Unfunded Mandates: Analysis of Reform Act Coverage (12-MAY-04,	 
GAO-04-637).							 
                                                                 
The Unfunded Mandates Reform Act of 1995 (UMRA) was enacted to	 
address concerns about federal statutes and rules that require	 
state, local, and tribal governments or the private sector to	 
expend resources to achieve legislative goals. UMRA generates	 
information about the nature and size of potential federal	 
mandates to assist Congress and agency decision makers in their  
consideration of proposed legislation and rules. However,	 
concerns about actual or perceived federal mandates continue. To 
provide information and analysis regarding UMRA's implementation,
GAO was asked to (1) describe the applicable procedures,	 
definitions, and exclusions under UMRA for identifying federal	 
mandates in statutes and rules, (2) identify statutes and final  
rules that contained federal mandates under UMRA, and (3) provide
examples of statutes and final rules that were not identified as 
federal mandates, but that affected parties might perceive as	 
"unfunded mandates," and the reasons these statutes and rules	 
were not federal mandates under UMRA. GAO focused on statutes	 
enacted and final rules issued in 2001 and 2002 to address the	 
second and third objectives.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-637 					        
    ACCNO:   A09989						        
  TITLE:     Unfunded Mandates: Analysis of Reform Act Coverage       
     DATE:   05/12/2004 
  SUBJECT:   Cost analysis					 
	     Regulatory agencies				 
	     Statutory law					 
	     Federal law					 
	     Federal legislation				 
	     Intergovernmental relations			 

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GAO-04-637

United States General Accounting Office

                                      GAO
	Report to the Chairman, Subcommittee on Oversight of Government Management, the FederalWorkforce, and the District of Columbia, Committee on Governmental Affairs, U.S. Senate 

May 2004

                                   UNFUNDED 
                                    MANDATES

                        Analysis of Reform Act Coverage 

                                       a

GAO-04-637 

Highlights of GAO-04-637, a report to the Chairman, Senate Subcommittee on
Oversight of Government Management, the Federal Workforce, and the
District of Columbia

The Unfunded Mandates Reform Act of 1995 (UMRA) was enacted to address
concerns about federal statutes and rules that require state, local, and
tribal governments or the private sector to expend resources to achieve
legislative goals. UMRA generates information about the nature and size of
potential federal mandates to assist Congress and agency decision makers
in their consideration of proposed legislation and rules. However,
concerns about actual or perceived federal mandates continue. To provide
information and analysis regarding UMRA's implementation, GAO was asked to
(1) describe the applicable procedures, definitions, and exclusions under
UMRA for identifying federal mandates in statutes and rules, (2) identify
statutes and final rules that contained federal mandates under UMRA, and
(3) provide examples of statutes and final rules that were not identified
as federal mandates, but that affected parties might perceive as "unfunded
mandates," and the reasons these statutes and rules were not federal
mandates under UMRA. GAO focused on statutes enacted and final rules
issued in 2001 and 2002 to address the second and third objectives.

May 2004

UNFUNDED MANDATES

Analysis of Reform Act Coverage

UMRA generally requires congressional committees and the Congressional
Budget Office (CBO) to identify and estimate the costs of federal mandates
contained in proposed legislation and federal agencies to do so for
federal mandates contained in their rules. Identification of mandates is a
complex process with multiple definitions, exclusions, and cost
thresholds. Also, some legislation and rules may be enacted or issued via
procedures that do not trigger UMRA reviews.

In 2001 and 2002, 5 of 377 statutes enacted and 9 of 122 major or
economically significant final rules issued were identified as containing
federal mandates at or above UMRA's thresholds. Of the other federal
actions in those 2 years, at least 43 statutes and 65 rules contained new
requirements on nonfederal parties that might be perceived as "unfunded
mandates." For 24 of those statutes and 26 of those rules, CBO or federal
agencies had determined that the estimated direct costs or expenditures
would not meet or exceed applicable thresholds. For the remaining examples
of statues, most often UMRA did not require a CBO review prior to their
enactment. The remaining rules most often did not trigger UMRA because
they were issued by independent regulatory agencies. Despite the
determinations made under UMRA, some statutes and rules not triggering
UMRA's thresholds appeared to have potential financial impacts on affected
nonfederal parties similar to those of the actions that were identified as
containing mandates at or above the act's thresholds.

Proposed Legislation Must Pass Multiple Steps to Be Identified as
Containing Federal Mandates at or Above UMRA's Cost Thresholds

Provision is contained in authorizing legislation reported by an
authorizing committee and not added after initial CBO UMRA review.

Automatic CBO Review Provision is not one of seven UMRA exclusions.

Provision is an enforceable duty on state, local, or tribal governments or
the private sector, and it is not an UMRA exception.

Direct cost estimate is feasible.

www.gao.gov/cgi-bin/getrpt?GAO-04-637. Source: GAO.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Patricia A. Dalton at (202)
512-6806 or [email protected].

Contents

Letter                                                                  1  
                                 Results in Brief                          3  
                                    Background                             6  
                              Scope and Methodology                        8  
           Identification of Federal Mandates in Statutes under Title I   10  
            Identification of Federal Mandates in Rules under Title II    25  
                                    Conclusions                           36  

Appendixes                                                             
                 Appendix I:      Objectives, Scope, and Methodology      38  
                                 Examples of Statutes with Impacts on     
                Appendix II:              Nonfederal Parties              
                               that Were Not Mandates at or Above UMRA    42  
                                              Thresholds                  
               Appendix III: Final Rules with Federal Mandates under UMRA 54  
               Appendix IV:   Reasons that Selected Final Rules Did Not   58  
                                             Trigger UMRA                 
                             Examples of Final Rules that Did Not Trigger 
                 Appendix V:                 UMRA But Had                 
                             Potentially Significant Financial Effects on 
                                              Nonfederal                  
                                               Parties                    80  

Tables 	Table 1: Table 2: 

Table 3: Table 4: Table 5: 

Table 6: 

Table 7: 

Legislation Enacted in 2001 and 2002 that CBO Identified 
as Containing Federal Mandates Under UMRA 17
Laws Enacted in 2001 and 2002 that CBO Identified as
Containing Federal Mandates Meeting or Exceeding 
UMRA's Cost Threshold 18
Selected Examples of Statutes with Potentially Significant 
Impacts on Nonfederal Parties 22
Selected Examples of Final Rules with Significant Impacts 
on Nonfederal Parties that Did Not Trigger UMRA 34
Examples of Statutes with Impacts on Nonfederal Parties
that Were Not Identified as Federal Mandates at or above
Applicable Cost Thresholds 42
Final Rules Published in 2001 and 2002 that Agencies
Identified as Containing Federal Mandates Under 
UMRA 54
Reasons 65 Final Rules with Significant Effects on 
Nonfederal Parties Did Not Trigger UMRA 60

                                    Contents

Table 8:
   	Examples of Final Rules Published in 2001 and 2002 with Provisions that Affected State, Local, and Tribal Governments or the Private Sector But Did Not Trigger UMRA 

Figures 	Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: 

A Multistep Process Has to Be Followed for CBO to 
Identify Federal Mandates in Proposed Legislation 11
How Certain Examples of Laws with Impacts on
Nonfederal Parties Were Treated Under UMRA 21
Few Final Rules Published in 2001 and 2002 Contained 
Federal Mandates Under UMRA 29
Agencies' Reasons for Determining that Their Rules Did 
Not Trigger UMRA's Requirements 31
Reasons that Agencies Could Have Claimed for Their
Rules Not Triggering UMRA 32

Contents

Abbreviations

CBO Congressional Budget Office
DOD Department of Defense
DOJ Department of Justice
DOL Department of Labor
DOT Department of Transportation
EPA Environmental Protection Agency
FCC Federal Communications Commission
FEMA Federal Emergency Management Agency
GSA General Services Administration
HHS Department of Health and Human Services
JCT Joint Committee on Taxation
NASA National Aeronautics and Space Administration
NCSL National Conference of State Legislatures
NRC Nuclear Regulatory Commission
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
PCAOB Public Company Accounting Oversight Board
RISC Regulatory Information Service Center
SEC Securities and Exchange Commission
TSA Transportation Security Administration
UMRA Unfunded Mandates Reform Act of 1995
USDA United States Department of Agriculture
VA Department of Veterans Affairs

This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. 

A

United States General Accounting Office

Washington, D.C. 20548

May 12, 2004 

The Honorable George V. Voinovich 

Chairman 

Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia Committee on Governmental Affairs United States Senate 

Dear Mr. Chairman, 

The Unfunded Mandates Reform Act of 1995 (UMRA) was enacted to address concerns expressed by state and local governments about federal statutes and regulations that require these nonfederal parties to expend resources to achieve legislative goals without being provided federal funding to cover the costs.1 Although UMRA was intended to "curb the practice of imposing unfunded Federal mandates,"2 the act does not prevent Congress or federal agencies from doing so.3 Rather, UMRA generates information about the nature and size of potential federal mandates on other levels of government and the private sector to assist Congress and agency decision makers in their consideration of proposed legislation and regulations. UMRA requires congressional committees and the Congressional Budget Office (CBO) to identify and provide information on potential federal mandates in certain legislation and federal agencies to identify the costs and benefits of federal mandates contained in certain regulations. 

Concerns about actual or perceived federal mandates continue. In the fall of 2003, for example, the presence of an intergovernmental mandate as defined by UMRA was one of the issues raised by senators opposing the Internet Tax Nondiscrimination Act (S. 150).4 The proposed legislation 

1Pub. L. No. 104-4, 2 U.S.C. S:S:658-658g, 1501-71. 

2Pub. L. No. 104-4 pmbl. 

3Although UMRA defines a federal mandate, it includes no specific definition of an unfunded mandate. Therefore, as in the act, we generally refer to the identification of federal mandates, rather than unfunded mandates, in this report. 

4 The Senate passed an amended version of this legislation in April 2004. The House passed a related version of this legislation, H.R. 49, in September 2003. 

would have permanently extended and expanded a federal moratorium prohibiting state and local governments from levying new taxes on Internet access and electronic commerce and also eliminated the "grandfather" protection for existing access taxes granted under the previous statutory moratorium, which expired November 1, 2003.5 Pursuant to UMRA, CBO estimated that repealing the grandfather clause would result in revenue losses for as many as 10 states and several local governments totaling from $80 million to $120 million annually, beginning in 2007, and that a change in the definition of Internet access under the legislation could result in additional substantial revenue losses for states and local governments. In recent months, criticisms of the No Child Left Behind Act of 2001 because of perceived "unfunded mandate" implications have also received increasing attention.6 No Child Left Behind contains a number of new or expanded requirements, such as the design and implementation of statewide achievement tests, imposed upon states and local educational agencies that receive federal assistance. 

You asked us to provide information and analysis regarding UMRA's implementation and identify options for refining the act. As agreed with your staff, this report addresses the first portion of that request, in which you asked us to describe and provide examples of how federal statutes and rules with potentially significant financial implications for state, local, and tribal governments or the private sector may be enacted or issued without being identified as federal mandates under UMRA.7 Specifically, you asked us to: (1) describe the applicable procedures, definitions, and exclusions for identifying federal mandates in statues and rules under UMRA, (2) identify statutes and final rules that contained federal mandates under UMRA, and (3) provide examples of statutes and final rules that were not identified as federal mandates, but that affected parties might perceive as "unfunded mandates," and the reasons these statutes and rules were not federal mandates under UMRA. In the body of this report, we address the three objectives separately for title I, which covers the legislative process, and title II, which covers the regulatory process. 

5Pub. L. No. 105-277. 6Pub. L. No. 107-110. 7We are continuing our work on the other parts of the request, to be reported separately. 

We reviewed UMRA and related guidance documents, analyses, and reports on the act's implementation, interviewed persons knowledgeable about the implementation of UMRA in OMB, CBO, and other congressional offices, and examined and analyzed sets of statutes and final rules. As agreed with your staff, we focused on statues enacted and final rules published during 2001 and 2002. We conducted our review from August 2003 through February 2004 in Washington, D.C., in accordance with generally accepted government auditing standards. We have not previously reported on the implementation of title I. We reported on the implementation of title II in February 1998, concluding that UMRA appeared to have had a limited direct impact on agencies' rulemaking actions.8 

Results in Brief
   	The identification and analysis of federal mandates on state, local, and tribal governments or the private sector is a complex process under UMRA. Proposed legislation and regulations must pass through multiple steps and meet multiple conditions before being identified as containing mandates at or above UMRA's thresholds, and there are some important differences in the provisions regarding legislation compared to those for regulations. For example, under title I of the act, CBO prepares mandate statements identifying and estimating the costs of mandates in legislation that meets certain criteria, whether or not those estimated costs meet or exceed UMRA's thresholds ($50 million for intergovernmental and $100 million for private sector mandates, in any of the first 5 fiscal years the mandate would be effective).9 Under title II, however, federal agencies are only required to prepare mandate statements for regulations containing intergovernmental or private sector mandates that would result in expenditures of $100 million or more in any year. Also, for proposed legislation a point of order can be raised on the floor of the House or Senate against consideration of any UMRA-covered mandate that lacks a CBO estimate or any unfunded intergovernmental mandate exceeding UMRA's threshold. 

For both legislation and regulations, there are two general ways that provisions would not be identified as federal mandates at or above UMRA's thresholds. First, some legislation and regulations may be enacted or issued via procedures that do not trigger UMRA reviews by CBO or 

8U.S. General Accounting Office, Unfunded Mandates: Reform Act Has Had
Little Effect on Agencies' Rulemaking
Actions, GAO/GGD-98-30 (Washington, D.C.: Feb. 4, 1998). 

9The dollar thresholds in UMRA are in 1996 dollars and are adjusted annually for inflation. 

agencies. For example, UMRA does not require CBO to review potential mandates in appropriations bills, and UMRA does not apply to final rules that agencies issue without having published a notice of proposed rulemaking or to any rules issued by independent regulatory agencies. Second, even if the statute or rule is reviewed, UMRA limits the identification of federal mandates through multiple definitions, exclusions, and costs thresholds. For example, if the requirements on nonfederal parties arise from participation in a voluntary federal program or are a condition of federal financial assistance, as was the case with No Child Left Behind, those requirements are not considered federal mandates under UMRA. 

In 2001 and 2002, 5 of 377 statutes enacted and 9 of 122 major or economically significant final rules issued were identified as containing federal mandates at or above UMRA's thresholds. All 5 statutes and 9 rules contained private sector mandates as defined by UMRA. One final rule-an Environmental Protection Agency (EPA) standard on arsenic in drinking water-also contained an intergovernmental mandate. At least with regard to legislation, CBO reports and testimonial evidence indicated that the existence of UMRA might hinder the introduction of intergovernmental mandates or lead lawmakers to reduce the costs of some of those mandates before enactment. 

Of the other federal actions in those years, at least 43 statutes and 65 rules resulted in new costs or other negative financial impacts on nonfederal parties that might be perceived by those parties to have "unfunded mandates" implications. We analyzed each of these examples to identify how they were treated under UMRA's mandate identification process. For 24 of the statutes and 26 of the rules, CBO or federal agencies had determined that the estimated direct costs or expenditures, as defined by UMRA, would not meet or exceed the applicable thresholds. For the remaining examples of statutes, most often UMRA did not require a CBO review prior to their enactment. The remaining rules most often did not trigger UMRA because they were issued by independent regulatory agencies not covered by the act. 

Despite the determinations made under UMRA, some of the statutes and rules that had not triggered UMRA's requirements appeared to have potential financial impacts on affected nonfederal parties similar to those of actions that had been flagged as containing federal mandates at or above the thresholds. Examples in the intergovernmental area included the Economic Growth and Tax Relief Reconciliation Act of 200110 and No Child Left Behind, both of which did not meet UMRA's definition of a mandate. Among other examples, the Sarbanes-Oxley Act of 2002 was not identified as containing a federal mandate at or above the UMRA threshold because total costs were uncertain.11 However, the direct costs of one provision were estimated at $80 million annually, while the costs of other provisions could not be estimated. The Department of Commerce estimated that a rule restricting fishing off Alaska to protect sea lions could reduce industry gross revenues by $225 million to $401 million per year. However, the rule did not trigger UMRA's requirements because it did not require expenditures of $100 million or more in any year and there was no notice of proposed rulemaking. 

This report provides descriptive information and analysis regarding UMRA's implementation, focusing specifically on the coverage and identification of federal mandates under UMRA. We are making no specific recommendations for executive action nor identifying any specific matters for consideration by Congress at this time. As requested, we will be continuing our work on other aspects of UMRA. 

On April 22, 2004, we provided a draft of this report to the Director of the Office of Management and Budget (OMB) for his review and comment. On April 29, 2004, an OMB representative notified us that OMB had no comments on our report. 

10Pub. L. No. 107-16. 11Pub. L. No. 107-204. 

Background
   	Many federal statutes, and the regulations that implement them, impose requirements on state, local, and tribal governments or private sector parties in order to achieve certain legislative goals. Such statutes and their regulations can provide substantial benefits, as well as imposing costs. OMB's 2003 final report on the costs and benefits of federal regulations estimated that the total annual quantified benefits of major rules issued from October 1, 1992, to September 30, 2002, ranged from $146 billion to $230 billion, while the total annual quantified costs ranged from $36 billion to $42 billion.12 

Title I of UMRA focuses on the legislative process, and title II focuses on the regulatory process. For both legislation and regulations, UMRA was intended to provide more information on and prompt more careful consideration of the costs and benefits of federal mandates that affect nonfederal parties. UMRA generally defines a federal mandate as any provision in legislation, statute, or regulation that would impose an enforceable duty on state, local, or tribal governments or the private sector or that would reduce or eliminate the amount of funding authorized to cover the costs of existing mandates. However, as discussed in the body of this report, some other definitions, exclusions, and thresholds in the act vary according to whether the mandate is in legislation or a rule and whether a provision imposes an intergovernmental or private sector mandate. 

If legislation or a rule contains a federal mandate, as defined by UMRA, a major consequence is that other requirements in the act are triggered. Under title I, when a committee of authorization of the Senate or the House of Representatives reports a bill or joint resolution that contains any federal mandates to the full legislative body, the committee is required to provide the bill or resolution to the Director of CBO and identify the mandates it contains. UMRA then requires CBO to analyze each of these bills and resolutions-and, on request, other legislative proposals-for the presence of such mandates and to estimate their associated costs. CBO prepares UMRA statements that are to be included in the authorizing committees' reports. The CBO mandate statements must also include an 

12Office of Management and Budget, Office of Information and Regulatory Affairs, Informing
Regulatory Decisions: 2003 Report to Congress on the Costs and Benefits of
Federal Regulations and Unfunded Mandates on State, Local, and Tribal
Entities

(Washington, D.C.: 2003). 

assessment of whether the legislation authorizes or otherwise provides funding to cover the costs of any new federal mandates. 

