[Senate Report 106-159]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-159
_______________________________________________________________________

                                     



 
                 FEDERALISM ACCOUNTABILITY ACT OF 1999

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                             TOGETHER WITH

                             MINORITY VIEWS

                              to accompany

                                S. 1214

TO ENSURE THE LIBERTIES OF THE PEOPLE BY PROMOTING FEDERALISM, TO 
  PROTECT THE RESERVED POWERS OF THE STATES, TO IMPOSE ACCOUNTABILITY FOR 
  FEDERAL PREEMPTION OF STATE AND LOCAL LAWS, AND FOR OTHER PURPOSES




               September 16, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-011                     WASHINGTON : 1999


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
                      Paul R. Noe, Senior Counsel
     Kristine I. Simmons, Staff Director, Oversight of Government 
  Management, Restructuring and the District of Columbia Subcommittee
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
Linda J. Gustitus, Minority Staff Director and Chief Counsel, Permanent 
                     Subcommittee on Investigations
  Carl Gold, Minority Congressional Fellow, Permanent Subcommittee on 
                             Investigations
                 Darla D. Cassell, Administrative Clerk


106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-159

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




                 FEDERALISM ACCOUNTABILITY ACT OF 1999

                                _______
                                

               September 16, 1999.--Ordered to be printed

                                _______


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

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 1214]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 1214) to ensure the liberties of the 
people by promoting federalism, to protect the reserved powers 
of the states, to impose accountability for federal preemption 
of state and local laws, and for other purposes, having 
considered the same, reports favorably thereon with amendments 
and recommends by a vote of 8-2 that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
  I. Purpose and summary..............................................1
  II Background and need for legislation..............................3
III. Legislative history and committee consideration.................12
 IV. Administration views............................................13
  V. Section-by-section analysis.....................................14
 VI. Regulatory impact statement.....................................23
VII. CBO cost estimate...............................................24
VIII.Minority views..................................................26

 IX. Changes in existing law.........................................29

                         I. Purpose and Summary

    S. 1214 is a bipartisan effort to achieve meaningful 
improvements to our federal system of government through 
important changes in the preemption doctrine and the process 
for passing legislation and promulgating federal regulations. 
S. 1214 would promote restraint in the exercise of federal 
power. It would encourage Congress and the federal agencies to 
think carefully before deciding whether or not to preempt state 
and local law and, if so, to use express preemption clauses. S. 
1214 is intended to ensure that the interests of state and 
local governments, and the people they serve, are given due 
consideration by the Federal Government. Upon introduction of 
S. 1214, Chairman Thompson stated:

          The Founders created a dual system of governance for 
        America, dividing power between the Federal Government 
        and the States. The Tenth Amendment makes clear that 
        States retain all governmental power not granted to the 
        Federal Government by the Constitution. * * * At the 
        same time, the Supremacy Clause states that Federal 
        laws made pursuant to the Constitution shall be the 
        supreme law of the land. The ``Federalism 
        Accountability Act'' is intended to require careful 
        thought and accountability when we reconcile the 
        competing principles embodied in the Tenth Amendment 
        and the Supremacy Clause.1
---------------------------------------------------------------------------
    \1\ 145 Cong. Rec. S6872 (daily ed. June 10, 1999).

    A brief synopsis of the major provisions of the bill 
follows:

            A. STATEMENTS IN COMMITTEE OR CONFERENCE REPORTS

    In the report accompanying any bill or joint resolution 
reported from a committee or conference of the Senate or House, 
Congress would be required to make an explicit statement on the 
extent to which the bill or joint resolution is intended to 
preempt state or local law and to provide an explanation of the 
reasons for such preemption.

             B. RULE OF CONSTRUCTION RELATING TO PREEMPTION

    S. 1214 would establish a rule of construction on 
preemption. No federal statute or federal rule enacted or 
promulgated after the effective date of the Act would be 
construed to preempt state or local law unless the statute or 
rule explicitly states that such preemption was intended or 
unless there is a direct conflict between such statute or rule 
and state or local law.

                    C. AGENCY FEDERALISM ASSESSMENTS

    Agencies would designate a federalism officer to implement 
the requirements of the Act and to serve as a liaison to state 
and local officials. Early in the process of developing rules, 
federal agencies would be required to notify, consult with, and 
provide an opportunity for meaningful participation by state 
and local government officials or their representative 
organizations. The agencies would prepare a federalism 
assessment for rules that have federalism impacts. Each 
federalism assessment would include an analysis of the 
following: whether, why, and to what degree the federal rule 
preempts state law; other significant impacts on state and 
local governments; measures taken by the agency, including the 
consideration of regulatory alternatives, to minimize the 
impact on State and local governments; and the extent of the 
agency's prior consultation with public officials, the nature 
of their concerns, and the extent to which those concerns have 
been met. The federalism assessment would be included in the 
rulemaking record for purposes of judicial review and would be 
considered by the court in determining whether the final rule 
as a whole is arbitrary or capricious. In addition, if the 
agency fails to perform the federalism assessment, or to 
undertake any consultation, the court also may remand or 
invalidate the rule, and the adequacy of compliance with the 
specific federalism assessment requirements shall not otherwise 
be grounds for remanding or invalidating the rule. Only state 
or local governments, or their representative organizations, 
would have standing to challenge noncompliance with the 
consultation and federalism assessment requirements.

     D. GOVERNMENT PERFORMANCE AND RESULTS ACT PERFORMANCE MEASURES

    The Act amends the Government Performance and Results Act 
of 1993 to clarify that performance measures for state-
administered grant programs are to be determined in 
consultation with public officials.

            E. CONGRESSIONAL BUDGET OFFICE PREEMPTION REPORT

    The Act would require the Congressional Budget Office 
(``CBO''), with the help of the Office of Management and Budget 
and the Congressional Research Service, to compile a report on 
preemptions by federal rules, court decisions, and legislation.

         F. FLEXIBILITY AND FEDERAL INTERGOVERNMENTAL MANDATES

    The Act amends the Unfunded Mandates Reform Act of 1995 to 
clarify that major new requirements imposed on states under 
entitlement authority are to be scored by CBO as unfunded 
mandates. It also requires that, where Congress has capped the 
federal share of an entitlement program, the Committee report 
and the accompanying CBO report must analyze whether the 
legislation includes new flexibility or whether there is 
existing flexibility to offset additional costs.

                II. Background and Need for Legislation

    Our constitutional federalism has been called the greatest 
charter for liberty, wealth creation, and community in 
political history. It was the Founders' brilliant solution to 
the greatest of political dilemmas: How could a government be 
made strong enough to protect liberty and property, without 
making it so strong it could oppress its citizens and 
expropriate their wealth? The Founders concluded that two 
interlocking governments--federal and state--would lead to less 
and better government than a unitary government.2
---------------------------------------------------------------------------
    \2\ Testimony of Professor John O. McGinnis, Benjamin N. Cardozo 
School of Law, before the Senate Governmental Affairs Committee, May 5, 
1999.
---------------------------------------------------------------------------
    In the Constitution, the Founders carefully enumerated the 
powers of the Federal Government and divided government power 
between the Federal Government and the States. The Federal 
Government's basic domestic responsibility was to ensure free 
flow of goods and people, as reflected in the Commerce Clause. 
The Founders also provided the Federal Government with a 
limited trump card, the Supremacy Clause, in the event of a 
conflict between federal and state law. The Framers envisioned 
a Federal Government capable of solving national problems, but 
just as surely they envisioned a republic whose vitality was 
assured by the diffusion of power not only among the branches 
of the Federal Government, but also between the Federal 
Government and the States.3
---------------------------------------------------------------------------
    \3\ Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 
528, 581 (Rehnquist, C.J., dissenting) (citing FERC v. Mississippi, 546 
U.S. 742, 790 (1982)).
---------------------------------------------------------------------------
    During the debates on the Constitution between 1787 and 
1788, many observers worried that the generality of the 
document, combined with the Supremacy Clause, would allow a 
centralization of power in the hands of the Federal Government 
beyond the limited enumerated powers granted to it. Much of the 
initial opposition to the Constitution was rooted in the fear 
that the Federal Government would become too powerful and would 
eliminate the States as viable political entities. Samuel 
Adams, for example, worried that if the several states were to 
be joined in ``one entire Nation, under one Legislature, the 
Powers of which shall extend to every Subject of Legislation, 
and its Laws be supreme & controul the whole, the Idea of 
Sovereignty in these States must be lost.'' 4 
Similarly, George Mason argued that ``the general government 
being paramount to, and in every respect more powerful than the 
state governments, the latter must give way to the former.'' 
5
---------------------------------------------------------------------------
    \4\ Letter from Samuel Adams to Richard Henry Lee (Dec. 3, 1787), 
reprinted in ``Anti-Federalists versus Federalists'' 159 (J. Lewis ed. 
1967).
    \5\ Address in the Ratifying Convention of Virginia (June 4-12, 
1788), reprinted in ``Anti-Federalists versus Federalists'', supra, at 
208-09.
---------------------------------------------------------------------------
    This concern was so strongly voiced that the proponents of 
the Constitution assured that a Bill of Rights, including a 
provision explicitly reserving powers in the States, would be a 
top priority for the new Congress. The Tenth Amendment was 
added soon after ratification in 1791. It emphasizes:

          The powers not delegated to the United States by the 
        Constitution, nor prohibited by it to the States, are 
        reserved to the States respectively, or to the people.

