ability to deal with some of these issues.
    While there are some forces pushing in the other direction,
    there are some real important forces, I think, still pushing in
    the direction of recognizing the benefits of federalism.
        I appreciate both of your references to what we are doing
    here in this Committee. We have tried to make a real statement
    and a real contribution to this. Everybody seems to give lip
    service to the concept of federalism and the laboratories of
    democracy and the government that is closest to the people is
    best and all that, but we are really trying to do something
    about it.
        As you point out, in our next markup, we are going to be
    considering a regulatory accounting bill, which will indicate,
    from your standpoint, among many other things, the impact of
    regulation on State and local government. We will attempt to
    pull together in one place the extent of regulations and what
    it is doing with regard to State and local government.
        The Regulatory Improvement Act that you have talked about
    will require more consultation with State and local
    governments. We would be requiring, in appropriate cases, cost-
    benefit analyses and risk assessments and things of that
    nature, not requiring anybody to make their decisions based on
    that, but at least having the information there, having some
    peer review, having some open discussion, some transparency,
    including discussions at an early stage with State and local
    governments before they are all locked in and there is really
    nothing you can do about it.
        The grants management bill will help with regard to the
    administration of grants. All these things are coming up next
    time, and I think they are all a part of a bigger picture and I
    appreciate your endorsement of those.
        Of course, there is the Government Partnership Act, as you
    mentioned, on the question of preemption. Again, what we are
    trying to do there is not come down with a heavy hammer and
    say, you have got to do it this way or the States and local
    governments always prevail. All you are basically saying is,
    first, before the Federal Government makes a determination that
    we are going to preempt in an area, that we give it some
    consideration as to the ramifications of what we are doing, and
    second, to make sure that we intend to do it. We are apparently
    preempting in areas that perhaps we did not even intend to
    preempt, thus the doctrine of implied preemption.
        So a lot of good things are happening and I think that one
    of the things we need to do, if we can move forward with the
    Government Partnership Act, is consider whether or not we
    should be in some way formally contacting your associations and
    having some discussions with regard to major changes that we
    might make in these areas as we do our assessments of the
    impact and so forth. I do not know how we are going to know
    that unless we contact you, so I look forward to us working
    together on those things.
        As you look at it, you are looking at it from the State and
    the local level. Representative Blue, you mentioned that
    perhaps we are doing more harm than we realize. That intrigued
    me. Also, you mentioned in your written statement that the
    Federal Government is not always effectively protecting the
    public, even in the environmental public health areas. You
    indicated there might be some abdication there on their part.
        Most people kind of look at the Federal Government and say,
    well, we have got to depend on the Federal Government totally
    to protect our health and environment. I take it from what you
    are saying that you do not necessarily subscribe to that
    totally. Could you elaborate on that a little bit?
        Mr. Blue. I think there are many instances in which State
    governments, especially, and to a more limited extent, local
    governments, can intrude into the environmental area. When you
    start talking about air quality on a large scale and issues
    like that, clearly, there is a need for Federal involvement.
        But when you start talking about more stringent
    requirements at a State level, you talk about something over
    and above whatever the minimum requirements are that the
    Federal Government or a Federal agency may impose, State
    governments and local governments ought to be free to
    experiment from that platform, to add things to enhance the
    quality of life of their respective citizens.
        Essentially, when I say ``abdicate'' in my statement, I
    meant it is not that the Federal Government has not entered
    into the field and has not legislated to some limited degree in
    an area. But in many instances, the ability of State and
    locally-elected officials to deal more seriously with specific
    problems, I think, is infringed upon sometimes when the Federal
    Government preempts the area and prohibits or prevents our
    government from entering in and enhancing whatever it is that
    you may be trying to achieve at the national level.
        Chairman Thompson. That was part of the debate, for
    example, in the Safe Drinking Water Act. The Federal Government
    was requiring the locals to test for things that did not----
        Mr. Blue. That did not grow anywhere within 2,000 or 3,000
    miles, I think. There is something happening in Hawaii and you
    have to test for it in Oklahoma and Nebraska, or somewhere in
    the Midwest. It did not make a lot of sense.
        Chairman Thompson. It shows that we can move off the dime
    eventually when we are faced with that, and with regard to
    that, welfare reform, unfunded mandates, Ed-Flex in the
    education area, and so forth.
        From the State area, and you, Mayor, from the local area,
    just on a daily basis, what are the biggest problems that you
    face or that you see that are presented by not recognizing
    sound principles of federalism, areas where you see the Federal
    Government preempting, that your citizens would be better off
    if there was not preemption or more flexibility on the State or
    the local level. Does anything in particular come to mind?
        Mr. Blue. Let me cite one specific for you. Just last week,
    we were debating in my legislature the issue of health care,
    and every time that issue comes up, we are confronted with what
    does ERISA do. Hundreds of court cases over the last several
    years have basically determined that certain areas in ERISA
    dealing with health care are off limits to State legislatures.
    We cannot do anything about it.
        Now, I do not know that there is any specific, at least as
    I recall, specific prohibitions in the actual Act that say that
    we are totally preempting the field----
        Chairman Thompson. I think you are.
        Senator Edwards. Especially in ERISA.
        Chairman Thompson. Yes.
        Mr. Blue. But I am talking about when we start talking
    about HMOs that are not dealing with major employers and you
    have got an ERISA plan. But every time you start a debate on
    health care, you run into at least what is perceived as some
    preemptive effort on the part of the Federal Government or
    Federal agencies.
        One of the things, I think, that Governor Thompson may have
    mentioned, the TANF grant, from an NCSL perspective, we are not
    as bothered by the regulations, because, quite frankly, our
    staffs were in constant consultation on developing the
    regulations. I know NCSL staff was, because I was consulted off
    and on. The principles may not have been to the degree that we
    should have been across the country, but from a staff
    standpoint, I think we probably won 90 percent of the battles
    that we engaged in on the TANF regulations themselves.
        But I think that it underscores a bigger point, and that
    is, as long as we know that before a decision is made, that we
    are consulted and we are at the table when the discussions are
    going on, it highlights what the difficulties are and it
    highlights where you are infringing on what we perceive to be
    State territory or local territory.
        Chairman Thompson. That is one of the things we are trying
    to address in the Unfunded Mandates Act and one of the things
    we are trying to address in the Regulatory Improvement Act.
        Mr. Blue. Absolutely.
        Chairman Thompson. It is early consultation.
        Mr. Blue. Sure.
        Chairman Thompson. Mayor Anthony.
        Mayor Anthony. The areas that I think local government
    tends to be affected by, and it probably transcends a lot of
    areas, because we not only have to deal with the Federal
    regulations but we oftentimes find ourselves being challenged
    by the State regulations. So we are, for lack of a better term,
    dumped on a couple of times as stuff rolls down in the process.
        Clearly, in the environmental area, it has always been a
    challenge that we are required to implement policies from the
    Federal and State level without funds being given to us. I
    think that is working a little bit better in some States, in
    some counties, but that continues to be an area.
        When it comes to things such as construction and trying to
    provide the municipal financing, there are stringent
    requirements that are not only placed on local governments by
    the SEC but the IRS and the process that we have to go through
    is oftentimes very cumbersome.
        I have often said that good policy for local governments
    that is created by the Federal Government and the State
    Governments are good policies when money is attached to it.
    Oftentimes, we are seeing issues such as the ADA, which I think
    is good policy, but there are a lot of requirements on the
    State and local government to abide by this legislation but no
    process or mechanism to provide us the resources to implement.
    So, yes, great policy, but it is not great policy when there is
    money not attached to it.
        As, Mr. Chairman, you have noted by your chart, the revenue
    that has increased for the Federal Government has not continued
    to increase at the same level as that of the local level. The
    differences really become more obvious when you take a State-
    by-State or government-by-government parallel with this chart.
    The Federal Government continues to grow at this point. State
    revenue grows here, and the local county and city revenues have
    not grown. They have basically decreased as it relates to your
    taxes collected.
        Chairman Thompson. So that red line there is basically
    State growth more than local growth, is that right?
        Mayor Anthony. It combines both and it makes the
    percentages look good in terms of the State and local, but if
    you pulled the local level out, as you will see when you get a
    chance to review this chart, we have the State revenue of
    California that has grown--Federal is at about 22 percent. The
    State of California is about 5 percent, and Santa Clara County
    City has decreased 5 percent.
        Chairman Thompson. What are you referring to there?
        Mayor Anthony. That is the pamphlet, the executive summary
    of the global----
        Chairman Thompson. That is a part of our record, is it not?
        Mayor Anthony. Yes, it is a part of your record.
        Chairman Thompson. OK.
        Mayor Anthony. So your chart, as amplified, is very correct
    and on point, but it is amplified by just the State level.
        Chairman Thompson. That is a very good point. Thank you
    very much. Senator Voinovich.
        Senator Voinovich. I have had a lot of opportunity to talk
    with Mayor Anthony about our mutual concerns. As I mentioned to
    Governor Leavitt, I think that if the National Conference of
    State Legislatures and the National League of Cities could give
    some really good examples of where preemption has hurt and
    preemption that is being contemplated now will hurt, I think it
    would give a lot more impetus to passage of Senator Thompson's
    legislation. I think that many members of the Senate just are
    not familiar with the problem. I think the more you can do
    that, the better off we will be.
        The anecdotal thing on the Safe Drinking Water was the fact
    that we had communities testing, adding 25 new things every 3
    years whether they needed to be tested for or not, so that you
    could not concentrate your money on the things that really
    mattered. Some of those kinds of anecdotal things are very
    helpful to members of the Senate and it is important that you
    communicate those to your respective Senators or get your
    members to so they understand there is a problem out there that
    needs to be addressed.
        This is kind of off the subject, but it sure does deal with
    federalism, and that is the TANF program. That program has been
    very successful. On the other hand, you know that in many
    States, the surpluses are building up and there are many people
    in Congress today that are looking at that with some interest
    in maybe taking some of the money. I would be interested in
    your response.
        Mr. Blue. Certainly, our response would be to urge you not
    to take it, because we think that as part of legislation
    several years ago, when we agreed to accept less to do more
    with it in exchange for the flexibility, and besides that, I
    want to point out that in North Carolina, we had gotten waivers
    before the new legislation and had had a jump start on trying
    to reduce the welfare rolls and I think that we have been very
    successful.
        I listened to Governor Thompson's numbers. We have not
    gotten 91 percent of the people off, but we have been extremely
    successful, and I think that to come in and reduce the amount
    now when we are getting to the most hard core of those on the
    welfare rolls would be a little unfair to the States that have
    really put forth the effort, the local governments that have
    maintained their effort as best they could, and we ought to
    have the ability to try to go ahead and totally correct the
    problem.
        But let me address one other issue that you raised, because
    we will have our staff pull together all of the instances where
    we think that preemptive efforts or lack of respect for
    federalism adversely affects State and local governments, but I
    want to underscore again the point that Governor Leavitt was
    making about what impact e-commerce is going to have on the
    ability of State and local governments to remain viable
    partners, especially State Governments, in this State-Federal
    partnership. It perhaps poses the biggest threat to our ability
    to generate the revenues to come up with innovative solutions
    to problem solving of anything that we have seen in our recent
    history and it very well may redefine the whole relationship
    between States and the Federal Government.
        When we look closely at the numbers, we certainly know that
    in basically putting a stand-still order in place, saying that
    we are going to study what the impacts are, Congress did not
    mean to tie the hands of State legislatures, or for that
    matter, local governments, because indirectly, they are
    impacted by their inability to collect property taxes as
    shopping centers start feeling the real pinch of e-commerce.
        But I would suggest that preemption in that area alone, by
    saying that the State Government cannot do what State
    Governments normally would do or local governments regarding a
    stream of revenue is something that was not intended, something
    that entered into the debate further on in the discussions, but
    something that was not intended by enactment of legislation.
    Without moving urgently and, I think, very quickly on that, the
    size of e-commerce will be so great that it will be very
    difficult to really protect States' interest in a stream of
    revenue that States absolutely have to have, since we are so
    dependent on sales tax revenue to finance the services of State
    Government.
        So when you talk about specific examples of preemption
    without a specific statement at least early on in the
    discussions as to an intent to do that, I think that is right
    now the most vivid one.
        Senator Voinovich. I really do not think that members of
    Congress understand the full impact that that is going to have
    on our sales tax revenues in our respective States and how
    important that source of revenue is to being able to provide
    basic services, and particularly in the area of education. One
    of the things that is puzzling to me is why we do not have more
    lobbying being done by the National Education Association and
    the American Federation of Teachers on this issue.
        I think that, again, you need to really dramatize this
    issue and its threat to the basic source of revenue that so
    many States have in order to provide services for people.
    Congress should understand, if it evaporates, then the
    pressures are going to be on Congress to come up with some
    other source of revenue to take care of that, and that means
    that they are going to have to get into the issue of some other
    taxation to compensate for the loss of revenue that you have.
        I think when people finally understand that, they may take
    a lot more interest in trying to work out some fair solution to
    State and local government and also to make sure that this is
    not an encroachment on electronic commerce in this country or
    even internationally. But it is a major threat to federalism
    because if you do not have the money to take care of the
    problems, then you are in bad shape.
        Chairman Thompson. That is really hitting home in my State
    right now. We are projecting shortfalls in the future. There is
    a lot of discussion going on as to what we should do about it
    in terms of our tax structure and so forth. But one of the
    things that has got to be figured into that is to what extent
    the Federal Government is preempting sources of revenue and to
    what extent they are causing the expenditures of revenue which
    could go to solve our problem. I can assure you, that is one of
    the things that I am going to be looking at.
        Mayor Anthony, did you have a comment on that?
        Mayor Anthony. I was just going to follow up on the basic
    service issue. It clearly does impact especially States like
    Florida which relies a lot on the sales tax in order to carry
    out services, and it will impact the teachers and services,
    police, fire, and basic services.
        I agree with Senator Voinovich--we have not been able to
    bring the partners to the table the way that we need to to get
    this issue out and available to people to understand. I am one
    that uses the e-commerce to be able to order my books and my
    wife uses it for books and other things, so it is a challenge
    when I say to her, you know, we are not providing taxes to be
    able to help local government. She says, oh, so I am not paying
    taxes if I order on e-commerce. So that is the reaction.
        We have to be able to find a new method of engaging other
    associations on this issue or we are going to see a continued
    loss, in not just Tennessee but States throughout this Nation.
    So we are partnering. The Big 7 has a campaign that we are
    trying to engage others in this dialogue.
        In regards to the issue on welfare reform and the process,
    I agree with Representative Blue. We are just beginning to see
    the successes in the States and counties. But I do want to
    share with you that this is the time now, since the economy is
    good and unemployment is low, that we deal with a population
    that we have not dealt with truly, and that is those that truly
    are impoverished. It is easy in a sense to look at the numbers,
    but if we looked at the numbers in regards to the unemployment
    of those that are in the inner cities and minorities, African
    Americans and Hispanics, those numbers continue to be high. So
    as we celebrate, we need not celebrate totally until we are
    able to get those rural communities and those pockets of people
    who have not participated in the prosperity of America like
    most have.
        That is the real challenge. So I do not want our arms to be
    tied at this point by more preemption and more regulation and
    less flexibility. This is truly the time that we can test
    ourselves to see if we really are bringing prosperity to all
    Americans as we approach the year 2000.
        Chairman Thompson. Thank you very much.
        Senator Edwards.

                  OPENING STATEMENT OF SENATOR EDWARDS

        Senator Edwards. Thank you, Mr. Chairman. I might add that
    I share many of the beliefs that you and former governor and
    Senator Voinovich have expressed this morning. I do not know
    why it is that we believe here inside the beltway in Washington
    that we are so much smarter than the State legislatures back
    home and the local governments. My experience has been that
    these folks are thoughtful, they are on the ground, they know
    what is happening, and they make good decisions about what
    needs to be done.
        Let me also add that I wanted to come here because Dan Blue
    is here, an old friend of mine, a colleague. You all have been
    referring to him as Representative Blue. He was the Speaker of
    our House, and so those of us who know him better refer to him
    as Speaker Blue, one of the best Speakers we ever had in the
    history of the North Carolina legislature. He is an old friend
    and colleague and someone who commands tremendous respect in
    the leadership community in North Carolina, so we welcome you.
        Mr. Blue. Thank you.
        Senator Edwards. Let me ask a couple of specific questions,
    and I will start with you, Speaker Blue. We have talked a
    little bit about this issue of preemption and your concern
    about preemption, and I fully share that concern. Can you give
    us some specific examples, and I am particularly interested in
    North Carolina, where preemption has created a real problem,
    for example, in the area of education. You mentioned health
    care, for example. I know right now the North Carolina
    legislature is engaged in discussion of a patient's bill of
    rights and HMOs and those sorts of things, and ERISA is
    obviously a real impediment to the efforts in that area. But,
    for example, any ideas about things you have encountered in the
    area of education?
        Mr. Blue. Nothing specifically comes to mind, except there
    are a lot of regulations regarding different classifications of
    students in public education. We have had some debates about
    that. I will not say that we are preempted. It is just the
    regulatory requirements that we run into and spending money the
    ways that we think may be more effective to address certain
    student populations.
        I will give you another area perhaps where preemption has
    bothered us, or at least we think it has. In the area of
    transportation, there has been a lot of debate. There was some
    debate about drivers' licenses requiring Social Security
    numbers and issues like that that directly conflicted with
    North Carolina law, and we thought without any valid reason,
    privacy issues and things like that where we have made a
    specific public policy finding that we wanted to preserve
    certain aspects of privacy. You get Federal law preempting
    without any clear indication on the part of the Congress that
    you want us totally preempted in that field. It is things like
    that that we get the midnight phone calls on, and a wide range
    of issues.
        I think, again, to answer your question directly, it would
    be much easier if I just list all of the various things, and we
    will get that to you this afternoon as they come to mind. I
    will call my staff at home and get the specific instances. I
    was looking at the broad effects and the cumulative effect of
    preemption in sort of a vacuum, somewhat, without looking at
    the specifics, but I will get that information for you.
        Senator Edwards. I think that Ed-Flex, for example, which
    was mentioned by the Chairman, was a good step in the right
    direction, but it is just one step that needs to be taken.
    There are many steps that need to be taken to remove some of
    these bureaucratic strings that are tied to Federal money that
    goes to State and local governments so that you all can use
    this money more efficiently. I mean, you are there. You are
    living there. You know what is happening.
        Mr. Anthony, can you respond to that question, too, some
    specific areas that you have seen?
        Mayor Anthony. Senator, first, I was going to ask you,
    would you like to be a mayor, because you sound as if you would
    make a great local government official.
        Senator Edwards. I have to see if I like this job, first.
        Mayor Anthony. As Representative Blue has already noted,
    there have been strings in the educational area in regards to
    stringent requirements, and you can go into the construction of
    schools, you can go and get examples in regards to specific
    curriculums that are required.
        But can I give you a great example? There are States all
    over this Nation that are taking charge and making sure that
    the flexibility that is there, they are utilizing it. For
    example, if we look in the education area, there are State
    legislators and governors all over this Nation that are having
    special sessions funding education because that is an important
    priority to their State. Other States are having special
    sessions on environmental policy because that is a specific
    interest in that State. Counties and cities are having special
    revenue directed for sensitive lands. In Palm Beach County,
    where I am from, we created a taxing authority for children's
    issues, children's services taxes.
        These are examples to show that if we have the flexibility
    and if we are not preempted by the requirements of the Federal
    Government, we deal with our issues based upon the concerns and
    the desires of the people that live in those communities, and I
    think that that is the real model that we would like to be able
    to share Nationwide and that Congress understands.
        Cities, States, and counties in this Nation are not
    usurping their responsibility. In fact, if we are concerned
    about education in our State, if you are not preempting us and
    giving us all of the additional requirements, we will have a
    special session and we will put money into education if that is
    our State priority. But we would like that flexibility, and
    some cities around this Nation are buying sensitive properties
    through a general obligation bond of the citizens of that
    community because that is their interest.
        So there are some examples and models throughout this
    Nation that I hope we keep in mind through this process that
    are working. As you said, Mr. Chairman, government officials
    all over this Nation are prepared to provide the services,
    Senator, that our citizens want.
        Senator Edwards. The word that comes to mind is a word I
    have heard the Speaker use on occasion, is empowerment. It
    seems to me that we want less of our Federal tax dollars spent
    on this bureaucracy up here in Washington and more of it spent
    to empower State and local governments to do the kind of job
    they need to do and are well-equipped to do, in my judgment. Do
    you agree with that, Speaker Blue?
        Mr. Blue. I agree with that, Senator. And the other thing,
    when we look at the wide range of issues, it is further
    empowerment, but also allowing us to use a power that at least
    historically we have had or perceived that we have.
        If you just look at the areas where preemption gets to be a
    hot topic, at least in NCSL corridors, it is tort reform, areas
    that traditionally have been the domain or bailiwick of the
    States. Right now, we have serious discussions on what kind of
    preemption there will be to insulate various entities from Y2K
    potential tort liability. Those are issues that States are best
    suited to deal with. Those are issues that, historically,
    States have been empowered to deal with.
        To have the Federal Government intrude in that area,
    whether it is commerce or other areas, and preempt us out of
    the fields, we think does not serve the purposes of the Federal
    system that we are a part of. And you can go down the list, of
    product liability and a wide range of different issues where
    there has been serious discussion of preempting State authority
    to act in ways the States are best suited to act.
        Senator Edwards. I could not agree with you more. All I
    have to say, I have ultimate confidence in State and local
    governments' abilities to act in those areas and to act
    intelligently and thoughtfully and with respect to their
    specific local concerns, which is what I think we ought to all
    be thinking about.
        Let me just say, Mr. Chairman, thank you very much. I want
    to say thank you to Speaker Blue. Mr. Anthony, thank you for
    being here. It is always an honor for me to be in the presence
    of our Speaker.
        Mr. Blue. Thank you.
        Chairman Thompson. Thank you very much. Senator Lieberman.
        Senator Lieberman. Very briefly. I am sorry, gentlemen, I
    had to be in and out. I thank you for your testimony and your
    interest and your leadership generally.
        I was actively involved in the activities here that led to
    the moratorium on taxation regarding Internet sales, and part
    of the reason for the moratorium was the complication of the
    issue. I do not know whether you have any thoughts today about
    it, but we are taking some tried and true federalism principles
    that have been applied to interstate commerce, but we are
    applying them to this extraordinary new highway, as they say.
        The question that puzzled a lot of us, because we see this
    trend developing--more and more sales going on e-commerce and,
    therefore, more and more revenue being deprived to the State
    and local governments from sales tax--but whom do we tax and
    how do we do it? Does the sale occur in the place where the
    person is sitting in front of their PC? Does it occur in the
    State where the headquarters of the seller is? Does it occur
    maybe in some third State where they have their warehouse from
    which they dispatch? Does it occur, as some have alleged, where
    the Internet service provider happens to be located, where all
    the connections are happening?
        It is really serious, and again, having come from State
    Government myself in a State that has been primarily dependent
    on the sales tax for its revenue, this has real serious
    implications. But the question is how to make it rational and
    fair and not deprive the States not only of the revenue, but,
    as you have said, of the independence that comes, of the
    strength that comes with an independent source of revenue. Do
    you have any thoughts about that this morning?
        Mr. Blue. I have a few. First, I agree with you that there
    are some very serious questions raised in e-commerce. You get
    the situs question, certainly, and it is as compelling as any.
        Senator Lieberman. Right.
        Mr. Blue. I think that this may be the kind of situation
    that does not question the States' rights to a revenue stream
    but raises a challenge for the States and localities in
    partnership with the Federal Government and the Congress to
    come up with some solution by defining those issues and still
    collecting the revenue. It may cause us to create different
    kinds of mechanisms for doing what all 50 States are uniquely
    qualified to do. Every State--well, not all 50, I think there
    may be four or five States without a sales tax, but that is the
    one strength of State tax officers and revenue collectors
    around the country. They are experts in collecting sales taxes.
        Senator Lieberman. Right.
        Mr. Blue. We distribute them back to the local government.
        But it may call for some kind of partnership developed at
    the national level so that you cannot skip from State to State
    or deciding the question that we ran into. Congress can deal
    with that because of its commerce powers while we can at the
    State level and you can determine how to aid us in doing what
    we have to do in order to deliver the services to our people.
        I do not at all question the need for a serious study. The
    moratorium may have been appropriate. I just would say that if,
    in fact, it is going to take us a long time to do something
    about it, the forces build up so quickly that after we have
    decided what to do, it may be a little more difficult to do it
    when you are dealing with a $100 billion stream of commerce as
    opposed to a $5 billion stream of commerce.
        So we think there is some urgency about it. We know that
    the Committee that was appointed to look at it has not met. We
    know about the challenges of its composition. But something has
    to be done. We have appointed a committee within the National
    Conference of State Legislatures to study all of the aspects of
    e-commerce and, hopefully, come up with some suggestions, and
    recommendations, that we can share with you here in Congress.
        Senator Lieberman. That is a fair point. Interestingly,
    your answer reminds me that in all the discussion we had
    leading up to that bill, nobody was talking about, or wanting,
    the Federal Government to become the tax collector. It was
    really more a question of how you rationalize the claims that
    competing State and local jurisdictions might have to tax this
    new form of commerce. Even if anybody thought about it
    conceptually, it was as a way to collect the taxes to then
    return them to the State and local governments, but I do not
    think there is much interest here in having the Federal
    Government develop the capacity or the whole bureaucracy
    required to begin to collect sales taxes, essentially.
        Mr. Blue. What we are concerned about, Senator Lieberman,
    is that we do not experience what so many of us went through in
    the late 1980's or early 1990's by coming up with a way to tax
    or to get the revenue from this source that we get from any
    other sale and 60 days later it has changed its situs. In the
    1980's, those of us at the State level addressed the use of
    incentives that States were giving to lure companies from one
    State to the other, and we know that with e-commerce, it is
    easy--in fact, you can move it instantaneously.
        So from the Federal level, we need some ability to ensure
    that it does not jump across the North Carolina mountains over
    into Tennessee and you constantly are chasing an object that
    you cannot catch.
        I know that there is serious discussion on us guaranteeing
    that the VAT tax will be collected for the European Community,
    and so there may be some other ways that we can look at what we
    do for States within this structure to collect sales tax on e-
    commerce. But I am saying that it is the kind of thing that is
    challenging, but certainly we ought to be able to rise to the
    instance.
        Senator Lieberman. To deal with it. Mayor, do you want to
    add anything?
        Mayor Anthony. I agree with Representative Blue. Clearly,
    as local governments, we think that the State level is where it
    is happening in regards to the revenue collection. The National
    League of Cities has been discussing and debating this process
    for the last 2 years in preparation for this commission. We do
    agree that more research is needed, but the arguments that have
    been made to create confusion, in a sense, of saying that we
    have 50 different States and 50 different collection processes
    is one that I think goes back to the concept that we do not
    think that State and local governments are able to manage and
    create policy for their own constituents and their own future,
    and, in fact, we are. We are prepared to deal with this.
        I personally think that the State in which the recipient
    receives the product is where the tax is collected. The report
    may not, in fact, come back and say that. It may be greater
    minds than mine, because I am a little country boy from South
    Bay, Florida, but----
        Senator Lieberman. Yes. The Chairman tries to pull that
    line on me every now and then. [Laughter.]
        Mayor Anthony. But I think that that is the answer there.
    But, again, we can go through a process of research to come up
    with one that I think is appealing to the partnership that we
    have created through the Big 7 to resolve this issue.
        Senator Lieberman. Good. I look forward to working with
    both of you and your organizations on it. Thanks very much.
        Chairman Thompson. One of the things in listening to that
    that I am reminded of is the conflicts of law question. I never
    could figure it out in law school, but it is there. Each State
    has its own rules as to the conflicts of law that it will
    apply. You think about the law of contract. Some States apply
    where the contract was executed, some where it was consummated,
    some where it was performed. Some recognize that if you put in
    the contract that this is the State law that will apply.
        So the point is that States are used to dealing with rather
    complex situations. There are accusations sometimes of forum
    shopping and things of that nature that would be under any kind
    of a system. But we have a rather, for, I guess, at least 150
    years or so, a rather complex set of 50 different sets of rules
    as to how they apply, conflicts of law situations that involve
    transactions across State lines with regard to very complex
    commercial transactions. We are not flying blind here. It is
    nothing that we cannot do.
        Thank you very much, gentlemen. You have been extremely
    helpful and we really appreciate you being here. We look
    forward to working with you in the future.
        Mr. Blue. Thank you.
        Mayor Anthony. Thank you very much.
        Chairman Thompson. Thank you very much.
        I would like to introduce our third and final panel.
    Professor John McGinnis is joining us from Cardozo Law School.
    He will be followed by Dr. William Galston, Director of the
    Institute for Philosophy and Public Policy.
        Gentlemen, thank you very much for being with us here today
    and for waiting through this long morning, but we certainly
    want to hear from you. Professor McGinnis, would you like to
    start?

    TESTIMONY OF JOHN O. McGINNIS,\1\ PROFESSOR OF LAW, BENJAMIN N.
                 CARDOZO LAW SCHOOL, YESHIVA UNIVERSITY

        Mr. McGinnis. Thank you very much, Mr. Chairman. I would
    like to make my full statement a part of the record. I am very
    grateful to be here today to talk about constitutional
    federalism, which is the cornerstone of our government. I would
    like briefly to talk about the virtues of constitutional
    federalism and then about how to revive it.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. McGinnis appears in the Appendix
    on page 180.
    ---------------------------------------------------------------------------
        Chairman Thompson. Your full statements will be made a part
    of the record, to whatever extent you want to summarize.
        Mr. McGinnis. Constitutional federalism is the most
    important structure of our Federal Government. It is a happy
    paradox that two interlocking governments can lead to better
    governance but less governance than one unitary State. The way
    the Constitution does that is to create two sets of
    governments, each limiting the other.
        The Federal Government was limited by the enumerated
    powers. Essentially, the Federal Government domestically was
    given the power to create a national free market. But that very
    power limited the State Governments, because the State
    Governments had to compete in that market. Therefore, any
    exactions they took from their citizens would tend to cause
    their citizens to move, or move their capital elsewhere, and so
    that was a limitation on State governments.
        But federalism also made governance better. It made
    governance better because it created a marketplace for
    governments. States had to compete, to create public goods, the
    public services that the market and the family cannot provide.
    There was pressure on them because they were in this national
    marketplace, this competitive marketplace among themselves to
    produce better services at lower costs.
        Finally, the other most important virtue of federalism was
    that it pushed decisions down to the people. Adam Smith, in
    fact, said that benevolence is much more likely when people
    live among one another, and social solidarity and civic
    responsibility comes most easily in our communities. That is
    the other reason that federalism is part of a greater principle
    of subsidiarily, of trying to push decisions down to the people
    in the smallest possible community.
        These are very great virtues. Unfortunately, our federalist
    system in the last 60 years has been very much frayed. In my
    testimony, I go into the reasons for that, but suffice it to
    say that we really no longer have a doctrine of enumerated
    powers. The Federal Government has plenary spending, and
    regulatory authority, and in my view, the consequences have
    been extremely unfortunate.
        The Chairman has put up, I think, a very useful graph,
    because one of the most important consequences is that both our
    State Governments and our Federal Government tax and spend less
    efficiently than they did when federalism was at the height. I
    will just give you one statistic to show that. When federalism
    was at the height, which, I think, was around 1910, before the
    Sixteenth and Seventeenth Amendments, the Federal Government
    spent around 1 percent of GNP domestically on programs. Today,
    it spends 17 percent.
        But it is not only the effects on our economy that are
    troubling. To me, the most worrying aspect of federalism's
    decline is the effect it has on our civic life. Because most
    government happens far away, apart from citizens' communities,
    citizens feel more alienated and distant from government.
        And finally, because the Federal Government now has plenary
    spending and regulatory authorities, there are really no clear
    demarcations between the State and the Federal Government and
    that leads to a serious problem in accountability. If both
    governments can do the same thing, Federal officials can avoid
    accountability by seeming to make a State official be
    responsible for the action the Federal Government has
    undertaken.
        So what I think we need today to do is to think about how
    to revive constitutional federalism, to do what Governor
    Leavitt said, create a new system of enforceable federalism. I
    am very pleased to support the draft bill of the Chairman of
    this Committee, which, I think, goes straight to the issue of
    accountability, the third danger to which the decline of
    federalism has led us.
        The problem of preemption today is that the State laws can
    be preempted without the Congress making a conscious decision
    to do that, and that is a serious problem. Happily, the
    Chairman's bill would require Congress to provide reasons in a
    legislative report for its decision to preempt State law and
    the bill would also declare that no legislation or regulation
    would preempt State law unless it expressly so stated or it was
    in direct conflict.
        This bill would encourage deliberation before preemption.
    It would also make it impossible for Federal judges to make
    decisions about preempting State law without express
    congressional authorization, and that is very important,
    because one of the protections the States still have in our
    system is that representatives are elected from the States and
    it is important that they make the decisions clearly and
    expressly to preempt State law.
        But I must confess that I think this bill in itself is not
    sufficient to restore constitutional federalism. Unless the
    Federal Government is constrained constitutionally from
    spending and regulating, interest groups will bypass States and
    obtain spending and regulation on their behalf from the Federal
    Government. One-stop shopping is not only easier, but it avoids
    the competitive pressures that inhibit States from adopting
    special interest legislation.
        Therefore, I would actually like to suggest that many of
    the other kinds of framework legislation and constitutional
    amendments that this body is considering to constrain the
    Federal Government are actually very important pieces of
    federalist legislation. I would point to the balanced budget
    amendment in this regard and the amendment which the House of
    Representatives has recently voted on, and voted with a
    majority, not the necessary two-third majority, to require a
    supermajority to raise taxes.
        An amendment that would restrict both debt and taxes would
    force individuals and interest groups back to their States.
    There would be, then, constraints on the ease with which the
    Federal Government could spend, and the advantage of that would
    be the Federal Government would again be a limited government
    and there would be restraints on that graph showing us the
    taxes that have gone up so far in the past 80 years. And States
    and localities would become once again the main repository of
    spending, and competition among them would be revived.
        Similarly, I think that one should also consider framework
    legislation and, if necessary, a constitutional amendment to
    make it very much harder for the Federal Government to devolve
    regulatory decisions on Federal agencies. If Congress itself
    has to make the decisions on regulations, the Federal
    Government can regulate substantially less. And once again, I
    think that would reinvigorate States, because everyone would
    look primarily to them for regulatory activity. We need to
    think of how to reinvigorate States constitutionally.
        I would add that none of these proposals would get rid of
    the Federal Government. The Federal Government could still
    operate to raise taxes, to raise debt, to spend more money,
    when there was a substantial national consensus. That is what a
    super-majority rule would require. They could still regulate if
    they were willing to take the hard work of making the
    regulations themselves rather than simply delegate these
    responsibilities to the State agencies.
        But these two kinds of reforms would once again
    reinvigorate federalism and bring the States back to their
    proper place in our Federal system. Thank you, Mr. Chairman.
        Chairman Thompson. Thank you very much. Professor Galston.

