[Senate Hearing 114-266]
[From the U.S. Government Publishing Office]
S. Hrg. 114-266
THE UNFUNDED MANDATES REFORM ACT:
OPPORTUNITIES FOR IMPROVEMENT TO SUPPORT STATE AND LOCAL GOVERNMENTS
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HEARING
before the
SUBCOMMITTEE ON
REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 24, 2016
__________
Available via http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
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Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Laura W. Kilbride, Chief Clerk
Benjamin C. Grazda, Hearing Clerk
SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio JON TESTER, Montana
MICHAEL B. ENZI, Wyoming CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
John Cuaderess, Staff Director
Eric Bursch, Minority Staff Director
Rachel Nitsche, Chief Clerk
C O N T E N T S
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Opening statement:
Page
Senator Lankford............................................. 1
Senator Heitkamp............................................. 3
Senator Portman.............................................. 14
Senator Ernst................................................ 16
Prepared statement:
Senator Lankford............................................. 33
Senator Heitkamp............................................. 35
WITNESSES
Wednesday, February 24, 2016
Hon. Virginia Foxx, A Representative in Congress from the State
of North Carolina.............................................. 4
Hon. Curt Bramble, President Pro Tempore, Utah Senate, and
President, National Conference of State Legislatures........... 7
Hon. Bryan Desloge, Commissioner, Leon County, Florida and First
Vice President, National Association of Counties............... 8
Paul Posner, Ph.D., Director, Center on the Public Service,
George Mason University, and Former Director of
Intergovernmental Affairs, U.S. Government Accountability
Office......................................................... 10
Richard J. Pierce, Jr., Lyle T. Alverson, Professor of Law,
George Washington University School of Law..................... 12
Alphabetical List of Witnesses
Bramble, Hon. Curt:
Testimony.................................................... 7
Prepared statement........................................... 40
Desloge, Hon. Bryan:
Testimony.................................................... 8
Prepared statement with attachment........................... 46
Foxx, Hon. Virginia:
Testimony.................................................... 4
Prepared statement........................................... 36
Pierce, Richard J.:
Testimony.................................................... 12
Prepared statement........................................... 104
Posner, Paul, Ph.D.:
Testimony.................................................... 10
Prepared statement........................................... 87
APPENDIX
Statement submitted from the Final Big 7 UMITA Letter............ 56
National Conference of State Legislatures letter to Hon.
Shelanski...................................................... 110
Recommended Principles for Regulatory Reform..................... 112
Responses to post-hearing questions for the Record:
Mr. Bramble.................................................. 113
Mr. Desloge.................................................. 119
Mr. Posner................................................... 125
Mr. Pierce................................................... 129
THE UNFUNDED MANDATES REFORM ACT:
OPPORTUNITIES FOR IMPROVEMENT TO SUPPORT STATE AND LOCAL GOVERNMENTS
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WEDNESDAY, FEBRUARY 24, 2016
U.S. Senate,
Subcommittee on Regulatory,
Affairs and Federal Management,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:33 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. James
Lankford, Chairman of the Subcommittee, presiding.
Present: Senators Lankford, Portman, Ernst, and Heitkamp.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Good morning everyone. We meet today to
discuss the burden Federal laws and regulations have on State
and local governments. This is a hearing on the Unfunded
Mandates Reform Act (UMRA) and some opportunities to be able to
do some improvement to support it for State and local
governments.
The Unfunded Mandates Reform Act of 1995 intended to
relieve State and local governments of many of the burdens that
come down from the Federal Government. We will also discuss how
we can build upon UMRA's successes and the ways that we can
address some of those.
The Unfunded Mandates Reform Act was the result of
bipartisan recognition that many decisions made by the Federal
Government have significant costs, particularly to State and
local governments.
UMRA has provided better quality information to Congress
and the agencies as we contemplate new requirements that will
add cost burdens to local governments. But the benefits of UMRA
on State and local governments have fallen short of their
intended goals.
UMRA is complex and contains many exceptions, and as a
result, Federal actions that affect State and local governments
do not benefit from the consultation and analysis required by
UMRA.
The Government Accountability Office (GAO) has found that
issued regulations seldom trigger UMRA's reporting and
consultation requirements. There are many reasons for this. It
could be because the rule was promulgated by an independent
agency or the regulation was issued without a Notice of
Proposed Rulemaking or perhaps the requirement in the
regulation was considered voluntary as a condition for Federal
aid or the regulation did not meet the dollar threshold for
UMRA. All of these complications allow a lot of opportunities
for a lot of loopholes.
Implementation of UMRA could be improved. Various experts
also told GAO that the process used to consult with State and
local officials needed to be more consistent and that more
could be done to involve State and local governments in the
rulemaking process. This goes back to a basic principle that we
have, that individuals who are affected by a rule should
actually have a voice when that rule is done.
I have heard these same sentiments from several officials
in State and local governments. The very public servants that
will later implement a regulation are not consulted early
enough to improve the regulation or are not given enough time
to make the changes required to be in compliance.
The provisions of UMRA require us to ask hard questions
about the balance between our Federal Government and the
governments closer to the people. We cannot pass the burden to
them in times of scarce resources without due consideration.
During my tenure in the House, we held three hearings on
the effects of UMRA and potential improvements on the statute.
I look forward to hearing more insights today.
It is time to revisit UMRA. H.R. 50, The Unfunded Mandates
Information and Transparency Act (UMITA), proposed by
Representative Virginia Foxx--who is here as a witness to begin
this hearing--and its Senate companion, S. 189, introduced by
Senator Fischer, was conceived to strengthen the original 1995
UMRA legislation. Representative Foxx, I want to acknowledge
your leadership on this issue and your tenacity on behalf of
State and local governments, and I have been honored to work
with you over the years on this important issue. I know this
has already passed the House and has been a point of
conversation of how do we actually move it through the Senate.
UMITA improves on UMRA by reflecting much of what we have
already learned since the original UMRA passage. It updates the
legislation to reflect current Congressional Budget Office
(CBO) practices, addresses current exceptions to UMRA analysis
and consultation, allows for analysis of mandates to States and
local governments as conditions about their grant aid, and it
codifies the Office of Management and Budget (OMB) directives
to agencies on how to consult with State and local governments
in an effort to enhance consistency of these efforts.
H.R. 50, when it passed the House in February 2015, was
supported by major stakeholders representing State and local
governments. I am optimistic about its prospects in the Senate,
but I do understand full well the challenges that we face.
I look forward to hearing from our panel today about the
real costs of Federal decisions on State and local governments,
how UMRA has worked, and actions that Congress could take to
create a more thoughtful decisionmaking process about the
balance between State and local governments.
With that, I recognize Senator Heitkamp for opening
remarks.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. Thank you, Chairman Lankford, and thanks
for calling this hearing. As a former State official myself, I
completely understand and appreciate, having worked with my
legislature and having served in State government, the
challenges that we face every day when we have two regulatory
regimes and trying to make those balance and understand the
impacts. And so as I have said before, it is critical that we
examine this kind of legislation, and it is critical that we
look at what has worked and what has not worked. And so I am
grateful for this hearing.
But we cannot lose sight that regulations are a critical
part of how the Federal Government keeps our products safe and
our food safe as well as ensuring a level playing field for our
businesses.
To get good regulation, we need a strong regulatory
process, and part of that strong regulatory process is engaging
stakeholders early. As Senator Lankford and I know, we look at
these regulations, and we say we need the regulators to talk
earlier with industry, labor groups, and other stakeholders
when they are developing the rules rather than doing this in a
vacuum and then presenting the rule as a completed effort with
no real opportunity for comment.
So I believe strongly that consultation with State and
local and tribal governments is part of the necessary outreach
that is critical to this regulatory process. Congress should
always consider the compliance costs of legislation and how
States and local and tribal governments will be impacted.
Appropriate consideration must always be given to how decisions
are made in Washington and how those decisions affect the
bottom line back home.
This analysis and consultation means we can create a safer
and more equitable Nation without unneeded regulation but with
the right amount of necessary regulation. And so out of this
need and out of this discussion, Congress passed in 1995 the
Unfunded Mandates Reform Act. This law has worked to keep us
and the executive agencies accountable in their home States and
in our communities to help ensure that those of us on the Hill
understand how our actions affect budgets beyond our own. It
requires agencies to consult with those individuals who have
boots on the ground and know how those rules could be followed
and what works and what does not.
It is important, then, as we approach the 21st anniversary
of President Clinton signing this bill into law that we take a
step back and review it a retrospective review, if you will--
that we check that our States and local partners believe that
we are doing the right thing in terms of making sure that they
have an opportunity to participate and have an opportunity to
weigh in, in terms of those additional costs.
And so I look forward to hearing from these witnesses
today. I look forward to continuing this dialogue in this
Committee with Senator Lankford and with all of the Members of
the Committee who have worked so hard to try and achieve
bipartisan solutions to maybe some of the more contentious
issues that we have in Congress. And so I welcome the Honorable
Congresswoman and look forward to her testimony.
Senator Lankford. Thank you, Senator Heitkamp.
I am glad to be able to welcome my colleague, Congresswoman
Virginia Foxx. She has been a tenacious advocate for this, for
good reason. This is one of those things that most people do
not know and do not track, but it has a tremendous impact on
the day-to-day effect of State and local governments and
entities around the country when the Federal Government creates
a new mandate and then expects someone else to pay for it. She
has been a very clear, articulate spokeswoman for this process
and has continued to work very hard in the House for its
reform. So I am glad to be able to receive words that you need
to say. I know you have to get to a House hearing in just a
moment, so you will not be able to stay for the full time as
well, but I am glad to be able to receive whatever statements
that you would like to make about UMITA and the UMRA process.
TESTIMONY OF THE HONORABLE VIRGINIA FOXX,\1\ A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Ms. Foxx. Thank you so much, Chairman Lankford, Ranking
Member Heitkamp, and distinguished Members of the Subcommittee.
