[Congressional Record Volume 142, Number 24 (Tuesday, February 27, 1996)]
[House]
[Pages H1278-H1279]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    REPORT FROM THE CONGRESSIONAL BUDGET OFFICE ON UNFUNDED FEDERAL 
                                MANDATES

  Congressional Budget Office Statement Submitted Pursuant to Section 
               423(f)(2) of the Congressional Budget Act

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                 Washington, DC, February 8, 1996.
     Hon. Don Young,
     Chairman, Committee on Resources,
     U.S. House of Representatives, Washington, DC.
       Dear Mr. Chairman: The Unfunded Mandates Reform Act of 1995 
     (Public Law 104-4) took effect on January 1, 1996. The new 
     law requires the Congressional Budget Office (CBO) and 
     Congressional committees to carry out a number of new 
     activities. I am writing to you today to let you know how CBO 
     plans to fulfill its responsibilities under the new law and 
     to provide you with mandate cost statements for those bills 
     under your jurisdiction that were on the House calendar as of 
     January 23, 1996.
       New Responsibilities Under the Act. The new law requires 
     CBO to provide a statement to authorizing committees as to 
     whether reported bills contain federal mandates. For 
     legislation that contains identifiable federal mandates, CBO 
     is required to estimate their aggregate direct costs. If 
     those costs are above a specified threshold in the fiscal 
     year that the mandate is first effective or in any of the 
     four following years, CBO must provide an estimate of the 
     costs, if feasible, and the basis of the estimate. The 
     threshold is $50 million for intergovernmental mandates and 
     $100 million for private-sector mandates.
       Any member may raise a point of order against any reported 
     bill unless the committee has published a CBO statement about 
     mandate costs. A member may also raise a point of order 
     against any bill, amendment, motion, or conference report 
     that would increase the direct costs of federal 
     intergovernmental mandates by more than $50 million unless 
     the bill provides for funding (either by creating direct 
     spending authority or by authorizing future appropriations), 
     and provides a mechanism for terminating or scaling back 
     mandates if agencies determine that there are not sufficient 
     funds to cover those costs. We have enclosed with this letter 
     a more detailed description of the new law and a brief 
     summary of the new responsibilities assigned to CBO and 
     Congressional committees.
       Whenever possible in future cost estimates, CBO will be 
     explicit about whether a bill contains mandates. If we are 
     uncertain, we will say so in the mandate statement and 
     provide as much detail as possible so that the Congress can 
     decide whether points of order apply to the bill.
       In order to have sufficient time to prepare mandate cost 
     statements, we will need to know about potential legislation 
     as early as possible, particularly those bills that might 
     contain mandates. Because it takes time to prepare mandate 
     analyses, we would greatly appreciate receiving early 
     notification about your legislative agenda for the year. It 
     might also be helpful--for both your committee and 
     ourselves--if your staff would contact us early in the 
     process of dealing with legislation that might contain 
     mandates. The CBO staff contacts for your committee are: For 
     intergovernmental mandates: Theresa Gullo (225-3220); and, 
     for private sector mandates: Elliot Schwartz (226-2940).
       Bills on the House Calendar. Enclosed with this letter are 
     two lists of the legislation on the calendar as of January 
     23, 1996, that is under your committee's jurisdiction: one 
     for intergovernmental mandates and one for private-sector 
     mandates. The lists group the legislation into three 
     categories: those that do not contain mandates as defined in 
     Public Law 104-4; those that contain mandates but the direct 
     costs are below the relevant thresholds; and legislation that 
     we need to review further.
       We look forward to working with your committee in these new 
     endeavors. Your assistance will be extremely important to us 
     as we strive to provide high quality and timely statements of 
     mandate costs to the Congress. If you have any questions 
     about CBO's new activities or about the enclosed lists, 
     please feel free to contact me or the staff contacts listed 
     above.
           Sincerely,
                                                  June E. O'Neill,
     Director.
                                                                    ____