UMRA's specific enforcement mechanism for the requirements of title I is a point of order, which a member of Congress may raise to indicate that a rule of procedure has been or will be violated.13 Generally, a point of order is available under UMRA if there is no CBO UMRA statement for the legislation or if the legislation contains an unfunded intergovernmental mandate with costs over UMRA's threshold or if it was not feasible to estimate the costs of the intergovernmental mandate. However, points of order are not available under UMRA for private sector mandates that exceed the cost threshold or if the private sector mandates' costs are not feasible to estimate.14 UMRA's rules are not self-enforcing and a point of order must be actively raised to hinder the passage of unfunded federal mandates. Specifically raising an UMRA point of order may serve to heighten the profile of "unfunded mandate" implications in the challenged legislation. As of March 2004, 13 points of order had been raised in the House of Representatives and no points of order had been raised in the Senate under UMRA. Only 1 of these 13, regarding the minimum wage in the Contract with America Advancement Act in 1996, resulted in the House voting to reject consideration of a proposed provision. 

For rules that contain federal mandates, title II of UMRA requires the agencies to prepare written statements containing specific descriptions and estimates, including a qualitative and quantitative assessment of the anticipated costs and benefits of the mandate. For such rules, agencies are to "identify and consider a reasonable number of regulatory alternatives and from those alternatives select the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule" or explain why that alternative was not selected.15 UMRA requires OMB to 

13The point of order is a parliamentary term used in committee or on the floor of either chamber of Congress to object to an alleged violation of a rule and to demand that the chair enforce the rule. When raised in the House of Representatives, the point of order is voted on by the full House. When raised in the Senate, the Presiding Officer makes an initial ruling on an UMRA point of order, but the ruling can be appealed to the full Senate and overruled by a simple majority. If a point of order is sustained against a measure, amendment, or motion, it may not be considered; if sustained against a provision in a measure, the provision is immediately deleted. 

14 See 2 U.S.C. S:658d of UMRA for more specific information on the availability of a point of order. 

152 U.S.C. S:1535. 

collect the written statements prepared by the agencies on federal mandates in rules and periodically forward them to CBO. UMRA also requires OMB to submit annual reports to Congress detailing agencies' compliance with title II. OMB's Office of Information and Regulatory Affairs (OIRA) has the primary responsibility for monitoring agencies' compliance with this title. 

CBO and OMB regularly produce reports on, respectively, activities under titles I and II of UMRA.16 CBO has prepared an annual report on its activities under title I each year since UMRA's enactment. Included in these reports is information on two requirements placed on CBO by title I, identifying (1) proposed legislation that would have imposed federal mandates on another level of government or the private sector and (2) the subset of the legislation examined by CBO that was found to contain mandates with costs at or above the relevant thresholds. Although not required by UMRA to do so, CBO also reviews all statutes enacted to identify mandates enacted into law for its annual reports. Since 2001, OMB has fulfilled its requirement to report to Congress on compliance with title II in the same document used to fulfill a statutory requirement for reporting to Congress on the costs and benefits of federal regulations. OMB's reports provide information on the rules that agencies have identified as containing federal mandates and also discuss agencies' efforts to consult with state, local, and tribal governments in the development of significant rules. 

  Scope and Methodology 

To describe the applicable procedures, definitions, and exclusions for identifying federal mandates in statues and rules under UMRA, we reviewed the act, other related guidance documents, and CBO and OMB reports on the implementation of UMRA. We also interviewed persons knowledgeable about the implementation of UMRA in OMB, CBO, and other congressional offices. To identify statutes and final rules that were and were not identified as containing federal mandates under UMRA and analyze the reasons for those determinations, we focused our review on statutes enacted and final rules published during 2001 and 2002, as agreed with your staff. 

16Title III of UMRA included requirements for the Advisory Commission on Intergovernmental Relations (ACIR) to report on various issues related to federal mandates, but Congress terminated funding for the commission in 1996. 

For our review and analysis of the implementation of title I, we relied on information provided to us by the CBO officials responsible for preparing UMRA statements on proposed legislation and the annual CBO reports on UMRA. At our request, CBO identified from that 2-year period the 5 statutes that contained federal mandates at or above UMRA's cost thresholds and 43 examples of statutes that were not so identified but nevertheless contained provisions having impacts on nonfederal parties. We did not ask CBO to compile a comprehensive list of all statutes in those years that might have impacts on nonfederal parties. For our review and analysis of the implementation of title II, we reviewed all 122 major and/or economically significant final rules-generally, those that would have an annual effect on the economy of $100 million or more or raise other significant economic or policy issues-that federal agencies issued during 2001 and 2002. Parallel to the information on statutes provided by CBO, we focused on identifying two sets of final rules-those that were identified as containing federal mandates at or above UMRA's threshold and those that were not but included provisions affecting nonfederal parties that might be perceived by those parties as potential "unfunded mandates." To determine whether the statutes and final rules we examined were perceived by affected parties as potentially having "unfunded mandate" implications, we shared them with the following national organizations representing nonfederal levels of government: National Association of Counties, National Conference of State Legislatures (NCSL), National Governors Association, the National League of Cities, and the U.S. Conference of Mayors.17 We then analyzed the statutes and rules to identify how they had been treated under UMRA, in particular identifying the application of procedural, definitional, and other provisions of UMRA that guide the identification of federal mandates. 

The scope of our review was limited to a 2-year period and, within that period, only to examples of legislation enacted and rules that were finalized (i.e., we did not include all legislation considered by Congress or rules that were proposed but not finalized). Therefore, the examples we reviewed might not illustrate all possible ways that a statute or rule with a perceived mandate could be enacted or issued without being identified as a federal mandate under UMRA. However, the representatives from external public sector organizations who reviewed the statutes and rules we examined generally concurred that they were perceived as potential "unfunded 

17We also shared our lists with organizations representing the private sector, but received no formal responses from them. 

mandates" and that we did not exclude any major examples that they believed should have been included. It is also important to recognize that perceived "unfunded mandates" could result from nonstatutory, nonregulatory federal actions, such as Homeland Security threat level adjustments, which are not covered by UMRA and therefore were outside the scope of our specific objectives. (See app. I for a more detailed description of our objectives, scope, and methodology.) 

  Identification of Federal Mandates in Statutes under Title I 

Statutory provisions that impose requirements on nonfederal parties might not be identified as federal mandates under UMRA because some legislative actions do not trigger a review and even if the provisions are subject to review, UMRA circumscribes the definition of a federal mandate. When legislation containing "mandates" does undergo UMRA's formal scrutiny, it has to meet three definitional requirements, not fall into any of seven exclusions, and impose costs at or above certain thresholds to be identified as containing federal mandates exceeding the cost thresholds under UMRA. In 2001 and 2002, 5 of the 377 statutes enacted were identified as containing provisions that were federal mandates exceeding the thresholds. From the remaining statutes, CBO identified 43 examples that had some kind of impact on nonfederal parties but were not identified during the legislative process as containing federal mandates at or above UMRA's thresholds. For 24 of those examples, this was because their estimated direct costs were below the thresholds. There is some evidence that the existence of UMRA served to hinder the introduction of intergovernmental mandates, or led to their modification before enactment in the past. There is also evidence that suggests that some of CBO's cost estimates under UMRA may have led lawmakers to reduce the cost of some mandates before enactment. 

    Legislation Must Undergo a Multistep Process to Be Identified as Containing Federal Mandates at or Above Applicable Cost Thresholds 

The type of legislation that a provision is contained in and how the legislation is considered determines if it is subject to automatic review by CBO. If provisions are subject to automatic CBO review, they are analyzed based on UMRA's definitional requirements and exclusions. The feasibility of developing a cost estimate and the level of the cost estimate is then compared to applicable thresholds. Figure 1 depicts this general sequence of conditions that must be met before a statutory provision would be identified as a federal mandate at or above UMRA's cost thresholds. 

Figure 1: A Multistep Process Has to Be Followed for CBO to Identify
Federal Mandates in Proposed Legislation

                                                            Definition                                                                                          Yes                                                                      No                                           
Is provision an enforceable duty on state, local, or tribal governments or the private sector, and is it not subject to exceptions?  CBO specifies type of mandate contained in the legislation  CBO issues UMRA statement stating legislation does not contain a mandate under UMRA  

                                                                        Cost threshold                                                                                                                                                   Yes                                                                                                                                            No  
Does direct cost estimate for all provisions in legislation meet or exceed thresholds?  CBO issues UMRA statement specifying type of federal mandate contained in the legislation and that it meets or exceeds the applicable cost threshold  CBO issues UMRA statement specifying type of federal mandate contained in the legislation and that it is below the applicable cost threshold  

Source: GAO. 

The following sections discuss these procedures, exclusions, definitions, and cost thresholds in more detail. 

UMRA Procedures Do Not Provisions that are (1) not contained in authorizing bills, or (2) not Require All Legislative reported by an authorizing committee are not automatically subject to CBO Provisions to Be Automatically review before going to the floor (see fig. 1), and thus a CBO UMRA Reviewed by CBO statement may not be issued. For example, appropriations bills are not 

automatically subject to CBO review under UMRA. In addition, even if a 

provision is contained in an authorizing bill, it still must be "reported" by 

that committee-as opposed to going directly to the full House or Senate or 

"discharged" by the committee without a vote to send it to the full House or Senate-to be subject to automatic CBO review. 

CBO was not required to review seven bills that contained federal mandates during 2001 and 2002 that ultimately became law because they either were appropriations bills or were authorizing bills not reported by authorizing committees. For example, a provision prohibiting states from issuing a permit or lease for certain oil and gas drilling in the Great Lakes was not reviewed by CBO prior to enactment because it was contained in the Energy and Water Development Appropriations Act of 2002.18 

Although UMRA does not require an automatic CBO review of provisions not contained in authorizing bills or bills not reported by authorizing committees, CBO told us that it initiates an informal review of provisions in appropriations bills and the results of these informal reviews are communicated to appropriations committee clerks when CBO finds potential mandates in these bills. During these informal reviews, CBO does not estimate costs unless CBO already has cost data from an earlier review or unless Congress requests it. CBO will also review any legislation on request. 

UMRA does not require automatic CBO review of provisions added after CBO's initial review. Amendments containing mandates may be added to legislation after CBO issues its statement about whether the legislation contains any federal mandates. UMRA states, however, that "the committee of conference shall insure to the greatest extent practicable" that CBO prepare statements on amendments offered subsequent to its initial review that contain federal mandates.19 According to CBO's annual report for 2002, three laws were enacted in 2002 that contained federal mandates not reviewed by CBO prior to enactment because they were added after CBO reviewed the legislation. For example, a provision requiring insurers of commercial property to offer terrorism insurance was added to the Terrorism Risk Insurance Act of 2002 after CBO's UMRA review, and thus not identified as a private sector mandate under UMRA prior to enactment.20 

18 Pub. L. No. 107-66. 192 U.S.C. S:658c(d). 20Pub. L. No. 107-297. 

There is one other important caveat regarding legislative provisions for which a CBO UMRA review is not required. The Joint Committee on Taxation (JCT), rather than CBO, has jurisdiction over proposed tax legislation and produces revenue estimates for all such legislation considered by either the House or the Senate. In addition, JCT examines legislative provisions that affect the tax code for federal mandates and estimates their costs. According to a JCT legislative counsel, a statement regarding the existence of federal mandates should be included in the House or Senate committee report. Also, according to CBO, JCT estimates of revenue impacts are included in CBO cost estimates for legislation. 

When Provisions Are Reviewed, A provision must meet the formal definition of a mandate and not be not be They Are Subject to Many classified as an "exception" to be identified as a federal mandate. UMRA Definitional Requirements and defines a federal mandate as a provision that would impose an enforceable Exclusions duty upon state, local, or tribal governments (intergovernmental mandate) 

or upon the private sector (private sector mandate). Exceptions are defined as enforceable duties that are conditions of federal financial assistance or arise from participation in a voluntary federal program. 

UMRA does include as intergovernmental mandates certain conditions on federal assistance programs and reductions in the authorization of appropriations for federal financial assistance and the control of borders under certain conditions.21 A provision would also meet the definition of a intergovernmental mandate if it relates to an existing federal program of $500 million or more (annually) to state, local, and tribal governments if the provision would increase the stringency of conditions of funding, place caps or reduce the funding and the state, local, or tribal governments cannot modify their financial or programmatic responsibilities regarding the federal program. 

A private sector mandate is also a provision that would reduce or eliminate the amount of authorization of appropriations for federal financial 

21Specifically, UMRA includes reductions in appropriations to state, local, or tribal governments for complying with previously imposed duties unless they are reduced or eliminated by the amount of reduction; or the control of borders by the federal government; or reimbursement to state, local, or tribal governments for various costs associated with illegal aliens, when such a reduction or elimination would result in increased costs to state, local, or tribal governments for costs associated with illegal aliens; except if the state, local, or tribal governments have not cooperated with the federal government to locate, apprehend, and deport illegal aliens. 

assistance that would be provided to the private sector for the purposes of ensuring compliance with such an enforceable duty. 

UMRA also excludes certain provisions from its application. Specifically, UMRA does not apply to any provision in legislation that: 

1. enforces Constitutional rights of individuals; 

2.
   	establishes or enforces any statutory rights that prohibit discrimination on the basis of race, color, religion, sex, national origin, age, handicap, or disability; 

3.
   	requires compliance with accounting and auditing procedures with respect to grants or other money or property provided by the federal government; 

4.
   	provides for emergency assistance or relief at the request of any state, local, or tribal government or any official of a state, local, or tribal government; 

5.
   	is necessary for the national security or the ratification or implementation of international treaty obligations; 

6.
   	the President designates as emergency legislation and that Congress so designates in statute; or 

7.
   	relates to the old age, survivors, and disability insurance program under title II of the Social Security Act (including taxes imposed by sections 3101(a) and 3111(a) of the Internal Revenue Code of 1986 relating to old-age, survivors, and disability insurance). 

If provisions are excluded, CBO will state the reason for the exclusion and make no statement regarding mandates in those provisions. 

If a provision is not excluded and meets the definition of a federal mandate without exception under UMRA, CBO identifies the provision as a federal mandate under UMRA, and then determines if a cost estimate is feasible. For intergovernmental mandates, if a cost estimate is feasible, the direct costs (to state, local, or tribal governments) of all mandates contained within the legislation must equal or exceed $50 million (in 1996 dollars) in any of the first 5 fiscal years that the relevant mandates would be effective for CBO to determine that the mandate meets or exceeds UMRA's cost 

threshold. The same requirements apply for private sector mandates, except that the cost threshold is $100 million (in 1996 dollars) or more. CBO adjusts both the intergovernmental and private sector cost thresholds annually for inflation. If an intergovernmental mandate exceeds the cost threshold, a point of order is available under UMRA. However, if a private sector mandate exceeds the cost threshold, a point of order is not available. If an intergovernmental or private sector mandate is below the applicable threshold, CBO states that a mandate (intergovernmental or private) exists with costs estimated to be below the threshold. Although this highlights the provision as mandate, it does not provide for a point of order under UMRA. 

Cost Estimates May Not Be Developing a cost estimate for federal mandates must be feasible, and their 

Feasible or Complete
   	direct costs must meet or exceed applicable cost thresholds for CBO to identify them as such under UMRA. However, in some instances, it is not feasible to develop a cost estimate. 

CBO indicated in its annual report for 2002 that common reasons why a cost estimate may not be feasible include (1) the costs depend on future regulations, (2) essential information to determine the scope and impact of the mandate is lacking, (3) it is unclear whom the bill's provisions would affect, and (4) language in UMRA is ambiguous about how to treat extensions of existing mandates. If a cost estimate for legislation is not feasible, CBO specifies the kind of mandate it contains, but that the agency cannot estimate its costs. This does not prevent the legislation from moving through the legislative process, but in the case of an intergovernmental mandate, UMRA would still allow a member of Congress to raise a point of order. 

CBO reported that it could not estimate the costs of mandates in nine bills that ultimately were enacted during 2001 and 2002. Of these nine laws, seven contained intergovernmental mandates and two contained both private sector and intergovernmental mandates. For example, CBO could not estimate the costs of provisions requiring manufacturers of medical devices to comply with certain labeling and notification conventions and to submit their registrations electronically contained in the Medical Device User Fee and Modernization Act of 2002.22 CBO stated that since many of the requirements in the act would depend on the future actions of the 

22Pub. L. No. 107-250. 

Secretary of Health and Human Services, CBO could not determine whether their direct costs would exceed UMRA's threshold. 

Even if costs can be estimated, UMRA focuses only on the direct costs imposed by federal mandates in legislation. According to UMRA, such costs are limited to spending that results directly from the mandates imposed by the legislation, rather than from the legislation's broad effects on the economy. The direct costs of a federal mandate also include any new revenues that state and local governments are prohibited from raising. While CBO has estimated the indirect costs of some federal mandates, CBO is limited to including only direct costs when determining if the aggregate total costs of federal mandates in legislation meet or exceed the applicable cost thresholds under UMRA. CBO testified in July 2003 that, "federal mandates often have secondary effects, including the effects on prices and wages when the costs of a mandate imposed on one party are passed along to other parties, such as customers or employees." CBO told us that if it determined that indirect costs (including secondary effects) would be significant, it would include the estimate in its UMRA statement, but that its determination of whether a mandate meets or exceeds the applicable thresholds is based only on direct costs. Therefore, although information on indirect costs may be available, legislation with significant total costs (direct and indirect) on nonfederal parties may not be identified as exceeding the cost thresholds under UMRA. 

CBO may conclude that legislation contains a federal mandate and is funded because the legislation authorizes funds to be appropriated to carry out or comply with the mandates. However, if the appropriation subsequently provided is less than the amount authorized, the federal mandate's costs may be at or above the threshold. 

UMRA contains a mechanism designed to help curtail mandates with insufficient appropriations, but it has never been utilized. UMRA provides language that could be included in legislation that would allow agencies tasked with administering funded mandates to report back to Congress on the sufficiency of those funds.23 Congress would then have a certain time 

232 U.S.C. S: 658d(a)(2)(B). 

period to decide whether to continue to enforce the mandate, adopt an alternate plan, or let it expire, meaning the provision comprising the mandate would no longer be enforceable. A CBO official did not recall any legislation ever containing this provision, and our database search has also resulted in no legislation found containing this provision.24 

    CBO Identified Few Laws in 2001 and 2002 as Containing Federal Mandates at or Above UMRA's Cost Threshold, But UMRA May Have an Indirect Effect 

Although few laws have been identified as containing federal mandates at or above applicable cost thresholds, there is some evidence that UMRA has a discouraging effect on the enactment of intergovernmental mandates and the magnitude of costs to nonfederal parties in proposed legislation. 