I particularly appreciate your opening comments today, and,
Senator Heitkamp, we welcome you as a cosponsor of the bill
with your eloquent comments. Senator Lankford, you summed up
the bill so well. I am going to talk about some certain things
today, but you have done a wonderful job, and I am very
grateful.
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\1\ The prepared statement of Hon. Foxx appears in the Appendix on
page 36.
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I thank all of you for the opportunity to appear before you
today to discuss the unfunded mandates imposed on State and
local governments by the Federal Government through the
legislative and regulatory processes. Like some of you, I
served as a State Senator and can testify to the difficulty of
balancing the State's budget when there are dozens of
complicated unfunded Federal mandates that must be taken into
account. Those experiences convinced me of the need to bring
accountability to Federal regulatory structures that so often
tie the hands of State and local governments.
In 1995, in a model of bipartisanship, Congress passed the
Unfunded Mandates Reform Act. It passed the House with close to
400 votes and the Senate with more than 90 votes and was signed
by President Clinton, as Senator Heitkamp has indicated.
UMRA focused on Washington's abuse of unfunded Federal
mandates and passed on the principle that the American people
would be better served by a government that regulates only with
the best information.
UMRA was designed to force the Federal Government to
estimate how much its mandates would cost local and State
governments, which was previously not the case. UMRA was not
intended to prevent the government from regulating but, rather,
to ensure that decisionmakers had the best information possible
when regulating.
I have always admired the purpose and spirit of UMRA, but
weaknesses in the law have been exploited in the intervening
decades and need to be addressed.
My bill, the Unfunded Mandates Information and Transparency
Act, seeks to address these shortcomings and will help UMRA
meet its unfulfilled potential.
There are five main components to UMITA:
First, UMITA ends the exemption that most independent
regulatory agencies have from UMRA's transparency requirements.
These agencies include the Securities and Exchange Commission
(SEC) , the National Labor Relations Board (NLRB), and the
Federal Communications Commission (FCC).
Second, UMITA treats ``changes to conditions of grant aid''
as mandates for cost disclosure purposes. If Federal
legislation or regulations force States, localities, or the
private sector to make costly changes in order to qualify for
Federal grant aid, these costs will be included in UMRA's cost
analysis. For example, if Congress ever passes another law such
as No Child Left Behind that changes the rules that States must
follow to continue receiving Federal funds, then those changes
and the resulting costs will be disclosed and considered.
Third, UMITA guarantees the public always has the
opportunity to weigh in on regulations. Currently, UMRA cost
analyses are required only for regulations that were publicly
announced through a formal Notice of Proposed Rulemaking. UMITA
requires agencies to complete cost analyses for all
regulations, whether or not such a notice was issued, while
providing an accommodation for emergency regulations.
Fourth, UMITA equips Congress, regulators, and the public
with better tools to determine the true cost of regulations.
Analyses required by UMITA will factor in real-world
consequences such as costs passed on to taxpayers and
opportunity costs when considering the bottom-line impact of
Federal mandates.
And, finally, UMITA ensures the Federal Government is held
accountable for following these rules.
UMRA contained little in the way of enforcement, so UMITA
provides that if the transparency requirements are not met,
States and local governments have access to a judicial remedy.
It is in these ways that UMITA will ensure public and
bureaucratic awareness about the costs in dollars and in jobs
that Federal regulations impose on the economy and local
governments.
Let me be clear. UMITA is not an anti-regulation bill. It
is intended neither to stall nor to prevent the regulatory
process from working as it should. UMITA is a bill to make our
regulatory apparatus more efficient, effective, and
transparent.
UMITA has bipartisan DNA and is purely about good
government, openness, and honesty about the cost of
regulations. These principles do not belong to either party.
That is why my Democrat colleagues Loretta Sanchez and Collin
Peterson join me as cosponsors, and it is why the bill passed
the House with votes from both parties.
Republicans and Democrats can agree that every unfunded
mandate the Federal Government imposes should be both
deliberative and economically defensible. It is my hope that
this hearing will be a first step toward an improved and more
transparent regulatory process that eases the burdens passed on
to State and local governments.
Thank you for giving me this time and for your
consideration of H.R. 50.
Senator Lankford. That is great. Thank you. Representative
Foxx, I appreciate you being here and getting a chance to walk
us through this.
Let us take just a short moment, and we are going to
transition the witness table and introduce our expert witnesses
that are here to talk about the bill today.
[Pause.]
At this time we will proceed with testimony from our expert
witnesses. Let me introduce all four of them, and then we will
swear you in and then get into your testimony as well.
Senator Curtis Bramble is the president of the National
Conference of State Legislatures (NCSL), a post he has held
since August 2013. He is also president pro tem of the Utah
State Senate, serving in his fourth term. He previously served
as Senate majority leader. Thank you--you have a very busy
schedule--for being here as well.
Commissioner Bryan Desloge is the first vice president of
the National Association of Counties (NACo). Mr. Desloge is
from Florida, serves as the Leon County Commissioner. He is a
board member and past president of the Florida Association of
Counties. Thanks for being here.
Paul Posner is the Director of the Graduate Public
Administration Program at George Mason University. He has
served as the president of the American Society for Public
Administration and as chairman of the board of the National
Academy of Public Administration. He has also served as the
Director of Intergovernmental Affairs of the Government
Accountability Office where he led the office's Federal budget
work. He has written extensively on UMRA and related topics.
Thank you.
Richard Pierce is the Lyle T. Alverson Professor of Law at
George Washington University Law School. He is also a member of
the Administrative Conference of the United States and has
taught and researched in the fields of administrative law and
regulatory practice for 38 years.
Gentlemen, I would like to thank you for being here in
front of us today. It is the custom of this Subcommittee that
we swear in all witnesses before they testify, so if you would
please stand and raise your right hand. Do you swear that the
testimony you are about to give before this Subcommittee will
be the truth, the whole truth, and nothing but the truth, so
help you, God?
Mr. Bramble. I do.
Mr. Desloge. I do.
Mr. Posner. I do.
Mr. Pierce. I do.
Senator Lankford. Thank you. You may be seated.
Let the record reflect that all the witnesses have answered
in the affirmative.
We are using a timing system today. You will see a
countdown clock in front of you. Your written testimony, I
appreciate you submitting that in advance. That will be a part
of the permanent record. Whatever you say orally, you can go
off of your written record or add to it. Either one is just
fine.
There is a countdown clock in front of you, and we would
like to ask you to stay within the 5-minute time period so we
can have a maximum amount of time for questions in the days
ahead.
Mr. Bramble, you get the privilege of being first in this
based on your position at the table, so we are honored to be
able to receive your testimony now.
TESTIMONY OF THE HONORABLE CURT BRAMBLE,\1\ PRESIDENT PRO
TEMPORE, UTAH SENATE, AND PRESIDENT,
NATIONAL CONFERENCE OF STATE LEGISLATURES
Mr. Bramble. So this is the hot seat. Thank you, Mr.
Chairman.
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\1\ The prepared statement of Hon. Bramble appears in the Appendix
on page 40.
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Chairman Lankford, Ranking Member Heitkamp, and
distinguished Members of the Subcommittee on Regulatory Affairs
and Federal Management (RAFM), as indicated, my name is Curt
Bramble, president of the National Conference of State
Legislatures and president pro tem of the Utah Senate. I appear
before you today on behalf of NCSL, the bipartisan organization
representing the 7,383 legislators of our Nation's States,
Commonwealths, Territories, possessions, and the District of
Columbia.
Thank you for the opportunity to discuss the Unfunded
Mandates Reform Act of 1995 and the opportunities for
improvement to support State and local governments. NCSL
applauds the leadership of the Committee for having this
discussion, as the fiscal impact of Federal actions on State
and local governments is often overlooked.
Mr. Chairman, I would also like to specifically thank you,
Senator Deb Fischer, a former NCSL executive committee member,
Congresswoman Foxx, and the Ranking Member, Senator Heitkamp,
for your leadership in seeking to strengthen the provisions of
UMRA with the introduction of the Unfunded Mandates Information
and Transparency Act of 2015.
UMRA was adopted over 20 years ago in an effort ``to curb
the practice of imposing unfunded Federal mandates on State and
local governments.'' While at that time it renewed the
commitment to cooperative federalism and brought attention to
the growing reliance of mandates as a policy instrument, the
law's definition of ``intergovernmental mandate'' is limited,
and as a result, the true impact of Federal actions on States
in many cases is not reflected in the cost estimates.
An example is the 1986 law called the Emergency Medical
Treatment and Labor Act (EMTALA). The cost to the States of
EMTALA and the Federal requirement of providing health care to
anyone that presents themselves may be very good policy, but
the unfunded mandate and the cost is a real challenge sometimes
for States to meet.
Mr. Chairman, State legislators across the country view a
Federal mandate much broader than is now defined in UMRA. We
would include situations when the Federal Government
establishes a new condition of grant-in-aid for longstanding
programs; uses fiscal sanctions to coerce States into taking
some action, for example, in the transportation arena, if you
do not do X, you may not get Federal funding; or where it
intrudes on State sovereignty. These just give you a few
examples.
So what is the solution? Provisions in UMITA that
strengthen the analysis and oversight of intergovernmental
mandates is a step in the right direction. In Utah, we actually
have a Federal Funds Commission. We do stress testing to see
what our State budget would look like without any Federal
funds.
In particular, NCSL supports provisions of Senate bill 189
that allow any Chair or Ranking Member of a Committee in the
Senate or House of Representatives to request that CBO compare
the authorized level of funding with the prospective costs of
carrying out a condition of Federal assistance imposed on the
States, local governments, or tribal governments. Changes to
grant requirements for established State and Federal programs
often result in new prescriptive requirements that shift costs
to State governments. While statutorily these programs are
deemed ``voluntary,'' in some cases these are State-Federal
partnerships that have existed for decades.
