[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
               UNFUNDED MANDATES AND REGULATORY OVERREACH

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

                                HEARING

                               before the

                SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
                POLICY, INTERGOVERNMENTAL RELATIONS AND
                           PROCUREMENT REFORM

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 15, 2011

                               __________

                            Serial No. 112-2

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

   Subcommittee on Technology, Information Policy, Intergovernmental 
                    Relations and Procurement Reform

                   JAMES LANKFORD, Oklahoma, Chairman
MIKE KELLY, Pennsylvania, Vice       GERALD E. CONNOLLY, Virginia, 
    Chairman                             Ranking Minority Member
JASON CHAFFETZ, Utah                 CHRISTOPHER S. MURPHY, Connecticut
TIM WALBERG, Michigan                STEPHEN F. LYNCH, Massachusetts
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
PATRICK MEEHAN, Pennsylvania
BLAKE FARENTHOLD, Texas


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 15, 2011................................     1
Statement of:
    Dudley, Susan E., the George Washington University Regulatory 
      Studies Center; Mayor Patrice Douglas, city of Edmond, OK; 
      Denise M. Fantone, Director, Strategic Issues, U.S. 
      Government Accountability Office; and Anthony H. Griffin, 
      county executive, Office of the Country Executive, county 
      of Fairfax, VA.............................................    11
        Douglas, Mayor Patrice...................................    22
        Dudley, Susan E..........................................    11
        Fantone, Denise M........................................    31
        Griffin, Anthony H.......................................    50
Letters, statements, etc., submitted for the record by:
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............     8
    Douglas, Mayor Patrice, city of Edmond, OK, prepared 
      statement of...............................................    24
    Dudley, Susan E., the George Washington University Regulatory 
      Studies Center, prepared statement of......................    14
    Fantone, Denise M., Director, Strategic Issues, U.S. 
      Government Accountability Office, prepared statement of....    33
    Griffin, Anthony H., county executive, Office of the Country 
      Executive, county of Fairfax, VA, prepared statement of....    52
    Lankford, Hon. James, a Representative in Congress from the 
      State of Oklahoma, prepared statement of...................     4


               UNFUNDED MANDATES AND REGULATORY OVERREACH

                              ----------                              


                      WEDNESDAY, FEBRUARY 15, 2011

                  House of Representatives,
   Subcommittee on Technology, Information Policy, 
      Intergovernmental Relations, and Procurement 
                                            Reform,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:32 a.m., in 
room 2203, Rayburn House Office Building, Hon. James Lankford 
(chairman of the subcommittee) presiding.
    Present: Representatives Lankford, Kelly, Chaffetz, 
Walberg, Labrador, Meehan, Issa, Connolly, Lynch, Speier, and 
Cummings.
    Staff present: Ali Ahmad, deputy press secretary; Michael 
R. Bebeau, assistant clerk; Robert Borden, general counsel; 
Molly Boyl, parliamentarian; John Cuaderes, deputy staff 
director; Gwen D'Luzansky, assistant clerk; Adam P. Fromm, 
director of Member liaison and floor operations; Linda Good, 
chief clerk; Frederick Hill, director of communications; Ryan 
Little, manager of floor operations; Justin LoFranco, press 
assistant; Kristina M. Moore, senior counsel; Kristin L. 
Nelson, professional staff member; Laura L. Rush, deputy chief 
clerk; Peter Warren, policy director; Krista Boyd, minority 
counsel; William Miles, minority professional staff member; and 
Suzanne Sachsman Grooms, minority chief counsel.
    Mr. Lankford. I'd like to begin this hearing by stating the 
Oversight and Government Reform Committee's mission statement, 
is what we will be doing in all of our different committee 
meetings. We exist to secure two fundamental principles: first, 
Americans have the right to know that the money in Washington 
comes from them, that is coming from them to Washington is well 
spent, and, second, Americans deserve an efficient, effective 
government that works for them. Our duty on the Oversight and 
Government Reform Committee is to protect these rights.
    Our solemn responsibility is to hold government accountable 
to the taxpayers, because taxpayers do have the right to know 
what they get from their government. We will work tirelessly in 
partnership with citizen watchdogs to deliver the facts to the 
American people and bring genuine reform to the Federal 
bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    This is the first committee meeting of the Subcommittee on 
Technology, Information Policy, Intergovernmental Relations, 
and Procurement Reform. We have an impressively long title, I 
know, for everyone. This hearing will focus on unfunded 
mandates and regulatory overreach.
    Since the founding of our Nation, the Federal Government 
has had to balance its own authority with that of the States, 
counties, and cities. While each has a unique responsibility to 
serve their constituents, they also have had to operate within 
their limitations, both budgetary and statutory. However, 
lately we have seen where dedicated, and probably well-
intentioned, government staff can move from serving people to 
mandating their preferences and priorities to an agency or 
legislative body onto people.
    In the modern regulatory environment, the probability that 
the Federal Government will overstep its clearly defined 
constitutional boundaries to impose its preferences on State 
and local leaders has become increasingly likely. With 
apparently little check and balance, Federal regulators can 
dramatically affect the budgets and staff structure of State 
and local governments.
    Many State and local governments face severe budgetary 
shortfalls that threaten their ability to perform basic 
services. Private businesses are struggling against numerous 
impediments to job creation. Quite frankly, they are all 
hurting.
    The preferences of a regulatory agency should not determine 
the budget or priorities of a State or local leader. While we 
are not addressing the issue of private business mandates 
today, I would also contend there is a significant 
responsibility of the Federal Government to restrain its 
regulatory power to areas that are clearly constitutional in 
scope and that are not redundant of State or local laws, codes 
or enforcement.
    I hear too many stories to recount where a Federal 
regulation can cost a business millions of dollars, with little 
or no opportunity of recourse or reversal of the matter.
    When the government enacts a statute or issues a regulation 
mandating that a State or local government, or private sector 
entity perform certain actions, but fails to provide the funds 
needed to perform the actions, it has issued an unfunded 
mandate.
    The Unfunded Mandates Reform Act of 1995 [UMRA], as you 
will probably hear it referred to several times today, was 
originally enacted to minimize the burden of unfunded mandates. 
This act sought to limit the growth of unfunded mandates by 
explicitly defining them and by creating a congressional point 
of order that could be used to help prevent the enactment of 
legislation creating them. However, multiple agencies and 
actions were excluded from UMRA and the definition of an 
unfunded mandate it established has come under criticism.
    This hearing today seeks to determine the effectiveness of 
UMRA. It is intended to focus on Title II of UMRA, which 
concerns the unfunded mandates handed down by the executive 
branch in the form of new rules and regulations.
    While the Unfunded Mandates Reform Act has a great name, it 
has limited reach because of its inapplicability to many 
regulatory actions. For instance, most rules issued to 
implement one of the major pieces of legislation enacted last 
year, the Dodd-Frank Wall Street Reform and Consumer Protection 
Act, are exempt from UMRA because they will be promulgated by 
the Securities and Exchange Commission, an independent 
regulatory agency. Rules issued by the new Bureau of Consumer 
Financial Protection created by Dodd-Frank will also be exempt 
from UMRA.
    Today's hearing focuses on local governments. I intend, in 
a future hearing, to bring in tribal and private sector 
witnesses to testify about their personal experience with 
burdensome Federal mandates.
    While we will hear today from the mayor of Edmond, OK, I 
want to myself relate just a couple of anecdotes from my own 
State to illustrate why I have called this hearing today.
    For instance, the city of Bethany, OK spent over a quarter 
million dollars in 1987 to put in two water wells, only to be 
required a few years later to take them out by the EPA because 
of their wastewater levels. Then the EPA changed its wastewater 
requirements in 2006, costing the city of Bethany over $9 
million. The street signs in Bethany also must change to a new 
type of reflective material to meet new Department of 
Transportation regulations, costing the city who knows how much 
yet.
    The Oklahoma Department of Transportation has to jump 
through millions of dollars of hoops to tear down an old bridge 
and to put up a new bridge in the exact same spot. It has to 
navigate the Clean Water Act, the National Historic 
Preservation Act, the Endangered Species Act, the Migratory 
Bird Treaty Act, and many other Federal laws, while people 
drive over an old, deteriorating bridge.
    What I want to know is whether the Unfunded Mandates Reform 
Act is of any consequence in terms of limiting the issuance of 
these sorts of unfunded mandates.
    Many observers, such as the Government Accountability 
Office, have commented on the numerous factors that limit the 
effectiveness of UMRA in minimizing unfunded mandates. We will 
hear today from GAO today about these limitations, exemptions 
and loopholes.
    The good news is that knowledgeable parties have also 
identified potential improvements to UMRA, and we will hear 
about some of those ideas today as well.
    I would like to now recognize my distinguished ranking 
member, the gentleman from Virginia, Mr. Connolly, for his 
opening statement.
    [The prepared statement of Hon. James Lankford follows:]

