[Senate Report 104-1]
[From the U.S. Government Publishing Office]



   104th Congress 1st            SENATE                 Report
         Session
                                                        104-1
_______________________________________________________________________

                                     

                                                        Calendar No. 12

                  UNFUNDED MANDATE REFORM ACT OF 1995

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                              to accompany

                                  S. 1

TO CURB THE PRACTICE OF IMPOSING UNFUNDED MANDATES ON STATES AND LOCAL 
    GOVERNMENTS; TO STRENGTHEN THE PARTNERSHIP BETWEEN THE FEDERAL 
    GOVERNMENT AND STATE, LOCAL AND TRIBAL GOVERNMENTS; TO END THE 
   IMPOSITION, IN THE ABSENCE OF FULL CONSIDERATION BY CONGRESS, OF 
   FEDERAL MANDATES ON STATE, LOCAL, AND TRIBAL GOVERNMENTS WITHOUT 
    ADEQUATE FUNDING, IN A MANNER THAT MAY DISPLACE OTHER ESSENTIAL 
GOVERNMENTAL PRIORITIES; AND TO ENSURE THAT THE FEDERAL GOVERNMENT PAYS 
   THE COSTS INCURRED BY THOSE GOVERNMENTS IN COMPLYING WITH CERTAIN 
  REQUIREMENTS UNDER FEDERAL STATUTES AND REGULATIONS, AND FOR OTHER 
                                PURPOSES




 January 11 (legislative day, January 10), 1995.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

 WILLIAM V. ROTH, Jr., Delaware, 
             Chairman
                                     TED STEVENS, Alaska
                                     WILLIAM S. COHEN, Maine
                                     FRED THOMPSON, Tennessee
                                     THAD COCHRAN, Mississippi
                                     CHARLES E. GRASSLEY, Iowa
                                     JOHN McCAIN, Arizona
JOHN GLENN, Ohio                     BOB SMITH, New Hampshire
SAM NUNN, Georgia
CARL LEVIN, Michigan
DAVID PRYOR, Arkansas
JOSEPH I. LIEBERMAN, Connecticut
DANIEL K. AKAKA, Hawaii
BYRON L. DORGAN, North Dakota
 Franklin G. Polk, Staff Director 
         and Chief Counsel
Susanne T. Marshall, Deputy Staff 
             Director
       John Mercer, Counsel
  Leonard Weiss, Minority Staff 
             Director
  Michal Sue Prosser, Chief Clerk
                                                        Calendar No. 12
104d Congress                                                    Report
                                 SENATE

 1st Session                                                      104-1
_______________________________________________________________________


 
                   UNFUNDED MANDATE REFORM ACT OF 1995

 January 11 (legislative day, January 10), 1995.--Ordered to be printed

_______________________________________________________________________


  Mr. Roth, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                          [To accompany S. 1]

    The Committee on Governmental Affairs to which was referred 
the bill S. 1, the Unfunded Mandate Reform Act of 1995, to curb 
the practice of imposing unfunded mandates on States and local 
governments; to strengthen the partnership between the Federal 
Government and State, local and tribal governments; to end the 
imposition, in the absence of full consideration by Congress, 
of Federal mandates on State, local, and tribal governments 
without adequate funding, in a manner that may displace other 
essential priorities; and to ensure that the Federal Government 
pays the costs incurred by those governments in complying with 
certain requirements under Federal statutes and regulations, 
and for other purposes, having considered the same, reports 
favorably thereon without an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................2
 II. Background.......................................................2
III. Legislative history..............................................8
 IV. Section-by-section analysis......................................9
  V. Regulatory impact statement.....................................22
 VI. CBO cost estimate...............................................23
VII. Additional views................................................26
VIII.
     Minority view...................................................30
 IX. Changes to existing law.........................................36

                               I. Purpose

    The purpose of S. 1--the ``Unfunded Mandate Reform Act of 
1995''--is to strengthen the partnership between Federal, 
State, local and tribal governments by ensuring that the impact 
of legislative and regulatory proposals on those governments 
are given full consideration in Congress and the Executive 
Branch before they are acted upon. S. 1 accomplishes this 
objective through the following major provisions: a majority 
point of order in the Senate to lie against Federal mandates 
without authorized funding to State, local and tribal 
governments; a requirement that the Congressional Budget Office 
(CBO) estimate the cost of Federal mandates to State, local and 
tribal governments as well as to the private sector; a 
requirement that Federal agencies establish a process to allow 
State, local and tribal governments greater input into the 
regulatory process; and, a requirement that agencies analyze 
the costs and benefits to State, local, and tribal governments 
of major regulations that include federal mandates.

                             II. Background

    On October 27, 1993, State and local officials from all 
over the Nation came to Washington and declared that day as 
``National Unfunded Mandates Day.'' These officials conveyed a 
powerful message to Congress and the Clinton Administration 
that unfunded Federal mandates imposed unreasonable fiscal 
burdens on their budgets, limited their flexibility to address 
more pressing local problems, forced local tax increases and 
service cutbacks, and hampered their ability to govern 
effectively.
    The Committee on Governmental Affairs heard that message, 
and on November 3rd scheduled a Full Committee hearing on the 
issue. Witnesses from all levels of State and local government, 
from big cities on down to small townships, testified at the 
hearing on how unfunded Federal mandates adversely effected 
their ability to govern and set priorities. Mayor Greg Lashutka 
of Columbus, Ohio summed up the problems best when he said:

          Others have called it [unfunded Federal mandates] 
        spending without representation. Across this country, 
        mayors and city councils and county commissioners have 
        no vote on whether these mandated spending programs are 
        appropriate for our cities. Yet, we are forced to cut 
        other budget items or raise taxes or utility bills to 
        pay for them because we must balance our budget at our 
        level.

    Mayor Ed Rendell of Philadelphia, Pennsylvania was more 
emphatic:

          What is happening is we are getting killed. In most 
        instances, we can't raise taxes. Many townships are at 
        the virtual legal cap that their State government puts 
        on them, or in my case in Philadelphia I took over a 
        city that had a $500 million cumulative deficit that 
        had raised four basic taxes 19 times in the 11 years 
        prior to my becoming mayor. We have driven out 30 
        percent of our tax base inP
        that time. I can't raise taxes, not because I want to 
        get reelected or because it is politically feasible to 
        say that, but because that would destroy what is left 
        of our base, and our base isn't good enough.

    Further, Mayor Rendell noted how Federal mandates forced 
undesirable tradeoffs against tackling more needy local 
problems:

          So when you pass a mandate down to us and we have to 
        pay for it, the police force goes down, the 
        firefighting force goes down. Recreation departments 
        are in disrepair. Our rec centers are in disrepair 
        because our capital budget is being sopped up by 
        Federal mandates, by the need to pay for Federal 
        mandates.

    Susan Ritter, County Auditor, Renville County, North 
Dakota, and David Worhatch, Township Trustee, Hudson, Ohio gave 
their perspective of how Federal mandates negatively impact the 
smallest of governments with a description of some specific 
examples. Ms. Ritter noted that the town of Sherwood, with a 
population of 286, will have to spend one half of its annual 
budget on testing its water supply. Mr. Worhatch noted how 
well-intentioned Federal mandates can have unintended 
consequences at a township-level that thwart the original 
purpose of the mandate. He pointed to strict regulations that 
could force the closure of a local landfill. That closure could 
lead to greater midnight dumping--an undesirable result.
    The Federal-State-local relationship is a complicated one. 
It is a blurry line between where one level of government's 
responsibility ends and another begins. Local officials decry 
unfunded State mandates as much as they do unfunded Federal 
ones. State officials then tell local officials that those 
mandates aren't theirs, but rather that they come from the 
Federal government and that States are just the conduit. The 
Federal government officials sometimes accuse State and local 
governments of falling down on their share of responsibilities 
when using Federal aid to carry out a Federal program. 
Likewise, State and local governments say that the regulations 
that go with accepting that aid are too onerous, and getting 
more so. They blame Federal agencies for promulgating 
burdensome and inflexible regulations. The agencies say that it 
is not their fault and claim that they are only carrying out 
the will of Congress in implementing statutes. Congress asserts 
that agencies have the statutory authority to allow State and 
local governments more leeway and flexibility in regulation and 
that therefore the responsibility lies there. What is lost in 
the debate is need for all levels of government to work 
together in a constructive fashion to provide the best possible 
delivery of services to the American people in the most cost-
effective fashion. Vice President Gore's National Performance 
Review recognizes this fundamental issue in its report--
``Strengthening the Partnership in Intergovernmental Service 
Delivery.'' The report notes:

          Americans increasingly feel that public institutions 
        and programs aren't working. In fact, serious social 
        and economic problems seem to be getting worse. The 
        percentage of low-birth-weight babies, the number of 
        single teens having babies, and arrest rates for 
        juveniles committing violent crimes are rising; the 
        percentage of children graduating from high school is 
        falling; welfare rolls and prison populations are 
        swelling; median incomes for families with children are 
        falling; more than half of children in female-headed 
        households are poor; and 37 million Americans have no 
        basic health care or not enough.
          Why? At least part of the answer lies in an 
        increasingly hidebound and paralyzed intergovernmental 
        process.

    The report goes on to explain how the 140 Federal programs 
designed to help families and children are administered by 10 
departments and 2 independent agencies. Fifteen percent of them 
are directly administered by the Federal government, 40 percent 
by States, and the remaining 40 percent by local, private or 
public groups.
    Whether these programs, as well as many other Federal 
programs, work or not hinges on the ability of Federal, State 
and local to work together as partners in carrying the 
program's responsibilities. When that coordination breaks down, 
the whole program suffers and program's objectives, be they 
improved environmental protection, reduced crime, better 
education, etc., fall short.
    State and local officials emphasized in the Committee's 
hearings of November 3, 1993, April 28, 1994, and January 5, 
1995, that over the last decade the Federal government has not 
treated them as partners in the providing of effective 
governmental services to the American people, but rather as 
agents or extensions of the Federal bureaucracy. In their view, 
this lack of coordination and cooperation has not only affected 
the provision of services at a local level but also carries 
with it the penalty of high costs, costs that they then pass on 
to local citizens.

     a. the cost of federal mandates to state and local governments

    There has been substantial debate on the actual costs of 
Federal mandates as well as on their indirect costs and 
benefits. Suffice it to say that almost all participants in the 
debate would conclude that there is not complete data on the 
aggregate cost of Federal mandates to State and local 
governments. So there is a need to develop a baseline of what 
the aggregate cost of Federal mandates is to State and local 
budgets.
    Notwithstanding the difficulty in preparing reliable cost 
estimates, the Committee believes that a strengthened and more 
thorough analytical process applied to legislation and 
regulation that impacts State, local and tribal governments is 
not only worthwhile, but achievable. There have been good faith 
efforts made in the past to measure the cost impacts of Federal 
intergovernmental mandates.
    The Advisory Commission on Intergovernmental Relations' 
(ACIR) 1993 report--``Federal Regulation of State and Local 
Governments: The Mixed Record of the 1980s'' examined the 
procedures by which Congress measures the impact of legislation 
on State and local governments. Since 1981, the Congressional 
Budget Office (CBO) has been preparing cost estimates on major 
legislation reported by Committee that is expected to have an 
annual cost to State and local governments in excess of $200 
million. According to CBO, on average roughly 10 to 20 reported 
bills per year exceed the $200 million threshold. These figures 
translate to between 2 and 4 percent of the total number of 
bills reported out of Committee. CBO estimates that about 11 
percent of all bills reported out of Committee each year have 
some cost impact on State and local governments. A breakout on 
a year-by-year basis between 1983 and 1988 is shown below.

                       TABLE 5-5.--STATE AND LOCAL COST ESTIMATES PREPARED BY CBO, 1983-88                      
----------------------------------------------------------------------------------------------------------------
              Estimates prepared                 1983    1984    1985    1986    1987    1988    Total   Average
----------------------------------------------------------------------------------------------------------------
For bills approved by committee...............     483     554     367     465     393     559    2,821      470
Other.........................................      90      87     166     125     138     127      733      122
                                               -----------------------------------------------------------------
      Total...................................     573     641     533     590     531     686    3,554      592
                                               =================================================================
Estimates with no state/local cost............     496     584     488     543     448     598    3,157      526
Percent.......................................      87      91      92      92      84      87       89       89
Estimates with some cost......................      77      57      45      47      83      73      382       64
Percent.......................................      13       9       8       8      16      11       11       11
Estimates with impact above $200 million......      24       6      14       8      22      15       89       15
Percent of total..............................       4       1       3       1       4       2        3        3
Percent of bills with some cost...............      31      11      31      17      26      21       23       23
----------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office Bill Estimates Tracking System, in Theresa A. Gullo, ``Estimating the Impact
  of Federal Legislation on State and Local Governments,'' in Michael Fix and Daphne A. Kenyon, eds. ``Coping   
  with Mandates: What Are the Alternatives?'' (Washington, DC: Urban Institute Press, 1990). p. 43.             