NCSL also supports provisions in UMITA that modify the
definition of direct cost in the case of Federal
intergovernmental mandates. On the regulatory side, NCSL
supports the provisions of Senate bill 189 that expand UMRA's
reporting requirements to independent regulatory agencies,
creates a mechanism for congressional requests for a regulatory
``lookback'' analysis of existing Federal mandates, and
provides for enhanced agency consultation with State and local
governments.
In addition to provisions included in UMITA, NCSL would
also encourage Congress to consider other reforms of UMRA that
are outlined in my written testimony.
Mr. Chairman, NCSL recognizes the need for the Federal
Government to reduce its annual deficits, curb growth in the
national debt, and achieve a sustainable fiscal path.
Provisions in UMITA are critical to ensuring that these efforts
be made with a full understanding of the fiscal impact on State
and local governments. This is not about blocking legislative
or regulatory action. This is about transparency and government
responsibility and accountability by ensuring the full
potential impacts of intergovernmental mandates in legislation
and regulations are known.
Mr. Chairman, thank you for this opportunity to testify
before the Subcommittee, and I look forward to answering any
questions the Members may have.
Senator Lankford. Thank you. Mr. Desloge.
TESTIMONY OF THE HONORABLE BRYAN DESLOGE,\1\ COMMISSIONER, LEON
COUNTY, FLORIDA, AND FIRST VICE PRESIDENT, NATIONAL ASSOCIATION
OF COUNTIES
Mr. Desloge. Thank you. Thank you, Chairman Lankford,
Ranking Member Heitkamp, and distinguished Members of the
Committee. I am honored to testify today on how the Unfunded
Mandates Reform Act can be improved.
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\1\ The prepared statement of Commissioner Desloge appears in the
Appendix on page 46.
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My name is Bryan Desloge. I am an elected county
commissioner from Leon County, Florida. I am representing the
National Association of Counties, which is 3,069 counties
across the country.
I would like to share with you three points today to
consider as you work to update and improve UMRA.
First, UMRA was established as a framework for improved
communication and collaboration between the Federal agencies
and their State and local partners. The process has been
helpful in raising awareness regarding unfunded mandates.
However, challenges do exist, and the work today presents us
with an opportunity to strengthen this.
UMRA does require that Federal agencies consult with local
governments in the regulatory process. We have found that there
are lots of inconsistencies about how this requirement is
applied. Consistency in the process and meaningful consultation
in the early stages of rulemaking would increase awareness of
the real impact of Federal regulations on local governments. It
is important to note that counties are often responsible for
implementing and funding policies and programs established by
the States and Federal Government, and counties play a key role
in the ultimate success of the process.
It is in our shared interest that counties be engaged as
partners throughout the entirety of these discussions and
actively participate in the planning, development, and
implementation of the rules. In current practice, we too often
are limited to the comment period offered to the general
public. One example I would like to highlight is the
Environmental Protection Agency (EPA) and the U.S. Army Corps
of Engineers (USACE) final rule on Waters of the U.S. Counties
repeatedly requested to be at the table to develop a practical
rule to protect our water resources, and, unfortunately, the
EPA refused to meaningfully consult with local governments, and
this lack of collaboration has resulted in a final rule that
created more confusion than clarity and significantly expanded
the EPA's jurisdiction over county-owned and--maintained
infrastructure.
We are concerned that agencies are conducting the
rulemaking process without truly consulting their
intergovernmental partners. As a result, the rules are not as
effective as they could be because they lack the informed
perspective of local leaders. The bottom line is Federal
regulations are the most effective when they are developed in
consultation with State and local leaders.
Second, if the process is not addressed, local governments
will continue to face increasing fiscal pressure. Counties
across the country are mandated to provide a growing number of
services while operating under greater State and Federal
restrictions on how we generate revenue. In fact, there are 40
States across the country today that limit the ability of local
governments to generate revenue. In Florida, the combined
fiscal impact of Federal and State mandates on counties is
substantial. Our counties in Florida contributed $281 million
to the local share of Medicaid costs this year, $57 million
last year for a portion of the costs for juvenile secure
detention, $525 million last year for court-related costs, and
$1.8 billion in fiscal year (FY) 2013 and 2014 for county
roads, bridges, and tunnels.
Shifting implementation costs of Federal policies and
programs on a local government creates budgetary imbalances,
leaving local governments with a choice between cutting
services like fire, law enforcement, emergency rescue,
education, and infrastructure or increasing revenue. Unfunded
mandates hide from policymakers the true impact of Federal
programs when the costs of implementing them is shifted on to
local governments that are already stressed.
And, finally, our system of federalism requires that there
is a strong State, Federal, and local partnership to achieve
common goals. At the end of the day, it is all taxpayer
dollars, and where it goes and how it comes, we should do a
better job, I think, of working together.
Government works best when we all work together, and we
hope that you will work toward creating policies that not only
achieve our shared objectives but will also provide adequate
funding to ensure that no one level is left to shoulder the
burden of policy implementation. Counties stand ready with
innovative approaches and solutions to work side by side with
our Federal and State partners to ensure the health, well-
being, and safety of our citizens.
Mr. Chairman, we are encouraged by initiatives like the
Unfunded Mandates Information and Transparency Act, that you
cosponsored with Senator Fischer and that Representative Foxx
led in the House. Although UMRA established a framework to
consider intergovernmental mandates in legislation and
regulation, UMITA presents the opportunity to improve the
process even more.
Thanks for the opportunity to testify. I would be happy to
take any questions.
Senator Lankford. Thank you. Mr. Posner.
TESTIMONY OF PAUL POSNER, PH.D.,\1\ DIRECTOR, CENTER ON THE
PUBLIC SERVICE, GEORGE MASON UNIVERSITY, AND FORMER DIRECTOR OF
INTERGOVERNMENTAL AFFAIRS, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Mr. Posner. Thank you, Chairman Lankford, Ranking Member
Heitkamp, and other Members of the Subcommittee. This hearing
is an important stocktaking on unfunded mandates, and it will
deliver much needed attention to this whole area.
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\1\ The prepared statement of Mr. Posner appears in the Appendix on
page 87.
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It is hard to believe, given how much we focus on this,
that before the 1960s, generally Congress displayed
considerable self-restraint with regard to State and local
government. Major mandates applied to the private sector were
exempted from coverage in the State and local sector--Social
Security, fair labor standards, among others. Most of the
national expansion that we saw with the New Deal and the Great
Society occurred through cooperative federalism, through grants
and collaboration, through the carrot not through the stick.
Something changed in the late 1960s through the present
day, and that is shown on page 4 of my testimony, the Advisory
Commission on Intergovernmental Relations (ACIR) showed the
rapid growth of preemptions through the following three
decades, through Democratic and Republican Congresses and
administrations alike. This is a bipartisan phenomenon.
I want to just say before we talk about UMRA that there are
very strong forces at work here that continue to this day to
promote what I call the ``switch from cooperative to coercive
federalism.'' One is the way that Members of Congress and other
national leaders get elected. It used to be there was strong
collaboration with State and local party leaders. There is
still that, but now members are increasingly on their own to
develop coalitions and the like to campaign and get reelected
for public office, sometimes in competition with State and
local officials.
There has been a nationalization of problems deposited on
the Federal doorstep. Private troubles are increasingly
converted to public problems deposited on Washington's doorstep
first, not last resort. Businesses have been converted from
allies of States to the leaders of the preemption parade.
State and local governments face extraordinary pressure
defending these kinds of issues. I was at the National
Governors Association (NGA) conference this week, and they said
that the Every Student Succeeds Act (ESSA) was the first
education bill NGA had been able to take a position on for 20
years, and that is true with most of the major legislation in
Washington. The State and local groups have a very difficult
time reaching agreement, their political leaders from all
sides, obviously, and mandates are particularly difficult. I
used to work for the mayor of the city of New York leading our
work on Federal relations, and I know how he struggled with
things like special education and environmental policies. It is
very difficult to take positions against such compelling
issues.
Now, against this strong tide, I think UMRA was a modest
reform that has achieved a modest result, which is not a small
accomplishment by any means. I think it was cleverly designed.
It went beyond just providing estimates and information to
providing a point of order. And it is important to understand
how that point of order has worked. It has been raised about 60
times in the House and about 3 times in the Senate since 1996.
But that is not the way mandates are stopped. Most of those
points of order did not stop the bills. It is through the
threat of the point of order, the threat of shame. There is
still residual concern about State and local costs that members
often modify bills to stay under that limit or even withdraw
them entirely, and I have several examples in my statement
where that has been laid out.
I think I totally agree with the other witnesses that the
focus of UMRA has been narrow and focused on direct orders, and
most of the mandates that really bother State and local
officials happen through preemptions and grant conditions,
particularly grant conditions. Grants, maybe widely
characterized as gifts, are not a gift horse. They are a Trojan
horse into which are packed many different requirements and
particularly, as one of the witnesses said here, existing
grants that are then piled on with retroactive conditions
become particularly onerous.
Now, the courts long agreed with the UMRA view that the
only true mandates are direct orders. But with the Sebelius
decision under the health reform, they now join the notion that
it is not just direct orders that commandeer State and local
resources, in the Court's words. It is grant conditions that
are onerous on the States, like the Medicaid expansion.
Whatever you think of it, it was viewed by the Court as a
mandate that was covered by constitutional issues.
So I think the UMRA legislation does a lot of good things,
including, I think, very sensibly extending coverage and
information to State and local government. The consultation
needs much more attention than it gets. I have suggested
creating an Office of Intergovernmental Advocacy like we have
Small Business Advocacy, because in the past we have learned
that not only are Federal agencies uneven, but State and local
governments do not pay as much attention as they should on
their own. I think they need some help in that department.
I want to say one more thing. Changes in the law, as well
intentioned and as important as they are, are not going to
solve the problem. We need to get the backing of institutions
that focus on intergovernmental issues and federalism in this
town, and unfortunately, those have largely been eliminated. In
1980, we had an Advisory Commission on Intergovernmental
Relations. We had Intergovernmental Subcommittees in this
Congress. OMB had a major division focusing on domestic grant
programs and the like. Even the State and local groups had an
Academy of State and Local government. All those have shrunk
and disappeared. In some way, we have a barren institutional
landscape to support the concerns that we all share, I think
that you particularly share on this Committee.