Of 377 laws enacted in 2001 and 2002, CBO identified at least 44 containing a federal mandate under UMRA. Of these 44, CBO identified 5 containing mandates at or above the cost thresholds, and all were private sector mandates (see tables 1 and 2 below). From 1996 to 2000, CBO identified 18 mandates (2 intergovernmental and 16 private sector) with costs at or above cost thresholds that became law. 

Table 1: Legislation Enacted in 2001 and 2002 that CBO Identified as
Containing Federal Mandates Under UMRA

                                  2001                           2002                        Both Years         
  Number of laws                                                                                                
     enacted                      108                     269                                    377            
Type of mandate(s)                     Private a                      Private  Both                  Private a   Both  
                    Intergovernmental    sector    Intergovernmental  sector   types  Intergovernmental sector  types  
Laws with mandate                  12  At least 1                  8       11   12              20 At least 12  
 Laws with mandate                                                                                              
 at or above cost                                                                                               
    threshold                       0           1                   0        4     0                        0 5 

Source: CBO. 

aCBO's annual report for 2001 did not separately report the number of laws that contained private sector mandates, but did report 1 law containing a private sector mandate above the cost threshold. Adding the 11 laws that CBO identified as containing private sector mandates in 2002 yields at least 12 laws during 2001 and 2002 that contained private sector mandates (exclusive of laws that contained both private sector and intergovernmental mandates). 

24 Search conducted on Lexis on January 22, 2004, for bills and committee reports containing this provision. 

Table 2: Laws Enacted in 2001 and 2002 that CBO Identified as Containing
Federal Mandates Meeting or Exceeding UMRA's Cost Threshold

Law Mandate Cost information

Aviation and Transportation Imposes a user fee to fund aviation-security CBO estimated that the direct costs to air carriers (net Security Act of 2001 (Pub. L. No. programs; requires security enhancements of savings) would range from $313 million in 2002 to 107-71) on aircraft; imposes additional security $1.0 billion in 2006. 

procedures 

Bipartisan Campaign Reform Act Bans "soft-money" collections by national CBO estimated that net direct costs to the private of 2002 (Pub. L. No. 107-155) political parties sector (including national political parties and 

broadcasters) could exceed $300 million in a Changes procedures for collection and use Presidential election year. of campaign contributions 

Farm Security and Rural Requires that some foods carry labels CBO estimated that increased costs to milk handlers Investment Act of 2002 (Pub. L. indicating their country of origin could total $1.3-1.5 billion annually. Most of this cost No. 107-171) would be passed to consumers. CBO estimated that 

Establishes new minimum prices for fluid the costs to retailers and suppliers to provide origin 

milk in different regions labeling could be as high as $1 billion annually. 

Job Creation and Worker Extends the requirement that health insurers CBO estimated that the direct costs of extending the Assistance Act of 2002 (Pub. L. cover mental health and medical benefits requirement to cover mental health would be $270 No. 107-147) equally million in 2002 for the private sector (group health 

plans) and would increase premiums for group health Limits nonaccrual accounting insurance. 

Alters treatment of indebtedness for CBO estimated the direct costs of the Consolidated S corporations Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation to be $200 million in 2002. 

Anton's Law of 2002 (Pub. L. No. Requires automobile manufacturers to install CBO estimated that auto manufacturers would spend 107-318) a lap and shoulder-belt harness in the as much as $1 billion to install new belts. 

center-rear seating position of certain vehicles 

Source: CBO. 

UMRA May Have Discouraged the Enactment of Proposed Unfunded Intergovernmental Mandates and Helped Reduce the Costs of Some Mandates 

UMRA may have indirectly discouraged the passage of legislation identified as containing intergovernmental mandates at or above UMRA's cost threshold. Since 1996 only three proposed intergovernmental mandates with annual costs above the applicable threshold had become law (an increase in the minimum wage in 1996, a reduction in federal funding for Food Stamps in 1997, and a preemption of state laws on premiums for prescription drug coverage in 2003). 

Between 1996 and 2002, CBO reported that 21 private sector mandates with costs over the applicable threshold were enacted. Of these, 8 involved taxes, 4 concerned health insurance, 4 dealt with regulation of industries, 2 affected workers' take home pay, 1 imposed new requirements on sponsors of immigrants, 1 changed procedures for the collection and use of 

campaign contributions, and 1 imposed fees on airline travel to fund aviation security. 

UMRA may have also aided in lessening the costs of some mandates. From 1996 through 2000, CBO identified 59 proposed federal mandates with costs above applicable thresholds. Subsequent to CBO identification, 9 were amended before enactment to reduce their costs below the applicable thresholds, while 18 mandates were enacted with costs above the threshold, and 32 were never enacted. Although CBO has not done an analysis to determine the role of UMRA in reducing the costs of mandates ultimately enacted, it did state in its report that "it was clear that information provided by CBO played a role in the Congress's decision to lower costs." 

There is also some testimonial evidence regarding the effectiveness of UMRA on legislation. CBO stated in its July 2003 congressional testimony that "both the amount of information about the cost of federal mandates and Congressional interest in that information have increased considerably. In that respect, title I of UMRA has proved to be effective." The Chairman of the House Rules Committee was quoted in 1998 as saying that UMRA "has changed the way that prospective legislation is drafted... Anytime there is a markup [formal committee consideration], this always comes up." Although points of order are rarely used, they may be perceived as an unattractive consequence of including a mandate above cost thresholds in proposed legislation. The director of policy and federal relations at the National League of Cities stated, "This is like a shoal out in the water. You know it is there, so you steer clear of it." 25 

25See Congressional Quarterly Weekly
Reports, p. 2318 (Washington, D.C.: Sept. 5, 1998). 

    Nonfederal Parties Perceived Some Enacted Provisions as Having Unfunded Mandate Implications 

Overall, CBO's annual reports from 2001 and 2002 showed that most proposed legislation did not contain federal mandates as defined by UMRA. Further, most of the proposed legislation with mandates would not have imposed costs exceeding the thresholds set by UMRA.26 We asked CBO to compile a list of examples from among those laws enacted in 2001 and 2002 that it perceived as having impacts on nonfederal parties but were not identified as containing federal mandates meeting or exceeding UMRA's cost thresholds. We then analyzed these 43 examples to illustrate the application of UMRA's procedures, definitions, and exclusions on legislation that was not identified as containing mandates at or above UMRA's threshold, but might be perceived to have "unfunded mandates" implications. We shared CBO's list of 43 examples with national organizations representing nonfederal levels of government, and they generally agreed that those laws contained provisions perceived by their members as mandates.27 

For 12 of the 43 examples, an automatic UMRA review was not required of at least some provisions prior to enactment because of the legislative process used to enact the bill, for example, not being reported by an authorizing committee. Out of the remaining 31 laws that did undergo a cost estimate, 24 were found to contain mandates with costs below applicable thresholds, 3 contained provisions that were excluded, 2 contained provisions with direct costs that were not feasible to estimate, 1 contained a provision that did not meet UMRA's definition of a mandate, and 1 was reviewed by JCT and found not to contain any federal mandates (see fig. 2). It should be noted that the number of laws in any of the categories listed do not necessarily correlate with the magnitude of perceived or actual impact on affected nonfederal parties. 

26For more detailed information on all legislation from 2001 and 2002 identified by CBO as including federal mandates, see CBO's annual reports on its activities under UMRA (www.cbo.gov). 

27 We also shared this list with organizations representing the private sector, but received no response. 

Figure 2: How Certain Examples of Laws with Impacts on Nonfederal Parties
Were Treated Under UMRA

Source: CBO. 

Of the 12 examples of laws with provisions that CBO was not required to review prior to enactment, CBO later determined how they would have been characterized under UMRA: 5 laws contained mandates with direct costs below UMRA's thresholds, 4 laws contained mandates with direct costs that could not be estimated, 1 was excluded under UMRA for national security so would not be reviewed for the presence of mandates, 1 did not meet the definition of a mandate, and 1 had some provisions with costs below the threshold and some provisions excluded (again, for national security).28 (See app. II for more detailed information on the 43 examples.) 

28Among the four laws containing mandates for which direct costs could not be estimated, some provisions had cost(s) estimated to be below the applicable cost threshold and others had cost(s) that were uncertain. 

Some Legislation Had Potentially Although cost estimates of the full impact (including direct and indirect Significant Impacts on costs) are not available for all 43 examples discussed previously, table 3 Nonfederal Parties describes 10 laws among the 43 that we consider important to highlight 

and/or have multiple uncertainties surrounding the magnitude of their 

potential impacts on nonfederal parties. 

Table 3: Selected Examples of Statutes with Potentially Significant
Impacts on Nonfederal Parties

                    Reason(s) the statute was not identified

GAO Description of potential impacts on as containing a federal mandate ID
Rule nonfederal parties exceeding costs thresholds

L1 Economic Growth and Tax Relief Increases tax credits and phases out the Did not meet the definition of a mandate Reconciliation Act of 2001 (Pub. L. estate and generation-skipping transfer tax, (no enforceable duty on state, local, or No. 107-16) which impacts state tax revenues. tribal governments or the private sector). JCT determined that the act did not contain any intergovernmental mandates or revenue raising provisions in excess of UMRA thresholds. 

L7 	USA PATRIOT Act of 2001 (Pub. L. No. 107-56) 

Multiple provisions preempting state and local laws in regard to disclosure of financial and consumer reporting information, and liability laws relating to education agencies and institutions. Restricts states' authority to issue licenses for operating motor vehicles to transport hazardous materials, and prohibits certain parties from shipping or receiving biological toxins in interstate or foreign commerce. 

Some provisions were not reviewed prior to enactment because mandates were added after CBO review. Some provisions were excluded for national security. After enactment, CBO estimated that provisions that were mandates had costs below thresholds. 

L18  No Child Left Behind Act of 2001  Imposes various requirements including state    Did not meet the definition of a mandate  
          (Pub. L. No. 107-110)            standards and assessments, progress            because the requirements were a        
                                         requirements, and other provisions, and     condition of federal financial assistance.  
                                          provides grants associated with these      
                                                      requirements.                  

L22 Public Health Security and Contains multiple provisions requiring Provisions were not reviewed prior to Bioterrorism Preparedness and assessments of water supplies and other enactment because an authorizing Response Act of 2002 (Pub. L. No. measures including extending prescription committee did not report them. After 107-188) drug application fees, and registration enactment, CBO stated some provisions requirements for food processors. were funded, some were estimated to be below thresholds, and the costs of others were uncertain. 

L25 Sarbanes-Oxley Act of 2002 (Pub. Established the Public Company Accounting CBO stated the costs of several provisions 

L. No. 107-204) Oversight Board (PCAOB), and required new were uncertain, but the operations of the 

financial disclosures of public companies. PCAOB and another standard-setting body would be $80 million per year and would be funded by fees assessed on public companies. 

(Continued From Previous Page)

                    Reason(s) the statute was not identified

GAO Description of potential impacts on as containing a federal mandate ID
Rule nonfederal parties exceeding costs thresholds

L32
   	Medical Device User Fee and Allows the assessment of user fees from CBO stated that some costs were below Modernization Act of 2002 (Pub. L. manufactures of medical devices to defray the the threshold and others were uncertain No. 107-250) cost to the Food and Drug Administration of because they depended on the future 

administering the approval of devices. actions of a government agency.
Requires medical device manufacturers to
comply with certain labeling and notification
conventions and to submit their registrations
electronically.

L34  Help America Vote Act of 2002    Places a number of requirements on state and       Some provisions excluded because they  
         (Pub. L. No. 107-252)      local governments regarding federal elections     enforced the constitutional rights of     
                                       including standards for voting systems,      individuals. For some other provisions,     
                                        computerized databases, and procedural      CBO stated that any costs to state, local,  
                                    development for provisional voting. The act     or tribal governments would be incurred     
                                    also authorized grants for these requirements.   voluntarily from participating in grant    
                                                                                                    programs.                   

L36 Homeland Security Act of 2002 Contains provisions including the preemption CBO estimated some costs would be (Pub. L. No. 107-296) of state and local laws in regard to disclosure below the threshold and others were of information, and requirements for training uncertain. A mandate requiring air carriers for airlines. to provide flight attendants with a method of communicating with pilots was added after CBO review, and thus its costs were not estimated prior to enactment. After enactment, CBO stated the costs of this mandate were uncertain. 

L37 Terrorism Risk Insurance Act of Requires commercial property insurers to offer CBO estimated some costs were below 2002 terrorism insurance, and requires insurers and thresholds, while others were uncertain. (Pub. L. No. 107-297) policyholders to pay assessments. The mandate requiring insurers to offer terrorism insurance was added after CBO review, and thus its costs were not estimated. After enactment, CBO stated that the costs of this mandate were uncertain. 

L41 Veterans Benefits Act of 2002 Establishes a temporary exemption of some CBO stated the costs of this mandate were (Pub. L. No. 107-330) National Guard members from certain uncertain since the number of National financial obligations. Guard members called to active duty in the future is uncertain. CBO stated other costs were below applicable thresholds. 

Source: GAO. 

The following paragraphs provide more detailed descriptions regarding 2 of these 10 examples. One law contained a definitional exception and was not identified as containing any mandates. The other law was identified as containing both intergovernmental and private sector mandates. 

The No Child Left Behind Act is a well-known example that has intergovernmental implications, but was not identified as a federal 

mandate under UMRA. No Child Left Behind provides federal grants for a host of education programs, requires states to design and implement standards and assessments, and provides financial penalties for states that fail to achieve certain standards over 2 consecutive years. CBO stated that the bill does not contain any federal mandates as defined by UMRA because any costs incurred by state, local, or tribal governments would result from complying with conditions of financial aid, a definitional exception under UMRA. 

Though it does not meet the UMRA definition of a federal mandate, No Child Left Behind is still perceived as an "unfunded mandate" by some interested parties. In a recent radio advertisement, the president of the National Education Association described this act as a "huge unfunded federal mandate."29 In response to our query, NCSL listed No Child Left Behind as one of the most important statutes that was not identified as a federal mandate, but should have been. A recent newspaper article identified 15 states with resolutions, bills, or studies that "protest" in one form or another against the act.30 According to the article, some states claim that significant impacts resulting from No Child Left Behind may include the loss of funds if schools fail to make enough progress, extra costs for tutoring and teacher training, and costs associated with possible longer school days and summer school, all of which may be required to meet standards set by the act. 

Another example among the 10 laws is the Sarbanes-Oxley Act of 2002. CBO identified this law as containing both intergovernmental and private sector mandates. The intergovernmental mandate's costs were estimated to not exceed the cost threshold, but the private sector mandates' costs were uncertain, and could possibly exceed UMRA's thresholds. Among the mandates contained in the law were provisions such as: (1) allowing PCAOB to assess fees on public companies, (2) establishing new standards for auditors and audit committees of public companies, (3) requiring public corporations to make enhanced financial disclosures to the Securities and 

29National Education Association radio advertisement, First Order of
Business (Washington, D.C.: January 2004). 

30See, Washington
Post, "More States Are Fighting `No Child Left Behind Law'" (Washington, D.C.: Feb. 19, 2004): A3. 

Exchange Commission (SEC), (4) requiring notices of blackout periods31 from pension plan administrators to investors, and (5) prohibiting insider trades during pension fund blackout periods if stock was acquired based on connection of service as a director or executive officer. 

CBO indicated that the only costs associated with Sarbanes-Oxley's federal mandates that the agency could estimate were for the notification of blackout periods by pension administrators, and the costs of operating PCAOB. CBO estimated the costs of providing notification of blackout periods fell below the UMRA thresholds but provided no quantified estimate, and CBO estimated the cost of running PCAOB and an associated standard-setting body to be approximately $80 million per year which would be funded from fees assessed on public companies. CBO stated it was uncertain if the rest of the mandates contained in Sarbanes-Oxley exceeded UMRA's cost threshold of $115 million adjusted for inflation. 

  Identification of Federal Mandates in Rules under Title II 

Procedurally, the identification of federal mandates under title II of UMRA is simpler than under title I. Although regulatory agencies generally are to assess the intergovernmental and private sector effects of all their actions, under UMRA title II they only need to publicly identify and prepare UMRA "written statements" on those rules that the agencies believe include a federal intergovernmental or private sector mandate that may result in expenditures of $100 million or more (adjusted for inflation) in any year. However, there are 14 definitional exceptions, exclusions, or other restrictions applicable to the identification of federal mandates in rules, compared to 10 that are applicable to identifying mandates in legislation. Agencies identified 9 of the 122 major and economically significant final rules published in 2001 and 2002 as containing federal mandates as defined by UMRA. However, based on our review of the published rules, we determined that 65 of the remaining rules imposed new requirements on nonfederal parties. Agencies cited, or could have cited, a variety of reasons that these 65 rules did not contain federal mandates under UMRA. Nevertheless, at least 29 of the 65 rules appeared to have significant financial impacts on affected nonfederal parties of $100 million or more in any year. 

31Blackout periods are the specified time periods when trades (purchase, sale, acquisition, or transfer of any equity security) are prohibited. 

    UMRA Procedures for Rules Are Less Complex than for Legislation, But More Restrictions Apply to Identifying Federal Mandates 

UMRA's process of identifying and reporting on rules with federal mandates is more straightforward than that for legislation. UMRA generally directs agencies to assess the effects of their regulatory actions on other levels of government and the private sector. However, the agencies only need to identify and prepare written UMRA statements on those rules that the agencies have determined include a federal mandate that may result in expenditures by nonfederal parties of $100 million or more (adjusted for inflation) in any year. Thus, unlike CBO's reviews of proposed legislation, one cost threshold applies to both intergovernmental and private sector mandates in rules, and there is no public identification of potential federal mandates in rules before agencies determine whether such mandates exceed the threshold. As is the case for legislation, UMRA contains many definitions and exclusions that affect the extent to which agencies' rules are considered to have federal mandates at or above the threshold. 

The three definitional provisions and seven general exclusions from UMRA that we previously identified as applicable to legislation also apply to federal rules. However, there are four additional restrictions to the identification of federal mandates in rules (i.e., in an UMRA statement): 

o 
   	UMRA's requirements do not apply to provisions in rules issued by independent regulatory agencies.32 

o 
   	Preparation of an UMRA statement, and related estimate or analysis of the costs and benefits of the rule, is not required if the agency is "otherwise prohibited by law" from considering such an estimate or analysis in adopting the rule. 