    The Committee also asked CBO to provide it with more recent 
cost estimates and to examine the number of bills that cross a 
$100 million annual threshold. In 1991, CBO scored 5 bills to 
cost State and local governments in excess of $100 million 
apiece. Another 8 bills had significant costs to State and 
local governments, but fell under the $100 million threshold. 
Further, CBO determined that for another 6 pieces of 
legislation for which they were unable to come up with specific 
estimates--5 bills would probably fall under the $100 million 
mark, one would probably exceed that total.
    In testimony before the Committee on April 28, 1994, Dr. 
Robert Reischauer, Director of CBO, noted that preparing 
thorough and reliable State and local cost estimates is not 
easy. He presented the following reasons for the difficulty CBO 
sometimes has in preparing the estimates:
          Preparing the estimates requires the use of many 
        different methodologies;
          The estimating process does not always yield firm 
        estimates. Further, completing the estimates does take 
        time--time that may not be readily available in the 
        normal legislative process; and,
          Legislative language may lack the detail necessary to 
        estimate the costs.
    Dr. Reischauer further stated that these constraints apply 
even more so to the preparation of cost estimates on private 
sector mandates. The Committee does believe that part of CBO's 
difficulty in performing these estimates lies in CBO not having 
adequate resources to conduct the estimates. Therefore, S. 1 
authorizes an increased in funding for CBO of $4.5 million for 
each of Fiscal Years 1996 through 2002. CBO's budget currently 
stands at just over $23 million.
    Federal environmental mandates head the list of areas that 
State and local officials have claimed to be most burdensome. A 
closer look at two of the studies done on the cost to State and 
local governments of compliance with environmental statutes 
does indicate these costs appear to be rising. A 1990 EPA study 
(prepared in conjunction with the Environmental Law Institute) 
``Environmental Investments: The Cost of a Clean Environment,'' 
estimates that total costs of environmental mandates (from all 
levels of government) to State and local governments will rise 
levels of government) to State and local governments will rise 
(in constant 1986 dollars) from $22.2 billion in 1987 to $37.1 
billion by the year 2000--a real increase of 67 percent. 
According to the Vice President's National Performance Review 
report on the EPA, this figure when adjusted for inflation 
reaches close to $44 billion on an annual basis by the year 
2000. EPA estimates that costs to local government will 
increase the most (70 percent) while the impact on State 
governments is less (48 percent), but still significant. Over 
the 13 year span, the average real increase in costs to State 
and local governments translates to 5.2 percent on an annual 
basis. A table is included as follows:

           TABLE 1-2.--TOTAL ANNUALIZED COSTS OF ENVIRONMENTAL MANDATES BY FUNDING SOURCES, 1972-2000           
                                          [In millions of 1986 dollars]                                         
----------------------------------------------------------------------------------------------------------------
                      Funding source                          1972       1980       1987       1995       2000  
----------------------------------------------------------------------------------------------------------------
Environmental Protection Agency..........................       $978     $4,574     $6,758     $9,161    $10,409
Other Federal Agencies...................................         87      1,932      2,649      7,970     11,670
State Government.........................................      1,542      2,230      3,025      3,911      4,476
Local Government.........................................      7,673     12,857     19,162     27,913     32,577
Private..................................................     16,201     36,376     53,696     76,101     88,772
                                                          ------------------------------------------------------
      Total..............................................     26,481     57,969     85,290    125,056    147,904
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency, ``Environmental Investments: The Cost of a Clean Environment''    
  (Washington, DC: U.S. Environmental Protection Agency. 1990) selected data from pp. 8-49 through 8-51. These  
  estimates use a mid-range discount rate of 7 percent and include funding to meet EPA's air, water, land,      
  chemicals, and multi-media regulations.                                                                       

    The City of Columbus, Ohio also noted a trend in rising 
costs for city compliance with Federal environmental mandates 
in its study ``Environmental Legislation: The Increasing Costs 
of Regulatory Compliance to the City of Columbus.'' The City 
examined its cost of compliance with 13 Federal environmental 
and health statutes and concluded that its cost of compliance 
with those statutes would rise from $62.1 million in 1991 to 
$107.4 million in 1995 (in 1991 constant dollars), a 73 percent 
increase. The City estimates that its share of the total city 
budget going to pay for these mandates will increase from 10.6 
percent to 18.3 percent over the timeframe. these calculations 
were based on an unchanging total city budget between 1991 and 
1995; assuming a 3 percent annual real growth rate in the 
budget reveals a lesser increase from 10.6 percent to 16.1 
percent.
    In addition to environmental requirements, State and local 
officials cite other Federal requirements as burdensome and 
costly; compliance with the Americans with Disabilities Act and 
the Motor Voter Registration Act; complying with the 
administrative requirements that go with implementing many 
Federal programs; meeting Federal criminal justice and 
educational program requirements. While all these programs 
clearly carry with them costs to State and local governments, 
they can have benefits both to society as a whole--a fact that 
State and local officials concede. It is the aggregate impact 
of all Federal mandates that has spurred the calls for mandate 
reform and relief. However, to truly reach a better 
understanding of the Federal mandates debate, it is necessary 
to look at the Federal funding picture.

             b. federal aid to state and local governments

    It is readily apparent that Federal discretionary aid to 
State and local governments both to implement Federal policies 
and directives as well as to comply with them saw a sharp drop 
in the 1980s before rising again in the early 1990s--although 
in real terms Federal aid is still significantly below its 
earlier levels.
    An examination of Census Bureau data on sources of State 
and local government revenue shows a decreasing Federal role in 
funding to State and local governments. In 1979, the Federal 
government's contribution to State and local government 
revenues reached 18.6 percent. By 1989, the Federal share of 
the State and local revenue pie had steadily shrunk to 13.2 
percent before edging up to 14.3 percent in 1991--the latest 
year that data is available (see accompanying chart).

  The Federal Government's contribution to State and local government 
                         revenues (1970-1991)\1\

                           Percent of State and local government revenue
Year:
    1970..........................................................  14.6
    1971..........................................................  15.8
    1972..........................................................  16.4
    1973..........................................................  18.0
    1974..........................................................  17.6
    1975..........................................................  17.8
    1976..........................................................  18.3
    1977..........................................................  18.5
    1978..........................................................  18.7
    1979..........................................................  18.6
    1980..........................................................  18.4
    1981..........................................................  17.8
    1982..........................................................  15.9
    1983..........................................................  15.2
    1984..........................................................  14.9
    1985..........................................................  14.7
    1986..........................................................  14.4
    1987..........................................................  13.6
    1988..........................................................  13.3
    1989..........................................................  13.2
    1990..........................................................  13.3
    1991..........................................................  14.3

\1\ U.S. Census Bureau--Government Finances Series, 1970-1991. Chart 
tabulated by Staff of Senate Committee on Governmental Affairs.

    A closer look at patterns in Federal discretionary grants-
in-aid programs during the 1980s confirms the finding that the 
Federal government lessened its financial support of State and 
local governments. According to the Federal Funds Information 
Service (FFIS), between 1981 and 1990 Federal discretionary 
funding to State and local governments rose from $47.5 billion 
to $51.6 billion, a nominal increase of 8.6 percent. However, 
this figure when adjusted for inflation (using the GDP Price 
Deflator) tells a much different story: Federal aid dropped 28 
percent over the decade--a 3.1 percent real decline on an 
annual average basis.
    A number of significant Federal aid programs to State and 
local governments experienced sharp cuts and, in some cases, 
outright elimination during the decade. In 1986, the 
Administration and Congress agreed to terminate the general 
revenue sharing program--a program that provided approximately 
$4.5 billion annually to local governments and allowed them 
broad discretion on how to spend the funds. Since its inception 
in 1972, general revenue sharing had provided approximately $83 
billion to State and local governments. Funding for Urban 
Development Action Grants, another significant program, was 
also terminated within this timeframe.
    Between 1981 and 1990, funding for numerous Federal-State-
local government grant programs was substantially trimmed, 
among them: Economic Development Assistance (47.5 percent--
decrease is in nominal dollars), Community Development Block 
Grants (21.1 percent), Mass Transit (30.2 percent), Refuge 
Assistance (38.4 percent), and Low-Income Home Energy 
Assistance (17.6 percent). These cuts were partially offset by 
increases in funding in other areas--primarily in housing and 
health and human services programs.
    The early 1990s saw a resurgence in funding for Federal-
State-local discretionary aid programs. Funding rose from $51.6 
billion in 1990 to $67.4 billion in 1993, a nominal increase of 
30.6 percent and an inflation-adjusted average annual gain of 
5.6 percent. This growth was driven primarily by expansions in 
funding for Head Start, Highway Funding, and Compensatory 
Education. Still, even with this recent growth, between 1980 
and 1993 discretionary funding declined 18.2 percent in real 
dollars--an average annual real decrease of 1.4 percent.
    In simple terms, over the last decade or so, State and 
local governments have gotten less of the Federal carrot and 
more of the Federal stick. The Committee has responded to State 
and local officials' calls for change, and has reported out 
bipartisan mandate reform legislation.

                        III. Legislative History

    In the 103d Congress, eight bills were introduced and 
referred to the Committee that addressed, at least in part, the 
subject of Federal mandates on State and local governments. 
Bill sponsors included: S. 480--Levin; S. 563--Moseley-Braun; 
S. 648--Gregg; S. 993--Kempthorne; S. 1188--Coverdell; S. 
1592--Dorgan; S. 1604--Glenn; and, S. 1606--Sasser. Several 
major concepts were contained in most of the bills, among them: 
analysis of the costs of legislation and regulation on State 
and local governments; a prohibition or restriction on new 
Federal mandates without funding; and, points of order 
enforcement. Senator Kempthorne's legislation, the original S. 
993--the ``Community Regulatory Relief Act of 1993''--had the 
strongest support, with more than 50 cosponsors. After two 
hearings and extensive meetings and discussions with State and 
local government organizations, the Administration, Senators 
and their staff, and the public interest community, the 
Committee crafted a legislative proposal that drew from many of 
the provisions of the eight bills, as well as incorporating 
several new provisions.
    On June 16, the Committee marked up and reported out S. 993 
with an amendment and an amendment to the title. Chairman Glenn 
offered a substitute bill to the original Kempthorne Bill, 
titled the ``Federal Mandate Accountability and Reform Act of 
1994'', which passed by unanimous voice vote. Several other 
amendments offered by members of the Committee were also 
adopted, including an amendment by Senator Dorgan to include 
the private sector under the CBO and Committee mandate cost 
analysis requirements of Title I of S. 993, and a Glenn 
amendment to allow CBO to waive the private sector cost 
analysis if CBO cannot make a ``reasonable estimate'' of the 
bill's cost.
    S. 993 as amended and reported by the Committee was 
considered by the Senate on October 6, 1994, without a time 
agreement. After some debate and the introduction of several 
additional amendments to the bill, the Senate proceeded to 
other items without taking any votes. The Senate adjourned 
without further consideration of S. 993.
    In the 104th Congress, Senator Kempthorne introduced S. 1--
the ``Unfunded Mandate Reform Act of 1995''--on January 4, 
1995, and the bill was concurrently referred both to the 
Governmental Affairs Committee. On January 5, the Governmental 
Affairs Committee held a joint hearing on the bill with the 
Budget Committee. On January 9, the Government Affairs 
Committee voted to report the bill, S. 1, by a vote of 9-4 
after adopting an amendment by Senator Glenn and two by Senator 
Levin. Voting ``aye'' were Senators Roth, Stevens, Cohen, 
Thompson, Cochran, Grassley, Smith, Glenn, and Nunn (with 
Senators McCain and Dorgan voting ``aye'' by proxy). Voting 
``nay'' were Senators Levin, Pryor, Lieberman, and Akaka.

                    IV. Section-by-Section Analysis

    S. 1 sets up a legislative and regulatory framework that is 
based on three relatively simple concepts:
          To better understand the impact of Federal mandates 
        on State, local and tribal governments, and on the 
        private sector, before policymakers act in either the 
        Congress or the Executive Branch.
          To ensure that the needs and views of State and local 
        governments are given full consideration before the 
        Congress or the Executive Branch imposes new Federal 
        mandates without funding.
          To establish a point of order in the Congress against 
        unfunded federal mandates on State, local and tribal 
        governments.
    A more detailed description of the most important 
provisions in the bill follows below.

                         section 1. short title

    This section identifies the short title as the ``Unfunded 
Mandate Reform Act of 1995.''

                          section 2. purposes

    This section establishes the purpose of the Act.

                         section 3. definitions

    This section breaks the definition of Federal mandates into 
two components: Federal intergovernmental mandates and Federal 
private sector mandates.
    The section amends the Congressional Budget and Impoundment 
Control Act of 1974, by adding several new definitions. It 
stipulates that a ``Federal intergovernmental mandate'' means 
any legislation, or a provision therein, or regulation that 
imposes a legally binding duty on State, local or tribal 
governments. This would include legislation or regulation that 
seeks to eliminate or reduce the authorization of 
appropriations of Federal financial assistance to State, local 
and tribal governments should they not comply with that 
legislation's or regulation's duties. The subsection also 
provides that legislation or regulation would be considered a 
Federal intergovernmental mandate if it sought to reduce or 
eliminate an existing authorization of appropriations for the 
purposes of complying with some previously imposed duty. The 
Committee believes that if the Federal government imposes 
legally binding duties on State, local or tribal governments, 
and provides financial assistance to them to carry out or 
comply with those duties, then S. 1's provisions should apply 
if the Federal government subsequently reduces the 
authorization of that aid, while continuing to keep the 
existing duties in place. Exempted from the provisions of this 
subsection is legislation or regulation that authorizes or 
implements a voluntary discretionary aid program to State, 
local and tribal governments that has requirements or 
conditions of participation specific to that program.
    Included, as part of the definition of Federal 
intergovernmental mandates, are Federal entitlement programs 
that provide $500 million or more annually to State, local or 
tribal governments. This would currently include nine large 
Federal entitlement programs, seven of which are either exempt 
from sequestration or subject to a special rule under the 
Budget Act. The nine are: Medicaid; AFDC; Child Nutrition; Food 
Stamps; Social Services Block Grants; Vocational Rehabilition 
State Grants; Foster Care, Adoption Assistance, and Independent 
Living; Family Support Welfare Services; and, Child Support 
Enforcment. Any legislation or regulation would be considered a 
Federal intergovernmental mandate if it: a) increases the 
stringency of State, local or tribal government participation 
in any one of these nine programs, or b) caps or decreases the 
Federal government's responsibility to provide funds to State, 
local or tribal governments to implement the program, including 
a shifting of costs from the Federal government to those 
governments. The legislation or regulation would not be 
considered a Federal intergovernmental mandate if it allows 
those governments the flexibility to amend their specific 
programmatic or financial responsibilities within the program 
while still remaining eligible to participate in that program. 
In addition to the nine previously-mentioned programs, also 
included are any new Federal-State-local entitlement programs 
(above the $500 million threshold) that may be created after 
the enactment of this Act. The Committee has included this 
provision in the legislation because of its concern over past 
and possible future shifting of the costs of entitlement 
programs by the Federal government onto State governments.
    Subsection (c)(i) (I) and (II) addresses the estimated 
costs of intergovernmental mandates. It is the intention of the 
Committee that reauthorization of existing laws not be subject 
to the requirements of S. 1 where the costs of the reauthorized 
legislation do not exceed the existing costs of the mandate 
plus the applicable thresholds established in the bill. This 
principle would apply to laws for which authorizations of 
appropriation may have expired.
    ``Federal private sector mandate'' is defined to include 
any legislation, or a provision therein, that imposes a legally 
binding duty on the private sector.
    ``Direct costs'' is defined to mean aggregate estimated 
amounts that State, local and tribal governments and the 
private sector will have to spend in order to comply with a 
Federal mandate. Direct costs of Federal mandates are net 
costs; estimated savings will be subtracted from total costs. 
Further, direct costs do not include costs that State, local 
and tribal governments and the private sector currently incur 
or will incur to implement the requirements of existing Federal 
law or regulation. In addition, the direct costs of a Federal 
mandate must not include costs being borne by those governments 
and the private sector as the result of carrying out a State or 
local government mandate. Finally, the Committee intends that 
direct costs be calculated on the assumption that State, local 
and tribal governments and the private sector are in compliance 
with relevant codes and standards of practice established by 
recognized professional organizations or trade associations.
    ``Private sector'' is defined to cover all persons or 
entities in the United States except for State, local or tribal 
governments. It includes individuals, partnerships, 
associations, corporations, and educational and nonprofit 
institutions.
    Independent regulatory agencies are excluded from the 
definition of a Federal ``agency''. The definition of ``small 
government'' is made consistent with existing Federal law which 
classifies a government as small if its population is less than 
50,000. ``Tribal government'' is defined according to existing 
law.