I am concerned that this dissolution of institutions
reflects a lower priority to federalism as a rule of the game.
I fear until we change that, nothing significant is going to
happen.
Senator Lankford. Mr. Pierce.
TESTIMONY OF RICHARD J. PIERCE, JR.,\1\ LYLE T. ALVERSON,
PROFESSOR OF LAW, GEORGE WASHINGTON UNIVERSITY SCHOOL OF LAW
Mr. Posner. Thank you, Chairman Lankford, Ranking Member
Heitkamp, and the other distinguished Members of the
Subcommittee on Regulatory Affairs.
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\1\ The prepared statement of Mr. Pierce appears in the Appendix on
page 104.
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I wanted just to start by saying I agree completely with
what has been expressed by the Chairman and the Ranking Member
and the other witnesses. UMRA is a very important statute in
its application to State, local, and tribal governments. I
frankly do not have any idea why it applies to private
regulated firms. That strikes me as a complete mismatch. They
are the most effective participants, most active participants
in the agency decisionmaking processes, and they are fully
protected by the series of Executive Orders (EO) that began
with Executive Order 11291 and continue today that Senator
Portman knows well. He implemented them for years. This
statute, the application of this statute to private parties
seems to me completely duplicative, unnecessary, and
counterproductive. But in its application, core application to
county, State, and tribal governments, I think it is terribly
important.
Now, turning to this particular bill and the proposed
changes, with one notable exception, I oppose them as they
apply to Federal agencies. I am not going to take a position on
how they might or might not improve things, and I do not have
enough knowledge of how Congress functions, your rules of
procedure, to know, to be able to express an informed opinion
on that.
As to their application to Federal agencies, I oppose all
but one because they are either duplicative and potentially
counterproductive in their unintended adverse effects or are
directly counterproductive.
Now, let me begin with the one that I support
enthusiastically, and that is Section 5, which would extend
UMRA to independent regulatory agencies. I have expressed my
view strongly in support of Senator Portman's bill, Senate Bill
1607, on many occasions. I continue to support it, and really
all of the same principles that I invoke as my basis for
supporting that bill apply here equally. It does not matter
whether it is an independent agency or, how you label the
agency. What matters is whether the agency imposes an unfunded
mandate on a State, local, or tribal government. And so I am
strongly supportive of that.
When I look at the other provisions and their potential
applications to agency decisionmaking, it seems to me they fall
into one of two categories. Many of them are just paraphrases
of existing requirements, some of which are drawn from court
opinions, some of which are drawn from Executive Orders or from
other statutes. I always dislike legislation that attempts to
reenact existing requirements using new words. What that does
is create massive uncertainty for decades. Nobody knows what
those words mean until some court decades later tells you what
they mean. And in many cases, it comes as a shock to everyone,
including the Members of Congress who thought they knew what
this was going to do until they read the court opinion and
said, ``Oh, dear.''
So I think anything that simply attempts to paraphrase
something that is already an existing requirement is
potentially very problematic and certainly unnecessary, because
the requirement is already there. In most cases, the
requirements we are talking about are in Executive Orders
11291, 12866, 13342, the series that I referred to earlier.
Some of these provisions I oppose for other reasons. They
obviously go beyond what 11291, 12866, and 13342 impose, and we
already have a big problem. It is called ``rulemaking
ossification.'' Just to give you an illustration, over the last
few years Federal agencies have failed to comply with over
1,000 deadlines contained in Federal statutes about rules they
are supposed to issue. Why? Because of rulemaking ossification.
The decisionmaking procedures take too long, they are too
resource-intensive, and the agencies simply cannot comply with
all of those and do the job of issuing the rules that you have
told them to issue. Plus all of these requirements apply to
amendments and to rescissions as well, and there are lots and
lots of obsolete rules that simply cannot be amended or
repealed because of rulemaking ossification. I oppose any
effort by you to impose more burdensome, time-consuming, costly
decisionmaking procedures on Federal agencies.
Senator Lankford. Thank you, Mr. Pierce.
I would like to ask unanimous consent that we move to
Senator Portman first. He actually has another meeting he has
to get to quickly as well. Without objection, Senator Portman,
you are up.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Mr. Chairman, thank you very much, and I
appreciate the fact that you and Senator Heitkamp are holding
the hearing and, more importantly for today's purposes, the way
you conduct yourself at these hearings, including letting
members ask questions and sometimes before you have had the
opportunity to do so yourselves, because you are going to be
here until the end, as Senator Heitkamp once told me, which I
also like about you guys.
So as the Republican author in the House of the Unfunded
Mandates Reform Act, it is difficult to see your child be
criticized. [Laughter.]
But I agree with most of the criticism, and in the sense
that, I do think it was a significant move forward. It was not
easy, and many of you supported this at the time. And, frankly,
we never could have gotten it done without the input from State
and local government, which is really where the pressure was
applied. It was part of the Contract with America. It was the
first one that was passed into law. It was Gary Condit and I.
He was the Democrat, former mayor, and it was also bipartisan
here in the Senate. As you know, Senator Glenn and others
helped it. So it is time after 20 years to take a look at it
and say, ``OK. What worked and what did not work?'' So I agree
with all that.
I do think, Professor Posner, you put your finger right on
where this has been most effective, and it is here nobody pays
much attention, which is the threat of a point of order being
raised has changed the entire way we legislate, particularly in
the House, because that point of order in the House, which was
the most difficult piece of this, as you know--and the Rules
Committee fought us on this consistently--has made a huge
difference. Not only do you get now the CBO analysis we did not
have before, and, we have all got thousands of different
analyses of what the costs of these mandates are, but I have
just got to tell you, for our State and local folks who are
here, when you want to come up with a bill and you know you
have to run through that gauntlet and you could be embarrassed
on the floor of the House, trust me, it makes a difference. And
it never gets out of committee.
So that has been the biggest impact probably and maybe, the
unheralded one until, Paul, you raised it this morning. So
thank you.
But I do think there is an opportunity to fix it. I am not
on UMITA. I have some concerns with some aspects of it, but I
think it is generally in the right direction.
I also think the legislation that Senator King and I have
proposed--and it was bipartisan over the last 3 or 4 years,
which is called the Regulatory Accountability Act--also gets at
some of these same issues. And what it says, basically, is that
the agencies have to bring State and local shareholders in
early. And I know both the Chair and Ranking Member agree with
that, and they have legislation that also directly affects
that. But that is in the Regulatory Accountability Act, and I
think that is a significant improvement to the current UMRA.
There have been, as was said, 60 points of order raised, but so
many that were not raised that provided that threat.
On the independent agencies, Professor Pierce has been very
brave. He has taken some slings and arrows from some folks who
do not want the independent agencies to be under the same rules
or even similar rules to the executive branch agencies. Let me
just give you a little data on this.
In 2014, the last year for which we have the data, nine
agencies proposed 17 major rules. These are independent
agencies. Only one of those rules contained a full cost-benefit
analysis. I can go back to 2013 when none of the 18 major rules
did. ``Major'' is over $100 million of impact of course. In
2012, only one of the 21. So I appreciate your standing up on
this. I know you have taken some heat on it. But it is the
right thing to do.
And, by the way, President Obama says it is the right thing
to do. He does not want it codified necessarily, but we ought
to codify it, and this is something that I hope--and, again,
this Subcommittee has been great on this issue. There is just
this big yawning gap here of the independent agencies, and it
does relate to what we are talking about here because they do
not have to live by the same State and local consultation and
so on. So I appreciate you, Professor Pierce, sticking your
neck out on that one and continuing to talk about it.
I have so many questions for you guys. Let me just ask you
this, Professor Posner, if I could. Your testimony talks about
the fact that OMB has guidelines for Federal agency
consultation with State and local governments, and you talk
about how UMITA seems to codify much of that. What do you think
the benefits are of codifying that guidance from OMB? And how
would that help in terms of implementing UMRA in a more
effective way?
Mr. Posner. Yes, I think this is a tradition. Codifying
executive rules and legislation helps give it more leverage
with the agencies and secures its survival across
administrations. The Government Performance Modernization Act
of 2010, for example, codified a lot of the things that OMB had
already been doing, and it made them kind of more a factor to
deal with.
So this is an area, I think, that needs far more attention,
and it has some notable successes, but it also has many lapses.
And the old Advisory Commission on Intergovernmental Relations
used to do this on behalf of the State and locals. They
collated the State and local comments, delivered them to
Federal agencies, and tried to serve as a broker.
Now, they have been eliminated, but one of the things they
reported is that not only did a lot of Federal agencies never
come to them with proposed regs, but a lot of the State and
locals did not respond to the invitation to comment. And so
that is where I wonder if we need some more proactive
institution as an intermediary, like an Office of Advocacy,
like the small business community has to serve as a proactive
hub to bring Federal statehood organizations on proposed
regulations.
Senator Portman. That is well beyond what UMITA does, but--
--
Mr. Posner. That is right.
Senator Portman [continuing]. Just to establish a
structure, as you said earlier, an institution.
Well, my time has expired. I thank the gentlemen for your
testimony today and for your advocacy of this issue and the
pressure on it. Thank you, Professor Pierce, and thank you to
my colleague from Iowa for your forbearance.
Senator Lankford. Thank you. Senator Ernst.
OPENING STATEMENT OF SENATOR ERNST
Senator Ernst. Thank you, Mr. Chairman, and thank you,
Senator Heitkamp.
Thank you, gentlemen, for being here today. This is an
important discussion and one that I am very familiar with,
having served at the county level as well as at the State
level. So thank you so much.
Mr. Posner, you mentioned the Help America Vote Act (HAVA),
in your written testimony, of which I am intimately familiar
with because, as a county auditor, I served as the Commissioner
of Elections at the time that HAVA was being implemented. So
this was given as an example of a prominent mandate that was
not considered to be an unfunded mandate under UMRA, and I
would like to visit with you about that today.