32According to the Paperwork Reduction Act, these include agencies such as the Commodity Futures Trading Commission, the Consumer Product Safety Commission, the Federal Communications Commission, the Federal Trade Commission, the Nuclear Regulatory Commission, the Securities and Exchange Commission, and "any other similar agency designated by statute as a Federal independent regulatory agency or commission" (44 U.S.C. 3502(5)). 

o 
   	The requirement to prepare an UMRA statement does not apply to any rule for which the agency does not publish a general notice of proposed rulemaking in the Federal
Register. This means that UMRA does not cover interim final rules and any rules for which the agency claimed a "good cause" or other exemption available under the Administrative Procedure Act of 1946 to issue a final rule without first having to issue a notice of proposed rulemaking.33 

o 
   	UMRA's threshold for federal mandates in rules is limited to expenditures, in contrast to title I which refers more broadly to direct costs. Thus, a rule's estimated annual effect might be equal to or greater than $100 million in any year-for example, by reducing revenues or incomes in a particular industry-but not trigger UMRA if the rule does not compel nonfederal parties to spend that amount. Under title I, though, the direct costs of a mandate in legislation also include any amounts that state and local governments are prohibited from raising in revenues to comply with the mandate. However, as in reviews of legislation, indirect costs of rules are not considered when determining whether a mandate meets or exceeds UMRA's threshold. 

Two of these restrictions on UMRA's scope in the regulatory process are essentially procedural. If a rule's path to issuance was through an independent regulatory agency or a final rule with no prior proposed rule, any "mandate" included in the rule would not be subject to identification and review under UMRA. 

OIRA Monitors Agencies' OIRA is responsible for the centralized review of significant regulatory 

Compliance with Title II actions published by executive branch agencies, other than independent 

Requirements
   	regulatory agencies. Under Executive Order 12866, which was issued in September 1993, agencies are generally required to submit their significant draft rules to OIRA for review before publishing the rules. As part of this regulatory review process, OIRA monitors agencies' compliance with UMRA. In the submission packages for their draft rules, federal agencies are to designate whether they believe the rule may constitute an unfunded 

335 U.S.C. 553. See also U.S. General Accounting Office, Federal
Rulemaking: Agencies Often Published Final Actions Without Proposed
Rules, GAO/GGD-98-126 (Washington, D.C.: Aug. 31, 1998). 

mandate under UMRA. According to OIRA representatives, consideration of UMRA is then incorporated as part of these regulatory reviews, and draft rules are expected to contain appropriate UMRA certification statements.34 

OIRA's guidance to agencies notes that the analytical requirements under Executive Order 12866 are similar to the analytical requirements under UMRA, and thus the same analysis may permit agencies to comply with both analytical requirements.35 However, OIRA representatives pointed out that UMRA might also require agency consultations with state and local governments on certain rules, and this is something that OIRA will look for evidence of when it does its regulatory reviews. The officials also pointed out that UMRA provides OIRA a statutory basis for requiring agencies to do an analysis similar to that required by the executive order (which can be rescinded or amended at the discretion of the President). 

Agencies Identified Few Federal agencies identified 9 of the 122 major and/or economically Final Rules Published in significant final rules that federal agencies published in 2001 or 2002 as 2001 and 2002 as Containing containing federal mandates under UMRA (see fig. 3).36 

                               Federal Mandates 

34 OIRA also checks for related statements and certifications from agencies on the Regulatory Flexibility Act (5 U.S.C. 601-612), which requires agencies to assess the impact of forthcoming regulations on "small entities," Executive Order 13132 which requires agencies to assess the federalism implications of their regulations, and other requirements that might be triggered by the nature of the draft rule. 

35 As pointed out in our previous report on UMRA (GAO/GGD-98-30), the committee reports for the Senate bill that ultimately resulted in UMRA indicate that Congress was aware that, in many respects, the bill duplicated existing requirements, including those already required under Executive Order 12866. 

36 Although we refer broadly to "final rules," these also included other regulatory actions with legal effect (such as interim rules, temporary rules, and some notices), in contrast to proposed rules that do not have legal effect. 

Figure 3: Few Final Rules Published in 2001 and 2002 Contained Federal
Mandates Under UMRA

Source: GAO. 

Only one of the nine rules that agencies identified as containing federal mandates under UMRA-EPA's enforceable standard for the level of arsenic in drinking water systems-included an intergovernmental mandate. The remaining rules imposed private sector mandates: 

o 
   	four Department of Energy rules that amended energy conservation standards for several categories of consumer products, including clothes washers and heat pumps; 

o 
   	three EPA rules that adopted emission standards to reduce air pollution from various sources, including paper and pulp mills and heavy-duty highway engines and vehicles; and 

o 
   	a Department of Transportation (DOT) rule that established a new federal motor vehicle safety standard that required tire pressure monitoring systems, controls, and displays. 

In each of these final rules, the agencies addressed the applicable UMRA analytical and reporting requirements. (See app. III for more detailed information on these rules.) The limited number of rules identified as federal mandates during 2001 and 2002 is consistent with the findings in our 1998 report on UMRA and in OMB's annual reports on agencies' compliance with title II.37 

    Most Often Rules with Financial Effects on Nonfederal Parties Did Not Trigger UMRA's Requirements Because They Did Not Require Expenditures at or Above UMRA's Threshold 

Of the 113 major and/or economically significant rules not identified as including federal mandates under UMRA, we determined that 48 contained no new requirements that would impose costs or have a negative financial effect on state, local, and tribal governments or the private sector. Often, these were economically significant or major rules because they involved substantial transfer payments from the federal government to nonfederal parties. For example, the Department of Agriculture (USDA) published a final rule that expanded loans, loan deficiency payments, and working assistance loans for certain agricultural commodities, such as cotton and honey, and was expected to increase federal outlays by about $1.1 billion annually. The Department of Health and Human Services (HHS) published a notice updating the Medicare payment system for home health agencies that was estimated to increase federal expenditures to those agencies by $350 million in fiscal year 2002. 

However, we determined that 65 of the 113 rules contained new requirements that would impose costs or result in other negative financial effects on state, local, and tribal governments or the private sector. We shared this list of rules with national organizations representing other levels of government affected by these rules.38 Representatives of those organizations generally confirmed that all of the 65 rules were perceived by their members to have at least some "unfunded mandates" implications. 

37See GAO/GGD-98-30. 

38We also shared our lists with organizations representing the private sector, but received no formal responses from them. 

In 41 of the 65 published rules, the agencies cited a variety of reasons for determining that these rules did not trigger UMRA's requirements (see fig. 4). There
were 26 rules in which the agencies stated that the rule would not
compel expenditures at or above the UMRA threshold and 10 rules in which the agencies stated that rules imposed no enforceable duty. For 24 of the 65 rules, the agency did not provide a reason. However, independent
regulatory agencies, which are not covered by UMRA, published 12 of these 24 rules, and there is no UMRA
requirement for covered agencies to
identify the reasons that their rules do not contain federal mandates.

  Figure 4: Agencies' Reasons for Determining that Their Rules Did Not Trigger
                              UMRA's Requirements

Rule does not require $100 million or more in expenditures

Rule contains no enforceable duty

Duties are part of a voluntary program

Duties are a condition of federal financial assistance

Analysis otherwise prohibited by law

Rule promulgated without a notice of proposed rulemaking

Source: GAO.

26

0 5 10152025 Number of rules

Note: Agencies cited more than one reason for nine of the rules.

Our review of the 65 rules indicated that agencies did not cite all of the
applicable reasons they could have for determining that the rules did not
trigger UMRA's
requirements (see fig. 5). For example, although in only 3 of the 65 rules did the agencies identify the absence of a notice of proposed
rulemaking as the reason the rule did not trigger UMRA, this reason applied to another 25. Similarly, although 5 rules cited the exclusion that any enforceable duties would occur as a consequence of participation in a voluntary federal program, another 21 rules could have claimed this
exclusion. Between what agencies cited or could have cited, 47 of the 65
rules (72 percent) had more than one applicable reason. (For each of the 

65 rules, app. IV identifies the reasons that agencies cited or could have cited for their rules not triggering UMRA.)

Figure 5: Reasons that Agencies Could Have Claimed for Their Rules Not
Triggering UMRA

Rule was promulgated without a notice of proposed rulemaking 25

       Any enforceable duties arise from participation in a voluntary federal
                                                                      program
    Rule will not result in expenditure of $100 million or more in any 1 year
                           Rule published by an independent regulatory agency
       Any enforceable duties are a condition of federal financial assistance
                                              Necessary for national security
                                         Analysis otherwise prohibited by law
                                                        Emergency legislation
Rule establishes or enforces statutory rights that prohibit discrimination
                                            Rule contains no enforceable duty
      Requirements are for compliance with accounting and auditing procedures

Source: GAO.

Some Rules that Did Not Trigger UMRA Had Potentially Significant Effects on
Nonfederal Parties

0 5 10152025

Number of rules

Note: More than one unclaimed reason applied to 29 rules.

At least 29 of the 65 rules with new requirements appeared to result in
significant costs or other negative financial effects on state, local, and tribal
governments or the private sector. In these 29 rules, the agencies either explicitly stated that they expected the rule could impose significant costs or published information indicating that the rule could result, directly or
indirectly, in financial effects on nonfederal parties at or above the UMRA threshold. (Appendix V provides more detailed information on each of the
29 rules that were not identified as federal mandates
under UMRA, but that could impose significant costs or have other negative financial effects on state, local, and tribal governments or the private sector.)

These 29 rules not identified as federal mandates under UMRA, but with
significant financial impacts on nonfederal parties, can be roughly categorized as follows:

o 	9 that imposed costs on individuals-a category included in UMRA's
definition of the private sector-exceeding $100 million in any year; 39

o 	5
that reduced the level of federal payments to nonfederal parties by more than $100 million in any year;

o 	4 with substantial indirect costs or economic effects on nonfederal
parties;

o 	4 from independent regulatory agencies that imposed substantial fees or
other costs on regulated entities; 

o 	3
published by DOT on aviation security in the aftermath of the September 11, 2001, terrorist attacks, which the agency noted "may impose significant costs," although it
did not prepare quantified estimates;

o
   	2 with voluntary options that might increase Medicaid costs to states by over $125 million in some years; 

o 	1
amending the Federal Acquisition Regulations that could result in nonfederal costs ranging from $92 million to $377 million annually, depending on the "uncertainty of manufacturers to distribute these costs over the general population;" and

o 	1 USDA rule imposing private-sector costs to limit retained water in
raw meat and poultry products.

Table 4 provides more detailed information about selected examples from among the 29 rules.

39UMRA section 421(9) defines the private sector as including all
persons or entities in the United States, including individuals,
partnerships, associations, corporations, and educational and nonprofit institutions, but not including state, local, or tribal governments.

Table	4: Selected Examples of Final Rules with Significant Impacts on
Nonfederal Parties that Did Not Trigger UMRA	

GAO Description of potential impacts	on Reason(s) the rule did not
trigger	ID Rule	nonfederal parties	UMRA	

R1
EPA final rule on identification of dangerous levels of lead in most pre-1978 housing and child	occupied facilities The rule set standards for the identification of lead-based paint hazards, residential lead dust cleanup levels, and amendments to dust and soil sampling requirements. EPA estimated that the total costs of actions that might be taken based on these hazard standards (over a 50-year span) would be $69 billion for the final dust and soil standards, $20 billion for paint interventions, and $14 billion for testing. EPA determined that the rule "in and of itself" did not mandate any action (no enforceable duty) or directly impose any costs (require expenditures of $100 million or more in any year). 

R11  HHS final rule on revision to  The rule revised Medicaid's upper payment          The rule did not require states to spend  
     Medicaid upper payment limit   limits for hospital services, nursing facility        $100 million or more in any year.      
             requirements           services, intermediate care facility services for  
                                      the mentally retarded, and clinic services. The  
                                    revisions would potentially reduce the federal     
                                    share of payments made by states to these          
                                    facilities by nearly $55 billion over 10 years.    

R20
Department of Commerce The rule restricted times and places for The rule did not require the private sector emergency interim rule to fishing. The agency estimated that, as a result to spend $100 million or more in any year, implement Steller sea lion of these restrictions, there could be a and there was no notice of proposed protection measures in fisheries of reduction in fishing industry gross revenues of rulemaking. the exclusive economic zone off $225 million to $401 million per year. Alaska 

R107
SEC final rule accelerating filing SEC stated that these amendments would The rule was issued by an independent deadlines for annual and quarterly increase costs to some affected reporting regulatory agency. reports and adding requirements companies. In the proposed rule, SEC for additional reporting and estimated that the initial costs could range disclosure from $29.9 million to $11.9 billion, and the on	

going annual costs could range from $75.5 million to $686.8 million. 

R115 HHS notice on Medicare program Increased the cost of premiums for individuals The agency said that this notice had "no monthly actuarial rates and enrolled in Medicare's Supplemental Medical consequential effect" on state, local, or monthly supplementary medical Insurance (SMI), with an estimated cost to tribal governments and that the private insurance premium rate enrollees of over $2 billion for 2003. sector costs fell below UMRA's threshold as well. 

Also, there was no notice of proposed rulemaking, and SMI is a voluntary federal program. 

Source: GAO. 

We determined that 1 of the 29 rules, a USDA rule on retained water in raw
meat and poultry products, probably was a federal mandate under UMRA. The rule
establishes a requirement of zero retained water, unless the water
retention is unavoidable in processes necessary to meet food safety

requirements. USDA did not mention UMRA
in the rule but estimated that, if extensive modifications to chilling systems were needed throughout the poultry industry,
the fixed costs could run to "well over $100 million." USDA provided only a "lower bound" estimate of $110 million in privatesector costs for the first year of implementation (representing the costs of reducing retained water in the range of 1 percent to 1.5 percent). While
that estimate was under the $113 million UMRA threshold (adjusted for inflation) in 2001, the agency did not quantify median or upper bound cost
estimates, which reference to a lower bound estimate implies. Because the lower bound estimate was so close to the UMRA threshold, it is
reasonable to assume that a median or upper bound estimate would
probably have equaled or exceeded the threshold, and the rule would have
been a private sector mandate under UMRA. No other UMRA exclusion appeared to apply to this rule. However, to address the requirements of
Executive Order 12866 the agency provided an analysis of the costs and
benefits of the rule, as well as an analysis of the regulatory alternatives considered. As noted earlier, OIRA
guidance points out that the same analysis may permit
agencies to comply with both the executive order's and UMRA's requirements.

For the remaining 36 of the 65 rules, either the agencies provided no information on the potential costs and economic impacts on nonfederal parties or the costs imposed on them were under the UMRA threshold. For example, a Federal
Emergency Management Agency interim final rule
on a grant program to assist firefighters included some cost-sharing and other
requirements on the part of grantees participating in
this voluntary program. In return for cost-sharing of $50 million to $55 million per year, grantees could obtain, in aggregate, federal assistance of approximately
$345 million. Similarly, USDA's interim rule on the noninsured crop disaster assistance program imposed new reporting requirements and service fees on producers estimated to cost at least $15 million. But producers were expected to receive about $162 million in benefits.

Even when the requirements of UMRA did not apply, agencies generally provided some quantitative information on the potential
costs and benefits
of the rule to meet the requirements of Executive Order 12866. Rules published by independent regulatory agencies were the major exception because they are not covered by the executive order.
In general, though, the type
of information that UMRA was intended to produce was developed and published by the agencies even if
they did not identify their rules as federal mandates under UMRA.40

Conclusions	UMRA was intended to restrain the imposition of unfunded federal
mandates on state, local, and tribal governments and the private sector, primarily by providing more information and focusing more attention on potential federal mandates in legislation and regulations. There is some evidence that
the information provided under UMRA and the spotlight that
information places on potential mandates may have helped to discourage or limit federal mandates. CBO's annual reports
indicate that, at least with
regard to the legislative process, UMRA sometimes does have such an indirect preventive effect.

However, there are multiple ways that both statutes and final rules containing what affected parties perceive as "unfunded mandates" can be enacted or published without being identified as federal mandates with
costs or expenditures at or above the thresholds established in UMRA. Our review demonstrated that many statutes and final rules with potentially
significant financial effects on nonfederal parties were enacted or published without being identified as
federal mandates at or above UMRA's
thresholds. Further, if judged solely by their financial consequences for
nonfederal parties, there was little difference between some of these statutes and rules and the ones that had been identified as federal
mandates with costs or expenditures exceeding UMRA's thresholds. Although the examples cited in our review were limited to a 2-year period,
our findings on the limited effect and applicability of UMRA are similar to
the data reported in previous GAO, CBO, and OMB reports on the
implementation of UMRA. The findings raise the question of whether UMRA's procedures, definitions, and exclusions adequately capture and 

40One exception might be that OMB's guidance to agencies for
regulatory analyses prepared under Executive Order 12866 does
not include instructions regarding distributional effects
of regulations that are as specific as those called for in UMRA. See
2 U.S.C. S:1532(a)(3).

subject to scrutiny federal statutory and regulatory actions that might impose significant financial burdens on affected nonfederal parties.

This report provides descriptive information and analysis regarding UMRA's implementation, focusing specifically on the coverage and
identification of federal mandates under UMRA. We are making no specific recommendations for executive action nor identifying any specific matters
for consideration by Congress at this time. As requested, we will be
continuing our work on other aspects of UMRA. 

As agreed with your office, unless you publicly announce the contents of
this report earlier, we will not distribute it until 30 days from the date of this letter. We
will then send copies of this report to the Director of OMB and will provide copies to others on request. It will also be available at no charge on GAO's Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report, please contact me at (202) 512-6806 or [email protected]. Key contributors to this
report were Curtis Copeland, Naved Qureshi, Michael Rose, and Tim Bober.

Patricia A. Dalton Director Strategic Issues 

Appendix I

                       Objectives, Scope, and Methodology

In this
report, you asked us to describe and provide examples of how federal statutes and rules with potentially significant financial implications for state, local, and tribal governments or the private sector may be enacted or issued without being identified as federal mandates under titles I and II
of UMRA, which respectively address the legislative and regulatory
processes. Our specific reporting objectives were to:

1.	Describe the applicable procedures, definitions, and exclusions for
identifying federal mandates in statutes and rules under UMRA. 

2.	Identify statutes and final rules that contained federal mandates under
UMRA.

3.	Provide examples of statutes and final rules that were not identified as federal mandates, but that affected parties might perceive as
"unfunded" mandates, and the reasons these statutes and rules were
not federal mandates under UMRA. 

As agreed with your staff, we focused on statutes enacted and final rules published during 2001 and 2002 to address the second and third objectives. 

To address the first objective, regarding the procedures, definitions, and exclusions applicable to the identification of federal mandates under titles I
and II of UMRA, we reviewed the act and other related guidance documents and reports on the implementation of UMRA. These other
related documents included the various annual
reports on UMRA prepared by CBO and OMB, materials
used in a congressional parliamentary process training seminar on unfunded mandates and points of order, and OMB's March 1995 guidance to federal agencies on the implementation of title II. We also interviewed persons knowledgeable about the implementation of
UMRA in congressional offices, CBO, and OMB. 