                         section 4. exclusions

    The Committee believes that several types of unfunded 
mandates should be properly excluded from the requirements of 
this Act. These include Federal legislation or regulation that: 
enforces constitutional rights of individuals; establishes or 
enforces statutory rights to prohibit discrimination on the 
basis of race, religion, gender, national origin, or 
handicapped or disability status; requires compliance with 
Federal auditing and accounting procedures; provides emergency 
relief assistance or is designated as emergency legislation; 
and, is necessary for national security or ratification or 
implementation of international treaties.
    A number of these exemptions are standard in many pieces of 
legislation in order to recognize the domain of the President 
in foreign affairs and as Commander-in-Chief as well as to 
ensure that Congress's and the Executive Branch's hands are not 
tied with procedural requirements in times of national 
emergencies. Further, the Committee thinks that Federal 
auditing, accounting and other similar requirements designed to 
protect Federal funds from potential waste, fraud, and abuse 
should be exempt from the Act.
    The Committee recognizes the special circumstances and 
history surrounding the enactment and enforcement of Federal 
civil rights laws. During the middle part of the 20th century, 
the arguments of those who opposed the national, uniform 
extension of basic equal rights, protection, and opportunity to 
all individuals were based on a States rights philosophy. With 
the passage of the Civil Rights Acts of 1957 and 1964 and the 
Voting Rights Act of 1965, Congress rejected that argument out 
of hand as designed to thwart equal opportunity and to protect 
discriminatory, unjust and unfair practices in the treatment of 
individuals in certain parts of the country. The Committee 
therefore exempts Federal civil rights laws from the 
requirements of this Act.

                      section 5. agency assistance

    Under this section, the Committee intends for Federal 
agencies to provide information, technical assistance, and 
other assistance to the Congressional Budget Office [CBO] as 
CBO might need and reasonably request that might be helpful in 
preparing the legislative cost estimates as required by Title 
I. Through the implementation of various Presidential Executive 
Orders over the last decade, agencies have developed a wealth 
of expertise and data on the cost of legislation and regulation 
on State, local and tribal government and the private sector. 
CBO should be able tap into that expertise in a useful and 
timely manner. Other Congressional support agencies may also 
have developed information on cost estimates and the estimating 
process which might be helpful to CBO in performing its duties. 
CBO should not attempt to duplicate analytical work already 
being done by the other support agencies, but rather use as 
needed that information.

             Title I--Legislative Accountability and Reform

       section 101. legislative mandate accountability and reform

    This section amends title IV of the Congressional Budget 
and Impoundment Control Act of 1974 by creating a new section 
408 on Legislative Mandate Accountability and Reform. 
Subsection (a) establishes procedures and requirements for 
Committee reports accompanying legislation that imposes a 
Federal mandate. It requires a committee, when it orders 
reported legislation containing Federal mandates, to promptly 
provide the reported bill to CBO so that it can be scored. The 
Committee is concerned that the CBO scoring process not 
unnecessarily impede or slow the legislative process. With this 
view in mind, the Committee would urge the relevant authorizing 
committees to work closely with CBO during the committee 
process to ensure that legislation containing federal mandates, 
as well as possible related amendments to be offered in markup, 
be scored in a timely fashion.
    The committee report shall include: an identification and 
description of Federal mandates in the bill, including an 
estimate of their expected direct costs to State, local tribal 
governments and the private sector, and a qualitative 
assessment of the costs and benefits of the Federal mandates, 
including their anticipated costs and benefits to human health 
and safety and protection of the natural environment. If a 
mandate affects both the public and the private sectors, and it 
is intended that the Federal Government pay the public sector 
costs, the report should also state what effect, if any, this 
would have on any competitive balance between government and 
privately owned business.
    Some federal mandates will affect both the public and 
private sectors in similar, and in some cases nearly identical, 
ways. For example, the costs of compliance with minimum wage 
laws or environmental standards for landfill operations or 
municipal waste incineration are incurred by both sectors. 
There has been some concern expressed that subsidization of the 
public sector in these cases could create a competitive 
advantage for activities owned by State, local or tribal 
governments in those areas where they compete with the private 
sector. In any instance where this might be the case, Congress 
should be aware of that impact and the effect on the continuing 
ability of private enterprises to remain viable, and carefully 
consider whether the granting of a competitive advantage to the 
public sector is fair and appropriate.
    For Federal intergovernmental mandates, Committee reports 
must also contain a statement of the amount, if any, of 
increased authorization of Federal financial assistance to fund 
the costs of the intergovernmental mandates.
    This section also requires the authorizing Committee to 
state in the report whether it intends the Federal 
intergovernmental mandate to be funded or not. There may be 
occasions when a Committee decides that it is entirely 
appropriate that State, local or tribal governments should bear 
the cost of a mandate without receiving Federal aid. If so, the 
Committee report should state this and give an explanation for 
it. Likewise, the Committee report must state the extent to 
which the reported legislation preempts State, local or tribal 
law, and, if so, explain the reasons why. To the maximum extent 
possible, this intention to preempt should also be clear in the 
statutory language.
    Also set out in this section are procedures to ensure that 
the Committee publishes the CBO cost estimate, either in the 
Committee report or in the Congressional Record prior to floor 
consideration of the legislation.

Duties of the Director

    New section 408(b) of the Congressional Budget and 
Impoundment Control Act requires that the Director of CBO 
analyze and prepare a statement on all bills reported by 
committees of the Senate or House of Representatives other than 
appropriations committees. This subsection stipulates, first, 
that the Director of CBO must estimate whether all direct costs 
of Federal intergovernmental mandates in the bill will equal or 
exceed a threshold of $50,000,000 annually. If the Director 
estimates that the direct costs will be below this threshold, 
the Director must state this fact in his statement on the bill, 
and must briefly explain the estimate. (Although this provision 
requires only a determination by CBO that the threshold will 
not be equalled or exceeded, if, in cases below the threshold, 
the Director actually estimates the amount of direct costs, the 
Committee expects that he will include that estimate in his 
explanatory statement.) If the Director estimates that the 
direct costs will equal or exceed the threshold, the Director 
must so state and provide an explanation, and must also prepare 
the required estimates.
    In estimating whether the threshold will be equalled or 
exceeded, the Director must consider direct costs in the year 
when the Federal intergovernmental mandate will first be 
effective, plus each of the succeeding four fiscal years. In 
some cases, the new duties or conditions that constitute the 
mandate will not become effective against State, local and 
tribal governments when the statute becomes effective, but will 
become effective when the implementing regulations become 
effective. In such cases, the Director must consider direct 
costs in the first fiscal year when the regulations are to 
become effective, and each of the next four fiscal years.
    The $50,000,000 threshold in this legislation for Federal 
intergovernmental mandates is significantly lower than the 
threshold of $200,000,000 in the State and Local Cost Estimate 
Act of 1981 (2 U.S.C. 403(c)). The threshold in the 1981 Act 
also included a test of whether the proposed legislation is 
likely to have an exceptional fiscal consequence for a 
geographic region or a level of government. The Committee 
believes that, in the context of this present legislation, 
applying a threshold for specific geographic regions or levels 
of government would be too subjective or too complex. However, 
the significantly lowered threshold of S. 1 should provide an 
extra margin of protection for particular geographic regions or 
levels of government affected by Federal intergovernmental 
mandates.
    If the Director determines that the direct costs of the 
Federal Intergovernmental mandates will equal or exceed the 
threshold, he must make the required additional estimates and 
place them in the statement. These additional estimates may be 
summarized as follows:
          An estimate of the total amount of direct costs of 
        the Federal intergovernmental mandates. This is an 
        aggregate amount, broken out on an annual basis over 
        the 5-year period.
          An estimate of any increase in the bill in 
        authorization of appropriations for Federal financial 
        assistance programs usable by the State, local, and 
        tribal governments for activities subject to the 
        Federal intergovernmental mandates.
    The amount of increase in authorization of appropriations 
would be calculated, as the sum of the increased budget 
authority of any Federal grant assistance, plus the increased 
subsidy amount of any loan guarantees or direct loans.
    The Director of CBO must also estimate first whether all 
direct costs of Federal private sector mandates in the bill 
will equal or exceed a threshold of $200,000,000 annually. In 
making this estimate, the Director must consider direct costs 
in the year when the Federal private sector mandate will first 
be effective, plus each of the succeeding four fiscal years. In 
some cases, the new duties or conditions that constitute the 
mandate will not become effective for the private sector when 
the statute becomes effective, but will become effective when 
the implementing regulations become effective. In such cases, 
the Director must consider direct costs in the first fiscal 
year when the regulations become effective, and each of the 
next four fiscal years. If the Director estimates that the 
direct costs will equal or exceed the threshold, the Director 
must so state and provide an explanation, and must also prepare 
the required estimates. These additional estimates may be 
summarized as follows:
          An estimate of the total amount of direct costs of 
        the Federal private sector mandates. This is an 
        aggregate amount, broke out annually over the 5-year 
        period.
          An estimate of any increase in the bill in 
        authorization of appropriations for Federal financial 
        assistance programs usable by the private sector for 
        activities subject to the Federal private sector 
        mandates.
    If the Director determines that it is not feasible for him 
to make a reasonable estimate that would be required with 
respect to Federal private sector mandates, the Director shall 
not make the estimate, but shall report in the statement that 
the reasonable estimate cannot be reasonably made. No 
corresponding section applies for Federal intergovernmental 
mandates.
    If the Director estimates that the direct costs of a 
Federal mandate will be below the specified threshold, the 
Director must state this fact in his statement on the bill, and 
must briefly explain the estimate. (Although this provision 
requires only a determination from CBO of whether the threshold 
will or will not be exceeded, if, in cases below the threshold, 
the Director actually estimates the amount of direct costs, the 
Committee expects that he will include this estimate in his 
explanatory statement.)

Point of order in the Senate

    This section provides that a point of order lies against 
any bill or joint resolution reported by a committee that 
contains a Federal mandate, but does not contain a CBO estimate 
of the mandate's direct costs. A point of order would also lie 
against any bill, joint resolution, amendment, motion, or 
conference report that increased the costs of a Federal 
intergovernmental mandate by an amount that caused the 
$50,000,000 threshold to be exceeded, unless that same amount 
were fully funded to State, local and tribal governments.
    Such action would have to specify that the funding of the 
mandate's full costs would be by way of; (1) an increase in 
entitlement spending with a resulting increase in the Federal 
budget deficit, (2) an increase in direct spending paid for by 
an increase in tax receipts, or (3) an increase in the 
authorization of appropriations.
    If the third alternative is used (authorization of 
appropriations), the specific appropriation bill that is 
expected to provide funding must be identified. The mandate 
legislation must also designate a responsible Federal agency 
that shall either: implement an appropriately less costly 
mandate if less than full funding is ultimately appropriated 
(pursuant to criteria and procedures also provided in the 
mandate legislation), or declare such mandate to be 
ineffective. In other words, the authorizing committee should 
expect that unless it expressly plans otherwise, its mandate 
will be voided if the appropriations committee at any point in 
the future under-funds the mandate. Therefore, if a ``less 
money, less mandate'' alternative is both feasible and desired, 
it is incumbent upon the authorizing committee to specify how 
the agency shall implement that alternative.
    Appropriations bills are not subject to a point of order 
under this section. If such a bill did seek to impose a federal 
mandate, it would likely be subject to the point of order that 
lies against legislating on an appropriations bill.
    The Committee expects that during those instances when the 
Parliamentarian must rule on a point of order under this 
section, there may be occasions when there is a need for 
consultation regarding the applicability of this Act. This 
section provides that on all such questions that are not within 
the purview of either the House or Senate Budget Committee, it 
is the Senate Governmental Affairs Committee or House 
Government Reform and Oversight Committee that shall make the 
final determination. For example, on the question of whether a 
particular mandate is properly excluded from coverage of the 
Act as bill which enforces constitutional rights of 
individuals, the Governmental Affairs Committee would be the 
appropriate Committee to consult. On a question regarding the 
particular cost of such a mandate, the Budget Committee would 
be the appropriate committee.