I actually had some folks from the Iowa Association of
Counties in my office on Monday, and they brought up this piece
of legislation. Another one of the visitors that I had was a
county auditor as well and a member of NACo. So it was good to
see them.
But although the act was well intentioned, it did place a
number of burdens upon the small counties, the rural counties,
economically challenged counties, which is where I came from,
and it negatively impacted the already stretched budgets.
As you know, through the legislation States are required to
purchase new voting machines, and oftentimes the technology far
outpaces what States are comfortable with and what they are
able to purchase on a rolling basis. There is also a number of
maintenance costs, the programming costs that are always
ongoing, and it was always very tough for us as a small county
to absorb these costs in our county budget.
So if you could talk a little bit about that issue and just
maybe what we need to do to solve those issues.
Mr. Posner. You obviously have a lot more experience than
anybody certainly that I know, and we have done a little work
in Virginia and have encountered the same issue. Basically, we
took one of the most voluntaristic parts of our public
administration system and imposed quite a number of
requirements in a very short period of time. And I think for
purposes of this hearing, it was not considered to be an
unfunded mandate for purposes of UMRA, partly because it
delivered it in the form of grants and conditions of aid. And I
think Congress bent over backward to try to avoid having a
large Federal agency manage this. But even with that, just the
requirements themselves, as you say, came down in a way that
really had a lot of unanticipated effects. And I think it is
one of the reasons why we need to be more cognizant and more
accountable when we do this up front.
Senator Ernst. Right.
Mr. Posner. Exactly the same thing you are talking about.
Senator Ernst. Thank you, and I appreciate that. The issue,
of course, grants did flow through our Secretary of State's
office because that is where elections are housed in Iowa, and
then on down to the county level. And what happened, a number
of counties would purchase equipment. It quickly became
outdated. You move on to the next version and the next version
and new software and new requirements, new accessories that are
required. And, unfortunately, all of that is not funded. So the
unintended consequences after that initial purchase of
equipment, and that is just one of the many examples that we
could push forward today. But thank you for that. I appreciate
it.
Mr. Desloge, you did mention Waters of the United States
and, of course, I have been pushing that quite heavily on the
expanded definition with a number of my Senate colleagues. I
have significant concerns about the impact, and this was
another issue that was brought up by the Association of
Counties members that stopped in the other day. You
specifically mentioned that the EPA did not meaningfully
consult counties prior to the proposed rule. Can you walk me
through NACo's experience and process with the EPA and the
Corps of Engineers? And were there any efforts by the folks at
OIRA or OMB to work through these conflicts?
Mr. Desloge. I can probably address it at about 40,000
feet. We tried to engage early on and lodged concerns, and the
devil is in the details. Obviously, we are all about clean
water, which is the pushback we always got: ``You do not like
clean water.''
Senator Ernst. Exactly.
Mr. Desloge. But there is language in there that will
cripple us eventually, and I will give you an example in my
home town. We have a storm going through there today. The
schools are closed in north Florida, and a couple of inches of
rain, probably. I promise you, the last 48 hours I have had all
my public works people out there cleaning out storm water
conveyances and making sure that nothing is going to flood. We
have concerns that some of that we are going to have to stop
and say, well, we need to touch base with the Corps and see if
need to get a permit for this. So I do not have that kind of
latitude. So there is a cost, and in this case there is a
safety issue as well.
We lodged complaints early on. It seemed that the Corps and
the EPA were not in tandem on this, and we got kind of
conflicting messages. We felt like we did not get all the
information, and in the end we kind of felt like we got run
over. And, again, the intent is honorable, and the whole issue
here is this is, I think people start off with the best of
intentions, but as you get further down the road in the
implementation, we end up taking the heat. And it is a big one.
And there are a number more like that if we are not careful.
Ozone is another one coming in the same kind of scenario. But
good question, thank you. And thank you for your county
services.
Senator Ernst. And I loved my time in county service, so
thank you so much. And thank you, Mr. Chairman.
Senator Lankford. Senator Heitkamp.
Senator Heitkamp. Thanks to all the panel, just very
reasoned and measured responses, and I think a great
opportunity to have a dialogue with all of us here. And I do
not mean to hijack this from the topic, but since I have
someone from the counties and someone from a State legislature,
I want to talk about an issue that I think is also critical.
And maybe, Professor Posner, it goes to an additional issue
that we could include in an intergovernmental aspect. Senator
Lankford and I opened up a portal which said Cut----
Senator Lankford. Cut Red Tape.
Senator Heitkamp. Cut Red Tape. I always want to say ``the
red tape.'' Cut Red Tape. And we invited criticism and, we
invited people to tell us what is working, what is not working.
A lot of criticism that we got was of State regulation. It was
of local regulation. It was about duplication between Federal
regulation and State and local regulation. And that adds to the
burden, it adds to the confusion, and it certainly adds to the
costs of achieving a public purpose that we are all trying to
move toward.
Now, this is a situation where a fair application of the
Tenth Amendment, you can say, ``Well, if the States are
regulating, the Federal Government ought to think twice about
whether they ought to do it.'' I am a big Tenth Amendment
person. I hate preemption and--because I think these are the
laboratories of democracy, which are State governments.
So when you were talking, Commissioner, about the
regulation, a lot of what you talked about on consultation
involved not Federal mandates, but mandates coming from State
legislatures and from executive agencies.
My question is really to the Senator: Do you know of any
model legislation that States have adopted on unfunded mandates
that deal with just State regulation and pushback from counties
and cities, from townships, from local government, that really
can help us inform a model beyond the model that we are working
with here?
Mr. Bramble. Thank you for the question. One of the
challenges, with the premise of the question is that there is a
different relationship between the Federal Government and the
States than there is between State governments and the
political subdivisions within the State. The vast majority of
States--there are a few States that have a home rule
difference, but the vast majority of the States, the political
subdivisions--the cities, the counties, the towns, school
districts, all of those special service districts, et cetera--
derive their sole authority from State statute. And so the
comparison saying, well, doesn't the same problem exist in the
States, where if the State legislature tells its political
subdivisions what they should do and they do not provide
funding, is not analogous to the Federal Government.
Well, Madison in Federalist No. 45 had something to say
about that. Talking about the proposed Constitution, he said,
``The powers delegated by the proposed Constitution to the
Federal Government are few and defined. Those which remain in
the State governments are numerous and indefinite.''
Senator Haitkamp. I get all that, and I do truly understand
the Tenth Amendment and the Eleventh Amendment. But my point
is--and it is not to say we do not have an obligation here to
look and see what the Federal-State relationship ought to be.
But as I have pointed out frequently--and I think if I were a
county commissioner who had my limitations on my property taxes
restricted by State legislature, only to receive a mandate on
my share of the Medicaid expenditure, I might take issue with
that relationship. I see my commissioner laughing a little bit.
And I do not mean to cause a fight between local and State
government, but I have been in State government long enough to
know that that tension exists.
What I am trying to get at is, we looked very closely at
what other models there might be, whether they are
international or whether they are, within our system itself, on
how we could do a better job coordinating between all the
levels and all the branches of government. And so for me, this
issue is bigger than just Federal unfunded mandates. It is how
do we work together on a layered basis to actually achieve
results.
And I want to go to Waters of the United States. We have
been litigating Waters of the United States for, what, 30
years? We have been arguing about what is jurisdictional waters
under EPA. It is time that Congress do its job and legislate
what waters are, to create the lane, because without Congress
legislating, they are going to be wandering around out there in
my wetlands, in my potholes, for the rest of my life.
And so, we can deal with the stay that we have now. I have
legislation. I know it has been endorsed by both the
organizations. I really appreciate the support. But I want to
get to Professor Posner's idea about some kind of more
institutional framework for dialogue and consultation, because
I agree with you, I do not believe there is enough consultation
on the front end. I think that is true not only for State and
local governments; we believe it is true for stakeholders as
well. And so we have a bill headed up by Senator Lankford to
require additional, notice before rulemaking begins so that we
can get comments earlier.
I begged EPA to reissue the rule, Waters of the United
States. They said they did enough consultation. I do not agree.
I do not think the courts of the United States agreed either.
And so here we are once again creating this great uncertainty
when maybe that could have been avoided with an institution
that was greater dialogue on the front end. And we are not here
to litigate individual legislation. We are here to talk about
how we can structure the relationship in a way that it actually
gets rid of the conflict and achieves the result.
And so I know if I talk to my colleagues about creating yet
another intergovernmental agency or another agency, the groans
will come up. You heard it, right? You heard the groan. But, I
am curious how you react to the groan and what persuasive
argument you can make for your idea.
Mr. Posner. Look at all the major Federal systems in the
world and in the Organisation for Economic Co-operation and
Development (OECD). We are the only ones without a real
extensive consultation mechanism. Germany, Australia, Canada
have very extensive consultations that----
Senator Heitkamp. And very robust subnational involvement.
Mr. Posner. Exactly. And staff. They staff it, too. So it
is not just an honorific kind of an issue.
I think these kind of things obviously take a lot of work,
but I think one of the things that happens sometimes in our
system that you alluded to is we focus on these different
titles--Title 1, Title 2 of UMRA. Sometimes Congress sets up
the agencies to have difficult problems because they do not
adequately consider the impact of legislation on State and
local government.
Senator Heitkamp. Right.
Mr. Posner. I think about the REAL ID Act of 2005 where,
basically the State motor vehicle administrators have worked a
bill that Congress approved that was going to use regulatory
negotiation with the Department of Transportation (DOT) to work
out a national ID--I will call it a national driver's license--
that was hardened. And then Congress literally 3 or 4 months
after that imposes REAL ID with much more stringent
requirements and no consultation at all with the State and
local community and transfers it to DHS, and then they wonder
why it has taken 10 years to implement it with all the State
pushback.