    TESTIMONY OF WILLIAM A. GALSTON,\1\ PROFESSOR, SCHOOL OF PUBLIC
            AFFAIRS, UNIVERSITY OF MARYLAND AT COLLEGE PARK

        Mr. Galston. Mr. Chairman, my name is William Galston. I am
    a professor at the University of Maryland's School of Public
    Affairs. I must say, it is an honor for a private citizen
    representing no one except himself to be invited to testify on
    a matter of such fundamental importance to our Nation.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Galston appears in the Appendix
    on page 195.
    ---------------------------------------------------------------------------
        As you know so well, federalism is not a new question for
    our country. Indeed, it is the oldest question. It is the first
    question our founders faced in framing our Constitution and
    then in defending it against its many adversaries.
        Confronted with the manifest inadequacies of the Articles
    of Confederation, the founders set out to strengthen the power
    and authority of the central government. They did so for three
    reasons that have shaped our history, and in my judgment,
    remain relevant today. First, to enable the American people to
    promote the common defense and general welfare of the Nation as
    a whole, as distinct from its parts. Second, to build a
    continental market free of internal barriers to the flow of
    commerce. And third, as James Madison emphasized in Federalist
    No. 10, to defend the rights and interests of individuals and
    minorities against the potential injustice of local majorities.
        Not surprisingly, the Framers' efforts encountered staunch
    resistance from State officials who feared the loss of
    prerogatives and power if the new Constitution were ratified.
    In response, the supporters of the Constitution formulated a
    theory of federalism, memorably articulated in the Federalist
    Papers. In the interest of time, let me very briefly summarize
    the key points.
        First, the system established by the new Constitution is
    neither a pure federation nor a pure centralized national
    government, but rather an historically unprecedented composite
    in which there would be concurrent jurisdiction over many
    matters, as well as some exclusively reserved to the States or
    to the Federal Government.
        Second, the Constitution invites and guarantees an ongoing
    tension between the States and the Federal Government, a
    tension that, like the struggle among the branches of the
    Federal Government itself, helps secure the people's liberties.
        Third, in this ongoing struggle, the States will endeavor
    to expand their powers at the expense of the union, as will the
    National Government at the expense of the States.
        Fourth, neither party to the struggle enjoys superior
    wisdom, virtue, or legitimacy. Both are trustees of the people,
    constituted with different powers to pursue different public
    purposes, ultimately answerable to the people alone.
        There is no question that, in practice, Federal power has
    grown substantially over the past 2 centuries. It is important
    to understand why. This growth stems in part from classic
    Supreme Court decisions early in our history by Chief Justice
    Marshall that established broad, rather than narrow,
    interpretations of the necessary and proper Commerce and
    Supremacy Clauses. Federal authority was further expanded by
    the Civil War, which led to constitutional guarantees for the
    privileges and immunities of national citizenship, created for
    the first time in the wake of the Civil War.
        Growth of Federal Government also reflects key 20th Century
    developments, such as the rise of an advanced interdependent
    industrial economy, a national economic emergency that
    overwhelmed the capacity of States and localities, a series of
    global military and security challenges, the struggle to secure
    in practice the rights of equal citizenship guaranteed to all
    Americans in theory, and the emergence of new challenges, such
    as environmental protection, that could not be fully addressed
    by States and localities acting individually.
        These considerations remain relevant today, in my judgment,
    and argue for continued vigorous Federal power in the 21st
    Century. Nevertheless, it is clear that Federal authority is
    not and should not be unlimited. As James Madison says in
    Federalist 39, under the Constitution, the States retain ``a
    residuary and inviolable sovereignty.''
        Courts have argued and will no doubt continue to argue
    about the precise extent of the matters reserved to the States,
    but the general proposition that the Framers intended a
    constitutional system with dual sovereignty is not open to
    serious doubt, and I would add, Mr. Chairman, that in the past
    decade the Supreme Court, in a series of cases, has endeavored
    to restore a brighter line between Federal and State authority,
    particularly in cases concerning the Commerce Clause.
        It is equally clear from a constitutional as well as
    practical standpoint that States and localities should play a
    key role in formulating and implementing public policy, and in
    my prepared written testimony, I list a number of reasons why.
        Roughly speaking, the half century after World War II has
    been divided into two fundamentally different eras. In the
    first of these eras, for reasons stemming largely from the
    civil rights struggle, the States were seen as the problem and
    the Federal Government took the lead. The second era turned
    this assumption on its head. The Federal Government was labeled
    the problem and devolution the solution. In my judgment, each
    of these assumptions represented, at best, a partial truth.
        It is only recently that our governing institutions have
    begun to create a new synthesis, a contemporary federalism that
    balances distinctive Federal and State capacities and is
    responsive to our changing circumstances. Key examples of this
    progress include the Unfunded Mandates Reform Act, welfare and
    Medicaid reform, and the new children's health insurance
    program. All of these were enacted with substantial bipartisan
    support in the Congress and could not have succeeded without
    cooperation between Congress and the Executive Branch.
        The challenge now is to maintain the progress towards this
    new synthesis, what Governor Leavitt earlier this morning
    called the golden mean. To this end and in conclusion, Mr.
    Chairman, I would urge the following points.
        First, in many areas, it will prove productive to form a
    new form of Federal-State partnership in which the National
    Government establishes general public purposes and provides
    resources which the States decide for themselves within very
    broad guidelines how to employ.
        Second, the National Government cannot retreat from its
    obligation to protect the rights of individual citizens,
    whether these rights are established by the Constitution or by
    legislation. The discharge of this obligation will not always,
    sadly, be consistent with the preferences of other actors in
    the Federal system.
        Third, given the continuing importance of guaranteeing a
    free and open national market, we must be open to the
    possibility that economic, technological, and social changes
    will require the reconsideration of long-established Federal-
    State relations in particular sectors. Telecommunications, the
    Internet, banking, health care, and education are examples of
    areas where such rethinking may well be in order.
        Fourth, it is likely that not all changes in the Federal
    system will point in the same direction. In some cases, the
    roles of States and localities will be significantly enhanced,
    while in others, the Federal Government may be called upon to
    exercise new leadership. A uniform approach is unlikely to
    promote the public good in every instance. Not every assertion
    of Federal power is justified, but not every restriction of
    State and local authority is unjustified. I would, therefore,
    recommend caution in the face of any proposal that represents a
    generalized presumption either for or against any particular
    level of the Federal system.
        Thank you for giving me this opportunity, and, of course, I
    will be happy to respond to any questions.
        Chairman Thompson. Thank you very much.
        Gentlemen, I really appreciate you being with us. We are
    dealing with fundamentals here, constitutional law, the
    fundamentals that form the basis of our constitutional law, and
    we are dealing with the question, essentially, of power, are we
    not? It is part of our system of checks and balances, our
    system of federalism, and who is going to exercise the power of
    government and the kind of balance we strike and so forth.
        I think that, as always, the philosophical basis on which
    we proceed with these bills and so forth is very important. We
    need to think that through. What is it we are trying to do?
    What direction should we be going in, being mindful of the fact
    that we are not going to, certainly by legislation, cure all
    the problems or set things right in and of itself. I think it
    is a question of which direction we go in. Where are we and
    what direction do we need to go in?
        It certainly does seem like the trend has been in a
    particular direction. There have been fits and starts, but when
    we look at the areas in which we have had devolution, really,
    it has to do with giving States a little more authority to
    implement Federal policy, essentially, is what we are talking
    about. We celebrate it and I am delighted for it, but that is
    kind of what we are talking about. I think even the court
    decisions, like in the Lopez case, for example, the school guns
    case, well, we solved that by one sentence, I guess, in the
    next bill that says it does affect interstate commerce, or
    something like that.
        It seems pretty clear that the trend and the direction is
    pretty much one way and by legislation we are trying to, in
    some way say, ``Wait a minute, let us think about it a little
    more before we go any further.''
        I guess my first question is whether or not because of
    reasons that people give, such as the technological revolution,
    such as the global economy, such as the industrial marketplace
    that we have now, whether or not this is a natural and
    inexorable force. Does all of that militate toward moving away
    from traditional concepts of federalism? I mean, is this
    something that is natural and to be expected? If it is, is it
    inherently bad?
        I take it, Professor McGinnis, you think that perhaps it is
    not necessarily inevitable, that these things perhaps do not
    necessarily lead one to conclude we should move away from
    federalism, and that you would think that if we did that, that
    would not be a good result. Am I characterizing your position
    correctly?
        Mr. McGinnis. Yes. I think that is absolutely right,
    because I think federalism depends on issues about human nature
    that are unchangeable. Federalism was a way of trying to limit
    government, and limiting government is a problem of human
    nature, as I suggest in my testimony. The problem is, we need
    to have a government that protects our liberties and our
    property, but a government that is powerful enough to do that
    can also threaten our liberty and property.
        Chairman Thompson. The fundamental debate that kicked our
    government off had to do with different views of human nature,
    did it not?
        Mr. McGinnis. That is correct.
        Chairman Thompson. Can it go back as far as Burke and
    Rousseau, perhaps, in terms of----
        Mr. McGinnis. Well, I think it does. It goes back, really--
    I think much of our debate in this country still goes back to
    Rousseau on one hand and to the Framers on the other hand.
        Chairman Thompson. And how our forefathers viewed the
    French revolution and all that, the nature of man.
        Mr. McGinnis. I think that is right, and our Framers and
    people like John Adams were very skeptical that you could ever
    believe in the complete beneficence of government. That is why
    having a structure in which the governments somehow compete
    with one another is so crucial, I think, to good government and
    to limited government. I do not think changes in our technology
    really transform that fundamental issue.
        Maybe we have to change the way we deal with things in
    certain incremental ways, but it does not change the problem
    fundamentally, because after all, government is still about
    ultimately the exercise of force, either through enforcing
    contracts usually, through the police or through the military.
    And given that it is the exercise of force of some set of
    individuals over another set of individuals, we have to think
    about restraining government and new technology really does not
    change that.
        I would say that it is harder to protect federalism today
    for one reason. I think people have less of an attachment to
    their States than they did in 1787. General Robert E. Lee said,
    ``I will fight for my country,'' his country meaning Virginia,
    in the Civil War. That is inconceivable to us today because of
    changes in transportation, in communication. But that may mean,
    actually, we may need to make our governmental structures more
    protective, not less protective of federalism, because
    federalism is so important to preserve this principle of
    subsidiarily to protect against the ambition of human nature
    that is unchangeable.
        Chairman Thompson. Plus the fact that the cost of being
    wrong at the Federal level has gone up, has it not, in terms of
    reaching for solutions to some of these problems. If you decide
    what that solution is and you impose it on the 50 States, there
    is a greater consequence to that than if each State was trying
    to come to its own conclusion on these things.
        Professor Galston, you suggest that we approach these
    things with no presumption either in favor of federalism or
    against it. We all pay lip service to federalism as an
    inherently good thing. What I take it you are saying is that
    depends basically on the circumstances. Clearly, each level of
    government has its proper role. Clearly, they are interrelated
    and interdependent, to a certain extent, and you have to look
    at the given situation as to whether or not this particular
    policy is wise.
        So does that not leave us with any ability to set a
    criterion as to what we follow? Should we have a standard when
    these issues arise as to fundamental principles, as Professor
    McGinnis suggests there are still present, on which we can
    bounce these various issues that we are always facing off of?
    Do you feel that there can be or should be some kind of
    objective standard that we apply in each of these cases?
        Mr. Galston. I think that there should be operating
    presumptions that are appropriate to different policies. So,
    for example, in the area of education, there is a history in
    this country which is backed, I think, by our constitutional
    tradition, as well, that creates a presumption in favors of
    States and localities and against the Federal Government. That
    presumption can sometimes be rebutted for cause, but it is
    clear where the burden of proof lies.
        Chairman Thompson. Why is that? Is that not rooted in the
    Constitution itself? Of course, that specific point is not
    dealt with in the Constitution, but traditionally, it has been
    assumed that this is a State and local matter based upon the
    Tenth Amendment or whatever other provisions you might want to
    look at. Is that not constitutionally based?
        Mr. Galston. Absolutely. But now consider the example that
    Senator Lieberman gave a few minutes ago of Internet
    regulation. It seems to me, it is much harder to approach that
    question with a clear set of presumptions in one way or
    another, because on the one hand, you have technological change
    inserted into the requirements of the national marketplace,
    which is increasingly functioning in a global economy, as we
    are all aware, and on the other hand, you have a profound,
    important, and growing set of interactions with State and
    localities' ability to raise revenues.
        So it seems to me it is a question of prudence, judgment,
    and balance to have a dialogue across the lines of the Federal
    system to come up with a solution that accommodates the
    different interests as much as possible, and that is an example
    of the sort of thing I had in mind.
        Chairman Thompson. I take it, basically, you would look at
    it sort of as each side has a competing constitutional basis it
    can rely upon. One side has the Tenth Amendment; the other side
    has the Necessary and Proper Clause and the Supremacy Clause
    and the Commerce Clause. In any given situation, we look at all
    of that and come up with a solution based upon the facts of the
    situation, not necessarily historical interpretation as to
    those particular constitutional provisions.
        As the Professor points out, the Constitution theoretically
    remains the same. As we all know, through interpretation, it
    changes some. Technology is always changing. How do we strike
    the balance? Then I will let Professor McGinnis comment.
        Mr. Galston. The Constitution----
        Chairman Thompson. I am just trying to get kind of an
    analytical framework. What do we go through? It is not going to
    be a matter of, well, what do we think this morning would be
    smart to do. I mean, we do have a Constitution to deal with.
        Mr. Galston. We do, indeed, and the Constitution has a text
    and it also has a history of interpretation, which I alluded to
    very briefly in my remarks. So, as I think Professor McGinnis
    would agree, the meaning of the Commerce Clause has been
    elucidated in a series of Supreme Court decisions stretching
    back almost to the beginning of the republic. There was a great
    debate between the forces of Alexander Hamilton and the forces
    of Thomas Jefferson as to the presumption that should be
    brought to the interpretation of the Commerce Clause, and I
    think most historians would agree that the expansive
    Hamiltonian interpretation won out in those decisions of John
    Marshall.
        So that is part of our constitutional tradition. But to get
    to the broader point, I do believe that in many cases, there
    will be competing constitutional and policy and prudential
    considerations which will be attached to different layers of
    the Federal system and it is going to be a matter of judgment,
    prudence, and balance to bring them into the most fruitful
    conjunction that best serves the public interest. I wish I
    could give you a simpler bright line, but I do not think it
    exists.
        Chairman Thompson. Do you want to comment on that,
    Professor?
        Mr. McGinnis. I would just like to comment on it briefly.
    Constitutional federalism cannot only be a matter of prudence.
    That is illustrated by difficulty with our structure now,
    because the States really do not have any protections other
    than at the discretion of Congress, and that in a political
    sense deprives the States of their few defenses. It makes
    government bigger because interest groups can always come to
    the Federal Government and essentially nationalize debates and
    issues, and that is a problem.
        The Framers' Constitution did not make federalism a matter
    of sufferance of the Federal Government, because they would
    understand if it is not a matter of sufferance the Federal
    Government would be where the presumption of action always
    would tend. It would tend to the people who have the most
    power.
        It is my sense in looking at the Constitution that these
    matters were not really settled by Alexander Hamilton or John
    Marshall but much more by the New Deal court, which largely
    eviscerated all of the enumerated powers. Before that, there
    was not the plenary spending authority and plenary regulatory
    authority in the Federal Government, which we essentially have
    today.
        Without some lines, and I have tried to suggest a new way
    of drawing lines in my testimony, I think you do not have the
    constitutional restrictions on government which the Framers
    thought you needed to make the competition work, because they
    understood that competition will not work if you have one side
    saying what the rules are, one side both the umpire and the
    competitor. That is not competition. So that is why I think you
    need to revive, as Governor Leavitt said, an enforceable
    federalism.
        Chairman Thompson. The strength of the National Government,
    I think, to me, is evidenced by the fact that some of the
    people pushing in favor of nationalizing some of these rules
    are normal critics of the Federal Government, and many in the
    business community in this area because it is much easier to do
    business under one rule. They look at all these issues in terms
    of that, what is easier to do business, and it would be. But it
    goes directly against, many times, in my opinion, concepts of
    federalism, which you would ordinarily expect them to be
    supportive of.
        Senator Lieberman.
        Senator Lieberman. Thanks, Mr. Chairman. That is a good
    point.
        Thanks to Professor Galston and Professor McGinnis for
    their very thoughtful papers, and thanks to you, Mr. Chairman,
    for calling them. Professor Galston is someone I have known for
    a long time. He bears the burden of having spent much of his
    earlier life in Connecticut. I am pleased to say that his
    parents are still my constituents, and I have benefited greatly
    from his work over the years, though, as they say in the
    preface to the book, I do not hold him accountable for anything
    I have done with the ideas that he has written.
        Professor McGinnis, I am becoming familiar with your work
    and I respect it greatly. Of course, you came to all of our
    attention as one of those commentators during the recently
    concluded national trauma.
        Mr. McGinnis. This is a much happier experience, Senator.
        Senator Lieberman. That is exactly what I was going to say.
    It is much more pleasant for you to return to constitutional
    concepts of federalism.
        I thought that Professor Galston made an interesting point
    in his statement, which is that over our history, one of the
    reasons why the Federal Government's power has grown is,
    ironically, to protect the freedom of the individual, the
    equality of the individual, which was, after all, the original
    motivating force of our founding documents, certainly the
    Declaration of Independence right of each individual to life,
    liberty, and the pursuit of happiness. So it is ironic, in a
    sense, that we have the big Federal Government having entered,
    particularly in matters of civil rights, to protect the rights
    of individuals.
        I wanted to ask you, Professor McGinnis, just to give me
    your reaction to that, and then to ask Professor Galston, and
    perhaps you, too, to comment on the point that he makes in one
    of his four final recommendations, which is that the discharge
    of this obligation, that is, the obligation to protect the
    rights of individual citizens, will not always be consistent
    with the preferences of other actors in the Federal system.
        Mr. McGinnis. Well, Senator, I certainly agree with the
    point that civil rights have been a crucial addition to our
    Federal system. Surely even regulatory federalism as I
    described it could not work for people who could not move from
    their States, who could not send their capital from their
    States, and so the Fourteenth and the Fifteenth Amendment were
    crucial completions to even a system of regulatory federalism.
    But they went beyond that in giving responsibility to the
    Federal Government to enforce rights.
        I think that system has generally served us well. My own
    testimony, as you will note, did not call for what actually
    some people who favor more federalism are in favor of--namely
    doing away with the incorporation doctrine, for instance, of
    the Fourteenth Amendment.
        I think my focus is really on regulation and on spending
    rather than on rights. I would say that it is not entirely
    clear to me that every job and title of incorporation has
    always been good, because I do think there is an experience, as
    Chairman Thompson has suggested. It is particularly dangerous
    for the Federal Government to get things wrong, and the Federal
    Government can even get things wrong on rights. It can get
    things wrong on the relations between civic responsibility and
    rights in a variety of areas.
        So if I were to discuss the incorporation doctrine, which I
    do not in my testimony, I would try to figure out ways of
    tempering that and allow some competition even among rights to
    happen among the States, but with the basic rights being
    protected by the Federal Government.
        So I agree, that civil rights are a very important
    completion of our Federal system. But I think civil rights are
    really not largely the cause of the pictures Chairman Thompson
    has given us today, the huge growth in government. My focus on
    reviving regulatory federalism would not be so much to do away
    with our centralized structure of rights but our centralized
    system of spending and regulation. I understand they cannot be
    completely disentangled from one another, but I think there can
    be some kind of separation between civil rights and budgetary
    matters.
        Chairman Thompson. Professor Galston, I wonder if I could
    invite you to comment a little bit more on the concept, and
    also perhaps to indicate that, now that we are in a time where
    devolution seems to be more in favor, whether this means either
    that individual rights do not need the protection of the
    Federal Government anymore or whether they are, in some sense,
    thereby jeopardized in the face of State and local majorities.
        Mr. Galston. Let me begin by saying that it is a matter of
    national consequence when the Federal Government gets things
    wrong. The Chairman is absolutely right about that.
        But in the area of civil rights, the Federal Government got
    things wrong for 100 years not by acting but by refraining from
    acting, and I think there is an important historical lesson in
    that.
        Senator Lieberman. Right.
        Mr. Galston. So the logic of that argument points in both
    directions.
        I think there is a substantial measure of agreement on the
    general point here, but I do want to underscore something that
    was in my written testimony. Namely, these rights can be
    created by acts of Congress as well as by legitimate
    constitutional interpretation. For example, the Americans with
    Disabilities Act, I believe is going to have and is already
    having profound consequences, not all of them entirely welcome,
    for State and local actors and for the private sector, as well.
        I have not heard an orgy of reconsideration in the halls of
    Congress as to the wisdom of that legislation, and that would
    be a contemporary example where the Congress in its wisdom,
    across party lines and with full cooperation of the legislature
    and the executive, created a new, enforceable right, which,
    whether we like it or not, enhances the power of the Federal
    Government in many respects. Now, perhaps on this panel, we
    could renew that debate right now, but I happen to think that
    it is going to take some prudence in judgment and perhaps even
    some legal tussles in order to come out with a balanced
    enforcement strategy for that act. But it is there, and I
    think, on balance, it is a good thing for those individuals and
    for the country as a whole that it is there.
        Senator Lieberman. Thank you both for those answers.
        Let me take up the discussion that the value, that both of
    you commented on and the intention of the Framers in creating a
    Federal system to protect interstate commerce. That inherently
    involves some limitation of State and local authority. My
    question is--although I am mindful of what you said, Professor
    Galston, which is that you are wary in this area of any
    generalized presumption for or against any particular level in
    the Federal system, that it is hard to make broad-based rules
    here--but to continue to maintain the interstate commerce, the
    free market nationally, inevitably entails a curtailment of
    State and local authority in some cases.
        Maybe I will direct this to you first, Professor McGinnis.
    What is the overview? If you were going to construct some rules
    here for when we should do that and when we should not--of
    course, there is a great body of constitutional law in this
    area and I am asking you one of those questions which your
    colleagues at your university would give you some good
    responses for, suggesting the impropriety of the question--what
    would you respond?
        Mr. McGinnis. I think, first of all, I would say that as a
    matter, just if I were to advise you, as a matter of
    constitutional law, essentially, you can do what you would like
    in the Federal Government today, as I think Senator Thompson
    very nicely suggested. Even the Lopez decision can easily be
    gotten around. In my class, I tell the five ways of getting
    around the Lopez decision and allowing that regulation at issue
    in case to go through, consistent with our structure now.
        So the question really is a matter of prudence under
    current law, and I would suggest, at least under our current
    system, that Federal responsibility really is about allowing
    markets to be open, preserving the free flow of goods and
    services among States. That is the crucial role for the Federal
    Government to protect, against regulations that would be
    parochial in the sense of favoring citizens of one State
    against one another, they should be done away with either by an
    act of Congress or even perhaps through the dormant Commerce
    Clause.
        But otherwise, I think, in regulations--where there are not
    spillovers between the States--where the costs of the
    regulation are borne by the people in the States, either in
    labor regulation or in some kind of environmental regulation,
    then I do not think the Federal Government should generally
    step in, because I think economists have suggested that when
    there are not large spillover effects between the States, and I
    would argue that there are a variety of regulations, that do
    not have a lot of spillovers among the States, that the State
    regulation imposes costs on wages and people in their States
    can make a good trade-off between the benefits of regulations
    and loss in wages. They may make a different trade-off in
    Alabama and they may make a different trade-off in Connecticut.
        But that is, in my view, the appropriate distinction
    between the Federal Government's role and the State's role, the
    Federal Government simply opening borders and dealing with
    spillover effects and the States dealing with regulations that
    largely have effects only within their State, or effects
    largely within their State.
        Senator Lieberman. Professor Galston, let me ask you to
    just comment a bit more and expand on the statement you made in
    your testimony, which is that we have got to be open to the
    possibility that economic, technological, and social changes
    will require the reconsideration of long-established Federal-
    State relations in regard to the free and open national market.
    What were you thinking of?
        Mr. Galston. Well, nothing that the Senate of the United
    States has not been thinking about for quite some time, and the
    Congress of the United States as a whole. Jim Leach, for
    example, has given a series of interesting speeches over the
    past couple of years suggesting that changes in the national
    economy, global capital flows, etc., require a fundamental
    reconsideration of the way we legislate and regulate in the
    area of banking. People disagree as to the remedy, but I think
    everybody agrees that we are in a new world, economically
    speaking, that is going to require some new thinking.
        Similarly, as we have mentioned more than once this
    morning, the Internet is changing everything and its impact
    goes well beyond the very important consequences for State and
    local capacity to raise revenues. It is reconfiguring
    relationships in a way that the Congress of the United States
    is going to have to take cognizance of, in a way that is
    consistent with our Constitution, the Commerce Clause, etc.
        I could go on and on with example after example of
    economic, social, and technological change which is forcing us
    to rethink and react and do things differently, whether we like
    it or not.
        Senator Lieberman. Professor McGinnis, at one point in your
    testimony, you described the passage of the Sixteenth and
    Seventeenth Amendments as unfortunate, and I wondered if you
    believe----
        Mr. McGinnis. I did not quite say they were unfortunate. I
    just said they had consequences that were.
        Senator Lieberman [continuing]. Consequences which were
    departures from the intention of the Framers. The irresistible
    question is, do you think that the direct election of Senators
    was an unfortunate departure?
        Mr. McGinnis. Senator, I certainly think that it was an
    inevitable departure with the sense of the importance of
    popular sovereignty and popular democracy, and certainly I am
    not here to urge, particularly before this body, an amendment
    to get rid of it.
        But I would say, though, that the amendment had
    consequences that we have to think of for our Federal system,
    and I am with Governor Leavitt in that. The whole burden of my
    academic work is to try to think of new ways of limiting
    government that are appropriate to our era. You cannot go home
    again to the original Constitution. You cannot get rid of the
    income tax. You cannot get rid of the direct election of
    Senators. But you can think of what is a constant problem in
    any era, which is how to deal with the Framers' eternal
    questions about human nature, the questions about how do we
    protect ourselves from government and make the limitations
    appropriate to our era, and that is what I have been trying to
    do in my testimony.
        So, no, it is no part of my testimony to eliminate them or
    to say that they were wrong, just to say that we need to do
    some compensatory work now.
        Senator Lieberman. That is a good point. Of course, each of
    our reaction to the Seventeenth Amendment would depend upon our
    evaluation of the sentiment of our respective State
    legislatures. But it was a significant change and, of course,
    had effects on our service since then.
        Thank you both very much. Mr. Chairman, thanks for an
    interesting hearing.
        Chairman Thompson. Thanks very much.
        I am going to take another minute or two. We touched on
    some court decisions. Just generally, I would be interested in
    your views as to the significance of some of the decisions. We
    pointed out some of the limitations of Lopez, the Pritz
    decision, a couple of others that seems to indicate that
    courts, maybe the Supreme Court, is tilting back the other way
    a little bit. Do you see very much significance in that? Does
    it portend things for the future? How would you categorize it?
        Mr. McGinnis. I think there are two issues. I raised two
    kinds of issues in my testimony, first that the dissolution of
    federalism has hurt government accountability and second that
    it has also simply made government bigger because it has given
    the Federal Government more power.
        I think on the accountability issue, the court has done a
    pretty good job, or it has done a fairly decent job of starting
    to make the Federal Government at least accountable for the
    decision it makes. Because of the current court Congress
    cannot, for instance, tell the State legislatures to pass
    legislation that Congress would like, because that is the basic
    problem of accountability because people are then confused. Who
    is responsible for this limitation on our liberty? And I think,
    similarly, the Pritz case is very important in promoting
    accountability.
        However, I do not see that the court has really changed the
    fact that the Federal Government has plenary, regulatory, and
    spending authority, and I think, Mr. Chairman, you were
    absolutely right in just referring to what happened after the
    Lopez case. You essentially were able to pass the same bill by
    changing it just slightly, and you could have passed it in a
    variety of other ways by making it a condition of Federal
    spending. So I do not think it has changed that, and----
        Chairman Thompson. You do not see that there are any new
    limitations on the Commerce Clause of any substance?
        Mr. McGinnis. I do not think that they actually restrain
    the substance of what the Congress can do when it really wants
    to act, and I think the court really believes it cannot do that
    because precedent is so much against it in that respect. If it
    really did that, because the court does not act only
    prospectively, as Congress does, it would cast out a lot of
    Federal programs that we have come to rely on, for better or
    worse.
        Chairman Thompson. What it did do is elevate the debate a
    little bit, or cause a debate among a few of us who thought it
    was worth talking about. So we at least caused them to have to
    go back and do it again and debate the issue. Perhaps that is a
    little progress.
        Do you share his analysis of these court decisions or what
    they mean?
        Mr. Galston. I guess my bottom line, Mr. Chairman, is that
    I think they are a bit more significant than that because I
    think they represent a change in a way of thinking, which, over
    time, will have practical and not just theoretical
    consequences.
        For about 4 decades after the beginning of the New Deal, I
    think that we did function juridically as well as legislatively
    with the presumption that the power of the Federal Government
    was essentially unlimited and that the General Welfare Clause
    of the Constitution was the most operative clause of the
    Constitution. That was the clear lesson of the New Deal in a
    number of respects.
        Starting in the mid-1970's, the courts and legislatures, to
    some extent, began to reexamine that assumption, in my
    judgment, for good reason. First, circumstances changed, and
    second, a case could be made that under the influence of a
    national economic emergency, the court suspended certain
    niceties which otherwise it would have been strongly inclined
    to observe, and, indeed, did try to observe for the first 2 or
    3 years of the New Deal.
        So I see a pendulum swinging back, a new balance in the
    making, juridically speaking. I think that the Lopez decision--
    I am not a constitutional lawyer, but I have it right here in
    front of me and I have considered it very carefully--I do think
    that the Lopez decision, in trying to restore juridical
    scrutiny of questions like, what is commerce, anyway, and what
    is interstate, anyway, and what does it mean to substantially
    burden interstate commerce, anyway, has put a new set, or,
    should I say, an old set of questions on the table that we are
    going to be wrestling with for the next generation, and I would
    not be surprised in 20 years if you reconvene this hearing if
    there would not be quite a significant change.
        Chairman Thompson. As I said, I think it does cause us to
    at least address the question of whether or not something that
    has been the province of the States and local communities for
    200 years is a good idea for us to federalize. It is happening
    in a lot of areas. It amazes me, the philosophical positions
    people get in. We are making decisions up here on our tort law
    based on whether or not we think there are too many lawsuits
    and not based on what level of government should be dealing
    with these, whether or not we want to federalize something that
    has been the State and local government province for 200 years.
    So I think the debate is good.
        The final thing is, and this really calls on your expertise
    as much as it does your general citizenship, one of the things
    you both agree on is that observing concepts of federalism
    would assist in this age of cynicism on the part of the
    American public. It is something that concerns me a lot. In
    times of peace and prosperity, we do not pay much attention.
    Issues of government, in general, are less relevant to us, and
    we see how quickly things can change and we get our attention
    gotten in a hurry and we realize, perhaps, that we do need to
    have some confidence in our government and even confidence in
    our Federal Government. So anything that we can do to enhance
    that becomes important.
        I think each of you agree that the proper observance of
    principles of federalism would help there, but more
    importantly, do you, as men of the law, and I know, Professor,
    you were with the government for a while, do you see that as a
    problem in society, the level of cynicism, the way people are
    looking at their government these days? Each of you may answer.
        Mr. Galston. It is a good thing, Mr. Chairman, you did not
    put that question to me when there was more time to answer it,
    because it is the question that interests me most passionately
    of all that you could have posed.
        But very briefly, I think we live in an era of almost
    unprecedented cynicism and mistrust, particularly directed
    towards our national political institutions. Some of it is
    warranted; much of it, in my judgment, is not, and I think it
    creates tremendous problems for self-government and for
    democracy and it is something we have to take very seriously
    with everything we say and with everything we legislate and
    regulate or otherwise do.
        For that reason, I suggested in my written remarks, and
    will repeat now, that you can help build trust through
    empowerment and through participation and through processes of
    local government which are more transparent, where people can
    actually see the relationship between their influence in the
    form of political participation and outputs in the form of
    public policy to promote the public good.
        So I think that in current circumstances, there are
    substantial reasons to devolve as much as can reasonably be
    devolved, consistent with the general welfare.
        Chairman Thompson. While I have got you, what other things
    do you think we should do? Expand on it a little, if you would,
    the nature of the problem. You have obviously given a good deal
    of thought to it, as I have. What are the manifestations and
    what are some things that we can, totally apart from anything
    else we have talked about, what are some things that you think
    that we could do to help in that regard?
        Mr. Galston. No more difficult question could have been
    posed, but let me just cite a couple of obvious things, all of
    which you have spoken out on, Mr. Chairman.
        First of all, although this is enormously complicated
    legislatively, it is clear that, as compared to 30 or 40 years
    ago, the American people see a Federal Government more
    dominated by ``special interests'' and the money behind them
    than they thought was the case a generation ago and they do not
    like it. I know of all the practical arguments against
    legislating in this area, but as a matter of public confidence
    and public trust, I believe that it is important for the
    Congress of the United States to address that issue in some
    way.
        A second point I would make is that as in war, so in
    domestic policy, there must be a proportionality between means
    and ends and between promises and performance. I think it is
    very important for elected officials on every level, as they
    are crafting and then selling a program, to be realistic about
    what it will and what it will not accomplish. I mean, if you
    promise the new Jerusalem and you have just taken one step out
    your front door, the American people are aware of the
    disproportion between promises and performance. It does not
    breed trust.
        One other point I would make is that I think a series of
    decisions made by the political system at every level,
    including the political parties, has increased the power of the
    media in determining public attitudes towards government at the
    expense of participatory political structures, such as
    political parties.
        I think the political parties have backed out of the
    political arena. Forty years ago, they were actual operating
    structures that connected individual citizens through local and
    State party institutions, to the national political party, so
    the political conventions were real and parties were
    participatory arenas. They have become now shells, and other
    forces that do not breed public trust, have rushed in to fill
    the void, and I would think very seriously about----
        Chairman Thompson. There is a serious chicken and egg
    question there, too.
        Mr. Galston. Yes, there is. But I think it is important to
    rethink what we have allowed to happen to our political system
    and its important participatory structures.
        Chairman Thompson. Thank you. Professor McGinnis.
        Mr. McGinnis. I think I have a slightly different
    perspective. I am less, myself, concerned about spending on
    elections than on the output of government. I think the change
    to cynicism is caused by a change in what government does.
        Government can do a variety of things. One, it can focus on
    public goods. Public goods are those that the market cannot
    provide, that the family cannot provide, things that benefit
    everyone. If government is focused on that, and I believe
    federalism and a whole variety of other structures in our
    government tried to focus only on producing such public goods--
    national defense, protection against crime, infrastructure, to
    name a few examples--then people are brought together by their
    government because these things are benefiting them all.
        On the other hand, if you have a much larger government, a
    government that consists as, alas, a lot of the spending which
    is supported by today's taxes does, in transferring money from
    one group of people to another group of people, then people
    will be necessarily suspicious of government because that will
    encourage citizens not to focus on what government can give
    them to benefit all, but what they can get from some other
    group of citizens for their own benefit.
        So I think that is the basic problem for cynicism of
    government, and, therefore, I would think whatever one's views
    about campaign finance, it is a mistake to believe that such
    reform is the real solution to cynicism. Big spending on
    elections is simply a consequence of big government. Special
    interests pay a lot of money to the government because there
    are so many transfers possible from the government, and
    limiting these transfers is the level at which I think we
    really need to address it by much more restricting government.
        I have some sense of that because I am about to go off to
    be a professor in Italy, and there, when I talk to people, they
    are far more cynical of government than we are in the United
    States, and that is because, in my view, their government is
    even a much less-restrained government than ours.
        So it is simply not a consequence, I think, of our
    political system, but fundamentally what government does. A
    limited government focused on what we have in common makes for
    people who will feel good about government. A government that
    is focused on transferring resources from each of us to another
    divides the Nation.
        Chairman Thompson. Gentlemen, very well said, both of you.
    I really appreciate that.
        You touched on something that has always been of interest
    to me with regard to the size and growth of government. I
    really think we need to make some changes in our campaign
    finance system for a variety of reasons, but a lot of the
    advocates of changes in that regard, I do not think face up to
    the fact that the basis for that is what you alluded to, is big
    government. The reason why the special interests flock to town,
    and you cannot wade through them some days, and the reason they
    give such large amounts of soft money is because they have got
    so much at stake right up here, because we are running
    everything right up here and the decisions we make are worth
    millions and millions of dollars to these people, sometimes
    billions.
        But my thinking is that there is something we can do about
    the money coming in a whole lot more readily than we can in
    changing that big thing around. We have got to do both, though,
    I think.
        But thank you very much. This has been extremely helpful
    and we look forward to working with you in the future. I
    appreciate it.
        Mr. McGinnis. Thank you.
        Mr. Galston. Thank you.
        Chairman Thompson. We have got a vote on right now. I
    wanted to come down and chat with you a moment, but we will not
    have time today, but thank you very much for being here.
        The record will remain open for 5 days after the conclusion
    of the hearing.
        The Committee is adjourned.
        [Whereupon, at 12:18 p.m., the Committee was adjourned.]

                          FEDERALISM AND CRIME CONTROL

                                  ----------

                             THURSDAY, MAY 6, 1999

                                           U.S. Senate,
                             Committee on Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:33 a.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Fred
    Thompson, Chairman of the Committee, presiding.
        Present: Senators Thompson, Voinovich, and Durbin.