        Section 102. Enforcement in the House of Representatives

    This section specifies the procedures to be followed in the 
House of Representatives in enforcing the provisions of this 
Act.

           Section 103. Assistance to committees and studies

    This section requires the Director of CBO to consult with 
and assist committees of the Senate and the House of 
Representatives, at their request, in analyzing proposed 
legislation that may have a significant budgetary impact on 
State, local or tribal governments or a significant financial 
impact on the private sector. It provides for the assistance 
that committees will need from CBO to fulfill their obligations 
under the provisions of S. 1.
    This section also states that CBO should set up a process 
to allow meaningful input from those knowledgeable, affected, 
and concerned about the Federal mandates in question. One 
possible way to establish this process is through the formation 
of advisory panels made up of relevant outside experts. The 
Committee leaves it to the discretion of the Director as to 
when and where it is appropriate to form an advisory panel; 
however, the Committee does encourage the Director to form 
these panels where feasible and helpful in performing the 
requisite studies. The membership of the panels should 
represent a fair balance of interests and constituencies, as 
well as include those expert in the areas of economic and 
budgetary analysis, but the Committee believes that when the 
Director convenes an advisory panel, he should appoint State, 
local or tribal officials (including their designated 
representatives) to the panels.
    This section encourages authorizing committees to take a 
prospective look at the impact of Federal intergovernmental and 
private sector mandates before considering new legislation. It 
stipulates that committees should request that CBO undertake 
studies in the early part of each Congress of the potential 
budgetary and financial impact of Federal mandates in major 
legislation expected to be considered in that Congress.

              Section 104. Authorization of appropriations

    This paragraph authorizes appropriations for CBO of 
$4,500,000 per year for FY 1996 through 2002. The Committee 
recognizes that additional resources and personnel are needed 
for CBO to fully perform its duties under this Act along with 
continuing to carry out its current responsibilities. The 
Committee understands that the current policy and practice at 
CBO is to rely on in-house personnel to conduct studies and 
cost estimates, rather than contracting these duties to outside 
entities. The Committee supports this policy and urges the 
Appropriations Committee, in funding this authorization, to 
increase CBO's authority to hire additional personnel in order 
to fulfill its new duties under this Act.

               Section 105. Exercise of rulemaking powers

    This section provides that the terms of title I are enacted 
as an exercise of the rulemaking power of the Senate and the 
House of Representatives, and that either house may change such 
rules at any time.

  Section 106. Repeal of the State and Local Cost Estimate Act of 1981

    This paragraph rescinds the provisions of the State and 
Local Cost Estimate Act of 1981.

                      Section 107. Effective date

    Title I will take effect on January 1, 1996 and apply only 
to legislation introduced on or after that date. This is to 
give CBO the time to develop the proper methodologies and 
analytical techniques in order to develop a more thorough cost 
estimating process, as well as to give Congress opportunity to 
provide adequate resources to CBO in the annual appropriations 
process.

             Title II--Regulatory Accountability and Reform

                    Section 201. Regulatory Process

    Under this section, agencies must assess the effects of 
their regulations on State, local and tribal governments, and 
the private sector, including resources available carry out 
Federal intergovernmental mandates contained in those 
regulations. In keeping with both statutory and regulatory 
objectives, agencies shall seek ways to minimize regulatory 
burdens that significantly effect State, local and tribal 
governments.
    Subsection (b) requires agencies to develop an effective 
process to permit elected officials of those governments (or 
their designated representatives) to provide meaningful and 
timely input into the development of regulatory proposals that 
contain significant Federal intergovernmental mandates. This 
provision mirrors Section 1(b) of President Clinton's Executive 
Order 12875--``Enhancing the Intergovernmental Partnership''--
which seeks to establish a closer partnership between Federal 
agencies and elected and other State, local and tribal 
officials in the regulatory process. The Committee expects 
agencies to fully and faithfully implement this section as well 
as the other provisions in the E.O. On January 11, 1994, OMB 
Director Leon Panetta and OIRA Administrator Sally Katzen 
issued guidance on the implementation of the E.O. Concerning 
Section 1 of the E.O., that guidance states, 
``intergovernmental consultation should take place as early as 
possible, and preferably before publication of the notice of 
proposed rulemaking or other regulatory action proposing the 
mandate. Consultations may continue after publication of the 
regulatory action initiating the proposal, but in any event 
they must occur `prior to the formal promulgation' in final 
form of the regulatory action `containing the proposed 
mandate.' '' Early and extensive intergovernmental consultation 
can help promote the development of more cost-effective Federal 
regulation as well as help all the participants in the process 
reach a better understanding of the proper needs and 
responsibilities of each level of government in implementing or 
complying with a Federal requirement.
    OMB's guidance also outlines with whom agencies should 
consult in State, local and tribal government. The Committee 
feels strongly that agencies should follow the OMB guidance 
concerning consultation with elected officials, including their 
representatives, from all levels of smaller governments because 
these officials are responsible for balancing the competing 
claims on their government's revenue base from many program 
responsibilities. The OMB guidance further discusses how 
Federal agencies should also confer with the designated 
representatives of elected officials as well as with program 
and financial officials from State, local and tribal 
governments. Program officials clearly are able to offer 
information and guidance to their Federal counterparts on the 
likely effectiveness of any Federal regulatory proposal, while 
financial officials can offer important perspectives on their 
government's ability to pay for the mandate. In consulting with 
financial officials, Federal agencies should look to the 
applicable treasury, budget, tax-collection, or other financial 
officers in State, local and tribal governments.
    Subsection (b) also states that the intergovernmental 
consultations should be consistent with the requirements 
established in existing Federal law governing the regulatory 
process. In particular, the Committee believes that agencies 
must ensure that the consultation process not subvert or 
violate in any way the public disclosure and sunshine 
provisions of existing law and Executive Order, including the 
Administrative Procedure Act.
    Subsection (c)(1) has agencies establishing plans to 
inform, advise, involve and consult with small governments 
before implementing regulations that might significantly or 
uniquely affect those governments. The Committee believes that 
Federal agencies should undertake a special effort to ensure 
that officials from small governments have an opportunity for 
significant input into the regulatory process. According to the 
Census Bureau, small governments (population below 50,000) make 
up 97 percent of all general purpose governments in the United 
States. A full 67 percent of all general purpose governments 
serve fewer than 2,500 people. Yet despite their prevalence, 
small governments have a relatively small presence in the 
Nation's Capital where Federal regulatory policies and 
decisions are made. It is the Committee's sense that Federal 
agencies have not always been aware of, or have adequately 
considered, small governments' capabilities in implementing 
certain regulatory requirements. This has resulted in the 
promulgation of regulations in certain cases that have not only 
over-burdened small governments to the point of widespread non-
compliance, but in so doing fails to achieve those regulations' 
goals and objectives. The Committee believes that one way to 
achieve the twin goals of more cost-effective regulation and 
greater rates of compliance on significant regulations that 
impact small governments is for agencies to establish plans for 
outreach to small governments. Such plans might incorporate 
activities such as greater technical assistance to small 
governments; regional planning activities, conferences, and 
workshops; and establishment of small government advisory 
committees, or appointment of small government representatives 
on existing advisory committees. One good approach is embodied 
in the recommendations of the National Performance Review 
Report for the Environmental Protection Agency. The NPR EPA 
Report recommends that the agency convene a series of town 
meetings across the United States to discuss more flexible ways 
to achieve environmental protection.

  section 202. statements to accompany significant regulatory actions

    This section states that before a Federal agency 
promulgates any final rule or notice of proposed rulemaking 
that includes any intergovernmental mandate that is estimated 
to result in an annual aggregate expenditure of $100,000,000 or 
more by State, local or tribal governments, and the private 
sector, the agency must complete a written statement containing 
the following:
          Estimates of the anticipated costs to State, local 
        and tribal governments, and the private sector, of 
        compliance with the mandate, including the availability 
        of Federal funds to pay for those costs;
          Future costs of Federal intergovernmental mandate not 
        estimated above, including estimates of any 
        disproportionate budgetary effects on any particular 
        regions of the United States or on particular States, 
        local governments, tribal governments, urban or rural 
        or other types of communities;
          A qualitative, and if possible, a quantitative 
        assessment of costs and benefits anticipated from any 
        Federal intergovernmental mandate, including 
        enhancement of public health and safety and protection 
        of the natural environment;
          An estimate of the effect on the national economy of 
        the mandate's impact on private sector costs;
          A description and summary of input, comments, and 
        concerns received from State, local and tribal 
        government elected officials; and,
          A summary of the agency's evaluation of those 
        comments and concerns, and the agency's position 
        supporting the need to issue the regulation containing 
        the Federal intergovernmental mandates.
    Subsection (b) requires agencies to summarize their written 
statements and include that summary in the promulgation of the 
notice of proposed rulemaking and in the final rule. Subsection 
(c) states that preparation of the written statements may done 
in conjunction with other analyses. This subsection ensures 
that agency actions be compatible with the regulatory planning 
and coordination provisions of the President's scheme for 
regulatory review as governed by Executive Order 12866--
Regulatory Planning and Review.
    The Committee believes that proper agency assessment of the 
impact of major regulations on State, local and tribal 
governments can lead to better and more cost-effective Federal 
regulation as well as reduce unreasonable burdens on smaller 
governments. The spirit and intent of this section is meant to 
be entirely consistent with the relevant portions of E.O. 
12866. As part of its principles, the E.O. states, ``each 
agency shall assess the effects of Federal regulations on 
State, local, and tribal governments, including specifically 
the availability of resources to carry out those mandates, and 
seek to minimize those burdens that uniquely or significantly 
affect such governmental entities, consistent with achieving 
regulatory objectives. In addition, as appropriate, agencies 
shall seek to harmonize Federal regulatory actions with related 
State, local, and tribal regulatory and other governmental 
functions.'' The Committee strongly endorses these principles 
and supports their full implementation.

       Section 203. Assistance to the Congressional Budget Office

    This section requires the Director of the Office of 
Management and Budget to collect the written statements 
prepared by agencies under Section 202 and submit them on a 
timely basis to CBO. The reason for this section is that CBO 
may find useful agency assessments and analyses in performing 
the required cost estimates on legislation. As OMB already 
collects these assessments and related information from all 
agencies under Executive Order authority, it makes good sense 
that OMB also supply that information to CBO as a matter of 
routine.

       Section 204. Pilot program on small government flexibility

    This section requires OMB, in consultation with Federal 
agencies, to establish at least two pilot programs to test 
innovative and more flexible regulatory approaches that reduce 
reporting and compliance burdens on small governments while 
continuing to meet overall statutory goals and objectives.
    The Committee believes that Federal agencies should 
experiment with some new and innovative approaches on 
regulations that affect small governments. Such a pilot program 
would embody some of the recommendations of the Vice 
President's National Performance Review. For example, the NPR 
report for the Environmental Protection Agency recommends that 
the agency establish a pilot project to assist a community in 
assessing its environmental and community health risks and how 
to direct resources to priority problems. The Committee's wish 
is that similar sorts of initiatives be tried by at least one 
other agency.

                       Title III--Baseline Study

           Section 301. Baseline study of costs and benefits

    This section establishes a Commission on Unfunded Federal 
Mandates.

   Section 302. Report on unfunded Federal mandates by the Commission

    This section provides that the Commission shall review the 
role and impact of unfunded Federal mandates in 
intergovernmental relations, and make recommendations to the 
President and Congress on how State and local governments can 
participate in meeting national objectives without the burden 
of such mandates. It shall also make recommendations on how to 
allow more flexibility in complying with mandates, reconcile 
conflicting mandates, terminate obsolete ones, and simply 
reporting and other requirements. The Commission shall first 
develop criteria for evaluating unfunded mandates, and then 
shall publish a preliminary report on its activities under this 
title within 9 months of the enactment of this Act. A final 
report shall be submitted within 3 months of the preliminary 
report.

                        Section 303. Membership

    This section provides that the Commission shall be composed 
of 9 members--3 appointed by the Speaker of the House of 
Representatives (in consultation with the minority leader), 3 
by the majority leader of the Senate (in consultation with the 
minority leader), and 3 by the President. No Member or employee 
of Congress may be a member of the Commission.

 section 304. director and staff of commission; experts and consultants

    This section provides for the appointment of the staff and 
Director of the Commission, without regard to certain Civil 
Service rules. It also grants the Commission the authority to 
hire on a temporary basis the services of experts and 
consultants for purposes of carrying out this title, as well as 
the right to receive details from Federal agencies on a 
reimbursable basis, if approved by the agency head.

                   section 305. powers of commission

    This section provides the Commission with the authority to 
hold hearings, obtain official data, use the U.S. mails, 
acquire administrative support services from the General 
Services Administration, and contract for property and 
services.

                        section 306. termination

    The Commission shall terminate 90 days after submitting its 
final report.

              section 307. authorization of appropriations

    This section authorizes the appropriation to Commission of 
$1 million.

                        section 308. Definition

    This section defines the term ``unfunded federal mandate'', 
as used in title III.

                       Title IV--Judicial Review

                      section 401. Judicial review

    This section provides that nothing under the Act shall be 
subject to judicial review, that no provisions of the Act shall 
be enforceable in an administrative or judicial action, and 
that no ruling or determination under the Act shall be 
considered by any court in determining the intent of Congress 
or for any other purposes.