So I think a lot of this consultation--if we had done
something before Congress even approached that through some
kind of intergovernmental process, I think we might have been
better off in the long run. That is the idea.
Senator Heitkamp. Professor Pierce, you said one of the
things that you are concerned about is we are not currently
meeting deadlines in terms of regulation. And I could give a
concrete example where failure to regulate actually had
tremendous costs, and that is in the tank car regulation that
DOT just did. They waited too long. The industry went ahead and
built a new generation of tank cars. All of those tank cars
that just rolled off the factory line now have to be
retrofitted to meet the guidelines. I am not saying that was
the wrong answer. I am just saying failure to engage and
regulate actually costs money. So we need to remember that
regulation many times can be clarifying for industry and can
achieve a result.
So what is your response to a commission that would be
charged with managing this relationship?
Mr. Pierce. Let me just start by expressing my complete
agreement with you and with Professor Posner that I think this
is the core problem, and it is just difficult, really difficult
for a lot of reasons.
First, the issues, the substantive issues we are addressing
here divide everyone. The Supreme Court, Waters of the United
States--I teach that case every year. The Supreme Court divided
4-1-4. There were not five Justices in support of anything.
There were two Justices, each of whom ``was on a different
side''--the Chief Justice and Justice Breyer--who said, ``You
have to make a rule, get together and make a rule. Get a rule
together, and we will support it.''
Well, I was not sure I believed them when they said that,
but a decade later we have a rule and, predictably, no one
likes it.
When you try to get 50 States to agree today on anything
important, that is not going to happen. Right now in the
context of climate change, the initial judicial action of the
Supreme Court was instigated by a State, and now the reaction
is 28 other States oppose. So nothing----
Senator Heitkamp. I think people forget that.
Mr. Pierce [continuing]. Is going to produce agreement
among the States.
Senator Heitkamp. Let us go back to the question, which is
finding some kind of institutional place for this dialog. Do
you believe that that would assist in at least getting early
indication of those conflicts?
Mr. Pierce. I do not know, because the next problem is each
State has its own unique governmental structure, and I have
tried to help Federal agencies who in good faith have tried to
go out in consultation, and they discover not only do the
States differ with one another, they differ within. And one
State institution, the Governor's office, will say, ``Our
position is X,'' and another State institution says, ``We are
the ones who control this, and our position is Y and not X.''
So trying to figure out with whom you consult, and then the
result when you wind up tallying votes after a lengthy
consultation process and conclude that 23 States are on one
side, 23 States are on the other----
Senator Heitkamp. Now you are just depressing me, so----
Mr. Pierce. And the others disagree internally on what
should be done. I do not have an answer to the problem. I agree
completely that is the problem. [Laughter.]
Senator Heitkamp. Thank you.
Mr. Posner. Could I just maybe turn one light bulb on, as
dim as it is? There have been some examples. The Federal
Government was threatening to take over the property casualty
insurance business from the States under Gramm-Leach-Bliley,
and that prompted the States to get together and do their own
voluntary codes, which, significantly helped, at least in some
people's minds, the State of play in the States.
The other one, which you are familiar with, is a simplified
sales tax initiative which 25 States bought into, which has
been a real help.
Now, you are right. It is not all of them. We have some
significant States that are outliers, but that provides a
foundation, and they said it could not be done.
Senator Heitkamp. We can go back to the Uniform Commercial
Code, which is a great example of State cooperation to avoid a
Federal commercial code. I appreciate and understand, having
come from State government, having refereed these dialogues as
the Attorney General (AG). But I am looking for systemic
reforms that, No. 1, we can sell to our colleagues, because our
really good ideas are having a hard time. Right, James?
Senator Lankford. Though they are really good ideas.
Senator Heitkamp. Really good ideas. We really like our
ideas, and they are having a hard time. And so we need to be as
persuasive as we can and get consensus on our ideas.
Senator Lankford. And it is the grand challenge, because
when you talk about regulations, immediately there is a whole
group--going back to your statement, Mr. Pierce, it is this one
whole group that says, ``Oh, my gosh, we need to not do more
regulations, not make this more difficult,'' and another group
that says, ``It is already incredibly difficult. We cannot fix
it unless we streamline it and work our way through the process
on it.''
I am interested--Senator Bramble, your comment earlier
about--let me see if I can get this term right--a Federal
stress test in Utah that you are trying to evaluate the cost
of--Federal dollars that are coming to it, what that actually
costs the State, and I am assuming--is it worth it based on the
mandates, or as Professor Posner had mentioned before, the
Trojan horse coming to you of the grant with the requirements
in the back of it? Is that what that is? Tell me a little bit
more about that.
Mr. Bramble. We have what is called a Federal Funds
Commission, and one of the concerns that we have at the State
level is you have the State budget that we control, and then
you have all of the Federal programs that come into the State.
And for most States, the Federal moneys dwarf the State budget.
Senator Lankford. Right.
Mr. Bramble. And so the challenge for the States, if you
look at what has happened during the economic downturn from
2009 forward, what happens when Federal funds are not there, in
the West payment in lieu of taxes is a major issue for our
States. That is the equivalent of property taxes. When a State
like mine has roughly 70 percent--it is actually about 68
percent of the land mass owned and controlled by the Federal
Government, and the payment in lieu of taxes (PILT), is not in
the Federal budget, what does that do to the State? And that
triggered us to take a look not just at that one issue, but
across the board, what would our State budget look like, what
would our financial affairs look like with a reduction in
Federal funding across the board in all the programs? And the
street test----
Senator Lankford. Right, which is entirely likely. So let
me ask this: Have you been able to determine, for instance--I
am just going to pick a program: education. Most States,
education dollars coming to their State, between 8 and 10 to 12
percent of the dollars for education are Federal dollars that
are coming in. Have you been able to determine, if we said no
to those Federal dollars, what the cost would be and what the
difference would be and how do you actually measure that?
Mr. Bramble. On education in our State it is a little over
7 percent of the total education budget comes from the Federal
Government, and we actually have a plan that we could implement
if those funds were no longer available. The issue is: How
would the State continue to maintain government services,
maintain its role without the Federal funds? And it was more
than just an idle curiosity because of the challenges that the
Federal Government has with debt, deficit, those kinds of
things. It seemed to be the responsible thing to do at the
State level to look and say what would the impact be.
Senator Lankford. So then the question, have you been able
to determine what you spend a year on education just fulfilling
Federal mandates and how that lines up with the dollars that
are actually coming into the States?
Mr. Bramble. We have but I do not know what that number is.
Senator Lankford. That is fine. The reason I ask is this
has been an interesting conversation among multiple States
trying to determine, as now, as you mentioned before the Trojan
horse coming to you and saying, ``Here is a grant, here is an
opportunity for you to be a partner. We will give you
additional Federal dollars if you do this.'' There are some
States that have asked the question, I am spending more, I
think, fulfilling the Federal mandate than the Federal dollars
actually coming in for this. But most States do not have the
resources or the process in place to be able to actually answer
that question. They think that is true, but they have never had
the opportunity to be able to actually evaluate it.
If you all have developed a method to be able to measure
that, that is something multiple other States would be
interested in and maybe something that would be of great
benefit to many States, if that makes sense.
Mr. Bramble. That is actually part of the process of what
we call our Federal Funds Commission. What is the cost of the
unfunded mandates? What are the costs of the Federal programs?
Senator Heitkamp, if I could go back to your question about
between the State and the locals, I will put on my hat as a
Utah Senator rather than president of NCSL to answer that. In
our State we have an administrative rules committee. We pass
legislation, and then we authorize the Executive Branch to
promulgate rules to implement. When those rules are being
drafted, when there are prospective rules, they go before the
administrative rules committee, and we take input from the
stakeholders. And that may be the Utah League of Cities and
Towns. It may be the Utah Association of Counties. It may be
the Association of Special Service Districts. It may be
stakeholders across the spectrum. And whether that rule gets
implemented, modified, or put on hold is a direct function of
that input. And then for rules that are already in place, we
guard jealously the legislative prerogative of setting policy,
and we expect the Executive Branch to carry out that policy.
We just had an example that demonstrates that: ultra-low
NOx water heaters. We have a problem with our air quality in
Utah because of mountain valleys and inversions. There is
broad-based support for a requirement that all water heaters,
new water heaters sold in the State should be these low
nitrogen--ultra-low NOx. Our Department of Environmental
Quality issued a rule that required that. It went to the
administrative rules committee, and that rule is being repealed
in favor of the legislature. There is a bill before the
legislature--we adjourn March 10, but there is a bill that is
being heard today, as a matter of fact, dealing with that
requirement. And while we repealed the administrative rule
because we did not believe the department had the authority,
the legislature is now debating what that authority should be,
because at the State level we guard that jealously. We do have
a process for the local political subdivisions to weigh in both
during the promulgating of the rule and after the
implementation of the rule.
Senator Heitkamp. Yes, we have the same kind of rules
committee in North Dakota. I think that can be a fairly common
model.
I have to issue my apologies. I have to run off and give a
floor speech. But this has been very enlightening, and I know
we will continue the dialogue. I am sorry.
Senator Lankford. That is great. I am going to talk about
retrospective review while you are gone, then. I will stick
with some of your favorite subjects. [Laughter.]
Let me bring that up because this is a big deal for Senator
Heitkamp and me both to deal with retrospective review, and it
is one of the challenges that we seldom get information. Once
an estimate is made by CBO and they say this is going to cost
$95 million or $150 million dollars to the economy--whatever
the number may be--we are now 5 years past, it is fully
implemented, it is rolled out. No one ever goes back to ask the
question, ``Was that correct and is that regulation working as
effectively as we thought? ''
So one of the areas I know are in Representative Foxx's
bill deal with this idea of a lookback from a Committee, for a
Committee Chairman or Ranking Member to be able to make the
request and say let us go back and revisit that regulation. Did
it meet the target costs that we expected? And is it
accomplishing what it said it was going to accomplish? The
logical question is: If it is not working or if it is costing
10 times as much, maybe there needs to be a change in the
statute or maybe it needs to be revisited in the regulation.