                 OPENING STATEMENT OF CHAIRMAN THOMPSON

        Chairman Thompson. The Committee will come to order,
    please. I welcome everyone to this hearing of the Governmental
    Affairs Committee to consider federalism and crime control.
        Today is our second hearing on federalism. The Committee
    will consider the increasing federalization of criminal law. It
    is a deeply rooted constitutional principle that the general
    police power belongs to the States, not to the Federal
    Government. This was clearly articulated in the Founding
    Fathers' careful constitutional design. As Alexander Hamilton
    said, ``There is one transcendent advantage belonging to the
    province of the State Governments, . . . the ordinary
    administration of criminal and civil justice.''
        For most of America's history, Federal criminal law was
    limited to national offenses, such as treason, bribery of
    Federal officials, counterfeiting, and perjury in Federal
    courts. Yet, in this age of mass media and saturation coverage,
    Congress and the White House are ever eager to pass Federal
    criminal laws in order, as Chief Justice Rehnquist put it, ``to
    appear responsive to every highly publicized societal ill or
    sensational crime.''
        In recent years, there has been an explosive growth in
    Federal criminal law. A recent ABA Task Force report, entitled
    ``The Federalization of Criminal Law,'' found that of all the
    criminal provisions enacted since the Civil War, over 40
    percent were enacted since 1970.\1\
    ---------------------------------------------------------------------------
        \1\ A copy of the ABA Task Force report, ``The Federalization of
    Criminal Law,'' has been retained in the files of the Committee.
    ---------------------------------------------------------------------------
        No one really knows how many Federal crimes now exist, but
    recent estimations of 3,000 have been surpassed by the surge in
    Federal criminalization. In 1995, the Supreme Court sent a
    clear message to the Congress in the Lopez case that it needs
    to carefully consider whether federalizing certain crimes is
    consistent with the Constitution. But only the following year,
    Congress--over my objection, I might add--re-enacted the Gun-
    Free School Zone Act. And there is no slowing in the growing
    number of proposed Federal criminal offenses, many of which do
    not even attempt to make the case that such crimes
    ``substantially affect interstate commerce,'' as the Supreme
    Court requires.
        Although a more vigilant court could help preserve
    federalism, it may be difficult indeed to increase Congress'
    respect for the constitutional and prudential limits to passing
    crime legislation.
        There is growing consensus across the criminal justice
    system that the increasing tendency to federalize crime is not
    only unnecessary and unwise, but also has harmful implications
    for crime control. Those concerned include prosecutors, judges,
    law enforcement officers, defense attorneys, State and local
    officials, and scholars.
        The ABA Task Force report cites many damaging consequences
    of federalization, as we will hear today. There will be times
    when enacting Federal criminal laws or placing conditions on
    receipt of Federal criminal justice funds will be appropriate.
    But in all too many instances, increased Federal involvement in
    the criminal law will pose more possible harm than benefit.
        Many leaders in the criminal justice system are counseling
    restraint when Congress and the White House consider Federal
    criminal legislation.
        We are fortunate to have a distinguished group of witnesses
    today, and I look forward to hearing their views.
        Senator Durbin, do you have any comments?
        Senator Durbin. I will waive the opening statement. Senator
    Lieberman has a prepared statement for the record.
        [The prepared statement of Senator Lieberman follows:]

                    PREPARED STATEMENT OF SENATOR LIEBERMAN
        Thank you Mr. Chairman. Let me start by thanking you for holding
    this hearing today. The issue of the appropriateness of making Federal
    crimes out of conduct that is traditionally regulated by the States'
    criminal justice systems is an extraordinarily important one. And,
    although you didn't know it when you scheduled this hearing, the topic
    is also a particularly timely one, in light of the events in Littleton,
    Colorado and with the Majority Leader having announced his intention to
    take up juvenile crime legislation on the floor next week.
        As you have well explained, we in Congress are often far too quick
    to respond to every high profile crime with a proposed law, and we
    often don't stop to think about whether Federal action is either
    necessary or wise. I've reviewed the ABA Task Force's excellent report
    on this topic, and both it and today's witnesses make a compelling case
    for those of us in Congress to make sure that we take better account of
    the differing roles of the Federal and State criminal justice systems--
    and of the resource limitations on Federal law enforcement and the
    Federal judiciary--when we consider crime legislation.
        With that said, I think we also need to be careful not to overstate
    the case here. I read with interest the often repeated finding that, of
    all Federal crimes enacted since 1865, over 40 percent were created
    since 1970. Although it certainly is an interesting fact, it does not
    necessarily say to me that we in Congress are doing anything wrong.
    After all, we probably would find that a far greater percentage of our
    Federal environmental laws or perhaps even our Federal workplace safety
    laws have been enacted since 1970, but I would argue that neither those
    facts, nor the increasing rate at which we have been regulating crime
    at the Federal level, in and of themselves suggest that Congress is
    wrongly intruding in matters that don't concern it.
        After all, as we all know, violent crime has become a much greater
    problem in America in the latter half of this century, and so it is
    only natural Congress would begin to legislate on it more than it did
    in the past. Just as importantly, and as we discussed yesterday, it
    shouldn't surprise any of us that the Federal Government is regulating
    more conduct today than it did 50 or 60 years ago and that conduct that
    once may have been the exclusive province of the States--because it
    once had almost exclusively local consequences--now is, and should be,
    regulated on a national scale. We live in an increasingly
    interconnected Nation, where our transportation and telecommunication
    systems have allowed seemingly local activities to have increasingly
    interstate effects, and that is surely so for crime.
        I'll give just one example. The Bureau of Alcohol, Tobacco and
    Firearms recently issued a report on the source of guns used in crimes
    committed in 27 cities across the country. Although the ATF found that
    the State in which the crime was committed generally provided the
    largest single source of traced crime guns, a significant portion of
    guns used in crimes originated outside of the State in which the crime
    took place. In Bridgeport, Connecticut for example, the AFT found that
    over 35 percent of the crime guns it traced were originally purchased
    outside of Connecticut.
        By raising this issue, I don't mean to suggest that any criminal
    activity, no matter how essentially local in nature is an appropriate
    subject of Federal criminal jurisdiction--in fact, I find the ABA's
    report quite persuasive in many respects. I do mean to suggest that it
    is enough to say that because the States have traditionally regulated
    things like drugs and guns, they should continue to do so to the
    exclusion of the Federal Government, regardless of the changing--and
    increasingly interstate--nature of drug crimes and gun crimes.
        I expect today's hearing to be quite interesting, and I look
    forward to hearing from and discussing these issues with our witnesses.

        Chairman Thompson. All right.
        I would like to recognize our first panel of witnesses. We
    are pleased to have with us today the Hon. Edwin Meese III, who
    was our 75th Attorney General. Mr. Meese serves as the Ronald
    Reagan Distinguished Fellow in Public Policy at the Heritage
    Foundation, and Chair of the American Bar Association's Task
    Force on the Federalization of Criminal Law, which has given
    rise, I think, to a new level of interest in this area, and we
    certainly appreciate that effort.
        Following Mr. Meese is the Hon. Gilbert Merritt. Judge
    Merritt presides over the Sixth Circuit Court of Appeals. He is
    an old friend of mine from Nashville, Tennessee, and we are
    very pleased to have you here with us today, Judge Merritt. I
    want to thank both of you for being here.
        Mr. Meese, would you like to proceed with your testimony?

     TESTIMONY OF HON. EDWIN MEESE III,\1\ FORMER ATTORNEY GENERAL
      OF THE UNITED STATES, RONALD REAGAN DISTINGUISHED FELLOW IN
      PUBLIC POLICY, THE HERITAGE FOUNDATION, AND CHAIR, ABA TASK
              FORCE ON THE FEDERALIZATION OF CRIMINAL LAW

        Mr. Meese. Thank you, Mr. Chairman and Members of the
    Committee. I appreciate this invitation to appear at this
    hearing on the topic of federalism and crime control. As you
    pointed out, as a former Attorney General of the United States
    and chairman of the American Bar Association's Task Force on
    the Federalization of Crime, I appreciate this opportunity to
    share some thoughts with you. At the same time, I should make
    it clear at the outset that these views are my own and do not
    necessarily represent those of the organizations with which I
    am affiliated or the policy of the American Bar Association.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Meese appears in the Appendix on
    page 239.
    ---------------------------------------------------------------------------
        As you pointed out, Mr. Chairman, the Criminal Justice
    Section of the ABA created a task force in response to
    widespread concern about the number of new Federal crimes that
    have been created over the past several years by Congress. Its
    initial objectives were to look systematically at whether there
    has been, in fact, an increase in Federal crimes which
    duplicate State offenses, and if so, to determine whether that
    development adversely affects the proper allocation of
    responsibility between the National and the State Governments
    in the very important field of crime prevention and law
    enforcement.
        The members of the task force, I would like to explain to
    the Committee, were selected with the explicit goal of
    including persons with diverse political and philosophical
    backgrounds. It was felt that the task force's conclusions and
    recommendations should be the product of a consensus among
    respected persons whose views on criminal justice issues
    generally would vary quite widely.
        Indeed, Mr. Chairman and Members of the Committee, I don't
    think you could find in one room as many diverse views as we
    had in the particular membership of the task force.
        We included, for example, former U.S. Senator Howell
    Heflin, and a former Congressman, Robert Kastenmeier. We had a
    former Deputy Attorney General of the United States, a former
    chief executive of the Law Enforcement Assistance
    Administration; former State attorneys general, present and
    former Federal and State prosecutors, State and Federal
    appellate judges, a police chief, private practitioners who
    specialize in criminal defense, as well as scholars for the
    legal academic community.
        I would like it to be part of the record of this hearing
    that we benefited greatly from the very excellent assistance of
    Professor James Strazzella of Temple University Law School, who
    served as the reporter for the task force and who was the
    principle author of the report which the Chairman made
    reference to. We also had the invaluable research assistance of
    Barbara Meierhoefer, who handled the collection and analysis of
    criminal justice statistical data.
        The task force examined the U.S. Code, data available from
    a variety of public sources, the body of scholarly literature
    on this subject, the views of professionals in Federal and
    State criminal justice systems, and the experience, the rather
    extensive experience, of the task force members themselves.
        The task force had several meetings. There was a great deal
    of work done by individual members on their own. And, of
    course, we had a great deal of expertise, as I mentioned
    earlier, including one of the persons who will appear later on
    one of your panels, Professor John Baker.
        As the Chairman noted earlier, the task force concluded
    that the evidence demonstrated a rather recent dramatic
    increase in the number and variety of Federal crimes.
        The task force also concluded that much of the recent
    increase in Federal crimes significantly overlaps offenses
    traditionally prosecuted by the States. This area of
    overlapping crimes is basically at the core of the task force
    study and the report which it has provided.
        The federalization phenomenon is inconsistent with the
    traditional notion that the prevention of crime and the
    enforcement of most public safety laws in this country are
    basically State functions. There was a nearly unanimous
    expression of concern from thoughtful commentators that the new
    Federal crimes duplicating State crimes became part of our law
    without any request for such enactment from State or Federal
    law enforcement officials.
        The task force looked systematically at whether new Federal
    criminal laws, which were popular when enacted, were actually
    being enforced, and we determined on the basis of the available
    data that in many instances they were not, that the laws were
    passed at a time when there was a great hue and cry about a
    particular infamous incident, but that later on, when it
    actually came to the implementation of those statutes, there
    was very little actual prosecution. So it was in a sense the
    feel-good enactment of laws, with very little follow-up.
        The task force also recognized the point that was made
    earlier by the Chairman, and that is the plea of Chief Justice
    William Rehnquist who deplored the expanded federalization of
    crime in his annual report to the Federal judiciary, which was
    filed last December.
        The task force found that increased federalization is
    rarely, if ever, likely to have any appreciable effect on the
    categories of violent crime that most concern American
    citizens, and we specifically found that there were numerous
    damaging consequences that flow from the inappropriate
    federalization of crime. These include some of the following:
    An unwise allocation of scarce resources that are needed to
    meet the genuine issues of crime; an unhealthy concentration of
    policing power at the national level; an adverse impact on the
    Federal judicial system--again, having been pointed out
    specifically in the Chief Justice's report; inappropriately
    disparate results for similarly situated defendants, depending
    on whether the essentially similar conduct is selected for
    either Federal or State prosecution; a diversion of
    congressional attention from criminal activity that only
    Federal investigation and prosecution can address; and,
    finally, the potential for duplicative prosecutions at the
    State and Federal levels for the same course of conduct, in
    violation of the Constitution's double jeopardy protection.
        Mr. Chairman, we would certainly subscribe to your comments
    as to the constitutionality of this whole business. Indeed, the
    Framers that you quoted made it very clear that the police
    power belonged with the States rather than with the Federal
    Government.
        It is interesting to note that as early as the 1930's, when
    this trend began, FBI Director J. Edgar Hoover, probably the
    most outstanding law enforcement official of our century,
    pointed out the dangers of a national police force. Even though
    his allies in the Congress at the time wanted to make the FBI
    separate from the Department of Justice as an independent
    agency and give it national police powers, he resisted this
    because he felt it would be an unconstitutional infringement on
    the States and instead as a substitute added the National
    Academy for the training of local and State police officers to
    the FBI's own training programs so that local law enforcement
    officers could be trained and then return to lead their own
    forces at the State and local level.
        In the course of our deliberations, we received statements
    from numerous law enforcement organizations throughout the
    country. The National Sheriffs Association, the National
    District Attorneys Association, the Police Executive Research
    Forum, and a number of other organizations provided their
    views. Uniformly, they supported the conclusions in the task
    force report that the federalization of crimes already on the
    books at the State level should be something to be avoided in
    the future and even to be looked back on, those that are
    already in existence, and to be considered for extinction.
        There are many more things I could say about the problems
    related to the federalization of crime, but they are reflected
    in the report. And I would ask, Mr. Chairman, that the report
    of the ABA Task Force on ``The Federalization of Criminal Law''
    be accepted by the Committee for inclusion in the proceedings
    of this hearing or for whatever other purpose the Committee
    might desire. I have provided copies to the reporter and to the
    Members of the Committee, and additional copies are being sent
    for those Committee Members who are not present.
        Chairman Thompson. Very good. Without objection, a copy
    will be made part of the record. \1\
    ---------------------------------------------------------------------------
        \1\ A copy of the ABA Task Force report, entitled ``The
    Federalization of Criminal Law,'' has been retained in the files of the
    Committee.
    ---------------------------------------------------------------------------
        Mr. Meese. I might point out that there are presently
    pending before the Congress of the United States several bills
    which would, in fact, continue this trend. The so-called hate
    crimes legislation, new gun laws that have recently been spoken
    about, and so on, are examples of this unfortunate trend, and
    perhaps this Committee, one of the possible results of this
    Committee's deliberations might well be to raise the issues of
    federalization of crime in regard to this pending legislation.
        The task force recognized that the federalization of local
    crimes is not something that is going to be easily solved as
    far as Congress is concerned. Obviously, many of these issues
    are politically popular, and many of them are generated by
    newsworthy cases that have raised a great deal of attention
    throughout the country. And it will take a high level of
    sophistication, a high level of congressional restraint, if you
    will, not to succumb to the popular trend to say let's pass
    another Federal law.
        The Committee has specifically made some suggestions as to
    how the Congress might deal with this problem. These are
    included in the report and in my testimony, but let me briefly
    just summarize them:
        First of all, to have a recognition within Congress and
    among the public on how to best fight crime within a Federal
    system where authority, particularly the police power, is
    divided between the Federal Government and the States.
        Second, focused consideration of the Federal interests in
    crime control and the risks that are entailed in the
    federalization of local crime, many of which I have already
    referred to.
        Third, Congress might well institute some institutional
    mechanisms to further restrain additional federalization, such
    things as an impact statement or analysis by the Congressional
    Budget Office, perhaps, or by the Congressional Research
    Service, as how to propose new Federal crimes impact or overlap
    and duplicate State and local criminal laws.
        In addition, the task force suggested that Congress might
    consider having a joint congressional committee on federalism.
    I would suggest, Mr. Chairman, that the deliberations of the
    Governmental Affairs Committee itself are a very important step
    along the lines that the Committee had recommended. But the
    whole idea of a federalization assessment by Congress as it
    contemplates action on these kinds of laws would itself be a
    very important step forward.
        Perhaps another institutional mechanism would be a sunset
    provision in any new criminal laws where they would
    automatically expire at the end of some period, perhaps 3 or
    not more than 5 years, so that they can be tested, first of
    all, to see whether they have an adverse impact on State laws
    and, second, to see whether they are, in fact, used very much
    and whether there is a need.
        Finally, a means of responding to public safety concerns
    through Federal support for State and local crime control
    efforts. Indeed, this has been used in the past whereby many
    times, if there is a problem at the State or local level, it is
    a lack of resources, and it would be far better, rather than to
    pass a new law, a new criminal law that overlaps, if Congress
    wishes to do something about a problem, to provide block grant
    funds to local law enforcement to take care of the problems.
        Another possible remedy that has been suggested would be to
    require through statute as an element of any Federal
    prosecution that the U.S. Attorney show in each criminal case
    before a judge that there is an element of Federal
    jurisdiction. I believe my colleague on the task force,
    Professor John Baker, who will testify later, will elaborate on
    this particular point.
        In summary, Mr. Chairman, the expanding coverage of Federal
    criminal law, much of which has been enacted without any
    demonstrated or distinctive Federal justification, is moving
    the Nation rapidly towards two broadly overlapping, parallel,
    and essentially redundant sets of criminal prohibitions, each
    filled with differing consequences for the same conduct. Such a
    system has little to commend it and much to condemn it.
        In the important debate about how to curb crime, it is
    crucial that the American justice system not be harmed in the
    process. The Nation has long justifiably relied on a careful
    distribution of powers to the National Government and to State
    Governments. In the end, the ultimate safeguard for maintaining
    this valued constitutional system must be the principled
    recognition by Congress of the long-range damage to real crime
    control and to the Nation's structure caused by inappropriate
    federalization.
        In the course of these remarks, I have included liberal
    references to the task force report. Again, let me mention that
    I alone am responsible for the totality of the views I have
    expressed today, and the task force report itself is not
    official policy of the ABA inasmuch as such policy can only be
    expressed when approved by the Association's House of
    Delegates.
        However, in closing, Mr. Chairman and Members of the
    Committee, let me state that I believe that these comments and
    conclusions, as well as the recommendations, would be helpful
    to this Committee and to the Congress in its consideration of
    the Federal responsibility for crime as well as those areas
    where the Federal Government should not be directly involved.
        Thank you for the opportunity of presenting these views
    before the Committee. I would be happy to respond to any
    questions as well as both now and in the future provide
    whatever further information might be of assistance to you in
    your endeavors.
        Thank you.
        Chairman Thompson. Thank you very much, General Meese.
        Judge Merritt.

     TESTIMONY OF HON. GILBERT S. MERRITT,\1\ JUDGE, U.S. COURT OF
          APPEALS FOR THE SIXTH CIRCUIT, NASHVILLE, TENNESSEE

        Judge Merritt. Mr. Chairman and Members of the Committee, I
    will be fairly brief. I take my text here from the remarks
    recently of Chief Justice Rehnquist whose view, I think, in
    this respect represents a consensus view in the Federal
    judiciary, perhaps not unanimous but I think a widespread
    consensus view. And he recently said, ``The trend to federalize
    crimes that traditionally have been handled in State courts not
    only is taxing the judiciary's resources and affecting its
    budget needs, but it also threatens to change entirely the
    nature of our Federal system.''
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Judge Merritt appears in the Appendix
    on page 247.
    ---------------------------------------------------------------------------
        When you look at the large historical context, you remember
    that in our mother country there was a time a number of
    centuries ago that there was a lot of local criminal
    jurisdiction in England. Over the course of five, six, or seven
    centuries, all of that criminal jurisdiction has now been
    subsumed in the central courts at Westminster. There isn't any
    longer any local jurisdiction in the country from which our
    legal system arose, our common law system of justice. And we
    have only been at this enterprise here in the United States, as
    we know, for a couple hundred years, but we are proceeding
    apace at a pace about the same as in England.
        I might say that one of the big problems, somewhat
    unrecognized, one of the causes of this federalization of
    crime, is not just elected officials reacting to the last crime
    that has been given major publicity in the press. There is
    among the staff in the Department of Justice, among a lot of
    very good people, a general tendency, kind of an instinct to
    expand its jurisdiction. It is natural for governmental
    bureaucracies to expand or want to expand their role and scope.
        Since my time as U.S. Attorney more than 30 years ago, I
    have watched the Department of Justice during that time and
    since then come up with new legislation in the criminal field
    in response to the demand that we cure some local problem. And
    we have had a great number of local crimes federalized in that
    period of time.
        The answer that the Department of Justice critics of
    federalization give when called upon is a variation on a theme,
    and this is kind of the theoretical basis for a continuation of
    the expansion of Federal crimes. And I quote here from a very
    able man, Roger Pauley, Director of the Office of Legislation
    for many years of the Criminal Division in the Department of
    Justice, and a man who conscientiously promotes this theory.
    And it is a debatable theory. He says, ``The scope of Federal
    criminal jurisdiction is not and never has been the proper
    measure of federalism.'' That federalism is rather maintained
    by Federal restraint in the exercise of already frequently
    plenary jurisdiction, for example, over drug crimes, robberies,
    auto thefts, domestic violence, fraud, extortion, etc., along
    with Federal limitations placed by Congress on Federal
    enforcement activities.
        Now, under attorneys general for many years of both
    political parties, that position has been one that has been
    promoted in the staff, at least, and frequently by appointed
    officials in the Department of Justice as a justification for
    federalizing new crimes and bringing within the scope of the
    enforcement power of the Department of Justice new crimes to
    deal with events that at the time seemed justified.
        The truth of it really is that since the Department of
    Justice has become a major Federal bureaucracy with a
    substantial staff, beginning a couple of generations ago, in
    the 1920's and 1930's, the federalization of crime has
    proceeded apace. It is not just the last 30 years or since the
    Second World War. Bank robbery as a separate crime, the Dyer
    Act, auto thefts across State lines, and many other Federal
    crimes were adopted prior to the Second World War. And I think
    that we overlook one of the major causes of this if we don't
    attribute it at least in part to the rise of a very substantial
    Federal permanent staff which instinctively supports many
    expansions of Federal jurisdiction.
        Now, I know the Members of the Committee have observations
    and questions, and I will leave there my own views which I have
    set out. I would say that there is a set of principles for
    determining what should be federalized in the way of crime and
    what should not be federalized. And I think these principles
    are of long standing. As the Chairman mentioned, they go back
    to the Founding Fathers.
        And the jurisdiction ought to be, in my view, limited to
    the following five areas which I will briefly summarize: One,
    offenses against the United States itself; two, multi-State or
    international criminal activity that is impossible--not just
    difficult but basically beyond that--for a single State or its
    courts to handle; three, crime that involves a matter of
    overriding Federal interests such as civil rights matters;
    four, widespread corruption at the State and local levels; and,
    finally, crimes of such a magnitude or complexity that Federal
    resources are required, and that would now be mainly
    international-type crime.
        Obviously, the Federal Government has got to get involved
    in Internet crimes across national boundaries, which is rising,
    and in money laundering across national boundaries and in
    international Mafia or international terrorism. With the first
    thing that should be considered is now repealing a lot of laws
    that are no longer needed in this area.
        I think that if this Committee and others in Congress would
    give some thought to the repeal, it would be certainly a
    controversial matter. But the repeal of some of the laws that
    are now on the books and are unused, it would be helpful.
        Thank you, Mr. Chairman.
        Chairman Thompson. Thank you very much.
        Well, I think that every citizen ought to read this ABA
    Task Force report on ``The Federalization of Criminal Law.'' As
    General Meese said, it is very much an eclectic group including
    Mr. Meese, of course--just a few names--Susan Estrich, Howell
    Heflin, and you mentioned former Congressman Kastenmeier,
    Robert Litt, James F. Neal, a friend of Judge Merritt's and
    mine from Nashville, Tennessee, and a prominent lawyer, Don
    Santarelli.
        And the conclusions that you came to here really are eye-
    opening. I think to me, the fact that more than 40 percent of
    Federal criminal laws have been enacted since 1970, and the
    fact that we really don't know how many Federal criminal laws
    there are. Some people use the figure 3,000, but considering
    the fact that some of these statutes are so complicated and
    convoluted, it is difficult to tell just how many provisions
    there are in some of these statutes that have criminal
    sanctions attached to them, not to mention administrative
    regulations now. So many of them have criminal sanctions
    attached to them.
        It was pointed out over a thousand bills were introduced in
    the 105th Congress having to do with criminal law--of course,
    we will talk about juvenile crime a little bit later--many of
    them having to do with juvenile crime even though there is only
    about 250 or so prosecutions of juveniles in the Federal system
    every year. So we are talking about an infinitesimal number
    here.
        Between 1982 and 1993, the Federal justice system
    expenditures were twice that of State and local expenditures.
    And, of course, much of this deals with matters that are left
    to the States. And then you deal with the results of all of
    this, and apparently from all of this there has been no real
    significant impact on public safety because by the very nature
    of the Federal system, you can only reach a small percentage of
    the crime involved. Less than 5 percent of the prosecutions are
    Federal prosecutions.
        Many of the new statutes that we pass in response to recent
    events--drive-by shootings, interstate domestic violence--since
    1994 they have been on the books, and I know in 1997 there was
    not one prosecution brought under either one of those statutes.
        So, ironically, it seems--and, General Meese, I will let
    you address this, if you would--that in this area we are
    federalizing, but it is not enough to do any good in terms of
    reducing the crime rate, really. We would have to have
    basically a Federal police force in order to really do some
    good in that regard. But it is enough to swamp our court system
    in some respects and violate certain of our principles and
    increasing Federal presence and power. So usually there is a
    trade-off. There is some good for some evil here. I have a
    difficulty in seeing what the good is here in that, as I say,
    it seems like we are not doing enough to really have any effect
    on the problem, and yet in trying to do so, we are creating
    some really disadvantageous situations. Is that a fair
    assessment?
        Mr. Meese. Yes, it is, Mr. Chairman. The task force found,
    for example, that it diffuses accountability and
    responsibility. People don't know whether to complain to
    Congress and their Federal Government or to the State
    legislature and their local law enforcement agency.
        I might point out in regard to what you said about Federal
    resources, there are only approximately 10,000 agents of the
    FBI, about a quarter of the police force of the city of New
    York alone. We have 500,000 State and local law enforcement
    officers. It seems frivolous almost to add to the jurisdiction
    of the FBI such things as deadbeat dads and some of the other
    similar crimes that have been assigned Federal jurisdiction by
    Congress over the years.
        Likewise, there are fewer Federal judges in the entire
    Federal judiciary than they have in the State of California.
    And, again, even a few cases or a small number of cases can
    swamp those Federal resources.
        But the real problem is it makes the public think that
    something is being done when actually there is really very
    little impact on public safety itself.
        Chairman Thompson. Well, I think maybe the greater problem
    is the fact that it may be swamping our resources. We are
    dealing now daily in the newspaper with the allegations that
    our most sensitive nuclear secrets over the past 50 years have
    been stolen, have been subject to espionage in this country.
    There are allegations concerning the nature of the
    investigation, whether or not it was effective. Everyone is in
    turmoil about it. And we are passing things like the Animal
    Enterprise Terrorism Act, the Odometer Tampering Act, and theft
    of livestock. We have federalized those areas now.
        Senator Durbin. Cattle rustlers.
        Chairman Thompson. Cattle rustlers, and guns in schools, a
    battle we had last year, where every State in the Union has
    already got a law in this area. Now we apparently want FBI
    agents going around and monitoring your local school house in
    every rural district in the country. So we clearly have got our
    priorities messed up in that regard.
        Judge Merritt, with regard to the court system, some say
    that because we don't use these laws that we are passing, the
    federalization that we are doing now, that it hasn't had that
    much effect on the courts. Can you talk a little bit about the
    change that has taken place in the Federal court system? We all
    know what it was originally designed to do. It was mostly a
    civil court system. You had a Federal question. You had
    diversity jurisdiction. And some say once upon a time you had a
    fairly leisurely pace.
        What is the situation with the Federal court system today?
    And to what extent does this federalization play a part in it?
        Judge Merritt. Well, let me give you some examples. I think
    they represent the general trend that the Chief Justice
    mentioned in the statement I gave.
        In my own court, the Sixth Circuit Court of Appeals, I have
    been a member of that court for 22 years, and when I became a
    judge on the Sixth Circuit, we had from 230 to 250 direct
    criminal appeals or criminal cases a year, and now we have
    about a thousand. Most of those cases, a majority of those
    cases are drug-related cases. Of course, those cases are ones
    that are duplicate cases with the State Governments, and many
    of them are just regular run-of-the-mill drug cases that could
    easily be prosecuted in the----
        Chairman Thompson. Possession cases?
        Judge Merritt. Distribution and possession cases, firearms
    cases, and they are----
        Chairman Thompson. What kind of firearms cases? Is that
    mostly possession illegally?
        Judge Merritt. Felon in possession of firearms, things that
    are also State crimes.
        In our home town of Nashville, where we both served as U.S.
    Attorneys, now I am told about 60 percent of the prosecutions
    in Federal court are drug-related, drugs and firearms cases.
    Then the rest of them are usually----
        Chairman Thompson. Do you know how many assistants they
    have in the Middle District?
        Judge Merritt. They have got about 20 now. When I was U.S.
    Attorney, I had four.
        Chairman Thompson. I was there right after you, I think,
    and we had five, I think, the early 1970's.
        Judge Merritt. But there has been a big increase in
    Detroit, for example, which is part of the Sixth Circuit, from
    the time I was U.S. Attorney. I think it has gone from about 25
    to 150 or perhaps more now, and a corresponding increase in the
    size of the staff. And most of that has been the result not of
    prosecuting core crimes against the United States itself or
    against officials of the United States or some kind of crime
    that addresses itself directly to the United States as an
    entity. It is mainly because of the prosecution of duplicative
    State crimes.
        I am not arguing that there should be no Federal laws that
    are in the area where the States have plenary jurisdiction, but
    they should be much more limited than they are.
        Chairman Thompson. But isn't the basic problem that there
    is really no way, philosophically or practically, to increase
    the number of courts and the number of Federal judges to keep
    up with this? I mean, you have got to either start dealing with
    them faster, which, of course, the quality is going to go
    down----
        Judge Merritt. Well, what has happened in our court I think
    is a good example. It has happened to other Federal courts.
    About half of the orally argued cases in our court are criminal
    cases. That used to be 15 percent. The reason is we have
    maintained the attitude that before you go to the penitentiary,
    you at least ought to get a opportunity to have a oral
    argument, have your lawyer----
        Chairman Thompson. A disturbing presumption.
        Judge Merritt. Yes, a lot of courts of appeal--some courts
    of appeal have just forgotten about or done away with oral
    argument in many criminal cases. We still try to maintain oral
    argument in criminal cases, and that has eaten up our oral
    argument docket so that now we are having telephone oral
    arguments, for example, in the court of appeals in order to
    keep up with the criminal docket. Next week, two judges and I,
    a panel of three, will hear seven cases next Wednesday on the
    telephone in an effort to----
        Chairman Thompson. How do you know if the lawyers are
    standing or not? [Laughter.]
        Judge Merritt. We know they are sitting.
        Chairman Thompson. I was not aware of that. Is that a
    recent--are other courts doing that, telephone oral arguments?
    I have never heard of that.
        Judge Merritt. There may be one or two, and there is more
    of this videoconferencing that is going on where the lawyers
    stay at home and sometimes the judges stay at home with a video
    monitor and you try to overcome the expense and the
    inefficiency of travel as a result of that.
        Chairman Thompson. Let me get in one more question before
    my time runs out here. General Meese, you referred to this, our
    tending to want to respond to the tragedies that we are
    experiencing. They come all too often. All of us have a natural
    response to want to do something, ask questions and so forth,
    and we in Congress are no different, and probably more so than
    most. We have seen the discussion, heard the discussion that
    has come about from the recent tragedy out in Colorado. People
    are searching for reasons. People are trying to come up with
    solutions and things of that nature. Some of them have to do
    with potential legislation. Some of them to do with cultural
    issues which present different kinds of constitutional
    questions and problems. Others have to do with preventive
    legislation. Another one has to do with punishment. Others have
    to do with gun control.
        From your experience and your observation, relate what we
    are talking about today, that is, the federalization of
    basically things that are already State criminal laws,
    preempting--or duplicating, I guess I should say, the State
    criminal justice system. What are your thoughts about what we
    should or should not do in response to that?
        Mr. Meese. Well, Mr. Chairman, I don't believe that there
    is any need whatsoever for any new Federal laws that would
    arise out of the tragic circumstances in Littleton, Colorado.
    Indeed, one of the persons who has done research on this has
    found that it was not a problem of inadequate laws. It was the
    fact that people broke laws. And they pointed out the fact that
    some 19 different laws were on the books that pertained to the
    violations that occurred as a part of that tragic circumstance
    out there. So it is a matter of enforcing the laws we have on
    the books, not trying to make a lot of new ones.
        And certainly the points you make, dealing with cultural
    problems, dealing with new preventive techniques, it seems to
    me that the Founders in the Constitution were quite right in
    saying the States should be the ones where they have the
    ability to experiment with different things, and if they don't
    work, then they can change them at the State level rather than
    having a sweeping generalized Federal law which would apply to
    all 50 States in trying to deal with very intricate moral and
    cultural matters which are best addressed at that level of
    government closest to the people.
        Chairman Thompson. It seems to me that there is a general
    proposition that we are searching for questions right now is a
    point in favor of federalism and different approaches and
    different venues to these problems to see what does work.
        Senator Durbin.

                  OPENING STATEMENT OF SENATOR DURBIN

        Senator Durbin. Thank you, Mr. Chairman.
        General Meese and Judge Merritt, thank you for joining us.
    I am not going to rise to the occasion of the last question
    because I have different views than the Chairman on such things
    as whether States can adequately regulate the sale of guns over
    the Internet or whether the Brady laws should be extended to
    gun shows, all of which I think may have some bearing on what
    is happening, not only gun violence in Littleton, Colorado, but
    across the country. But I really want to focus on a much
    different question.
        I agree, incidentally, with the findings of this report and
    with the Chairman's conclusion that we should encourage all of
    our colleagues to read it closely because it really puts an
    amazing perspective on what the Congress views as its role in
    the results of our legislation. But I would like to really look
    at this issue from a different angle than the commission and,
    frankly, from the testimony here, focusing less on what goes
    into the system and more on what comes out of the system. And
    let me tell you exactly where I am headed.
        General McCaffrey, our drug czar, testified last year
    before the Senate Judiciary Committee, and I asked him point-
    blank whether the statistics that I had read were accurate, and
    they were as follows: African Americans comprise 12 percent of
    the population of America; they comprise 13 percent of people
    committing drug-related crimes; they comprise 33 percent of all
    arrests for drug crimes, 50 percent of all convictions for drug
    crimes, and 67 percent of all incarcerations for drug crimes in
    our country.
        I also note here that the sentencing under Federal law and
    Federal Sentencing Guidelines for drug-related crimes, as noted
    on page 30 of the report, is dramatically higher in the Federal
    courts than it is in the State courts.
        There was a survey done by The Tennessean newspaper back in
    1995 which took a look at sentencing across the Federal courts
    of the Nation and came to the conclusion that African Americans
    were more likely to be sentenced to 10 percent longer sentences
    for Federal crimes than whites.
        Now, let me hasten to add that this was not a Tennessee or
    a Southern phenomenon. In fact, the opposite is true. The
    disparity was highest in the Western part of the United States
    in Federal courts. It was next in my area, the Midwest, 12
    percent; the Northeast, 10 percent; and the South, 3 percent.
    So this is not a Southern Federal court phenomenon. It appears
    to be a national problem, much worse in the West and Midwest
    than in the South or the Northeast.
        The point I am getting to is this: If we are to create more
    drug crimes, as we have, if we are to create sentencing
    guidelines, and if the net result of that is to incarcerate
    more African Americans, disparately larger numbers of African
    Americans, and to sentence them to longer sentences in the
    Federal court system, what is coming out of this system is
    exceptionally perverse. And I would like your thoughts on that.
        It is my estimate, at least in 1995--and I am sure the
    figures have changed somewhat--that about 6 percent of the
    Federal judiciary were African American, and we find a system
    now that is unfortunately producing results that are
    prejudicing at least one group in terms of incarceration and
    sentencing. So as we federalize, as we impose more sentencing
    guidelines, are we going to exacerbate this problem, General
    Meese?
        Mr. Meese. Well, I would be interested in the source of the
    statistics because most of the surveys I have seen do not show
    that kind of a dichotomy on a racial basis in sentencing
    generally.
        Now, it may well be--and particularly in the Federal
    system--that the sentencing guidelines, it must be that there
    is some--if those statistics were correct, that there would be
    some unusual perversion of the sentencing guidelines. Perhaps
    Judge Merritt has had experience in this regard to be able to
    answer this question, but it seems hard for me because the
    sentencing guidelines were designed to regularize sentences
    without regard to external, non-relevant factors, and to
    concentrate on specific criteria relating to the crime rather
    than to the criminal, particularly the irrelevant
    characteristics that you mentioned.
        So I also would be interested in the source of the
    statistics in the sense that I don't know how they can find
    that 13 percent of--that African Americans compose 13 percent
    of those who commit drug crimes but 33 percent are arrested,
    since how do you know who is committing drug crimes other than
    by arrests. So the statistics intrinsically have some question
    as to their validity as to that factor.
        In terms of the convictions and the incarceration rate, you
    would have to look in much more detail as to the particular
    offenses charged and so on.
        In the Federal system, most of the drug crimes relate to
    the distribution of drugs, the transportation, illegal
    importation and that sort of thing, the more serious drug
    crimes. Often possession may be the actual charge, but that is
    not what the person has done. It is what they are able to prove
    in a particular instance. But obviously any racial basis, as I
    say, based on irrelevant characteristics should not be a factor
    in either arrests or convictions or punishment. And so it would
    be interesting to delve behind those statistics if they are, in
    fact, true.
        Senator Durbin. Thank you. Judge Merritt.
        Judge Merritt. Well, let me say about the sentencing
    guidelines--and this is, I am sure, a voice in the wilderness.
    I have said many times the worst thing that ever happened to
    the Federal courts was the sentencing guidelines. And the
    result of the sentencing guidelines has been sentences which
    are much harsher now than ever. And the drug war has been a
    part of that situation, and the theory of the sentencing
    guidelines no longer has anything to do with rehabilitation. It
    is altogether--the theory of it is deterrence, mainly, and to
    some extent vindictiveness or retribution.
        So the sentencing guidelines themselves are extremely
    harsh. The Federal judges have supposedly considerably reduced
    discretion in sentencing than previously.
        Now, on the question of disparate treatment of African
    Americans, I read the series in The Tennessean, because that is
    the newspaper that I read, and discussed the problem with some
    of the people over there, and in my view, it could be true but
    the statistical basis for it was somewhat flawed. For example,
    it didn't take into account the criminal history situation
    entirely of the people being sentenced.
        At the same time, however, I am not sure that it is wrong.
    It is just that you can't tell whether it is right or wrong.
    And they did a conscientious job, and it is worth raising the
    issue, certainly.
        But the sentencing guidelines themselves are a major
    problem for the Federal courts. One of the reasons they are
    such a problem for our court is the number of appeals has grown
    tremendously. Everybody appeals the sentence, and this is a
    major problem for us. Our resources are--we are struggling to
    keep up. One reason is the sentencing guidelines.
        Senator Durbin. I will make just two observations, Mr.
    Chairman, before ending my questioning, and that is, Congress
    is at fault here as well, and I would confess to be part of
    that problem as part of Congress. For example, the disparity
    between sentences for crack cocaine as opposed to pot or
    cocaine is going to have an impact more on certain groups in
    our society, namely, African Americans.
        The last point I will make is that I have a genuine concern
    about the integrity of our judicial system and the respect
    which we have to have for it if it is to succeed and if that
    respect is not--if we do not strive to make that respect
    universal, I am afraid that it will be very difficult for those
    who are charged with enforcing the law to do their job.
        Thank you, Mr. Chairman.
        Chairman Thompson. Thank you very much. Senator Voinovich.