    The drafters of the Constitution believed that to protect 
liberty, power should be divided between the Federal and State 
Governments so that ``[a]mbition be made to counteract 
ambition.'' 6 They described this new form of 
government as ``in strictness, neither a national nor a federal 
Constitution.'' 7 Madison explained the division of 
power by contrasting the attributes of a ``national'' 
government with the federal system of governance established by 
the Constitution. He explained that while a national government 
would possess an ``indefinite supremacy over all persons and 
things,'' the government established by the Constitution 
consisted of ``local or municipal authorities [which] form 
distinct and independent portions of the supremacy, no more 
subject within their respective spheres to the general 
authority, than the general authority is subject to them, 
within its own sphere.'' 8 In this ``compound 
republic of America,'' Madison said, ``[t]he different 
governments will control each other, at the same time that each 
will be controlled by itself.'' 9
---------------------------------------------------------------------------
    \6\ The Federalist No. 51 (James Madison).
    \7\ The Federalist No. 39 (James Madison).
    \8\ Id.
    \9\ The Federalist No. 51.
---------------------------------------------------------------------------
    While the Constitution limited the powers of Federal 
Government, and the Federal Government checked the States in 
limited areas such as interstate commerce, the States also were 
limited by competition among themselves. Federalism created a 
marketplace among governments. Citizens could vote with their 
feet and take themselves and their wealth elsewhere if subject 
to abuse.10
---------------------------------------------------------------------------
    \10\ Michael S. Greve, ``Real Federalism: Why It Matters, How It 
Could Happen'', American Enterprise Institute (1999).
---------------------------------------------------------------------------
    The benefits of federalism are many. It limits the power of 
government to preserve liberty. It also creates an efficient 
marketplace for government. States compete with each other for 
citizens' business, taxes, and talent. That, in turn, fosters a 
healthy business climate. Local governments can tailor their 
policies to the needs and values of the community and thereby 
increase the satisfaction of their citizens. Federalism also 
fosters experimentation among the laboratories of democracy. As 
Justice Brandeis stated in an oft-quoted passage, ``[i]t is one 
of the happy incidents of the federal system that a single 
courageous State may, if its citizens choose, serve as a 
laboratory; and try novel social and economic experiments 
without risk to the rest ofthe country.'' 11 The 
best ideas that emerge from innovative states can then be adopted 
elsewhere. This experimentation is crucial to address major problems 
like welfare reform and education. Federalism also increases civic 
responsibility.12
---------------------------------------------------------------------------
    \11\ New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) 
(Brandeis, J., dissenting).
    \12\ See Testimony of Professor John O. McGinnis, Benjamin N. 
Cardozo School of Law, before the Senate Governmental Affairs 
Committee, May 5, 1999; Statement of Adam D. Thierer, Heritage 
Foundation, before the Senate Governmental Affairs Committee, May 5, 
1999; Testimony of Professor William Galston, University of Maryland 
School of Public Affairs, before the Senate Governmental Affairs 
Committee, May 5, 1999.
---------------------------------------------------------------------------
    Charged with the duty to oversee Federal-State 
relations,13 the Committee is mindful of the 
principles of federalism. As Justice Black eloquently stated:
---------------------------------------------------------------------------
    \13\ Standing Rules of the Senate, S. Doc. No. 8, 104th Cong., 1st 
Sess. 28-29 (1995).

          [O]ne familiar with the profound debates that ushered 
        our Federal Constitution into existence is bound to 
        respect those who remain loyal to the ideals and dreams 
        of ``Our Federalism.'' * * * What the concept 
        [represents] is a system in which there is sensitivity 
        to the legitimate interests of both State and National 
        Governments, and in which the National Government, 
        anxious though it may be to vindicate and protect 
        federal rights and federal interests, always endeavors 
        to do so in ways that will not unduly interfere with 
        the legitimate activities of the States. It should 
        never be forgotten that this slogan, ``Our 
        Federalism,'' born in the early struggling days of our 
        Union of States, occupies a highly important place in 
        our Nation's history and future.14
---------------------------------------------------------------------------
    \14\ Younger v. Harris, 401 U.S. 37, 44-45 (1971) (stating that 
federal judges should be directed by comity, the proper respect for 
State functions).

    Unfortunately, we have strayed far from the Founders' 
vision.15 As Justice O'Connor put it, ``[t]he 
Federal Government undertakes activities today that would have 
been unimaginable to the Framers in two senses: first, because 
the Framers would not have conceived that any government would 
conduct such activities; and second, because the Framers would 
not have believed that the Federal Government, rather than the 
States, would assume such responsibilities.'' 16
---------------------------------------------------------------------------
    \15\ Adam D. Thierer, ``The Delicate Balance: Federalism, 
Interstate Commerce, and Economic Freedom in the Technological Age'', 
The Heritage Foundation (1999); Statement of Adam D. Thierer, Heritage 
Foundation, before the Senate Governmental Affairs Committee, May 5, 
1999; Statement of Professor John S. Baker, Jr., Louisiana State 
University Law Center, before the Senate Governmental Affairs 
Committee, July 14, 1999.
    \16\ New York v. United States, 505 U.S. 144, 157 (1992).
---------------------------------------------------------------------------
    Undoubtedly, there are many causes of the decline of 
federalism. Although the Framers expected that the composition 
of Congress would make it reluctant to invade State 
sovereignty, ``a variety of structural and political changes 
occurring in this century have combined to make Congress 
particularly insensitive to State and local values.'' 
17 The 16th Amendment authorized a Federal income 
tax that allowed the rapid growth of the Federal Government in 
the 20th century. The 17th Amendment ended the election of 
Senators by State legislators. Political parties weakened on 
the local level, and the national media ascended. The emergence 
of an industrialized national economy was accompanied by a 
breathtaking expansion of Federal legislation and regulation.
---------------------------------------------------------------------------
    \17\ Advisory Commission on Intergovernmental Relations, 
``Regulatory Federalism: Policy, Process, Impact and Reform'', 50 
(1984).
---------------------------------------------------------------------------
    Two major developments in the Court's jurisprudence in 
early 20th century profoundly altered the character of our 
federal system. First, the unequivocal recognition of a 
congressional power of preemption became an intrinsic part of 
the vast expansion of federal powers. The Supremacy Clause 
states:

          This Constitution, and the Laws of the United States 
        which shall be made in Pursuance thereof; and all 
        Treaties made, or which shall be made, under the 
        Authority of the United States, shall be the supreme 
        Law of the Land; and the Judges in every State shall be 
        bound thereby, any Thing in the Constitution or Laws of 
        any State to the Contrary notwithstanding.18
---------------------------------------------------------------------------
    \18\ U.S. Const. art. VI (emphasis added).