Comments on that from anyone on the process? Because that
is a major part. Mr. Desloge.
Mr. Desloge. Yes, I do not think you are going to want to
do that for everything, but if you said, when State and local
governments stepped in and said, ``This is not working for us,
your estimates are way off,'' that could trigger that. I think
you would put an onerous kind of burden if you tried to do it
on every piece of regulation that came down the pike. But, yes,
it would give us, at least at a local level, a chance to argue
our case and say, ``Hey, this really did not turn out the way
we thought it would.'' And I think that would be beneficial for
us.
Senator Lankford. OK. Mr. Pierce.
Mr. Pierce. I certainly agree with you completely that
retrospective review is a very important function, and I am
sure you know, each of the last three Presidents has issued an
Executive Order that requires every Executive Branch agency to
engage in that process.
Senator Lankford. But do they?
Mr. Pierce. No, because they do not have the resources
because of rulemaking ossification, because it takes too many
resources to perform that function at the same time they are
unsuccessfully attempting to issue the rules that you say have
to be issued, amend the rules that need to be amended. They
simply do not have the resources to perform those functions,
and the particular mechanism in this piece of legislation
raises very serious constitutional questions under a series of
Supreme Court opinions in which the Court has basically said
the task of Congress is to legislate. And when a Member or even
a Committee of Congress gets into the business of directing a
Federal agency to do something, it at least raises serious
questions of constitutionality.
Senator Lankford. So the basic oversight role of Congress
is also there, and that has been supported by multiple Supreme
Court cases as well, that any committee could reach into an
agency, as this Committee has done multiple times, and say,
``Here is a list of questions, and we need information and
facts.'' And that agency then provides us the facts and the
details. This type of retrospective review asks the question:
``This is the estimate that you made as an agency 5 years ago.
Did it prove to be correct?'' That is an oversight role. If an
agency gave an estimate that was far out of bounds, we would
want to know why and how can we change that process so that we
get a more accurate look at it or to be able to evaluate the
fact that you created a regulation in hopes that it would do
XYZ, it did not, it did ABC instead. I think that is a fair
part of oversight.
Mr. Pierce. I agree with that. I would just go back to they
do not have anything like the resources necessary to--that is a
very difficult task.
Senator Lankford. Yes, sir.
Mr. Pierce. And it takes a lot more than the resources they
now have to do it.
Senator Lankford. All right. Mr. Posner.
Mr. Posner. This reminds me a little bit of something that
Senator Portman, when he was head of OMB, did under the Bush
Administration called Program Assessment Rating Tool. They
tried to review every one of the 1,500 programs in the Federal
budget, 300 every year. It was far too much. It beat everybody
up. Nobody could pay attention to it.
I certainly support the retrospective process. I think you
might want to organize it more on a priority basis, as was
suggested, maybe by a portfolio. So maybe one year you look at
all agencies regulating food safety and you do a regulatory
lookback on them and kind of a reassessment of how well all 19
agencies are doing inspecting food, for example. That might be
a way to rationalize that process and avoid some of the
problems that we were just discussing.
Senator Lankford. For Senator Heitkamp and me, one of the
things that we have proposed is for major rules, as they go out
the door, that there is a scheduled time for retrospective
review and no longer than 10 years, and so that everyone knows
when the rule is finalized, we also know exactly what year it
will be reviewed, and every 10 years it is reviewed. And it
could be 5, it could be 10, it could be 7. The agency sets that
time period--it is a predictable time period--to be able to
have some review, and so, again, they can budget for it, they
can schedule it, and they know when it is coming.
We have talked a lot about the impacts on State and local
governments and, for the Unfunded Mandates Reform Act when it
was passed, the loopholes that are in it, areas where it did
not trigger this type of disclosure, which, as you have all
mentioned, is informational basically to Congress, so that
Congress, when they are making a decision, they can have good
information. Those loopholes that are out there, can anyone
identify any particular bills or conversations that have
happened where one of these unfunded mandates got through and
it did not trigger some of the review? Senator Bramble?
Mr. Bramble. Yes, I have a couple of them. One general
problem is that the UMRA criteria starts from the basis that if
it is already an unfunded mandate, then it is only the
incremental change that would be subject to the criteria of
fitting whether there is additional review. But two specific
examples:
One is the Individuals with Disabilities Education Act. The
Federal Government did not maintain its commitment to fund 40
percent average per pupil expenditure. The mandate continued.
It did not trigger UMRA because it was in place already, and
the fact is that the Federal Government is not adequately
funding it but the requirements are still there, and States
still have to comply with the act.
For the REAL ID Act, we have the same kind of situation,
and I think that it provides an example of one of the loopholes
where, if it is a mandate that is a funded mandate, when the
funding dries up, there is no triggering UMRA in those cases.
Senator Lankford. OK. Let me ask the where and who
question. Dr. Posner, you had mentioned before about trying to
do this intergovernmental process. That begs the question of
where does that land best that it is most effective. You had
mentioned outside groups that had done that here in this town
and tried to raise that information to all bodies. The White
House, the Congress, different groups have been out there.
Where is the place that it would be most effective to make sure
if we are going to have intergovernmental conversations it
actually has impact? Is that in OMB's area? Is that here in
Congress? Where is that?
Mr. Posner. Well, the one that was eliminated in 1995 was
an independent commission appointed by the President and
approved by the Congress, which included 30 Cabinet
Secretaries, State legislators, county board supervisors,
mayors, and Governors. And I think that had a formative role on
certain areas--general revenue sharing formation, the Reagan
federalism program, and several others. I think that may be a
good place for it.
I think they also need to be populated in the various
policymaking circles. So Congress had a Subcommittee on
Intergovernmental Relations in both the House and the Senate
that worked with the ACIR on issues, so that is the way things
get done. As we know, it is not just one hand clapping.
And so I think that is what we are missing, is that
population of the intergovernmental perspective, in both the
Congress and the executive at the very least.
Senator Lankford. OK. Senator Bramble.
Mr. Bramble. Mr. Chairman, this is a document,
Congressional Budget Office cost estimate, on H.R. 3821 dated
February 11, 2016. Let me read from it: ``For large entitlement
programs like Medicaid, UMRA defines an increase in the
stringency of conditions or a cap on Federal funding as an
intergovernmental mandate if the affected governments lack
authority to offset those costs while continuing to provide
required services.''
And then it goes on to say, ``Because States have
flexibility within the Medicaid program to offset their
financial and programmatic responsibilities in order to reduce
costs, CBO concludes that the new conditions or resulting costs
would not constitute an intergovernmental mandate.''
Medicaid is the second largest expenditure in the State of
Utah, second only to education, and most States find that. And
yet Medicaid itself does not trigger UMRA, and changes to
Medicaid do not trigger UMRA. Under the Affordable Care Act,
the Medicaid expansion, the 90/10 split--our State is one of 16
or 17 that have not expanded Medicaid. But that major Federal
mandate in health care does not even trigger the UMRA criteria.
Senator Lankford. Mr. Desloge.
Mr. Desloge. And I will take it a step further, because
what happens is at the State level, when they are dealing with
the Medicaid issues, in Florida at least, they offset and the
county level picks up a percentage of that. And it is debated
all the time in the courts as far as how they get to the
percentage, and it has been a battle between the State
government and us on an ongoing basis. We ran up a half a
billion dollar backlog of disputed bills. You have people
moving in and out of the State. And so, we are not a Medicaid
provider, yet the State had figured out that they were going to
ask us to shoulder part of it.
So I hate to say it, but it flows downhill, and we are kind
of where the buck stops in local government. And we want a seat
at the table, and I commend you for this. I think this is a
great tune-up of existing legislation. And we would just like
the opportunity to be there early and be there throughout the
process, and we do not think we will add any regulatory or
additional burden. But I think you are spot on with where you
are heading with this.
Senator Lankford. OK. Dr. Posner, can you talk about your
Trojan horse conversation earlier about grant conditions and
such? You said some of those are coming much later. You take
the grant money, and then suddenly you find out after the fact
here is what that means.
Mr. Posner. Yes, on Medicaid requirements that are imposed
after the fact. There is actually a Pennhurst decision that
Justice Rehnquist authored that was about the Vocational
Rehabilitation Act, which at the time was a billion-dollar-a-
year program. Long after the States had become partners in
managing this program, the Federal Government imposed
additional requirements. And the Court ruled that was
unconstitutional. It was a retroactive rule that burdened the
States.
Increasingly, it seems that major Federal grant programs
like highways or education are vulnerable to having new Federal
conditions imposed. For example, when Congress decides to slap
on the 21-year-old drinking age and a 55-mile-an-hour speed
limit and drunk driving tolerance levels, you wonder whether
the purpose of Congress is to fund the substantive activity or
to use it as a vehicle for delivery of regulatory mandates.
And, increasingly, it seems more like the latter.
So those are the kinds of things we are talking about
where, since 1956, we have had a cooperative relationship
financially where the Federal Government collects the gas tax
and redistributes it, but with now this overlay of regulatory
mandates that have largely maybe overtaken the point of the
program.
Senator Lankford. OK. Let me read a quote to you. This
comes from--and this has been an ongoing, long-term
conversation about this bill and about any other changes to
unfunded mandates reform. When I was serving in the House,
Susan Dudley came and testified early on before this piece of
legislation was even written, and we were talking about just
the problems of the Unfunded Mandates Reform Act. In 2011, to
one of my questions, she answered this--or she made this
statement: ``To broaden the coverage, Congress could consider
aligning UMRA language with that of Executive Order 12866''
your comment before--``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.''
Mr. Pierce, you had made a comment about that earlier, that
you had some concerns in that area of, again, ossification and
making this much more difficult, as you had mentioned before.
It is extremely helpful in many areas if you know that there is
a way to be able to restrain an agency to say if you do not
follow the rules, as with the Clean Air Act and Clean Water
Act, outside entities can step in and say, no, you have to
actually follow the rule itself and the guidelines.