To address the second and third objectives regarding statutes that were and were not identified as federal mandates under title I of UMRA, we consulted with the CBO officials responsible for preparing UMRA statements on individual bills. The CBO officials identified the 5 statutes enacted during 2001 and 2002 that contained federal mandates at or above UMRA's cost thresholds. At our request, they also identified 43 examples of
statutes enacted during that 2-year period that they believed, based on
professional judgment, had potential intergovernmental or private sector impacts but had not been identified as containing mandates at or above
UMRA's thresholds. (We did not ask CBO to compile a comprehensive list

Appendix I
Objectives, Scope, and Methodology

of all statutes passed by the 107th Congress that may have had intergovernmental or private sector impacts.) To assure that this set of examples was relevant for our purposes and to confirm CBO's characterization of the potential impacts of these statutes and the reasons
why provisions were or were not identified as federal mandates, we reviewed available source material on each of these statutes. In particular, we examined the detailed descriptions and information on each statute that
were contained in CBO mandate statements, cost estimates, annual reports, and testimony, as well as other relevant information on each statute from
the Legislative Information System of Congress.

To address the second and third objectives regarding final rules that were
and were not identified as federal mandates under title II of UMRA, we
conducted a content analysis of all 122 major and/or economically
significant final rules that agencies published in
2001 or 2002 to identify the rules that could have significant
financial effects on nonfederal
parties and determine why they were or were not considered federal mandates.1
We
chose not to review other rules because, by definition, they were less likely
to have significant effects on nonfederal parties, although arguably some could have had a significant effect. To arrive at our final set of 122 rules,
we relied primarily on the list of 119 major rules published during the 2year period, as identified in GAO's compilation of reports on federal agency major rules.2 Our Office of General Counsel takes several steps to assure
the completeness
of the list of major rules; however, to generally corroborate that this list of major rules included those that could have significant effects on nonfederal parties, we also compared GAO's major
rules list to the rules identified as "economically significant" by the

1The terms "major" and "economically significant" rules are defined,
respectively, by the Congressional Review Act and Executive Order 12866.
However, both definitions are similar and refer generally to rules that
will have an annual effect on the economy of $100
million or more or raise other significant policy issues.

2The Congressional Review Act requires agencies to submit their major
rules to Congress and to us before those rules can take effect. We
are required to prepare a report on each
major rule to assure that the agency has complied with procedural requirements
regarding cost-benefit analysis, regulatory flexibility analysis, and specified sections
of UMRA. Pursuant to the Congressional Review Act, we provide
these reports on major rules to the standing
committees of jurisdiction of both Houses of Congress. The database
is publicly available at www.gao.gov under GAO Legal Products.

Appendix I
Objectives, Scope, and Methodology

Regulatory Information Service Center (RISC).3 As a
result of this exercise, we supplemented our
initial list with 3 additional rules.4 We then reviewed the Federal
Register notices that agencies published for all 122 of these
rules to confirm that they were major and/or economically significant and
to identify whether, and to what extent, they imposed requirements on nonfederal parties. On the basis of our comparisons and reviews, we concluded that these data were sufficiently reliable for our purposes.

Because we were asked to identify rules that affected parties might
perceive as intergovernmental or private sector mandates, even if not
technically identified as such under UMRA, our initial screening used a broader definition of a potential mandate than delineated in UMRA. For this screening, we used the information in the published rules to make a team consensus judgment on whether a nonfederal party (state, local, and tribal governments or the private sector) might consider provisions of the rule to impose requirements or mandates that had at least some costs or negative financial effects. In particular, we focused on identifying rules that imposed new requirements and costs (direct or indirect) on affected parties. For each rule identified as including a potential "mandate," team
members then independently reviewed the text of each rule to code the
reasons agencies may have cited that their rules were not federal mandates
under UMRA, as well as other reasons available under UMRA that might
have applied to these rules. The team members generally concurred in
their initial coding, and, based on team discussions, we were able to resolve any differences and determine a team consensus judgment on the appropriate coding for each rule. 

To provide corroboration that the examples of statutes CBO identified and final rules we identified to address objective three were perceived by

3RISC is part of the General Services Administration, but works closely with OMB to provide the President, Congress, and the public with information on federal regulatory policies. Its
major project has been to coordinate the development and publication of the Unified
Agenda of Federal Regulatory and Deregulatory
Actions, which is published twice a year.

4Discrepancies between the two lists were expected because, although most rules defined
as "major" under the Congressional Review Act are also
defined as "economically
significant" under Executive Order 12866, there is not an
exact match. The major rules include those published by independent regulatory
agencies not covered by the executive order, and rules from
nonindependent agencies may be identified as economically significant for
purposes of OMB regulatory reviews without necessarily triggering the $100
million impact threshold that would define them as major.

Appendix I
Objectives, Scope, and Methodology

affected parties as having "unfunded mandate" implications, we shared our draft lists of examples with national organizations representing other levels

of government.5
These organizations included the National Association of Counties, National Conference of State Legislatures, National Governors Association, the National League of Cities, and the U.S. Conference of Mayors. Their representatives generally concurred that the statutes and rules we focused on were perceived by their members to have "mandate"
implications and that we had not left out any major examples from our time
period that they believed were important.

One limitation of our review was that, in agreement with your staff, we focused on statutes
enacted and final rules published during 2001
and 2002. Those statutes and rules may not reveal all of the ways in which provisions
with significant cost effects might not be identified as federal mandates.
Neither CBO nor we reviewed the many bills that were not enacted and rules that were proposed, but not finalized, during 2001 and 2002. However, our findings and the specific examples we identified were
sufficient to illustrate how statutes and rules with potentially significant effects on nonfederal parties might not be identified as federal mandates
under UMRA. In addition, our findings for this review were consistent
with those in prior GAO, CBO, and OMB reports on the implementation of UMRA. In general, we also recognize that perceived "unfunded mandates"
could also result from other nonstatutory, nonregulatory federal actions, such as Homeland Security
threat level adjustments. However, UMRA does not cover such nonstatutory or nonregulatory actions, so they were out of the scope of this review.

We conducted our review from August 2003 through February 2004 in Washington, D.C., in accordance with generally accepted government
auditing standards. On April 22, 2004, we provided a draft of this report to
the Director of the Office of Management and Budget (OMB) for his review
and comment. On April 29, 2004, an OMB representative notified us that
OMB had no comments on our report. We also provided the draft to CBO officials for their technical review. We incorporated their comments and suggestions as appropriate. 

5We also shared our lists with organizations representing
the private sector, but received no formal responses from them.

Appendix II

Examples of Statutes with Impacts on Nonfederal Parties that Were Not Mandates at or Above UMRA Thresholds

CBO provided us the following examples of laws enacted in 2001 and 2002 that it believed had impacts on nonfederal parties, but were not identified
as federal mandates at or above applicable cost thresholds (see table 5). A number of groups representing nonfederal parties generally agreed that
these examples were statutes perceived to have "unfunded mandate" implications.

Table 5: Examples of Statutes with Impacts on Nonfederal Parties that Were
Not Identified as Federal Mandates at or above Applicable Cost Thresholds

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L1      Economic Growth and Tax  (Intergovernmental) Increases the unified tax  Did not meet the definition of a mandate (no    
Relief Reconciliation Act of  credit and reduces the tax rates to phase out    enforceable duty on state, local, or tribal   
       2001 (Pub. L. No. 107-16) the estate                                          governments or the private sector).        
                                 and generation-skipping transfer tax.          
                                                                                JCT determined that the act did not contain any 
                                                                                 intergovernmental mandates or revenue raising  
                                                                                   provisions in excess of UMRA thresholds.     

L2       Supplemental        (Intergovernmental) Places new reporting    CBO did not review provision prior to    
Appropriations Act, 2001  requirements on the District of Columbia.                 enactment.                 
     (Pub. L. No. 107-20)                                              
                                                                                                 Not contained in 
                                                                                  an authorizing bill. Contained  
                                                                               in an appropriations bill.         
                                                                       CBO estimated costs were below threshold.  

L3
ILSA Extension Act of (Private Sector) Requires the President to CBO estimated costs were below threshold. 2001 (Pub. L. No. 107-24)
impose certain sanctions on U.S. entities or
foreign companies that have invested more
than a specified amount of money in
developing the petroleum and natural gas resources of Libya or Iran.

The act allows the President discretion to make
exceptions in applying such sanctions.

L4  Authorization for Use of     (Private Sector) The act is intended to         Excluded for national security.       
Military Force (Pub. L. No.              constitute specific             
                                        statutory authorization to          
             107-40)            use U.S. armed forces within the meaning of   CBO did not review provision prior to    
                                        the War Powers Resolution.          enactment because an authorizing committee 
                                                                                        did not report it.             

L5 Air Transportation Safety   (Private sector) Sets forth certain insurance       CBO did not review provision prior to    
    and System Stabilization    requirements, including limiting air carrier     enactment because an authorizing committee 
Act (Pub. L. No. 107-42)  liability for losses to no more than $100 million               did not report it.             
                             in the aggregate for all claims arising as a result 
                                           of an act of terrorism.                 Did not meet definition of a mandate.    

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L6 Defense Production Act  (Private Sector) Provides the President the      Excluded for national security. 
     Amendments of 2001    authority to require preferential performance on 
    (Pub. L. No. 107-47)     contracts and orders to meet approved national 
                           defense requirements, and to allocate            
                           materials, services, and facilities as necessary 
                           to promote the national defense in a major       
                           national emergency.                              

L7	USA PATRIOT Act of 2001 (Pub. L. No. 107-56)

(Intergovernmental) Prohibits state, local, tribal,
or territorial governments from disclosing that they
have reported a suspicious financial transaction to a federal agency.

(Intergovernmental) Preempts state liability laws and regulations relating to consumer reporting agencies
that disclose consumer reports for counterterrorism purposes.

(Intergovernmental) Requires education agencies and institutions
to disclose records to the Attorney General in a terrorism
investigation or prosecution; preempts state liability laws relating to those agencies.

(Intergovernmental) Restricts states' authority to issue licenses for operating
motor vehicles to transport hazardous materials.

(Private Sector) Prohibits certain parties from
shipping or receiving biological toxins in interstate or foreign commerce.

CBO did not review some provisions prior to enactment because some
mandates were added to the bill after it was reviewed by CBO.
After enactment, CBO estimated that
provisions that were mandates had costs below thresholds.

For provisions reviewed prior to enactment,
CBO estimated costs for some to be below threshold, and some
other provisions were excluded for national security.

L8     Energy and Water      (Intergovernmental) Prohibits states from   CBO did not review provisions prior to   
          Development        issuing a permit or lease                                 enactment.                 
                             for certain oil and gas                   
Appropriations Act, 2002        drilling in the Great Lakes.        
     (Pub. L. No. 107-66)                                                                        Not contained in 
                                                                                  an authorizing bill. Contained  
                                                                               in an appropriations bill.         
                                                                       CBO estimated costs were below threshold.  

L9	Internet Tax (Intergovernmental) Extends the prohibition on CBO estimated costs were below threshold. Nondiscrimination Act collecting certain types of state and local taxes.
(Pub. L. No. 107-75)

L10    Agriculture, Rural     (Private Sector) Requires some tobacco  CBO estimated costs were below threshold. 
    Development, Food and     producers to have                       
                              their product graded by the             
    Drug Administration, and           government for a fee.          
        Related Agencies                                              
    Appropriations Act, 2002                                          
      (Pub. L. No. 107-76)                                            

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L11	Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies
Appropriations Act, 2002 (Pub. L. No. 107-77)
(Intergovernmental) Expands an existing
requirement that transportation officials report
to the Immigration and Naturalization Service certain information about people traveling to
the United States; authorizes the Attorney
General to extend that requirement to cover any public or private carrier transporting people
by land to the United States.

(Private Sector) Increases the entry fee for
certain passengers arriving by airplane and
authorizes the Attorney General to charge and
collect a $3 entry fee on commercial vessel passengers;
authorizes the Attorney General to require arrival and
departure manifests in advance for land travel (train or bus) as well as
travel by air or water.

CBO did not review provisions prior to enactment.

Not contained in an authorizing bill. Contained in an appropriations bill.

CBO estimated costs were below threshold.

L12	Department of (Intergovernmental) Requires the Washington CBO estimated costs were below threshold.
Transportation and Related Metropolitan Area Transit Authority to
change Agencies Appropriations
the name of the National Airport station and to Act, 2002 (Pub. L. No. 107-change all signage and related documentation.

87)
(Intergovernmental) Perhaps contained grants that were perceived as "under funded."

L13	District of Columbia (Intergovernmental) Places new reporting and
CBO did not review provisions prior to
Appropriations Act, 2002 other requirements on the District of Columbia.
enactment. (Pub. L. No. 107-96)

Not contained in an authorizing bill. Contained in an appropriations bill.

CBO estimated costs were below threshold. 

L14	An act to amend chapter (Intergovernmental) Preempts state authority
CBO estimated costs were below threshold. 90 of Title 5, United States
to tax certain federal long-term care policies.
Code, relating to Federal long-term care insurance (Pub. L. No. 107-104)

L15	National Defense (Intergovernmental) Allows the Secretary of CBO estimated costs were below threshold.
Authorization Act for Fiscal
Defense, under some circumstances, to waive Year 2002 (Pub. L. No. compliance with state or territorial fish and
107-107) game laws at military installations or facilities. 

(Intergovernmental) Preempts certain
California state laws that would prohibit or restrict the construction or approval of a road or
highway on an easement within the Camp Pendleton Marine Corps base.

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L16 Intelligence Authorization      (Intergovernmental) Establishes the       CBO estimated costs were below threshold. 
    Act for Fiscal Year 2002           Commission on Preparedness and         
       (Pub. L. No. 107-108)    Performance of the Federal Government for the 
                                 September 11 Acts of Terrorism and gives it  
                                authority to subpoena testimony and evidence. 

L17  Best Pharmaceuticals (Private Sector) Extends the time period that   CBO estimated costs were below threshold. 
                     for                                                  
        Children Act          drug manufacturers are prohibited from      
    (Pub. L. No. 107-109) marketing generic versions of certain drugs by  
                          6 months; repeals waiver of user fees for all   
                           applications for pediatric supplements; and    
                          requires drug manufacturers to revise labeling  
                            of drugs based upon findings of pediatric     
                                             studies.                     

L18 No Child Left Behind Act of
(Intergovernmental) Calls for designing and
Did not meet UMRA's definition of a mandate 2001(Pub. L. No. 107-110)
implementing statewide standards and because the requirements were a condition of assessments
and various other requirements. federal financial assistance.

L19	District of Columbia Family
(Intergovernmental) Places new reporting and
CBO estimated costs were below threshold. Court Act of 2001 (Pub. L.
administrative requirements on the mayor and 107-114)
court system of the District of Columbia.

L20	Enhanced Border
Security (Private Sector) Requires manifests for arriving CBO estimated costs were below threshold.
and Visa Entry Reform Act and departing commercial vessels or aircraft.
of 2002 (Pub. L. No. 107173) (Private Sector) Increases fees for certain

visas.

L21	Clergy Housing Allowance (Private Sector) Restricted the amount of Not reported by an authorizing committee.
Clarification Act of 2002
rental-allowance income that members of the (Pub. L. No. 107-181)
clergy may exclude for tax purposes to no more
CBO did not review provision prior to 

than the fair rental value of the home (including enactment.
furnishings) plus utilities. CBO estimated costs were below threshold.

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L22	Public Health Security and Bioterrorism Preparedness
and Response Act of 2002 (Pub. L. No. 107-188)

(Intergovernmental) Preempts state laws that
conflict with quarantine requirements for communicable diseases.

(Intergovernmental) Requires assessments of
water supplies in communities of more than 3,300 people.

(Intergovernmental) Extends prescription drug application fees.

(Intergovernmental and Private Sector) Requires registration with the federal
government of the possession, use, and
transfer of listed agents and toxins.

(Private Sector) Requires that certain facilities
engaged in manufacturing, possessing, packing, or holding food for
consumption in the United States
register with the Department of Agriculture.

(Private Sector) Requires that if food has been refused admission into the United States,
owners or consignees of the food must affix a
label stating such on the container.

(Private Sector) Requires importers of certain drugs and their devices to register annually
with the federal government.

(Private Sector) Allows prescription drug application fees
to be raised under certain conditions.

CBO did not review provisions prior to enactment.

Not reported by an authorizing committee.

CBO estimated the costs of preemption of state laws
was below the threshold, the costs
of the water assessments were funded, and other costs were uncertain.

L23 Terrorist Bombings
(Private Sector) The act would establish a Excluded for treaty implementation.
Convention sentence of life in prison or death
for those who Implementation Act of are convicted of participating in bombings in
2002 (Pub. L. No. 107-197) public places, government facilities, public
transportation systems, or infrastructure
facilities. In addition, the act would establish minimum prison sentences and criminal fines
for those who provide
or collect funds with the intent that such funds be used to carry out terrorism crimes.

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L24 Approving the site at Yucca  (Intergovernmental) Approves the placement    CBO estimated costs were below threshold. 
      Mountain, Nevada, for the of a nuclear waste site in Nevada (additional  
         development of a       costs to Nevada and neighboring states could   
    repository for the disposal    result from existing federal mandates).     
    of high-level radioactive                                                  
    waste and spent nuclear                                                    
       fuel, pursuant to the                                                   
    Nuclear Waste Policy Act                                                   
    of 1982 (Pub. L. No. 107-                                                  
               200)                                                            

L25	Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204)
(Intergovernmental) Allows the Public
Company Accounting Oversight Board to conduct operations and maintain offices in any
state without regard to any conflicting state law.

(Private sector) Establishes the Public
Company Accounting Oversight Board to regulate the accounting industry and a standard-setting body to write national
standards for accounting practices; the two regulatory bodies will assess fees on public
companies to cover their costs.

(Private sector) Requires that auditors and audit committees
of public companies comply with new standards.

(Private sector) Prohibits insider trades of stock during pension fund
blackout periods if the stock was acquired in connection
with service as a director or executive officer.

(Private sector) Requires pension plan
administrators to notify plan participants,
beneficiaries, and the insurer of employer
securities of an impending blackout period.

(Private sector) Requires that public corporations make
enhanced financial disclosures to the Securities and Exchange Commission.

CBO did not review intergovernmental provision prior to enactment because it was
added to the bill after it was reviewed by CBO.

CBO estimated the costs of notification of blackout periods by pension plan
administrators were below applicable thresholds, and other costs were uncertain. 

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L26 Trade Act of 2002 (Pub. L.
(Private Sector) Requires each land, air, or
CBO estimated costs were below threshold. No. 107-210)
vessel carrier to provide by electronic
transmission cargo manifest information in
advance of entry into the United States or clearance by Customs.

(Private Sector) Increases compliance cost of
existing requirement to provide health
insurance for certain separated workers.