                    The Unfunded Mandates Reform Act

       CBO's New Responsibilities. The Unfunded Mandates Reform 
     Act (Public Law 104-4) requires the Congressional Budget 
     Office (CBO) to provide a statement to authorizing committees 
     about whether reported bills contain federal mandates. If the 
     total direct costs of all mandates in the bill are above a 
     specified threshold in the fiscal year that the mandate is 
     first effective or in any of the four following years, CBO 
     must provide an estimate of those costs, if feasible, and the 
     basis of the estimate. The threshold is $50 million for 
     intergovernmental mandates and $100 million for private-
     sector mandates.
       A mandate is defined as any provision in legislation, 
     statute, or regulation that would impose an enforceable duty 
     on state, local, or tribal governments, or the private sector 
     or that would reduce or eliminate the amount of authorization 
     of appropriation for federal financial assistance to cover 
     the costs of existing mandates. Direct costs are defined as 
     amounts that state, local, or tribal governments and the 
     private sector are required to spend to comply with the 
     enforceable duty.
       Beyond that, the terms ``mandates'' and ``direct costs'' 
     are defined narrowly. For example, the act would not apply to 
     legislation enforcing constitutional rights or enforcing 
     prohibitions against discrimination (for example, the 
     Americans With Disabilities Act). The act would also not 
     apply to conditions of federal assistance or duties arising 
     from participation in a voluntary federal program (unless the 
     program meets specific criteria in the bill).
       Direct costs would exclude amounts spent under current laws 
     or programs and would be limited to spending directly 
     resulting from the legislation rather than broad effects on 
     the economy. The amounts that states, localities, and tribes 
     ``would be prohibited 

[[Page H1279]]
     from raising in revenues'' are also included in the definition of 
     ``direct costs.'' In this way, the act allows for 
     consideration of the impact of federal legislation on the 
     revenue-raising capabilities of these governments.
       The CBO statement must also include an assessment of 
     whether the bill authorizes or otherwise provides funding to 
     cover the costs of the mandates. For intergovernmental 
     mandates, the cost statement must estimate the appropriations 
     needed to fund such authorizations for up to 10 years after 
     the mandate is effective.
       CBO must ``to the greatest extent practicable'' prepare 
     statements for conference agreements if they contain mandates 
     not previously considered by either House or if they impose 
     greater direct costs than the previously considered versions 
     of the bill. If an individual Senator requests it, CBO must 
     prepare estimates of the costs of intergovernmental mandates 
     contained in an amendment the Senator may wish to offer.
       The Congress may also call on CBO to do analyses at other 
     stages of the legislative process. If asked by the chair or 
     ranking minority member of a committee, and to the extent 
     practicable, CBO will: conduct special studies on legislative 
     proposals; compare an agency's estimate of the costs of 
     proposed regulations implementing a federal mandate with 
     CBO's estimate prepared when the law was enacted; and conduct 
     continuing studies to enhance comparisons of budget outlays, 
     credit authority, and tax expenditures. CBO's ability to 
     carry out those additional activities will depend on 
     available resources.
       Although the act does not specifically require CBO to 
     analyze the cost of mandates in appropriation bills, a point 
     of order would lie against legislative provisions in such 
     bills--or amendments to such bills--that increase the direct 
     costs of intergovernmental mandates but do not have the 
     appropriate CBO statement. CBO will also be required, when 
     requested, to assist committees by preparing studies of 
     legislative proposals containing federal mandates. For 
     intergovernmental mandates, CBO is directed to solicit 
     information or comments from elected officials and to 
     consider establishing advisory panels.
       Enforcement and Implementation Mechanisms Related to CBO's 
     Work. A point of order will now lie against any reported bill 
     unless the committee has published a CBO statement about 
     mandate costs. A point of order will also lie against any 
     bill, amendment, motion, or conference report that would 
     increase the direct costs of federal intergovernmental 
     mandates by more than $50 million, unless it provides 
     spending authority or authorizes appropriations sufficient to 
     cover those costs. Such authorizations would have to be 
     specified for each year up to 10 years after the effective 
     date, and--in the Senate--would have to be consistent with 
     the estimated costs of the bill, amendment, motion, or 
     conference report as determined by the Budget Committee. 
     Finally, a point of order will lie against any bill, 
     amendment, motion, or conference report that would increase 
     the direct costs of federal intergovernmental mandates by 
     more than $50 million, unless it provides a procedure for 
     terminating or scaling back mandates if agencies determine 
     that funds are not sufficient to cover those costs.
       How CBO Is Responding. Although CBO has been preparing 
     estimates of the impacts of federal legislation on state and 
     local governments since 1982, the passage of the Unfunded 
     Mandates Reform Act has signaled Congressional interest in 
     having more and better information on the costs of mandates. 
     This heightened interest on the part of the Congress makes it 
     clear that CBO must devote more time and resources to 
     providing the Congress with high quality and timely 
     estimates.
       CBO has done several things to enhance our state and local 
     government cost-estimating efforts. Most important, we have 
     established a new unit in the Budget Analysis Division--the 
     State and Local Government Cost Estimates Unit. In 
     addition to preparing cost estimates, the unit will do 
     special studies related to mandates and their budgetary 
     impacts and will provide ongoing support to Congressional 
     committees as they address the issues of intergovernmental 
     mandates. The new unit is currently staffed with a unit 
     chief and four analysts who have begun developing those 
     capabilities.
       For private-sector analyses, CBO has hired additional staff 
     in our program divisions to prepare cost estimates and to 
     conduct special studies when requested. The policy divisions 
     also will provide ongoing support to congressional committees 
     as they address the issues of private-sector mandates.
       New Responsibilities of Congressional Committees. The 
     Unfunded Mandates Reform Act also contains a number of new 
     requirements for committees. In general, when an authorizing 
     committee reports a bill or joint resolution that includes a 
     federal mandate, the report must identify and describe those 
     mandates and include a statement from the Director of the 
     Congressional Budget Office on their estimated costs. If that 
     statement cannot be published with the report, the committee 
     is responsible for ensuring that it is published in the 
     Congressional Record in advance of floor consideration. The 
     committee is responsible for promptly providing CBO with a 
     copy of the bill and for identifying mandates contained in 
     the bill.
       In addition, the report must contain a qualitative and, if 
     practical, a quantitative assessment of costs and benefits 
     anticipated from the mandates (including the effects on 
     health and safety and the protection of the natural 
     environment). Finally, the committee must state the degree to 
     which a federal mandate affects both the public and private 
     sectors, and the effect on the competitive balance between 
     those sectors if federal payments are made to compensate for 
     costs imposed on the public sector.
       If the bill imposes intergovernmental mandates, the 
     committee report shall contain a statement of how those 
     mandates are to be funded by the federal government; whether 
     the committee intends for the mandate to be partially or 
     fully funded; how the funding mechanism relates to the 
     expected direct costs to the respective levels of state, 
     local, and tribal governments; and any existing source of 
     funds in addition to those already identified that would 
     assist governments in meeting the direct costs of the 
     mandate.
       Bills must also provide for agencies to determine whether 
     funds are sufficient to cover the costs of new 
     intergovernmental mandates. If funding is insufficient, the 
     agency must notify the authorizing committee within 30 days 
     of the beginning of the fiscal year. The agency can submit a 
     reestimate of the costs or recommend a less costly approach. 
     If the Congress takes no action within 60 days, the mandate 
     becomes ineffective.
       For amended bills, joint resolutions and conference 
     reports, the committee of conference shall ensure, to the 
     greatest extent possible, that the Director of CBO prepare a 
     statement if the amended form contains a federal mandate not 
     previously considered by either House, or contains an 
     increase in the direct costs of a previously considered 
     mandate.
       Finally, the committees are required to identify in their 
     annual views and estimates reports to the Budget Committees, 
     issues that they will consider that will have costs for 
     state, local, or tribal governments or for the private 
     sector.