                     V. Regulatory Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires Committee reports to evaluate the legislation's 
regulatory, paperwork, and privacy impact on individuals, 
businesses, and consumers.
    S. 1 addresses Federal government process, not output. It 
will directly affect and change both the legislative and 
regulatory process. It will not have a direct regulatory impact 
on individuals, consumers, and businesses as these groups are 
not covered by the bill's requirements.
    However, the implementation of S. 1 will likely have an 
indirect regulatory impact on these groups since a primary 
focus of the bill is to ensure that Congress assess the cost 
impact of new legislation on the private sector before acting. 
In so much as information on private sector costs of any 
particular bill or resolution may influence its outcome during 
the Congressional debate, it is possible that this bill may 
ease the regulatory impact on the private sector--both on 
individual pieces of legislation as well as overall. However, 
it is impossible at this time to determine with any specificity 
what that level of regulatory relief may be.
    S. 1 does address the Federal regulatory process in three 
ways:
          (1) It requires agencies to estimate the costs to 
        State, local and tribal governments of complying with 
        major regulations that include Federal 
        intergovernmental mandates;
          (2) It compels agencies to set up a process to permit 
        State, local and tribal officials to provide input into 
        the development of significant regulatory proposals; 
        and
          (3) It requires agencies to establish plans for 
        outreach to small governments.
    However, with the exception of the third provision, the 
bill will not impose new requirements for agencies to implement 
in the regulatory process that are not already required under 
Executive Orders 12866 and 12875. The bill merely codifies the 
major provisions of the E.O.s that pertain to smaller 
governments.
    The legislation will have no impact on the privacy of 
individuals. Nor will it add additional paperwork burdens to 
businesses, consumers and individuals. To the extent that CBO 
and Federal agencies, will need to collect more data and 
information from State, local and tribal governments and the 
private sector, as they conduct their requisite legislative and 
regulatory cost, estimates, it is possible that those entities 
will face additional paperwork. However, although smaller 
governments are certainly encouraged to comply with agency and 
CBO requests for information, they are not bound to.

                         VI. CBO Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, January 9, 1995.
Hon. William V. Roth,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1, the Unfunded 
Mandate Reform Act of 1995.
    Enactment of S. 1 would not affect direct spending or 
receipts. Therefore, pay-as-you-go procedures would not apply 
to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                    Robert D. Reischauer, Director.
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    1. Bill number: S. 1.
    2. Bill title: Unfunded Mandate Reform Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on Governmental Affairs on January 9, 1995.
    4. Bill purpose: S. 1 would require authorizing committees 
in the House and Senate to include in their reports on 
legislation a description and an estimate of the cost of any 
federal mandates in that legislation, along with an assessment 
of their anticipated benefits. Mandates are defined to include 
provisions that impose duties on states, localities, or Indian 
tribes (``intergovernmental mandates'') or on the private 
sector (``private sector mandates''). Mandates also would 
include provisions that reduce or eliminate any authorization 
of appropriations to assist state, local, and tribal 
governments or the private sector in complying with federal 
requirements, unless the requirements are correspondingly 
reduced. In addition, intergovernmental mandates would include 
changes in the conditions governing certain types of 
entitlement programs (for example, Medicaid). Conditions of 
federal assistance and duties arising from participation in 
most voluntary federal programs would not be considered 
mandates.
    Committee reports would have to provide information on the 
amount of federal financial assistance that would be available 
to carry out any intergovernmental mandates in the legislation. 
In addition, committees would have to note whether the 
legislation preempts any state or local laws. The requirements 
of the bill would not apply to provisions that enforce the 
constitutional rights of individuals, that are necessary for 
national security, or that meet certain other conditions.
    The Congressional Budget Office (CBO) would be required to 
provide committees with estimates of the direct cost of 
mandates in reported legislation other than appropriation 
bills. Specific estimates would be required for 
intergovernmental mandates costing $50 million or more and, if 
feasible, for private sector mandates costing $200 million or 
more in a particular year. (CBO currently prepares estimates of 
costs to states and localities of reported bills, but does not 
project costs imposed on Indian tribes or the private sector.) 
In addition, CBO would probably be asked to assist the Budget 
Committees by preparing estimates for amendments and at later 
stages of a bill's consideration. Also, at times other than 
when a bill is reported, when requested by Congressional 
committees, CBO would analyze proposed legislation likely to 
have a significant budgetary or financial impact on state, 
local, or tribal governments or on the private sector, and 
would prepare studies on proposed mandates. S. 1 would 
authorize the appropriation of $4.5 million to CBO for each of 
the fiscal years 1996-2002 to carry out the new requirements. 
These requirements would take effect on January 1, 1996, and 
would be permanent.
    S. 1 would amend Senate rules to establish a point of order 
against any bill or joint resolution reported by an authorizing 
committee that lacks the necessary CBO statement or that 
results in direct costs (as defined in the bill) of $50 million 
or more in a year to state, local, and tribal governments. The 
legislation would be in order if it provided funding to cover 
the direct costs incurred by such governments, or if it 
included an authorization of appropriations and identified the 
minimum amount that must be appropriated in order for the 
mandate to be effective, the specific bill that would provide 
the appropriation, and a federal agency responsible for 
implementing the mandate.
    Finally, S. 1 would require executive branch agencies to 
take actions to ensure that state, local, and tribal concerns 
are fully considered in the process of promulgating 
regulations. These actions would include the preparation of 
estimates of the anticipated costs of regulations to states, 
localities, and Indian tribes, along with an assessment of the 
anticipated benefits. In addition, the bill would authorize the 
appropriation of $1 million, to be spent over fiscal years 1995 
and 1996, for a temporary Commission on Unfunded Federal 
Mandates, which would recommend ways to reconcile, terminate, 
suspend, consolidate, or simplify federal mandates.
    5. Estimated cost to the Federal Government:

------------------------------------------------------------------------
                      1995     1996     1997     1998     1999     2000 
------------------------------------------------------------------------
Congressional                                                           
 Budget Office:                                                         
    Authorization                                                       
     of                                                                 
     appropriation                                                      
     s............  .......      4.5      4.5      4.5      4.5      4.5
    Estimated                                                           
     outlays......  .......      4.0      4.4      4.4      4.4      4.4
Commission on                                                           
 Unfunded Federal                                                       
 Mandates:                                                              
    Authorization                                                       
     of                                                                 
     appropriation                                                      
     s............      1.0  .......  .......  .......  .......  .......
    Estimated                                                           
     outlays......      0.4      0.6  .......  .......  .......  .......
Bill total:                                                             
    Authorization                                                       
     of                                                                 
     appropriation                                                      
     s............      1.0      5.5      4.5      4.5      4.5      4.5
    Estimated                                                           
     outlays......      0.4      4.6      4.4      4.4      4.4      4.4
------------------------------------------------------------------------

    The costs of this bill fall within budget function 800.
    Basis of Estimate: CBO assumes that the specific amounts 
authorized will be appropriated and that spending will occur at 
historical rates.
    We estimate that executive branch agencies would incur no 
significant additional costs in carrying out their 
responsibilities associated with the promulgation of 
regulations because most of these tasks are already required by 
Executive Orders 12875 and 12866.
    6. Comparison with spending under current law: S. 1 would 
authorize additional appropriations of $4.5 million a year for 
the Congressional Budget Office beginning in 1996. CBO's 1995 
appropriation is $23.2 million. If funding for current 
activities were to remain unchanged in 1996, and if the full 
additional amount authorized were appropriated, CBO's 1996 
appropriation would total $27.7 million, an increase of 19 
percent.
    Because S. 1 would create the Commission on Unfunded 
Federal Mandates, there is no funding under current law for the 
commission.
    7. Pay-as-you-go considerations: None.
    8. Estimated cost to State and local governments: None.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: James Hearn.
    12. Estimate approved by: Paul Van de Water, Assistant 
Director for Budget Analysis.
                 VII. ADDITIONAL VIEWS OF SENATOR GLENN

    I support, with reservations noted below, passage and 
enactment of S. 1--the Unfunded Mandate Reform Act of 1995. The 
main premise of the legislation is that Congress and the 
Executive Branch more carefully consider the impact on State 
and local government of proposed legislation and regulation 
prior to final action on those measures. I believe that it will 
contribute to a much needed debate over the reordering and 
sorting out of Federal, State, local and tribal 
responsibilities in many program areas.
    S. 1 is based largely on S. 993--last year's Kempthorne-
Glenn Bill, legislation that had 67 cosponsors and nearly 
passed the Senate. However, there are some new provisions that 
have been added to S. 1 that give me some cause for concern. 
These provisions deal with points of order application on 
amendments, private sector regulatory analysis, and Committee 
jurisdiction over monitoring implementation of the legislation.
    As I noted at the Committee's hearing on January 5th and 
subsequent markup on the 9th, I think it's worth stepping back 
and taking a look at the evolution of the Federal-State-local 
relationship over the last decade and a half so we can put this 
debate into some historical context. During the last 10 to 15 
years, Federal aid to State and local governments was severely 
cut, or even eliminated, in a number of key domestic program 
areas. At the same time, enactment and subsequent 
implementation of various Federal statutes passed on new costs 
to State and local governments. Let me quote just a few facts 
and figures highlighted in the Committee report (S. Rpt. 103-
330) on last year's Federal mandate reform bill.
          According to CBO, 89 bills were reported out of 
        Congressional Committees between 1983 and 1988 that had 
        an annual estimated cost to State and local governments 
        in excess of $200 million each. A total of 382 bills 
        were reported out that had some new costs to State and 
        local governments. Obviously, not all of these bills 
        became law, but CBO's figures do give pause for 
        reflection.
          EPA estimates that the cost of environmental mandates 
        to State and local governments will rise from $22 
        billion in 1987 to $37 billion by the year 2000. The 
        Vice President's National Performance Review puts this 
        figure at $44 billion by 2000, after allowing 
        adjustments for inflation.
          According to the Federal Funds Information Service, 
        Federal discretionary aid to State and local 
        governments fell 28 percent in real terms during the 
        decade of the 1980s. In 1986, the general revenue 
        sharing program was terminated, a program that provided 
        approximately $4.5 billion a year in flexible funds to 
        State and local governments and a program that had 
        provided $83 billion in funding since its inception in 
        1972.

    In simple terms, State and local governments have ended up 
receiving less of the Federal carrot and more of the Federal 
stick. This year's Committee report makes many of the same 
points and arguments made in last year's report.
    Hopefully, we will be able to restore harmony to the now-
dysfunctional intergovernmental family with passage of S. 1--
The legislation will set new standards for fiscal understanding 
and discipline for Congress to meet when it considers 
legislation that may impose Federal mandates on State and local 
governments. S. 1 has requirements for cost analyses on State 
and local impacts of both legislation and regulation. It has 
provisions to encourage greater and cooperation and 
coordination among all branches of government in the 
implementation of many Federal programs. Finally, and most 
importantly, the bill establishes a point of order mechanism to 
trigger a recorded vote on the imposition of any future 
mandate.
    However, there are some serious flaws in S. 1 which I would 
like to see corrected between now and enactment. The bill's 
point of order mechanism now extends to floor amendments which 
S. 993 did not cover. My concern in applying the point of order 
requirements for CBO cost estimates and State and local funding 
to amendments is that it will unnecessarily bog down the 
legislative process, particularly for the first year or two 
when this Act goes into effect. It's possible that someone 
might raise points of order in almost every floor amendment 
that is offered to almost any one bill. Also, CBO's cost 
estimating responsibilities would increase substantially if 
they have to score amendments. I understand that points of 
order can currently be raised under the Budget Act on 
amendments that affect Federal direct spending but have not 
been scored by CBO. I also understand that those seeking to 
``game'' S. 1's requirements could do so by offering 
legislation containing unfunded Federal mandates in amendment 
form as opposed to free-standing legislation. However, S. 1's 
point of order requirements do extend to Conference Reports. So 
any unfunded Federal mandate that passes as an amendment to 
another bill would be picked up and scored by CBO coming back 
from Conference.
    Further, in the Budget Committee markup, Senators Domenici 
and Exon offered an amendment, which was adopted, to strike the 
references in Section 101 of the legislation regarding the 
responsibilities of the Senate Committee on Governmental 
Affairs and the Senate Committee on Budget in overseeing 
implementation of the legislation's requirements. The original 
provisions in S. 1 gives the Committee on Governmental Affairs 
the authority to determine whether the provisions in S. 1 would 
apply to any legislation being considered. I support that. 
Further, the section gives the Budget Committee a role in 
overseeing the level of Federal mandates in any bill or joint 
resolution and CBO's estimates of those levels. I agree that 
the Budget Committee, given their responsibility for CBO, 
should have a role here. However, in striking these provisions 
in markup, the Budget Committee has now left S. 1 silent as to 
who is responsible for the determination of whether S. 1's 
provisions apply to any particular bill, joint resolution, 
amendment or conference report. This raises the question of 
whether the bill now vests this responsibility in the Director 
of CBO, instead of to a body of elected officials. That 
possibility raises some interesting Constitutional questions of 
the appropriateness of vesting that much authority in the hands 
of a non-elected official. I would urge that the Senate re-
insert the original provisions on Committee determination back 
into S. 1.
    Another problematic change from S. 993 is the expansion of 
the ``regulatory accountability and reform'' provisions of 
Title 2 to go beyond intergovernmental mandates to address any 
and all regulatory effects on the private sector. The intended 
purpose of S. 1 is to control unfunded Federal mandates on 
State and local governments. I have always supported that goal. 
Moreover, I believe that if we keep the bill sharply focused on 
that purpose, we can get the legislation passed quickly and 
signed into law. If, however, we let the bill be stretched to 
cover other issues, we hurt prospects for enactment and we 
break our pledge to our friends in State and local governments.
    Title 2 as it appears in S. 1 does not serve this purpose 
to the extent it requires agencies to analyze the effects of 
their regulations on the private sector apart from 
intergovernmental mandates. I believe the bill should be 
brought back to its original purpose by limiting regulatory 
analysis to intergovernmental mandates. Under this legislation, 
agencies should have to analyze private sector costs of 
complying with an intergovernmental mandate, but should not 
under this law have to analyze private sector costs imposed by 
other sorts of laws and regulations. In short, I support using 
this legislation to control intergovernmental regulatory costs. 
I oppose using this bill to address broader regulatory reform 
issues.
    Accordingly, I argued in Committee mark-up that the 
Committee should strike the words ``private sector'' from 
section 201(a)(1) in order to maintain the section's intended 
purpose of requiring agencies to assess the effects of their 
regulations on State, local, and tribal governments, 
``including specifically the availability of resources to carry 
out any Federal intergovernmental mandates in those 
regulations''. The intended scope of section 201 is clearly 
shown by the language of subsection (a)(2): ``[agencies shall] 
seek to minimize those burdens that uniquely or significantly 
affect such governmental entities, consistent with achieving 
statutory and regulatory objectives.'' Adding the words 
``private sector'' to section 201 thus was inconsistent with 
the clear meaning of the section--those words should be 
removed.
    Along these same lines, I also argued that section 
202(a)(4) be amended to substitute ``intergovernmental'' for 
``private sector'' mandate and be moved to be a new subsection 
(a)(2)(C) to appropriately require that agencies ``to the 
extent. . .reasonably feasible [estimate] the effect of the 
Federal intergovernmental mandate on the national economy. . . 
.'' Again, the clear purpose of the underlying section, that 
is, sec. 202, is to require the preparation of a written agency 
regulatory analysis of intergovernmental mandates (see p. 33, 
1. 25) that have a major national economic impact. The attempt 
to insert a free-standing requirement to analyze private sector 
costs (as is seen in section 202(a)(4) of S. 1 as introduced) 
is wrong, inconsistent with the section and the purpose of the 
bill.
    I agree that we need to address the issue of Federal 
regulatory burdens on the private sector. But we should not do 
so on legislation dealing with intergovernmental mandates. 
Regulatory reform involves questions about cost/benefit 
analysis, risk assessment, private property rights, review of 
existing regulations, presidential regulatory review, and more. 
These are complicated and unsettled issues. Inserting the words 
``private sector'' into an intergovernmental regulatory 
analysis requirement is not the way to go. I am serious about 
addressing the broader regulatory reform issues. I have already 
introduced legislation (S. 100) to establish a comprehensive 
regulatory analysis and review process. I understand, also, 
that the Committee intends to hold hearings in early February 
on these issues. This is the way we should proceed.
    In sum, I support the thrust of S. 1 and look forward to 
working toward its eventual enactment. My hope is that we will 
be able to resolve my concerns as we move forward in the 
legislative process.