    [GRAPHIC] [TIFF OMITTED] T7172.001
    
    [GRAPHIC] [TIFF OMITTED] T7172.002
    
    Mr. Connolly. I thank the chairman, and I want to 
personally welcome him to Congress and thank him for his 
graciousness as he and I have tried to manage the transition on 
this new subcommittee, and I thank him so much for his personal 
graciousness and commitment to cooperation on a bipartisan 
basis.
    As a former local government official with 14 years of 
experience in Fairfax County, I appreciate Chairman Lankford's 
interest in unfunded mandates. Early in my tenure as a 
supervisor on that board, Congress passed the Unfunded Mandates 
Reform Act [UMRA], following an outcry by State and local 
elected officials about unfunded mandates and their burden.
    It was a positive step forward, but, as I learned in the 
subsequent decade, the act, as the chairman just indicated, did 
not fully stem the tide of unfunded mandates. It was written in 
a manner that exempted bills that imposed significant costs on 
localities, such as No Child Left Behind. As has been well 
documented, the design, testing, and implementation costs of No 
Child Left Behind increased local educational costs 
significantly, by hundreds of millions of dollars, in many, 
many places, including my own county.
    I am pleased that Fairfax County Executive Tony Griffin is 
here today so that he can discuss the continuing impact of 
Federal unfunded mandates on local governments.
    I am concerned, however, that some have conflated mandates 
with regulation. I recognize that UMRA focuses on both 
intergovernmental and private sector mandates; however, the 
focus of our efforts should be on the continued burden that 
unfunded mandates place on local governments. This was the 
focus of a series of hearings in 2005 by Congress in this 
committee in particular, and I remain it should remain that way 
today.
    Despite the technical language of UMRA, I do not consider 
regulations affecting businesses as unfunded mandates 
necessarily. As President Obama suggested, regulation should be 
reviewed for efficacy. But I simply do not believe that 
mercury, sulfur dioxide, or carbon dioxide restrictions on 
power plants should be placed in the same box was unfunded 
Federal mandates on local governments.
    When the private sector is engaged in activity that places 
public health or safety at risk, these actions should be 
regulated. In fact, carte blanche elimination of regulations 
could create new costs for local taxpayers. In Fairfax County, 
for example, most smog forming pollution comes from power 
plants in the Ohio Valley. Deregulation of pollution from those 
plants through repeal of the Clean Air Act or otherwise would 
increase the costs of local government. The public health 
impact alone would be significant and would result in more 
hospital emissions, emergency service expenses, and lost 
workdays due to respiratory illnesses.
    Fairfax County and other local jurisdictions would be 
forced to pay for more bus and transit service, telework 
coordination and other efforts to reduce vehicular emissions in 
order to prevent escalating costs of air pollution. It is 
imperative that our regulatory system prevent companies from 
passing on those costs of doing business to our local 
taxpayers.
    I would be very apprehensive about any effort to use UMRA 
as a vehicle for an overall review of the regulatory process as 
it relates to the private sector. I believe that such a review 
would run counter to the original purpose of UMRA. In light of 
this, I am pleased that we have two witnesses today 
representing local governments. I thank Chairman Lankford for 
recognizing the importance of this issue to State and local 
governments. I believe there are some substantive reforms to 
prevent unfunded mandates that are worthy of bipartisan 
examination, as the chairman indicated.
    For example, the Tax Prevention and Reconciliation Act of 
2005 included an unfunded mandate called for a 3 percent 
withholding that will impose a cost of more than $70 million 
for State and local governments, create additional 
administrative burdens, and reduce competition in contracting. 
Another Bush era law, the Real ID Act of 2005, could cost 
States as much $11 billion to fully implement an unfunded 
mandate.
    In addition, we will hear about the impact of the BRAC 
process on local governments and local communities from Mr. 
Griffin. Implementation of BRAC recommendations can impose 
multi-billion dollar transportation and infrastructure 
obligations on States and localities if BRAC relocations occur 
in urban areas, such as they do in Fort Belvoir and Quantico in 
Northern Virginia. Within the context of UMRA, these 
improvements are considered optional, but only if it is 
optional for my constituents to go to work.
    I support efforts to reform UMRA to take a realistic view 
of these costs on local governments, but I do not support using 
UMRA in an attempt to roll back important public health 
regulations like the Clean Air Act. In addition, I would ask 
unanimous consent that a letter from the National Association 
of Counties expressing opposition to unfunded mandates and 
drastic discretionary spending cuts be placed in the record.
    I look forward to working with my chairman, Mr. Lankford, 
to examine reforms that would ensure UMRA can be used to 
measure the impacts on legislation like No Child Left Behind, 
and I look forward to the testimony today. Thank you. I yield 
back.
    [The prepared statement of Hon. Gerald E. Connolly 
follows:]

[GRAPHIC] [TIFF OMITTED] T7172.003

[GRAPHIC] [TIFF OMITTED] T7172.004

    Mr. Lankford. You are welcome. And I see no issue with 
receiving by unanimous consent that report.
    [The referenced information follows:]
    [Note.--No Insert/Information Provided.]
    Mr. Lankford. All other Members have 7 days to submit their 
opening statements for the record.
    Let me recognize our panel and lay some ground rules for 
the conversation and let you all finally get a chance to be 
able to talk as well.
    Susan Dudley is the director of the George Washington 
University Regulatory Studies Center. From April 2007 to 
January 2009, Professor Dudley served as the Presidentially 
appointed Administrator of the Office of Information and 
Regulatory Affairs in the U.S. Office of Management and Budget. 
Thank you for coming.
    Mayor Patrice Douglas. Mayor Douglas serves as the mayor of 
Edmond, OK, a position where she was elected in April 2009. 
Aside from her mayoral duties, Mayor Douglas has made a career 
as a community banker and as an attorney. She is a wife and a 
mom, and she actually does not have an opponent now for her 
next re-elect, so she is able to be here actually fancy free on 
that one.
    Denise Fantone is the Director of Strategic Issues, U.S. 
Government Accountability Office, where she oversees work on 
Federal agency budget processes and cross-cutting regulatory 
issues, including Federal rulemaking. Very glad that you are 
here today.
    And Anthony Griffin, as Mr. Connolly has already 
recognized, Mr. Griffin is the county executive of Fairfax 
County, VA, appointed in 1999. Mr. Griffin oversees the 
operations of all Fairfax County government. Thank you for 
coming up. You have the shortest drive, I believe, of all of 
you, but very glad that you are here as well on that.
    Let me set some quick ground rules for our hearing. Each of 
you has been asked to submit a written statement for the record 
and we have also asked you to prepare an oral statement no 
longer than 5 minutes so we can allow time for questions and 
discussions on your statements. You will see on this desk a 
series of lights that will count down from 5 minutes it will be 
green, then the lights will change to yellow when you have 1 
minute and red when your time has expired and it will be just 
your opportunity to quickly wrap up.
    After all the panel has given their oral statements, each 
Member present will have 5 minutes to be able to ask questions 
of the panel. Many Members may have several questions, so it is 
very important that you answer the questions quickly and 
concisely. Don't feel you have to give a lengthy answer on 
that.
    Please also forgive the members of this committee if they 
have to excuse themselves. Most of us have multiple committee 
assignments this morning and we are juggling concurrent 
meetings. Your testimony will be recorded completely for 
review.
    Though each Member completely chooses the content of their 
5 minutes of questioning, I would ask that Members honor our 
guests' time and attendance by prioritizing answers and 
information from them, instead of making speeches during your 
questioning time. I would also ask Members not to ask a 
question after their 5 minutes of time has expired. As 
chairman, I do reserve the right to remind you that time has 
expired and ask for proper decorum during our hearing.
    If you have been asked a question and you see the red light 
come on while you are still answering, please feel free to 
finish up your answer, though, as a guest here of the panel.
    All of our panels are bipartisan. There are Members of both 
parties on this committee. It is our desire to hear the facts 
so that we can make an informed decision in our Nation's best 
interest. There are many issues in Congress that are divisive, 
but most of the issues we deal with in this committee should be 
very bipartisan.
    We are very grateful of the time you have committed to 
doing your written and oral statements, and the time you have 
given away from your family for this hearing. May I also say 
that I understand many or most of you gave up your Valentine 
evening with your family to travel here to D.C. last night, so 
please pass on our gratitude to your family and your 
willingness to share your expertise today.
    Do you understand the ground rules of this hearing?
    It is the policy of this committee that all witnesses be 
sworn in before they testify, so would you please raise your 
right hands?
    [Witnesses sworn.]
    Mr. Lankford. Thank you very much.
    We will begin initially with Ms. Dudley, I believe, with 
your testimony, so we would be very please to receive that now.