L27    An Act to rename Wolf    (Intergovernmental) Renames "Wolf Trap Farm CBO estimated costs were below threshold. 
    Trap Farm Park as ``Wolf    Park" and requires Virginia to erect signs  
    Trap National Park for the  referring to the park by its new full name. 
    Performing Arts'', and for                                              
          other purposes.                                                   
       (Pub. L. No. 107-219)                                                

L28     An act to amend the Public (Intergovernmental) Places requirements on CBO estimated costs were below threshold. 
        Health Service Act to          manufacturers of medical devices.      
    redesignate a facility as the                                             
        National Hansen's Disease                                             
    Programs Center, and for                                                  
           other purposes.                                                    
        (Pub. L. No. 107-220)                                                 

L29 John F. Kennedy Center (Intergovernmental) Allows the mayor of the     CBO estimated costs were below threshold. 
    Plaza Authorization Act of District of Columbia to dispose of property 
                                                2002 (Pub. L. No. 107-224) 
                            without City Council approval; allows the U.S. 
                               Secretary of Transportation to require the  
                            District to reconfigure streets in the Kennedy 
                                 Center construction area; may require the 
                       District to transfer air or property rights to the  
                            construction project.                          

L30     Foreign Relations       (Private Sector) Requires exporters or their    CBO estimated costs were below threshold. 
    Authorization Act, Fiscal  agents not covered under current regulations to  
     Year 2003 (Pub. L. No.      file their export declarations through the     
             107-228)                      Automated Export System.             

L31   National Construction     (Private Sector) Requires private-sector    CBO estimated costs were below threshold. 
    Safety Team Act (Pub. L.  entities, if subpoenaed,                      
                              to provide testimony                          
          No. 107-231)        and evidence related to matters the National  
                                    Construction Safety Team would be       
                                        empowered to investigate.           

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L32	Medical Device User Fee (Private Sector) Gives the Secretary the CBO
stated some costs were below
applicable and Modernization Act of authority to assess and collect user fees from
thresholds and others were uncertain. 2002 (Pub. L. No. 107-250)
manufacturers of medical devices to defray the 

cost to FDA of reviewing applications for
approval to market those devices.

(Private Sector) Requires manufacturers of medical devices to comply with
certain labeling
and notification conventions and to submit their registrations electronically.

L33 Health Care Safety Net  (Intergovernmental) Preempts state statutes of  CBO estimated costs were below threshold.  
      Amendments of 2002                                        limitations 
                                    in cases in which the beneficiary of a  
     (Pub. L. No. 107-251)       medical loan fails to make payments.       
                               States have flexibility to offset costs.     

L34	Help America Vote Act of 2002 (Pub. L. No. 107-252)
(Intergovernmental) Places a number of new requirements on state and local
governments, specifically setting new standards for voting
systems used in federal elections, requiring each state to
develop a computerized database of all registered voters in the state, and
requiring local election jurisdictions to develop procedures for provisional voting.

The act also authorizes grant programs to reimburse state and local governments for costs incurred in complying with these requirements. 

Some provisions excluded because they
enforced the constitutional rights of individuals.
For some other provisions, CBO stated that any costs to state, local, or
tribal governments would be incurred voluntarily from participating
in grant programs.

L35	21st Century Department of Justice Appropriations
Authorization Act (Pub. L. No. 107-273)
(Intergovernmental) Eliminates federal interest
payments to states related to costs for incarcerating illegal aliens.

(Private Sector) Limits access to body armor by violent felons.

(Private Sector) Waives copyright infringement rules for educators who teach long-distance classes over the Internet and thus restricts copyright owners from receiving compensation for such use
by educators.

(Private Sector) Provides that contract disputes
between motor vehicle manufacturers and
dealers can be resolved by arbitration only after both parties agree to arbitration as a means of
settling the dispute.

                   CBO estimated costs were below threshold.

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L36	Homeland Security Act of 2002 (Pub. L. No. 107-296)
(Intergovernmental) Preempts state or local laws to the extent that they require disclosure
or information records.

(Intergovernmental) Preempts state liability laws in cases involving alleged negligence
related to smallpox vaccines.

(Private sector) Requires that air carriers
provide additional training to flight and cabin crews.

(Private sector) Requires airline carriers to provide flight attendants with a method of communicating with pilots.

(Private sector) Requires manufacturers and importers
of explosive materials to furnish samples to the
Bureau of Alcohol, Tobacco,
and Firearms; imposes new licensing and reporting requirements for people handling
explosive materials.

CBO did not review a private sector provision prior to enactment because it was added to the
bill after it was reviewed by CBO.

CBO stated some costs were below
applicable thresholds and others were uncertain.

Appendix II
Examples of Statutes with Impacts on
Nonfederal Parties that Were Not Mandates
at or Above UMRA Thresholds

                         (Continued From Previous Page)

                                   CBO's description of     Reason(s) CBO did 
                                   potential impacts, or  not identify one or 
                                                                         more 
                                   requirements on state,       provisions as 
                                     local, and tribal       unfunded federal 
                                                                  mandates at 
                                     governments or the    or above the costs 
GAO ID           Law                private sector        thresholds under 
                                                                         UMRA 
    L37   Terrorism Risk Insurance                        
                Act of 2002                               
           (Pub. L. No. 107-297)                          

(Private sector) Requires that
insurers and policyholders of commercial property and casualty insurance pay assessments and surcharges for repayment of the federal
financial assistance provided in connection with acts of terrorism.

(Private sector) Requires insurers of
commercial property to offer terrorism insurance.

(Intergovernmental) Nullifies any terrorism
exclusion in a contract for property and casualty insurance; that nullification preempts
any previous state approval of insurance with terrorism exclusions.

(Intergovernmental) Preempts any state definition of an "act
of terrorism" that is inconsistent with the federal definition; requires
insurers to disclose books and records to the Secretary of the Treasury, notwithstanding state laws to the contrary.

(Intergovernmental) Creates an exclusive federal
cause of action for losses resulting from
an act of terrorism; preempts all state causes of action.

CBO estimated some costs were below thresholds, while others were uncertain. The
mandate requiring insurers to offer terrorism
insurance was added after CBO review, and thus
its costs were not estimated. After enactment, CBO stated that the costs of this mandate were uncertain. 

L38	Real Interstate Driver
(Intergovernmental) Exempts ground CBO estimated costs were below threshold.
Equity Act of 2002 (Pub. L. transportation carriers
that provide prearranged No. 107-298) service from state licensing and fee

requirements as long as the carriers are properly licensed in their home
states and meet federal interstate transportation requirements. 

L39 Intelligence Authorization      (Intergovernmental and Private Sector)       CBO estimated costs were below threshold. 
    Act for Fiscal Year 2003    Requires public and private sector entities, if  
       (Pub. L. No. 107-306)         subpoenaed, to provide testimony and        
                                    evidence to the National Commission on       
                                   Terrorist Attacks upon the United States.     
                                (Intergovernmental) Preempts state and local     
                                laws that would require a government body to     
                                             disclose information.               

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

                                  CBO's description of potential impacts, or      Reason(s) CBO did not identify one or 
                                                                                                                   more 
                                   requirements on state, local, and tribal     provisions as unfunded federal mandates 
                                                                                                                     at 
GAO             Law                   governments or the private sector        or above the costs thresholds under UMRA 
ID                                                                            
L40     An act to amend the      (Intergovernmental) Preempts state laws and  CBO estimated costs were below threshold. 
    Consumer Product Safety       regulations governing low-speed electric    
      Act to provide that low-      bicycles that are more stringent than     
    speed electric bicycles are    regulations established by the Consumer    
    consumer products subject             Product Safety Commission.          
     to such act (Pub. L. No.                                                 
              107-319)                                                        

L41 Veterans Benefits Act of (Intergovernmental and Private Sector) CBO
stated some costs were below applicable 2002 (Pub. L. No. 107-330)
Establishes a temporary exemption of some
thresholds and others were uncertain.
National Guard members who are performing homeland security activities from certain financial obligations.

L42	Indian Financing Amendments Act `of 2002 (Pub. L. No. 107-331) (Intergovernmental) Extinguishes outstanding
legal claims of the Cherokee, Choctaw, and Chickasaw nations.

(Private Sector) Prohibits anyone from
condemning certain land owned in fee by the Pechanga band until the Secretary of the
Interior renders a final decision on the band's
pending application to transfer that land into a trust and until final decisions have been made
about all appeals relating to that application.

(Private Sector) Limits the fees payable to
attorneys under contract with the Cherokee, Choctaw,
and Chickasaw nations to 10 percent of the funds allocated by the government to
each of those nations.

                   CBO estimated costs were below threshold.

                                  Appendix II
                      Examples of Statutes with Impacts on
                   Nonfederal Parties that Were Not Mandates
                          at or Above UMRA Thresholds

                         (Continued From Previous Page)

    CBO's description of potential impacts, or Reason(s) CBO did not identify
                                                                  one or more
      requirements on state, local, and tribal provisions as unfunded federal
                                                                  mandates at
GAO ID Law governments or the private sector or above the costs thresholds
                                                                   under UMRA

L43	Pipeline Safety Improvement Act of 2002 (Pub. L. No. 107-355)
(Intergovernmental) Requires operators of natural gas pipelines
to adhere to minimum
safety standards, provide whistleblower protection for employees, create an employee
qualification program, honor orders by the Department of Transportation to correct unsafe
conditions, conduct facility risk analysis,
develop an integrity management program, create a terrorism security plan, and provide mapping data.

(Private Sector) Requires operators of natural gas and hazardous-liquid pipelines to adhere to
minimum safety standards, provide whistleblower protection for employees, create
an employee qualification program, honor orders by the Department of Transportation to correct unsafe conditions, conduct facility risk
analysis, develop an integrity management
program, create a terrorism security plan, and provide mapping data.

                   CBO estimated costs were below threshold.

Source: CBO.

Appendix III

Final Rules with Federal Mandates under UMRA

The following table presents information on each of the nine final rules
published by federal regulatory agencies during 2001 and 2002 that the agencies identified as federal mandates under UMRA (see table 6). For
each rule, we provide (1) GAO's identification number for the rule, (2) the title of the rule and its date of publication in the Federal
Register, (3)
the agency that published the rule, (4) summary information about the potential costs or other negative financial effects of the rule on affected
nonfederal parties, and (5) the agency's statement, as it appeared in the Federal
Register notice, regarding the applicability of UMRA.

Table 6: Final Rules Published in 2001 and 2002 that Agencies Identified
as Containing Federal Mandates Under UMRA

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R8 National Emission Environmental Required chemical recovery combustion
"The EPA has determined that this rule Standards for
Protection sources to meet standards reflecting the
(in conjunction with the MACT I and Hazardous Air Agency (EPA)
application of maximum achievable control MACT III rules
and the effluent guidelines Pollutants for Chemical
technology (MACT) to control hazardous air recently promulgated for the pulp and Recovery Combustion
pollutants emissions from these sources.
paper industry) contains a Federal Sources at
Kraft, Soda, mandate that may result in estimated Sulfite, and
Stand-EPA estimated that the pulp and paper costs of $100 million or more to either Alone Semichemical
industry would incur total capital costs of
State, local, or tribal governments, in the Pulp Mills
control for this rule of $240 million (1997$) aggregate, or to the private sector in any (Jan. 12, 2001)
under the final rule. EPA projected 1 year."
annualized compliance expenditures of $30 million (1997$).

R9	Energy Conservation
Program for Consumer Products: Clothes Washer Energy Conservation
Standards (Jan. 12, 2001) Department of
Amended existing energy conservation 

Energy	standards for standard-size and compact clothes washers as well as making minor
amendments to the test procedure for measuring the energy efficiency of clothes washers.

To meet the 2004 standard in this rule, the
department estimated that the price of a
washer would increase $53, offset by an
annual savings of about $15 on utility bills
and, to meet the 2007 standard, the price would increase $249, offset by
an annual savings of about $48. The estimated economic impact on
manufacturers was a cumulative net present value loss of
between $421.1 million and $528.4 million.

"Today's final rule may impose expenditures of $100 million or more on
the private sector. It does not contain a Federal intergovernmental mandate."

           Appendix III Final Rules with Federal Mandates under UMRA

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R12	Energy Conservation Department of Amended the existing energy
conservation "Today's Final Rule may impose Program for Consumer Energy
standards for water heaters. expenditures of $100 million or more in a
Products: Energy year in the private sector. It does not Conservation
The department estimated that the total
contain a Federal intergovernmental Standards for Water average increased
cost to a consumer for an mandate." Heaters electric
and gas water heater would be $105 (Jan. 17, 2001)
and $118, respectively. The department's 

manufacturer impact analysis noted that
energy efficiency standards could result in
losses of industry net present value from
about $8 million to $57 million, while requiring investments of $33 million to $229
million.

R14	Control of Air Pollution from New Motor Vehicles: Heavy-Duty
Engine and Vehicle Standards and Highway Diesel Fuel
Sulfur Control Requirements (Jan. 18, 2001)

Environmental Established a national control program to

Protection regulate the heavy-duty vehicle and its fuel

Agency	as a single system. Set new emission
standards applicable to heavy-duty highway engines and vehicles, to begin
to take effect
in model year 2007. Set new standard to reduce the level of sulfur in highway diesel fuel by mid-2006.

EPA estimated annual costs starting out at less
than $1.0 billion in 2006 and increasing during the initial years to about $3.6 billion in
2010. Thereafter, total annual costs are projected to continue increasing due to the effects of projected growth in engine sales and fuel consumption.

"This rule contains no federal mandates
for state, local, or tribal governments as defined by the provisions
of Title II of the UMRA. The rule imposes no enforceable duties
on any of these governmental entities. Nothing in this rule
will significantly or uniquely affect small governments.

EPA has determined that this rule contains federal mandates that may
result in expenditures of more than $100
million to the private sector in any single year. EPA considered and evaluated a
wide range of regulatory alternatives before arriving at the program finalized
today. EPA believes that today's final rule
represents the least costly, most cost
effective approach to achieve the air quality goals of the rule."

R21	Energy Conservation
Program for Consumer Products: Central Air Conditioners and Heat Pumps Energy
Conservation Standards (Jan. 22, 2001) Department of Energy
Amended the existing energy conservation
standards for central air conditioners and heat pumps.

To meet the 2006 standard in this
rule for air conditioners, the department estimated that
the installed price of a typical air conditioner would increase $335, offset by
annual energy savings of about $42 on utility bills. To
meet the 2006 standard for heat pumps,
the installed price of a typical heat pump would increase $332, offset by
annual energy savings of about $70. The decrease
in the net present value of the air conditioning and heat pump manufacturing industry is expected to be $300 million. 

"Today's final rule may impose expenditures of $100 million or more on
the private sector. It does not contain a Federal intergovernmental mandate."

           Appendix III Final Rules with Federal Mandates under UMRA

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R22   National Primary     Environmental    Among other provisions, established an        "EPA has determined that this rule     
       Drinking Water       Protection       enforceable Maximum Contaminant Level    contains a Federal mandate that may        
    Regulations; Arsenic       Agency      for arsenic of 0.01 milligrams per liter,  result in expenditures of $100 million or  
    and Clarifications to                  applicable to nontransient, noncommunity       more for State, Tribal, and local      
    Compliance and New                       water systems and to community water     governments, in the aggregate, or the      
    Source Contaminants                    systems. EPA's analysis identified both         private sector in any one year."      
          Monitoring                       publicly owned and privately owned water   
       (Jan. 22, 2001)                    systems that would be regulated under the   
                                                        arsenic rule.                 
                                           EPA estimated that this rule would have a  
                                          total annualized cost of approximately $181 
                                                           million.                   

R87	Energy Conservation
Program for Consumer Products; Central Air Conditioners and Heat Pumps Energy
Conservation Standards (May 23, 2002) Department of
Amended existing energy conservation 

Energy	standards for central air conditioners and
heat pumps and withdrew the final rule published on January
22, 2001, [ID 21] that would have established even higher standards. 

To meet the 2006 standard in this
rule for air conditioners, the department estimated that
the installed price of a typical air conditioner would increase $213, offset by
annual energy savings of about $31 on utility bills. To
meet the 2006 standard for heat pumps,
the installed price of a typical heat pump would increase $144, offset by
annual energy savings of about $50. The decrease
in the net present value of the air conditioning and heat pump manufacturing industry is expected to be $159 million.

"Today's rule will impose expenditures of
$100 million or more on the private sector. It does not contain a Federal intergovernmental mandate."

           Appendix III Final Rules with Federal Mandates under UMRA

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R88	Federal Motor Vehicle Safety Standards; Tire Pressure Monitoring
Systems; Controls and Displays (June 5, 2002)

(In August 2003, the 

U.S. Court of Appeals

held that this rule was

contrary to the intent of

the tire safety

legislation andarbitrary 

and capricious under

the Administrative

Procedure Act (see

Public Citizen, Inc. v.

Mineta, 340 F.3d 39 

(2003)). However,

because DOT identified

the rule as a federal 

mandate when

originally published in

2002, we are including

it in our list of rules

identified as mandates

under UMRA.)

Department of Established a new Federal Motor Vehicle

Transportation	Safety Standard that requires the installation
of tire pressure monitoring systems that
warn the driver when a tire is significantly
under-inflated. The rule presented two compliance options, (1) a four tires, 25
percent under-inflation option and (2) a one tire, 30 percent
under-inflation option.

The agency estimated that, under the first
option, compliance with this rule would cost about $771 million per year, and under the second option would cost about $533 million per year.

"This final rule will not result in the expenditure by State, local, or tribal
governments, in the aggregate, of more
than $100 million annually, but it will
result in the expenditure of that magnitude by vehicle manufacturers
and/or their suppliers."

R119	Control of Emissions Environmental Adopted emission standards for several "This rule contains no federal mandates
From Nonroad Large Protection groups of nonroad engines that have not for state, local, or tribal governments as
Spark-Ignition Engines, Agency been subject to EPA's emission standards.
defined by the provisions of Title II of the and Recreational UMRA.
The rule imposes no enforceable Engines (Marine and
EPA estimated that, annually, the cost to duties
on any of these governmental Land-Based)
manufacturers would be approximately $210 entities. Nothing in this rule
would (Nov. 8, 2002) million. significantly or uniquely affect small

governments. EPA has determined that
this rule contains federal mandates that
may result in expenditures of more than $100 million to the private sector in any single year."

Source: GAO.

Appendix IV

Reasons that Selected Final Rules Did Not Trigger UMRA

The following table provides information on 65 major or economically significant final rules published during that 2001 and 2002 that did not
trigger UMRA but that would result
in at least some costs or negative financial effects on state, local, and tribal governments or the private sector (see table 7). The table displays the various reasons that agencies cited or could have cited to explain why the rules did not trigger UMRA. Code "A"
identifies reasons the agencies cited, and code "O" identifies other reasons
that could have applied. Note that only 11 of the 14 possible reasons under UMRA were applicable to any of these rules.1

1 The reasons that were not applicable to any of the
65 rules included: (1) enforcing the constitutional rights of
individuals, (2) providing emergency assistance or relief
at the request of any state, local, or tribal government, and (3) relating to the old age, survivors,
and disability insurance program under the Social Security Act and the Internal Revenue
Code.