The plain language of the Supremacy Clause indicates that it 
was to serve as a conflict resolution mechanism in particular 
cases.19 A specific state statute should be trumped 
if it conflicts with federal law without depriving the state of 
all concurrent lawmaking power in that area. Starting in the 
second decade of the twentieth century,20 however, 
the Court's preemption doctrine evolved beyond a conflict 
resolution mechanism into a jurisdiction-stripping power. 
Congress can deprive the states of their power to act at all in 
a given area, regardless of whether State law actually 
conflicted with federal law.21
---------------------------------------------------------------------------
    \19\ See Stephen A. Gardbaum, ``The Nature of Preemption,'' 79 
Cornell L. Rev. 767 (1994).
    \20\ See Southern Railway Co. v. Reid, 222 U.S. 424 (1912).
    \21\ See Stephen A. Gardbaum, supra note 19.
---------------------------------------------------------------------------
    The Court's expansion of the preemption doctrine was 
accompanied by a vast expansion of the Commerce Clause during 
the New Deal.22 In combination, those two 
developments dramatically altered the balance of power between 
the Federal Government and the States and raised profound 
questions about the meaningfulness of federalism.23 
Only recently, a number of Supreme Court decisions have begun 
to right the balance.24
---------------------------------------------------------------------------
    \22\ See NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937); 
United States v. Darby, 312 U.S. 100 (1941).
    \23\ See Stephen A. Gardbaum, supra note 19, at 814-15. The impact 
of the preemption doctrine and the expanded interpretation of the 
Commerce Clause was dramatic, notwithstanding the Court's introduction 
of a presumption against preemption. Id. at 806.
    \24\ See United States v. Lopez, 514 U.S. 549 (1995) (Gun-Free 
School Zones Act, prohibiting possession of firearms in school zones, 
exceeded Commerce Clause); New York v. United States, 505 U.S. 144 
(1992) (Federal Low-Level Radioactive Waste Policy Amendments Act 
violated 10th Amendment by commandeering states into legislating); 
Printz v. United States, 521 U.S. 898 (1997) (Brady Act provision 
requiring local law enforcement officers to conduct background checks 
on proposed handgun transfers, violated 10th Amendment by commandeering 
state officers to execute federal laws); Seminole Tribe v. Florida, 517 
U.S. 44 (1996) (Congress lacked power under commerce clause to abrogate 
state's 11th Amendment immunity); City of Boerne v. Flores, 117 S. Ct. 
2365 (1997) (striking down Religious Freedom Restoration Act under 
section 5 of 14th Amendment because Congress exceeded power by 
redefining 14th Amendment religious freedom guarantees); Alden v. 
Maine, 144 L.Ed.2d 636 (1999) (state probation officers could not sue 
state in state courts because Congress lacked power to subject 
nonconsenting states to private suits for damages); Florida Pre-paid 
Postsecondary Education Expense Board v. College Savings Bank, 142 
L.Ed.2d 654 (1999) (neither companies nor individuals can sue 
nonconsenting states for patent infringement in violation of federal 
statute); College Savings Bank v. Florida Prepaid Postsecondary 
Education Expense Board, 144 L.Ed.2d 605 (1999) (neither companies nor 
individuals can sue nonconsenting states for false advertising in 
violation of federal statute).
---------------------------------------------------------------------------
    Since the ratification of the Constitution, the nature and 
extent of commerce have changed dramatically. Interstate 
economic activity has steadily expanded. Industrialization, 
coupled with advances in transportation and communications, has 
created a national economy in which virtually every activity 
occurring within the borders of a State can play a part. Recent 
technological advances such as the Internet have created a 
truly global economy.25
---------------------------------------------------------------------------
    \25\ See Adam D. Thierer, ``The Delicate Balance: Federalism, 
Interstate Commerce, and Economic Freedom in the Technological Age'', 
The Heritage Foundation (1999).
---------------------------------------------------------------------------
    The Committee recognizes that there may be compelling 
reasons for Congress or agencies to exercise the power of 
preemption in particular cases. Indeed, the second finding in 
S. 1214 states that ``preemptive statutes and regulations have 
at times been an appropriate exercise of Federal powers.'' 
26 First and foremost, the Federal Government has a 
duty to protect the Constitutional rights of individuals. Civil 
rights is a clear example where federal preemption has been 
warranted. Preemption also may be necessary to solve problems 
that are national in scope, such as air pollution control. 
27 In other contexts, state regulations that made 
sense at a time of primarily local markets may produce wasteful 
conflicts and duplication where national businesses are 
affected. Modern commercial realities may demand a cost-
effective balance of federal and state regulation. While the 
Committee recognizes that preemption may be appropriate or even 
necessary, the Committee believes that decisions whether or not 
to preempt state and local authority should be made in a 
careful and open manner.
---------------------------------------------------------------------------
    \26\ S. 1214, section 2(2).
    \27\ See Testimony of Professor William A. Galston, University of 
Maryland School of Public Affairs, before the Senate Governmental 
Affairs Committee, May 5, 1999; Testimony of Professor Rena Steinzor, 
University of Maryland School of Law before the Senate Governmental 
Affairs Committee, July 14, 1999, at 5.
---------------------------------------------------------------------------
    Federal preemptions of state and local authority mushroomed 
in the twentieth century. Only about 30 statutes were enacted 
between 1789 and 1899 had the effect of significantly 
preempting the powers of the States.28 That trend 
began to shift at the turn of the century. Of the approximately 
439 significant preemption statutes enacted by Congress in the 
200 years since 1789, more than half were enacted since 
1963.29 Preemption has been at the center of many 
hard-fought legal battles on important economic and social 
issues.30 From their initial limited scope, 
preemptions have come to span a wide range of commercial, 
monetary, civil rights, environmental, health, and safety 
fields.31 The frequency and pace of Federal 
preemption has accelerated even more since the mid-
1990s.32 Preemption legislation recently has been 
considered or enacted in areas ranging from taxation of 
electronic commerce to telecommunications, health care, civil 
justice, international trade, electricity deregulation, 
financial services, and land use planning.33 If this 
trend continues, state and local governments may find it 
increasingly difficult to play their traditional 
role.34
---------------------------------------------------------------------------
    \28\ U.S. Advisory Commission on Intergovernmental Relations, 
``Federal Statutory Preemption of State and Local Authority: History, 
Inventory, and Issues (Sept. 1992), at 6, Table 1-1.
    \29\ U.S. Advisory Commission on Intergovernmental Relations, supra 
note 28, at iii, 9, Table 1-1.
    \30\ See Kenneth Starr et. al., supra note 19, at 1-2.
    \31\ Id.; U.S. Advisory Commission on Intergovernmental Relations, 
``Regulatory Federalism: Policy, Process, Impact and Reform'' (Feb. 
1984).
    \32\ See William T. Waren, ``Anything Left to Legislate About?,'' 
State Legislatures 23 (Sept. 1999); Carl Tubbesing, ``The Dual 
Personality of Federalism,'' State Legislatures (Apr. 1998).
    \33\ Testimony of Governor Michael O. Leavitt, Vice Chairman, 
National Governors' Association, before the Senate Governmental Affairs 
Committee, May 5, 1999; Testimony of Governor Thomas R. Carper, 
Chairman, National Governors' Association, before the Senate 
Governmental Affairs Committee, July 14, 1999; William T. Waren, supra 
note 32; Carl Tubbesing, supra note 32.
    \34\ Testimony of Majority Leader Daniel T. Blue, Jr., President, 
National Conference of State Legislatures, before the Senate Committee 
on Governmental Affairs, May 5, 1999; William T. Waren, supra note 32; 
Carl Tubbesing, supra note 32.
---------------------------------------------------------------------------
    The increase in Federal preemption of state and local 
powers has been reflected in court dockets. Preemption is 
``almost certainly the most frequently used doctrine of 
constitutional law in practice.'' 35 According to 
one study, ten preemption cases, or two percent of the Court's 
docket, were heard during the Supreme Court's 1962, 1963 and 
1964 terms combined. By its 1985, 1986 and 1987 terms, the 
Court heard 39 preemption cases, which represented nine percent 
of its docket.36 A cursory review by the 
Congressional Research Service indicated that from January 1997 
to August 1999, there were approximately 508 preemption 
opinions issued by the Federal courts and 600 by the state 
courts.
---------------------------------------------------------------------------
    \35\ Stephen A. Gardbaum, supra note 19, at 768.
    \36\ Kenneth Starr, et al., supra note 19, at 1 and n.3.
---------------------------------------------------------------------------
    The expansion of the preemption power has played an 
integral role in the Federal Government's inroads on state 
power and has had important implications. The extent to which 
federal law displaces state law affects both the distribution 
of power between the States and the Federal Government and the 
substantive legal rules of our society.37 Preemption 
can prohibit economic regulation and other activities by state 
and local governments, as well as require states to enforce 
federal laws, conform their own laws to federal standards, and 
take on new responsibilities.38
---------------------------------------------------------------------------
    \37\ Testimony of Professor Caleb Nelson, University of Virginia 
School of Law, before the Senate Governmental Affairs Committee, July 
14, 1999.
    \38\ U.S. Advisory Commission on Intergovernmental Relations, 
``Federal Statutory Preemption of State and Local Authority: History, 
Inventory, and Issues'' (Sept. 1992).
---------------------------------------------------------------------------
    Preemption also can undermine democratic accountability. 
The Court's current preemption doctrine, particularly obstacle 
and field preemption, effectively shifts power from elected 
state officials to the courts. By inferring a broad intent to 
preempt in situations where other plausible and less drastic 
interpretations of Congressional intent are available, the 
courts may unnecessarily strip the states of all power to act 
in a given area.39
---------------------------------------------------------------------------
    \39\ Stephen A. Gardbaum, supra note 19.
---------------------------------------------------------------------------
    According to some commentators, the courts often analyze 
preemption cases without focusing directly on the question 
whether Congress actually intended to preempt state law. The 
courts tend to focus on the effect of state law on the 
operation of the federal scheme rather than on the intent of 
Congress to displace state authority. Courts may state that 
they analyze congressional intent but then focus on the general 
purpose of the federal statute at issue instead of the specific 
intent to displace state law. In other words, Congressional 
``intent'' often is inferred as though the States did not exist 
at all, and the state law is then placed in opposition to that 
intent.40
---------------------------------------------------------------------------
    \40\ Paul Wolfson, ``Preemption and Federalism: The Missing Link,'' 
16 Hastings Const. L.Q. 69, 98 (Fall 1988); Testimony of Professor 
Caleb Nelson, University of Virginia School of Law, before the Senate 
Governmental Affairs Committee, July 14, 1999.
---------------------------------------------------------------------------
    The lack of Congressional guidance in statutes has 
compounded the difficulties faced by state and local 
government. Congress often provides little direction regarding 
the intended scope of the preemptions it has enacted. Faced 
with vague statutory language, state and local government 
officials have been forced to confront substantial uncertainty 
or to engage in time-consuming, costly litigation.
    The current preemption doctrine has been a source of 
considerable confusion and uncertainty.41 The courts 
do not have clear rules for interpreting Congressional intent 
to preempt.42 The courts have not followed a 
consistent and predictable doctrine in adjudicating these 
cases. They have not required an express statement of the 
intent to preempt state or local law, or a conflict between 
federal and state law, before inferring an intent to 
preempt.43 ``[T]he distinction between express (and 
actual conflict) preemption and implied preemption is 
important. By their very nature, implied preemption doctrines 
authorize courts to displace state law based on indirect and 
sometimes less than compelling evidence of legislative intent. 
This indirectness in turn suggests a greater potential for 
unpredictability and instability in the law.'' 44 
Most troubling, it is highly questionable in some cases whether 
a preemptive intent inferred by the courts ever would have 
received the support of a majority in Congress had it been 
expressly stated.45
---------------------------------------------------------------------------
    \41\ Testimony of Professor Caleb Nelson, University of Virginia 
School of Law, before the Senate Governmental Affairs Committee, July 
14, 1999.
    \42\ See, e.g., San Diego Building Trades Counsel v. Garmon, 359 
U.S. 236, (1959) (referring to ``ascertaining the intent of Congress'' 
as a ``delusive phrase''); Hines v. Davidowitz, 312 U.S. 53, 67 (1941) 
(``In the final analysis, there can be no one crystal clear distinctly 
marked formula''); Testimony of Professor Caleb Nelson, University of 
Virginia School of Law, before the Senate Governmental Affairs 
Committee, July 14, 1999; Statement of Professor John S. Baker, Jr., 
Louisiana State University Law Center, before the Senate Governmental 
Affairs Committee, July 14, 1999; Roger Miner, ``Preemptive Strikes on 
State Autonomy: The Role of Congress,'' Heritage Lecture Series (Feb. 
18, 1987).
    \43\ Testimony of Professor Caleb Nelson, University of Virginia 
School of Law, before the Senate Governmental Affairs Committee, July 
14, 1999; Stephen A. Gardbaum, supra note 19; Roger Miner, supra note 
42.
    \44\ Kenneth Starr, et al., supra note 19, at 15.
    \45\ Testimony of Professor Caleb Nelson, University of Virginia 
School of Law, before the Senate Governmental Affairs Committee, July 
14, 1999.
---------------------------------------------------------------------------
    While Congress must take greater responsibility to respect 
principles of federalism, so too must the executive branch. As 
the modern administrative state has grown, the federal-state 
balance has been increasingly affected by the actions of the 
federal agencies that Congress created and entrusted with a 
wide variety of statutes.46
---------------------------------------------------------------------------
    \46\ Kenneth Starr, et al., supra note 19, at 31.
---------------------------------------------------------------------------
    A dispute over the federalism policy of the executive 
branch in 1998 helped catalyze the development of S. 1214. 
Until recently, the federalism policy of the executive branch 
has been guided by Executive Order 12612, issued by President 
Ronald Reagan in 1987. Grounded in the Tenth Amendment, E.O. 
12612 outlined a set of strong federalism policymaking criteria 
to dissuade agencies from interpreting federal statutes 
expansively and heedlessly preempting state law. The Order 
required agencies to appoint a federalism officer, to consult 
with state and local officials, and to prepare federalism 
assessments for rules with federalism impacts.
    On May 14, 1998, President Clinton signed Executive Order 
13083 on ``Federalism.'' That Order proposed to repeal the 
longstanding Reagan order and replace it with a new set of 
policymaking criteria that raised concerns that it could have 
allowed, or even encouraged, federal bureaucracies to intervene 
in State and local affairs or preempt state and local law under 
a variety of circumstances.47 While the order 
directed federal agencies to consult more with state and local 
officials, it was drafted without any consultation. State and 
local government organizations, upset with the substance of the 
order and the lack of consultation, expressed their concern to 
members of Congress. On July 22, Chairman Thompson introduced a 
resolution calling on the White House to revoke its 
order.48 The Thompson resolution was supported by 
then-Governor George Voinovich, who chaired the National 
Governors' Association.49 That same day, the 
Thompson resolution passed the Senate unanimously.50 
On July 28, Chairman David McIntosh of the House Government 
Reform and Oversight's Subcommittee on Regulatory Affairs 
convened a hearing on E.O. 13083. On August 5, shortly before 
the annual meeting of the National Governors' Association, the 
White House announced that it would suspend E.O. 13083 and 
would consult with State and local officials on a new 
order.51
---------------------------------------------------------------------------
    \47\ Letter from Big 7 to President Clinton, July 17, 1998, 144 
Cong. Rec. S8747 (July 22, 1998).
    \48\ 144 Cong. Rec. S8747.
    \49\ Id. at S8748.
    \50\ 144 Cong. Rec. S8769.
    \51\ David S. Broder, ``Clinton `Suspends' Federalism Order to 
Assuage Local, State Officials,'' Washington Post, A5, August 2, 1998; 
``Executive Rules,'' Wall Street Journal, A14, August 6, 1998.
---------------------------------------------------------------------------
    Shortly after these events, representatives of the ``Big 
7'' 52 state and local government organizations 
asked Chairman Thompson to work with them on comprehensive 
federalism legislation. The goal was enforceable legislation 
that would apply not only to the executive branch, but also to 
Congress and the judicial branch. Senators Thompson, Voinovich 
and Levin, as well as Congressmen David McIntosh, Jim Moran and 
five other House members, collaborated in drafting legislation. 
This effort led to the introduction of S. 1214 with broad 
bipartisan support on June 10, 1999. On June 16, the companion 
bill, H.R. 2245, was introduced in the House.
---------------------------------------------------------------------------
    \52\ The ``Big 7'' includes the National Governors' Association, 
the National Conference of State Legislatures, the National Association 
of Counties, The U.S. Conference of Mayors, the Council of State 
Governments, the National League of Cities, and the International City/
County Management Association.
---------------------------------------------------------------------------
    While the federalism legislation was being drafted, GAO 
completed an investigation requested by Chairman Thompson on 
agency non-compliance with the longstanding federalism order, 
E.O. 12612.53 GAO found that for 11,414 rules issued 
between 1996 and 1998, the federal agencies prepared only 5 
federalism assessments. For over 1,900 rules issued by the 
Environmental Protection Agency during that period, the agency 
never even mentioned E.O. 12612.54
---------------------------------------------------------------------------
    \53\ See Statement of L. Nye Stevens, Director, Federal Management 
and Workforce Issues, General Government Division, GAO, before the 
Senate Governmental Affairs Committee, ``Federalism: Implementation of 
Executive Order 12612 in the Rulemaking Process'', GAO/T-GGD-99-93, May 
5, 1999.
    \54\ OMB officials raised some concerns about GAO's findings. In a 
letter to GAO, the Acting OIRA Administrator stated that the critical 
issue was how well the federal agencies consulted with state and local 
officials. Letter from Don Arbuckle, Acting Administrator of OIRA to 
Nye Stevens, Director of Federal Management and Workforce Issues, GAO 
(May 4, 1999). However, following that letter, Senator Levin asked GAO 
to determine how many of the major rules issued between April 1996 and 
December 1998 involved consultation. GAO reported that of the 117 major 
rules issued during that period, 96 of those rules did not mention any 
intergovernmental consultation, even though 32 of those 96 rules had a 
federalism impact, and 15 of the 32 rules also preempted state law. See 
Opening Statement of Senator Carl Levin, Hearing on S. 1214, the 
Federalism Accountability Act (July 14, 1999).
---------------------------------------------------------------------------
    On August 4, about a year after E.O. 13083 was suspended, 
the White House issued a new federalism order, E.O. 13132.\55\ 
Representatives of the Big 7 stated that the new order was a 
substantial improvement over the proposed E.O. 13083. However, 
mindful of the stark record on noncompliance with federalism 
assessment requirements, the Committee believes that 
legislative action is warranted. Upon introduction of S. 1214, 
Chairman Thompson stated, ``[i]t is time for legislation to 
ensure that the agencies take such requirements more 
seriously.'' \56\ Senator Levin also stated, ``as was amply 
demonstrated by a recent GAO report, Executive Order 
requirements for federalism assessments have been ignored. The 
bill would correct this noncompliance by the Executive Branch, 
and ensure that the independent agencies, as well, will engage 
in such consultation and publish assessments along with 
rules.'' \57\
---------------------------------------------------------------------------
    \55\ 64 Fed. Reg. 43255 (Aug. 10, 1999).
    \56\ Statement of Chairman Fred Thompson, 145 Cong. Rec. S6872 
(June 10, 1999).
    \57\ Statement of Senator Carl Levin, 145 Cong. Rec. S6874 (June 
10, 1999).
---------------------------------------------------------------------------
    The ``Federalism Accountability Act'' seeks to remedy the 
problems in Federal-State-local relations. The Act sets forth 
principles of federalism to guide the development of statutes 
and regulations. In addition, the Act establishes an analytical 
process for the Congress and federal agencies to assess the 
justification for and the acceptable scope of preemption and 
other federalism impacts according to these principles. 
Finally, the Act seeks to provide guidance to the courts and 
federal agencies in determining Congressional and agency intent 
regarding preemption.
    The procedures in the Federalism Accountability Act are 
intended to ensure that state and local government are accorded 
their due respect in our federal system of government. The 
legislation pushes federalism to the fore, where procedurally 
it would be more difficult to ignore.\58\ By requiring Congress 
and the federal agencies to consider the federal implications 
of their proposed actions, the legislation would foster better 
communication between elected officials at the federal, state 
and local levels. The legislation also is intended to clarify 
and rationalize the preemption doctrine. Finally, the 
legislation would impose political accountability for decisions 
that significantly impact federalism. As one authority put it, 
``[p]ower and responsibility should go together, like pepper 
and salt. Because Congress has the ultimate power to decide 
preemption cases--Congress after all can always overrule the 
Court on this question--Congress ought to exercise this power 
unambiguously and shoulder the ultimate responsibility as 
well.'' \59\
---------------------------------------------------------------------------
    \58\ Statement of Professor John S. Baker, Jr., Louisiana State 
University Law Center, before the Senate Governmental Affairs 
Committee, July 14, 1999.
    \59\ Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional 
Law, ``Federal Regulation and State Authority,'' Sec. 12.4 (1992), at 
91.
---------------------------------------------------------------------------