STATEMENTS OF SUSAN E. DUDLEY, THE GEORGE WASHINGTON UNIVERSITY 
   REGULATORY STUDIES CENTER; MAYOR PATRICE DOUGLAS, CITY OF 
EDMOND, OK; DENISE M. FANTONE, DIRECTOR, STRATEGIC ISSUES, U.S. 
   GOVERNMENT ACCOUNTABILITY OFFICE; AND ANTHONY H. GRIFFIN, 
 COUNTY EXECUTIVE, OFFICE OF THE COUNTRY EXECUTIVE, COUNTY OF 
                          FAIRFAX, VA

                  STATEMENT OF SUSAN E. DUDLEY

    Ms. Dudley. Thank you, Chairman Lankford, Ranking Member 
Connolly, and members of the committee, for inviting me today. 
I am Susan Dudley, Director of the George Washington University 
Regulatory Studies Center and Research Professor of Public 
Policy at GW. From April 2007 to January 2008, I oversaw the 
executive branch Regulations of the Federal Government as 
Administrator of the Office of Information and Regulatory 
Affairs [OIRA]. The views I express here are my own.
    I thought I would use my 5 minutes to summarize why I think 
UMRA has been less effective than some had hoped at curbing 
unfunded mandates and to offer some modest proposals.
    During my tenure as OIRA Administrator, executive branch 
agencies issued 108 economically significant final regulations, 
only 17 of which were classified as unfunded mandates, and not 
one of those was considered to impose mandates on State, local, 
and tribal governments. Now, that doesn't mean that no 
regulations issued during my tenure imposed burdens on other 
levels of government. Indeed, EPA issued two national ambient 
air quality standards during that period, and I heard from 
several States seriously concerned about the cost of 
implementing them.
    They were not classified as unfunded mandates because, one, 
the cost to States did not meet the UMRA definition of mandate 
and, two, the Clean Air Act prohibits EPA from considering cost 
when setting the primary acts. More recent acts for sulfur 
dioxide have argued further that UMRA is not triggered because 
it is the Clean Air Act itself that imposes the obligation on 
States and EPA is merely interpreting those requirements.
    Another regulation issued during my tenure that a 
reasonable person might consider burdensome on States was an 
HHS rule eliminating reimbursement to States under Medicaid for 
school-based administration expenditures and certain 
transportation costs. Despite the elimination of approximately 
$635 million in Federal funding, the rule was not covered by 
UMRA because it ``did not require States to replace that 
Federal funding with State funding or take any particular 
steps.''
    These illustrations show the limitations of UMRA. Though 
both UMRA and Executive Order 12866, which governs agency 
rulemaking, exclude independent agencies and rely on a 
threshold of $100 million, UMRA covers a fraction of what the 
Executive order covers, in large part because UMRA applies the 
$100 million threshold to mandated spending, while the 
Executive order applies it to affects, and UMRA contains seven 
additional exemptions, more I think that we will hear about 
from GAO.
    Not only does the Executive order cover more regulations 
than UMRA, but it provides OMB more authority to hold agencies 
accountable for conducting analysis and basing regulatory 
policy on the results of that analysis.
    UMRA only requires analysis if an agency ``in its sole 
discretion determines that accurate estimates are reasonably 
feasible and that such effect is relevant and material.'' In 
contrast, OIRA determines whether a regulation is subject to 
Executive Order 12866 and whether agencies' regulations and 
supporting analysis meet the principles of the order.
    The Executive order calls for quantitative and qualitative 
analysis and decision factors that are similar to those 
contained in UMRA. It emphasizes consultation with other levels 
of government and States of each agency ``shall assess'' the 
effects of Federal regulations on State, local, and tribal 
governments, and seek to minimize those burdens. As a result, 
in my experience, the analytical and interagency review 
requirements of the Executive order provided OIRA a more 
effective mechanism for holding agencies accountable to the 
objectives expressed in UMRA, both conducting the analysis to 
understand the effects of the regulations and in choosing the 
most cost-effective regulatory approach from alternatives.
    Now onto my modest suggestions to address, one, the limited 
coverage and, two, the lack of accountability. To broaden 
coverage, Congress could consider aligning on the language with 
that of Executive Order 12866 and/or extending it to include 
independent regulatory agencies, which are not currently bound 
by the Executive order either. To make the executive branch 
more accountable for the goals of UMRA, Congress could provide 
OMB oversight authority beyond certifying and reporting on 
agencies' actions.
    Congress might also want to expand judicial review under 
UMRA so that, for example, an agency's failure to justify not 
selecting the most cost-effective or least burdensome 
alternatives could be grounds for staying or invalidating the 
rule. Congress might even go further, for example, by making 
compliance with mandates discretionary for State, local, and 
tribal governments unless funding is provided.
    Even without amending the statute, this committee has 
options for increasing knowledge of the extent of unfunded 
mandates. Section 103 provides that, at the request of 
Congress, CBO would compare its Title I estimate of the 
unfunded mandates of a statute with an agency's Title II 
estimate of the cost of the regulations implementing that 
statute.
    I am not aware whether Congress has ever made such a 
request, but it could yield interesting comparisons to inform 
Congress's deliberations of both future legislation involving 
unfunded mandates and whether agency implementing regulations 
are consistent with original congressional intent.
    Thank you.
    [The prepared statement of Ms. Dudley follows:]

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    Mr. Lankford. No, thank you very much. Look forward to your 
questioning.
    Mayor Douglas, thanks for being here. We would very much 
entertain your oral statement now.

               STATEMENT OF MAYOR PATRICE DOUGLAS

    Ms. Douglas. Thank you very much, Chairman Lankford, for 
inviting me. Thank you, Members, for allowing me to be here 
today. I am Patrice Douglas. I am the mayor of Edmond, OK.
    Edmond is just to the north of Oklahoma City and is 
Oklahoma's sixth large city. We have about 86,000 people, with 
a school district of 110,000. We cover 90 square miles. We have 
a general fund budget of about $43 million and our overall 
budget is about $226 million. Last year, Edmond was named the 
top place to raise a family by Family Circle magazine. I had to 
put that in there.
    Edmond, as all Oklahoma cities and cities across the 
Nation, are facing budget decreases. We are a sales tax only 
city; we are funded only by sales tax and what we make from our 
utility companies. For the first time in more than two decades, 
last year we had a 9 percent budget decrease. No living mayor 
in Edmond had ever faced that issue. We were able to prioritize 
people, and we didn't have any furloughs or layoffs of police 
or firefighters. We delayed capital improvement projects, which 
means roads, bridges, repairs, and we were able to cut 
expenses.
    Other Oklahoma cities didn't fare as well; they cut 
expenses and had to lay people off and furlough people, fire 
police and civilian employees. Across the Nation I believe that 
the picture was worse. And having been at the U.S. Conference 
of Mayors recently, I heard about mayors who were laying off as 
many as 30 percent of their work forces. So municipalities are 
facing severe challenges right now.
    I first want to commend those of you who were in Congress 
and supported UMRA when it was passed. I hope that you continue 
to support that, but I hope that we can tighten it up. I hope 
that we can make it more effective for local governments 
because we are feeling the pressure right now. Every time we 
have a Federal mandate handed to us, then that is one less 
thing I can do that my citizens elected me to do, and I am held 
directly accountable because I grocery shop with those people.
    I want to hit on just a few things that we are seeing as 
overwhelming costs in our budget. First, the recordkeeping that 
we are required to do for stormwater regulation, I know, is 
extremely burdensome and is extensive.
    I first want to tell you that Edmond is in compliance and 
we are happy about that. Over the last 5 years we have done 
what we needed to do, but it has cost us $2 million to do that. 
So $2 million that I can't spend to fix roads, all to show that 
I am in compliance, that I was not outside the regulatory 
guidelines of that.
    Second, there are people on this panel who know more about 
the Clean Air Act than me, but I can tell you that Edmond sits 
in a greater Oklahoma City region and that we are in 
compliance, but there is talk about changing the standards. And 
if they change the standards, we will have some very long, 
extensive processes and regulations and costs that go along 
with that.
    I would be remiss if I didn't mention health care. We are, 
right now, in the city of Edmond, reviewing what our options 
are with regard to health care. We have traditionally covered 
the benefits for 100 percent of our employees; we have paid 
their premiums at 100 percent and we have paid dependent 
coverage at 75 percent.
    Our consultants are telling us that we are going to see an 
almost 20 percent increase in health care costs this year, 
which amounts to $600,000. Almost 15 percent of that is 
directly attributable to some of the mandates that came down 
through the recent Health Care Reform Act, and that is what we 
are being told.
    So we are trying to budget for that. I am not sure how we 
are going to it. We are just now starting our budgeting process 
and what I believe is going to happen is we are going to have 
to consider the options on health care and perhaps lowering the 
coverage on our employees or raising the premiums or requiring 
some payback from employees. I am not sure how it is going to 
end up, but we are facing that.
    Last, I would be remiss if I didn't mention the Dodd-Frank 
act and the concern that we have with an SEC regulation that is 
being proposed that will affect cities and volunteer boards. I 
have more than 30 boards and commissions in Edmond with 
volunteers serving. If this SEC rule is adopted, it is likely 
that I am going to have many of my volunteers have to be 
registered through the SEC.
    Not only does that probably put a wet blanket on volunteers 
wanting to volunteer for these boards, but it also causes my 
employees where I am already short-staffed because I am not 
filling vacancies, causes them additional work. So the costs I 
can't determine because the rule hasn't been passed yet, but I 
urge folks to look really closely at that rule because I do 
believe it is going to impose some serious requirements on 
cities.
    Thank you.
    [The prepared statement of Ms. Douglas follows:]