                 OPENING STATEMENT OF SENATOR VOINOVICH

        Senator Voinovich. Well, first of all, I would like to
    congratulate the Chairman for following up our hearings on
    federalism with this particular subject of federalizing crime.
    I have been concerned a long time about Federal preemption of
    State law and local law, and I am hoping that perhaps with some
    legislation here we can cause our staff to look at whether or
    not various laws that Congress is considering preempt State and
    local laws and perhaps have a presumption that says that they
    don't.
        But I hadn't thought about the federalization of crime
    until you raised it at this hearing, and it gets back to a pet
    peeve I have had for years, and that is that all the polls
    always show crime is an issue, and a dime will get you a dollar
    that most of the laws on the Federal books today are a result
    of those polls that said somebody has got to have something on
    their record to show they have cracked down on crime and they
    can go back and campaign on it or do a 30-second commercial.
        I think, Mr. Chairman, that these five recommendations of
    Judge Merritt are very good and that perhaps we ought to have
    these as guidelines before we pass any more Federal legislation
    in the area of crime, and that we should highlight that of all
    this legislation that is passed, very little is enforced. It is
    all form and no substance that has led to public cynicism and
    we ought to do more about that. And I think most people also,
    Mr. Chairman, look at dealing with crime and that their logic
    tells them it is a State and local matter.
        The other thing that it is a commentary on is the fact that
    today in our society, instead of really looking at the problem
    with the right perspective, we are all interested in the silver
    bullet. It's the easiest thing. That's the problem. We had the
    Littleton thing; let's pass a couple laws and everything is
    going to be fine, and then we go off and do something else,
    instead of taking the time to look at what the real problem is.
        I will give you an example of it. Two years ago, or 3 years
    ago, Professor John DiIulio over at Princeton was talking about
    the upcoming predator generation, that our demographics show
    that we are going to have a lot more younger people in this
    country, and as that goes up we are going to have some real
    problems in the year 2010, 2015. So I had called a juvenile
    crime summit in Ohio in 1997, and it was very interesting that
    many of the people who were proposing we need tougher laws on
    crimes and longer sentences and more boot camps and all the
    rest of it, that the real experts said that the real problem
    dealt with other things. And it reminded me initially of
    something that the man who ran our prison system in Ohio once
    said when we were talking about how to reduce the population in
    Ohio's prisons, and he said ``Head Start,'' that we have got to
    get people early on in their lives and make a difference.
        It is interesting. Professor DiIulio said the big problem
    today is that people are growing up in moral poverty, which he
    describes as ``the poverty of being without loving, capable,
    responsible adults who teach you right from wrong.'' And I
    think that this whole tendency to pass a law and assume that
    the problem is taken care of is a cop-out and that we need to
    be a lot more thoughtful in some of these areas where we think
    that we are going to be making a difference.
        Mr. Chairman, one of the things you are going to be hearing
    from me is that I am going to be promoting more activity on the
    Federal level in reordering priorities to deal with the
    prenatal-to-three area, which all of the experts say is
    probably the most important area in the development of a child,
    which we completely neglect.
        The point I am making is that we need to spend a lot more
    money early on making a difference in the lives of the people
    in our society instead of dealing with the problem later on.
    And in Ohio, in terms of the Federal crimes, Mr. Chairman, the
    Federal prosecutors usually tell the State guys, you handle it,
    we haven't got time for it, besides that you have got the jails
    and we haven't got the jails. I mean, there is a lot of that
    going on at the local level.
        I think probably the most positive thing from my
    observations over the years--and I would be interested in,
    General Meese, your observation--is the coordination in terms
    of enforcement between local and Federal officials. I
    experienced as mayor of Cleveland several instances where there
    was no coordination, and everybody was off doing their thing,
    DEA, FBI, Treasury, and local prosecutor, local police. If we
    really are interested in making a difference in terms of crime
    in this country, more emphasis ought to be placed on
    coordinating the activities of the various law enforcement
    officers so that they can work together to really make a
    difference. I would be interested in your comment on that.
        Mr. Meese. Well, thank you, Senator, and you are absolutely
    right; it is the coordination between the various law
    enforcement agencies at all levels of government. Your own
    experience in a sense parallels my own. We have both served at
    both the local, State, and now Federal Government in your case,
    and mine when I was Attorney General.
        One of the principal objectives during the time that I
    served in the Department of Justice was to advance that kind of
    coordination. We organized the Law Enforcement Coordinating
    Councils in each Federal district, bringing together local
    chiefs of police, sheriffs, and State officials of the State
    Department of Justice, along with our U.S. Attorneys and the
    various heads of the DEA, FBI, Marshals Service, and the other
    Federal law enforcement agencies. And this has gone a long way.
        In the drug field, for example, the Drug Enforcement and
    Organized Crime Task Forces, I think this is a very important
    aspect. In many cases, we don't need additional resources. We
    need the resources we have working together more effectively
    and also allocating the responsibility according to what they
    do best. And one of the things that the proliferation of
    Federal laws that duplicate State laws does, it destroys that
    kind of allocation of responsibility as well as hampers
    coordination if they are all fishing in the same ponds.
        Senator Voinovich. Mr. Chairman, do I have time?
        Chairman Thompson. Yes.
        Senator Voinovich. Does the ABA comment about legislation
    that is being proposed?
        Mr. Meese. I believe that the ABA may. The task force
    operated separately from the legislative advocacy branch of the
    ABA. I don't know whether they do or do not comment on specific
    pieces of legislation. But I know the task force would hope
    that when they do consider--and the ABA has a process whereby
    they take positions only after they have been adopted by the
    House of Delegates. But we certainly will urge on the House of
    Delegates, which meets only infrequently during the year, that
    our report on the federalization of crime be one of the
    criteria they use in determining the ABA position on specific
    legislation.
        Senator Voinovich. Well, I would suggest that they give it
    serious consideration. I think that if you had a task force
    that used criteria, perhaps what Judge Merritt suggested, and
    then you had some criteria in terms of when it was appropriate,
    and that they would make it a point that when some of this
    stuff is being considered here that they come in and say it is
    not needed, it is duplicative, it is not going to help things,
    that would go a long way to reduce some of these bills that are
    being introduced here because the people introducing them would
    know that there is going to be somebody that is going to
    comment about whether indeed they are really needed.
        Mr. Meese. I think that is an excellent suggestion, and,
    incidentally, the criteria that Judge Merritt has proposed is
    substantially included in the report itself, as well, as the
    basis on which Federal legislation is necessary. So I will
    certainly pass that on to the appropriate officials within the
    ABA.
        Chairman Thompson. What we have run up against is the
    marrying together between those who seem to always look for a
    Federal solution, Senator, along with those who want to be
    tough on crime, and they get together and form a heavy
    majority. And those who are out there saying, hey, wait a
    minute, there is absolutely no indication that it is going to
    do any good, every State in the Union already prohibits this
    activity. I think last time that came up on the guns-in-school
    legislation, we got 21 votes, something like that, for that
    proposition. So I am glad you are here now, so maybe that is
    22.
        Senator Voinovich. Mr. Chairman, I would also like to say
    one other thing, that we need to do a little better job talking
    about the things that work. For example, our State I think is
    the only State in the country where the number of people in our
    juvenile facilities has been reduced because several years ago
    we went to a program called Reclaim Ohio, where we are allowing
    our judiciary, the juvenile judges on the local level, to find
    alternative places for these youngsters rather than sentencing
    them to State facilities. And that took a little money because
    in the old days, their only alternative was to send them to the
    State because the State will pay for it. Now what we say to
    them is if you keep them in the local area, we will give you
    $75 a day. In other words, they are looking at these youngsters
    and saying they have mental problems, they have drug problems,
    but there is a different approach to dealing with this. It is
    not crack down, throw them in jail, and they are going to be
    better.
        Our statistics show that boot camps, for example, don't
    work. We have found that boot camps for juveniles really do not
    help but hurt. I just think that more publicity, more best
    practices being shared about what really does make a difference
    needs to be emphasized rather than the silver bullet that so
    many people would like to advertise and then, as I say, go off
    and do something else.
        Chairman Thompson. Senator, you are pointing out something
    that I think is very important, and while I have still got you
    here, I would like to address just maybe one further question
    to you, again, if you please. That is, in response, again, to
    the current situation that we have, one of the things that we
    are considering is the Violent Repeat Juvenile Offenders Act. I
    don't know if you have had a chance to look at that. And since
    this juvenile crime legislation has been pending--I was on the
    Judiciary Committee until recently, and my concern has been
    just what you were talking about. Everybody has got their own
    idea as to what is a great program. And we sit up here in
    Washington and decide what makes sense to us. We find out later
    that either it doesn't do any good, maybe it does a little
    good, maybe it does harm, but we decide. And then we encourage
    the States to do what we decide that they ought to do in
    response to this problem.
        My feeling has always been that as far as a Federal role is
    concerned, one of the things that the Federal Government does
    better than anyone else, I think, is probably research and
    development and evaluation. And perhaps maybe we ought to
    acknowledge our ignorance in these areas and spend a little
    more time just doing basic evaluation in Washington, making
    that information available throughout the States, be a
    clearinghouse for information, programs that are being tried
    all across the country, what works, what doesn't work, and then
    let States make their own determination as to what they want to
    do.
        I would like your thoughts on this bill, General Meese. I
    think the staff indicated that I was going to ask you a
    question about it. It is complicated. It has many provisions in
    it, some of which I think are much better than they were. I
    think there is still some expansion of--we are still into this
    juvenile gang business. We get the camel's nose under the
    tent--juvenile gangs, and then people who help juvenile gangs,
    then people who help people who help juvenile gangs, and we
    keep going in that direction. And then there are a lot of
    grants, $450 million for the juvenile accountability block
    grant. That is for buildings and prosecutors and things like
    that, as I understand it; $75 million for juvenile criminal
    history upgrades; $200 million for challenge grants, that is
    more in the preventive area, as I understand it; $200 million
    for prevention grants; $40 million for National Institute of
    Juvenile Crime Control and Prevention, of which $20 million
    would go to evaluation and research; $20 million for gang
    programs; $20 million for demonstration programs; and $15
    million for mentoring programs.
        With regard to the juvenile accountability block grant, to
    be eligible for the grants, States must make assurances it will
    establish, first, a system of graduated sanctions because
    States don't have enough sense to realize that you ought to
    have graduated sanctions. We need to tell them that. We will
    give them the money if they will follow our wisdom because we
    have got those answers up here.
        Second, drug testing for juvenile offenders, I think we
    could all agree that is a good thing in general.
        Third, a system to recognize the rights and needs of the
    victims of juvenile crime. It is a good thing, but three
    things, three priorities of a million priorities that you could
    choose from.
        What about all of this? I know you don't have time to
    address all the details. Is this a right approach? Is it 50
    percent right? Should we start all over again in the way we are
    looking at the problem here?
        Mr. Meese. Well, Senator, Mr. Chairman, my own view is that
    whether this bill passes or doesn't pass will have zero effect
    on violent crime or juvenile crime in the United States. It is
    the local officials, it is the local resources that are going
    to have the impact on this. There are some valuable things in
    the bill, namely, it eliminates a lot of programs that the
    Federal Government is presently engaged in which have been
    found to be useless or redundant or unnecessary. I think, quite
    frankly, we have plenty of money now going out of the Federal
    Government to the States in the juvenile field. I would get all
    of that money together, divide it by population and on a
    population or some other similar fair basis give it to the
    States in block grants and let them decide how best to use it.
        Some of the provisions in the bill are pernicious in that
    it extends the federalization of crime, particularly those that
    relate to the firearms provision and the criminal gang
    provision, makes substantive offenses on the basis of Federal
    law, which is already covered or can be covered by the States
    if they so desire and see it is important.
        So, as I say, if this bill did not pass, it would not have
    any detrimental effect on the enforcement of criminal law in
    the States. If it does pass, it is not going to have any real
    beneficial effect. I would think that, again, the best thing
    that the Federal Government could do is take the money already
    going to the States for a whole variety of these programs, give
    it to them in block grants----
        Chairman Thompson. Practically every department of
    government has juvenile crime prevention money. The Department
    of Agriculture, we found out, has some.
        Mr. Meese. My understanding is that there are some 300
    different programs scattered among the various agencies of the
    Federal Government.
        Chairman Thompson. Judge Merritt, with regard to the
    judiciary, I noticed in the ABA report they said from 1980 to
    1994 the number of Federal prosecutors increased 125 percent,
    and the number of Federal judges, both district and appellate,
    increased 17 percent. So you are being outgunned there in terms
    of----
        Judge Merritt. Well, we just have to hire staff. The
    problem in the Federal courts is not only the rise in cases,
    but something has to give when that occurs, and what concerns
    me is that the deliberative process itself may be undermined.
    The Supreme Court can limit its jurisdiction to a certain
    number of cases a year. The Federal district courts and courts
    of appeal can't do so. So shortcuts then become necessary, and
    any shortcut reduces the amount of time a judge has for
    deliberation and reflection.
        I might say on the subject, there is something to be said
    for Federal action in a symbolic sense; that is, the political
    arm of the government, the Congress of the United States, sees
    a problem and they want to act in order to express the will of
    their constituents. There is, it seems to me, better and worse
    ways to do that.
        The worst way to do it is to permanently federalize the
    criminal area. The least worst way may be through
    appropriations of some kind because that is an annual year-to-
    year process, not permanent, and it may waste some money, but
    it doesn't undermine the fabric of a federalist society. So
    when symbolic action becomes necessary through the political
    process, for example, in response to Littleton and other
    similar events, there is something to be said for symbolic
    action, but little to be said for federalizing the matter as a
    matter of crime, and much to be said for seeing if there is
    some experimental program that may require some appropriations
    which can be easily ended from year to year.
        Chairman Thompson. And perhaps more in terms of evaluation
    of programs that are----
        Judge Merritt. And research. I think there are a lot of
    things the Federal Government can do to assist State and local
    law enforcement. For example, electronic surveillance is
    assisting State and local governments where necessary in
    serious crimes. In that respect that is one example.
        There is a lot of aid that can be given which doesn't
    entail or require the creating of Federal crime or bringing
    some case in Federal court by a Federal prosecutor.
        Chairman Thompson. That is an extremely helpful and
    insightful analysis, I think.
        Let me ask just two more things. On your five criteria that
    we are talking about, you said something that was interesting
    to me. With regard to the interstate-international aspect of
    it, you said something that is difficult, almost impossible to
    do otherwise. It is an interstate--it seems to me that the
    state of the law is--well, not the law but the state of
    Congress is that if we can remotely attach anything to
    interstate commerce, it is not a question of whether it is wise
    or not, we just go ahead, if we can remotely--or even allege,
    just allege, we don't even have to show that there is some
    connection. I take it that then we go ahead and pass laws in
    that area and say, well, it affects interstate commerce. And,
    of course, I guess in one sense or another, everything affects
    interstate commerce. And up until fairly recently, anyway, the
    Supreme Court has kind of gone in that direction.
        I take it that you feel that there not only should be some
    nexus but there should be some very strong nexus to interstate
    commerce before we federalize in that area.
        Judge Merritt. Yes, and one of the reasons is because the
    way the prosecutorial system works inside the Department of
    Justice is very decentralized; that is, the U.S. Attorneys
    pretty much have discretion to bring what cases they want to.
    There are few areas where they are limited and have to get the
    permission of the Criminal Division of the Department of
    Justice, for example, in areas like local corruption. But in
    the main, in the great broad sweep of these duplicative crimes,
    it is left to the discretion of the local prosecutor. The local
    prosecutor can bring, as they frequently do and as we see every
    day, a case that is no different from the case that would be
    brought in a local police court of the local jurisdiction. It
    depends on prosecutorial discretion and selection, and there is
    not much control of that through the Department of Justice, and
    there is, in fact, a tension between the local--as you may
    remember, a tension between the department oftentimes and the
    local prosecutor, a ``don't tread on me'' sort of attitude. And
    a lot of cases are brought as a result of that.
        Chairman Thompson. One final thing. You mentioned in your
    statement that much of your docket now is drug cases, illegal
    possession of firearms cases, and that it was having minimal
    effect on the distribution of drugs and illegal firearms. You
    said most of your cases, or a good many of them, anyway, are
    possession cases.
        Is one of the places we are missing the boat as far as
    drugs and firearms are concerned is that we are not drawing a
    proper distinction between possession on the one hand and
    perhaps interstate transportation on the other hand, that
    perhaps if it is an interstate transportation case, those are
    traditionally Federal kinds of cases and activities? But on the
    other hand, if it is mere possession of drugs or firearms that
    are otherwise prohibited by local law, that that is not
    something that needs to be federalized?
        Judge Merritt. Let me give you an example. It depends on
    what you mean by interstate transportation or how much
    interstate commerce you want to say is a prerequisite.
        In Memphis, for example--and this is true in a lot of
    cities that are near the border of the State. In Memphis, there
    are a lot of cases where the local police officer will make a
    case, he will stop or she will stop an automobile that is
    coming across from Arkansas or Mississippi or somewhere, and
    the law is that you can stop for any reason and then search for
    drugs, and the reason for the stop is somewhat of a pretext. So
    the police officer stops an automobile, they find some drugs,
    and the case is then brought in the Federal court. It may be 10
    grams of crack cocaine or cocaine base or whatever. But the car
    came across the State line----
        Chairman Thompson. So what you are saying is that even in
    some so-called interstate cases, it should not be federalized?
        Judge Merritt. Yes. I mean, it is a big country now. I
    think that--and a lot of State lines--we don't need to
    prosecute all those cases in the Federal court.
        I think the Federal Government, the Federal law enforcement
    establishment would be much--and the Congress--would be much
    better off if just as a matter of priority it looked at the
    international criminal area, which I think is affecting the
    country now substantially, because this is an area that State
    Governments can't really deal with. The National Government has
    to deal with that, and crimes in that respect are crimes
    against the Nation and fall clearly within our jurisdiction
    over foreign policy.
        So I think that there should be a de-emphasis on these
    local domestic situations and an emphasis on----
        Chairman Thompson. The original purposes of the Federal
    court system.
        Judge Merritt. Right.
        Chairman Thompson. At a time when we have increasing
    problems--you mentioned the international aspect of drugs.
    Practically all illegal drugs come in from a foreign country.
        Judge Merritt. Well, that is true, and then we have gangs.
    I mean, I have heard a lot and read in the paper of gangs from
    different countries--the Russian Mafia is coming into the
    United States. Well, it is hard for State and local people to
    deal with that kind of problem, and Nigeria, other places.
        Chairman Thompson. The point being that we have got--I
    mentioned the espionage case. We have got serious Federal,
    national problems that require serious Federal resources. And,
    we are talking about animal hijacking and having FBI agents go
    out to country schools, presumably to check on kids. We are
    going the wrong direction there.
        I have kept you much too long. I appreciate it. General
    Meese, do you have any parting comments?
        Mr. Meese. Just that I would strongly support the
    Chairman's comments on research and evaluation. One of the
    things is that there is very little evaluation of most of these
    programs, and rather than end programs that are not effective,
    we add new programs without looking at those that are already
    on the books. So I support your comments on research and
    evaluation, which needs to be done on a national scale, and
    which outfits like the National Institute of Justice, Bureau of
    Justice Statistics, and others can be very effective as a
    nationwide support for local law enforcement.
        Chairman Thompson. Thank you very much, gentlemen. That is
    extremely helpful.
        I would like to ask our second and final panel to come
    forward, please. Our first witness will be the Hon. John Dorso,
    the Majority Leader of the North Dakota House of
    Representatives, who is testifying on behalf of the National
    Conference of State Legislatures.
        He will be followed by Gerald Lefcourt, immediate past
    president and legislative committee chair of National
    Association of Criminal Defense Lawyers.
        Our final witness today will be Professor John Baker, Jr.,
    the Dale E. Bennett Professor of Law, Louisiana State
    University Law School.
        Gentlemen, welcome. Representative Dorso, would you like to
    begin, please?

      TESTIMONY OF HON. JOHN M. DORSO,\1\ MAJORITY LEADER, NORTH
      DAKOTA HOUSE OF REPRESENTATIVES, ON BEHALF OF THE NATIONAL
                    CONFERENCE OF STATE LEGISLATURES

        Mr. Dorso. Thank you. Good morning, Mr. Chairman. As you
    said, my name is John Dorso. I am the Majority Leader of the
    North Dakota House of Representatives, and I also serve as
    chairman of the Law and Justice Committee of the National
    Conference of State Legislatures. Today I am testifying on
    behalf of NCSL and, I believe, all State legislators.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Dorso appears in the Appendix on
    page 251.
    ---------------------------------------------------------------------------
        First of all, let me thank you for your kind reception of
    the present president of NCSL, Speaker Dan Blue, yesterday. I
    understand that went very well. We appreciate that.
        I want to thank you for holding these hearings on the
    issues of federalism and preemption because I think that they
    are very serious issues. As State legislators, we face what you
    do every time we go into session. It seems that we in North
    Dakota are dealing with some more mandates or preemptions that
    come down from Congress, and it is very troublesome to us that
    we have to deal with those issues because NCSL's touchstone and
    my touchstone is, of course, the Tenth Amendment and what is
    supposed to be reserved to the States. And, of course, the
    police power is one of those that we believe is one of our
    prerogatives.
        Today, as I was listening here, so much of what was said is
    what I was going to say that I am going to skip my prepared
    remarks. As a legislator for 15 years, I guess I don't like to
    listen to the same things said twice, and I am sure that your
    Committee has the same opinion. And I certainly don't like to
    have people read to me, so I am going to skip that.
        Chairman Thompson. I am used to it.
        Mr. Dorso. You are used to it?
        Chairman Thompson. In retribution, I read to other people.
    [Laughter.]
        Mr. Dorso. Well, I'll try not to.
        I think some things have been said today. I totally agree
    with Ed Meese and the judge. North Dakota, being a small State,
    I have the ability to visit with our Federal judges. Pat Conmy,
    who sits in Bismarck, was a former legislator. Rodney Webb, who
    sits in Fargo, was active in party politics before becoming a
    judge. And the Federal prosecutor, U.S. Attorney John
    Schneider, was the minority leader before becoming the U.S.
    Attorney. So I have a close personal relationship with most of
    those folks, and I have an opportunity to visit with them about
    the federalization of criminal issues. And much of what is said
    today is the same thing they are telling me from their
    perspective, Mr. Chairman.
        The problems that were pointed out here I think are real.
    There is confusion as to jurisdiction, and that happens a lot,
    and especially in North Dakota, because we may not have a
    unique circumstance, but one that Western States suffer, and
    that is the Indian reservations and the Native American
    problem, and who has jurisdiction and the resources to deal
    with those problems.
        As an example of that, I will give you the methamphetamine
    problem. That is starting to centralize itself on the Indian
    reservations because those that perpetrate that crime find it
    is easier to do it there than in other parts of our State
    because of the confusion over jurisdiction, whether you are a
    member of the tribe or whether you are not a member of the
    tribe, and the jurisdictional problems. And I think there are a
    lot of resources being wasted, and I think the judges and the
    U.S. Attorney would agree with that statement.
        Many times we are chasing the same thing to get to a
    result, and a lot of resources are wasted where really the
    State could have done it just fine on its own, and the Federal
    Government could have been taking care of some other cases and
    what I believe is your responsibility, and those resources
    would be better spent on those types of cases.
        Now, you mentioned the ABA report, and I have had an
    opportunity to read that, and certainly I agree with the
    statistics and the conclusions.
        One of the things that I looked at in that report and I
    said, really, why does this happen? I mean, what is the root
    cause of this happening? And I think you have identified that,
    Mr. Chairman, as I think a lot of it is politics--and both of
    us--obviously, you are a U.S. Senator, but I have served in the
    North Dakota House of Representatives, see it. A lot of it is
    populist party politics. And it is too bad, but that is real.
    Any legislative session I am in, there will either be criminal
    law and/or even civil law that is introduced by special
    interest groups that seem to come as a reaction to events that
    have happened--we only meet every 2 years, but in the interim--
    and then it is very difficult sometimes to say no to passing a
    new law because it looks good, it sounds logical, but really it
    should be left, in your case, to us as the States and, in our
    case, it should be left to the local political subdivisions.
    And that is difficult to do. I understand that. But it is
    something that I think we have to be very careful of, and I
    think sometimes in Congress that hasn't happened.
        So I think there are a number of reasons why it has
    happened. One is the populist politics. The other one is the
    bureaucracy that was mentioned earlier. We all know bureaucracy
    in State Governments, just like bureaucracy in the Federal
    Government, they will feather their nest, they will grow,
    unless somebody reins them in. And that I believe is our job as
    a member of Congress or as a legislator, to rein in the size of
    the bureaucracy and its tendency to overreach its original
    mission.
        Then I think there is another thing here, and that is that
    you pass it because you can. And that maybe sounds a little bit
    trite, but, that is a fact. You can, just as sometimes we can.
    And unless we put some type of restraints upon ourselves, it
    will continue to happen.
        I bring up the context of federalism in general, not just
    in criminal issues. Unless there is, as was discussed here
    earlier by the earlier panelists, some way for you folks to
    draw a line in the sand to say that you are not going beyond
    that, which means outside review by CBO or whoever--I have no
    idea whhere would be the most appropriate place to put that
    responsibility--to say to you this is where we have drawn the
    line in the sand. Now, if you choose to go beyond that, that is
    a decision you can make, but, still, you have gone beyond the
    line in the sand. And I think that is important. We have tried
    to do that in the North Dakota Legislature by putting certain
    procedures into our rules so that when we start trodding on the
    local political subdivisions, they come in and they can raise a
    lot of hell with us. And then that tells us we should back off.
    And I think that there is something that needs to be done in
    that regard, and I heard that it was discussed earlier.
        I think that there are a number of areas that the Federal
    Government needs to help us in, and I heard that discussed and
    I agree with that. I also do not subscribe to the theory that
    all Federal criminal law is bad, because I certainly think that
    when it comes to organized crime and dealing with the Cali
    cartel on drugs and stuff, we are not capable of dealing with
    those types of things at the State level. I think certainly we
    can be cooperative in those efforts with our local law
    enforcement officials and State law enforcement officials, but
    in general, when it comes to international and organized crime
    to the level of interstate trafficking, etc., we are not
    capable of dealing with that. I think that the Federal
    Government has a legitimate role. But I think there needs to be
    that line drawn, and it needs to be clear, and it also needs to
    be clear as to what is our responsibility at the State level
    when we are dealing with those issues.
        So, with that, Mr. Chairman, I would rather spend some time
    answering questions later, but those are my feelings on this
    issue, and I certainly appreciate these hearings, and I hope
    that something can come of it.
        Chairman Thompson. Thank you very much. I appreciate your
    being here.
        It has been a long time, Mr. Lefcourt. Good to have you
    here.

     TESTIMONY OF GERALD B. LEFCOURT,\1\ IMMEDIATE PAST PRESIDENT
       AND CHAIR, LEGISLATIVE COMMITTEE, NATIONAL ASSOCIATION OF
                        CRIMINAL DEFENSE LAWYERS

        Mr. Lefcourt. It has been.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Lefcourt appears in the Appendix
    on page 260.
    ---------------------------------------------------------------------------
        Chairman Thompson. I used to pay good money to hear Mr.
    Lefcourt lecture and learn about the law. Now I don't have to
    pay, but I am still learning.
        Mr. Lefcourt. I remember those days, and I remember your
    counselorship on the Watergate Committee, and I really remember
    it with a lot of fondness and respect.
        Chairman Thompson. Well, I appreciate that very much.
        Mr. Lefcourt. Mr. Chairman, I, too, am not going to read to
    you, but we all have our favorite sort of sound-bite stories,
    and really this hearing could be sound bite or sound policy, a
    look at the overfederalization of criminal law.
        One of my favorites, it is a scary one, and I think you
    will appreciate that knowing your background in the criminal
    law. After the Atlanta Olympic bombings, needless to say, a
    shocking, frightening, terrifying event, the administration,
    before anybody knew what really happened, proposed the most
    sweeping undertaking of wiretapping that there had ever been in
    this Nation. As you know, our wiretap laws, both State and
    Federal, require applications to courts. Those courts uniformly
    grant them. I think there has been only three in the last 15
    years that have been turned down. But, nevertheless, without
    knowing the cause, the reason, or what have you, in order to
    act as if something is being done, sweeping wiretap legislation
    was proposed. And it took Herculean efforts by literally dozens
    of groups across a broad political spectrum, from the National
    Rifle Association to the National Association of Criminal
    Defense Lawyers and the American Civil Liberties Union, and
    many groups all over the lot to try to derail that legislation.
        And this is just the kind of thing that scares everybody,
    and I think what every speaker here today and yesterday has
    been talking about: An overreaction, the feeling that something
    has to be done, some legislation has to be passed, and to hell
    with the consequences. And this is the real concern. We have
    submitted, Mr. Chairman, an article by three of us, and this is
    kind of an unusual and absolutely very creative alliance that
    was formed 2 years ago by myself as president of the National
    Association of Criminal Defense Lawyers; William Murphy, the
    president of the National Association of District Attorneys;
    and Ron Goldstock, the then-Chair of the ABA Criminal Justice
    Section, which sponsored the Meese report.
        We began to think about these issues and the principal
    concerns that we had with this type of reaction to highly
    publicized events, and you could think of many in your own mind
    during the last Presidential election. And it doesn't matter
    what party, and we are not looking for a particular result. We
    are looking for a process.
        During the last election, one of the candidates said the
    President of the United States should be behind victims. Who
    could argue with such a proposition? And the other candidate
    said, well, I am going to one up you. I am going to propose a
    constitutional amendment, the victims rights amendment, and I
    have read what you, Your Honor, Mr. Chairman, have written on
    the subject and couldn't agree with you more. And this is the
    product of the political fray. But, lo and behold, we are
    becoming dangerously close to actually passing a constitutional
    amendment where, clearly, statutes should be tried first, as
    everyone says, and are being tried and tried through the
    States, and working quite well.
        We have on our docket a constitutional amendment that could
    alter our entire adversarial system in the name of sound bites,
    with all due respect, because it doesn't matter which political
    party proposed it. The fact of the matter is such sweeping
    proposals could have disastrous effects on our constitutional
    system.
        And so the three of us, thinking about things that we agree
    on, have written a series of articles. The most recent one is
    my testimony today, which, as I speak, appears in the National
    Association of District Attorneys magazine, the Defense Lawyers
    magazine, and the ABA Criminal Justice Section magazine. What
    it does is, putting all of our talk over the last few days into
    a concrete piece of legislation which with standing rules from
    both Houses could result in a mechanism that could at least
    some way protect us from sweeping proposals which have very
    little actual good effect and potential disastrous effect, like
    the ones we have been speaking about.
        This concrete proposal draws on a statute which is already
    in effect, and that statute requires the Judicial Branch and
    Executive Branch of government to come in with a prison impact
    statement with their proposals of new legislation.
        You didn't hear me say ``congressional'' proposals. It is
    only the Judicial Branch and Executive Branch.
        Well, this statute, 18 U.S.C. 1047, could easily be
    expanded--and that is our proposal--to be a two-fold statute,
    to have two inquiries: A Federal assessment and it actually
    picks up on what Judge Merritt was talking about in the five
    criteria because those five criteria come from the long-range
    plan of the Judicial Conference. His five criteria are that
    five criteria, and we adopt it because it is a reasonable look
    at what the Feds, so to speak, should be involved in. And so it
    has a two-part component, this statute: A Federal assessment
    using that five criteria, and then a cost/benefit analysis,
    using agencies like the Attorney General, the General
    Accounting Office, but also drawing on States' attorney
    generals and local, and to see how this proposed legislation,
    whatever it be, might affect the prosecutorial, judicial,
    defense functions of State and local governments.
        You talk about the juvenile legislation. I guess Attorney
    General Meese did not know, but the American Bar Association
    has taken a position against S. 254, as it did against S. 10,
    which was the predecessor last session. And that is exactly the
    type of legislation that would benefit by the type of study the
    statute that we propose in that article would undergo. And one
    would take a look at it in terms of the Federal assessment
    criteria and also the cost/benefit analysis.
        If you look at the Federal assessment criteria of the
    juvenile justice legislation, for example, I mean, the notion
    that you could have children in the United States district
    court whose feet can't reach the floor from the chair they are
    sitting on being brought to trial as they would under that
    Federal legislation at the unreviewable discretion of an
    Assistant U.S. Attorney--the judge would have no role--and that
    that child could then be housed, if you will, with adults where
    we know from statistics that they are 7.7 times more likely to
    commit suicide when housed with adults, and that we have this
    whole Federal bureaucracy involving juvenile justice.
        I think if you looked at that statute, using the Federal
    assessment criteria suggested by the Judicial Conference and
    mentioned by Judge Merritt here, and you looked at the cost/
    benefit analysis of that statute, and there was some real study
    that the statute that we propose envisions, I don't think that
    there would be many people in Congress that would have a
    problem on how to deal with it.
        But now, when any sound bite gets into a piece of
    legislation and a filing and nobody knows and they are afraid
    to say no because they don't really want to look soft or they
    don't want to take the wrong appropriate political position, we
    end up with legislation that nobody wants.
        I think that this issue--and I am so happy that you have
    decided to have hearings on it--has become so important that it
    has united--look at the segments of our system that are united.
    Whether you are talking about the Chief Justice of the United
    States, the American Bar Association, Attorney General Meese,
    State legislatures, criminal defense lawyers, State DAs--
    everybody knows that our sort of predilection for sound bites
    and spinning has grown just totally out of control. And unless
    we adopt a statute with teeth that applies to Congress, the
    judiciary, the executive, and instead of sound bite has sound
    policy, we are really going down a disastrous road.
        So that is our position, and I hope that out of these
    hearings comes something concrete, a statute that people could
    get behind. We are certainly not going to be able to stop
    people from talking, and sound bites and press conferences will
    continue. But at least we know that they will go into a
    process, and, again, it is the process that is important, not a
    particular result.
        Thank you very much.
        Chairman Thompson. Thank you very much.
        Professor Baker.