          III. Legislative History and Committee Consideration


                         A. COMMITTEE HEARINGS

    On May 5, 1999, the Governmental Affairs Committee held a 
hearing on the State of Federalism, which included discussion 
of the draft bill later introduced as the Federalism 
Accountability Act. Testifying at this hearing were: The 
Honorable Michael O. Leavitt, Governor of Utah and Vice-Chair 
of the National Governors' Association; The Honorable Tommy 
Thompson, Governor of Wisconsin and President of the Council of 
State Governments; The Honorable Clarence E. Anthony, Mayor of 
the City of South Bay, Florida and President of the National 
League of Cities; The Honorable Daniel T. Blue, Jr., Senior 
Democratic Leader of the North Carolina House of 
Representatives and President of the National Conference of 
State Legislatures; Professor John O. McGinnis, Cardozo Law 
School; and Professor William A. Galston, University of 
Maryland School of Public Affairs. Adam D. Thierer of the 
Heritage Foundation, and L. Nye Stevens, Director of Federal 
Management and Workforce Issues, GAO,\60\ submitted statements 
for the record.
---------------------------------------------------------------------------
    \60\ Statement of L. Nye Stevens, Director, Federal Management and 
Workforce Issues, General Government Division, GAO, before the Senate 
Governmental Affairs Committee, ``Federalism: Implementation of 
Executive Order 12612 in the Rulemaking Process,'' GAO/T-GGD-99-93, May 
5, 1999.
---------------------------------------------------------------------------
    On July 14, the Committee held a second hearing that solely 
addressed the Federalism Accountability Act. Testifying at this 
hearing were: The Honorable John Spotila, Administrator, Office 
of Information and Regulatory Affairs, OMB; Mr. Randy Moss, 
Acting Assistant Attorney General, Office of Legal Counsel, 
Department of Justice; The Honorable Thomas Carper, Governor of 
Delaware and Chairman of the National Governors' Association; 
The Honorable John Dorso, Majority Leader, North Dakota House 
of Representatives, on behalf of the National Conference of 
State Legislatures; The Honorable Alexander G. Fekete, Mayor of 
Pembroke Pines, Florida, on behalf of the National League of 
Cities; Professor Caleb Nelson, University of Virginia School 
of Law; Professor Ernest Gellhorn, George Mason University 
School of Law; and Professor Rena Steinzor, University of 
Maryland School of Law. Professor John D. Baker, Louisiana 
State University Law Center, submitted a statement for the 
record.

                   B. AMENDMENTS AND COMMITTEE ACTION

    On August 3, 1999, the Committee on Governmental Affairs 
marked up and favorably reported S. 1214 by a vote of 8 to 2. 
Voting in the affirmative were Senators Stevens, Collins, 
Voinovich, Lieberman, Levin, Akaka, Edwards and Thompson. 
Voting in the negative were Senators Durbin and Cleland. In 
addition, Senators Roth, Domenici, Cochran, and Gregg voted in 
the affirmative by proxy.
    Several amendments were offered, debated and voted upon. 
The following amendments were adopted:
          (1) Senator Thompson offered an amendment to 
        establish standing requirements, limited judicial 
        review, and an emergency exemption for the federalism 
        assessment requirement, as amended by Senator Levin's 
        second degree amendment (adopted by voice vote).
          (2) Senator Thompson offered an amendment to section 
        8 of the bill to clarify that performance measures for 
        State-administered grant programs are to be determined 
        in consultation with public officials, as amended by 
        Senator Levin's second degree amendment (adopted by 
        voice vote).
          (3) Senator Lieberman offered an amendment to strike 
        from the bill subsection 6(c) (adopted by voice vote).
    The following amendment was defeated: Senator Durbin 
offered an amendment to modify theEmployee Retirement Income 
Security Act of 1974 (``ERISA'') to state that nothing in ERISA shall 
be construed to preempt state law providing a cause of action or a 
remedy relating to benefit claims processing for a benefit under an 
employee welfare plan. The amendment was defeated by a vote of 6-10. 
Voting in the affirmative were Senators Specter (by proxy), Akaka, 
Durbin, Torricelli (by proxy), Cleland, and Edwards. Voting in the 
negative were Senators Roth (by proxy), Stevens, Collins, Voinovich, 
Domenici (by proxy), Cochran (by proxy), Gregg (by proxy), Lieberman, 
Levin, and Thompson.