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    Mr. Lankford. Thank you.
    Ms. Fantone, we would love to be able to hear your oral 
statement now.

                 STATEMENT OF DENISE M. FANTONE

    Ms. Fantone. Good morning, Mr. Chairman, Ranking Member 
Connolly, and members of the subcommittee. I am pleased to be 
here to discuss the Unfunded Mandates Reform Act of 1995 as it 
relates to Federal agency rules. Congress has asked GAO to 
evaluate UMRA several times and on its 10th anniversary to seek 
diverse views on UMRA restraints and weaknesses. Drawing on 
this work, I will describe exceptions and exclusions for 
identifying Federal mandates, summarize GAO's findings, and 
also present suggestions made by knowledgeable parties about 
improvements to the act.
    UMRA was enacted to address concerns about Federal mandates 
that require other levels of government or the private sector 
to spend resources without providing funding to cover their 
costs. UMRA does not prevent Federal mandates from going into 
effect; instead, the act's purpose is to provide information on 
the costs and benefits of Federal mandates and rules that meet 
the reporting threshold and to obtain meaningful and timely 
input from State, local, and tribal governments as rules are 
developed.
    Before any of this happens, however, rules must pass 
through multiple steps and meet multiple conditions. My 
statement lists 14 reasons why an agency would not identify its 
rules as containing a Federal mandate subject to UMRA. Let me 
give you a few examples.
    Rules are not identified as having a mandate if costs are 
imposed as a condition of Federal assistance or where 
participating in the Federal program is considered voluntary. 
Other exclusions are based on the type of agency issuing the 
rule. UMRA does not apply, as has been said, to independent 
regulatory agencies, such as the Securities and Exchange 
Commission. Or another exemption is where the rule starts. It 
must begin as a proposed rule. There are other exclusions as 
well, such as rules that involve enforcement of individual 
rights, national security and emergency activities, or 
procedures for safeguarding Federal funds.
    Given these reasons and others I have not described, it is 
not surprising that GAO found over the years few rules that 
trigger UMRA. In 2004, we reviewed all final major and 
economically significant rules published in 2001 and 2002. Only 
nine tripped the UMRA requirements. Of the 113 that did not, 65 
had new requirements that we determined could impose costs or 
other impacts on non-Federal parties; 29 appeared significant 
and little different from the rules identified as Federal 
mandates. Why didn't these rules trigger UMRA? The most 
frequent explanations were the financial threshold of $100 
million was not met; the rule did not go through the proposed 
rule stage; participation in the Federal program was considered 
voluntary; or the rule was issued by an independent regulatory 
agency. Similar GAO findings before and since raise the 
question whether UMRA adequately captures regulatory actions 
that might impose financial burdens on others. The evidence 
suggests the answer is no.
    In 2005, GAO asked a diverse group from academia, advocacy 
groups, business, Federal agencies, and State and local 
governments for their views. No one suggested repealing UMRA. 
They recognized its positive aspects, but found areas that they 
would like to see fixed.
    Two areas in particular are relevant to today's hearing. 
The most frequent comment across all sectors was about UMRA's 
coverage. Most, but not all, of UMRA's narrow coverage was a 
barrier to the act's effectiveness. While there was less 
agreement on approach, many suggested amending particular 
exclusions, notably as a condition for Federal assistance or 
for participation considered voluntary.
    Other frequent comments were to lower the cost threshold, 
which, for regulations, would be the expenditure threshold or 
to include both direct and indirect costs; and some parties, 
particularly from the public interest advocacy sector, viewed 
UMRA's coverage as a strength and wanted to include health and 
environmental protection.
    As for the underlying purpose of UMRA to generate 
information about the size and nature of Federal mandates, they 
generally agreed there needed to be more complete estimates, 
and a frequent suggestion was that agencies evaluate mandates 
after they had been implemented as a way to better understand 
actual costs and benefits. Such information could help provide 
additional accountability and potentially lead to better design 
and funding decisions.
    Thank you very much.
    [The prepared statement of Ms. Fantone follows:]

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    Mr. Lankford. I thank you. Look forward to getting a chance 
to ask you some questions related to some of those. Thank you.
    Mr. Griffin, thank you for being here.

                STATEMENT OF ANTHONY H. GRIFFIN

    Mr. Griffin. Good morning, Mr. Chairman, Mr. Ranking 
Member, and members of the subcommittee. I am Anthony H. 
Griffin, county executive, Fairfax County, VA, a position that 
I have had the privilege of holding since January 2000. I 
appreciate the opportunity to speak to you today on the subject 
of unfunded mandates. It is a subject that is treated with some 
sensitivity in how Fairfax County legislates and operates.
    When county staff proposes changes to local ordinances or 
on how it operates, there is a requirement to identify the 
regulatory and financial impact of such changes as part of the 
staff report to the board of supervisors. In addition, county 
staff works in advance with the impacted parties to understand 
the effects of any changes and to reach a consensus, if 
possible, on implementation and costs.
    The county staff frequently is trying to balance the 
interests of public safety and quality of life with the 
immediate concerns of neighborhoods and industry. The process 
concludes with a public hearing. If staff has done its job 
well, there are few or no speakers and the decision of the 
board of supervisors is usually unanimous.
    Since local government is the closest to the people, it is 
ironic that the use of a significant amount of its resources 
are in fact dictated by the higher levels of government. In 
fiscal year 2008, the last time Fairfax County analyzed the 
cost of mandates, it was estimated that the net cost of Federal 
and State mandates was $751 million out of a $3 billion general 
fund. Federal mandates accounted for 39 percent of all mandated 
expenditures, for a net cost to the county of $313 million.
    What is more difficult to do with the cost of mandates is 
to decipher how much a community would pay to implement a 
mandate, whether it was a mandate or not. In many instances, 
Fairfax County chooses to exceed State mandates because the 
mandate is viewed as a minimum as it relates to quality of 
life. Schools and mental health are examples.
    Some Federal mandates are not as apparent as, say, the 
American Disabilities Act or the Health Insurance Portability 
and Accountability Act. For example, Fairfax County is trying 
to mitigate the impacts of decisions made in the last round of 
the Base Closure and Realignment Act [BRAC], which in most 
instances relocated Defense employees located near transit to 
Fort Belvoir, which has no transit and is served by a road 
system already at capacity.
    While the county appreciates the additional 26,000 jobs at 
Fort Belvoir, it actually tried to limit BRAC-related moves in 
the National Capital Region because of the negative impact to 
the transportation system.
    The Defense Department provides no money for road 
improvements external to military installations unless the 
impacts exceeds the doubling of traffic. Given that the primary 
roads involved are Interstate 95 and Route 1, no money is 
forthcoming. The estimate to mitigate the moves to Fort Belvoir 
are in excess of $800 million, money which neither the State 
nor the county have.
    Unlike the county's process, the Federal Government did not 
quantify the impacts of the relocation on the host jurisdiction 
or the region, nor has the Federal Government, in the form of 
the Defense Department, offered to mitigate the impacts. In 
fact, access to the proving ground of Fort Belvoir would not 
have been possible without a significant financial contribution 
by the county and the State.
    In closing, I would note that regulation by all levels of 
government are necessary to achieve certain minimums and how 
services and facilities are available to our public. 
Communication, sensitivity, balance, and identified resources 
need to be part of the process creating them.
    Mr. Chairman, thank you for the privilege to speak. I would 
be pleased to respond to the committee's questions.
    [The prepared statement of Mr Griffin follows:]