                                                        John Glenn.
                          VIII. MINORITY VIEWS

    Last year, the Committee reported out a bill, S. 993, 
addressing the problems of unfunded mandates. We each not only 
voted for that bill but cosponsored it as well. Our committee 
had worked hard last Congress to come up with a reasonable 
solution to the problem of federal mandates--a real dilemma 
faced by our state, local and tribal officials--and we were 
pleased to support S. 993.
    This bill, S. 1, however, has gone too far. What previously 
required an authorization for the amount of the estimated cost 
of an intergovernmental mandate to overcome a point of order, 
now requires the authorizing committee to place on the 
appropriate agency the requirement that the mandate be made 
ineffective or proportionately cut back should a future 
appropriation not meet the level of the CBO cost estimate for 
each year of the authorization.
    In providing for a point or order which creates the 
presumption that we will either pay for mandates on state, 
local or tribal governments or we will waive those mandates, 
this bill takes a major step beyond its stated purpose.
    The purposes section to S. 1 reads in part:

    (3) to assist Congress in its consideration of proposed 
legislation establishing or revising * * * Federal mandates * * 
* by--
          (A) providing for the development of information 
        about the nature and size of mandates in proposed 
        legislation and
          (B) establishing a mechanism to bring such 
        information to the attention of the Senate and the 
        House of Representatives before the Senate and the 
        House of Representatives vote on proposed legislation;
    (4) to promote informed and deliberate decisions by 
Congress on the appropriateness of Federal mandates in any 
particular instance;
    (5) to require that Congress consider whether to provide 
funding to assist State, local and tribal governments in 
complying with Federal mandates, to require analyses of the 
impact of private sector mandates, and through the 
dissemination of that information provide informed and 
deliberate decisions by Congress and Federal agencies and 
retain (sic) competitive balance between the public and private 
sectors * * *

    We agree with that purpose, and believe that is what S. 993 
accomplished. S. 1, however, takes a CBO estimate of the cost 
of legislation to state, local and tribal governments (an 
estimate that CBO states may be impossible to obtain in a 
number of cases) and says that if we don't appropriate money at 
the level of the CBO estimate then the legislation that we 
passed requiring radon abatement or an increase in the minimum 
wage or tougher sewage treatment standards or reductions in 
dioxin, will be ineffective. That proposal is simply too 
extreme.
    In order to improve the bill to clarify certain provisions 
and to refine the bill's application to legislation, several 
amendments were offered at the mark-up. All but two technical 
amendments were defeated.
    One amendment, offered by Senator Levin, would have 
excluded from coverage of the point of order legislation which 
establishes employee rights. Such legislation would apply to 
state, local and tribal governments in their capacity as 
employers, as it would apply to all employers. We supported 
that amendment, because we couldn't find a compelling reason to 
treat state, local and tribal governments any differently than 
every other employer when it comes to laws governing employer-
employee relations, such as minimum wage and Family and Medical 
Leave. Why would we want to exempt state, local and tribal 
governments from the requirements of such legislation, 
particularly since we are in the process of making sure the 
Congress is covered by such laws. We also could not forsee the 
situation in which we would agree that state, local and tribal 
governments should be paid for the costs in implementing 
employer-related legislation, since it would be legislation 
that is designed to apply to every entity in the country in its 
capacity as an employer. For that reason we support excluding 
this type of legislation from the point of order. The amendment 
was not adopted, however.
    This issue raises the problem of the inherent unfairness in 
the bill's treatment between the public and private sector. 
This legislation requires us to overcome a point of order if we 
don't pay for a federal intergovernmental mandate, but it 
doesn't create a similar point of order for private sector 
mandates. There is a presumption created thereby that we should 
fund the mandate or not apply it to the public sector. (The 
majority views go beyond this and suggest, counter to many 
assurances otherwise, that authorizing committees should not 
plan on overcoming the presumption by 51 vote waiver on the 
point of order.) This is particularly troubling when the state, 
local or tribal government is acting in the same capacity as a 
private sector entity.
    We are uneasy about the presumption of disparate treatment 
established in S. 1. The presumption potentially could result 
in a significant competitive disadvantage for private 
enterprises engaged in the same activities that the state, 
local or tribal governments are engaged in. And it potentially 
could result in disproportionate health protection for our 
citizens. S. 1 could result in vastly different levels of 
protection for citizens throughout this country and even in one 
state. Citizens living near or downwind from a publicly owned 
facility could be exposed to toxins emitted from an incinerator 
exempt from pollution control standards while citizens living 
near a private facility would be protected from those emissions 
because the private facility is not exempt.
    Obviously, results like this would also put private 
entities at a competitive disadvantage relative to state, local 
and tribal governments that operate the same kind of 
businesses. In a letter to Senator Kempthorne dated December 
16, 1994, Browning-Ferris Industries, a waste management 
company, discussed some of the potential consequences of 
unfunded mandates legislation. It wrote:

          The results would severely skew the marketplace in 
        favor of government rather than the private sector 
        services because the private sector would have to add 
        in prices to its customers for compliance with these 
        various federal rules that customers of the compliance 
        with these various federal rules that customers of the 
        public sector would not have to pay.

    The unintended consequences of the legislation in fact may 
be to encourage an expansion of government at the state and 
local levels. Government could be stimulated to contract out 
fewer services to private industry because the costs charged by 
private industry probably would be higher. This could result in 
an expansion of government in quasi-private industry.
    At the same time, by exempting the smokestacks and 
discharge pipes operated by local and state governments from 
complying with environmental standards, S. 1 could force a wide 
range of businesses to bear even more of the burden to meet 
overall clean air and clean water goals.
    We will be working on an amendment to address these 
concerns including competitiveness and unfairness against the 
private sector when the bill comes to the floor.
    Another amendment, offered by Senator Levin, would have 
added to the pubic sector cost estimate a provision that the 
bill currently contains for the private sector cost estimate. 
That provision states that if CBO can't estimate the cost of 
the private sector mandate, it must so state and explain why. 
This is simple enough provision, but it was rejected at the 
committee mark-up as applied to the public sector cost 
estimate, apparently, because the bill intends that CBO must 
come up with an estimate for the cost of a public sector 
mandate whether or not it is able to do so. We don't think 
that's intellectually straight or appropriate, and that's why 
we supported the Levin Amendment. CBO must have the option, and 
the bill should specifically provide, to tell us if they simply 
can't estimate the cost of a public sector mandate. That 
doesn't mean they should be excused from doing everything 
reasonably in their power to obtain an estimate, but it does 
mean that if they decide after making a reasonable attempt that 
they cannot make an estimate, they should say so and tell us 
why the estimate is impossible. Dr. Robert Reischauer, CBO 
Director, has already states in testimony before the Committee 
and in a letter to Senator Levin dated December 30, 1994, that 
there are bills containing mandates on state, local and tribal 
governments for which a cost estimate is ``virtually 
impossible.''
    The problems with the CBO cost estimate cannot be ignored.
    The heart of this bill is the point of order. And the heart 
of the point of order is the determination of the cost of the 
intergovernmental mandate which is based on the CBO estimate. 
When a program is being authorized, CBO is required to estimate 
the cost of any intergovernmental mandates in the program on an 
aggregate basis for the 87,000 state and local jurisdictions in 
the country. The cost estimate is supposed to reflect the 
direct costs to the state and local governments and net out any 
direct savings.
    These CBO cost estimates are to be made not for just one 
year, but for the life of the program. If the authorization is 
for 5 years, the CBO cost estimate is to be for each of the 
five fiscal years. If the authorization is for 10 years, the 
CBO estimate is to be for each of the 10 fiscal years.
    Under the new version, S. 1, when CBO does this estimate at 
the time of the authorization, that estimate becomes the 
benchmark against which all future appropriations to pay for 
any intergovernmental mandates are measured. It becomes locked 
in concrete, so to speak, as the standard that has to be met in 
order to avoid a point of order on the Senate floor.
    This is troubling because of the extreme difficulty CBO is 
going to have in making a rational and serious estimate. CBO's 
difficulty stems from a number of problems, including the 
following:
          1. The condition of the state and local governments 
        with respect to any mandate is going to vary widely. 
        One state may have extreme air quality problems, while 
        another may have very limited ones. One state may have 
        imposed strict clean air requirements years ago, while 
        another may have done nothing in the area.
          2. The alternative courses that may be followed in 
        order to comply with a mandate may be as varied as the 
        number of state and local governments. One government 
        may choose to construct a whole new building to meet 
        ramp requirements; another may decide to modify an 
        existing building; another may decide to rent an 
        already ramped building; another may decide to use 
        teleconferencing instead of constructing a ramp. The 
        choices for compliance may be too numerous to 
        anticipate.
          3. There is no way to tell how a law will be 
        implemented by an agency. Many laws give agencies broad 
        discretion. Some use words that are open to many 
        interpretations--such as ``best efforts'' or 
        ``reasonable technology'' or ``safe levels''. It is up 
        to the agency to decide how the law will be applied, 
        and CBO can't possibly know the outcome. Radon 
        abatement is an excellent example. Implementation would 
        depend entirely on EPA deciding what level of radon was 
        unusually high and then determining which jurisdictions 
        had that level. In situations like that, until the 
        agency--in this case EPA--acts, there's no way for CBO 
        to know how many state, local and tribal governments 
        will be affected.
          4. There is no way to tell when a law will be 
        implemented by an agency. The issuance of regulations 
        can take months or years. Complicated regulations may 
        require extensive public hearings and maybe several 
        comment periods. Litigation can sidetrack the 
        implementation of regulations. CBO will not be able to 
        predict with any degree of certainty just when a 
        mandate will actually take effect.
          5. CBO is supposed to consider the direct benefits of 
        any mandates. It has little to no experience in this 
        area. If Congress establishes a radon abatement program 
        in public buildings CBO will have to determine what the 
        health benefits from decreased radon are to state, 
        local and tribal governments.
    That's why CBO has said that it will be ``virtually 
impossible'' in some situations where it will matter the most, 
to determine the cost of intergovernmental mandates. Any cost 
estimate in such situations would necessitate at best a wide 
range of possible costs. Moreover, CBO reports that the most 
important source for its cost estimates will be the state and 
local governments themselves. Yet these are the very entities 
to whom the money will be going and who will benefit most from 
high cost estimates.
    A third amendment, offered by Senator Levin, would have 
addressed two problems. It would have placed a sunset on the 
Title I of S. 1, and it would have clarified the fact that the 
bill is intended to cover only new federal mandates and not any 
reauthorizations to the extent they continue the level of 
existing mandates. We believe that, while the cost estimates 
and the point of order are well-intentioned as a procedural 
device to insure that we openly consider the costs we may be 
imposing on state, local and tribal governments and the private 
sector when we legislate, we also believe that these very 
devices may cause serious problems in the legislative process. 
CBO may not be able to reach an estimate on the cost of 
mandates; amendments may be offered in committee and on the 
floor that could cause serious delays because of a lack of cost 
estimates; uncertainties could arise as to how a mandate is 
identified and who has the final say in determining the 
required amount of the authorization. It is possible that this 
bill could turn gridlock into a trainwreck. We don't want that 
to happen.
    The requirement for a cost estimate will apply to both 
bills and amendments. That means that as an amendment is 
offered on the floor, that could possibly involve a mandate, 
that amendment will be subject to a point of order until the 
Budget Committee comes up with a cost estimate. Now that cost 
estimate will be just as difficult to ascertain as the cost 
estimates for the bills themselves. But unless the point of 
order is waived, that legislation could be delayed for months.
    We are also giving to the Budget Committee a tremendous 
amount of power. Based on their estimates--programs may live or 
die. Now some say that's no different from what the Budget 
Committee does now. But that's with CBO assessing how much a 
program will cost the federal government--not how much a 
program will cost 87,000 state and local governments. It's a 
task of a very different dimension.
    So we strongly support a sunset provision which will make 
sure that we review the implementation of this legislation and 
make any appropriate corrections.
    We should not be fearful of sunsetting this process in a 
relatively short period of time, because there is strong 
support for the process, and we all know that without an actual 
sunset date it can take years for Congress to address problems 
in existing law. Sunset is an action-enforcing mechanism to 
make sure we have the opportunity to correct any serious 
problems with the process. And since the process created by S. 
1 is so new and so dramatically different from current 
procedures, we owe it to ourselves and the public to have a 
reasonably early check-in.
    We also have to recognize that we may not even be 
addressing what the real fiscal problems of the state, local 
and tribal governments will be in the next 10 years--and that's 
an actual pull out of federal funding and involvement.
    For example, the federal government has various programs to 
assist state and local governments in meeting the needs of the 
homeless. If, in our efforts to reduce the size of the federal 
government and to cut programs, we eliminate the federal 
programs relating to the homeless, that wouldn't be a mandate 
covered by this bill. We wouldn't be requiring state, local and 
tribal governments to do anything with respect to the homeless; 
we would just be pulling out. That doesn't mean the problems of 
the homeless go away. That doesn't mean the state and local 
governments don't have to address the problems of the homeless, 
it means that the federal government won't be involved in 
helping to solve the problem. There's not point of order on our 
actions to do that. That does not come within the definition of 
a mandate, and it is not covered by this bill. But, that type 
of action by Congress is probably the most likely and most 
frequent action we are going to be taking with respect to state 
and local governments over the next several years. We will 
probably not be imposing new mandates; we will be cutting 
back--not reaching out. And this legislation is not going to 
address that.
    Many of us on this committee have had direct experience in 
local government. We know that federal funding of local 
initiatives is a two-edged sword--that the federal government 
can both give and take away--and that the federal government 
can impose requirements that in Washington seem logical but in 
small communities across America don't work. That's why we're 
sympathetic with the desire of state and local governments to 
raise the issue of federal mandates to a top priority. We 
should not mindlessly impose costly burdens on state and local 
governments to meet needs we've identified at the national 
level as we should not mindlessly impose costly burdens on 
anyone. We should have the best information available to assess 
the impact of what we are legislating, and we should have to 
act with our eyes open and our ears sensitive to the warnings 
of both the public and private sectors as to what we are doing. 
No one can argue with that.
    But S. 1, if amended, has the potential of causing havoc in 
the legislative process and aiding in the very gridlock we are 
all so desperate to avoid.
    It's very important that we require an analysis of the 
impact of costs on state and local governments and the private 
sector before a committee reports a bill to the full Senate for 
consideration. That's what the hearing process is supposed to 
be about. The public is supposed to let us know just what the 
consequences of our proposals could be. And, it's very 
important that the requirement for a cost analysis be enforced 
by saying that a point of order will lie against a bill that 
doesn't have that cost analysis. We agree with that approach. 
But to go to the next step and say that an often problematical 
cost estimate will now become the actual cost--that what CBO 
estimates will be the cost to state and local governments for 
each year of the authorization, moves from being a cost 
estimate to an assertion of actual costs and that that level of 
costs should be funded--that's a leap we're unwilling to make 
without several important changes. We lost those proposed 
changes in Committee; we will attempt to include them on the 
floor, and we hope we will be successful so we can be in 
support of final passage.