        TESTIMONY OF JOHN S. BAKER, JR.,\1\ DR. DALE E. BENNETT
        PROFESSOR OF LAW, LOUISIANA STATE UNIVERSITY LAW CENTER

        Mr. Baker. Thank you, Mr. Chairman, for inviting me to
    testify. As an academic, I feel some burden to explain that I
    have not spent all my time in academia. I do write and teach in
    the area of constitutional and criminal law, but I was an
    assistant district attorney in New Orleans where I tried many
    felony cases. I was a consultant to the Justice Department
    under Mr. Meese, where I worked with the Office of Juvenile
    Justice. I was a consultant to the Senate Judiciary Committee
    at the time of the proposed Federal Criminal Code back in the
    early 1980's, which would have been a disaster had it been
    enacted. I have argued cases in the Federal courts, including
    the Supreme Court. Some of this was prison litigation.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Baker appears in the Appendix on
    page 266.
    ---------------------------------------------------------------------------
        I served on the ABA task force with Mr. Meese. Obviously,
    my views expressed today do not necessarily reflect those of
    the ABA nor the school at which I teach.
        Mr. Meese mentioned that the Task Force included diverse
    views. In all fairness, it was, if anything, stacked towards
    the prosecution. Out of the 17 members on that Task Force, 11
    were present or former prosecutors, State and Federal. So this
    was not a defense-oriented task force at all.
        Chairman Thompson. Well, everybody always admits to having
    been a former prosecutor. Probably if you look close enough,
    they were also defense lawyers at one time.
        Mr. Baker. There were actually very few defense lawyers in
    that group--your friend, Mr. Neal, but there were not that many
    others. It was, if anything, a prosecution-oriented group.
    Certainly Mr. Meese fits that description.
        One of the things that I learned in my short time working
    in the Congress was that the protection that the Founders
    intended in structuring Congress may work very well when it
    comes to non-criminal legislation, but the description of the
    Federalist about how the structure of Congress protects our
    liberty does not work well when it comes to criminal
    legislation.
        We have no need for new substantive criminal law in this
    country, either at the State or the Federal level--except
    possibly in the areas of electronic commerce and international
    relations, etc. This knee-jerk reaction, to pass new criminal
    laws, is not only a problem in Congress; it is a problem in the
    States. But there is a difference between the two.
        At the State level, there are certain protections that
    actually limit the damage that State legislatures can do. One
    of the things that I want to point out is that when Congress
    pass as criminal legislation, it is not just that it is
    worthless. It is dangerous. It is much worse than worthless.
        Let me give you just three general areas. It is, first of
    all, a threat to the innocent, which I will elaborate on. Two,
    it is a threat to democracy and the whole governing structure
    of this country. Third, it gets the Congress into moral,
    cultural disputes which it should know to stay away from.
        First of all, on the ineffective part, we all know at the
    prosecutorial and defense level what is driving federalization
    at the local level. It has to do with longer sentences, as has
    already by other witnesses. In most States, in drug cases, the
    Federal sentences are much longer, and, therefore, law
    enforcement has an incentive to push at least some of the drug
    cases into Federal court.
        In the State I come from, Louisiana, the State sentences
    are still much longer than the Federal sentences; so law
    enforcement does not have that same incentive.
        In terms of effectiveness, it is not sensible to push cases
    through the Federal system and it is not simply because they
    can't handle the case load. From a cost point of view, it makes
    no sense. You may have heard about Project Exile in Richmond,
    Virginia. There, the Justice Department, with the cooperation
    of the local DA, who probably should be unseated for pushing so
    many cases into the Federal system, wants virtually every gun
    case prosecuted in to the Federal system. The Federal district
    judges there have written to the Chief Justice complaining that
    their court has been reduced to a local police court. But, more
    importantly, they have pointed out that the cost of trying a
    Federal gun case is three times the cost that it would be in
    State court.
        Simply from an effectiveness point of view, cost
    consideration would dictate that you spend the money on the
    State rather than pushing the cases into Federal court.
        Chairman Thompson. That is being touted as a national
    success, and the logical extension of that is that you do it
    everywhere, which means a national police force.
        Mr. Baker. Right, exactly. I have written about that, and I
    want to point out that their claim is misleading. First of all,
    they are citing statistics on dramatic drops, but those numbers
    do not survive scrutiny. First of all, violent crime stats
    nationwide are down. They don't mention that. Second, New
    Orleans just experienced a 31 percent drop in murder rates,
    without the Project Exile program. New Orleans adopted New
    York's community policing, which seems to be responsible for
    its dramatic drop in crime. And that has nothing to do with the
    Federal Government.
        Moreover, we recently had in our State legislature a visit
    from Mr. Heston, who was promoting this Project Exile. We
    adopted a Project Exile, but with no involvement of the Federal
    Government. The main feature of Project Exile is sentencing. If
    you want to implement Project Exile, all you have to do is have
    your legislature raise the sentencing possibilities for
    particular crimes that you are concerned about. Local DA's are
    perfectly competent to handle these cases, and if they aren't,
    you need to unseat them and get a different DA. That is what
    the democratic process calls for.
        The biggest problem--which you as a former U.S. Attorney
    know--is that U.S. Attorneys are not politically accountable.
    If you don't like what your local DA is doing, you can have an
    impact on his or her policies. I went in with a local DA who
    campaigned against certain policies. He got into office, and
    the people said they wanted those policies continued. He did a
    180-degree turn. He had no choice if he wanted to be re-
    elected.
        On the issue of innocence, which is really critical and on
    which no one else today has focused, it seems to me there is a
    fundamental difference between substantive criminal law at the
    State level and at the national level. At the State level,
    criminal law is essentially based on the common law. Even
    though we have the model penal code and even though we have
    revised the common law, we are still dealing with the basic
    crimes of murder, rape, robbery, burglary, theft, etc. This is
    extremely important because these cases are ultimately tried
    before a jury and a jury can recognize a murder, rape, robbery,
    etc. The problem in Federal criminal law is the great
    uncertainty in many of the statutes.
        The Supreme Court this term has decided two carjacking
    cases involving uncertainties in the language that Congress had
    used in drafting this statute.
        The uncertainty of Federal statutes is compounded by what
    the Justice Department does, as indicated by Judge Merritt, and
    by what the Federal courts have been doing with statutory
    interpretation. Federal crimes have historically been tied to
    jurisdictional limits, which complicate a statute, for example,
    the interstate transportation element of many crimes.
    Interpretation often distorts the language of the statute. You
    don't have that problem at the State level. When you get into a
    Federal criminal trial, the statutory issues can become
    extremely complex. It is difficult for the jury to understand,
    in many cases, what constitutes guilt or innocence because the
    parties involved, the lawyers--prosecution, defense--and even
    the judge can't agree on what is the essential core of the
    offense.
        While we know what a murder is, who knows what a RICO is? A
    jury can't recognize that kind of crime. Ultimately, many of
    these juries are making judgments based on the indications
    given to them by the court and on whether they view the
    defendants as ``bad actors'' or not. This is where the Justice
    Department comes in.
        The Justice Department, since the beginning of the century,
    has promoted statute after statute that is vaguely and broadly
    defined, with the attitude of ``just trust us,'' we will only
    use it in appropriate cases. But the history has demonstrated
    that they have used it well beyond the original arguments that
    were used to justify particular statutes.
        When it comes to a question of court interpretation, the
    problem is that the Federal courts have gotten way far away
    from the old rule of strict construction. They call it the rule
    of levity, but they have gone well beyond it. And, again, in
    one of the two carjacking cases, Justice Scalia in dissent was
    complaining that the majority completely ignored the notion of
    narrowly construing the statute as they ought to have done.
        Ultimately, creating Federal statutes for crimes that
    should properly be brought at the State level results in
    bringing and increasing the police power of the Federal
    Government. As the Lopez case said, there is no general police
    power in the Federal Government. The Congress has legislated
    well beyond any of its powers under the Constitution. There is
    no clear connection between the Commerce Clause and many of
    these criminal statutes.
        What the Congress is getting itself into with the police
    power are moral questions because the police power is used to
    shape the morality of a community. If you want to live in Las
    Vegas, where prostitution is legal, gambling is legal, fine,
    move there. But if you want to live in a more conservative
    State where prostitution and gambling are illegal, you can go
    to that State. Those are political, democratic, moral issues
    that local majorities ultimately decide on.
        When you take the police power and move it to the national
    level, what you have guaranteed is that you will generate more
    political divisiveness over crime at the national level. For
    instance, we know that supporters of abortion rights got the
    Congress to pass the FACA statute, the Freedom of Access to
    Clinics Act. We also know over the last couple of years that
    there has been the attempt to get a criminal statute on
    partial-birth abortion.
        Will the Federal Government's policy on criminal law as
    regards to abortion affect every congressional and Presidential
    race? Will it turn on who is in the Executive Branch to decide
    what is going to be the policy of the Justice Department in
    using its criminal powers in the area of abortion? Or shouldn't
    this be a matter that is left to the States?
        Ultimately, in the early 1980's, that bill that I
    mentioned, the proposed Federal Criminal Code, which was
    cosponsored by Senators Strom Thurmond and Edward Kennedy, went
    down to defeat for totally extraneous reasons--that is, it was
    a strange alliance between the Moral Majority and the ACLU that
    ultimately killed the bill.
        Unfortunately, when the bill was being considered, a bill
    of about 500 pages, most of the debate occurred over procedural
    matters. But of all the 500 pages, most of it concerned
    substantive criminal law. When I testified on that bill in a
    House committee and I asked about certain provisions in theft
    and other areas, the response from the staff was, well, we
    really don't know what those statutes do because the person who
    drafted those statutes has left.
        Some of the things that would have been criminalized in
    that bill were amazing. The House bill would have turned a
    normal accident into a murder if it resulted in death. It would
    have made corporate executives in this country guilty of murder
    for accidental deaths in some of their businesses. Sexual
    conduct between Members of Congress or the Executive Branch and
    staff members would have been made a felony.
        The consequences of many provisions in that bill were
    little understood. Fortunately, that bill died. Unfortunately,
    many parts of that bill were passed in the intervening years
    piece by piece. That is how we have gotten to the point where
    the Federal police power is so extensive and dangerous, even
    through prosecutors don't use all the powers of Federal
    criminal law. The fact is we are not just talking about courts
    and prosecutors. We are talking about investigation. We are
    talking about the fact that there are people on the payroll who
    have to justify what they are doing. There are between 100 and
    200 Federal police agencies in this country that have the power
    to investigate. Whether or not their cases ever result in a
    prosecution, they can generate grand jury investigations that
    cause people to have to endure investigation for several years
    at a cost of several hundred thousand dollars in attorney's
    fees, only to find out that there really was no case after all.
    Although there are abuses at the State level, that kind of
    abuse simply can't happen in State cases because there are
    other checks. You could never spend the same kind of money in
    defending typical State cases.
        Thank you for listening to my statement.
        Chairman Thompson. Well, thank you very much. It is hard to
    know where to start. I could talk for a long time about all
    these issues.
        I am really amazed, as I think about what Mr. Lefcourt
    said, the confluence of opinions and philosophies and so forth.
    Everybody who deals with this, whether it be people that have
    to do with State prosecution, the defense, people concerned
    about civil liberties, people concerned about the concentration
    of too much power in the Federal Government, all agree, seem to
    agree on something that is totally losing in terms of the
    battle. It really, I think, gives hope that maybe we can do
    something about it.
        We had a hearing yesterday on federalism with regard to the
    civil side of the ledger. We have got a preemption bill that
    is, I think, in many respects very much comparable to what you
    are talking about, Mr. Lefcourt. It requires the Congress to,
    first of all, acknowledge what it is doing. If it is going to
    preempt in a civil situation, then it has to then state why. It
    doesn't go into quite as much detail as probably it should.
    Then it does an assessment at the end of the year as to the
    cumulative effect of all of these preemptions and so forth.
        But it is even more important in the criminal area because
    what you have in the criminal area that you don't have in the
    civil area is what you have in the criminal area in general. I
    mean, it is coercive power of government which makes it much
    more significant.
        Professor Baker, you point that out. Only 5 percent of the
    prosecutions are Federal. Many of these laws that we are
    passing are not being used. They are strictly window dressing
    out there for somebody to pick up--they pick and choose. But
    your point is even though that is the case, what is happening
    has detrimental effects in terms of the presence and the power
    of the Federal Government, that it has tentacles perhaps that
    we don't see in some way. Could you elaborate on that somewhat?
        Mr. Baker. Well, the way I use----
        Chairman Thompson. What harm is it doing? If we don't
    have--if it is such a small percentage and we don't use what is
    happening, anyway, what harm does it do?
        Mr. Baker. Well, you forget that laws, as you well know,
    can be used to threaten people as well as actually using the
    laws for prosecution. You certainly know from your experience
    that when things get testy between a Federal prosecutor and the
    defense, there is often a threat of prosecuting for obstruction
    of justice or other similar charges.
        But let me just tell you what I tell the opening day to the
    criminal law class. I point out and I say, look, you may not
    realize it, but everybody in this room is indictable for
    something. And they don't believe that initially. And then I
    ask, well, who has ever been a salesman in here, or saleswoman?
    Have you ever taken anybody out to lunch, somebody who was
    about to make a purchase that you wanted their company to make?
    And, of course, somebody has done that.
        I have said, well, did you realize that technically what
    you have done violates the Federal bribery statute? And, of
    course, it is not that anyone is going to be prosecuted for
    that act. But the difference at the local level is that State
    prosecutors have enough good sense not to get into that stuff.
    They don't have time and if they did make such a case, they
    would be laughed out of court.
        Federal U.S. Attorneys don't have the same constraints.
    Some of the theories put forward by the Justice Department are
    that ludicrous. There is one case, the Kosminsky case, in which
    Justice O'Connor pointed out that the Justice Department theory
    on what constituted ``involuntary servitude'' would have made
    it a Federal criminal offense for a parent to threaten to
    withhold affection from a child who wanted to leave home. The
    government admitted that at oral argument.
        You get some very bizarre theories when Justice decides
    that the defendant is a bad actor and that they have to get him
    somehow.
        Chairman Thompson. Mr. Lefcourt, how much in human society
    today remains untouched by potential Federal criminal statutes?
    I mean, is there any criminal activity today--and, Professor,
    you, too. Is there any criminal activity today that has not
    been covered now by Federal law that you can think of?
        Mr. Lefcourt. It is just amazing. Even what used to be
    regulatory solely, a whole host of them in the securities
    field, in the environment field, in employee pensions, in
    welfare plans, in employing of immigrants, there is now a
    criminal component in all of these areas which used to be
    strictly regulatory. And it is hard to imagine something that
    the Feds can't prosecute.
        As a matter of fact, of course, you know about the Federal
    mail and wire fraud statutes, which people sometimes jokingly
    equate to the old Soviet Union's crime against the State,
    whatever it means, that through the Federal mail and wire
    frauds, there is just about--there is almost no activity that
    Federal authorities can't grab a hold of if they want it.
        But I would add to some of the things that the professor
    said in terms of the duplication and waste of tax dollars.
        I do mostly white-collar criminal defense work, and it is
    almost a typical scenario that I am worried at the same time
    about the local authorities and the Federal authorities, and
    they are both conducting investigations into a whole slew of
    local issues, whether it be real estate transactions in the
    city of New York or environmental stuff or Medicaid. They both
    are on top of it and have jurisdiction and are conducting
    investigations.
        Chairman Thompson. Usually Federal, usually based on wire
    or mail fraud?
        Mr. Lefcourt. Correct, but there are specific statutes in
    some of these areas as well. And the other thing that is really
    terrible about it is the effect on local law enforcement
    because when there is a high-profile case--and I hate to bring
    it down to this level, but you know that the turf wars exist,
    and how when there is an important case that has received a lot
    of attention, both the U.S. Attorney in the area, the district
    attorney, and maybe some other State authority are all trying
    to grapple for that prize.
        Chairman Thompson. Mr. Dorso, how does it make people in
    the State level feel when the implication is that you are not
    capable of dealing with a carjacking case?
        Mr. Dorso. Well, certainly, Mr. Chairman, we know we are
    capable of doing it, and that is the frustrating part about
    watching you folks do what you do.
        Chairman Thompson. And your association that you have
    there, what is the group that you are on?
        Mr. Dorso. National Conference of State Legislatures.
        Chairman Thompson. Yes, on the Justice side. Do you ever
    talk about these issues and what the Federal Government is
    doing, the conflicts or the things they are doing they should
    not be doing? What part of it seems to be most disturbing from
    a State and local standpoint?
        Mr. Dorso. Well, yes, we do talk about it. I suspect the
    No. 1 concern is the Tenth Amendment and the usurpation of
    States' rights. But I think second of all, and probably my
    colleagues feel the same, is the unintended consequences that
    you talked about yourself previously. The tentacles of what
    happens reach so far into the State and local government,
    talking about--as an example, someone mentioned mandatory
    sentencing. Well, then that starts a whole ball rolling, and
    then we end up with mandatory sentencing at the State level
    because it is politically really good because the two Senators
    from North Dakota supported that, so we are going to do it at
    the State level. And we push that down on our district judges,
    and now we get prisons, and as an example, our corrections
    budget has doubled in the last 4 years.
        Chairman Thompson. These decisions are made at your level,
    though. You make those decisions as to the trade-offs about
    sentences versus prisons and taxes.
        Mr. Dorso. You are right, Mr. Chairman.
        Chairman Thompson. And that is something the Federal
    Government doesn't have to do.
        Mr. Dorso. But the professor pointed out, then if you
    don't, then it becomes a shopping mechanism. What is better--go
    to the State district court or go to the Federal district
    court? Who wants to get the credit for this big drug bust?
        The intended consequences are those that come about because
    you have done something, we are going to react one way or
    another because we either get pressure from local district
    attorneys or whatever, or the judges come in and they say, hey,
    we should pass some of the mandatory drug sentencing because we
    don't want all of these people bringing themselves to our
    court, we would rather have them over at the Feds.
        Chairman Thompson. Professor Baker, you write about the
    confusion with the power under the Commerce Clause with police
    power, and I think you are absolutely right about that. But
    there also seems to be confusion that runs throughout our court
    system. They are buying off into that, and now the Lopez case
    came about, but we re-passed that law making the allegation
    that it is interstate commerce activity.
        Is there any hope in terms of the judiciary, do you see
    anything there in terms of the difference in the trend? And is
    it true from a constitutional standpoint that all we have to do
    is make some allegation of Federal interest or interstate
    commerce without actually having to prove it presumably in the
    criminal case that that particular gun did travel in interstate
    commerce? What is the state of the law, and how do you see it
    developing?
        Mr. Baker. Well, since the Lopez case has come out, the
    lower Federal courts really haven't taken it very far. A few
    district courts have. The one exception is the Fourth Circuit
    which ruled on a statute that has a criminal and a civil side.
    It ruled in a civil case, and that issue presumably will be
    decided ultimately by the Supreme Court.
        The problem in the Supreme Court, I think, as reflected in
    the Lopez opinion, is that some of the Justices--Justices
    Kennedy and O'Connor in particular--are concerned to
    distinguish between the criminal area and not to repeal the
    changes that came about in the Commerce Clause jurisprudence in
    1937. And I think there is a way to distinguish the criminal
    area from non-criminal Commerce Clause matters, and I think
    there is something in Lopez that provides the basis for doing
    so.
        Lopez mentions that the defect--one of the defects in the
    statute--was that it failed to demonstrate on a case-by-case
    basis that the jurisdictional elements were, in fact, met. Now,
    when Congress re-passed the statute and made findings, that may
    have helped a little bit, but it doesn't deal with the case-by-
    case issue. Earlier Mr. Meese mentioned that I was going to
    propose possible legislation, which in concept I have run by
    Mr. Meese. It is based on making a distinction between the
    symbolic, which Judge Merritt was talking about, and the really
    practical aspects of a prosecution.
        What I was suggesting to Mr. Meese was that Congress might
    consider passing a general statute that applies across the
    board to all criminal statutes and provides that the
    prosecution has to prove the jurisdictional elements, not only
    as part of the case before the jury, but separately to the
    judge. This would make jurisdiction a legal question to be
    addressed in every case.
        That would allow judges to kick out a lot of these cases
    that they would love to kick out. For instance, the district
    judges in Richmond wanted to kick out a lot of these gun cases,
    but they couldn't go along with the defense theory on
    unconstitutionality.
        What you need to do is give them a statute where they can
    kick out cases that don't belong there, yet without ruling the
    statute unconstitutional. I think that the big struggle for the
    Federal courts is that very few of the judges are willing to
    say that Congress has gone too far under the Commerce Clause
    because they don't want to threaten everything that has
    happened since 1937. A statute that required the prosecution to
    prove a jurisdictional basis would make it very difficult for
    Justice to bring some of the screwball cases that they bring.
        Chairman Thompson. I have a vote on here, unfortunately.
    Let me ask you very briefly, you have heard the discussion
    concerning the Colorado situation, the discussion concerning
    juvenile crime legislation that is pending. Any thoughts about
    that?
        Mr. Lefcourt. Well, I for one think that the Colorado
    authorities should be credited for a lot of what they have been
    doing, and there are, of course, already in Colorado laws that
    could include the prosecution of families in taking
    responsibility for their children. I am not saying I advocate
    such laws, but they already have such things.
        It seems to me that what is better than the Senate version
    of S. 254 is what the unanimous Judiciary Committee of the
    House in H.R. 1501 has talked about. If we are going to have
    juvenile justice legislation, theirs is more here is the money,
    here are the ways you could use it, and we are not going to
    tell you how to use it, and we are not going to create a
    better--we are not going to create Federal juvenile
    prosecutions. You do it, you experiment, as is the State's
    prerogative, and go from there. And that is supported by both
    Republicans and Democrats unanimously on the House Judiciary
    Committee, and it seems to me a better way to go than to create
    a Federal bureaucracy.
        I think what was being discussed before is when you have
    purse strings, you can have money if you eliminate parole. And
    now all of a sudden you have prison costs that start to triple.
    Governor Cuomo during his term in New York is responsible for
    doubling the prison population. Essentially, prisons are being
    opened, and libraries and hospitals and other institutions are
    losing.
        Chairman Thompson. Professor Baker.
        Mr. Baker. When I was in juvenile justice, I learned that
    this is really a contest between conservatives and liberals
    over family policy in the country and each side uses the
    Federal funding to try to dictate policy to the States. Often,
    their notion of federalism is that we will tell you how to do
    it and here is the money to do it. But most of the money that
    came through juvenile justice served as subsidies for
    academics. It didn't really go to solve the problems. The funds
    went to studying the problem because the lobby behind the
    program consisted largely of academics who needed supplements
    to their income.
        Chairman Thompson. What do you think about the notion that
    we don't really know what the solutions are and let's just kind
    of subsidize additional research and evaluation of programs
    that are out there, that sort of thing? Is that valid?
        Mr. Baker. But research is not objective when you are
    talking about family issues, which is what juvenile justice is
    about. We know that there is a strong ideological divide in
    this country, and so it is going to be a question of who gets
    control over Federal funds, what academics get the money, and
    what studies they do. I saw this on pornography issues, on a
    whole series of issues.
        Chairman Thompson. In other words, if you give it to
    academics who think movies are the problem, that is the
    solution. If you give it to academics who think guns are the
    problem, that is going to be the solution.
        Mr. Baker. Exactly. You already know when you pick the
    academic what the bottom line of the report is going to be.
        Chairman Thompson. So it is like everything else.
        Mr. Baker. Their views are well-known ahead of time. They
    have written on the topic, so you know what their position is
    going to be.
        Chairman Thompson. Well, gentlemen, thank you very much. As
    I said, we could talk on this for a long time. You have really
    given us some interesting ideas. Maybe some long-term effort
    can be put into this and we can work together to maybe get some
    attention on this.
        I think Senator Voinovich said he is very much attuned to
    the civil side of things, but not the criminal. This is
    something that could go across ideological lines. It looks like
    the problem really got started in the 1970's, and we are all
    guilty to one extent or another for letting this happen. But
    for any of us who are concerned about our court system,
    concerned about concentration of power, this is something we
    really need to give some attention to, not to mention the
    resource question.
        We are lacking apparently in some of the most fundamental
    things. If we can't protect our national security, if we can't
    do something with our vast resources to protect our borders a
    little better, in terms of espionage, drugs, what-not, then
    what can we do?
        So we are fiddling around and throwing money in all these
    different directions for things that are not remotely connected
    with fundamental responsibilities of government, while at the
    same time we are not coming close, apparently, to doing our job
    with regard to those basic responsibilities. So maybe we can
    work together and do some good on this.
        Thank you very much for being here. The record will remain
    open for 5 days after the conclusion of the hearing. We are
    adjourned.
        [Whereupon, at 11:47 a.m., the Committee was adjourned.]

               S. 1214--THE FEDERALISM ACCOUNTABILITY ACT OF 1999

                                  ----------

                            WEDNESDAY, JULY 14, 1999

                                           U.S. Senate,
                             Committee on Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3 p.m., in room
    SD-342, Dirksen Senate Office Building, Hon. Fred Thompson,
    Chairman of the Committee, presiding.
        Present: Senators Thompson, Roth, Voinovich, and Levin.

                 OPENING STATEMENT OF CHAIRMAN THOMPSON

        Chairman Thompson. I think we need to go ahead and get
    started because we don't know exactly what the vote situation
    is going to be, other than we do know we will have some votes
    as we go along. But we will try to run continuously as best we
    can.
        We are considering a bill today that really goes to the
    basics of our Federal system. It has to do with the kind of
    government we have in terms of separation of powers, checks and
    balances. We have, as in many of our areas, an inherent and
    planned conflict in that we sometimes have to balance the
    considerations of the Supremacy Clause on the one hand with
    principles of federalism and separation of powers and the Tenth
    Amendment on the other hand. And the courts oftentimes have to
    deal with that balance, keeping in mind that if Congress so
    chooses, it can oftentimes preempt a field under the Supremacy
    Clause. And that is what we are dealing with here today,
    basically, is the question of preemption.
        If under the Supremacy Clause Congress decides
    affirmatively and clearly to preempt, there doesn't seem to be
    much of a problem with that. Where we get into confusion and
    problems oftentimes is when we get into the field of implied
    preemption where Congress passes a law, doesn't address the
    issue of preemption at all, probably is the furthest thing
    removed from most Members' minds as they vote for a particular
    piece of legislation. And, lo and behold, after a period of
    time, lawsuits start coming down the pike and courts are left
    to try to determine what Congress' congressional intent was.
    And they come up with all kinds of elaborate theories to
    determine what Congress' congressional intent was when there
    probably wasn't any congressional intent on a lot of the things
    that they have to come up with.
        So, basically, the question becomes: If it is a question of
    Congress's congressional intent as to whether or not Congress
    meant to preempt a certain area, who is best to express that
    intent--Congress or the courts?
        A lot of us feel like that if it is a matter of
    congressional intent, we would be better served if Congress was
    required to face up to that question and deal with it. And that
    is basically what the Federalism Accountability Act is. I think
    the act is well named because it has to do with accountability.
    It doesn't have to do with making those policy decisions as to
    whether or not a particular area ought to be preempted. I
    happen to think that we have gone much too far in terms of
    preemption. Federalism has been one of the things that I have
    been concerned about for a long time, or the lack of
    federalism. Everybody gives lip service to it. Everybody says
    they want it. We have Executive Orders, we pass bills
    acknowledging its importance, and nobody pays any attention to
    it.
        But that is kind of beside the point to a certain extent
    with regard to this act. All this act says is, look, Congress,
    if you are going to do it, face up to it, deal with it, and
    state that that is what you are doing. In other words, don't
    pass the political buck to some unelected branch of government
    who, years after the fact, tries to read your mind on something
    where there is not really any legislative history on it. And
    the bill would also require agencies to consider for the first
    time, as they are supposed to do now and they don't do--and I
    am going to ask Mr. Spotila here in a few minutes why that is
    the case, but making agencies consider these issues as they are
    making their rules.
        So that is what this is about, consideration of this piece
    of legislation which is S. 1214, which addresses the problem
    essentially of the implied preemption situation that we have
    that seems to be growing all the time.
        I don't have any up-to-date figures, but I know in the
    1960's preemption cases were taking up about 2 percent of the
    Supreme Court's docket. In the 1980's, they were taking up
    about 9 percent of the Supreme Court's docket. And we are going
    to get more recent figures, and I dare say it is higher than 9
    percent now, all having to do with or largely having to do with
    reading Congress' mind.
        So it just gets basically to whether you believe in
    democracy or not, doesn't it, Mr. Spotila? So, with that, any
    statements you have to make? Before you proceed, we will
    include Senator Levin's and Senator's Voinovich's statements in
    the record at this point.
        [The prepared statements of Senators Levin and Voinovich
    follows:]
                  PREPARED OPENING STATEMENT OF SENATOR LEVIN
        Mr. Chairman, I am pleased to be a cosponsor of the Federalism
    Accountability Act, and I am also pleased that the Committee is
    beginning its consideration of this legislation today. The bill
    includes a provision which I introduced in 1991 to create a presumption
    of no preemption in Federal legislation unless Congress explicitly
    states its intent to preempt or unless there exists a direct conflict
    between Federal law and a State or local law which cannot be
    reconciled. Enactment of this provision would close the back door of
    implied Federal preemption.
        Over the past years, State and local officials have become
    increasingly concerned with the number of instances in which State and
    local laws have been preempted by Federal law--not because Congress has
    done so explicitly, but because the courts have found such preemption
    implied in the law. Since 1789, Congress has enacted approximately 350
    laws specifically preempting State and local authority. Half of these
    laws have been enacted in the last 20 years. These figures, however, do
    not touch upon the extensive Federal preemption of State and local
    authority which has occurred as a result of judicial interpretation of
    congressional intent, when Congress' intention to preempt has not been
    explicitly stated in law.
        Article VI of the Constitution, the supremacy clause, states that
    Federal laws made pursuant to the Constitution ``shall be the supreme
    law of the land.'' In its most basic sense, this clause means that a
    State law is negated or preempted when it is in conflict with a
    constitutionally enacted Federal law. A significant body of case law
    has been developed to arrive at standards by which to judge whether or
    not Congress intended to preempt State or local authority--standards
    which are subjective and have not resulted in a consistent and
    predictable doctrine in resolving preemption questions. The presumption
    created by this bill will mean that silence by Congress on the subject
    of preemption will mean no preemption. Silence on preemption will not
    be an invitation for the courts to try to glean what Congress intended
    or what policy should be adopted. If the law doesn't address preemption
    and there is no direct conflict with State or local law, then this bill
    says there should be no judicial determination in favor of preemption.
        The bill also contains a requirement that agencies notify and
    consult with State and local governments and their representative
    organizations during the development of rules, and publish proposed and
    final federalism assessments along with proposed and final rules. There
    is already an Executive Order, 12612 that requires similar attention by
    the agencies to federalism concerns. But GAO has informed us that there
    is little, in fact virtually no, compliance with that Executive Order.
    Out of 11,414 rules issued between April 1996 and December 1998, only
    five rule publications contained a federalism assessment. I also asked
    GAO to find out how many major rules involved consultation with State
    and local governments, setting aside the issue of whether or not a
    federalism assessment was done. GAO reported to me, based on a quick
    review of the 117 major rules issued between April 1996 and December
    1998, that 96 of those rules did not mention intergovernmental
    consultation despite the fact that 32 of those 96 rules had a
    federalism impact. In fact 15 of the 32 rules said they were going to
    preempt State law.
        Common sense dictates that State and local governments should be
    notified and consulted before the Federal Government regulates in a way
    that weakens or jeopardizes the work of State and local governments.
    Both past and present administrations have recognized the value of
    having Federal agencies consult with State and local governments. This
    bill would make sure that happens; it would ensure that Executive
    Branch agencies engage in such consultation with State and local
    governments and publish with the rules assessments of the impacts of
    such rules on State and local governments.
        I am pleased that this legislation has received bipartisan support,
    and I look forward to working with my colleagues on the Committee to
    resolve any issues they may have with this legislation. We have a good
    group of witnesses today, and I look forward to hearing their testimony
    as well.

                PREPARED OPENING STATEMENT OF SENATOR VOINOVICH
        Mr. Chairman, I want to commend you for holding this hearing on S.
    1214, the Federalism Accountability Act. I am very proud to have
    cosponsored this bill with you and Senator Levin, I think it is
    thoughtful legislation that deals responsibly with Federal preemption.
    It's an issue that I have been concerned about throughout my years of
    government service.
        In fact, the Federalism Accountability Act exemplifies one of the
    reasons why I wanted to come to the U.S. Senate after having served
    over 30 years in State and local government as a county commissioner,
    State representative, a mayor, and a governor. I know first hand how
    important it is to protect the authority of States and localities to
    ably serve their citizens without undue interference from Washington. I
    wanted to work in support of this fundamental principal of Federalism
    ``from the inside.'' After pursuing it on the outside as President of
    the National League of Cities and as Chairman of the National
    Governors' Association, I am happy to say that months of work with my
    colleagues has resulted in this bipartisan, common-sense bill that we
    are discussing today.
        Mr. Chairman, one principle that we must get across is the States
    are not agents of the Federal Government. the Constitution and the
    Tenth Amendment recognized the unique and sovereign role that the
    States play in our democracy and it is a role that we must maintain.
    There has been a great deal of progress in recent years in restoring
    this balance between the States and the Federal Government, and I think
    we can all be proud of that. The Unfunded Mandates Reform Act of 1995,
    the Safe Drinking Water Act Amendments of 1996, Medicaid and welfare
    reform, and the recently enacted ``Ed Flex'' and tobacco anti-
    recoupment measures are all examples where the effectiveness of States
    and localities have won out over Washington bureaucracy.
        Yet despite these welcome victories, the war over Federalism is not
    won. There is an excellent article to this effect called ``The Dual
    Personality of Federalism,'' written by Carl Tubbesing, which appeared
    in the April 1998 issue of State Legislatures magazine, and I certainly
    recommend that my colleagues read this article if they have not already
    done so.
        The article notes that for all the progress made in devolution,
    flexibility, and more responsibility for the States, there are growing
    dangers in increased Federal preemption and the centralization of
    policymaking in Washington. Frankly, I see it every week as I vote on
    legislation in the Senate, whether it be the Juvenile Justice Bill or
    this week's debate on the Patients' Bill of Rights.
        When the Federal Government preempts State and local laws, it can
    erode the ability of State and local governments to protect consumers,
    promote economic development, and develop the revenue streams that fund
    education, public safety, infrastructure, and other vital services. The
    current Federal moratorium on all State and local taxes on Internet
    commerce--taking away a possible revenue source from a governor if he
    or she so chooses--is just one striking example that could have a
    devastating effect on the ability of States and localities to serve
    their citizens.
        The danger of this growing trend toward Federal preemption is the
    reason the Federalism Accountability Act is so important. The
    legislation makes Congress and Federal agencies clear and accountable
    when enacting laws and rules that preempt State and local authority. It
    also directs the courts to err on the side of State sovereignty when
    interpreting vague Federal rules and statutes where the intent to
    preempt State authority is unclear.
        I am particularly gratified that this legislation addresses a
    misinterpretation of the Unfunded Mandates Reform Act as it applies to
    large entitlement programs. The Federalism Accountability Act clarifies
    that major new requirements imposed on States under entitlement
    authority are to be scored by the Congressional Budget Office as
    unfunded mandates. It also requires that where Congress has capped the
    Federal share of an entitlement program, the accompanying committee and
    CBO reports must analyze whether the legislation includes new
    flexibility or whether there is existing flexibility to offset
    additional costs incurred by the States. This important ``fix'' to the
    Unfunded Mandates law is long overdue and I am pleased it is included
    in our federalism bill.
        Finally, I would like to join the Chairman in welcoming our
    witnesses here this afternoon, particularly my good friend Governor Tom
    Carper, who is chair of the National Governors' Association. It is
    truly amazing how much can get done when legislation is introduced on a
    bipartisan basis. Having, myself, served in his current capacity, I
    appreciate the importance that this legislation means to the NGA for
    him to appear here to present his views. I appreciate the great
    relationship we continue to have with the National Governors'
    Association and other State and local government associations. We would
    not be where we are today without their help.
        Thank you, Mr. Chairman.