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

Table 7: Reasons 65 Final Rules with Significant Effects on Nonfederal
Parties Did Not Trigger UMRA

                          Enforces rights Requires compliance Associated with
     Rule, date of publication, and prohibiting with accounting and Necessary
                                                                for emergency
         GAO ID publishing agency discrimination auditing procedures national
                                                         security legislation

R1	Lead; Identification of Dangerous Levels of Lead (Jan. 5, 2001)

Environmental Protection Agency (EPA)

R2      Interim Final Rules for                     O 
           Nondiscrimination in Health             
           Coverage in the Group Market            
           (Jan. 8, 2001)                          
           Departments of the Treasury, Labor      
           (DOL), and Health and Human             
           Services (HHS)                          

R4	Retained Water in Raw Meat and Poultry Products; Poultry Chilling Requirements
(Jan. 9, 2001)

Department of Agriculture (USDA)

R5	Medicaid Program; Change in
Application of Federal Financial Participation Limits (Jan. 11, 2001)

HHS

R6	State Child Health; Implementing Regulations for the State Children's
Health Insurance Program (Jan. 11, 2001)

HHS

R7	Promotion of Competitive Networks in Local Telecommunications Markets
(Jan. 11, 2001)

Federal Communications Commission (FCC)

R10	Special Areas; Roadless Area Conservation (Jan. 12, 2001)

USDA

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                         Duty arises 
                                                                                from 
No notice No                                             Duty is a  participation 
          of expenditure  Otherwise Independent          No condition             in 
             of                                                        
    proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
y             million or by                                 financial        federal 
  rulemaking more in any        law      agency        duty assistance       program 
               1 year                                                  
                       A                                  A            

A

                                      O AO

AA

                                       O

A

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

                         (Continued From Previous Page)

              Enforces rights Requires compliance Associated with

Rule, date of publication, and prohibiting with accounting and Necessary
for emergency GAO ID publishing agency discrimination auditing procedures
national security legislation

R11	Medicaid Program; Revision to
Medicaid Upper Payment Limit Requirements for Hospital Services,
Nursing Facility Services,
Intermediate Care Facility Services for the Mentally Retarded, and Clinic
Services (Jan. 12, 2001)

HHS

R13	Food Stamp Program; Personal Responsibility Provisions of the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(Jan. 17, 2001)

USDA

R16	Safety Standards for Steel Erection (Jan. 18, 2001)

DOL

R17	Medicaid Program; Medicaid Managed Care (Jan. 19, 2001)

HHS

R18	Hazard Analysis and Critical Control
Point (HAACP); Procedures for the Safe and Sanitary Processing and
Importing of Juice (Jan. 19, 2001)

HHS

R19	Occupational Injury and Illness Recording and Reporting Requirements
(Jan. 19, 2001)

DOL

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
           more in any        law                         assistance               
rulemaking   1 year                    agency        duty                  program

A

AO O

                                       AO

                                      A AO

A

                                       OO

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

                         (Continued From Previous Page)

                          Enforces rights Requires compliance Associated with
     Rule, date of publication, and prohibiting with accounting and Necessary
                                                                for emergency
         GAO ID publishing agency discrimination auditing procedures national
                                                         security legislation

R20	Fisheries of the Exclusive Economic Zone Off Alaska; Steller Sea Lion
Protection Measures for the Groundfish Fisheries Off Alaska; Final 2001 Harvest Specifications
and Associated Management Measures for the Groundfish Fisheries Off Alaska
(Jan. 22, 2001)

                            Department of Commerce 

R23	Disclosure of Mutual Fund After-Tax Returns (Feb. 5, 2001)

Securities and Exchange Commission (SEC)

R24	Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS)/TRICARE; Partial Implementation of Pharmacy
Benefits Program; Implementation of National Defense Authorization
Act Medical Benefits for Fiscal Year 2001 (Feb. 9, 2001)

Department of Defense (DOD)

R28	2000-Crop Disaster Program (Mar. 21, 2001)

USDA

R30	Assistance to Firefighters Grant Program (Mar. 29, 2001)

Federal Emergency Management Agency (FEMA)

R31	Adjustment of Status To That
Person Admitted for Permanent Residence; Temporary Removal of Certain Restrictions of Eligibility
(Mar. 26, 2001)

                          Department of Justice (DOJ)

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                         Duty arises 
                                                                                from 
No notice No                                             Duty is a  participation 
          of expenditure  Otherwise Independent          No condition             in 
             of                                                        
    proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
y             million or by                                 financial        federal 
  rulemaking more in any        law      agency        duty assistance       program 
               1 year                                                  
           O           O                                               

                                       OO

O

                                     O AOO

                                     OO AA

                                      OA O

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                         (Continued From Previous Page)

                                   Enforces rights prohibiting discrimination

Requires compliance with accounting and auditing procedures

Necessary for national security

                                        Associated with emergency legislation

GAO ID Rule, date of publication, and publishing agency

R33	Light Truck Average Fuel Economy Standard, Model Year 2003
(Apr. 2, 2001)

Department of Transportation (DOT)

R34     Federal Acquisition Regulations;            O 
           Electronic and Information              
           Technology                              
           Accessibility                           
           (Apr. 25, 2001)                         
           DOD, General Services                   
           Administration (GSA), and National      
           Aeronautics and Space                   
           Administration (NASA)                   

R35	Safety Incentive Grants for Use of Seat Belts-Allocations Based on
State Seat Belt Use Rates (Apr. 26, 2001)

DOT 

R39	Adjustment of Status Under Legal
Immigration Family Equity (LIFE) Act Legalization Provisions and LIFE Act Amendments Family Unity Provisions
(June 1, 2001)

DOJ

R41	Revision of Fee Schedules; Fee Recovery for FY 2001 (June 14, 2001)

Nuclear Regulatory Commission (NRC)

R42	Supplemental Property Acquisition and Elevation Assistance
(June 15, 2001)

FEMA 

R44	Assessment and Collection of Regulatory Fees for Fiscal Year 2001
(July 11, 2001)

FCC

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
rulemaking more in any        law      agency        duty assistance       program 
             1 year                                                  
         O                      A                                    

                                    O OA OA

                                 OA O O O AA O

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                         (Continued From Previous Page)

                                   Enforces rights prohibiting discrimination

Requires compliance with accounting and auditing procedures

Necessary for national security

                                        Associated with emergency legislation

GAO ID Rule, date of publication, and publishing agency

R46	Medicare Program; Prospective
Payment System and Consolidated Billing for Skilled Nursing Facilities-Update; Final
Rule (July 31, 2001)

HHS

R49	Medicare Program; Prospective
Payment System for Inpatient Rehabilitation Facilities (Aug. 7, 2001)

HHS

R54	Risk-Based Capital (Sept. 13, 2001)

Department of Housing and Urban Development

R58	Regulations for Air Carrier Guarantee Loan Program Under Section 101(a)(1) of the Air Transportation Safety and System
Stabilization Act (Oct. 12, 2001)

Office of Management and Budget 

R60	Medicare Program; Monthly Actuarial Rates and Monthly Supplementary Medical Insurance Premium Rate Beginning January 1, 2002
(Oct. 26, 2001)

HHS

R61	Medicare Program; Inpatient
Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts for 2002
(Oct. 26, 2001)

HHS

R62	Procedures for Compensation of Air Carriers (Oct. 29, 2001)

DOT 

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
           more in any        law                         assistance               
rulemaking   1 year                    agency        duty                  program

                                       A

OA A

OA

                                     OA OO

                                       OO

                                      OA O

                                     OO OO

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                         (Continued From Previous Page)

                                   Enforces rights prohibiting discrimination

Requires compliance with accounting and auditing procedures

                                        Associated with emergency legislation

GAO ID Rule, date of publication, and publishing agency

Necessary for national security

R65	Books and Records Requirements for Brokers and Dealers Under the Securities Exchange Act of 1934
(Nov. 2, 2001)

SEC

R67	Copayments for Medications (Dec. 6, 2001)

Department of Veterans Affairs (VA)

R68	Broadcast Services; Digital Television (Dec. 18, 2001)

FCC

R69	September 11th Victim Compensation Fund of 2001 (Dec. 21, 2001)

DOJ

R70	Adjustment of Certain Fees of the Immigration Examinations Fee Account
(Dec. 21, 2001)

DOJ

R73	Medicaid Program; Modification of the Medicaid Upper Payment Limit for Non-State Government-Owned or Operated Hospitals
(Jan. 18, 2002)

HHS

R75	Class Exemption for Cross-Trades
of Securities by Index and Model-Driven Funds (Feb. 12, 2002)

DOL

R76	Aviation Security Infrastructure Fees O (Feb. 20, 2002)

DOT

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
rulemaking more in any        law      agency        duty assistance       program 
             1 year                                                  
                     O                      O                        

                               A O OA OO AO AO O

A

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

                         (Continued From Previous Page)

                                   Enforces rights prohibiting discrimination

Requires compliance with accounting and auditing procedures

                                        Associated with emergency legislation

GAO ID Rule, date of publication, and publishing agency

Necessary for national security

               R77 Civil Aviation Security Rules (Feb. 22, 2002)

DOT

                                       OO

       R78           Security Programs for Aircraft               O         O 
                          12,500 Pounds or More                     
                             (Feb. 22, 2002)                        
                                   DOT                              
       R79          Assistance to Firefighters Grant                
                                 Program                            
                             (Feb. 27, 2002)                        
                                  FEMA                              
       R80               September 11th Victim                      
                        Compensation Fund of 2001                   
                             (Mar. 13, 2002)                        
                                   DOJ                              
       R81              Noninsured Crop Disaster                    
                           Assistance Program                       
                             (Mar. 19, 2002)                        
                                  USDA                              

R83	Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS)/ TRICARE; Partial Implementation of Pharmacy
Benefits Program; Implementation of National Defense Authorization
Act for Fiscal Year 2001 (Apr. 3, 2002)

DOD

R84	Light Truck Average Fuel Economy Standard, Model Year 2004
(Apr. 4, 2002)

DOT

R85	New Entrant Safety Assurance Process (May 13, 2002)

DOT

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
           more in any        law                         assistance               
rulemaking   1 year                    agency        duty                  program

A

A

                                     OO AA

                                     OA OO

                                     OO AOO

                                   OO O A OA

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                         (Continued From Previous Page)

                                       Enforces Requires              Associated 
                                         rights compliance                  with 
     Rule, date of publication,                 with       Necessary             
                and                 prohibiting accounting    for    
                                                and                    emergency
GAO      publishing agency       discrimination auditing   national  legislation 
ID                                              procedures security  
R86 Ultra-Wideband Transmission                                      
              Systems                                                
           (May 16, 2002)                                            
                FCC                                                  

R89	Adjustment of Status Under Legal
Immigration Family Equity (LIFE) Act Legalization Provisions and LIFE Act Amendments Family Unity Provisions
(June 4, 2002)

DOJ

R90	TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing
Facility Benefit; Home Health Care Benefit; Adopting Medicare Payment
Methods for Skilled Nursing Facilities and Home Health Care Providers
(June 13, 2002)

DOD

R91	Medicaid Program; Medicaid Managed Care: New Provisions
(June 14, 2002)

HHS

R93	Revision of Fee Schedules; Fee Recovery for FY 2002 (June 24, 2002)

NRC

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
           more in any        law                         assistance               
rulemaking   1 year                    agency        duty                  program

                                O OA O O OO AO O

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

                         (Continued From Previous Page)

              Enforces rights Requires compliance Associated with

Rule, date of publication, and prohibiting with accounting and Necessary
for emergency GAO ID publishing agency discrimination auditing procedures
national security legislation

R94	Order To Permit Operation of NGSO FSS Systems Co-Frequency With
GSO and Terrestrial Systems in the
Ku-Band Frequency Range; Authorize Subsidiary Terrestrial Use
of the 12.2-12.7 GHz Band by Direct Broadcast Satellite Licensees and
Their Affiliates; and in Re Applications of Broadwave USA, PDC Broadband Corporation, and Satellite Receivers, Ltd. in the [12.2]-12.7 GHz Band
(June 26, 2002)

FCC

R96	Assessment and Collection of Regulatory Fees For Fiscal Year 2002
(July 12, 2002)

FCC

R97	Medicare Program; Prospective
Payment System and Consolidated Billing for Skilled Nursing Facilities-
Update; Notice (July 31, 2002)

HHS

R98	Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2003 Rates (Aug. 1, 2002)

HHS

R100	Standards for Privacy of Individually Identifiable Health Information
(Aug. 14, 2002)

HHS

R105	Medicare Program; Medicare-Endorsed Prescription Drug Card
Assistance Initiative (Sept. 4, 2002)

HHS

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
rulemaking more in any        law      agency        duty assistance       program 
             1 year                                                  
                     O                      O                        

                                      O OA

A O

                                      O AA

                                  Appendix IV
                   Reasons that Selected Final Rules Did Not
                                  Trigger UMRA

                         (Continued From Previous Page)

                          Enforces rights Requires compliance Associated with
     Rule, date of publication, and prohibiting with accounting and Necessary
                                                                for emergency
         GAO ID publishing agency discrimination auditing procedures national
                                                         security legislation

R106	Certification of Disclosure in Companies' Quarterly and Annual
Reports (Sept. 9, 2002)

SEC

R107	Acceleration of Periodic Report Filing Dates and Disclosure
Concerning Web Site Access to Reports (Sept. 16, 2002)

SEC

R111             Disaster Assistance; Federal                          O 
                    Assistance to Individuals and              
                    Households                                 
                    (Sept. 30, 2002)                           
                    FEMA                                       

R115	Medicare Program; Monthly
Actuarial Rates and Monthly Supplementary Medical Insurance Premium Rate Beginning January 1, 2003
(Oct. 21, 2002)

HHS

R116	Medicare Program; Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts for 2003
(Oct. 21, 2002)

HHS

Total number of rules in which agencies cited the reason

Total number of rules in which 2 1 3 2
agencies could also have cited
the reason

Source: GAO

Appendix IV
Reasons that Selected Final Rules Did Not
Trigger UMRA

                                                                       Duty arises 
                                                                              from 
No notice  No                                             Duty is a  participation 
    of     expenditure  Otherwise Independent          No condition             in 
           of                                                        
  proposed        $100 prohibited regulatory  enforceable of federal     voluntary 
            million or by                                 financial        federal 
rulemaking more in any        law      agency        duty assistance       program 
             1 year                                                  
                     O                      O                        

                                  O OO OA O OA

                                   3263 10 35

                                 25 172121 9 21

Appendix V 

Examples of Final Rules that Did Not Trigger UMRA But Had Potentially Significant Financial Effects on Nonfederal Parties 

The following table presents information on 29 final rules published by federal regulatory agencies during 2001 and 2002 that did not trigger UMRA but that had potentially significant costs or financial effects on state, local, and tribal governments or the private sector (see table 8). For each rule, we provide (1) GAO's unique identification number for the rule, (2) the title of the rule and its date of publication in the Federal
Register, (3) the agency that published the rule, (4) summary information about the potential costs or negative financial effects of the rule on affected nonfederal parties, and (5) the agency's statement in the Federal
Register notice, if any, regarding the applicability of UMRA. 

Table 8: Examples of Final Rules Published in 2001 and 2002 with
Provisions that Affected State, Local, and Tribal Governments or the
Private Sector But Did Not Trigger UMRA

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R1	Lead; Identification of Dangerous Levels of Lead (Jan. 5, 2001)

EPA	Established standards for the identification of
lead-based paint hazards in most
pre1978 housing and child-occupied facilities,
residential lead dust cleanup levels and amendments to dust and soil sampling
requirements, and amendments to state program authorization requirements.

Although EPA stated that the rule "in and of
itself" did not contain a mandate, the agency estimated the potential costs of
actions that might be taken based on the hazard standards. Those total costs (estimated over a 50-year span and discounted at 3 percent) were $69 billion for the final dust and soil standards, $20 billion for paint interventions, and $14 billion for testing. 

"EPA has determined that this rule does
not contain a Federal mandate that may
result in expenditures of $100 million or more for State, local, and tribal
governments, in the aggregate, or the private sector in any 1 year. As
indicated previously, this rule does not, in and of itself, mandate any action, or directly
impose any costs. ...The UMRA
requirements in sections 202, 204, and 205 do not apply to this rule, because
this action does not contain any `Federal
mandates' or impose any `enforceable duty' on State/Tribal, or local governments or on the private sector."

                                   Appendix V
                  Examples of Final Rules that Did Not Trigger
                      UMRA But Had Potentially Significant
                    Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R2	Interim Final Rules for Departments of Nondiscrimination in
the Treasury, Health Coverage in Labor, and the Group Market
Health and (Jan. 8, 2001) Human Services
Prohibited discrimination based on a health factor for group health plans and issuers of
health insurance coverage offered in connection with a group health plan.

The departments estimated a one-time
cost to health plans and insurers to implement this regulation of less than $19
million. They also provided a rough estimate of more than $400 million
annually
for the transfer in premium and claims costs incurred by group health
plans to provide
coverage to individuals previously denied coverage or offered restricted coverage based on health factors. The departments
noted that plan sponsors generally can pass these costs back
to participants in health plans through changes to employee
premiums or benefits.

"For purposes of the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), as well as Executive Order 12875, this
interim final rule does not
include any Federal mandate that may result in expenditures by State,
local, or tribal governments, nor does it include mandates
which may impose an annual burden of $100 million or more on the
private sector."

R4   Retained Water in   USDA Limited the amount of water retained by           (No mention of UMRA) 
    Raw Meat and Poultry      raw, single-ingredient meat and poultry           
Products; Poultry          products as a result of post-evisceration         
Chilling Requirements               processing, such as carcass washing and  
(Jan. 9, 2001)             chilling.                                         
                                      The agency estimated that the lower bound 
                              of costs to the private sector in the first year  
                                       of implementation would be $110 million. 

R5   Medicaid Program;   HHS Gave states additional flexibility in setting "This final rule will have no impact on 
Change in Application          Medicaid eligibility requirements.       the private sector. The rule imposes no 
of Federal Financial                                                    requirements on State, local or tribal  
Participation Limits          According to the agency, the rule did not governments. Rather, it offers State    
      (Jan. 11, 2001)             require that states make any changes in   governments additional flexibility in  
                             their programs. However, the agency           operating their Medicaid programs, but  
                                 projected a cost to state Medicaid of     does not require that they make any     
                             removing federal financial participation            changes in their programs."       
                                limits that was estimated at $680 million  
                                 over federal fiscal years 2001-2005.      

                                   Appendix V
                  Examples of Final Rules that Did Not Trigger
                      UMRA But Had Potentially Significant
                    Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R10	Special Areas; Roadless Area Conservation (Jan. 12, 2001)

USDA	Established prohibitions on road
construction, road reconstruction, and
timber harvesting in inventoried roadless areas on the National Forest
System's lands.