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    Mr. Lankford. We look forward to that, actually, and we 
will go back and forth, giving a chance just to ask questions, 
and we are just looking for your honest answers and just 
response to it. We will take not only your written testimony, 
but your oral testimony will be all compiled together in a 
permanent record.
    Let me just bounce a couple questions off you to get us 
started, then I will have ranking member, Mr. Connolly, be able 
to ask some questions as well.
    Mr. Griffin, define for us in your mind, from the county 
perspective, what is an unfunded mandate. Now, I know if we ask 
Ms. Fantone, we would get a very strict, clear defined of what 
the law says on it. What would your perspective be? How would 
you define it?
    Mr. Griffin. My perspective would be an obligation imposed 
on the county which the county otherwise would probably have 
not undertaken on its own.
    Mr. Lankford. OK. That's great.
    Mayor Douglas, the cap is $100 million of effect on that. 
In the $226 million budget for Edmond, a $100 million burden 
would be rather large. Is a $25 million burden an unfunded 
mandate, you would say? Would that have an effect if there was 
a 10 percent burden on the city of Edmond?
    Ms. Douglas. Absolutely. Absolutely.
    Mr. Lankford. Go ahead and push your mic right there. 
That's all right.
    Ms. Douglas. Absolutely. I need to set up to answer the 
questions, I guess.
    Mr. Lankford. Great.
    Ms. Dudley, tell me a little bit about 12866, that 
wonderful Executive order that has been out there for us since 
the 1990's, trying to deal with the unfunded mandates. You made 
some specific suggestions for that, including aligning UMRA 
with the 12866, and then you also talked about the independent 
agencies. Tell me your personal perspective on it. If those 
were excluded, how would the independent agencies be looped 
into the unfunded mandates? If this were to be reformed, how do 
you suggest those get engaged?
    Ms. Dudley. By covering the independent agencies. There are 
two parts to it. Executive Order 12866 also does not apply to 
independent agencies, so simply by covering them, you wouldn't 
have the advantage of having OMB serving as a check, so 
Congress would need to do that if OMB didn't. But I do think 
there are a lot of important regulations that go out as 
independent agencies.
    Mr. Lankford. Do you see an issue with those being included 
in those that are facing accountability of Congress and of the 
executive? Would it, by nature, violate their independent 
status to have accountability around them, for instance?
    Ms. Dudley. I am not a lawyer, although I have pretended to 
be one on occasion, but, no, from what I understand, it would 
not violate any constitutional principles to include them.
    Mr. Lankford. OK. That is terrific. There was a statement 
you made as well about the Section 103 about Congress requiring 
information back. It is my understanding that has also not been 
required as well on that as a followup to saying, OK, this is 
what you said it would cost; what did it actually cost. That is 
an interesting determination that we may have to determine as 
well on finding other regulations and saying how will we 
process through that with individuals on it.
    Then you made a statement as well about the judicial review 
and determining if things are cost-effective. Tell us about 
just the inside conversation that may happen saying, OK, is 
this the most cost-effective way to do this. Is that something 
that is really discussed often among the agencies?
    Ms. Dudley. It is. Agencies do take that seriously and OMB 
takes it seriously. But it is never judicially reviewable, so 
it is discussed within the executive branch, but there isn't 
another branch of government that serves the check or a 
balance.
    Mr. Lankford. So you are saying if there was an agency that 
determined it doesn't matter, we want to do it this way, there 
is no way to really stop them at this point. OK.
    Ms. Fantone, let me ask you a quick question as well. Give 
us an example of a voluntary Federal program. You said that was 
a major piece of an exception that is sitting out there. What 
is a good example of a voluntary Federal program?
    Ms. Fantone. Well, oftentimes what we have is the same kind 
of thing that actually applies with Federal assistance, there 
is the carrot and the stick. An example would be if you have--
and I will use firefighters. Oftentimes we provide technical 
assistance and there may be some cost-sharing piece of that.
    As soon as you have a condition in which you want to get a 
Federal assistance, or it can also happen with the private 
sector, you have to commit to making a decision that you are 
going to go ahead with a program and it will cost you something 
in return for either Federal assistance or some other largesse 
from the Federal Government.
    Mr. Lankford. All right. So if there is any option for them 
to opt out of it, it is considered a voluntary program, is that 
what you are saying?
    Ms. Fantone. Yes.
    Mr. Lankford. OK. That is terrific. But once they take it 
on, they have to fulfill all those mandates.
    Ms. Fantone. Exactly. I think Ranking Member Connolly, in 
his opening statement, described a situation where there is a 
bit of a catch 22.
    Mr. Lankford. Thank you very much.
    I would be very pleased to recognize Ranking Member 
Connolly for 5 minutes of questioning.
    Mr. Connolly. I thank the chairman and, again, welcome to 
our panelists.
    Mayor Douglas, one thing I did not follow. You referred to 
voluntary boards and commissions, and, of course, we have those 
in Fairfax County as well.
    Ms. Douglas. Right.
    Mr. Connolly. I am not aware of the Dodd-Frank legislation 
affecting any of our boards or commissions in Fairfax. What 
were you referring to?
    Ms. Douglas. There is an SEC proposed rule to carry out 
some of the language that is in the Dodd-Frank act that talks 
about municipal advisors, and they are defining municipal 
advisors as people who have to be registered through the SEC. 
The SEC has proposed this rule. I believe lots of cities are 
coming in and saying--there is a common period going on right 
now and are saying please don't do that because it is going to 
hurt our recruitment of volunteer boards if they have to 
register through the SEC to comply with the Frank-Dodd act.
    Mr. Connolly. Presumably, that would affect people who 
would advise the city or municipality in financial matters.
    Ms. Douglas. Correct. But when you look at many of my 
boards, for example, I have an economic development authority 
that has bonds that go through it. It still goes to a bond 
advisor and the opinion registered by my board still has to be 
approved by another board advisor or somebody who is well 
versed in that.
    Mr. Connolly. Mr. Griffin, do you have a similar situation 
in Fairfax County?
    By the way, I think, Mayor Douglas, you said your 
population is 86,000?
    Ms. Douglas. Yes, sir.
    Mr. Connolly. And, of course, Fairfax's population is what?
    Mr. Griffin. One million eighty-three thousand as of the 
Census.
    Mr. Connolly. So you have a lot of boards and commissions. 
Have you had this problem from the Dodd-Frank legislation?
    Mr. Griffin. I am not aware of the details. I suspect 
organizations like our economic development authority may have 
to be involved, but I think most of our volunteer committees 
and commissions would not be impacted. I think it relates only 
to financial.
    Mr. Connolly. Yes. I would invite you that, if you have a 
similar situation, Mayor Douglas, you might submit it for the 
record.
    Mayor Douglas also testified that she has been advised that 
the health care reform legislation, even though most of the 
major provisions don't kick in for another 2 years or 3 years, 
has actually contributed to an increase in her premium cost. Is 
that the case in Fairfax as well?
    Mr. Griffin. Yes. Staff estimate is that our cost to 
provide health insurance for our employees will increase 
approximately 4 percent over time to administer the program.
    Mr. Connolly. Attributed to that?
    Mr. Griffin. Yes, sir.
    Mr. Connolly. And what has been the increase in premium 
costs normally?
    Mr. Griffin. I would say over the last 10 years the 
increase has been about 10 percent a year.
    Mr. Connolly. Unrelated to health care reform.
    Mr. Griffin. Correct.
    Mr. Connolly. Ms. Fantone, an unfunded mandate, how does 
GAO separate the issue of unfunded mandates from normal 
regulation? I mean, the minimum wage requirement, in a sense, 
is an unfunded mandate; it tells people you have to pay this 
much, you can't pay less per hour.
    Presumably, nobody would say that we ought to eliminate 
that or we ought to fully fund that requirement. This is a 
societal requirement saying this is what a living and just wage 
ought to be. We may disagree about what that level ought to be. 
We might even philosophically disagree about whether it is the 
role of the Federal Government to impose it. But there is lots 
of history suggesting, by and large, the U.S. population agrees 
there should be such a regulation.
    How do we separate that kind of regulatory activity, 
normal, by the State or Federal Government, versus unfunded 
mandates? I would put No Child Left Behind or the BRAC process, 
for example, in the latter category.
    Ms. Fantone. Well, as you point out, this is a decision 
that is as much a policy and philosophical decision as anything 
else. I think probably to respond I would like to briefly 
describe what we did in 2004 when looking at rules that were 
not classified as Federal mandates.
    So we did a variety of different things. First of all, we 
looked at all of the ones that were unclassified, and that was 
113, and then we reviewed the evidence, and the evidence 
included what statements were available from the agencies 