                        IV. Administration Views

    At the Committee's July 14 hearing on S. 1214, two 
witnesses testified for the Administration: The Honorable John 
Spotila, Administrator, Office of Information and Regulatory 
Affairs, Office of Management and Budget, and Mr. Randy Moss, 
Acting Assistant Attorney General, Office of Legal Counsel, 
Department of Justice. Mr. Spotila expressed concern about the 
impact of judicial review on the federalism assessment 
requirements in section 7 of the bill. Mr. Moss expressed 
concern about the rule of construction in section 6, 
particularly subsection 6(c). The Administration also expressed 
the desire to work with the Committee to address these 
concerns.

                     V. Section-by-Section Analysis


                         SECTION 1. SHORT TITLE

    The name of this legislation is the ``Federalism 
Accountability Act of 1999''.

                          SECTION 2. FINDINGS

    Section 2 lays out six basic findings by the Committee. 
These findings underscore both the strengths and problems with 
our federal system of government. These findings are as 
follows:
    First, the Constitution created a strong federal system, 
reserving to the States all powers not delegated to the Federal 
Government.
    Second, preemptive statutes and regulations have at times 
been an appropriate exercise of federal powers, and at other 
times, have been an inappropriate infringement on state and 
local government authority.
    Third, on numerous occasions, Congress has enacted statutes 
and the agencies have promulgated rules that explicitly preempt 
state and local government authority and describe the scope of 
the preemption.
    Fourth, in addition to statutes and rules that explicitly 
preempt State and local government authority, many other 
statutes and rules that lack an explicit statement by Congress 
or the agencies of their intent to preempt and a clear 
description of the scope of the preemption have been construed 
to preempt state and local government authority.
    Fifth, in the past, the lack of clear congressional intent 
regarding preemption has resulted in too much discretion for 
federal agencies and uncertainty for state and local 
governments, leaving the presence or scope of preemption to be 
litigated and determined by the judiciary and sometimes 
producing results contrary to or beyond the intent of Congress.
    Sixth, state and local governments are full partners in all 
federal programs administered by those governments.

                          SECTION 3. PURPOSES

    Section 3 lays out four basic purposes of the Federalism 
Accountability Act:
    First, to promote and preserve the integrity and 
effectiveness of our federal system of government;
    Second, to set forth principles governing the 
interpretation of congressional and agency intent regarding 
preemption of state and local government authority by federal 
laws and rules;
    Third, to establish an information collection system 
designed to monitor the incidence of federal statutory, 
regulatory, and judicial preemption; and
    Fourth, to recognize the partnership between the Federal 
Government and state and local governments in the 
implementation of certain federal programs.

                        SECTION. 4. DEFINITIONS

    This section defines certain terms used in the Federalism 
Accountability Act.
          (1) The term ``local government'' means a county, 
        city, town, borough, township, village, school 
        district, special district, or other political 
        subdivision of a State;
          (2) The term ``public officials'' means elected state 
        and local government officials and their representative 
        organizations;
          (3) The term ``State'' (A) means a State of the 
        United States and an agency or instrumentality of a 
        State; (B) includes the District of Columbia and any 
        territory of the United States, and an agency or 
        instrumentality of the District of Columbia or such 
        territory; (C) includes any tribal government and an 
        agency or instrumentality of such government; and (D) 
        does not include a local government of a State.
          (4) The term ``tribal government'' means an Indian 
        tribe as that term is defined under section 4(e) of the 
        Indian Self-Determination and Education Assistance Act 
        (25 U.S.C. 450b(e)).
    In addition to the specific definitions provided in S. 
1214, the definitions under section 551 of title 5, United 
States Code, apply.

               SECTION 5. COMMITTEE OR CONFERENCE REPORTS

    Section 5 requires each Congressional committee report or 
conference report to include a statement on whether bills or 
joint resolutions of a public character are intended to preempt 
state or local law, and if so, to provide an explanation of the 
reasons for preemption. In the absence of a committee or 
conference report, the committee or conference shall report to 
the Senate and the House of Representatives a statement 
containing the information described in this section before 
consideration of the bill, joint resolution, or conference 
report.
    The statement shall include an analysis of: (1) the extent 
to which the bill or joint resolution legislates in an area of 
traditional State authority; and (2) the extent to which state 
or localgovernment authority will be maintained if the bill or 
joint resolution is enacted by Congress.

         SECTION 6. RULE OF CONSTRUCTION RELATING TO PREEMPTION

    Section 6 establishes a rule of construction to guide 
courts and agencies in interpreting whether statutes or rules 
are intended to preempt State or local law.
    Subsection 6(a) provides that no statute enacted after the 
effective date of the Federalism Accountability Act shall be 
construed to preempt, in whole or in part, state or local 
government laws, ordinances, or regulations, unless the statute 
explicitly states that preemption is intended, or there is a 
direct conflict between such statute and a state or local law 
so that the two cannot be reconciled or consistently stand 
together.
    Subsection 6(b) provides that no rule promulgated after the 
effective date of the Federalism Accountability Act shall be 
construed to preempt, in whole or in part, state or local 
government laws unless preemption is authorized by the statute 
under which the rule is promulgated and the agency, in 
compliance with section 7, explicitly states that such 
preemption is intended; or there is a direct conflict between 
such rule and a state or local law so that the two cannot be 
reconciled or consistently stand together.
    Section 6 establishes a rule of construction for the 
federal courts and agencies in carrying out their reviewing 
function when it is necessary for them to determine whether or 
not Congress or the agencies, in enacting a particular statute 
or promulgating a rule, intended to displace or strike down 
state or local law. This accords with the Supremacy Clause of 
the Constitution. The rule of construction affords no new power 
either to the Congress or to the States. This rule of 
construction would not impair the Supremacy Clause. To the 
contrary, section 6 requires courts and reviewing agencies to 
interpret federal statutes and rules in conformity with the 
Supremacy Clause.61 The Supremacy Clause itself does 
not foreclose states from legislating in a field of concurrent 
jurisdiction. The rule of construction merely directs the 
courts and agencies not to infer or presume an intent by 
Congress or the agencies to preempt or preclude states or 
localities from legislating in a concurrent field unless, by an 
express provision, they have stated their intent to preempt, or 
unless there is a direct conflict 62 between the 
federal law and the state or local law so that the two cannot 
be reconciled or consistently stand together.
---------------------------------------------------------------------------
    \61\ See discussion, supra, Section II.
    \62\ Gibbons v. Ogden, 22 U.S. (9 Wheat) 1 (1824), is the 
paradigmatic preemption case involving an actual conflict between state 
and federal law. Such a conflict exists where the conflict can be 
either substantive or jurisdictional. See Caleb Nelson, ``Preemption,'' 
__ Va. L. Rev. __ (forthcoming 2000). In such cases, preemption 
analysis requires a straightforward application of the Supremacy 
Clause.
---------------------------------------------------------------------------
    It has long been recognized that Congress may pass rules of 
construction governing the interpretation of subsequent 
statutes.63 Corpus Juris Secundum states:
---------------------------------------------------------------------------
    \63\ See The Dictionary Act, 1 U.S.C. Sec. 1 et seq. (1985).

          A statute governing the construction of statutes will 
        be given effect. Since it is competent for the 
        legislature to provide rules for the construction of 
        statutes, a statute governing the construction of 
        statutes will be given effect. These provisions may be 
        for the construction of statutes already in existence, 
        or for those which may be enacted in the future; and 
        after the passage of such provisions succeeding 
        legislatures should frame enactments with reference 
        thereto, but these provisions are not, and cannot be, 
        an attempt to hinder future legislatures in enacting 
        new laws. The statutory rules of construction may be 
        declaratory of the common law, or they may be intended 
        to furnish additional rules for the guidance of the 
        court when necessary.64
---------------------------------------------------------------------------
    \64\ 82 C.J.S. Statutory Rules and Provisions Sec. 314 (Supp. 
1999), at 534 (citations omitted); see also, Stockdale v. Insurance 
Companies, 87 U.S. 323, 332 (1847) (refusing to ``captiously to 
construe the use of the word `construe' as a revision of the judicial 
functions where the effect of the statute and the purpose of the 
statute are clearly within the legislative function'') .

---------------------------------------------------------------------------
    Similarly, Sutherland on Statutory Construction states:

          The usual purpose of a special interpretative statute 
        is to correct a judicial interpretation of a prior law 
        which the legislature determines to be inaccurate. 
        Where such statutes are given any effect, the effect is 
        prospective only. Any other result would make the 
        legislature a court of last resort. But the corollary 
        so frequently asserted by the courts that a legislature 
        cannot with binding effect interpret or define its own 
        terms in a subsequent and independent statute is 
        unfounded. The application of the law to particular 
        situations in litigation is clearly a judicial 
        function, but the definition of the meaning of the 
        legislature's own acts is essential to the 
        determination of the quality and character of the 
        legislative regulation. There should be no question but 
        that an interpretative clause operating prospectively 
        is within legislative power. Any other result would 
        emasculate legislative authority and in effect counter 
        an unreviewable legislative power on the 
        court.65
---------------------------------------------------------------------------
    \65\ Sutherland Stat Const Sec. 27.03 (5th Ed. 1994) (citations 
omitted).