Among the estimated costs of the rule, the agency identified lost jobs
and lost income in certain industries (timber, road
construction, mineral resources, and recreation) plus other effects (e.g., lost
coal, phosphate, and gas resources). For
example, the agency estimated that up to 546 direct and 3,095 total jobs
related to limitations on exploration for and development of leasable minerals could be
affected, with a potential effect on miningrelated annual income of $36.2 million less
direct and $127.8 million less total income.

"This proposed rule does not compel
the expenditure of $100 million or more by any State, local,
or tribal government, or anyone in the private sector. Therefore,
a statement under Section 202 of the Act is not required."

R11	Medicaid Program; Revision to Medicaid Upper Payment Limit
Requirements for Hospital Services, Nursing Facility
Services, Intermediate Care Facility Services for the Mentally
Retarded, and Clinic Services (Jan. 12, 2001)

HHS	Modified the Medicaid upper payment limits
for certain health care services.

Budget projections indicated that potentially two-thirds of the federal share of
enhanced payments to government facilities that are not state-owned or
operated could be in excess of the upper payment limits imposed by this final rule. The limits imposed by this rule could therefore result in federal financial participation reductions of nearly
$55 billion over the next 10 years.

"Absent FFP [federal financial participation], we do not believe States
will continue to set excessive payment rates for Medicaid
services furnished by government providers. Generally, discontinuing an
expenditure should not result in new costs, unless the State has
to fund the portion of the expenditure
that is no longer Federally funded with all State and local dollars. ...We do not believe the aggregate upper payment
limits in this final rule have any unfunded mandates implications
because they do not require any additional expenditures by States to
providers under their Medicaid program."

Appendix V
Examples of Final Rules that Did Not Trigger
UMRA But Had Potentially Significant
Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R17	Medicaid Program; Medicaid Managed Care (Jan. 19, 2001)

HHS	Amended the Medicaid regulations to
implement provisions of the Balanced Budget Act of 1997 that, among other changes, allowed states greater flexibility
by permitting them to amend their state
plan to require certain categories of Medicaid beneficiaries to enroll in
managed care entities without obtaining waivers, if beneficiary
choice is provided.

The agency said that some of the new
provisions "represent new requirements for States, MCOs, PHPs, and PCCMs but also
provide expanded opportunities for participation in Medicaid managed care."
Also, "a large number of entities, such as
hospitals, State agencies, and MCOs will
be affected by the implementation of these statutory provisions, and a substantial
number of these entities may be required to
make changes in their operations..." The
state costs of the 6-month guaranteed
eligibility option were projected to exceed $100 million in 2 fiscal years.

"This rule does not impose any mandates on State, local, or tribal
governments, or the private sector that
will result in an annual expenditure of $100 million or more."

R20	Fisheries of the Department of Implemented Steller sea lion protection
(No mention of UMRA) Exclusive Economic Commerce measures.
Zone Off Alaska; Steller Sea Lion Under one set of assumptions, the agency
Protection Measures estimated that, as a result of the reduced
for the Groundfish harvest in restricted times and places due Fisheries Off Alaska; to this rule, processing and
fishing industry
Final 2001 Harvest revenues could drop by between $225 Specifications and million to $401 million per year.
Associated Management Measures for the Groundfish Fisheries Off Alaska
(Jan. 22, 2001)

                                   Appendix V
                  Examples of Final Rules that Did Not Trigger
                      UMRA But Had Potentially Significant
                    Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R31	Adjustment of Status To That Person
Admitted for Permanent Residence; Temporary Removal of Certain Restrictions
of Eligibility (Mar. 26, 2001)

DOJ	Amended regulations governing eligibility
for adjustment of status under section 245(i) of the Immigration and Nationality Act to conform the regulations to existing policy and procedures and to remove
language that had been superseded by subsequent legislation.

DOJ estimated that the effect on the economy "directly associated with the
expected increase in the number of applications for adjustment of
status...with the required $1,000 penalty fee and other
associated applications" would be about $178.3 million in 2001, $99.2 million in
2002, and $91.9 million in 2003.

"This rule will not result in the expenditure by State, local and tribal
governments, in the aggregate, or the
private sector, of $100 million or more in
1 year, and it will not significantly
or uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995."

R34	Federal Acquisition Regulations; Electronic and
Information Technology Accessibility (April 25, 2001)
DOD, GSA, Amended the Federal Acquisition (No mention of UMRA)

NASA	Regulations to incorporate standards
for electronic and information technology
(EIT) to ensure that EIT allows those with disabilities to have access
and use of
information comparable to that of other federal employees (with the standards
applying to federal contracts awarded on or after the effective date of this final rule and to indefinite-quantity contract delivery
orders or task orders issued on or after the effective date).

Summary information on the potential costs
of the rule indicated that nonfederal costs could range from $92 million
to $377 million annually. The range of costs was attributed
to the "uncertainty of manufacturers to
distribute these costs over the general consumer population." 

R39 Adjustment of Status DOJ Established procedures for certain class      "This rule will not result in the    
        Under Legal             action participants to become lawful     expenditure by State, local and tribal 
    Immigration Family         permanent residents of the United States.  governments, in the aggregate, or by  
     Equity (LIFE) Act                                                   the private sector, of $100 million or 
       Legalization            Fees were required of applicants, with an  more in any 1 year, and it will not   
    Provisions and LIFE         expected impact on the economy, directly       significantly or uniquely effect 
                                                                                                   [sic] small  
       Act Amendments          associated with the expected increase in   governments. Therefore, no actions    
        Family Unity          the number of applications and an increase    were deemed necessary under the     
         Provisions          in fees, of approximately $152.4 million in  provisions of the Unfunded Mandates   
       (June 1, 2001)                           2001.                             Reform Act of 1995."          

Appendix V
Examples of Final Rules that Did Not Trigger
UMRA But Had Potentially Significant
Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

                                                                                Agency's statement in the Federal     
GAO                              Potential costs or negative financial         Register about the applicability of    
ID          Rule          Agency  effects of the rule on nonfederal parties                   UMRA                    
R44    Assessment and      FCC   Revised FCC's regulatory fee schedule.          (No mention of UMRA, but, as an      
       Collection of                                                           independent regulatory agency, not     
    Regulatory Fees for          For fiscal year 2001, the amount to be                 subject to UMRA)              
      Fiscal Year 2001             recovered through fees was $200,146,000. 
       (July 11, 2001)                                                      
R60  Medicare Program;     HHS   Announced the monthly actuarial rates for            (No mention of UMRA)            
      Monthly Actuarial              aged and disabled enrollees in the     
      Rates and Monthly                Medicare Supplementary Medical       
       Supplementary               Insurance (SMI) program for 2002 and the 
     Medical Insurance           monthly SMI premium rate to be paid by all 
        Premium Rate                         enrollees in 2002.             
    Beginning January 1,                                                    
            2002                 Increased premium costs to beneficiaries   
       (Oct. 26, 2001)                by about $1.83 billion for 2002.      
R61  Medicare Program;     HHS        Announced the inpatient hospital       "This notice has no consequential effect 
     Inpatient Hospital          deductible and the hospital and extended   on State, local, or tribal governments or 
       Deductible and            care services coinsurance amounts for               on the private sector."          
        Hospital and              calendar year 2002 under Medicare Part A. 
        Extended Care                                                       
    Services Coinsurance            The agency estimated that the total     
      Amounts for 2002           increased cost to beneficiaries for the    
       (Oct. 26, 2001)             deductible and coinsurance amounts would 
                                           be about $430 million.           

R67 Copayments for VA    Amended VA's medical regulations to set  "This rule would have no consequential 
     Medications           forth copayment requirements for         effect on State, local, or tribal    
    (Dec. 6, 2001)                   medications.                             governments."              
                           Raised the copayment amount for        
                          medications from $2 to $7, with an      
                      estimated total impact of an increase in VA 
                       collections from veterans of $250 million  
                                      annually.                   

Appendix V
Examples of Final Rules that Did Not Trigger
UMRA But Had Potentially Significant
Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R70	Adjustment of Certain Fees of the Immigration Examinations Fee Account
(Dec. 21, 2001)

DOJ	Adjusted (increased) the fee schedule for certain immigration and naturalization applications
and fees, as well as the fee for
fingerprinting of applicants who apply for certain immigration and naturalization benefits.

The agency anticipated collecting an additional $127 million in fees from
individuals and businesses filing
immigration applications and petitions in fiscal year 2002. The agency also stated
that the rule would have an effect on the
economy of $169 million, in order to generate the revenue necessary to
fund
the increased expenses of processing the Service's immigration and naturalization applications and
petitions.

"This rule will not impose a mandate of
enforceable duty on State, local, and tribal governments in the aggregate, or
on the private sector, and it will not significantly or uniquely affect small governments.
Accordingly, no further actions are necessary under the
provisions of the Unfunded Mandates Reform Act of 1995."

R73 Medicaid Program;     HHS   Modified the Medicaid upper payment limit     "Because this final rule does not      
    Modification of the           (UPL) provisions to remove the 150-              mandate any new spending          
       Medicaid Upper          percent UPL for inpatient hospital services requirements or costs, but rather limits  
           Payment              and outpatient hospital services furnished     aggregate payments to a group of      
    Limit for Non-State             by nonstate government-owned or        hospitals, we do not believe it has any   
    Government-Owned                      operated hospitals.                   unfunded mandate implications."      
    or Operated Hospitals                                                  
       (Jan. 18, 2002)            The limits on aggregate federal payments 
                                 to a group of hospitals were estimated to 
                                reduce potential federal costs by about $9 
                              billion over fiscal years 2002 through 2006. 

R76 Aviation Security   DOT     Imposed a fee (the Aviation Security     "The requirements of Title II of the 
    Infrastructure Fees     Infrastructure Fee) on air carriers and      Unfunded Mandates Reform Act of 1995 
      (Feb. 20, 2002)           foreign air carriers engaged in air      do not apply when rulemaking actions 
                            transportation, foreign air transportation,  are taken without the issuance of a  
                                and intrastate air transportation.          notice of proposed rulemaking.    
                                                                         Accordingly, the TSA [Transportation 
                            The agency noted that this rulemaking         Security Administration] has not    
                               "may impose significant costs on air      prepared a statement under the Act." 
                                carriers and foreign air carriers."      

R77 Civil Aviation  DOT Required additional qualifications, training, "The requirements of Title II of the  
    Security                                                          
         Rules              and testing of individuals who screen      Unfunded Mandates Reform Act of 1995 
    (Feb. 22, 2002)         people and property carried in passenger  do not apply when rulemaking actions  
                                          aircraft.                    are taken without the issuance of a  
                                                                         notice of proposed rulemaking.     
                             Although the agency did not complete an  Therefore, the FAA [Federal Aviation  
                             economic analysis for this rule, it        Administration] and TSA have not    
                            recognized that "this rule may impose     prepared a statement under the Act."  
                         significant costs on aircraft operators and  
                                   foreign air carriers."             

                                   Appendix V
                  Examples of Final Rules that Did Not Trigger
                      UMRA But Had Potentially Significant
                    Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R78	Security Programs for Aircraft 12,500 Pounds or More (Feb. 22, 2002)

DOT	Required certain aircraft operators
using aircraft with a maximum certified takeoff weight of 12,500 pounds or more to carry
out security measures, conduct criminal history records checks on their
flight crew members, and restrict access to the flight deck. 

Although the agency did not complete an economic analysis for this rule, it
recognized that "this rule may impose
significant costs on aircraft operators."

"The requirements of Title II of the Unfunded Mandates Reform Act of 1995
do not apply when rulemaking actions are taken without the issuance of a
notice of proposed rulemaking. Accordingly,
TSA has not prepared a statement under the Act."

R89 Adjustment of Status DOJ Final adoption of procedures for certain         "This rule will not result in the    
        Under Legal            class action participants to become lawful  expenditure by State, local, and tribal 
    Immigration Family           permanent residents of the United States.  governments, in the aggregate, or by   
     Equity (LIFE) Act                                                     the private sector, of $100 million or  
       Legalization              Fees were required of applicants, with an more in any one year, and it will not   
    Provisions and LIFE           expected impact on the economy, directly        significantly or uniquely effect 
                                                                                                      [sic] small  
       Act Amendments            associated with the expected increase in    governments. Therefore, no actions    
        Family Unity            the number of applications and an increase    were deemed necessary under the      
         Provisions            in fees of about $43.3 million in 2001,       provisions of the Unfunded Mandates   
       (June 4, 2002)        $152.2 million in 2002, and $37.9 million in           Reform Act of 1995."           
                                                 2003.                     

R90	TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing Facility
Benefit; Home Health Care Benefit; Adopting Medicare
Payment Methods for Skilled Nursing Facilities and Home
Health Care Providers (June 13, 2002)

DOD	Established a sub-acute care benefits program with
skilled nursing facility and home health care benefits modeled after those of the Medicare program
and
implemented other reforms enacted in the National Defense Authorization Act for
Fiscal Year 2002.

The rule was expected to result in reduced
federal TRICARE payments to skilled
nursing facilities in excess of $100 million
per year, partially offset by increases in
Medicare payments to skilled nursing
facilities, home health agencies, and other institutional providers of $4 million in fiscal
year 2003.

                              (No mention of UMRA)

Appendix V
Examples of Final Rules that Did Not Trigger
UMRA But Had Potentially Significant
Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R91	Medicaid Program; Medicaid Managed Care: New Provisions
(June 14, 2002)

HHS	Amended Medicaid regulations to
implement provisions of the Balanced Budget Act of 1997 that allow states
greater flexibility to amend their state plans regarding managed care,
established some new beneficiary
protections, and eliminated certain requirements viewed by state agencies as impediments to the growth of
managed care programs.

The agency recognized that "a large number of entities, such as hospitals,
State agencies, MCOs, PIHPs, PAHPs, and PCCMs will be affected by
the implementation of these statutory
provisions, and a substantial number of these entities may be required
to make changes in their operations..." The agency
discussed potential impacts on states and providers in 12 different areas, projecting
that some of the changes (such as new
quality standards and a 6-month guaranteed eligibility option) could result in
costs to providers or states of $125 million or more in fiscal years 2004 and 2005.

"We have determined that this final rule does not impose any mandates on
State, local, or tribal governments, or the private sector that will result in an annual expenditure of $110 million or
more."

R93   Revision of Fee    NRC     Amended the NRC's licensing, inspection,      (No mention of UMRA,      
                                                                                    but, as an           
      Schedules; Fee           and annual fees charged to applicants and  independent regulatory agency, 
                                                                                                    not  
    Recovery for FY 2002                      licensees.                         subject to UMRA)        
      (June 24, 2002)                                                     
                             The final rule resulted in increases in the  
                                annual fees charged to certain licensees  
                             and holders of certificates, registrations,  
                             and approvals, and decreases in annual       
                             fees for others. For fiscal year 2002, NRC's 
                                    fee recovery amount was to be         
                                    approximately $479.5 million.         

R96   Assessment and     FCC Revised FCC's regulatory fees for fiscal  (No mention of UMRA,           
                                                                       but, as an                     
       Collection of                        year 2002.                 independent regulatory agency, 
                                                                                                 not  
    Regulatory Fees For                                                       subject to UMRA)        
      Fiscal Year 2002       The expected total amount of fees was     
      (July 12, 2002)                     $218,757,000.                

                                   Appendix V
                  Examples of Final Rules that Did Not Trigger
                      UMRA But Had Potentially Significant
                    Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

Agency's statement in the Federal GAO Potential costs or negative
financial Register about the applicability of ID Rule Agency effects of
the rule on nonfederal parties UMRA

R97	Medicare Program; Prospective Payment System and
Consolidated Billing for Skilled Nursing Facilities-Update; Notice
(July 31, 2002)

HHS	Updated the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal
year 2003, as required by statute.

The updating of rates was projected to increase payments to SNFs by
approximately $400 million, but the agency also identified an estimated aggregate decrease in payments associated with this
notice of $1 billion for fiscal year 2003 because of the expiration of previous
temporary add-ons to the prospective payment rates to SNFs.

"This notice will have no consequential effect on State, local, or tribal
governments. We believe the private sector cost of this notice falls below
these thresholds [$110 million or more] as well. Because this
notice does not impose unfunded mandates, as defined
by section 202 of UMRA, we have not prepared an assessment."

R107	Acceleration of Periodic Report Filing Dates and Disclosure
Concerning Web Site Access to Reports (Sept. 16, 2002)

SEC	Accelerated filing deadlines for annual and quarterly reports and
included requirements for additional reporting and disclosure.

The amendments accelerating quarterly
and annual report due dates were estimated to increase costs to some
affected reporting companies-including
costs for preparing the reports, using
additional in-house and outside resources,
and making additional capital investments,
such as in information systems. SEC
provided cost ranges and median estimates regarding initial costs (from about $29.9 million to $11.9 billion-
median value of $298.6 million) and ongoing annual costs (from $75.5 million to
$686.8 million-median value of $247.2 million) of accelerating reporting deadlines, but noted that these estimates might overstate the actual costs from the amendments being adopted in this final
rule. The final rule's amendments
regarding Web-site access to information were estimated to increase the costs to
affected companies by a total of $463,525.

(No mention of UMRA, but, as an independent regulatory agency,
not subject to UMRA)

Appendix V
Examples of Final Rules that Did Not Trigger
UMRA But Had Potentially Significant
Financial Effects on Nonfederal Parties

                         (Continued From Previous Page)

                                                                               Agency's statement in the Federal    
GAO                              Potential costs or negative financial        Register about the applicability of   
 ID          Rule         Agency  effects of the rule on nonfederal parties                  UMRA                   
R115                       HHS                                                    "This notice has no consequential 
      Medicare Program;             Increased the cost of premiums for                                       effect 
      Monthly Actuarial               Medicare's Supplemental Medical       on State, local, or tribal governments. 
      Rates and Monthly                  Insurance (SMI) enrollees.         We believe the private sector costs of  
        Supplementary                                                                   this notice fall below this 
                                                                                                   threshold [$110  
      Medical Insurance          The agency estimated that the cost of the            million] as well."            
         Premium Rate                 increase in the premium to the        
     Beginning January 1,        approximately 38 million SMI enrollees     
             2003                would be about $2.161 billion in 2003.     
       (Oct. 21, 2002)                                                      

R116  Medicare Program;    HHS Announced inpatient hospital deductible       "This notice has no consequential effect 
      Inpatient Hospital       and hospital extended care coinsurance       on State, local, or tribal governments or 
        Deductible and          amounts for services furnished in calendar           on the private sector."          
         Hospital and                year 2003 under Medicare Part A.       
         Extended Care                                                      
     Services Coinsurance      The total increase in cost to beneficiaries, 
       Amounts for 2003           due to the increase in deductible and     
        (Oct. 21, 2002)        coinsurance amounts and the change in        
                                   the number of deductibles and daily      
                                   coinsurance amounts paid, was estimated  
                                     at about $580 million in 2003.         

Source: GAO.

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