themselves that would indicate that there were additional 
costs, and then we went out and we talked to those that would 
be affected to see whether we in fact had captured correctly, 
and that included the Federal agencies that were involved as 
well as those, again, who were affected; and there was 
consensus that, in fact, there was additional costs, some of 
which, 29 in particular, that would be significant.
    So it is kind of the Goldilocks complex here, trying to get 
it just right. It is a difficult thing, but that is how we went 
about how it in 2004.
    Mr. Connolly. My time is up, Mr. Chairman.
    Ms. Dudley, I would hope to, in another round, come back to 
your testimony. Thank you.
    Mr. Lankford. The Chair would now like to recognize the 
distinguished gentleman from Pennsylvania, the vice chairman of 
this committee, Mr. Kelly, for 5 minutes.
    Mr. Kelly. Thank you, Mr. Chairman. And also the board, 
thank you for being here today, because I know you are taking 
time out of your private lives to come and do this.
    My questions are mainly for the mayor, because I also sat 
on the city council in a very small town, a third class city.
    Ms. Douglas. Bless you.
    Mr. Kelly. Thank you.
    Ms. Douglas. Bless you.
    Mr. Kelly. That was after sitting on a school board, so----
    Ms. Douglas. Oh, bless you again.
    Mr. Kelly. And I think that it would be hard to argue that 
a lot of these are well-intentioned when they start off. But I 
would submit that in our little town, 67 cents out of every 
dollar we bring in in revenue, tax revenue, is already eaten up 
by public safety and there are so many unfunded mandates that 
are out there. As a mayor, as you sit there and as you watch 
what is going on, you are almost afraid to read your next email 
or open the next piece of mail that comes through because you 
don't know where it is going to come from or who is going to 
ask you to participate in something.
    So we have these partners that say we need to do this, but 
they don't bring any money to the table. So if you could tell 
me--I know we struggle with our budgets every year, trying to 
meet all these--some of the things that you have to do and some 
of the services that have to be cut dramatically just to comply 
with a mandate, an unfunded mandate.
    Ms. Douglas. Well, we have to direct money away from our 
general fund, which is, like you said, that is my 33 percent 
that I get to run the rest of city government on, outside of 
police and fire. So that is what I run my trash collection, I 
repair my roads, I clean my roads after the recent two 
blizzards, I repair bridges after a 500-year flood that I had 
this summer.
    So you are exactly right. What we are looking at this year 
is simply trying to decide whether or not--we are one of the 
fastest growing communities in Oklahoma, so we are an economic 
engine for our State; we provide jobs. And what we are looking 
at right now is deciding between keeping people or building the 
roads to get economic development to our city, because you have 
companies that won't locate there unless you can build the 
roads.
    So it is a decision right now for me and my council 
priorities. We have to prioritize are we going to do the 
infrastructure projects that we have already delayed, because 
last year we could not build roads, we couldn't do the repairs 
we needed and that we had budgeted because we had a 9 percent 
decrease. So we are making those decisions.
    I talk about, in my written testimony, that there is a 
program called NIMS. Nobody can fight about the fact that 
homeland security is very important, but Edmond was the eighth 
safest city in America a couple of years ago; yet, we are 
spending at least $82,000 and by my estimates that they called 
me last night, $310,000 to do a training program that we are 
now having to document we are doing. And we are already one of 
the safest cities in America. So we are not going to fight 
against homeland security, but it is $310,000 that comes out of 
my budget in order to get other Federal grants. It is money 
that sits out there and says if you don't do this, then you 
don't get these grants. And it doesn't just apply to homeland 
security grants, it applies to other grants.
    So I think local governments are better at determining what 
they need, what they need, and we need to be ready, we need to 
be secure and safe, and my electorate is going to kick me out 
if we are not.
    Mr. Kelly. And I understand that. Also, you know, the 
determination of whether a regulation or rule is cost-
effective, what kind of a formula do you understand that they 
use to actually determine if it is cost-effective? Is there a 
real cost-benefit analysis there? I mean, I have never seen it.
    Ms. Douglas. I have never seen it.
    Mr. Kelly. It usually doesn't make sense to those of us 
that actually have to pick up the tab on this.
    Ms. Douglas. I have never seen it.
    Mr. Kelly. OK.
    Ms. Douglas. I have never seen it. For many of the 
regulations that are imposed on the city, I have never seen it.
    Mr. Kelly. Very good. Thank you.
    That is all, Mr. Chairman.
    Mr. Lankford. Thank you.
    I am honored to be able to recognize the ranking member of 
the Oversight and Government Reform Committee of a whole. Glad 
you are here, Mr. Cummings. I recognize the gentleman from 
Maryland for 5 minutes.
    Mr. Cummings. Thank you very much, Mr. Chairman. I 
congratulate you on your position. I am looking forward to 
working with you.
    First of all, I want to thank the panel for outstanding 
testimony. As I listened to us, you know, I have stated it: we 
have a problem here. On the one hand, we have the Federal 
Government, your representatives, all of us, on the Federal 
level trying to get certain things done; and then when it is 
filtered down to you all, then you all are where the rubber 
meets the road, so then you have all of these issues that you 
have to deal with. And I just want to ask a few questions with 
regard to you, Ms. Dudley.
    You talked about expanding judicial review. How extensive 
would that judicial review be? I am just wondering about that.
    Ms. Dudley. As I say, I am not a lawyer, so I don't have 
specific advice. I know that is a criticism that I have seen of 
UMRA, that the courts could only call an agency out for not 
doing an analysis when it should have done the analysis.
    Mr. Cummings. Right.
    Ms. Dudley. But it can't do more than that.
    Mr. Cummings. Well, going to you, Mayor Douglas, certainly, 
we sympathize with everything you have said. I think your 
employees are very fortunate to be getting 100 percent of their 
insurance covered. I mean, I think that is great, and that says 
a lot for you and your city. But I want to go back to you were 
talking about spending $2 million on compliance, showing that 
you complied. I was just wondering, is that to show that you 
complied or is that actually putting yourself in compliance, or 
is it a combination of both? Do you understand what I am 
saying?
    Ms. Douglas. To my knowledge, we were in compliance, but I 
am not going to answer that for certain. What I will tell you 
is that what this money went for was to implement the minimum 
control measures with six areas of focus: to address the 
stormwater runoff quality and to report on it; to address 
public participation and to report on that; to address public 
education and outreach and to report on that; to address post-
construction stormwater management and report on that; new 
development, old development, stormwater management; and to 
file the reports.
    So we were in compliance for 5 years. It is apparently a 5-
year study. I have been mayor for 2, but it was a 5-year study 
and over the course of that 5 years it was $2 million.
    Mr. Cummings. And it sounds like it was for both, for being 
in compliance, then making sure you report on compliance, based 
upon what you just said.
    I was just wondering from each of you members can you 
provide us with suggestions as to how to improve UMRA in order 
to help State and local governments? I think, as I listened to 
you, Mayor Douglas, it sounds like, in an effort to plan 
sometimes, it becomes very difficult if you don't know what is 
coming down. As a matter of fact, the chairman talked about the 
case in Oklahoma, your city, I think it was, is that right? 
Right. OK. So how does it affect planning and what can the 
Federal Government do to help locals be able to plan better 
with regard to so-called unfunded mandates?
    Ms. Douglas. I believe that I think we can't change the 
mandates without getting a lot of warning to a municipality, 
first of all. I think you have to give us warning like you were 
talking about.
    Second, I think that we need to have input on that. We need 
to have input. Right now the SEC is taking comments on what it 
is going to cost governments and how many people are going to 
have to be registered under this new proposed rule. I am glad 
that they are taking comments, because they are going to hear 
from me about what it is going to cost me.
    I think, as well, that if you have a city that is showing 
itself to be a quality city in all these regards, I believe 
that they should I don't want to say have less requirements on 
them, but I think that it should be understood that this city 
is already in compliance. The bottom line is every decision 
that requires me to fund a mandate takes money out of my roads, 
my bridges, my parks, my infrastructure in my city.
    So I think we just need to keep that in mind, realize that 
the local officials are the ones who are tasked with getting 
those roads built.
    Mr. Cummings. I see my time is up. Thank you, Mr. Chairman.
    Mr. Lankford. Mr. Cummings, you had asked a question of all 
of them to be able to determine what their suggestions. Would 
you like another couple minutes to be able to let the other 
panelists to be able to answer?