    Under its terms, S. 1214 would not invalidate any existing 
federal statute, nor would it limit the jurisdiction and 
judicial function of any court. It would not apply in a field 
which the Constitution delegates to Congress the exclusive 
power to legislate.
    Section 6 addresses the circumstances under which State and 
local law is preempted. Nothing in section 6 requires or 
authorizes the invalidation or narrow construction of a federal 
minimum standard or of a federal agency's authority to adopt a 
standard. Section 6 does not, for example, limit the stringency 
or scope of federal statutes or regulations that establish 
minimum standards,such as those protecting public health or 
safety or the environment. Nor does section 6 limit the authority of a 
federal agency to promulgate such standards.
    The requirement in subsection (b) that an agency preemption 
be authorized by the statute restates current law that agencies 
cannot exercise the power of preemption unless they have the 
authority to do so. In requiring that preemption ``be 
authorized by the statute under which the rule is 
promulgated,'' subsection (b)(1)(A) does not limit the kind of 
statutory authority that an agency must have for its regulation 
to preempt state or local law. Subsection (b)(1)(A) merely 
requires that an agency's explicit statement of preemptive 
intent will be deemed effective under subsection (b)(1)(B) only 
if the agency adopted the preemption under some valid statutory 
authority.66
---------------------------------------------------------------------------
    \66\ See City of New York v. FCC, 486 U.S. 57, 64 (1988).
---------------------------------------------------------------------------
    S. 1214, in effect, would say to the reviewing court or 
agency that where Congress and the States share concurrent 
powers, if an act of Congress does not contain an express 
preemption provision, there should be no presumption of an 
intent to preempt the field, and the state law should not be 
struck down, unless the two laws--federal and state--cannot 
consistently stand together. On the other hand, if Congress in 
a federal statute, or a federal agency in a rule, has stated an 
intent to preempt through an express preemption provision, the 
federal law shall prevail so long as the Congress or the agency 
has the authority to preempt.
    The effect of the Act, then, is to guide the court in 
understanding legislative intent which is not stated in an 
express preemption clause and which would invalidate a state 
statute, unless the court finds that the legislation causes a 
direct conflict between the two acts so that the two cannot 
stand together.
    The Committee believes that S. 1214 recognizes the 
fundamental principle that the United States is a nation in 
which sovereign power is divided between the States and the 
Federal Government. If decisions are to be made to deprive the 
States of their authority, these decisions should be made by 
the democratic branches of the Federal Government. Because 
Congressional intent is the touchstone of preemption analysis, 
Congress has a responsibility to guide reviewing courts and 
agencies in interpreting its intent.

                SECTION 7. AGENCY FEDERALISM ASSESSMENTS

    This section lays out the requirements for agencies to 
consult with public officials and to prepare federalism 
assessments for rules that have federalism impacts. The 
Committee believes that the longstanding requirement for 
agencies to prepare federalism assessments, coupled with an 
exceptionally poor record of agency compliance with those 
requirements,67 justifies codifying basic 
requirements for consultation and preparation of federalism 
assessments. The Committee also believes that greater openness 
and communication between the federal agencies and state and 
local officials will promote democratic self-governance. The 
administration and enforcement of federal laws and regulations 
are largely in the hands of unelected staff and career civil 
servants. These employees may have little knowledge or concern 
for the states and localities that may be affected by the 
federal statutes or regulations for which they are responsible. 
They are unlikely to be as responsive to the affected 
communities as the state and local officials who were elected 
to serve them. 68 The consultation and federalism 
assessments requirements in section 7 should help address these 
problems.
---------------------------------------------------------------------------
    \67\ Statement of L. Nye Stevens, Director, Federal Management and 
Workforce Issues, General Government Division, GAO, before the Senate 
Governmental Affairs Committee, ``Federalism: Implementation of 
Executive Order 12612 in the Rulemaking Process'', GAO/T-GGD-99-93, May 
5, 1999.
    \68\ See Garcia, supra note 3, at 576 (Powell, J., Rehnquist, C.J., 
and O'Connor, J., dissenting).
---------------------------------------------------------------------------
    Subsection 7(a) provides that the head of each agency shall 
be personally responsible for implementing the Federalism 
Accountability Act. The agency head shall designate a 
federalism officer within the agency to manage the 
implementation of the Act and to serve as a liaison to state 
and local officials and their designated representatives.
    Subsection 7(b) establishes procedures for notice and 
consultation with potentially affected state and local 
governments. Early in the process of developing a rule and 
before the publication of a notice of proposed rulemaking, the 
agency shall notify, consult with, and provide an opportunity 
for meaningful participation by public officials of governments 
that may potentially be affected by the rule for the purpose of 
identifying any preemption of state or local government 
authority or other significant federalism impacts that may 
result from issuance of the rule. If no notice of proposed 
rulemaking is published, consultation shall occur sufficiently 
in advance of publication of an interim final rule or final 
rule to provide an opportunity for meaningful participation.
    Subsection 7(c) establishes requirements for agency 
federalism assessments. In addition to whatever other actions 
the federalism officer may take to manage the implementation of 
the Act, such officer shall identify each proposed, interim 
final, and final rule having a federalism impact, including 
each rule with a federalism impact identified under subsection 
7(b), that warrants the preparation of a federalism assessment. 
With respect to each such rule identified by the federalism 
officer, a federalism assessment, as described in subsection 
7(d), shall be prepared and published in the Federal Register 
at the time the proposed, interim final, and final rule is 
published. The agency head shall consider the federalism 
assessment in all decisions involved in promulgating, 
implementing, and interpreting the rule. Each federalism 
assessment shall be included in any submission made to the 
Office of Management and Budget by an agency for review of a 
rule.
    Subsection 7(d) sets forth the requirements for contents of 
federalism assessments. Each federalism assessment shall 
include--(1) a statement on the extent to which the rule 
preempts state or local government law, ordinance, or 
regulation and, if so, an explanation of the reasons for such 
preemption; (2) an analysis of the extent to which the rule 
regulates in an area of traditional state authority; and the 
extent to which state or local authority will be maintained if 
the rule takes effect; (3) a description of the significant 
impacts of the rule on state and local governments; (4) any 
measures taken by the agency, including the consideration of 
regulatory alternatives, to minimize the impact on state and 
local governments; and (5) the extent of the agency's prior 
consultation with public officials, the nature of their 
concerns, and the extent to which those concerns have been met.
    Subsection 7(e) provides publication and disclosure 
requirements for federalism assessments. For any applicable 
rule, the agency shall include a summary of the federalism 
assessment prepared under this section in a separately 
identified part of the statement of basis and purpose for the 
rule as it is to be published in the Federal Register. The 
summary shall include a list of the public officials consulted 
and briefly describe the views of such officials and the 
agency's response to such views.
    The requirements of section 7 are procedural only--notice 
and consultation and the preparation, consideration, and 
publication of federalism assessments. The requirements of 
section 7 do not override or supersede an agency's substantive 
authority or scope of discretion. In other words, section 7 
does not contain a ``supermandate.'' It does not override the 
range of regulatory options, including options that could 
preempt state law, that are lawfully available to the agency.
    Subsection 7(f) establishes the framework for judicial 
review of agency compliance with the federalism assessment 
requirements of this legislation. First, subsection 7(f)(1) 
provides that only a state or local government that is 
adversely affected or aggrieved by final agency action, or its 
representative organization, may sue to seek judicial review of 
compliance with section 7.
    Second, subsection 7(f) sets the standard for judicial 
review. Subsection 7(f) is addressed solely to judicial review 
of ``[c]ompliance by an agency with this section.'' To the 
extent that an agency action is being challenged on grounds 
other than alleged noncompliance with the provisions of section 
7, subsection 7(f) would not apply.
    Subsection (f)(2) sets three basic conditions for judicial 
review of agency compliance with the provisions of Subchapter 
II: The judicial review must occur--(1) in connection with 
review of final agency action; (2) in accordance with 
subsection 7(f); and (3) in accordance with the limitations on 
timing, venue, and scope of review imposed by the statute 
authorizing the review. In setting forth the third condition, 
the Committee recognizes that in some cases, the statute 
authorizing review may not impose any special limitations on 
timing, venue, or scope of review; in other cases, these 
matters may be addressed in several different statutes.
    Subsection (f)(3) governs the availability and standard of 
review of agency determinations whether a federalism assessment 
is required to be prepared. An agency's determination of 
whether a rule has a federalism impact and thus is subject to 
the requirements of section 7--is subject to review only in 
connection with review of the final agency action to which it 
applies. At that time, a court may set aside the agency's 
determination of whether a federalism assessment is required 
only if it is shown to be arbitrary or capricious.
    In close cases, the Committee would expect that the agency 
would err on the side of good analysis and avoid the risk of 
remand or invalidation of the rule. As a practical matter, the 
agency's determination will be consequential where the agency 
wrongly determines that a federalism assessment is not required 
and does not bother to perform one or to consult with public 
officials. In such a case, subsection (f)(6) would require the 
court to remand or invalidate the rule, unless the court found 
that such failure to perform the assessment was not 
prejudicial.
    By contrast, if the agency incorrectly determines that a 
rule has federalism impacts, the impact on the rule itself is 
not likely to be adverse--since a rule would not be remanded or 
invalidated just because an agency performed a federalism 
assessment and consulted with public officials.After all, the 
Executive Branch is free to undertake such actions today even where it 
is not required to do so by statute. Indeed, that is the premise of 
executive orders on federalism that date back to the Reagan 
Administration's Executive Order 12612, and that is currently embodied 
in Executive Order 13132.
    Under subsection (f)(4), a designation by the Director of 
OMB that a federalism assessment shall be prepared--or the 
failure to make such a designation--is not subject to judicial 
review. If the Director has determined a rule has federalism 
impacts, the requirements of section 7 must be met. Conversely, 
if neither the Director nor the agency determines that a rule 
does not have federalism impacts, then the requirements of 
section 7 would not apply.
    Subsection (f)(5) provides that any federalism assessment 
required under section 7 for a rule shall not be subject to 
judicial review separate from review of the final rule to which 
the assessment applies. Such a federalism assessment, however, 
would be part of the rulemaking record, and if the final rule 
to which it applies is brought before a court for review, the 
court would have to consider the assessment--to the extent 
relevant--in determining whether the final rule is arbitrary, 
capricious, an abuse of discretion, or unsupported by 
substantial evidence.69 Subsection (f)(6) states 
that if an agency fails to perform the federalism assessment, 
or to provide for consultation as required under section 7, the 
court ``may, giving due regard to prejudicial error, remand or 
invalidate the rule.'' The adequacy of compliance with the 
specific requirements of the subchapter shall not otherwise be 
grounds for remanding or invalidating a rule under section 7. 
If the court allows the rule to take effect, the court shall 
order the agency to promptly perform such assessment and to 
provide for consultation. If an agency fails to perform the 
federalism assessment, or consultation, the court may, with due 
regard to the principle of prejudicial error, invalidate or 
remand the rule. In this respect, S. 1214 expands the role of a 
reviewing court by directing that a rule may be invalidated in 
circumstances where it might not be invalidated under current 
law.
---------------------------------------------------------------------------
    \69\ The ``substantial evidence'' standard would apply in those 
cases where a ``substantial evidence'' standard of review is provided 
by the enabling statute--such as under the Occupational Safety and 
Health Act, 29 U.S.C. Sec. 655(f), or the Toxic Substances Control Act, 
15 U.S.C. Sec. 2618(c)--or where it is required by the Administrative 
Procedure Act, 5 U.S.C. Sec. 706(2)(E).
    The phrase ``under the statute granting the rule making authority'' 
clarifies that a rule should not be set aside where the action alleged 
to be arbitrary, capricious, or an abuse of discretion involves a 
matter that cannot be relevant to promulgating the rule.
---------------------------------------------------------------------------
    Under section 7, an agency's failure to comply with a 
specific requirement of S. 1214 regarding how to perform a 
federalism assessment would not, in and of itself, be grounds 
for invalidating a rule. That is, a rule could not be 
invalidated simply because a ``how to'' requirement of section 
7 was not met where the relevant statute does not impose such a 
requirement. At the same time, however, in determining whether 
the final rule is arbitrary or capricious, the court would be 
free to consider the effect that the agency's failure to comply 
with such requirements had on the rulemaking. In addition, of 
course, the information generated under section 7 would be 
available to the court and could be considered in determining 
whether the final rule is arbitrary or capricious. In sum, in 
determining whether a rule is arbitrary or capricious, a court 
would remain free under S. 1214--as it is under current law--to 
consider both what the agency did do, as reflected in the 
federalism assessment, and what it did not do, such as failing 
to comply with the requirements of section 7.
    Subsection 7(g)(1) provides a limited exemption from 
compliance with the requirements of section 7 prior to issuance 
of the rule where: (1) the agency for good cause finds that 
conducting the federalism assessment under this section before 
the rule becomes effective is impracticable or contrary to an 
important public interest; and (2) the agency publishes the 
rule in the Federal Register with such finding and a succinct 
explanation of the reasons for the finding.
    The Committee merely intends to provide sufficient 
flexibility for agencies to respond to a true emergency when a 
rule must be promulgated without awaiting completion of the 
assessment. This exemption closely tracks a category of rules 
exempt from the notice and comment procedures of the 
Administrative Procedure Act, and the Committee does not expect 
this exemption to be used often.
    Subsection (g)(2) requires that, if a rule is adopted under 
paragraph (1) without prior compliance with section 7, then the 
agency shall comply with this section as promptly as possible, 
unless the Director of the Office of Management and Budget 
determines that compliance would be clearly unreasonable. This 
is a very narrow exception to avoid clearly unreasonable 
situations where a costly assessment would be required for a 
rule that would not be in effect when the assessment was 
completed.