                                   Carl Levin.
                                   Joe Lieberman.

                      IX. Changes to Existing Law

    Paragraph 12 of rule XXVI of the Standing Rules of the 
Senate requires that Committee reports indicate the changes to 
existing law of the proposed legislation. Existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman.

      The Congressional Budget and Impoundment Control Act of 1974

                              definitions

    Sec. 3. In General.--For purposes of this Act--
          (1) The terms ``budget outlays'' and ``outlays'' mean 
        * * *
          (2) The term ``budget authority'' means * * *
          * * * * * * *
    (11) The term `Federal intergovernmental mandate' means--
          (A) any provision in legislation, statute, or 
        regulation that--
                  (i) would impose an enforceable duty upon 
                States, local governments, or tribal 
                governments, except--
                          (I) a condition of Federal assistance 
                        or
                          (II) a duty arising from 
                        participation in a voluntary Federal 
                        program, except as provided in 
                        subparagraph (B)); or
                  (ii) would reduce or eliminate the amount of 
                authorization of appropriations for Federal 
                financial assistance that would be provided to 
                States, local governments, or tribal 
                governments for the purpose of complying with 
                any such previously imposed duty unless such 
                duty is reduced or eliminated by a 
                corresponding amount; or
          (B) any provision in legislation, statute, or 
        regulation that relates to a then-existing Federal 
        program under which $500,000,000 or more is provided 
        annually to States, local governments, and tribal 
        governments under entitlement authority, if the 
        provision--
                  (i)(I) would increase the stringency of 
                conditions of assistance to States, local 
                governments, or tribal governments under the 
                program; or
                  (II) would place caps upon, or otherwise 
                decrease, the Federal Government's 
                responsibility to provide funding to States, 
                local governments, or tribal governments under 
                the program; and
                  (ii) the States, local governments, or tribal 
                governments that participate in the Federal 
                program lack authority under that program to 
                amend their financial or programmatic 
                responsibilities to continue providing required 
                services that are affected by the legislation, 
                statute or regulation.
    (12) The term ``Federal private sector mandate'' means any 
provision in legislation, statute, or regulation that--
          (A) would impose an enforceable duty upon the private 
        sector except--
                  (i) a condition of Federal assistance; or
                  (ii) a duty arising from participation in a 
                voluntary Federal program; or
          (B) would reduce or eliminate the amount of 
        authorization of appropriations for Federal financial 
        assistance that will be provided to the private sector 
        for the purposes of ensuring compliance with such duty.
    (13) The term ``Federal mandate'' means a Federal 
intergovernmental mandate or a Federal private sector mandate, 
as defined in paragraphs (11) and (12).
    (14) The terms ``Federal mandate direct costs'' and 
``direct costs''--
          (A)(i) in the case of a Federal intergovernmental 
        mandate, mean the aggregate estimated amounts that all 
        States, local governments, and tribal governments would 
        be required to spend in order to comply with the 
        Federal intergovernmental mandate; or
          (ii) in the case of a provision referred to in 
        paragraph (11)(A)(ii), mean the amount of Federal 
        financial assistance eliminated or reduced.
          (B) in the case of a Federal private sector mandate, 
        mean the aggregate estimated amounts that the private 
        sector will be required to spend in order to comply 
        with the Federal private sector mandate;
          (C) shall not include--
                  (i) estimated amounts that the States, local 
                governments, and tribal governments (in the 
                case of a Federal intergovernmental mandate) or 
                the private sector (in the case of a Federal 
                private sector mandate) would spend--
                          (I) to comply with or carry out all 
                        applicable Federal, State, local, and 
                        tribal laws and regulations in effect 
                        at the time of the adoption of the 
                        Federal mandate for the same activity 
                        as is affected by that Federal mandate; 
                        or
                          (II) to comply with or carry out 
                        State, local governmental, and tribal 
                        governmental programs, or private-
                        sector business or other activities in 
                        effect at the time of the adoption of 
                        the Federal mandate for the same 
                        activity as is affected by that 
                        mandate; or
                  (ii) expenditures to the extent that such 
                expenditures will be offset by any direct 
                savings to the States, local governments, and 
                tribal governments, or by the private sector, 
                as a result of--
                          (I) compliance with the Federal 
                        mandate; or
                          (II) other changes in Federal law or 
                        regulation that are enacted or adopted 
                        in the same bill or joint resolution or 
                        proposed or final Federal regulation 
                        and that govern the same activity as is 
                        affected by the Federal mandate; and
          (D) shall be determined on the assumption that State, 
        local, and tribal governments, and the private sector 
        will take all reasonable steps necessary to mitigate 
        the costs resulting from the Federal mandate, and will 
        comply with applicable standards of practice and 
        conduct established by recognized professional or trade 
        associations. Reasonable steps to mitigate the costs 
        shall not include increases in State, local, or tribal 
        taxes or fees.
    (15) The term `private sector' means all persons or 
entities in the United States, except for State, local, or 
trial governments, including individuals, partnerships, 
associations, corporations, and educational and nonprofit 
institutions.
    (16) The term `local government' has the same meaning as in 
section 6501(6) of title 31, United States Code.
    (17) The term `tribal government' means any Indian tribe, 
band, nation, or other organized group or community, including 
any Alaska Native village or regional or village corporation as 
defined in or established pursuant to the Alaska Native Claims 
Settlement Act (83 Stat. 688; 43 U.S.C. 1601 et seq.) which is 
recognized as eligible for the special programs and services 
provided by the United States to Indians because of their 
special status as Indians.
    (18) The term `small government' means any small 
governmental jurisdictions defined in section 601(5) of title 
5, United States Code, and any tribal government.
    (19) The term `State' has the same meaning as in section 
6501(9) of title 31, United States Code.''
    (20) The term `agency' has the meaning as defined in 
section 551(1) of title 5, United State Code, but does not 
include independent regulatory agencies, as defined in section 
3502(10) of title 44, United States Code.
    (21) The term `regulation' or `rule' has the meaning of 
`rule' as defined in section 601(2) of title 5, United States 
Code.

                          duties and functions

    Sec. 202 (a) Assistance to Budget Committees.--It shall be 
***
    (b) Assistance to Committees on Appropriations, Ways and 
Means, and Finance.--At the request ***
    (c) Assistance to Other Committees and Members.--
          (1) At the request * * *
          (2) At the request of any committee of the Senate or 
        the House of Representatives, the Office shall, to the 
        extent practicable, consult with and assist such 
        committee in analyzing the budgetary or financial 
        impact of any proposed legislation that may have--
                  (A) a significant budgetary impact on State, 
                local, or tribal governments; or
                  (B) a significant financial impact on the 
                private sector.
          [2] (3) At the request ***
          * * * * * * *
    (h) Studies.--[The Director shall conduct continuing 
studies to enhance comparisons of budget outlays, credit 
authority, and tax expenditures.]
          (1) Continuing studies.--The Director of the 
        Congressional Budget Office shall conduct continuing 
        studies to enhance comparisons of budget outlays, 
        credit authority, and tax expenditures.
          (2) Federal mandate studies.--
                  (A) At the request of any Chairman or ranking 
                member of the minority of a Committee of the 
                Senate or the House of Representatives, the 
                Director shall, to the extent practicable, 
                conduct a study of a Federal mandate 
                legislative proposal.
                  (B) In conducting a study on 
                intergovernmental mandates under subparagraph 
                (A), the Director shall--
                          (i) solicit and consider information 
                        or comments from elected officials 
                        (including their designated 
                        representatives) of State, local, or 
                        tribal governments as may provide 
                        helpful information or comments;
                          (ii) consider establishing advisory 
                        panels of elected officials or their 
                        designated representatives, of State, 
                        local, or tribal governments if the 
                        Director determines that such advisory 
                        panels would be helpful in performing 
                        responsibilities of the Director under 
                        this section; and
                          (iii) if, and to the extent that the 
                        Director determines that accurate 
                        estimates are reasonably feasible, 
                        include estimates of--
                                  (I) the future direct cost of 
                                the Federal mandate to the 
                                extent that such costs 
                                significantly differ from or 
                                extend beyond the 5-year period 
                                after the mandate is first 
                                effective; and
                                  (II) any disproportionate 
                                budgetary effects of Federal 
                                mandates upon particular 
                                industries or sectors of the 
                                economy, States, regions, and 
                                urban or rural or other types 
                                of communities, as appropriate.
                  (C) In conducting a study on private sector 
                mandates under subparagraph (A), the Director 
                shall provide estimates, if and to the extent 
                that the Director determines that such 
                estimates are reasonably feasible, of--
                          (i) future costs of Federal private 
                        sector mandates to the extent that such 
                        mandates differ significantly from or 
                        extend beyond the 5-year time period 
                        referred to in subparagraph 
                        (B)(iii)(I);
                          (ii) any disproportionate financial 
                        effects of Federal private sector 
                        mandates and of any Federal financial 
                        assistance in the bill or joint 
                        resolution upon any particular 
                        industries or sectors of the economy, 
                        States, regions, and urban or rural or 
                        other types of communities; and
                          (iii) the effect of Federal private 
                        sector mandates in the bill or joint 
                        resolution on the national economy, 
                        including the effect on productivity, 
                        economic growth, full employment, 
                        creation of productive jobs, and 
                        international competitiveness of United 
                        States goods and services.

         ANNUAL ADOPTION OF CONCURRENT RESOLUTION ON THE BUDGET

    Sec. 301. * * *
          * * * * * * *
    (d) Views and Estimates of Other Committees.--Within 6 
weeks after the President submits a budget under section 
1105(a) of title 31, United States Code, each committee of the 
House of Representatives having legislative jurisdiction shall 
submit to the Committee on the Budget of the House and each 
committee of the Senate having legislative jurisdiction shall 
submit to the Committee on the Budget of the Senate its views 
and estimates (as determined by the committee making such 
submission) with respect to all matters set forth in 
subsections (a) and (b) which relate to matters within the 
jurisdiction or functions of such committee. The Joint Economic 
Committee shall submit to the Committees on the Budget of both 
Houses its recommendations as to the fiscal policy appropriate 
to the goals of the Employment Act of 1946. Any other committee 
of the House of Representatives or the Senate may submit to the 
Committee on the Budget of its House, and any joint committee 
of the Congress may submit to the Committee on the Budget of 
both Houses, its views and estimates with respect to all 
matters set forth in subsections (a) and (b) which relate to 
matters within its jurisdiction or functions. Any Committee of 
the House of Representatives or the Senate that anticipates 
that the committee will consider any proposed legislation 
establishing, amending, or reauthorizing any Federal program 
likely to have a significant budgetary impact on any State, 
local, or tribal government, or likely to have a significant 
financial impact on the private sector, including any 
legislative proposal submitted by the executive branch likely 
to have such a budgetary or financial impact, shall include its 
views and estimates on that proposal to the Committee on the 
Budget of the applicable House.