    Mr. Cummings. With unanimous consent, Mr. Chairman.
    Mr. Lankford. I would absolutely give that unanimous 
consent. You bet.
    Mr. Cummings. Thank you.
    Mr. Lankford. Would any other members like to be able to 
help answer that question? What the suggestions were, I think 
was Mr. Cummings' question, what their suggestions were for 
improving UMRA.
    Ms. Fantone. Going to the work that we did in 2005, we 
brought in representatives from all sectors that were involved, 
I would like to be able to respond to some of their comments on 
what would help. Notably, and I have mentioned two of them 
already and it has been part of our discussion, about getting 
it right in terms of what is the right relationship with 
Federal assistance and how much is involved; also the question 
of voluntary, is this program really voluntary.
    But the other issue is one of threshold. And for rulemaking 
the threshold is in fact a higher bar because they use 
expenditures rather than considering that there are other kinds 
of costs involved in deciding whether something is in fact a 
Federal mandate. So you have to identify it first. And if you 
take it off the table because you can't meet the threshold, 
then you don't have the written analysis, you don't have that 
discussion.
    So if you go with expenditures, and some of the suggestions 
were to broaden it to conform to other definitions where you 
include lost revenue, for example, where you include both 
direct and indirect costs.
    Mr. Griffin. In response to your question, I would refer to 
my testimony. I indicated that dealing with mandates is really 
a balancing act. My perception is that while it is useful to 
have a comment period such as has been referred to with the 
SEC, I think it would be helpful if there could be more in-
depth, if you will, a pilot study of what the impact would 
actually be in a community or in a State before the legislation 
is finalized. I think too often the legislation is generalized, 
and impacts are perceived but not actually determined, and I 
think it would be helpful to have a more in-depth analysis 
actually at the local and the State level.
    Ms. Dudley. I will just say I agree with all of those 
suggestions.
    Mr. Cummings. Mr. Chairman, thank you very much.
    Mr. Lankford. You are welcome.
    Pleased to be able to recognize Mr. Labrador from Idaho for 
5 minutes.
    Mr. Labrador. Mr. Chairman, as you know, I am new to this 
Congress and I don't have a lot of questions. I just want to 
thank you for being here. It is a little bit dumfounding that 
we are hearing testimony that we have agencies that determine 
whether UMRA applies to them or not and we have a bill that is 
not really being followed. But I am just going to yield the 
balance of my time to the chairman and he is going to have more 
questions for you. But I just want to thank you for being here.
    Mr. Lankford. Thank you very much.
    Pleased to be able to recognize Ms. Speier for 5 minutes 
for questioning.
    Ms. Speier. Thank you, Mr. Chairman. And thank you to all 
of the witnesses that are here today.
    Mayor Douglas, you indicated that the city pays the entire 
cost of health care premium for the employees, is that----
    Ms. Douglas. The employees currently.
    Ms. Speier. Which is a very rich program. I mean, I can't 
imagine many cities or counties or States or Federal Government 
that could provide 100 percent coverage for the premium. Having 
said that, you indicated that the increase of 20 percent is 
due, or at least 15 percent, 14\1/2\ percent, is directly 
attributable to the health care reform law.
    Ms. Douglas. Correct.
    Ms. Speier. I would like to know how you came up with that 
figure.
    Ms. Douglas. Well, I am going to have to refer you to the 
consultants that we hire to come up with that figure. We hire a 
group that comes in and evaluates our program where, at the 
beginning of that.
    We, in fact, had the first presentation last week in 
Edmond. What they have told us their review to us said that it 
was directly attributable to the fact that we have to begin, 
since we are a self-funded plan, we have to begin to set money 
aside for the requirement of covering up to 25, dependents up 
to the age of 25 or 26, I can't remember, 26, and that we also 
have to begin to make accommodations for the pre-existing 
condition requirements that they believe are going to lift the 
amount of claims that we have in our plan. So they divided it 
out. We asked specifically for it to be divided out so that we 
would know what was basically the increase that we would have 
seen versus the increase that we are seeing now.
    Ms. Speier. So you are totally self-funded.
    Ms. Douglas. We are.
    Ms. Speier. Which means that you don't have an insurance 
company that is providing you benefits.
    Ms. Douglas. We have a group. We actually do have a group. 
You have a level of insurance that you cover and then you have 
the excess----
    Ms. Speier. You are self-funded for catastrophic.
    Ms. Douglas. For a certain amount. Yes, ma'am.
    Ms. Speier. All right. So you were told, then, that your 
increases would go up less than 14 percent had health care 
reform not passed?
    Ms. Douglas. Yes.
    Ms. Speier. How did they come up with that?
    Ms. Douglas. Again, I am going to have to refer----
    Ms. Speier. OK. I don't know that is necessarily all that 
helpful to us, then.
    Let me ask all of you. You know, I worked in local and 
State government for many years before I came to Congress, so I 
am real familiar with unfunded mandates, and they have been the 
bane of my existence for 20 years because it was always the 
Federal Government imposing a mandate and yet not paying for 
it. So I don't think it is fair and I would agree with all of 
you who complain about that. Having said that, first, to be 
really, I think, productive here, I think we should hone in on 
the most egregious unfunded mandate that you incur. If you can 
provide that to us.
    Mr. Griffin. Well, in my testimony I refer to the BRAC 
process and the fact that 26,000 Defense-related employees were 
transferred to Fort Belvoir from essentially the Metropolitan 
Washington area, the National Capital Region, and that has 
imposed a burden on the State and the county primarily to make 
transportation improvements to provide access to Fort Belvoir 
because the road system serving Fort Belvoir was already at 
capacity.
    So we are having to make significant new investments to 
facilitate getting people in and out of the fort, while also 
maintaining traffic flow past the installation. The primary 
routes for Fort Belvoir are Interstate 95 and Route 1, and we 
have no money forthcoming from the Defense Department to 
mitigate those impacts. And that is not something we were 
really consulted about; it just happened.
    Now, the good news for Fairfax County is it certainly 
strengthens the county's employment base in that part of the 
county, and we do appreciate that. But it is offset by a 
significant taxpayer investment by the locals, in essence, to 
accommodate that. And that is probably the most egregious 
recent example that I could give.
    Ms. Speier. But there was a cost-benefit associated there. 
It is not like a mandate that is imposed without any benefit.
    Mr. Griffin. Well, it is debatable whether there is a 
benefit or not because, as I indicated, the employees were 
already in the region. In fact, they were vacating leased 
office space, which was a benefit to the private sector, and 
going into space built on Federal facilities. So the county no 
longer accesses the property tax, if you will, that we 
benefited from before. So we haven't done a precise cost-
benefit, but in the long-term I think there is a benefit, but 
in the short-term there is a significant cost.
    Ms. Speier. Anyone else? Yes, Ms. Dudley?
    Ms. Dudley. Well, I don't represent a State or local 
government, so I am not sure I would be appropriate, but I 
thought that the examples in both of our local representatives' 
testimony provided illustrations of what they thought were the 
most egregious examples.
    Ms. Speier. All right, has my time expired?
    Mr. Lankford. Yes. Thank you.
    Mr. Connolly and I are going to do one more set of 
questions between the two of us, then we are very, very 
grateful for the time you all have. Let me just followup on a 
couple of things.
    Mayor Douglas, if you would like to submit the statement 
from the consultant just as background on that, you are welcome 
to do that and I would be glad to be able to pass it on to Ms. 
Speier, so we would be able to get the information on that.
    Ms. Douglas. Certainly.
    Mr. Lankford. The question that you had raised on this, 
mayor, was you need more warning, more advanced information. 
What is an appropriate amount of time to say if this mandate is 
coming, 3 months, 6 months, 2 years, 5 years? What would just a 
ballpark on that?
    Ms. Douglas. Well, we budget out 5 years. Not all cities do 
that, but we try to look at a 5-year plan. I am not saying that 
we need 5 years, but we need adequate time to get that rolled 
into our budget. When these rules come down and you find out 
that you are going to have to spend $400,000 out of your 
general fund in the next year, that is a near impossibility for 
a city the size of mine to do. So I would say take into 
consideration the fact that we have a 1-year budget cycle, so 
rules need to accommodate that.
    I also believe that it is really important to note that 
what some of the panelists have talked about is direct and 
indirect costs, and you can't always determine the indirect 
costs quickly; it takes you a little while to get a handle on 
what some of those indirect costs are. For example, that NIMS 
training. It took us a while to get a handle on how much it was 
going to cost us to comply with the homeland security 
requirements.
    So we thought at first it was going to be a small amount of 