                    SECTION 8. PERFORMANCE MEASURES

    Section 8 amends the Government Performance and Results Act 
of 1993 to ensure that performance measures for state-
administered grant programs are determined in consultation with 
public officials.

        SECTION 9. CONGRESSIONAL BUDGET OFFICE PREEMPTION REPORT

    Section 9 requires the Congressional Budget Office to 
submit to Congress a biennial report on preemption that covers 
significant preemptions by agency rules, court decisions and 
legislation.
    Subsection 9(a) requires OMB annually to submit to CBO 
information describing interim final rules and final rules 
issued during the preceding calendar year that significantly 
preempt State or local government authority. Subsection 9(b) 
requires the Congressional Research Service annually to submit 
to CBO information describing court decisions issued during the 
preceding calendar year that preempt state or local government 
authority.
    Subsection 9(c) requires CBO, after each session of 
Congress, to prepare a report on the extent of significant 
federal preemption of State or local government authority 
enacted into law or adopted through judicial or agency 
interpretation of federal statutes during the previous session 
of Congress. The report shall contain: (1) a list of federal 
statutes preempting State or local government authority; (2) a 
summary of legislation reported from committees preempting 
State or local government authority; (3) a summary of rules of 
agencies preempting State and local government authority; and 
(4) a summary of court decisions finding preemption. CBO shall 
send the report to each committee of Congress; each Governor; 
the presiding officer of each chamberof the legislature of each 
state; and make the report available to other public officials and the 
public on the Internet.
    While the CBO is designated to compile the report, the 
Committee expects that CRS and OMB will coordinate closely with 
CBO to prepare the required information. The Committee intends 
that OMB and CRS will be responsible for identifying regulatory 
and judicial preemptions, and for organizing, summarizing and 
ensuring the accuracy and reliability of that information 
before providing it to CBO in a format that CBO easily can 
incorporate into the annual report. CBO's primary duty will be 
to review and ensure the accuracy and reliability of that 
information and forward it to the Congress, along with 
information about legislative preemptions. If CBO determines 
that more thorough, accurate or reliable information is needed, 
the Committee expects OMB and CRS to cooperate closely with CBO 
in supplying that information.

     SECTION 10. FLEXIBILITY AND FEDERAL INTERGOVERNMENTAL MANDATES

    Section 10 addresses a misinterpretation of the Unfunded 
Mandates Reform Act of 1995 as it applies to large entitlement 
programs. Subsection 10(a) amends section 421(5) of the Budget 
Act, which defines what constitutes an intergovernmental 
mandate. For entitlement programs that provide more than $500 
million annually to the states (``state entitlement 
programs''), section 421(5)(B) provides that legislation 
proposing a new restriction in these programs or a reduction in 
spending for these programs is a mandate unless there is 
sufficient flexibility to implement the restriction or funding 
reduction. The amendment proposed by subsection 10(a) modifies 
this definition to provide that legislation which proposes any 
new restriction will be an ``intergovernmental mandate'' 
regardless of whether or not there is flexibility to implement 
the change. Of course whether or not a point of order would lie 
against the legislation depends upon whether or not the cost 
(if any) exceeds the thresholds set out in the Unfunded 
Mandates Reform Act ($50 million/year).
    Sections 10(b) and (c) amend sections 423(d) and 424(a), 
respectively, of the Budget Act with respect to reporting 
requirements imposed upon Congressional committees and the 
Congressional Budget Office (CBO) by the Unfunded Mandates 
Reform Act.
    Currently, section 423(d) of the Budget Act requires 
Congressional committees to include information in the 
committee's report accompanying legislation which proposes 
reducing funding for state entitlement programs. The amendment 
proposed by section 10(b) adds a new requirement that the 
committee reports explain how the committee intends the states 
to implement the reduction in funding and what flexibility, if 
any, is provided in the legislation.
    Section 424 of the Budget Act requires CBO to prepare 
mandates statements for legislation reported from committee. 
The amendment proposed by section 10(c) would add a new 
requirement for mandates statements in connection with 
legislation which proposes to reduce federal funding for state 
entitlement programs. If such legislation provides no 
additional flexibility to the states to implement the reduced 
funding, CBO must include in its report how the states could 
implement the reductions under existing law. If such 
legislation does provide additional flexibility, then CBO must 
include in its report an estimate of whether the savings from 
the additional flexibility would offset the reduction in 
federal spending. Such estimates shall assume that the states 
fully implement the additional flexibility provided in the 
legislation.

                       SECTION 11. EFFECTIVE DATE

    The Federalism Accountability Act and the amendments made 
by it shall take effect 90 days after the date of enactment of 
the Act.

                    VI. Regulatory Impact Statement

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the Committee, after due consideration, 
concludes that S. 1214 will have a significant regulatory 
impact.

                         VII. CBO Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 27, 1999.
Hon. Fred Thompson,
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. 1214, the Federalism 
Accountability Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are John R. 
Righter and Mary Maginniss.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 1214--Federalism Accountability Act of 1999

    S. 1214 would require Congressional committees and federal 
agencies to report on the extent that legislation, 
administrative rules, and federal court decisions preempt state 
or local authority. The bill also would require federal 
agencies to consult with state and local officials prior to 
issuing administrative rules that could preempt their 
authority. S. 1214 would allow the courts to review assessments 
performed by federal agencies as part of their review of agency 
rulemaking records. In addition, the bill would place 
additional reporting requirements on Congressional committees, 
CBO, and the Congressional Research Service (CRS). Subject to 
the availability of appropriated fund, CBO estimates that 
implementing the legislation would cost up to $500,000 each 
year.
    For executive branch agencies, the provisions in S. 1214 
are very similar to provisions contained in Executive Order 
13132, which President Clinton signed on August 4, 1999, and in 
the Unfunded Mandates Reform Act (UMRA). For instance, the 
executive order requires executive branch agencies to consult 
extensively with state and local officials on rules or other 
actions that could encroach on state and local authorities. In 
addition, the order also requires agencies to issue federalism 
assessments for certain rule, although S. 1214 would require 
some additional information and would apply to more rules. (The 
executive order limits the assessments to rules or other 
actions that have ``substantial direct effects'' on state or 
local governments.) UMRA requires that agencies consult with 
state and local officials and, for any major rule (that is, a 
rule with expected annual costs to state and local governments 
of $100 million or more), issue a statement assessing the 
rule's impact on state and local governments. Because much of 
S. 1214 would codify existing consultative and analytical 
requirements, CBO estimates that implementing these provisions 
would cost executive branch agencies less than $250,000 a year, 
subject to available amounts.
    Under S. 1214, a committee would be required to include a 
statement in its report on whether the legislation preempts 
state or local laws. The Office of Management and Budget and 
CRS would be required to identify, compile, and summarize 
preemptions in agency rulemaking and judicial decisions, 
respectively, that occurred during the year. CBO would include 
this information in an annual report, along with a summary of 
statutes enacted and legislation reported from committees that 
preempted state or local government authority. In addition, the 
bill would direct CBO to include in its cost estimates 
information about states' flexibility in complying with certain 
legislative mandates in large entitlement programs. CBO 
estimates that implementing the bill would cost legislative 
branch agencies less than $250,000 annually, subject to the 
availability of appropriated funds.
    Because enacting S. 1214 could affect direct spending by 
agencies not funded through annual appropriations, such as the 
Office of Thrift Supervision and the Tennessee Valley 
Authority, pay-as-you-go procedures would apply. CBO estimates 
that any such effects would not be significant. S. 1214 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on the budgets of 
state, local, or tribal governments.
    The CBO staff contacts are John R. Righter and Mary 
Maginniss. This estimate was approved by Paul N. Van de Water, 
Assistant Director for Budget Analysis.