                [ANALYSIS BY CONGRESSIONAL BUDGET OFFICE

    [Sec. 403. (a) The Director of the Congressional Budget 
Office shall, to the extent practicable, prepare for each bill 
or resolution of a public character reported by any committee 
of the House of Representatives or the Senate (except the 
Committee on Appropriations of each House), and submit to such 
committee--
          [(1) an estimate of the costs which would be incurred 
        in carrying out such bill or resolution in the fiscal 
        year in which it is to become effective and in each of 
        the 4 fiscal years following such fiscal year, together 
        with the basis for each such estimate;
          [(2) an estimate of the cost which would be incurred 
        by State and local governments in carrying out or 
        complying with any significant bill or resolution in 
        the fiscal year in which it is to become effective and 
        in each of the four fiscal years following such fiscal 
        year, together with the basis for each such estimate;
          [(3) a comparison of the estimates of costs described 
        in paragraphs (1) and (2), with any available estimates 
        of costs made by such committee or by any Federal 
        agency; and
          [(4) a description of each method for establishing a 
        Federal financial commitment contained in such bill or 
        resolution.
The estimates, comparison, and description so submitted shall 
be included in the report accompanying such bill or resolution 
if timely submitted to such committee before such report is 
filed.
    [(b) For purposes of subsection (a)(2), the term ``local 
government'' has the same meaning as in section 103 of the 
Intergovernmental Cooperation Act of 1968.
    [(c) For purposes of subsection (a)(2), the term 
``significant bill or resolution'' is defined as any bill or 
resolution which in the judgment of the Director of the 
Congressional Budget Office is likely to result in an annual 
cost to State and local governments of $200,000,000 or more, or 
is likely to have exceptional fiscal consequences for a 
geographic region or a particular level of government.]
          * * * * * * *

SEC. 408. LEGISLATIVE MANDATE ACCOUNTABILITY AND REFORM.

    (a) Duties of Congressional Committees.--
          (1) In general.--When a committee of authorization of 
        the Senate or the House of Representatives reports a 
        bill or joint resolution of public character that 
        includes any Federal mandate, the report of the 
        committee accompanying the bill or joint resolution 
        shall contain the information required by paragraphs 
        (3) and (4).
          (2) Submission of bills to the director.--When a 
        committee of authorization of the Senate or the House 
        of Representatives orders reported a bill or joint 
        resolution of a public character, the committee shall 
        promptly provide the bill or joint resolution to the 
        Director of the Congressional Budget Office and shall 
        identify to the Director any Federal mandates contained 
        in the bill or resolution.
          (3) Reports on federal mandates.--Each report 
        described under paragraph (1) shall contain--
                  (A) an identification and description of any 
                Federal mandates in the bill or joint 
                resolution, including the expected direct costs 
                to State, local, and tribal governments, and to 
                the private sector, required to comply with the 
                Federal mandates;
                  (B) a qualitative, and if practicable, a 
                quantitative assessment of costs and benefits 
                anticipated from the Federal mandates 
                (including the effects on health and safety and 
                the protection of the natural environment); and
                  (C) a statement of the degree to which a 
                Federal mandate affects both the public and 
                private sectors and the extent to which Federal 
                payment of public sector costs would affect the 
                competitive balance between State, local, or 
                tribal governments and privately owned 
                businesses.
          (4) Intergovernmental mandates.--If any of the 
        Federal mandates in the bill or joint resolution are 
        Federal intergovernmental mandates, the report required 
        under paragraph (1) shall also contain--
                  (A)(i) a statement of the amount, if any, of 
                increase or decrease in authorization of 
                appropriations under existing Federal financial 
                assistance programs, or of authorization of 
                appropriations for new Federal financial 
                assistance, provided by the bill or joint 
                resolution to pay for the costs to State, 
                local, and tribal governments of the Federal 
                intergovernmental mandate; and
                  (ii) a statement of whether the committee 
                intends that the Federal intergovernmental 
                mandates be partly or entirely unfunded, and if 
                so, the reasons for that intention; and
                  (B) any existing sources of Federal 
                assistance in addition to those identified in 
                subparagraph (A) that may assist state, local, 
                and tribal governments in meeting the direct 
                costs of the Federal intergovernmental 
                mandates.
          (5) Preemption clarification and information.--When a 
        committee of authorization of the Senate or the House 
        of Representatives reports a bill or joint resolution 
        of public character, the committee report accompanying 
        the bill or joint resolution shall contain, if relevant 
        to the bill or joint resolution, an explicit statement 
        on the extent to which the bill or joint resolution 
        preempts any State, local, or tribal law, and, if so, 
        an explanation of the reasons for such preemption.
          (6) Publication of statement from the director.--
                  (A) Upon receiving a statement (including any 
                supplemental statement) from the Director under 
                subsection (b)(1), a committee of the Senate or 
                the House of Representatives shall publish the 
                statement in the committee report accompanying 
                the bill or joint resolution to which the 
                statement relates if the statement is available 
                at the time the report is printed.
                  (B) If the statement is not published in the 
                report, or if the bill or joint resolution to 
                which the statement relates is expected to be 
                considered by the Senate or the House of 
                Representatives before the report is published, 
                the committee shall cause the statement, or a 
                summary thereof, to be published in the 
                Congressional Record in advance of floor 
                consideration of the bill or joint resolution.
    (b) Duties of the Director.--
          (1) Statements on bills and joint resolutions other 
        than appropriations bills and joint resolutions.--
                  (A) Federal intergovernmental mandates in 
                reported bills and resolutions.--For each bill 
                or joint resolution of a public character 
                reported by any committee of authorization of 
                the Senate or the House of Representatives, the 
                Director of the Congressional Budget Office 
                shall prepare and submit to the committee a 
                statement as follows:
                          (i) If the Director estimates that 
                        the direct cost of all Federal 
                        intergovernmental mandates in the bill 
                        or joint resolution will equal or 
                        exceed $50,000,000 (adjusted annually 
                        for inflation) in the fiscal year in 
                        which any Federal intergovernmental 
                        mandate in the bill or joint resolution 
                        (or in any necessary implementing 
                        regulation) would first be effective or 
                        in any of the 4 fiscal years following 
                        such fiscal year, the Director shall so 
                        state, specify the estimate, and 
                        briefly explain the basis of the 
                        estimate.
                          (ii) The estimate required under 
                        clause (i) shall include estimates (and 
                        brief explanations of the basis of the 
                        estimates) of--
                                  (I) the total amount of 
                                direct cost of complying with 
                                the Federal intergovernmental 
                                mandates in the bill or joint 
                                resolution; and
                                  (II) the amount, if any, of 
                                increase in authorization of 
                                appropriations under existing 
                                Federal financial assistance 
                                programs, or of authorization 
                                of appropriations for new 
                                Federal financial assistance, 
                                provided by the bill or joint 
                                resolution and usable by State, 
                                local, or tribal governments 
                                for activities subject to the 
                                Federal intergovernmental 
                                mandates.
                  (B) Federal private sector mandates in 
                reported bills and joint resolutions.--For each 
                bill or joint resolution of a public character 
                reported by any committees of authorization of 
                the Senate or the House of Representatives, the 
                Director of the Congressional Budget Office 
                shall prepare and submit to the committee a 
                statement as follows:
                          (i) If the Director estimates that 
                        the direct cost of all Federal private 
                        sector mandates in the bill or joint 
                        resolution will equal or exceed 
                        $200,000,000 (adjusted annually for 
                        inflation) in the fiscal year in which 
                        any Federal private sector mandate in 
                        the bill or joint resolution (or in any 
                        necessary implementing regulation) 
                        would first be effective or in any of 
                        the 4 fiscal years following such 
                        fiscal year, the Director shall so 
                        state, specify the estimate, and 
                        briefly explain the basis of the 
                        estimate.
                          (ii) Estimates required under this 
                        subparagraph shall include estimates 
                        (and a brief explanation of the basis 
                        of the estimates) of--
                                  (I) the total amount of 
                                direct costs of complying with 
                                the Federal private sector 
                                mandates in the bill or joint 
                                resolution; and
                                  (II) the amount, if any, of 
                                increase in authorization of 
                                appropriations under existing 
                                Federal financial assistance 
                                programs, or of authorization 
                                of appropriations for new 
                                Federal financial assistance, 
                                provided by the bill or joint 
                                resolution usable by the 
                                private sector for the 
                                activities subject to the 
                                Federal private sector 
                                mandates.
                          (iii) If the Director determines that 
                        it is not feasible to make a reasonable 
                        estimate that would be required under 
                        clauses (i) and (ii), the Director 
                        shall not make the estimate, but shall 
                        report in the statement that the 
                        reasonable estimate cannot be made and 
                        shall include the reasons for that 
                        determination in the statement.
                  (C) Legislation falling below the direct 
                costs thresholds.--If the Director estimates 
                that the direct costs of a Federal mandate will 
                not equal or exceed the thresholds specified in 
                paragraphs (A) and (B), the Director shall so 
                state and shall briefly explain the basis of 
                the estimate.
    (c) Legislation Subject to Point of Order in the Senate.--
          (1) In general.--It shall not be in order in the 
        Senate to consider--
                  (A) any bill or joint resolution that is 
                reported by a committee unless the committee 
                has published a statement of the Director on 
                the direct costs of Federal mandates in 
                accordance with subsection (a)(6) before such 
                consideration; and
                  (B) any bill, joint resolution, amendment, 
                motion, or conference report that would 
                increase the direct costs of Federal 
                intergovernmental mandates by an amount that 
                causes the thresholds specified in subsection 
                (b)(1)(A)(i) to be exceeded, unless--
                          (i) the bill, joint resolution, 
                        amendment, motion, or conference report 
                        provides direct spending authority for 
                        each fiscal year for the Federal 
                        intergovernmental mandates included in 
                        the bill, joint resolution, amendment, 
                        motion, or conference report in an 
                        amount that is equal to the estimated 
                        direct costs of such mandate;
                          (ii) the bill, joint resolution, 
                        amendment, motion, or conference report 
                        provides an increase in receipts and an 
                        increase in direct spending authority 
                        for each fiscal year for the Federal 
                        intergovernmental mandates included in 
                        the bill, joint resolution, amendment, 
                        motion, or conference report in an 
                        amount equal to the estimated direct 
                        costs of such mandate; or
                          (iii) the bill, joint resolution, 
                        amendment, motion, or conference report 
                        includes an authorization of 
                        appropriations in an amount equal to 
                        the estimated direct costs of such 
                        mandate, and--
                                  (I) identifies a specific 
                                dollar amount estimate of the 
                                full direct costs of the 
                                mandate for each year or other 
                                period during which the mandate 
                                shall be in effect under the 
                                bill, joint resolution, 
                                amendment, motion or conference 
                                report, and such estimate is 
                                consistent with the estimate 
                                determined under paragraph (3) 
                                for each fiscal year;
                                  (II) identifies any 
                                appropriation bill that is 
                                expected to provide for Federal 
                                funding of the direct cost 
                                referred to under subclause 
                                (IV)(aa);
                                  (III) identifies the minimum 
                                amount that must be 
                                appropriated in each 
                                appropriations bill referred to 
                                in subclause (II), in order to 
                                provide for full Federal 
                                funding of the direct costs 
                                referred to in subclause (I); 
                                and
                                  (IV)(aa) designates a 
                                responsible Federal agency and 
                                establishes criteria and 
                                procedures under which such 
                                agency shall implement less 
                                costly programmatic and 
                                financial responsibilities of 
                                State, local, and tribal 
                                governments in meeting the 
                                objectives of the mandate, to 
                                the extent that an 
                                appropriation Act does not 
                                provide for the estimated 
                                direct costs of such mandate as 
                                set forth under subclause 
                                (III); or
                                  (bb) designates a responsible 
                                Federal agency and establishes 
                                criteria and procedures to 
                                direct that, if an 
                                appropriation Act does not 
                                provide for the estimated 
                                direct costs of such mandate as 
                                set forth under subclause 
                                (III), such agency shall 
                                declare such mandate to be 
                                ineffective as of October 1 of 
                                the fiscal year for which the 
                                appropriation is not at least 
                                equal to the direct costs of 
                                the mandate.
          (2) Rule of construction.--The provisions of 
        paragraph (1)(B)(iii)(IV)(aa) shall not be construed to 
        prohibit or otherwise restrict a State, local, or 
        tribal government from voluntarily electing to remain 
        subject to the original Federal intergovernmental 
        mandate, complying with the programmatic or financial 
        responsibilities of the original Federal 
        intergovernmental mandate and providing the funding 
        necessary consistent with the costs of Federal agency 
        assistance, monitoring, and enforcement.
          (3) Committee on appropriations.--Paragraph (1) shall 
        not apply to matters that are within the jurisdiction 
        of the Committee on Appropriations of the Senate or the 
        House of Representatives.
          (4) Determination of applicability to pending 
        legislation.--For purposes of this subsection, on 
        questions regarding the applicability of this Act to a 
        pending bill, joint resolution, amendment, motion, or 
        conference report, the Committee on Governmental 
        Affairs of the Senate, or the Committee on Government 
        Reform and oversight of the House of Representatives, 
        as applicable, shall have the authority to make the 
        final determination.
          (5) Determinations of federal mandate levels.--For 
        the purposes of this subsection, the levels of Federal 
        mandates for a fiscal year shall be determined based on 
        the estimates made by the Committee on the Budget of 
        the Senate or the House of Representatives, as the case 
        may be.
    (d) Enforcement in the House of Representatives.--It shall 
not be in order in the House of Representatives to consider a 
rule or order that waives the application of subsection (c) to 
a bill or joint resolution reported by a committee of 
authorization.