What is the barrier if, when the Federal Government is
promulgating a rule, they do not consult, they do not engage as
they are asked to do, States and counties can step in and say
at least you have to consult us, slow down the process? The
judicial review being the stick, I guess, that the States could
use to be able to say you did not consult us.
Mr. Pierce. Yes, let me try that one. Let me start by
saying that Susan is a colleague and a good friend, and I agree
with her on most everything, including the desirability of
trying to make 12866 and whatever you folks do with UMRA fit
together nicely.
Senator Lankford. And that is a lot of the conversation of
codifying this. We have done it now for two decades. Let us go
ahead and make it the standard, because each administration
says that is the Executive Order. But they also know, ``OK, if
we are busy, we are not going to follow it because it is not
really statute. We will generally follow it, but at times we
will not.''
Mr. Pierce. Once you get the courts involved, you are
really unleashing something over which neither you nor the
Executive Branch have any control at all. And I have no idea
what they would do with that, and in many circumstances it has
unintended adverse effects far worse than the intended
beneficial effects. And that comes back to why I am concerned
about efforts to codify provisions of 12866, for instance,
where, sure, a new President could change it, but we have had a
string of Presidents of both parties who have said, ``We like
it,'' and have kept it the way it is and kept the courts out of
it, which to me is one of the strengths they implemented. And
that allows them to sit down and talk with agencies and have a
dialogue with Federal agencies and tell a Federal agency, ``I
want you to go talk to the folks in Utah,'' or the folks
wherever.
Senator Lankford. Right.
Mr. Pierce. Courts cannot do that. Courts are blunderbusses
that come in 5 years after the fact and say, ``It was all
wrong. Start all over.'' I do not like that.
Senator Lankford. No, and I would agree. But when you can
get some clarification, once the courts have gone through the
painful process of multiple years and you get a clarification
and everyone agrees on this is really the process, or Congress
comes back and says, ``That is not what we intended. We are
going to fix it and provide some clarity to it.'' The key
aspect is right now with 12866 there may be consultation, but
it may not be in a way that people felt like they were
consulted. I have had several agencies that a rule would come
out, and I would say, ``Did you consult anyone on this?'' And
they would say, ``Yes.'' And I would say, ``Who?'' They would
say, ``Well, we have a group that we work with and consult.''
``Well, how was the process done?'' ``We do consultation.''
``With who?'' ``This group that we consult.'' ``Who is on the
list?'' ``Well, we do not really put their names out.''
OK. Well, the people that were affected by it never felt
like they had a voice to really say, so suddenly a guideline or
a rule comes out, it is fairly significant, that changes either
their staffing, their budgeting, or materials, and they never
got a voice. Someone did, but no one who is the someone. So
allowing the agencies to define the someone at times gets a
little too loose.
Mr. Pierce. I agree, and I agree with Professor Posner's
point very early on in the hearing that you cannot really solve
that with legislation. It is too complicated, too variable. I
have been working on the Clean Power Plan coordination process.
There are about eight agencies in every State that have some
role in the process of implementation, assuming that that rule
is ultimately upheld and implemented, trying to figure out
which agencies--they are all--they differ. They differ in their
powers; they differ in their perspectives on what should be
done. Trying to find them and say, OK, EPA usually works with
the natural resource agencies. Well, in the case of this
particular rule, the most important agencies are the public
utility commissions. Well, seven of them are elected. The
Governor has no power over them. The people are the only ones
who have power over them. Others report to this--they each
have--trying to figure out who to consult with in a very
complicated 50-State system and within each State, seven, eight
agencies with overlapping or conflicting power, it is a very
difficult process. I do not think you are going to be able to
solve it with legislation, and I am not sure how else to solve
it.
One suggestion is you could bring in, at least for informal
consultation--my former colleague at Columbia who runs the
American Law Institute that was responsible for getting the
uniform code, Lance Liebman has been working on this for
decades. His experience is it has gotten much harder. The
things they were able to do in getting States to agree 20, 30
years ago, they cannot get that level of agreement. They cannot
even get States to agree on who within the State is----
Senator Lankford. What about something just as basic for
major rules like an Advanced Notice of Proposed Rulemaking? So
it is Federal Register, publicly announced, everyone knows, now
you are not having a matter of chasing down who is the right
person within the State; it is a public announcement. But we
get it in before the rulemaking actually begins. We give
greater consultation early on in the process. So before there
is text written and everyone is fighting about that word has
this thing, it gives the ability for States, counties, affected
parties--whether that be independent businesses, whatever it
may be--they can actually rush in and say, ``Have you
considered the tribal impacts of this? Before you write the
rule, think about this.''
Mr. Pierce. Advanced Notices of Proposed Rulemaking
certainly can be beneficial, and agencies sometimes use them
with good benefit. They definitely add to the time required to
make a decision. They add to the complexity. And, also, what
you are suggesting assumes that there is not a draft until the
agency issues--that is not true.
Senator Lankford. Correct.
Mr. Pierce. And because of the way the courts have defined
the requirements of a Notice of Proposed Rulemaking--the courts
have defined that, not the way Congress defined it 70 years
ago. They have redefined it in such a way that, as a practical
matter, the first notice has to be the final, because if you
make any change, you have to justify it to the satisfaction of
the court. So the easy way to minimize the burden and risk of
judicial review is by making all of the decisions before you
ever put anything in writing, and most agencies--EPA is a good
example. They have hundreds of meetings through which they come
up with the initial draft. All you would be doing is backing
that process up and saying all those meetings have to take
place before the issuance of the Advanced Notice of Proposed
Rulemaking because the courts would just come in and say if you
have made a change, you have to justify it.
The easy way around that is do not make changes, which
means as a bottom line make all your decisions before you ever
issue the notice.
Senator Lankford. Which we are back to the same issue then.
Mr. Pierce. Yes.
Senator Lankford. You do not get public consultation. The
county never gets an opportunity to be able to speak to it
because they have a group of folks that they normally work with
and a group of attorneys that hash the issues, and they say,
``We think this is the tightest language that we can make it
work.''
Mr. Pierce. In the informal process, that I think is
exactly right, and it is a big problem. In the formal process,
they certainly have the right to come in with comments, and
there has been a lot of empirical studies that show that they
simply do not. They choose in most cases, for whatever reason--
and I am sure a lot of this is resource problems at the State
and local level. They choose, they say, ``Oh, somebody just
told me some Federal agency is proposing to do something we
care about, and we have a right to comment on it.'' We do not
have the personnel, we do not have the time, we do not have the
resources. And often just trying to figure out, is this the
Governor or the Attorney General? In many cases, they dislike
each other intensely and have completely conflicting views. And
so if we say something on behalf of the Governor, well, the
Attorney General is just going to come in and say, ``That is
all wrong.'' Can we clear it with--this is a horrendously
difficult practical problem that I know you appreciate it.
Senator Lankford. I do.
Mr. Pierce. It needs to be solved, and I think we all
appreciate it, but I do not have a good solution.
Senator Lankford. Right. It is also why federalism is so
important that the majority of these rules and issues should be
handled on a State level, State to State rather than the
Federal. But the things that are Federal, that is a whole
different issue.
Mr. Pierce. Thirty-eight types of gasoline in the United
States today is a problem.
Senator Lankford. We can talk about--now that some other
folks here that are strong advocates for it are gone, we can
also talk about ethanol requirements as well. But that is a
whole different---- [Laughter.]
Dr. Posner.
Mr. Posner. Just a quick footnote on this. I think the
Earth and the Moon and the stars on consultation were aligned 6
years ago with the Recovery Act. It was tremendously urgent to
get the money out the door, and I think GAO did a lot of
studies on this. That was a peak where Governors, mayors, the
President, the Vice President, the agency heads, all were
focused on that one program. And the administration did a
remarkable job in working with both the program people within
the agencies as well as at the top, the Vice President and the
Budget Director. They did weekly phone calls with States, State
representatives and Governors, and I think everybody felt good
about what happened. And there was also tremendous visibility
to that spending, so, you had that reinforcement that everybody
was kind of under the gun and the glare of publicity and
transparency, a lot of information was being floated. And the
system worked. So that was under a lot of stress.
I think what we are talking about here is much more
complicated when you are talking about rules and the like. But,
there have been extraordinary periods where this has come
together, and it might be worth studying that to see what
lessons we can learn.
Senator Lankford. The accountability on the back side of
that was also very important.
Senator Bramble, if there are any final comments, I will
allow you to make them. But votes have just been called. You
know exactly what that means as far as timing. So we will wrap
up here in just a moment. Senator Bramble.
Mr. Bramble. Thank you. I just want to comment very quickly
on the consultation. It is also a matter of timing. Some
agencies, in talking with staff at NCSL and colleagues across
the country, the timing can be critical. If an agency calls 12
hours before the rule is effective and then claims that,
``Well, we reached out to the State,'' that really does not
count. They may check the box and say, ``We consulted
immediately before it became effective,'' but that is not the
kind of consultation that works.
Senator Lankford. Right. And that is the reason we have the
courts to say, ``Clearly the law was not followed as it was
intended to be followed,'' and now what happens? And I get the
dynamic of it. But with no stick in the process and no voice
that comes back, you struggle with how do you actually maintain
enforcement consistency on this.
Before we adjourn, I would like to announce to folks that
on March 17, the Subcommittee will hold a hearing examining the
degree of deference, another issue we can talk about at length
at some point, the Federal courts and their granting of
deference to regulatory agencies and examining that agency
deference and what happens in the days ahead and the trends
that we are facing on that.
This concludes our hearing today. I would like to thank our
witnesses very much for your testimony. Your written testimony
is obviously a part of the full long-term record. The hearing
record itself will remain open for 15 days until the close of
business on March the 10 for the submission of additional
statements or questions for the record.
With that, this hearing is adjourned.
[Whereupon, at 12:10 p.m., the Committee was adjourned.]
A P P E N D I X
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