money and now it has come out to be, in 2 years, $310,000, 
which is not small to my general fund. So I would urge caution 
in rules like that. I would urge that you understand that it is 
local governments that are going to be funding things like that 
and you look at whether or not you are actually getting a 
benefit out of them for the costs that it is costing to those 
of us who are the rubber meeting the road. I liked your phrase.
    Mr. Lankford. Have to bear the burden.
    Ms. Dudley, let me ask you this. There is some concern to 
say that the input--and Mayor Douglas mentioned it as well--
they just want input on it, that an agency could create a rule, 
seek public comment. Do they have to abide by that public 
comment? If there were 500 comments all saying this is a bad 
idea, do they have to respond and say, no, we can do it? Is it 
typical for them to be responsive on that? What have you 
experienced?
    Ms. Dudley. There are several requirements on agencies to 
respond to public comment. Probably the most important of which 
is the Administrative Procedure Act, which does involve 
judicial review. And if an agency ignored all their comments, 
the courts would be able to find that it was arbitrary and 
capricious and could send it back, send the rule back to the 
agency.
    Mr. Lankford. How do we get, then, public comment from 
municipalities to say this is a possible unfunded mandate that 
is coming down? How do we allow municipalities to do that in a 
reasonable way?
    Ms. Dudley. Well, agencies try to notify potentially 
affected parties as early in the process as possible, and they 
are required to not only under UMRA, but also under the 
federalism Executive order. In fact, I am on the Administrative 
Conference of the United States, and we just came out with new 
recommendations on Federal preemption and how agencies should 
spend more time consulting with State, local, and tribal 
interests before issuing regulations that will have those 
impacts.
    Mr. Lankford. Mayor, are you experiencing that? And I could 
ask the same thing of Mr. Griffin. Do you feel like you are 
getting--that is the rule. Do you feel like you are getting 
information to say this is coming, preparatory information?
    Ms. Douglas. Well, we were notified. We read articles about 
the SEC proposal to comply with the Dodd-Frank act. So we read 
about that. My city treasurer came to me and said, OK, I think 
this impacts more than just the city treasurer's office. And 
then there was an article I believe in the Wall Street Journal 
talking about how it is going to affect volunteer boards, and 
there were comments from several State-wide treasurers.
    Mr. Lankford. But that is not actually coming from an 
official Federal source on that.
    Ms. Douglas. That is not actually coming from an official 
Federal source.
    Mr. Lankford. Mr. Griffin, have you experienced the Federal 
Government contacting you and trying to get input and say this 
is a consideration that is going on?
    Mr. Griffin. Generally not. Most of my information comes 
from my staff, who either read the Federal Register or through 
professional associations that have notice. Or your 
Congressman, that is true.
    Mr. Lankford. Let me ask one more quick statement.
    Ms. Dudley, a couple comments have been made about EPA, and 
I note your comments earlier on that from my wonderful ranking 
member on it about air quality standards and such. Would that 
fall under an unfunded mandate as it currently stands now?
    Ms. Dudley. No.
    Mr. Lankford. OK. So that is outside of what is--though a 
city or municipality may have to spend millions of dollars in 
readjusting that, that would not be considered an unfunded 
mandate according to law at this point.
    Ms. Dudley. That is right, for several reasons. That is 
right.
    Mr. Lankford. OK. Great. Those are all the questions that I 
had. I would be glad to be able to yield some time to my 
ranking member, Mr. Connolly.
    Mr. Connolly. Thank you again, Mr. Chairman. Before Mr. 
Cummings leaves, I do want you all to know that Mr. Cummings 
and I practice what we preach. With his leadership, we 
introduced a bill to regulate, further regulate, frankly, water 
quality for the Chesapeake Bay in the last Congress, and we 
created a new standard for local governments in the watershed 
to have low development impacts, to have one standard that 
applied to everyone.
    But we funded it. We provided a substantial amount of money 
for local governments to apply for grants to fully comply with 
the new standard. And ours was the only bill that did that, but 
because we were sensitive to this very issue, I just thought 
for the record, Mr. Chairman, we would point out we practice 
what we preach. And I thank my colleague, Elijah Cummings, for 
his leadership.
    Ms. Dudley, you, in your testimony, talked about, and I 
certainly am intrigued and would welcome working with my 
chairman and others on the committee on tightening up UMRA. I 
am all in favor of it. As somebody with big local government 
background, it drove me crazy, and I will start with No Child 
Left Behind. Good intentions. Unfunded. Too rigid. And I fought 
with the previous administration and their secretary of 
education very publicly about this issue, so I can't wait to 
address it in this Congress.
    However, you talked about maybe creating a new judicial 
standard that would make it easier to seek an injunction to 
stay the implementation of a new regulation. Do you want to 
just expand on that?
    And then I want to follow up, if I may, Mr. Chairman, with 
Ms. Fantone as a followup to your answer, Ms. Dudley.
    Ms. Dudley. The reason I suggested that is I was trying to 
find ways identifying why it has not been more effective, and 
one of the reasons it hasn't is even when analysis is required, 
that is all that the act does, is require the analysis. And, as 
we have discussed, it is a small subset of the rules that a 
normal person might think is an unfunded mandate that actually 
gets covered. The analysis, as UMRA states, isn't to say let's 
not do this regulation, so it is not deregulatory; it is really 
a transparent accounting of the information that we know about 
the costs and the benefits.
    As Mr. Griffin says, let's do a balancing. So it requires, 
among the alternatives you look at, look at the costs, look at 
the benefits, qualitative as well as quantitative, and find 
that least costly, least burdensome or most cost-effective 
alternative. There is nothing in the statute that provides any 
checks and balances on that, either from OMB or from the 
courts. So that would be a suggestion. Perhaps modest was not 
right, perhaps it is not a modest suggestion, but would be to 
allow the courts to say, well, the analysis didn't demonstrate 
that you have chosen the least costly approach you could.
    Mr. Connolly. Right. Let me just ask, though, in the 
category of perhaps unintended consequences, because everything 
you just said sounds awfully reasonable to me. Why wouldn't you 
do that? But in looking at the language of the statute on the 
books, it expressly provides that an agency's failure to 
perform any estimate analysis statement or description cannot 
be used, cannot be used as a basis for delaying or invalidating 
a rule. So what we just talked about would actually 
significantly alter the current statutory language on UMRA.
    Ms. Fantone, in that report issued 2 years ago, GAO said 
that, in terms of the average rulemaking, new rule, it takes 4 
years. If we were to change the judicial review language in 
UMRA, what might that 4-year review process now look like?
    Ms. Fantone. You asked me the question that is difficult 
for me to answer first because, again, I am not a lawyer 
either, and judicial review is not an area that I feel 
qualified to talk about. The report you are referring to is a 
Federal rulemaking report in which we tried to identify how 
long something takes, what are the resources; and, frankly, we 
got a very mixed response. A lot of it has to do with the 
complexity of the rules themselves and to come up with sort of 
a this is the proper amount of time is not going to be 
something that I think is a fruitful direction.
    I would like to add to some of the comments that have 
already been made in terms of suggestions of what Congress 
could revisit, and I think address some of the questions here, 
which is right now there is an exclusion for those that don't 
go through proposed rulemaking. So that would be an area to 
revisit, whether there is opportunities there to get some of 
the information that would help balance the equation a bit. And 
then adding to that would be retrospective analysis, which 
potentially could improve cost-benefit analysis by looking back 
and seeing, well how well did agencies do in estimating these.
    So I am sorry I didn't answer your question directly, but I 
think these are other things that might assist.
    Mr. Connolly. I thank you.
    And my time is up. Thank you, Mr. Chairman.
    Mr. Lankford. Thank you.
    And thank you to all of our witnesses for taking time to be 
able to be here. I want you to know all of this is recorded and 
written down and is reviewed. In fact, in preparing for this 
particular hearing, I was going back through the notes from the 
2005 and previous hearings where we have been dealing with 
these issues before. In fact, the ranking member, Mr. Connolly 
was actually on the other side of this table in 2005. I was 
going through the notes on that, as a witness there. So these 
are very important comments. They are held in record and there 
will be decisions that will be made in future days based on 
much of the input that you have given. Thank you very much for 
being here.
    With that, the committee stands adjourned.
    [Whereupon, at 10:48 a.m., the subcommittee was adjourned.]

                                 
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