    TESTIMONY OF HON. JOHN T. SPOTILA,\1\ ADMINISTRATOR, OFFICE OF
     INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
                                 BUDGET

        Mr. Spotila. Good afternoon, Mr. Chairman. Thank you for
    inviting me to appear before you today. The last time I was
    here, I was seeking your support for my confirmation. I
    appreciate your help and all the courtesies you extended.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Spotila appears in the Appendix
    on page 291.
    ---------------------------------------------------------------------------
        Chairman Thompson. Should have had this hearing first.
    [Laughter.]
        Mr. Spotila. I do recall some questions on this even then.
    But I do appreciate all your help and courtesies you extended
    to me in the confirmation process, and I do look forward to
    working closely with you and your staff in the months to come.
        At the outset, on behalf of the President, I want to
    emphasize our commitment to the principles of federalism and
    our respect for the Tenth Amendment to the Constitution. And,
    Mr. Chairman, as you rightly have pointed out, the National
    Government has limited powers and, generally, government
    closest to the people works best. President Clinton, a former
    Governor, has actively encouraged intergovernmental
    consultation in his issuance of Executive Orders 12866 and
    12875 and his support for and signing of the Unfunded Mandates
    Reform Act.
        You have asked me to discuss S. 1214, the Federalism
    Accountability Act of 1999. This bill seeks to promote the
    integrity and effectiveness of our Federal system of
    government. It clearly represents a serious effort to guide
    relations between the Federal Government and State and local
    government. We respect and support that effort. We do have
    concerns, however, that S. 1214 could have unintended
    consequences. These may include burdening agency efforts to
    protect safety, health, and the environment by imposing new
    administrative requirements and by encouraging additional
    litigation. The administration believes that these aspects
    depart from the approach adopted in the Unfunded Mandates
    Reform Act, which it supported and is implementing. We believe
    that S. 1214 needs some revision if it is to accomplish its
    goal effectively. We would welcome the opportunity to work with
    you and your staff in this regard.
        Today the Department of Justice will be discussing the
    administration's concerns with Section 6 of the act, ``Rules of
    Construction Relating to Preemption.'' My testimony will focus
    on views on Section 7, ``Agency Federalism Assessments.'' We do
    have some other drafting comments that we would like to share
    with you and your staff at a later point, but they are not part
    of my testimony today.
        Our primary concerns with Section 7 revolve around the
    interaction between its creation of new rulemaking requirements
    and the potential for harmful litigation arising from them.
    Section 7(a) would require each rulemaking agency to designate
    a special federalism officer to serve as a liaison to State and
    local officials and their designated representatives. Section
    7(b) would require each agency, early in the process of
    developing a rule, to ``consult with, and provide an
    opportunity for meaningful participation'' by public officials
    of potentially affected governments. Section 7(c) would require
    agencies, when publishing any proposed, interim final, or final
    rule which the federalism official identified as having a
    federalism impact, to include in the Federal Register a formal
    federalism assessment. Each of these federalism assessments
    would involve four mandatory components: Identifying ``the
    extent to which the rule preempts State or local government
    law,'' analyzing the extent to which the rule regulates ``in an
    area of traditional State authority'' and the degree ``to which
    State or local authority will be maintained,'' describing the
    measures the agency took ``to minimize the impact on State and
    local governments,'' and describing the extent of the agency's
    prior consultations with public officials, the nature of their
    concerns, and ``the extent to which those concerns have been
    met.''
        These requirements may not be unreasonable in themselves.
    As now written, however, S. 1214 raises the risk that agencies
    could face litigation on each subcomponent of these
    requirements. The resultant need to document formally each and
    every aspect of an agency's compliance with each subcomponent
    could involve a significant new administrative burden. This is
    particularly true for agencies who are trying to implement laws
    and protect public health, safety, and the environment with
    limited resources. Even if an agency has acted in good faith,
    litigation can cause delays and drain scarce resources. To
    avoid such excessive litigation, the administration feels that
    S. 1214 should include a statutory bar to judicial review of
    agency compliance with its provisions.
        There are practical implications in this regard. Currently,
    agencies reach out to State, local, and tribal governments and
    their representatives on a regular basis to hear their concerns
    and discuss important rulemakings. These discussions typically
    proceed in a spirit of intergovernmental partnership, often
    informally, after reasonable efforts to reach those most likely
    to be interested. Thus, as a general matter, we believe
    agencies already carry out consultations as envisioned in
    Section 7 and do so in a meaningful way.
        Our concern here revolves around increasing the potential
    for litigation. If we make these collegial, informal
    discussions subject to the possibility of judicial review, it
    would change the whole dynamic. Rather than discussing matters
    openly in a spirit of partnership, some agencies could resort
    to checklists--building up a record that proves that each step
    has been carried out. Instead of working to improve their
    rules, agencies might shift their focus to improving their
    litigation position.
        This will divert scarce resources. Agencies would feel
    compelled to prove that each step has been carried out fully.
    They would create a prerulemaking record as formal and
    objectively documented as their counsel deems necessary to
    withstand a court challenge. It is not at all clear that this
    will lead to better rules, despite the good intentions embodied
    in Section 7.
        How might this play out? Here is an example: Section 7
    directs each agency to ``provide an opportunity for meaningful
    participation by public officials of governments that may
    potentially be affected.'' We agree that agencies should do
    that. But allowing judicial review of agency compliance with
    this provision would permit potential litigants to ask a
    Federal judge to decide a wide variety of new issues. How much
    notice is legally adequate to ``provide an opportunity''? How
    much outreach efforts does an agency have to make to seek
    ``meaningful participation''? If an agency conducts extensive
    consultations with some of the Big 7, can others of the Big 7
    litigate their failure to be included? What about individual
    State or local governments that do not agree with positions
    taken by the Big 7? Do they each need to be invited to
    participate?
        The agencies would have to consider, plan for, and
    determine how to resolve questions like these. This would take
    time. It also might keep them from other important tasks, like
    paperwork reduction initiatives, the review and revision of
    outdated and burdensome existing rules, and the conversion of
    rules into plain language.
        For that matter, each agency would have to do more than
    just ensure that all of those who were supposed to be notified
    and consulted were satisfied with the agency's compliance with
    Section 7. Others with an interest in the rulemaking--including
    various special interests--could potentially challenge the
    rulemaking because they were not satisfied with that
    compliance. They might even do so just to hamstring the agency
    and slow down its regulatory efforts. Agencies would have an
    even broader group to consider when designing a consultation
    effort.
        We all know what road is paved with good intentions. While
    we respect the careful thought and sincere concern underlying
    S. 1214, we believe that it requires some changes to avoid
    unintended, adverse consequences. We would be pleased to work
    with you and your staff on these issues.
        Thank you for the opportunity to appear before you today,
    and I would be happy to answer any questions you may have.
        Chairman Thompson. Thank you very much. Mr. Moss.

      TESTIMONY OF RANDOLPH D. MOSS,\1\ ACTING ASSISTANT ATTORNEY
      GENERAL, OFFICE OF LEGAL COUNSEL, U.S. DEPARTMENT OF JUSTICE

        Mr. Moss. Mr. Chairman, Members of the Committee, I am
    honored to be here today to testify regarding S. 1214, the
    Federalism Accountability Act of 1999. As Mr. Spotila has
    indicated, my remarks will focus on Section 6, which would
    establish rules of construction relating to statutory and
    regulatory preemption of State law and, more broadly, rules of
    construction relating to any Federal law touching upon the
    authority of the States.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Moss appears in the Appendix on
    page 296.
    ---------------------------------------------------------------------------
        Section 6(a) and 6(b) would significantly alter the rules
    under which courts determine the preemptive effect of Federal
    statutes and regulations. In our view, sweeping reform of this
    nature would be warranted only if Congress were convinced that
    existing preemption doctrine systematically operates to
    frustrate congressional intent and that the new rules of
    construction would produce better results.
        Section 6(c) would operate even more broadly than Section
    6(a) and 6(b). It would require that any ambiguity in any
    Federal law, whether pertaining to preemption or to any other
    subject, be construed in favor of preserving the authority of
    the States and the people. Section 6(c) threatens to frustrate
    congressional intent wherever Federal law implicates the
    allocation of power between Federal and State governments.
        First, I would like to explain our view that Section 6(a)
    and 6(b) would fundamentally alter long-established preemption
    doctrine in ways that may create significant new problems. It
    should only be adopted if necessary to correct equally
    fundamental misinterpretations of congressional intent by
    courts and administrative agencies.
        Federal statutes may preempt State law in either express
    terms or implicitly. In either case, congressional intent is,
    of course, the touchstone of preemption analysis. Thus, implied
    preemption requires clear evidence of congressional intent to
    preempt, such as the establishment of Federal requirements that
    conflict with State law or that occupy an entire field.
        Further, the courts require a heightened showing of intent
    to preempt in areas of traditional State primacy. The Supreme
    Court has stated that, ``[w]hen Congress legislates in a field
    traditionally occupied by the States, `we start with the
    assumption that the historic police powers of the States were
    not to be superseded by the Federal Act unless that was the
    clear and manifest purpose of Congress.' '' Thus, current
    Supreme Court doctrine already reflects considerable
    sensitivity to federalism concerns.
        Section 6(a) would, nevertheless, alter existing law. No
    Federal statute enacted after this provision took effect would
    preempt State law unless the statute contained an express
    statement of Congress' intent to preempt or there was a
    ``direct conflict'' between the Federal statute and State law
    so that the two could not ``be reconciled or consistently stand
    together.'' This change would appear to abolish the doctrine of
    field preemption and impose significant new limits on conflict
    preemption.
        State law that prevented the achievement of purposes of the
    Federal statute could stand so long as there was no direct and
    irreconcilable conflict between the two.
        The findings section of S. 1214 states that this change is
    motivated by Federal court rulings that have applied current
    preemption doctrine to produce results ``contrary to or beyond
    the intent of Congress.'' It is not clear, however, which
    applications of existing preemption doctrine are viewed as
    having misinterpreted the intent of Congress. Before altering
    such broad-reaching and fundamental rules of law, rules dating
    back to the early days of the Republic, it is essential to
    consider whether some less drastic action might redress the
    problem.
        Section 6(a) would be likely to increase congressional
    reliance on express preemption provisions. We are concerned
    that this would raise problems of its own. Detailed express
    preemption provisions may be prone to overinclusiveness,
    displacing State law where such displacement is not truly
    necessary, and underinclusiveness, undermining the
    effectiveness of Federal law by failing to displace
    antithetical State law.
        Some of the harshest criticism of Federal preemption has
    focused on the operation of express statutory provisions
    contained in such legislation. In addition, implementation of
    Section 6(a), as well as the other rules of construction
    contained in Section 6, would generate disputes as to whether
    subsequent congressional action implicitly intended to exempt
    particular statutes from these rules of construction.
        Section 6(b)'s proposed changes to current regulatory
    preemption doctrine raise similar and additional concerns. The
    Supreme Court has permitted the issuance of preemptive
    regulations under broad grants of rulemaking authority where
    preemptive regulations represent a reasonable accommodation of
    conflicting policies that Congress left to the rulemaking
    agencies to reconcile.
        Section 6(b) would alter the Supreme Court's approach. A
    Federal rule issued after the effective date of the Federalism
    Accountability Act could preempt State laws in only two
    circumstances: First, if regulatory preemption was authorized
    by statute and the regulation was accompanied by a statement in
    the Federal Register explicitly stating that such preemption
    was intended; and, second, if the regulation directly
    conflicted with State law.
        Unlike Section 6(a), which applies only to newly enacted
    statutes, Section 6(b) would arguably apply to the
    implementation of many existing statutes. If this
    interpretation were to prevail--if this were the interpretation
    that was intended, existing rulemaking authority in a great
    many areas would be constricted, even if the statutory source
    of rulemaking authority remained unchanged. Enactment of
    Section 6(b) in its current form would engender significant
    confusion. Uncertainty and the threat of litigation could be
    especially serious for agencies that are called upon to update
    and revise complex regulations under longstanding statutes that
    lack specific and express authorizations to issue preemptive
    rules.
        At a minimum, Section 6(b) should be revised to clarify
    that agencies that now possess authority to issue preemptive
    regulations under their existing statutes and case law may
    continue to do so and that Congress does not need to revisit
    the dozens of statutes that have been on the books for decades
    to consider in each and every instance whether the agency
    should continue to have that authority.
        Under Section 6(c), any ambiguity in S. 1214 or ``in any
    other law of the United States''--predating or postdating the
    Federalism Accountability Act--would ``be construed in favor of
    preserving the authority of the States and the people.'' This
    provision would apply to any ambiguity in any Federal law,
    whether pertaining to preemption or to any other subject. The
    implications of an instruction of this sweeping scope are
    difficult to assess, although the potential for far-reaching
    and unanticipated consequences is troubling.
        It is unclear, for example, how Section 6(c) would apply to
    statutory and regulatory language that, although ambiguous on
    its face, has been clarified by case law or administrative
    interpretation predating the enactment of Section 6(c). Special
    difficulties would arise in the interpretation of Federal laws
    that limit State authority in ways that arguably enhance the
    authority of the people. Thus, one wouldn't know which section
    of Section 6(c) to rely upon. Due to its breadth and
    generality, Section 6(c) would create a risk that unintentional
    ambiguities in Federal statutes and regulations, with only
    tenuous connections to the balance between Federal and State
    power, could be exploited in unforeseen ways to frustrate the
    intentions of Congress and rulemaking agencies.
        Mr. Chairman, thank you for the opportunity to share these
    observations, and like Mr. Spotila, I would be happy to answer
    any questions.
        Chairman Thompson. Thank you very much. I would be remiss
    if I didn't acknowledge my appreciation of the strong support
    by the State and local governments, as well as many of my
    colleagues on both sides of the aisle. Senator Voinovich
    certainly has been a leader in this effort, and we are very
    pleased that, with his experience, he is coming on this
    Committee and leading the effort in this respect, and also
    Senators Levin, Roth, and Cochran on this Committee for their
    valuable support and assistance in developing this legislation.
        I appreciate both of you being here today, and you have had
    some discussions with our staff, and I think it has been in the
    spirit of cooperation and seeing whether or not we couldn't
    come up with something that would serve our purposes without
    creating additional problems. But I sit here and listen, and I
    am struck by--I have never seen a place that is so intent on
    passing laws and regulations and is so scared to death of
    litigation. Congress passes law after law after law, but we
    don't want any litigation over it. And rules after rules after
    rules after rules are passed, but we don't want any litigation.
        What that basically means is that we don't want anybody
    challenging what we are doing, and, therefore, we don't want
    judicial review and we don't want to have to answer to any of
    that. But that is really not our system, and we have seen in
    this particular area that if there are no sanctions connected
    with these rules, with these laws, then they are not carried
    out.
        It seems that we develop--we come up with these broad
    policies and broad statements like the values and benefits of
    federalism and consultation and all of that, and we all agree
    on that and say that we should do that. But we really don't
    want any mechanism that is going to in any way require us to do
    that. Just trust us, we will do the right thing. But we have
    seen in this area where we are not doing the right thing.
        Mr. Spotila, you ought to know better than anybody with
    regard to the Executive Order on federalism that it has been
    routinely ignored. We make these statements. The President
    makes these statements. He puts it in an Executive Order, and
    the President's own Executive Order--of course, this is a
    carryover but it is still in effect. And your shop is the one
    that is supposed to be seeing that these things are carried out
    and the Executive Order--over 11,400 rules. There were five
    federalism assessments. How can you come up here and say, we
    don't want any judicial review of all this, we agree with you
    and we are going to do it, and we are doing it, when you are
    obviously not?
        Now, you have been there a short period of time, and so you
    are going to get a little leeway. I emphasize the word
    ``little.'' But tell me about that. How can you reconcile the
    fact that if we don't have some kind of judicial review for
    this thing that we all say that we love and we want and we want
    to do, that we really will carry it out when it stands in the
    way of some regulator or someone else from doing what he wants
    to do unfettered?
        Mr. Spotila. Let me say a couple of things. Let me begin by
    saying that I am a firm believer that Executive Orders should
    be complied with and certainly laws should be complied with.
    There is no question about that. In instances where there is a
    need for better enforcement, then I think that is something
    that we should pay attention to. So I do agree clearly with
    that.
        In the instance of Executive Order 12612, which was signed
    in 1987 originally by President Reagan and carried forward by
    President Bush----
        Chairman Thompson. And carried forward by President
    Clinton.
        Mr. Spotila. And carried forward by President Clinton
    until--we know that there was an effort and a new Executive
    Order which was then suspended and so forth. I think that the
    truth is probably somewhere a little in between. By that I mean
    I don't think that this order has been well enforced probably
    by any of those three administrations from what I have been
    able to gather and from what I saw largely as an agency general
    counsel.
        I think that it was enforced more--it was complied with
    more by agencies than the GAO report probably gives credit. I
    think that in some instances with----
        Chairman Thompson. You mean 10,000 out of 11,000 instead of
    five or what?
        Mr. Spotila. The GAO referred to the number of times that
    the preamble to a rule cited the Executive Order and used that
    as a guide, which is probably a pretty good indicator. I
    certainly would not suggest to you that there was widespread
    compliance with this order. I think, though, that there was
    some attention given to federalism implications in the
    agencies. There has been and continues to be.
        In 1993, when President Clinton issued Executive Order
    12875, that called for an emphasis on consultation, and which
    was followed by the Unfunded Mandates Reform Act, the agencies
    got a clear message that the White House, that the President,
    wanted them to give a lot more attention to consulting and to
    be particularly sensitive to the problems of unfunded mandates.
    Neither of those was directed at preemption, but both of those
    were focused on items that are important and that relate to
    federalism and that we care about.
        I think that the agencies have given more attention to
    this. Our reports identify agency action that were not dealt
    with by the GAO in its report and that tell a story of more
    compliance than GAO would indicate.
        None of that, though, is to say that that is an ideal
    situation or that----
        Chairman Thompson. Well, while we are on the subject--the
    proof is in the pudding in terms of the extent of compliance.
    And I am looking at the statement of Professor Gellhorn who
    will be testifying here in a few minutes. But he says, ``One
    empirical survey undertaken for the American Bar Association's
    Section of Administrative Law and Regulatory Practice showed
    that requirements not pressed by the Office of Information and
    Regulatory Analysis''--that is your office--``the office with
    responsibility in OMB for implementing the regulatory Executive
    Orders, or subject to judicial review, have been ignored rather
    than implemented by the agencies.''
        ``Another review of agency rules between 1996 and 1998 by
    GAO shows that agencies generally have paid only lip service to
    the Executive Order on federalism. In fact, EPA did not mention
    the order in any of the 1,900 rules issued in this period, and
    only 5 of over 11,414 agency rules issued during these 2 years
    indicated that a federalism assessment had been done.''
        So, we are past the point of debate, really, I think, in
    terms of whether or not this has been given any credence, any
    lip service to it, no priority by your office, clearly. Do you
    have a review checklist that lists the things that you check
    these agencies on?
        Mr. Spotila. When rules are considered, this is one of the
    elements that OIRA staff----
        Chairman Thompson. This should not be a partisan matter.
    You brought it up. But I have to say that President Reagan
    raised this issue in his Inaugural address, issued this
    Executive Order, and his OMB Director then sent a directive to
    the agencies reiterating the importance of the order. President
    Bush personally sent a directive to the agencies to the same
    effect. But the real proof is in the pudding here in terms of
    these statistics. It just gets back to how much importance you
    place on this.
        Now, when you were over at the SBA, the matter of the
    Regulatory Flexibility Act came up, and that requires agencies
    to determine if there is a significant impact on certain small
    entities, and if there is, they are supposed to do an analysis
    and take steps to alleviate all of that. And when you were at
    SBA, you supported, along with the Vice President, giving
    judicial review.
        Now, is the impact on these small entities or these small
    businesses important, more important than impacts on States?
        Mr. Spotila. I was a supporter and am a supporter----
        Chairman Thompson. Of local governments?
        Mr. Spotila. Of judicial review in the context of the
    Regulatory Flexibility Act. Candidly, I think that it has been
    constructive to have it. The agencies take their requirements
    more seriously because of it.
        Having said that, a lot of attention was given to how to
    focus that judicial review provision narrowly to accomplish
    better compliance without opening up an enormous amount of
    excessive litigation. And those are some of the same concerns
    that I am referring to today. I think that we need----
        Chairman Thompson. So you think we could focus ours in a
    way that would serve the same salutary purposes that----
        Mr. Spotila. Well, the short answer to that is yes. As a
    little longer answer, the President has already signed the
    Unfunded Mandates Reform Act, which has a judicial review
    provision. He has indicated he would sign S. 746, which also
    has a targeted approach. So I think it would be a fair
    assumption to say that a targeted approach would be something
    we could--we ought to be able to agree on.
        But if we are too indiscriminate, then there is a real risk
    of excessive litigation, and I do not think that serves the
    public interest.
        Chairman Thompson. Mr. Moss, moving to Section 6, the rule
    of construction, you talk about the fact that this alters long-
    established doctrines. But the long-established doctrines that
    it alters are judicial doctrines which are trying to interpret
    our intent. Right?
        Mr. Moss. Correct.
        Chairman Thompson. Don't you think we have a dog in that
    fight? I mean, we ought to be able to state what our intent is.
    We should be willing to do that, shouldn't we?
        Mr. Moss. I absolutely believe that you have a very big dog
    in that.
        Chairman Thompson. We won't say what kind, but just----
    [Laughter.]
        Mr. Moss. A very positive dog in that.
        What I would say, though, is that it is unclear to me
    whether moving to a system in which you have what I would call
    a framework rule that applies to future enactments, which
    provides only for express preemption or direct conflict
    preemption, is one that, in fact, in the long run will best
    capture congressional intent. Some of the most contested,
    difficult cases in the Supreme Court--you mentioned the
    increase in cases dealing with preemption. Some of the really
    big Supreme Court cases recently in preemption have been
    figuring out what express preemption provisions mean. The
    Cippolone case dealing with the cigarette warnings, the
    Medtronics case dealing with the medical device amendments,
    some of the most contested issues have dealt with that.
        In addition, some of the most heated, I think, attacks on
    preemption have been in the area of express preemption, attacks
    on the broad express preemption provision in ERISA.
        Chairman Thompson. But those are policy debates.
        Mr. Moss. They are policy debates, but I think that there
    are still questions that go to whether----
        Chairman Thompson. So you are basically saying it is
    impossible for us to express our intent.
        Mr. Moss. No, not at all. I believe----
        Chairman Thompson. That it is very difficult.
        Mr. Moss. I believe that Congress should do so. I suspect
    that, although perhaps more difficult in the long run, it may
    be best done on a case-by-case basis rather than in a piece of
    framework legislation like that. I can give you an example of
    what I mean by that.
        Chairman Thompson. Well, you can still--you can do it on a
    case-by-case basis the other way. If we are concerned--and some
    of the witnesses that come after you will have some instances,
    and which I believe to be the case, where there are more and
    more cases where you have these confusing doctrines butting
    heads with each other and inconsistencies and courts coming up
    with these interpretations that are inconsistent with one
    another. So if we conclude that and we decide that we want to
    lay down a framework and say unless we say otherwise, here is
    the rule.
        Mr. Moss. Right.
        Chairman Thompson. That doesn't keep us from saying
    otherwise. In a given case, we can wipe the whole thing out if
    we choose to in a given case. The question is: What is the
    general rule going to be when we are silent on the issue? That
    is the issue here, isn't it?
        Mr. Moss. I believe that is correct, although I think that
    it is even the case that where you are silent on the issue in
    the subsequent enactment, there are going to be debates, and
    the courts in the end are going to have to figure out what
    congressional intent is.
        To give you an example, another type of framework--there is
    not a great deal of framework legislation of this type, but
    another piece of framework legislation of this type dates back,
    I believe, to 1871, and it is the Dictionary Act. And it says
    unless Congress says otherwise, this is what these terms are
    going to mean.
        In a case called Monel, Justice Brennan writing for the
    Supreme Court looked to the definition of the word ``person''
    in the Dictionary Act. He said the word ``person'' in the
    Dictionary Act includes a body politic, and, therefore, it must
    include municipalities. And, therefore, one can bring an action
    against a municipality under Section 1983.
        In a subsequent case called Quern v. Jordan, Justice
    Rehnquist was writing for the majority, and the question was
    whether that same analysis would apply to States. And Justice
    Rehnquist said the Dictionary Act is just too thin a reed to
    rely upon, to rely on that definition in an 1871 statute to
    decide whether States should be subject to an action under
    Section 1983. There was nothing in the 1983 statute itself
    which addressed that. But the Court still had to wrestle with
    the question of what congressional intent was and whether
    implicitly Congress reached a different conclusion.
        Chairman Thompson. That wasn't a preemption case, was it?
        Mr. Moss. It was not a preemption case.
        Chairman Thompson. There can always be an issue as to what
    a particular word means, especially over a long period of time.
    It sounds like a significant length of time past that. I am not
    saying that it would never produce any litigation, but this
    litigation you are concerned about needs to be juxtaposed to
    the litigation that we have. I mean, we are just replete with
    litigation now, taking wild guesses as to what congressional
    intent is. This isn't a panacea that is going to foreclose
    every possible issue. And we will, if we decide to preempt,
    state so in clear, explicit language, hopefully. But I don't
    think we ought to get too hung up on throwing our hands up and
    saying, we are unable to express our intent. If that is the
    case, then we are in worse shape than I thought.
        Mr. Moss. I entirely agree that Congress should as clearly
    as possible express its intent. But let me just mention two
    other cases that come to mind in defense of implied preemption.
    Few people realize that perhaps one of the great decisions ever
    decided was an implied preemption case, and that is Gibbons v.
    Ogden. That is the case decided by Chief Justice Marshall in
    1824 that opened up our markets to interstate commerce. And I
    think people generally studied the case in law school and think
    of the case in law school as a case which establishes the broad
    power of Congress to regulate interstate commerce. But the
    ultimate holding in the case, Chief Justice Marshall comes down
    and says I don't need to decide in this case whether the power
    to regulate interstate commerce is exclusively for the Federal
    Government and whether the States have a role here.
        The State of New York imposed a monopoly on steamboat
    traffic between New York and New Jersey, and Chief Justice
    Marshall said there is a Federal statute that provides for
    licensing of ships that are involved in the coastal trade. And
    I think an implication of that must be that Congress would have
    intended not to allow States to impose these sorts of
    monopolies and limitations. And, therefore, as a matter of
    implied preemption, Chief Justice Marshall concluded that the
    markets had to be opened up and economic development began in
    earnest, and the case was widely received as one of the great
    decisions at the time it came down, even by those who were
    strong supporters of States' rights.
        Chairman Thompson. So what is your point?
        Mr. Moss. That implied preemption at times is extremely
    important and has a long history dating back to the early----
        Chairman Thompson. It is important--I mean, if it carries
    out the intent of Congress, it is important.
        Mr. Moss. Yes.
        Chairman Thompson. And if it doesn't, it is important, too.
    But, I mean, that is the issue. Is a decision such as that
    carrying out the intent of Congress? And what you have there is
    a judge having to decide, as the courts often do, what the
    congressional objectives are, what the national purposes are.
    My point is this legislation would void all that.
        Mr. Moss. Let me give just another example, Mr. Chairman--
    --
        Chairman Thompson. I will tell you what. Give it to Senator
    Voinovich because I have taken too much time.
        Mr. Moss. As have I, and I appreciate your indulgence.
        Chairman Thompson. We will have time.
        Senator Voinovich. I would just like to say that I
    appreciate the thorough evaluation that you have given of the
    legislation, and I for one will take it into consideration. And
    if we think that any of your points are well taken, we will try
    to incorporate them into the legislation.
        I happen to be one that feels that the more clarity we have
    in this area, the better off we are all going to be. I think
    the more consultation that we have with each other, the better
    off we are going to be. And that is really the kind of
    environment that we are trying to create through this
    legislation.
        Chairman Thompson. Thank you very much. Senator Levin.
        Senator Levin. Thank you, Mr. Chairman.
        I was intrigued by your last statement about the value of
    implied preemption. Just a few minutes before that, you said it
    is desirable that Congress be as clear as possible as to
    whether or not it intends to preempt. Those are inconsistent
    statements.
        Mr. Moss. I don't believe so, Senator Levin. For example,
    one could imagine a circumstance in which Congress thinks as
    carefully as any group of human beings could possibly consider
    an issue. They think about every angle on it, and they draft a
    Federal law to address a problem. Twenty years later, the
    States for the first time start adopting some new form of
    regulation in the area that poses an obstacle to the Federal
    statute. No one in Congress at the time could have been
    expected to have foreseen this development. The development
    interferes with achieving Congress' purpose. And under this
    statute, it is unclear whether the Federal statute would be
    allowed to achieve its goal. And maybe in those circumstances
    Congress would then have to go back and re-evaluate the issue.
        So I don't think that it is always going to be the case
    that the rule that says that Congress always must be expressed
    or there must be a direct conflict will always best achieve
    congressional intent.
        Senator Levin. Well, I think you just put your finger on
    what the answer is, that if something crops up where the
    Congress now sees it is important to preempt, it can just
    simply adopt a preemption provision as an amendment to that law
    that was passed 20 years ago. But to use that as an example of
    why implied preemption somehow or other is desirable, when you
    yourself say as a general matter it is important to not do
    anything by implication, it is important that we express one
    way or the other, it seems to me in general are inconsistent
    statements.
        Mr. Moss. Well, I respectfully disagree with that, and one
    reason I think I disagree is that these categories are not as
    neat as we would like to think of them. And, in fact, conflict
    preemption is a form of implied preemption. The two major
    categories are express preemption where Congress says we are
    preempting X, Y, and Z, and there is implied, which includes
    conflict preemption, field preemption, obstacle preemption. And
    Justice Black very eloquently in a case decided, I believe, in
    1941 named Hines said that it is extremely difficult to figure
    out which of these categories something fits into, but in the
    end the goal is to figure out what Congress intended.
        I think that the courts by and large are very respectful of
    that. They have rules and presumptions against finding
    preemption where it interferes with an area of traditional
    State regulation. And if there are areas in which Congress--
    where the courts have been finding preemption and Congress
    didn't intend it, I think that is something that obviously
    needs to be considered in the first instance to figure out
    whether there are particular areas that need to be fixed.
        Senator Levin. I think Congress is in a lot better position
    to determine whether it intends to preempt States than courts
    are through rules of construction which are incredibly
    complicated trying to divine what that congressional intent is.
    It is far better, it seems to me, to know what the
    congressional intent is, or in the event that it is unknowable
    or unknown or unspecified, than for Congress to say which way
    it wants this to go. Do we want to preempt in the absence of an
    express preemption or a conflict or not? And if we say the
    presumption is that we do not want to preempt the States from
    acting, unless we expressly state so or unless there is a
    direct conflict, it seems to me that is a lot clearer guidance
    to a court than these rules that have been created over time,
    and it ought to be welcomed--I would think it would be welcomed
    by a court.
        I will leave that there, but your analogy as to how at
    times the absence of any clarity in law and the courts trying
    to figure out Congressional intent has led to a good decision
    reminds me a bit of saying, well, President Roosevelt during
    the 1930's was able to either ignore or evade the Neutrality
    Act, or whatever it was called, through our Lend-Lease Program;
    therefore, it is great for Presidents to evade our laws just
    because we have a good circumstance there. I am all for it.
    Looking back in history, I am glad the President--I hope I
    would have been at the time--engaged in the Lend-Lease Program;
    therefore, I am glad the President evades our laws. But that
    can't be our general principle because I can come up with an
    example of where it was good that a President did evade our
    laws.
        So I don't think your--going back to the Marshall case is a
    particularly good one. Just because you can pull out an example
    where there was silence and, therefore, a very creative,
    wonderful Supreme Court Justice was able to reach a great
    decision is not, it seems to me, a very good argument for a
    policy of silence being something which leads to good results.
        Mr. Moss. If I can just say one thing quickly, Senator. It
    was not my intent to suggest that the court should reach out
    and just come up with good results in cases contrary to what
    Congress intended but, rather, that I am not convinced, based
    on my reading of the cases, that a rule that says there must be
    an express preemption provision is in the long run going to
    better capture congressional intent. And in my looking at the
    cases, I see enormous debate and complexity in discerning
    express preemption provisions, and it is unclear to me that the
    courts are getting closer to congressional intent with those
    than they are in the implied preemption, where they are quite
    deferential.
        Senator Levin. You are saying that you don't think a court
    is given more guidance by an express statement of preemption
    than it is by silence. That is what you are saying to me. And
    it seems to me that has palpably just got to be wrong. That
    goes directly counter to what you earlier said, which is we
    should express our position on preemption. Do you want us to do
    it or not?
        Now, if you want us to do it--and I do, I think most of us
    do--then you have to take that position even though it may be
    not totally conclusive and even though there may be questions,
    as the Chairman pointed out, that remain for a court to try to
    figure out.
        You can't have it both ways. You either want us to express
    our intent or you don't. Which do you?
        Mr. Moss. I think it is preferable for Congress to express
    their intent, and----
        Senator Levin. Even though there may be some open issues
    for a court.
        Mr. Moss. Sure. Yes.
        Senator Levin. I think that is a better position, but it is
    inconsistent, I am afraid, with a few other directions that you
    have taken or tried to take this morning.
        Mr. Moss. Well, respectfully, Senator, I don't think----
        Senator Levin. You don't have to be that respectful. You
    can just disagree period. [Laughter.]
        Mr. Moss. I think there is a difference when one is dealing
    with a type of framework legislation like this where in 1999
    Congress passes a rule like this that presumably will be on the
    books for many decades to come and future Congresses will be
    guided by it, compared to a circumstance where Congress sits
    down in a particular context and says what is it exactly we
    want to do here and let's say as clearly as we can what we want
    to do here, which I think is a very good thing.
        Senator Levin. Another area I want to go into with you is
    also an area which the Chairman got into, and that is the
    failure of apparently three administrations in a row here now
    to prepare federalism assessments. We had an Executive Order
    back in 1987 of President Reagan. Now we are going into the
    seventh year of the Clinton administration. According to the
    Acting Director of OIRA, that Executive Order basically has
    never been followed, apparently, through three administrations,
    if I read this correctly. We know from a test in the last 2
    years it has never been followed. Apparently, it wasn't even
    followed during the administration in which it was issued.
        That, it seems to me, presents an awfully good argument for
    us to incorporate into law the requirement rather than using it
    as, apparently, I think you do as a reason for why we shouldn't
    do it because it has never been followed.
        Isn't the fact that that Executive Order has been ignored
    administration after administration reason for why we should
    act, why we should put its requirements in law, including the
    federalism assessment, rather than using that as I think it has
    been used by the administration as a reason not to act?
        Mr. Moss. Let me----
        Senator Levin. I think I should go to Mr. Spotila. I am
    sorry. I agree. You are looking over to your right and I will
    look over to your left.
        Mr. Spotila. I thought maybe I was going to escape that
    one.
        Senator Levin. No.
        Mr. Spotila. Senator, as I said, right before you came in,
    I am firmly convinced that Executive Orders should be complied
    with. They must be complied with, as must laws, with or without
    judicial review. I don't have direct experience on OMB's
    relationship with Executive Order 12612, but I have been
    advised, as you have alluded to, that it appears that for three
    administrations this was not enforced by OMB. It is unclear
    whether GAO has captured precisely the amount of agency
    compliance with the Executive Order, but there seems to be a
    general sense that there wasn't much compliance, if any.
        I think that the efforts in this administration began with
    Executive Order 12875 on consultation and then the effort to
    come up with a new Executive Order that would deal with
    preemption as well as consultation and unfunded mandates last
    year. That effort recognizes that there is a need for guidance
    to the agencies and that with clear guidance then we would be
    in a position to compel the agencies to do what is appropriate.
        Having said that, if the Congress determines that it would
    add value to legislate in this area, then I don't think we
    object to that concept. It becomes a matter of how to do it and
    whether we can avoid unintended consequences.
        Senator Levin. Putting aside the judicial review question
    just for a minute, do you support, does the administration
    support a requirement that there be a federalism assessment in
    law?
        Mr. Spotila. I think the administration believes that it is
    not necessary for it to be in law, that it can be dealt with
    through an Executive Order. I believe that is the
    administration position. That does not necessarily mean that
    the administration would not--that the President would not sign
    such a bill, but it does mean that they feel that an Executive
    Order can be shaped in an effective way to deal with this
    issue.
        Senator Levin. Thank you. If history is any guide here, the
    Executive Order which has been on the books for 12 years has
    been ignored, which is one of the problems with Executive
    Orders, by the way. We face this all the time. I am looking at
    a former chief executive here, so I am a little bit worried
    about saying that here. But we find too often that the
    administrative agencies simply ignore what is in the Executive
    Order, and they get away with it because it is not in statute.
    So we face this in a number of areas where we have to put in
    statute something in order to make sure it gets done. And I
    think it is very clear from the history of this that this is
    one such example.
        I think maybe I have gone over time, but those are all the
    questions I have. Thank you, Mr. Chairman.
        Chairman Thompson. Along those lines, we are right in the
    middle now, apparently, of your negotiating with State and
    local government representatives on a new Executive Order. I
    mean, that has been up in the air for some time now, hasn't it?
    Aren't you in the process of negotiating one?
        Mr. Spotila. The administration is in the process, yes. I
    have not personally been involved yet in that, but----
        Chairman Thompson. Who is handling that? Is Ms. Katzen
    still handling that?
        Mr. Spotila. She has some involvement in it, yes. She has
    the advantage of having worked on this issue for some time now
    and has been one of the people involved.
        Chairman Thompson. I know she has, and we have got some
    questions for her, too, when she comes up for confirmation.
        Mr. Spotila. I know that there is a significant effort to
    try to reach an understanding, and I think people----
        Chairman Thompson. Well, the administration tried to repeal
    or supersede the Executive Order we have been talking about
    with a new Executive Order, which caused great concern among a
    lot of the people affected on this federalism issue, and
    without consulting with State and local representatives, even
    though the Executive Order would require consultation with
    State and local representatives. So they weren't even--in the
    process, they weren't even complying with the Executive Order
    that they were trying to get done. I mean, how much more
    evidence do we need for the need to legislate in this area? I
    don't know what is going to come out of that, but I will
    guarantee you one thing: If because of everything else that is
    going on some reluctant acknowledgment is made in some
    Executive Order about federalism, with this history it doesn't
    mean a whole lot to me in terms of this legislation.
        I am more than willing to work with you on the judicial
    review. I don't want to bog this thing down. I must say that
    the elements that have to be complied with by the agencies are
    of a little different category than in some of the things that
    we deal with here. We might could use the Regulatory
    Improvement Act as a model for judicial review. But the
    requirements here have to do more with assessments and
    descriptions and analysis under this federalism bill. If it
    really doesn't go directly to the merits of the rule that is
    being promulgated, it just has to do with an analysis of the
    federalism impact and the extent to which you have consulted.
        Frankly, if you do want it all, I don't see much grounds
    for challenging that since it doesn't go to the efficacy of the
    rule itself. Do you see what I mean? I am not sure how all that
    cuts, but it does seem like this is a different kind of
    category of rules, and it shouldn't present a major--or
    requirements, I should say, in promulgating the rule, and
    shouldn't present a major problem for us in figuring out some
    way to require an agency to make a good-faith effort--I mean,
    not to be able to say, yes, we consulted with everybody when,
    in fact, they didn't. I mean, there has got to be some remedy
    for that if something like that happened.
        Mr. Spotila. Well, we believe that we ought to be able to
    work with you on this and work something out. As I said in my
    testimony and as I will repeat again, we share many of the same
    objectives here, and I think it is a matter of how to work
    together to get this right.
        Chairman Thompson. Well, I appreciate that.
        Mr. Moss. Mr. Chairman, not to invite a question on this,
    but also not to leave any misimpression, I should tell you that
    I have been present during a number of the discussions with the
    State and local governments which I regarded as very fruitful.
        Chairman Thompson. How is it going?
        Mr. Moss. I think we have had a very positive interchange,
    and we are working very hard, and I think we remain hopeful
    that we are going to be able to reach----
        Chairman Thompson. Have you decided, in trying to come up
    with an order that requires consultation with them, that you
    ought to consult with them?
        Mr. Moss. Yes, Mr. Chairman.
        Chairman Thompson. We have gotten over that hurdle.
        All right. Is that a vote? [Pause.]
        I am going to recess here just very briefly in order to go
    vote, and we will come right back. I am sorry. I was hoping we
    would be able to keep going, but it doesn't look like we are
    going to be able to. So we will recess hopefully just very
    briefly to have an opportunity to vote.
        [Recess.]
        Chairman Thompson. Let's come back to order here very
    briefly. Senator Roth has come in, and he has an introduction
    to make which will allow us to get started on our second panel.
    So, gentlemen, we want to thank you for being with us, and we
    will--I don't think we need to ask the whole second panel to
    come up, but you may go, if you would. Senator Roth will make
    an introduction to lead off our next panel.