                          VIII. MINORITY VIEWS

    S. 1214 would require Congress and agencies to issue an 
explicit ``intent to preempt'' statement and explanation of the 
reasons whenever laws or rules preempt state or local law. I 
note that the bill does not create a new point of order or 
other procedural mechanism to enforce the legislative aspect of 
this requirement. Agency compliance, on the other hand, would 
appear to be governed by the obligation to prepare federalism 
assessments where appropriate, and the availability of judicial 
review as a check on adherence to that mandate.
    S. 1214 also establishes a new ``rule of construction'' 
such that courts shall not construe a Federal statute as 
preempting a State or local law unless (1) Congress is clear 
and explicit about the intent to preempt or (2) the Federal law 
is in direct conflict with the State or local law. 
Additionally, the bill requires agencies early on to notify and 
consult state and local officials who could potentially be 
affected by a rule.
    S. 1214 recognizes that at times Congress enacts laws which 
preempt State laws without a full review of the scope of 
preemption or without deliberation of the traditional role of 
the States in a given area.
    One of the most frequently cited statutes illustrative of 
overly broad Federal preemption is the Employment Retirement 
Income Security Act of 1974 (ERISA). ERISA is the proverbial 
poster child for preemption run amok. Throughout the debate 
prior to enactment, the debate on ERISA focused on pension 
security. The intent of ERISA was to protect worker's 
retirement income and to provide strong, uniform solvency 
standards. At the conclusion of the debate, health benefits 
were included under this uniform federal structure.
    At that time, managed care as a health care delivery system 
had not yet emerged. In 1974, health insurance was entirely 
administered through a fee-for-service system. Therefore, 
health benefits were provided based on medical necessity with 
payment after the fact. Under such a system, the areas of 
dispute between a health insurance company and a patient are 
limited to denial of payment, which the remedies under ERISA 
addressed. However, under the current managed care delivery 
system, the actual provision of health care may be based on 
medical determinations by the insurer. ERISA is not well 
equipped to address disputes arising from such determinations 
which may profoundly affect an individual's health and well-
being.
    It is clear from reading the legislative history of ERISA 
that Congress never intended to preempt individual's rights to 
access state courts for remedies arising from negligence, 
medical malpractice, or other tort actions. The entire 
legislative history of ERISA, including committee hearings, is 
silent on this. In recognizing the role the States play in 
regulating insurance including health insurance, the preemption 
language specifically exempts insurance from preemption. 
However, the remaining preemption language is extremely broad, 
covering anything that ``relates to an employee benefit.'' 
Congress has inadvertently removed individual's States rights 
and remedies when injured by a health plan covered by ERISA. In 
many cases, courts have called on Congress to amend this 
preemption language to mirror congressional intent to provide 
worker protections.
    During markup, I offered an amendment designed to clarify 
this ERISA preemption language so that it no longer denies 
injured parties access to their rights and remedies under State 
law. It would not create any new cause of action, but merely 
clarify that ERISA does not deny individuals their State-based 
rights and remedies. I hope we will have further opportunities 
to consider this, in light of the interest in addressing 
practical implications of Federalism principles as S. 1214 aims 
to do.
    In their testimony at the July 14 committee hearing on this 
bill, both the Office of Management and Budget and the Justice 
Department raised specific concerns about S. 1214. OMB 
contended that new administrative requirements on agencies 
would burden and delay efforts to protect safety, health, and 
the environment, potentially necessitate litigation and require 
judicial review of collegial informal discussions, and divert 
resources and time from other tasks, including paperwork 
reduction initiatives, review and revision of obsolete rules, 
and conversion of rules into plain language.
    The Justice Department emphasized the concern that the 
``rule of construction'' provision, notably Section 6(a), would 
``profoundly alter the Federal courts' longstanding approach to 
preemption by Federal statute'' and ``would apparently abolish 
the doctrine of field preemption and impose significant new 
limits on conflict preemption.'' The Justice Department noted 
that enacting this bill would not prevent a later Congress from 
instructing that the preemptive effects of particular statute 
be determined by reference to traditional implied preemption 
doctrines, and that this could precipitate confusion that does 
not arise under current doctrine. The Justice Department 
further argued that rules for construing agency rules and the 
parameters on when an agency is permitted to issue preemptive 
rules under language in section 6(b) of the bill would engender 
confusion and could produce a volume of protracted and 
complicated litigation.
    In late July, Health and Human Services Secretary Donna 
Shalala sent a separate letter opposing enactment of this bill, 
describing particular concerns that efforts to narrow 
preemption authority would weaken important consumer protection 
programs (e.g., FDA rules on medical devices, nutritional 
labels on food) whose effectiveness depends on nationally 
uniform rules and that burdensome and ambiguous procedural 
requirements for agency rulemaking will increase the costs and 
delays of regulations without providing meaningful public 
benefits. The National Resources Defense Council, the Sierra 
Club, and U.S. Public Interest Research Group also joined in a 
letter outlining similar objections to the bill.
    I recognize that this federalism accountability proposal 
has attracted widespread support and that refinements made 
through amendments adopted during markup, particularly the 
deletion of section 6(c) regarding resolution of ambiguities in 
favor of State authority and a provision for agency exemption 
under emergency circumstances, have addressed some of the 
objections raised. However, I am concerned that some of the 
problems outlined above or raised to the committee may remain 
unaddressed and deserve continued discussion.

                                                       Dick Durbin.

                      IX. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 1214, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
changes are proposed is shown in roman):

     [From United States Code, Title 2--The Congress, Chapter 17--
                      Congressional Budget Office]

        CONGRESSIONAL BUDGET AND IMPOUNDMENT CONTROL ACT OF 1974

           *       *       *       *       *       *       *


       TITLE IV--ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

           *       *       *       *       *       *       *


                       Part B--Federal Mandates

           *       *       *       *       *       *       *


SEC. 421. DEFINITIONS.

           *       *       *       *       *       *       *


          (1) * * *

           *       *       *       *       *       *       *

          (5) Federal intergovernmental mandate.--The term 
        ``Federal intergovernmental mandate'' means--
                  (A) * * *
                  (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 State, local, and 
                tribal governments under entitlement authority, 
                if the provision--
                          [(i)(I) would] (i) would increase the 
                        stringency of conditions of assistance 
                        to State, local, or tribal governments 
                        under the program; or
                          [(II) would] (ii)(I) would place caps 
                        upon, or otherwise decrease, the 
                        Federal Government's responsibility to 
                        provide funding to State, local, or 
                        tribal governments under the program; 
                        and
                          [(ii) the] (II) the State, local, 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.

           *       *       *       *       *       *       *


SEC. 423. DUTIES OF CONGRESSIONAL COMMITTEES.

    (a) * * *

           *       *       *       *       *       *       *

    (d) Intergovernmental Mandates.--If any of the Federal 
mandates in the bill or joint resolution are Federal 
intergovernmental mandates, the report required under 
subsection (a) shall also contain--
          (1)(A) * * *
          (B) * * *
          (C) if funded in whole or in part, a statement of 
        whether and how the committee has created a mechanism 
        to allocate the funding in a manner that is reasonably 
        consistent with the expected direct costs among and 
        between the respective levels of State, local and 
        tribal government; [and]
          (2) any existing sources of Federal assistance in 
        addition to those identified in paragraph (1) that may 
        assist State, local and tribal governments in meeting 
        the direct costs of the Federal intergovernmental 
        mandates[.]; and
          (3) if the bill or joint resolution would make the 
        reduction specified in section 421(5)(B)(ii)(I), a 
        statement of how the committee specifically intends the 
        States to implement the reduction and to what extent 
        the legislation provides additional flexibility, if 
        any, to offset the reduction.

           *       *       *       *       *       *       *


SEC. 424. DUTIES OF THE DIRECTOR; 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:
          (1) * * *
          (2) * * *
          (3) Additional Flexibility Information.--The Director 
        shall include in the statement submitted under this 
        subsection, in the case of legislation that makes 
        changes as described in section 421(5)(B)(ii)(I)--
                  (A) if no additional flexibility is provided 
                in the legislation, a description of whether 
                and how the States can offset the reduction 
                under existing law; or
                  (B) if additional flexibility is provided in 
                the legislation, whether the resulting savings 
                would offset the reductions in that program 
                assuming the States fully implement that 
                additional flexibility.
          (4) Estimate not feasible.--If the Director 
        determines that it is not feasible to make a reasonable 
        estimate that would be required under paragraphs (1) 
        and (2), 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. If such 
        determination is made by the Director, a point of order 
        under this part shall lie only under section 425(a)(1) 
        and as if the requirement of section 425(a)(1) had not 
        been met.

           *       *       *       *       *       *       *

                              ----------                              


 [From United States Code, Title 31--Money and Finance, Subtitle--The 
Budget Process, Chapter 11--The Budget and Fiscal, Budget, and Program 
                              Information]

                 GOVERNMENT PERFORMANCE AND RESULTS ACT


SEC. 1115. PERFORMANCE PLANS

           *       *       *       *       *       *       *


    (g) When developing a performance plan under this section 
that includes a State-administered Federal grant program, the 
agency shall consult with public officials as defined under 
section 4 of the Federalism Accountability Act of 1999.

                                  
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