 Congressional Budget Office--Intergovernmental Mandate Statement for 
                      Bills on the House Calendar


                        (as of january 23, 1996)

       Committee: Resources.
       Bills that do not contain mandates: H.R. 260--National Park 
     System Reform Act of 1995; H.R. 1077--BLM Reauthorization Act 
     of 1995; H.R. 1122--Alaska Power Administration Sale Act; 
     H.R. 1175--Marine Resources Revitalization Act of 1995; H.R. 
     1675--National Wildlife Refuge Improvement Act of 1995; H.R. 
     1745--Utah Public Lands Management Act of 1995; H.R. 1815--
     National Oceanic and Atmospheric Administration Authorization 
     Act of 1995; H.R. 2402--Snowbasin Land Exchange Act of 1995; 
     H.R. 2726--A bill to make certain technical corrections in 
     laws relating to Native Americans; and S. 1341--Saddleback 
     Mountain-Arizona Settlement Act of 1995.
       Bills that contain mandates, but aggregate net costs are 
     below $50 million: None.
       Bills that require further review: None.

Congressional Budget Office--Private Sector Mandate Statement for Bills 
                         on the House Calendar


                        (as of january 23, 1996)

       Committee: Resources.
       Bills that do not contain mandates: H.R. 1077--BLM 
     Reauthorization Act of 1995; H.R. 1122--Alaska Power 
     Administration Sale Act; H.R. 1175--Marine Resources 
     Revitalization Act of 1995; H.R. 1815--National Oceanic and 
     Atmospheric Administration Authorization Act of 1995; H.R. 
     2402--Snowbasin Land Exchange Act of 1995; H.R. 2726--A bill 
     to make certain technical corrections in laws relating to 
     Native Americans.
       Bills that require further review: H.R. 260--National Park 
     System Reform Act of 1995; H.R. 1675--National Wildlife 
     Refuge Improvement Act of 1995; H.R. 1745--Utah Public Lands 
     Management Act of 1995; and S. 1341--Saddleback Mountain-
     Arizona Settlement Act of 1995.

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