                   OPENING STATEMENT OF SENATOR ROTH

        Senator Roth. I want to thank the Chairman for his
    courtesy. Please come up, Governor Carper. For me it is a great
    pleasure to introduce a distinguished Delawarean to the
    Committee today. And appearing as a witness for the second
    panel is Tom Carper. Tom is governor of the State we all
    affectionately call ``the small wonder.''
        Now, I have known Governor Carper for many years, and we
    have had the opportunity of working on many issues of great
    importance to our beautiful State.
        Tom has a very distinguished background. He served as
    Delaware's State treasurer from 1977 to 1983. In 1983, he came
    to Washington as a Congressman and spent almost a decade in
    that office before assuming the governorship in 1993.
        Currently, the governor serves as chairman of the National
    Governors' Association, and his background as well as his
    responsibilities in this new role gives him a unique insight
    into the topic before our Committee today, the important issue
    of federalism.
        Like many of us here, Governor Carper understands the
    special role of State government and the need to keep these
    governments strong and vital. He is such an expert on this area
    that he agrees with me and supports the Federalism
    Accountability Act.
        So it is a great pleasure to welcome you here today,
    Governor Carper, and have you before our Committee. We look
    forward to working with you on this bill as it proceeds.
        Governor Carper. Mr. Chairman, thank you very much. I feel
    like this is a home game as opposed to an away game, and I am
    delighted to be here with you. It is great to see George
    Voinovich who preceded me as chair of the NGA and to see
    Senator Levin, whose brother I served with in the House on the
    House Banking Committee for a while.
        I just want to say to you and to others on this Committee
    and the Senate, Democrats and Republicans alike, who have
    sponsored this particular bill that you are holding a hearing
    on, many thanks, many thanks.
        I would ask permission, Mr. Chairman, if the full text of
    my statement might be entered into the record, and I would just
    like to summarize it if I could.
        Senator Roth. That will be fine. We will have to recess
    because we do have a vote on the floor. And so I am going to
    recess and go back, and the Chairman will return in just a few
    minutes.
        Governor Carper. That will give me time to rewrite my
    testimony. [Laughter.]
        Senator Roth. Again, we welcome you here.
        Governor Carper. Thanks. You are good to be here. I
    appreciate it, sir.
        Senator Roth. The Committee is in recess.
        [Recess.]
        Chairman Thompson. We will reconvene and turn to our second
    panel. The first witness will be the Hon. Thomas Carper,
    governor of Delaware, the chairman of the National Governors'
    Association, who has been introduced.
        He will be followed by the Hon. John Dorso, Majority Leader
    of North Dakota House of Representatives, who is testifying on
    behalf of the National Conference of State Legislatures.
    Majority Leader Dorso testified before our Committee in May on
    the federalization of crime, and we are pleased to have him
    again with us.
        The final witness on this panel will be the Hon. Alexander
    Fekete, who is the Mayor of Pembroke Pines, Florida, who is
    testifying on behalf of the National League of Cities.
        Governor, I know you have to leave soon, so I thank you for
    being with us today, and we would be pleased to hear any
    statement you have to make.

       TESTIMONY OF HON. THOMAS R. CARPER,\1\ GOVERNOR, STATE OF
        DELAWARE, AND CHAIRMAN, NATIONAL GOVERNORS' ASSOCIATION

        Governor Carper. Mr. Chairman, thanks very much. Could I
    ask that my printed statement be entered into the record?
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Governor Carper appears in the
    Appendix on page 306.
    ---------------------------------------------------------------------------
        Chairman Thompson. It will be made part of the record.
        Governor Carper. Thanks very much. Thank you for inviting
    us to come and letting us be here.
        This is sort of the second bite out of the apple that the
    governors have had. Mike Leavitt of Utah was here I think
    earlier in the year and testified, and we appreciate the second
    chance. It is just great to be with Senator Voinovich. It is
    hard to call him Senator. He still thinks like a governor, and
    we are delighted that he is here. It is great to be with you.
    Sometime during my testimony you will hear me speaking, but you
    will see his lips moving. [Laughter.]
        It has been that way for a while, hasn't it, George?
        Senator Voinovich. Governor, I would like to say thank you
    for being here today, and I just want to say that there are
    some wonderful things that have happened in this session of the
    U.S. Congress because of the wonderful relationships that your
    organization and the other organizations and the Big 7 have
    developed with the leadership here in the Senate and in the
    House. Hopefully, we will keep following through with this
    legislation.
        Governor Carper. I hope so. I just want to say particularly
    to you, but to others as well, education flexibility, and your
    colleague from Tennessee, Bill Frist, was very good in that,
    tobacco recoupment, all kinds of issues, thank you very much
    for what you are doing.
        I was sitting in the audience when some of the discussion
    from the last panel got off on the Executive Order that the
    administration has been working on. Senator Voinovich was then
    a governor. In fact, we were, I think, in Milwaukee getting
    ready for a governors meeting when the word came out that the
    administration was about to issue a new Federal Executive Order
    on federalism. We got on the phone and called the folks back
    here in the administration, asked them to back off--he says you
    haven't consulted with us at all, not the governors
    organization or any other organization to our knowledge, and we
    just asked them to back off and give us a chance to sort of
    revisit the issue. And they have been good about doing that,
    and we have had a real long conversation. And I think for the
    most part we have narrowed and eliminated our differences.
    There is still a difference on a key issue, and that is, I
    think, the 4(b) preemption. But other than that, I think they
    have met us halfway, and I am well pleased.
        I am pleased to have a chance to come before you today, and
    I just want to sort of summarize my testimony for about the
    next 45 minutes. [Laughter.]
        Not really.
        Chairman Thompson. We are used to that.
        Governor Carper. When you had Mike Leavitt here, you had
    the governor who knows about this stuff. You got me, and I have
    learned from him and from George Voinovich.
        I would like to share with you a couple points. First, is
    thank you for being our partner. Thank you for regarding us as
    a full partner, and we are real supportive of this legislation,
    as you know, and are delighted to see it has bipartisan
    support. We hope you can come up with something that the
    President can sign and that we can all benefit from.
        If you look at the last decade, most recently education
    flexibility legislation, what you did on unfunded mandates,
    what you have done on child care, what you have done on welfare
    reform and some other areas, you have actually sort of devolved
    power back to the States. We think that is good, putting the
    power closer to the people and trying to hold us accountable,
    and that is the way it ought to be.
        While devolution has sort of occupied center stage during
    the last couple of years, another story has unfolded with a
    little less fanfare, and that is preemption of State and local
    laws. Sometimes we focus on the administration doing the
    preempting, but the Congress preempts, too. I used to be a
    Congressman, was for 10 years. I did my share of preempting.
    And, in fact, one of my primary antagonists was Senator Levin's
    brother, Sandy, and we did war on the House Banking Committee.
    I was trying to preempt some State laws. We were trying to work
    on--the issue of how long it takes you to get access to your
    money, your checking accounts, after you deposit a check? We
    call it clearing times, and I was trying to preempt some State
    laws. Sandy was trying to stop that or slow it down. In the
    end, we preempted and I think we came up with a good national
    policy.
        So I sit before you today as one who has done a little
    preempting, but who sits as governor----
        Chairman Thompson. A reformed sinner. [Laughter.]
        Governor Carper. Reformed, that is right. What is it? Hate
    the sin, love the sinner. But there are times when it is
    appropriate to preempt, and I think what you are trying to do
    here is to say if there is a Federal law that we pass and if
    you got a State law over here that is inconsistent, before the
    Federal law preempts the State law, you have got to say here in
    Congress we mean to preempt you. And if you don't and we end up
    in court, then we sort of say to the courts, in that case you
    cede to the States. You basically yield to the States. And that
    is pretty much the way we think it ought to work.
        Federal preemption of State laws has occurred as a result
    of not any kind of malicious desire on the part of anybody here
    in this body or across the Capitol to undermine State
    sovereignty. There is sometimes the unintended byproduct of
    other issues, and, unfortunately, that can be the same for
    States regardless of whether the motives are good or bad.
    Sometimes we have ended up with State and local authority
    decision-making reduced. We have seen a little bit of
    centralization of power here in Washington. Maybe more than is
    in the interest of our country.
        As I said earlier, it is not just the agencies that
    preempt, but the Congress does as well.
        I just learned this in preparing for my testimony. There is
    a service in the congressional legislative website. It is
    called Thomas. That is provided, and some of our folks looked
    it over to see if we could find the preemption in the titles of
    any bills that are coming before Congress. I am told it came up
    with 115, which is pretty impressive, 115. I don't know where
    they came up with the name Thomas.
        Chairman Thompson. Just 1 day's work sometimes. [Laughter.]
        Governor Carper. I would like to sit here before you today
    and say I think this situation is going to get better with
    respect to preemption. My guess is as we go forward and have
    more international competition and folks are trying to respond
    quickly to technological developments and people are trying to
    maximize opportunities that are created by deregulation and
    businesses seek to streamline legal and regulatory
    requirements, my guess is we might end up with greater problems
    with preemption. And I can understand businesses not wanting to
    contend with a whole myriad of State and local codes with our
    statutes and our rules that prevent them from being able to
    respond effectively to changes in the marketplace.
        However, just as Federal laws and oversight serve important
    purposes that include preventing monopolies, raising revenues,
    and also financing Social Security, we think the State and
    local laws fulfill a variety of critical functions, too.
        State and local taxing authorities provide funds. You know
    this as well as I do. We do it for education. We do it for the
    roads that you help us to build, for law enforcement, for
    health care, and for environmental protection, too. State
    banking, insurance, and security laws impose capital adequacy
    requirements and underwriting standards, licensing procedures
    that safeguard consumer deposits and investments and protect
    against fraud and against abuse.
        We have State utility regulators that are trying to ensure
    our citizens get high-quality water and electric and sewage and
    telephone service and they get it at reasonable prices.
        The important role of State laws and our regulatory
    responsibilities shouldn't be forgotten in the midst as we
    scramble to accommodate businesses and react to the forces of
    globalization, the forces of technology, and the forces of
    deregulation. Our States and our citizens, people you
    represent, too, stand to benefit as much as businesses from the
    changes that are being made, but not at the cost of continuing
    Federal preemption of State laws.
        I want to thank you for the work that has been done on
    unfunded mandates, and I know that was done by a previous
    Congress, previous leadership of the NGA, but we are grateful
    for it.
        The legislation we are discussing here today is actually
    pretty similar to the unfunded mandates legislation that was
    enacted about 4 years ago. That legislation has been successful
    because it provides better information and analysis about
    unintended consequences of Federal action before they happen. I
    will say that again: Before they happen instead of after they
    happen. And your preemption bill is not dissimilar to that. It
    focuses on, as I understand it, providing information and
    ensuring consultation prior to action by either the Congress or
    by any Federal agency taking action with federalism
    implications.
        I am happy to tell you today NGA supports your bill, S.
    1214, Mr. Chairman. We urge you to schedule markup as soon as
    possible, maybe after this testimony is over today, maybe later
    this week, or maybe next month. But we would like for you to--
    we would encourage you to move forward with all due diligence.
        There are a couple of changes we would like for you to
    think about making to the bill, and let me just mention them
    briefly.
        First of all, I think in Section 5 the analysis required in
    Committee or conference reports you might want to consider
    expanding that a bit. We think it is important for Federal
    officials to understand the effects of legislative and
    regulatory preemptions on costs, on economic development, on
    consumer protection, and State and local enforcement
    authorities. We would ask you to keep that in mind with respect
    to Section 5.
        Additionally, I think you have got a point of order. I
    think the unfunded mandates law includes a point of order. I
    don't believe this bill does, and you may want to consider
    amending this bill to provide for a point of order, and I would
    ask you to keep that in mind.
        The other point, I think this deals with Section 6(b), and
    the rules of construction would apply to all rules promulgated
    after enactment of this legislation. Let me try to get this
    straight. I think the way the bill is written it says that you
    would affect Federal rules promulgated pursuant to legislation
    enacted previously. So that is a rule or regulation promulgated
    after the passage of this bill where it could be promulgated
    with respect to legislation that was previously adopted. And
    what we would encourage you to consider is amending that
    subsection so that the rules of construction apply only to
    Federal rules promulgated pursuant to legislation enacted after
    S. 1214.
        In conclusion, let me just say that the legislation I
    worked on down here was never perfect. I don't know that this
    is either. It is good. I don't know that you are going to be
    finished or we are going to be finished on this front. But I
    just want to encourage you to continue your efforts and to
    expand your good work to this threat to federalism, and that is
    preemption.
        We want to urge you to join us as States and as governors
    in a working partnership involving all of America in our system
    of government through all of its elected officials, whether we
    are in State houses or here on Capitol Hill. And I think that
    we can best meet the needs of the folks that we are all elected
    to serve if we meet the collective needs of the people and we
    pull together as you tried to do here in this partnership.
        Again, it is a good bill, and we have got a couple points
    we would like for you to keep in mind as you go forward. We
    would like to urge you to mark it up and send this baby over to
    the House of Representatives.
        Thank you very much.
        Chairman Thompson. Thank you very much, governor. I really
    appreciate the leadership that you have shown in this area, and
    it is something that is kind of misunderstood by a lot of
    people. It has to do with--the benefits of moving in this
    direction, and we have had a lot of activity in terms of
    devolution, are first of all it is consistent with sound
    constitutional principles, and there is a reason that it is set
    up that way in the Constitution, because what we are talking
    about is power and the distribution of power. And we all know
    what the Founding Fathers thought about that and how important
    it was.
        There seems to be a tendency in democratic societies to
    centralize as time goes on, and we are trying to fight against
    that not only for constitutional reasons and for distribution
    of power reasons, which is important in a democratic society,
    but for very practical reasons. And governors such as yourself
    who have come up recently with such innovative ideas, so much
    of the good things that are happening in this country are going
    on at that level, and we have learned that not all the good
    ideas come from up here, and that we ought to be very careful
    in preempting these fields.
        As far as this bill is concerned, I appreciate your
    suggestions. I would like a point of order, too. Frankly, there
    may be some practical difficulties in getting that done. Maybe
    we can work together and maybe you can help us get that done.
        Governor Carper. Be happy to try.
        Chairman Thompson. I think that would be a good idea.
        I think in terms of the other point, the bill does have to
    do with statutes that have already been previously passed, and
    I must say that there undoubtedly, of course, will be
    additional rules, many, many rules coming down that have to
    do--that are done pursuant to statutes that have already been
    passed. But it is not meant to preempt those statutes that have
    already been passed. The bill says that preemption can be
    authorized by the statute, and if courts have previously
    determined, for example, that a statute preempts certain areas,
    I think that would be incorporated in the rule.
        In other words, I am a little bit concerned about the
    wording of this and making sure it was clear enough as to what
    we were trying to do, and I think it needs a little work,
    perhaps. But we want it to apply to old statutes, but we are
    not trying to rewrite or preempt all the old statutes, if you
    know what I mean. So we are on the same track there, I think,
    and we will continue to work on that.
        Thank you very much. Senator Voinovich.
        Senator Voinovich. I am pleased that we included in this
    legislation a problem we had, and that is the issue of Medicaid
    caps, whether they are unfunded mandates, and the issue of
    whether or not, if you have some of the changes in
    administrative costs, whether or not that is an unfunded
    mandate. Mr. Chairman, that is real important because it is a
    follow-through----
        Chairman Thompson. You were on to us about that before you
    ever got here. I remember.
        Senator Voinovich. Right. The other thing is that on the
    record I would like your comment about the fact that under the
    unfunded mandates relief legislation there was to be agency
    review of impact on regulations. I would be interested in your
    opinion on whether or not that has happened or not, just for
    the record.
        Governor Carper. I wish I could tell--I think there has
    been, but, Senator, I could not tell you for sure.
        Senator Voinovich. Well, one of the things was that they
    were supposed to be looking at the regs, and from my experience
    that has been pretty well ignored in terms of----
        Governor Carper. By some it has been, by others not. It has
    been uneven.
        Senator Voinovich. The other is the question of judicial
    review in terms of federalism impact statements. How important
    do you think that is?
        Governor Carper. In a perfect world, I think it is
    desirable. I don't know if you can get it done. And as you go
    forward, I would--what is the old adage? Don't let the perfect
    be the enemy of the good. If you can get it done, fine. If you
    can't, then get what you can.
        Senator Voinovich. In terms of the suggestions that were
    made by representatives of the administration today, I would be
    very interested to have your response to some of those
    suggestions. We certainly want to make sure that once this
    legislation is marked up that we have a good chance of having
    the President sign it. I think that where you feel they may
    have made some good suggestions that you feel comfortable with
    that are not inconsistent with what we are trying to accomplish
    here, I would sure like to hear about them.
        Governor Carper. Good, and we would welcome the opportunity
    to submit something in writing. I was in and out of the room
    while they testified. We will have some really smart people who
    heard the whole thing and who know this stuff backwards and
    forwards to help us prepare something that would be helpful.
        Chairman Thompson. Thank you very much, Senator.
        Governor, I know you have other obligations. Thanks again
    for being here with us. We look forward to working with you.
        Governor Carper. Thanks very much. Let me just say again to
    Senator Voinovich, if you had something to do, Senator, with
    getting that Medicaid cap--the language included on the
    appropriations bills--the entitlement programs, rather, that
    you alluded to earlier, thank you. That is much appreciated.
        Senator Voinovich. He heard us.
        Chairman Thompson. I can attest to the fact that you beat
    up Senator Glenn and me both over that.
        Governor Carper. Good work. And, Senator, I look forward to
    being in your State. Your governor, Governor Sundquist, is
    going to be hosting the Nation's governors and a bunch of
    people at a technology conference, education technology
    conference, in about a week.
        Chairman Thompson. Great.
        Governor Carper. We want to get, naturally, and learn as
    much as we can from Tennessee.
        Chairman Thompson. There is a lot to be learned down there.
        Governor Carper. Most of us governors learned what we know
    from George Voinovich. [Laughter.]
        Chairman Thompson. Thank you very much. We appreciate your
    being with us.
        Mr. Dorso and Mr. Fekete, we appreciate your forbearance,
    and, Mr. Dorso, thank you again for coming back. You are
    getting to be a regular customer to this Committee, and we
    appreciate the work you are doing in this area. Would you make
    your statement, please?

      TESTIMONY OF HON. JOHN M. DORSO,\1\ MAJORITY LEADER, NORTH
      DAKOTA HOUSE OF REPRESENTATIVES, ON BEHALF OF THE NATIONAL
                    CONFERENCE OF STATE LEGISLATURES

        Mr. Dorso. Good afternoon, Senator Thompson. I guess I will
    skip through all of the majority leader stuff and just say, as
    the governor said, the staff of NCSL and I have put together
    written testimony which I think is very good, and I encourage
    you and the Members to read it.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Dorso appears in the Appendix on
    page 324.
    ---------------------------------------------------------------------------
        Chairman Thompson. We will make the full statement a part
    of the record.
        Mr. Dorso. OK. As I listened to the proceedings here today,
    it is fairly obvious that you--and I have heard you in some of
    the presentations that you have made--understand the problem.
    The problem obviously is the increasing frequency of
    preemption, not only by Congress but by agencies of government.
    And, certainly I guess we all understand that the Supremacy
    Clause is there, and if you have a will to do that, certainly
    you can.
        I don't have a problem with that, and as you have said, if
    that is your intention, let us know what your intention is as
    you debate whatever your bill is in front of you that contains
    that type of activity. I mean, we will all be part of the
    debate at that time as to whether, in fact, that is exactly
    what you intend to do.
        So I really don't have a problem with preemption from the
    standpoint as you have pointed out. If we all know that that is
    what is going to happen, then we should all understand it and
    what it really means.
        Certainly I think that we as States from the other
    standpoint think that we do a good job in what we do, and we
    don't like preemption any more than it has to be. We understand
    that sometimes it has to be. But I think that we all understand
    that States are probably the basis of a democracy. It is part
    of the Constitution, a cornerstone of the Constitution, that we
    keep government as close to the people as possible, and
    certainly the States are there.
        I have a number of instances in my testimony where I talk
    about instances where Congress has preempted States and it is
    causing big problems for us. One of them is the Internet Tax
    Freedom Act. North Dakota is one of those States that did pass
    a tax on Internet providers, and Congress did its will on that,
    and we are fighting through that problem.
        Obviously, the whole problem about the Internet gets to be
    sales tax revenues, and I know State Senator Finan, Senator
    Voinovich--we are good friends, and we have talked considerably
    about what a terrible problem it is for Ohio. Obviously, Ohio
    has much bigger sales tax numbers to deal with, but in North
    Dakota, it is a big problem for us, too, and for the political
    subdivisions. And it would be unconscionable for Congress to
    take our right to sales tax away.
        Chairman Thompson. You can imagine what it is like for a
    State that doesn't have an income tax.
        Mr. Dorso. Well, yes, sir, I understand that.
        Chairman Thompson. Which is Tennessee.
        Mr. Dorso. And it is not only that we have got the State
    tax problem, but I have retailers in my home town of Fargo,
    North Dakota, that are going to be put in a terrible position
    competing against Internet sales and sales taxes is 7, or 8
    percent, some of them going to the local subdivision, some of
    it to the State. I mean, it is just a bad situation, and I
    think we have got to work through that.
        Now, that may take working together, I hope, States and
    Congress, to do that, but the Tax Freedom Act I think was a bad
    way to start, and obviously we have talked about the fact that
    that committee was put together, and we didn't like the way
    that was done very well either.
        But, the Y2K liability bill, we have talked about that
    particular problem. I would like to talk a little bit about
    electric deregulation. I mean, that is a subject that comes up
    in Congress on a regular basis.
        I have a friend of mine, Chase Hibberd, who is the chairman
    of the tax committee in Montana, and we converse on a regular
    basis, sometimes about hunting dates, but we were just talking
    the other day about Montana has gone much more quickly than
    North Dakota as far as electric industry deregulation and a
    redo of their tax structure.
        Well, we haven't moved as fast, but one of the reasons that
    I have not wanted--and we have an interim committee studying
    it. We really want to watch what Iowa and Montana, some of our
    neighboring States are doing to see if they have done it right
    before we get too far down the road and have to fix it.
        Now, of course, on the other side of it, I think we can fix
    it faster than you could fix it here, because we seem to be
    able to move quicker on those types of issues. So I think that
    we as States can react to some of these things faster, and I
    think we can do it in an inventive kind of way. And we don't
    have a one-size-fits-all situation. Obviously, the Montana
    structure, as far as their electric industry, is completely
    different--well, not completely, but somewhat different than
    North Dakota's. We are going to have to approach things a
    little bit different than they. And on so many issues, that is
    the way it is, and I am sure you are aware of that.
        Chairman Thompson. You mentioned Y2K. Could you state your
    concern there a little bit more?
        Mr. Dorso. Well, Mr. Chairman, we in North Dakota--I will
    give it to you from the North Dakota perspective. We had a
    number of Y2K bills introduced in the last legislative session.
    We chose to defeat those bills that were introduced, the
    industry people one, other people different versions. We
    decided that this was an issue left to the courts, that it was
    only going to be something that lasted through the year 2000,
    maybe a couple years thereafter, and we didn't need a law to
    deal with Y2K liability that would be sitting there on the
    books for the next century waiting for another turn of the
    clock.
        So we don't perceive that we are going to have a big
    problem with it in North Dakota, and we really didn't think
    when we saw what Congress was doing that it was necessary to
    have, again, a one-size-fits-all thing.
        Chairman Thompson. I appreciate that.
        Mr. Dorso. As I said, I am going to try and move through
    this fairly quickly in case you have got some questions.
        You have already talked about the fact that this is
    increasing five times. I want to point out another example that
    I just came across because, being the chairman of the Law and
    Justice Committee at NCSL, we were dealing with some Native
    American issues. And the Department of Interior was proposing a
    rule on trust lands, and the staff at NCSL sent that to me, and
    I started reading it, and when I got to it, I just got livid
    because in it it says, ``They acknowledge the local tax base
    may be affected, but the refusal to comply with the Executive
    Orders is based on a totally unsupported statement that because
    the loss of revenue is minimal.''
        Well, I can tell you, in North Dakota, where we have a
    number of reservations, that that is just absolutely malarkey.
    And if that is the way that these agencies just go around and
    put you in a pen by just making statements like that--and,
    also, I called NCSL, and I said write them a letter and say
    that is absolutely a gross misrepresentation of where we are
    at.
        I mean, they either don't acknowledge it at all, or if they
    do acknowledge it, they put something like that in it.
        Chairman Thompson. That doesn't necessarily answer the
    federalism issue, anyway. I mean, one part of it.
        Mr. Dorso. But, agencies propose rules all the time that
    affect us, either fiscally and/or legally. The DOJ on the ADA
    thing, I mean, I think ADA is fine, there are a lot of great
    things about it, but when you get to mental health issues and
    community health care, we have got a lot of issues to work
    through with that. And they just write a rule that is supposed
    to fit everything. Well, I can tell you, what fits Baltimore
    doesn't fit Williston, North Dakota, when you get to that
    issue. But they seem to think it is, and they just send it out,
    and we are supposed to all of a sudden comply. If we don't
    comply, there is reason for somebody to bring a lawsuit against
    the State. And there is no way for us----
        Chairman Thompson. But not against them.
        Mr. Dorso. No, they don't sue the Department of Justice.
    They sue us.
        So then I have got the Attorney General calling me and
    saying what are you going to do about it, and that is just
    another instance that's in here.
        Like I say, in conclusion, Mr. Chairman, I know that you
    have been active in this, and I know Senator Voinovich from his
    days as governor has been active in this. I was in Ohio when we
    originally started talking about this, what, 4 or 5 years ago,
    Senator?
        Mr. Chairman, I will tell you I feel so strongly about this
    I got up at 4 o'clock this morning to come down here. I am
    going home tonight. But I feel this is a cornerstone of our
    democracy, and I know that you believe that and Senator
    Voinovich believes it. We are totally in support of what you
    are doing here. If we can be helpful in this regard, I know
    this is not probably the final product, and it has to work its
    way through.
        I certainly think there has to be some safeguards built
    into it. I heard the judicial review question. I am not sure
    that we want everybody to sue every agency if they do not like
    it. But, still, if we do not have some kind of judicial review,
    at least reserved to maybe the State and some political
    subdivisions. I do not know what it will mean if it is not in
    there because, as you have pointed out, the agencies do not
    seem to care anyway. At this point, an Executive Order does not
    do anything.
        So I think the point of order question, I do not understand
    that. That is not the way we operate in the legislature in
    North Dakota. You have to be the judge of whether that is
    important to you, whether it could be an effective tool or not.
    I do not know. But if it is effective, and you can get it, as
    was said by the governor, I guess that is something that you
    will have to weigh out.
        I think the most important part of this is is that you are
    making the effort to get this done. And just the dialogue of
    making that effort is important. But passage of it would be
    great. I think it is something we can build upon. I think there
    is an experience curve here that would be great for the States,
    and I certainly want to congratulate you and the co-sponsors
    for your efforts in this regard.
        Chairman Thompson. Thank you very much. We really
    appreciate your taking the trouble to come down here.
        Mayor Fekete.

      TESTIMONY OF ALEXANDER G. FEKETE,\1\ MAYOR, PEMBROKE PINES,
          FLORIDA, ON BEHALF OF THE NATIONAL LEAGUE OF CITIES

        Mayor Fekete. Thank you, Mr. Chairman. Good afternoon. And,
    Senator Voinovich, my name, as you stated, is Alex Fekete. I
    tell people it rhymes with spaghetti.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mayor Fekete appears in the Appendix
    on page 340.
    ---------------------------------------------------------------------------
        Not only am I mayor of Pembroke Pines, but I am also the
    vice chairman of the Finance Administration and
    Intergovernmental Relations Committee of the National League of
    Cities. I am pleased to be here this afternoon to testify
    before you with my colleagues on what we believe is ground-
    breaking Federal legislation, the Federalism Accountability Act
    of 1999, S. 1214. This bill embraces and preserves the Chair's
    principle of federalism and promotes a new Federal-State-local
    partnership with respect to the implementation of certain
    programs.
        I thank the Committee for having this hearing today. I
    would also especially like to thank the Chairman, Senator
    Thompson, and his colleague, Senator Levin, for their
    leadership, and Senator Voinovich, for working with the members
    of the ``Big Seven'' State and local government organizations
    to craft this bill. At the same time, I would like to recognize
    and thank the bill's cosponsors for their leadership, which
    will help pass this legislation.
        The National League of Cities is the oldest and largest
    organization representing the Nation's cities, towns and their
    elected officials. NLC represents 135,000 mayors and council
    members from municipalities across the country.
        Whatever their size, all cities are facing significant
    Federal preemption threats to historic and traditional local
    fiscal, land use and zoning authority. Whatever their size, all
    cities and all Americans will benefit from legislation such as
    S. 1214. S. 1214 is important legislation because it permits
    cities to govern for the benefit of all of their residents.
        To illustrate the need for this legislation, I want to
    bring to the Committee's attention a recent article in the
    Washington Post, which reports on a poll taken by Peter Hart
    and Robert Teeter. The poll results shows a general alienation
    of the people from their government. According to this poll, 54
    percent of American people do not feel that they have a
    government body that is envisioned by President Clinton and his
    ``of, by and for the people.'' People today tend to think of
    government as the government not our government.
        We need to work together to change this perspective, and S.
    1214 is the best and most definitive way to do that. The
    Washington Post article, additionally, notes that people feel
    more connected to their State and local governments than the
    Federal Government. S. 1214 would help connect Congress with
    the success of State and local governments by checking
    preemption by a Federal Government the citizens feel distant
    from. At the same time, S. 1214 is a springboard to a
    government that is ultimately more responsive to the people
    because it creates the partnership between all levels of
    government, Federal, State and local.
        The pervasive and imminent threat of preemption by the
    Federal Government and the low level of participation by local
    government in creation of Federal laws and rules, which impact
    them mostly, is why S. 1214 is needed.
        Let me clarify that it is not the intent of NLC to
    undermine the supremacy clause of the Constitution. In fact, I
    think everyone in the room today acknowledges that there are
    times when Federal law should trump State law--when there is a
    direct conflict between Federal and State law or when it is
    Congress's express intent to preempt State law.
        During the 1960's, for example, the Nation needed the
    Federal Government to move forward with civil rights
    legislation that would ensure the equal treatment of all
    Americans under our Constitution. The problem, however, is not
    with our dual form of government, as it was established by the
    Framers of the Constitution, our concern is focused on the
    frequency of Federal preemption of State and local laws.
        Moreover, there seems to be a lack of sensitivity on the
    part of Federal Government with regard to local government and
    a preemptive impact of Federal legislation and regulations on
    local government. It is the National League of Cities' highest
    priority to put a meaningful check on this preemptive of State
    and local authority. Allow me to cite a few actions the Federal
    legislation has taken just in the last few months.
        First and foremost, recent legislation signed into law last
    October impedes States' and local governments' ability to tax
    sales and services over the Internet in the same manner as all
    other sales and services are taxed, despite the fact that no
    such limitation would apply to the Federal Government.
        There is also legislation being voted on today by the House
    of Representatives called the Religious Liberty Protection Act
    of 1999, which is a massive preemption of State and local
    zoning and land use laws. This bill, if enacted into law, would
    chill a city's ability to uniformly apply neutral zoning laws
    to an entire community by exempting religious-based land use
    like churches, synagogues and mosques.
        Local zoning and land use laws also face severe preemption
    in the area of takings law, with the reintroduction of takings
    legislation in the House and the Senate, which would allow
    developers to pursue takings claims in Federal court without
    first exhausting their State judicial procedures.
        Current law preempts municipal authority over the siting of
    group homes and preempts a municipality from applying zoning,
    environmental, health and safety standards to railroads. There
    is no question that the most significant impacts of these
    preemptions will be felt at home in our Nation's cities and
    towns through the erosion of local tax bases and through the
    inability to enforce local ordinances enacted for the benefit
    of all who live in our community.
        The time to revitalize our federalist form of government is
    now. The Supreme Court has spoken of the need to recognize that
    freedom in this country is embodied in the creation of two
    governments, Federal and State, and that State and local
    governments are joint participants with the Federal Government
    in our Federal system.
        Members of the Committee, sometimes a more regional or
    local approach to governing is needed, and sometimes the needs
    of the people are better met at local level through the
    enactment, application and preservation of local laws. The
    Federalism Accountability Act would help to restore some
    balance between Federal, State and local governments.
        Let me turn to S. 1214. This bill provides cities
    nationwide with a viable means of alleviating many of the
    problems associated with Federal preemption of local laws. S.
    1214 represents one of the most important efforts to
    fundamentally rethink the nature and relationship of our
    Federal system and to expand the partnership of elected
    government officials. S. 1214 contains several good tools for
    creating this new idea of federalism, which are beneficial to
    cities.
        Section 4 of the bill defines a public official as
    including the representative organization of State and local
    elected officials, those being the national associations of the
    Big Seven, State and local government organizations. This
    inclusion is vital to providing cohesiveness to the
    consultation provision of the bill. It will make it easier to
    get State and local input from these national associations who
    can best represent the views of a cross section of their
    respective membership. It streamlines and simplifies the
    consultation process for all involved.
        Section 5 of the bill requires Senate and House Committees,
    including Conference Committees, to include a statement with
    each Committee or conference report on a bill or joint
    resolution that details the preemptive impact of the
    legislation, gives the reasons for this preemption and explains
    how State or local authority will be maintained following the
    passage of legislation.
        Where there is no Committee or conference report, there
    must be a written statement by the Committee or conference that
    details the level of preemption. This section is critical to
    local governments. So often it is the case that a bill passed
    has severe consequences on our Nation's cities because it
    preempts State and local law. One such example is the Internet
    Tax Freedom Act of 1998. Without a Committee or conference
    report or statement to explain the preemption and the reasons
    behind it, it is impossible for local governments to know
    whether such impacts were even considered by Congress. Under
    this section of the act, local government is assured of such
    deliberation.
        Another very positive and important aspect of this bill is
    contained in the Rules of Construction. It clarifies instances
    of Federal preemption by requiring that the intent to preempt
    be expressly stated in the statute or rule or permitting
    preemption when there is a direct conflict between a Federal,
    State and a statute of local law. This section should not be
    interpreted as a prohibition. To the contrary, this bill
    recognizes that at times preemption is appropriate.
        What this section attempts to do, however, is minimize
    instances where the intent to preempt is not clear, thus
    avoiding expensive and adversarial litigation by limiting a
    court's ability to find that an implied preemption exists. It,
    again, makes the Federal Government accountable for what it
    does, as you stated, Mr. Thompson.
        This section also creates a presumption against preemption
    of State and local law and permits cities to govern by
    requiring that any ambiguity in the act be construed towards
    preserving State and local authority. These rules of
    construction, therefore, are of vital importance to cities.
        Section 7 of the bill spells out several important
    requirements to ensure that State and local public officials
    participate in the Federal agencies' rulemaking process in an
    early and meaningful way. This section directs the heads of
    Federal agencies who are responsible for implementing this act
    to appoint a federalism officer within each agency. The officer
    would execute the provisions of this act and serve as a liaison
    to State and local officials and their representatives, thereby
    providing cities with a definable person who is a point of
    contact in the rulemaking process.
        Section 7 additionally requires that agency heads give
    notice to and consult with State and local elected officials
    and their representative national organizations early in the
    rulemaking process and prior to publication of a Notice of
    Proposed Rulemaking when that rule might interfere with or
    intrude upon historic and traditional rights and
    responsibilities of State and local governments.
        This provision of the bill requires Federal agencies to
    stop, look, listen and think before they leap into the arena of
    preemption. It further provides cities with a much-needed voice
    in their rulemaking process especially when those rules would
    have a direct and potentially debilitating impact on our
    Nation's cities. Most importantly, it is an opportunity for
    local elected officials to work more closely with Federal
    agencies earlier in the rulemaking process.
        This section of the bill furthermore calls for a federalism
    assessment to accompany each proposed, interim final, and final
    rule in the Federal Register and each rule review submitted to
    the Office of Management and Budget, when those rules could
    affect State and local authority. The federalism assessment
    would detail, analyze and attempt to justify the extent of the
    preemption of State or local authority. The assessment would
    describe the extent to which State or local authority would be
    preserved after the rule's enactment. It would additionally
    communicate the agency's efforts to minimize the impact on
    State and local governments and to consult with public
    officials, including the concerns of those officials and the
    extent to which those concerns have been satisfied. Agency
    heads would have to consider these assessments when
    promulgating, implementing and interpreting the relevant rules.
        Last, but certainly not least, Section 9 of the bill
    provides cities with an overall check on the Federal
    Government's preemption activities. It requires the Director of
    the Office of Management and Budget to submit to the director
    of the Congressional Budget Office information describing each
    provision of interim final rules and final rules issued during
    the preceding calendar years that preempts State and local
    government authority. CBO must then submit to the Congress a
    report on preemption through Federal statutes, rules or court
    decisions and legislation reported out of Committee during the
    previous year of the Congress. Again, this extra check will
    help all levels of government track Federal activities dealing
    with preemption and provides information to local governments
    on the critical issues.
        The above provisions taken together provide for a greater
    accountability of our Federal Government. They provide for the
    opportunity for increased input for most directly affected by
    rule or statute, and they provide the opportunity for a more
    meaningful and balanced federalism.
        Thank you, Mr. Chairman and Mr. Voinovich, for allowing me
    to make the statement.
        Chairman Thompson. Thank you very much. Senator Voinovich.
        Senator Voinovich. I have no questions. I think you have
    done a beautiful job of laying it out, both of you. And I could
    not help but think, Mr. Chairman, that we are now considering a
    bill this week, Patient Protection Plus, that has great
    implications in terms of federalism and preemption.
        Several weeks ago, we had another piece of legislation that
    the Chairman and I spent a lot of time talking about, a need
    that was the Juvenile Justice bill, and its implication in
    terms of a preemption. And there is no question that this is a
    topic that is very, very important to the future of this
    country and also to the relationship that we have with our
    partners in State and local government.
        So I just want to say thank you very much for being here.
        Mayor Fekete. Mr. Chairman, may I request that my testimony
    be part of the written record?
        Chairman Thompson. The full statement will be made a part
    of the record. Thank you very much.
        Mayor Fekete. Thank you, sir.
        Chairman Thompson. Senator, your point is really well made.
    The so-called Patients Bill of Rights on the floor would
    basically federalize all of the State laws or supersede all of
    the State laws that now have to do with HMOs. We have gone to
    managed care now. Costs were absolutely out of hand, and we had
    to do something. We went to managed care, and there are a lot
    of things that we are trying to work out.
        But the fact that we are trying to work out the details
    means that we need for States to have the opportunity in the
    non-ERISA plans, to do what they feel like they need to do. And
    Tennessee, North Dakota, and Ohio might have different
    approaches, and some will work better than others. And we can
    do what you are doing on the Y2K thing, look and see what is
    working and what is not working, and what drives up costs, and
    what are the unintended consequences of what we do.
        But we face it every day on something--federalizing crimes
    we have had. Before Senator Voinovich got here, once in a while
    we would have a 99 to 1 vote because it would be--we
    federalized you cannot bring lawsuits against Good Samaritans
    or something. Well, that is a perfectly noble thing, but there
    are State laws already on the books on that. And you look at
    the States on a particular issue, and if some of the States
    have passed a law about it and some have not, the argument up
    here is that, well, we need uniformity. And then if you look at
    another issue and all of the States have passed a law on it,
    they say, well, what is the harm in federalizing it? We have
    already got the laws that say we need it.
        So it is a constant problem, and we really need the
    National Conference of State Legislators and the National
    League of Cities to weigh in on these things because you have a
    voice, you have clout, people listen to you, and I cannot
    overemphasize how important it is for you all to stay on the
    job and help us when these things get to the floor and when we
    bring them up to get them out of Committee and so forth to
    really weigh in because people do listen to what you have to
    say on these issues.
        And I want to thank you again. I know you have been
    inconvenienced greatly, but it is a very worthwhile cause, as
    you have well stated. So thank you very much for being with us.
        Mayor Fekete. Thank you very much.
        Chairman Thompson. Let us ask Ernest Gellhorn, professor of
    law, George Mason University, and Caleb Nelson, associate
    professor of law, University of Virginia, and Rena Steinzor,
    associate professor of law, University of Maryland.
        Ladies and gentlemen, we apologize for the lateness of the
    hour. It could not be avoided today, but we really appreciate
    your bearing with us.
        Mr. Gellhorn, would you like to proceed? Your full
    statements will be made part of the record. You have heard, I
    think most of you have heard what has been going on here today.
    And any comments or points that you feel like are especially
    noteworthy to be made from all of this, feel free to summarize
    those for us.

    TESTIMONY OF ERNEST GELLHORN,\1\ PROFESSOR OF LAW, GEORGE MASON
                               UNIVERSITY

        Mr. Gellhorn. Thank you for the opportunity of appearing
    before you. I will focus my remarks, Mr. Chairman, on Section 7
    of the bill, which relates to how agencies would implement it.
    The bill really has two components. One is the Federal
    preemption component, which I am not addressing, and the second
    focuses more on federalism assessment, which I will discuss.
    What is the impact of the proposed rule on States and local
    governments? This is an important topic because the estimate of
    the impact of Federal regulations on State and local economies
    exceeds half a trillion dollars a year. So we are talking about
    something that is not only important in terms of its impact,
    but also is basically common-sense legislation.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Gellhorn appears in the Appendix
    on page 355.
    ---------------------------------------------------------------------------
        S. 1214 covers three things: First, before an agency adopts
    a rule, the bill requires that the agency talk to the local and
    State Government and local individuals who will be affected by
    the rule and get their input. Second, S. 1214 also requires
    that before a rule is adopted the agency must make an
    assessment of the local effects. Third, the agency must explain
    how it has taken the assessment into account. The results
    should be more rational rules that are consistent rules with
    the legislative intent.
        Now, the alternative proposed by the administration of
    adopting an Executive Order is not meaningful. We have already
    seen that the existing Executive Order has not really been
    followed so something more is required. In addition, there is
    another problem, and that is the Executive Order does not apply
    to independent agencies because of a concern expressed,
    apparently, by the President as to whether or not orders can
    reach the independent agencies. I happen to think they can, but
    they have not chosen to do so. So under the Executive Order
    alternative, a significant area of its potential regulation
    would not be reached by the federalism requirement.
        The issue that I would call to your attention, where I
    think additional effort should be given, is to the provisions
    for judicial review. There is not any in the bill, and as a
    consequence, the Administrative Procedure Act's judicial review
    standards would apply. If an agency does not follow all of the
    procedural requirements, the rule could be stricken under
    Section 706(2)(D) of the Administrative Procedure Act. That is,
    a challenge could be brought that not each aspect of the law
    has been followed, allowing for a challenge under 706(2)(C) of
    the Administrative Procedure Act. Finally, a challenge made to
    the agency rule as to whether or not the rule is arbitrary and
    capricious for a failure to comply with the assessment
    requirement.
        I believe that this broad approach to judicial review
    should be cut back. Instead, the judicial review provisions,
    such as set forth in S. 981 that was before this Committee in
    the last Congress or that is in the Unfunded Mandates
    legislation, be applied. Indeed, I think there is a parallel
    between those bills and acts and this bill because under S.
    981, the agencies would take into account the costs and
    benefits of regulation and consider them. That is the very same
    thing here. It urges agencies to take into account the
    federalism aspects of every proposed rule and consider them.
        There is another thing I do want to emphasize, particularly
    because of some additional testimony that will be provided, I
    think this bill is neither pro-regulation or anti-regulation.
    What it is, it is a plea for sensible regulation. It says,
    ``Look before you leap.'' Take into account what the rule is
    likely to do. And that, it seems to me, is sensible whether you
    are adopting more regulations, fewer regulations, intensifying
    them or deregulating.
        Finally, I would suggest to this Committee that it is
    perhaps time to engage in an assessment of regulatory
    assessments and impacts. This is the eighth area in which
    either Congress or the President has said to the agencies:
    Analyze what you are doing. I think that many of these
    requirements make sense. But, of course, there is at some
    point, analytical paralysis.
        Chairman Thompson. We do enough assessments to where we
    come to an assessment of the assessment.
        Mr. Gellhorn. I think that is exactly right, Senator, and
    that is the way I think one ought to put it.
        Indeed, if you put all assesstment requirements together,
    you could accomplish a couple of things. One is, it seems to
    me, you might find out that some are not necessary. But the
    more important point is you would put in one place for the
    agencies to look at the assessments that they ought to
    undertake.
        Right now, they have eight different assessment
    requirements that agencies must comply with. They are all
    different; they have requirements that are not always clear;
    and the agencies aren't certain how to comply. You could have a
    single process for engaging a regulatory impact assessment,
    simplify the process, and reduce the number of laws on the
    books.
        Thank you.
        Chairman Thompson. Thank you very much. Professor Nelson.

     TESTIMONY OF CALEB E. NELSON,\1\ ASSOCIATE PROFESSOR OF LAW,
                  UNIVERSITY OF VIRGINIA SCHOOL OF LAW

        Mr. Nelson. Mr. Chairman and Members of the Committee,
    thank you for the opportunity to speak with you today about
    Federal preemption of State law. My testimony will focus on the
    rules of construction that courts currently apply to determine
    the preemptive effect of Federal statutes, a subject that is
    relevant to Section 6 of S. 1214. I will make my remarks brief.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Nelson appears in the Appendix on
    page 365.
    ---------------------------------------------------------------------------
        My views on Section 6 are summarized in the written
    statement that I would ask to be made a part of the record.
        Chairman Thompson. All statements will be made part of the
    record.
        Mr. Nelson. Thank you, Mr. Chairman.
        Mr. Chairman, as you mentioned in your introductory
    remarks, the preemptive effect of any particular Federal
    statute is a matter of statutory interpretation. But the rules
    of construction that courts currently use in preemption cases
    risk making judges too quick to infer broad preemption clauses.
        Suppose that a Federal statute does not contain an express
    preemption clause. The statute will still have preemptive
    effects. It will unquestionably displace whatever State law its
    substantive provisions contradict.
        But the Supreme Court has said that, in addition, the
    statute will be read to preempt State law that, ``Stands as an
    obstacle to the accomplishment and execution of the full
    purposes and objectives of Congress.'' In effect, then, the
    courts read every Federal statute that does not expressly
    address preemption as if it implied the following preemption
    clause: ``No State may enact or enforce any law or policy to
    the extent that such law or policy stands as an obstacle to the
    accomplishment and execution of the full purposes and
    objectives behind this statute.''
        Imagine what would happen if a proposed bill actually
    contained such a preemption clause. I suspect that many members
    of Congress would find the clause both too vague and too broad.
        First, the clause is too vague. In the absence of careful
    statutory specification of exactly what ``purposes and
    objectives'' the clause is referring to, it seems likely to
    lead to unpredictable results as a test for preemption. Many
    statutes will be the products of compromise. Members of
    Congress who want to pursue one set of purposes will have
    agreed on language that is acceptable to members of Congress
    who want to pursue a different set of purposes. Both sets of
    purposes will have shaped the statute, but they will have very
    different implications, quite possibly, for State law. Simply
    telling courts to base preemption decisions on the full
    purposes and objectives of Congress does not seem to provide
    much guidance.
        Second, the clause is too broad. Even if all members of
    Congress can agree on the full purposes and objectives behind a
    particular Federal statute, they may not want to displace all
    State law that makes achieving those purposes more difficult.
    As the Supreme Court itself has acknowledged in other contexts,
    ``no legislation pursues its purposes at all costs,'' and ``it
    frustrates rather than effectuates legislative intent
    simplistically to assume that whatever furthers the statute's
    primary objective must be the law.''
        This is particularly true in preemption cases. Our Federal
    system is premised on the assumption that Congress will not
    pursue Federal interests to the total exclusion of State
    interests. One of the principal safeguards on which the
    Constitution relies to protect State authority is the simple
    fact that members of Congress come from the States. In many
    contexts, Congress will hesitate to pursue Federal purposes at
    the expense of State policies that in the judgment of the
    relevant State authorities serve worthwhile interests in their
    own right.
        Chairman Thompson. If we were still appointed by State
    legislatures, we would not have this problem. [Laughter.]
        Mr. Nelson. The Seventeenth Amendment may, indeed, have
    affected that calculus. Of course, there still is a process for
    State constituencies to hold members of Congress accountable,
    and therefore members of Congress continue to take State
    interests into account to a degree that I think the Court's
    current tests for preemption fail to recognize. I think that
    the Court's current rules of construction make judges too quick
    to infer preemption clauses--to infer preemption clauses that
    members of Congress might well have rejected if they had
    actually come before them.
        In recognition of this problem, S. 1214 seeks to establish
    new ground rules for the interpretation of Federal statutes, so
    that the courts are working off the same page as Congress. As I
    understand Section 6(a), it would tell courts not to read broad
    obstacle preemption clauses into new Federal statutes. When
    Congress enacts a statute that does not expressly address
    preemption, the statute would preempt all State law that is in
    ``direct conflict'' with it, but not State law that merely
    hinders the accomplishment of the full purposes and objectives
    behind it.
        Of course, if Congress wants a particular Federal statute
    to include an obstacle preemption clause, it is free to enact
    one. Congress is already familiar with such provisions. At
    least one Federal statute includes an express obstacle
    preemption clause. But Federal statutes enacted after the
    effective date of S. 1214 would no longer be deemed to
    establish such provisions by default.
        In the absence of a deliberate decision by Congress to
    preempt all State law that stands in the way of Federal
    purposes, courts would not try to reconstruct those purposes
    under the assumption that Congress wanted to pursue them at all
    costs. In sum, Section 6 would restrain the court's tendency to
    infer preemption clauses that Federal statutes do not actually
    establish.
        My written testimony discusses Section 6 in more detail.
    But overall, I think that the rule of construction set out in
    S. 1214, and particularly the rule of construction set out in
    Section 6(a), would be an improvement upon the rules of
    construction that the courts currently apply in preemption
    cases.
        I appreciate the opportunity to present these views. Thank
    you very much.
        Chairman Thompson. Thank you very much. Professor Steinzor.

    TESTIMONY OF RENA STEINZOR,\1\ ASSOCIATE PROFESSOR, UNIVERSITY
                       OF MARYLAND SCHOOL OF LAW

        Ms. Steinzor. Mr. Chairman and Senator Voinovich, I
    appreciate the opportunity to testify before you today. I feel
    a little bit like the skunk at the picnic because I think I am
    the only witness who has some serious doubts about the wisdom
    of this bill. So taking my courage in hand, I will forge on
    ahead.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Steinzor appears in the Appendix
    on page 381.
    ---------------------------------------------------------------------------
        Just as State and local governments tell you that one-size-
    fits-all regulation does not work for them, I suggest to you
    that one-size-fits-all devolution is not a solution here. I was
    listening earlier to the other panel that was talking about the
    concerns that prompted this legislation, and it seems that
    certain tax policies having to do with the Internet that are
    upsetting people and that I am certainly not qualified to
    comment on. You also mentioned two additional examples of
    legislation that were on the floor of the Senate recently.
    Because I teach environmental law I am here to focus on health
    and safety regulation.
        I want to give you an example of a legislative approach
    that worked very well and suggest to you that it would be, in
    the long run, a more productive way for you to go about getting
    the Federal Government in check, making it listen to State and
    local governments and come up with a balanced compromise. That
    example is the Safe Drinking Water Act amendments that you
    passed 2 years ago.
        To State and local governments, environmental laws were the
    major complaint they had. I did a study of the debate on the
    floor on Unfunded Mandates Reform Act. EPA was clearly the
    unacknowledged poster child of that debate, and two-thirds of
    the complaints, roughly, were about statutes like the Safe
    Drinking Water Act and the Clean Water Act. In response to
    these complaints, you got about the hard business of sitting
    down, rewriting that law, having everyone come up and talk to
    you about it, factoring everybody's concerns into the
    democratic process, and you came out with a new law just 2
    years ago that EPA is now in the process of implementing.
        That law will address, as best as our democratic process
    can address, the concerns of State and local governments. There
    will still be some people that are dissatisfied with the
    regulations that the agency comes up with, but that
    dissatisfaction certainly is not the result of any shortcomings
    in your efforts to be responsive to those constituents. So, I
    would suggest to you, that model is the one we need to follow
    here.
        As my colleague, Professor Galston, of the University of
    Maryland told you just recently when he testified before you,
    our system of government is based on the brilliant idea that
    supreme political authority does not reside in any one level of
    government, but is shared among them and is ultimately the
    people's to hold. There has to be a constant renegotiation of
    the balance of power between the three levels of government,
    and there just is no silver bullet, no shortcut around those
    negotiations, which must involve detailed, careful
    consideration in the context of the specific issues.
        So I would urge you to consider that ultimately you can
    provide for all of the assessments in the world, but none of it
    is going to mean as much as returning to the laws causing the
    most friction and having the debate fully and honestly in the
    House and the Senate to decide what the Federal Government
    policy should be.
        In the time I have left, and I know it is the end of the
    day and everybody is a little tired now, I would like to
    address some of the ambiguities in the bill that I hope you
    would address. And like my colleague, Professor Gellhorn, I
    wholeheartedly support the recommendation that you apply the
    judicial review provisions of, for example, the Unfunded
    Mandates Reform Act.
        I am going to focus on Section 7, which contains the
    provisions that deal with how the agencies do their business.
    Section 7, as you know, requires that the agencies notify,
    consult with and provide an opportunity for meaningful
    participation by public officials potentially affected by a
    rule. It covers proposed, interim final, and final rules.
    Federalism assessments must be considered in all decisions
    regarding a rule.
        Well, first, I need to correct a small mistake I made in my
    written testimony. I had said that approximately 4,000 minor
    rules might be affected. Speaking to Mr. Copeland of GAO
    earlier, I learned that the actual number is 8,000. I would be
    happy to provide the figures for the record, and I would like
    an opportunity to correct my testimony. This bill would apply
    to all of them.
        The Unfunded Mandates Reform Act, in contrast, only applies
    to about 30 to 50 a year. Now, maybe you do not want that small
    a universe. But somewhere along the continuum, I would suggest
    to you is a better place to draw lines than at 8,000 rules.
        In EPA's case, just as an example, this additional workload
    could easily break the straw of what is already a sagging
    camel's back. The agency is now functioning with a budget that
    is a mere 15 percent higher in real dollars than it was in
    1985, before the passage of a dozen major new rules, including
    the 1990 Clean Air Act amendments. And it really is no accident
    that we love to hate a Federal bureaucracy that can never
    accomplish what you tell them to do. And, again, these budget
    realities argue for going back and revisiting some of those
    laws and trimming out some of the underbrush.
        Finally, I would urge you to just consider what it is going
    to mean if people bring agencies to court because they failed
    to find each and every elected official who was potentially
    affected by the rule. This bill would exclude the professional
    administrators that are relied on in highly technical areas
    like environmental protection. You would not be hearing from
    the State environment commissioners nor the experts that run
    the programs. You would be hearing from elected officials only.
        Would consulting with the staff of the National League of
    Cities be adequate? What if a handful of local officials from a
    group of cities that are not members of the League decided that
    they really dislike a rule and go to court arguing that the
    League staff failed to adequately represent their interests? In
    another life, I worked closely with the National League of
    Cities, and I know that such satisfaction is a really common
    occurrence. You cannot make all of the people happy all of the
    time. You cannot tailor legislation to fit every local
    circumstance.
        So I would really urge you to consider being clearer in the
    language so that we do not end up with what Professor Thomas
    McGarity, in his usual very astute way, calls further
    ``ossification'' of the rulemaking process, or the endless
    procedural requirements that make it very difficult for the
    agencies to fulfill their mandates. Laboring under such a
    burden, they cannot do what you want them to do and reinvent
    themselves, as everybody is demanding.
        I ended my testimony with a quote from D.C. Circuit Chief
    Judge Patricia Wald, who said in a speech a couple of years ago
    that all of these procedural requirements that you are asking
    the courts to administer, in essence, will put them in a
    ``checklist'' mode rather than a ``safety-value'' mode, where
    they are trying to focus on catching agency decisions that, on
    the merits, are just very bad. If they are required to deal
    with all of these elaborate requirements, you may get a
    different quality of decision than you really intended to get.
    And, again, I think that Professor Gellhorn's suggestion
    regarding judicial review is a good one.
        Thank you.
        Chairman Thompson. Thank you very much.
        You brought my attention to something that occurred to me
    earlier on. I had made a pledge to myself that I would never
    use the word ``meaningful'' in any context, in any statement,
    or be a part of any legislation that had it in it, and I am
    going to try to do something about that. [Laughter.]
        Ms. Steinzor. You can see how the courts would react.
        Chairman Thompson. Well, I mean, even in any context. I
    think it is the worst-used word in the American language right
    now, and we can do better than that.
        I do think that it is a valid point, though, on some of the
    points that you make, which all are very good ones, to remember
    that this is not a devolution bill. This does not come down on
    the side of devolving or not or regulating or not or preempting
    or not. All it does is try to set the ground rules for when
    Congress is silent. Congress needs, I think, to address these
    issues more.
        You were talking about the Clean Air Act, Congress sat down
    and decided what they said, ``We are trying to do too much up
    here, too much of the wrong things. Let us give the States more
    authority in these areas.'' That was a conscious decision. So I
    do not think that is what we are trying to do here. We are
    trying to require Congress to face up to those decisions and to
    give the agencies and the courts some guidance as to when
    Congress chooses not to, what the presumption is going from
    presumption toward preemption, perhaps, to one that is not.
        The problem, I mean, the point--I have been concerned about
    putting regulation on top of regulation, and to what extent
    that maybe we are doing that sometimes. And these things
    wouldn't be a problem if some of these agencies were doing what
    they were supposed to. It is not like this consideration of
    complexity and checklists is in a vacuum. It is in response to
    another problem, and we are trying to balance all of that out.
    And we are expending resources, and it does take some time. But
    the same price--on the other hand, we are saying, the President
    is saying in an Executive Order, that they ought to be doing
    these things anyway.
        So it really points out the fallacious nature of the
    Executive Order. Because we say, on the one hand, in the
    Executive Order we ought to be doing all of these things, but
    on the other hand, we are saying we really cannot because it is
    costing resources, and we are overburdened. So that is what we
    are trying to get around here.
        Ms. Steinzor. May I?
        Chairman Thompson. Yes, ma'am.
        Ms. Steinzor. First of all, I think you are having more of
    an influence than you realize. I spent the summer studying what
    EPA is doing to devolve its programs, and it is in constant
    consultation with State officials, it has task forces, it is
    listening to them very carefully.
        The concern I have is the unintended consequences. I read
    an article that was published just a few months back that
    basically advised anyone who did not like a Federal
    environmental regulation how to nail it. And one of the major
    examples was the judicial review provisions of the Unfunded
    Mandates Reform Act. The article urged people to bring such
    challenges. Now, I think that is not wrong legal advice. I
    think that is a very carefully drawn bill. But what I am
    worried about is that you make a decision, you the Congress,
    you tell the agencies to go off and do something, and then
    someone who still has their nose out of joint gets to go
    running off to court.
        Chairman Thompson. But do you know what the sanction is for
    them not doing a proper assessment under the Unfunded Mandates
    Reform Act? Making them do it, going back and making them do
    what they were supposed to do to start with. It does not defeat
    the rule. It does not overturn the rule, even if they do not do
    it.
        I would think if that was a concern and I was a part of the
    Executive Branch, and I was in OIRA, for example, I would say,
    ``Look, we need to do what we say that we are doing.'' That is
    the real solution. That is the way to try to avoid this, not
    fall down on our job and then be critical of those who were
    trying to come in and make us do what we say that we want to do
    anyway. But I get your point. I understand what you are saying.
    I think it is a proper balance that we are trying to reach
    here.
        Mr. Nelson, the first of your comments are somewhat in a
    different direction it seems to me like than Mr. Moss. He was
    saying here is a review of the cases that indicate that the
    courts require--I wrote down--that require clear evidence that
    Congress intended to preempt before the Court will preempt.
        And then I read your testimony here, and I see in the areas
    of labor law, Customs, Clean Water Act, patent copyright, and
    all of that, where you believe that even though there has been
    some recent adjustment maybe that if Congress is silent on is
    just kind of jump ball, and there is no telling where the Court
    is going to come out. They try to determine congressional
    objectives, and national purposes and all of that.
        So I take it, he says that it is not that much of a
    problem, courts are restrained. You do not see that much
    restraint with regard to the courts, I take it.
        Mr. Nelson. I think preemption jurisprudence, in general,
    is just a muddle. I think it is common for courts to invoke a
    so-called presumption against preemption. Although there is a
    recent Eleventh Circuit case in which the court says there is
    no presumption against implied preemption, against obstacle
    preemption. So I think the lower courts are a little bit
    confused, despite some suggestions that there is such a
    presumption.
        Even if the courts apply a presumption against preemption,
    they are doing so in the context of a very broad test for
    obstacle preemption, where Federal statutes are read to include
    a clause that I think most members of Congress would just
    consider too vague and too broad to include expressly in any
    piece of legislation, a clause that says that State law is
    preempted to the extent it gets in the way of the full purposes
    and objectives of this statute. I think that is something that
    just is bound to lead to a muddle.
        And if you look--looking at law reviews is a hazardous
    business, but I think the academic commentators who have
    addressed preemption agree that the jurisprudence is currently
    pretty chaotic. They tend to focus on preemption in particular
    areas of the law, but when they do so, they use the words
    ``chaos'' or ``awful mess'' or ``wildly confused lower court
    rulings.''
        Now, I think when a doctrine causes such problems in area
    after area, it is time at least to think about whether the
    unifying doctrine that the courts apply to preemption
    jurisprudence is just unworkable.
        Chairman Thompson. You mentioned the problem with the
    courts trying to determine the common purpose or the common
    objective when different members of Congress have different
    purposes and objectives. But it occurred to me that in more
    cases than not, with regard to not necessarily the subject, the
    subject of the legislation is one issue and what the common
    objective was there, if any. But with regard to the question of
    preemption, there was probably no purpose--it was not a matter
    conflicting purpose--it was not thought of. My guess is that in
    most cases this never occurred to anybody, unless there was an
    obvious situation. And if it is an obvious conflict, then that
    really kind of solves the problem to a certain extent.
        But do you think that is a fair assessment?
        Mr. Nelson. Mr. Chairman, I think that is a fair
    assessment, and I think the Supreme Court acknowledges as much
    in some of its cases. In labor cases, for instance, the Court
    has said, more or less, we know that Congress did not think
    about this, we know it did not have any intent. We are going to
    reconstruct what we think it might have wanted to do.
        Chairman Thompson. What we think it should have been.
        Mr. Nelson. Very close to the same thing, yes. Yes, Mr.
    Chairman.
        I would say one thing, with respect to Mr. Moss's
    testimony. The case of Gibbons versus Ogden from 1824 is, I
    would say, an example of a ``direct conflict.'' I am not sure
    that it would fall under S. 1214. There you had a Federal
    statute that, at least as construed by the Supreme Court, said,
    Ships that have Federal licenses can engage in the coasting
    trade. A New York statute said, Certain types of ships that
    have Federal licenses--in particular, among other ships, is
    steamboats--cannot engage in a particular aspect of the
    coasting trade, ferrying passengers from one place to another
    place.
        That seems like a ``direct conflict'' where the Federal
    statute is saying these ships can do this, and the State law is
    saying no, they cannot. It seems an example that, perhaps, does
    not show that the sky would fall under S. 1214.
        Chairman Thompson. That is a good point. Senator Voinovich.
        Senator Voinovich. First of all, Professor Gellhorn, thank
    you for your suggestion that we ought to look at the language
    of S. 981 in terms of these provisions of judicial review.
        I also was interested, you talked about eight different
    assessments that are going on and that perhaps there are eight
    different assessments required today and that you think that
    perhaps they could be combined in some way to expedite it?
    Would you comment on that?
        Mr. Gellhorn. They range from family values to civil
    justice reform, to tribal governments, to federalism, to
    unfunded mandates, to small business impacts, etc. And it seems
    to me that rather than forcing the agencies to look at each
    separate Executive Order or each separate statute to find out
    what is required, it would be sensible to put that all in one
    assessment requirement imposed upon the agencies--that is, one
    procedure for engaging in the assessments, one process for
    identifying notification, one process setting forth for how the
    agencies should consider the results of their studies, and one
    similar process for judicial review.
        Having eight different patterns out there is likely to lead
    to confusion. Indeed, I think it is, in part, the reason that
    the agencies are not making the required evaluation in every
    instance. The courts are not always applying it. And that that
    ultimately perhaps does create a burden that is unnecessary. So
    I would suggest that is a simplification.
        Senator Voinovich. I would like to find out more about your
    thoughts on that, and how this fits in with what we are doing
    right here. Because that seems to make a lot of sense to me.
        Mr. Gellhorn. I am happy to do so. I have been working with
    your staff.
        Senator Voinovich. Whether it would be germane to what we
    are doing here, Mr. Chairman, or not, I do not know, but I
    would sure like to find out more about it.
        I was also interested in your testimony about safe drinking
    water because I was very much involved in that. In fact, I was
    at the White House when the President signed the bill. And we
    started out on that legislation, I recall when no one said we
    would get it done because the environmentalists I recall being
    accused of wanting to poison the water and everything else. But
    we worked at it.
        And I am interested in your reference to that and how it
    fits in with what we are doing here. Was it the process that
    went into that, where everybody was together and that is the
    way we should get things done or was there some specific aspect
    of Safe Drinking Water that you are honing in on, and I am--
    perhaps that portion of it that dealt with the cost benefit
    process that you go through to determine whether a reg should
    be carried out or not?
        Ms. Steinzor. I was making the first point, which is the
    broader one, that in 1986--and I know you were very actively
    involved in the debate--you passed a law, not so long ago. And
    then as people started to implement it, some people became very
    distressed and came back to you. And in 1996, through this very
    arduous debate--you rewrote the whole thing.
        And that is what I am suggesting, that there really is not
    any replacement for that; that if people are disturbed in the
    environmental area about the way that all of these programs are
    working, then the solution is to get back at the organic
    statutes, the authorizing statutes, and work it out with the
    ultimate compromise that nobody completely ``wins.'' It was
    really the perfect melding of all of the different interests,
    and it was very hard work.
        I mean, the 1990 Clean Air Act amendments, for people who
    were not here, Senator Mitchell sat in a small room off the
    Capitol for hours and hours negotiating changes with his
    colleagues.
        Senator Voinovich. But the fact is that process that you
    are talking about does not really help us with the myriad of
    regulations that are being passed and legislation in terms of
    whether it is preempting State law or not preempting.
        Ms. Steinzor. No. What I am concerned about, to be real
    clear about it, is that you tell EPA to go off and do some
    regulations after having gone through this big arduous process.
    There are still some people that are not happy about what the
    1996 amendment said. You tell EPA to go off and do their
    regulations. Those same people that are not satisfied with the
    compromises and your decisions come in and start complaining to
    the agency.
        And then if you are not careful in a bill like this, this
    becomes a tool to be used to stop all of those regulations that
    you told them to do, and they never get around to eliminating
    doing the things that I would agree they need to do; cut out
    the underbrush of their excessive regulations, reinvent the way
    they do business, give local and State Governments more
    flexibility. A couple of court decisions, and they are frozen,
    and frozen agencies are not any more effective than unduly
    activist ones.
        Senator Voinovich. Well, I can tell you I, for years, have
    participated as a mayor and as a governor in a lot of exercises
    with Federal agencies, and in all due respect, so often they go
    through the motions, and that is about the extent of it. And
    that has been very, very discouraging over the years.
        I do think, though, that the point you make in terms of the
    meaningful participation and clarifying what that means is
    pretty doggone important, so that you don't end up with a lot
    of controversy about that. It ought to be pretty specific, Mr.
    Chairman, I think, in order to avoid, first of all, someone
    claiming it would be arbitrary and capricious, and second of
    all, just so the agencies understand what that actually means
    and the people that are supposed to be listening to it
    understand what that means and know more than what that means.
        Chairman Thompson. The Senate might say it means whatever
    it means in the Executive Order.
        Mr. Gellhorn. Well, I think you can avoid the problem if
    you have a more limited judicial review. Because the question
    of who gets notified would not be subject to judicial review
    under the more narrow approach. That is exactly the kind of
    question that ought not to be examined in the court, as long as
    there has been some attempt, a serious, reasonable attempt, to
    reach out, whether they have a contact with every State or five
    States, it seems to me not to be something that a court ought
    to wrangle with.
        Chairman Thompson. Yes, I was interested in your comments
    along those lines, too, and perhaps using the Regulatory
    Improvement Act as an example, where it is you are required to
    do it, but it goes into the entire rule, and you look at the
    rule to see whether or not it is arbitrary and capricious. That
    is a little different though than the unfunded mandates because
    I do not think there is really any sanction. If they do not do
    it, you cannot invalidate the rule I think under that act. I
    think regulatory improvement is probably a better example
    there.
        But that is something that we ought to look at because we
    are not interested in buying a whole lot of new lawsuits, even
    though I think the bigger potential question does have to do
    with the opportunity of meaningful participation and all of
    that. I think that that needs to be a little more specific. But
    on the others, as I indicated a while ago, it is more of a
    requirement to make a description or an analysis or the extent
    of which it does not go into the validity of the rule itself.
    It is just asking the agency, telling the agencies to describe
    what is going on. And so it is, you can still, I mean, anybody
    can file a lawsuit, I guess, but you are not going to hold up
    or defeat an agency rule if they are doing halfway what they
    are supposed to be doing, I think, in that regard.
        Senator Voinovich. Mr. Chairman, one point that is
    interesting is that I periodically look at the Unfunded Mandate
    Relief legislation to ascertain whether or not it is doing any
    good. And in terms of regulations, it is not doing much good at
    all.
        But just the fact that you have the point of order, it is
    amazing the impact that that has had on agencies coming forward
    with the things that might be interpreted as unfunded mandates.
        So somewhere along the line, although it is restricted to,
    what is it, $100 million? It said there is a certain amount of
    dollars.
        Mr. Gellhorn. $100 million.
        Senator Voinovich. Yes, that is involved; that that reduces
    the area covered. The fact that I think it is CBO is reviewing
    this has really made a difference, and it kind of, it is
    comforting to know that the thing is working.
        Mr. Gellhorn. Well, I think you make a very important
    point, and that is that one of the purposes behind this bill is
    to get the agencies to think a little differently, to pay
    attention to this. It is sort of an intellectual discipline.
    But it seems to me also that without any judicial review, which
    is what the administration spokesman suggests, it becomes
    meaningless because there is no discipline, and we have already
    seen now several years of inactive response to that kind of----
        Chairman Thompson. My guess is they probably know that that
    horse is out of the barn.
        Mr. Gellhorn. I think that is right. In fact, they said it
    by saying they would approve a targeted approach. So I thought
    the signal was rather strong.
        Chairman Thompson. I think so. I think we ought to be able
    to get that done.
        Do you have anything further, Senator?
        Senator Voinovich. No.
        Chairman Thompson. Thank you very, very much. We really
    appreciate you being here with us and waiting until this late
    hour. But your analysis and your written statements are
    extremely helpful to us. And we look forward to working with
    you further.
        We are adjourned.
        [Whereupon, at 5:41 p.m., the Committee was adjourned.]

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