Unfunded Mandates: Views Vary About Reform Act's Strengths,
Weaknesses, and Options for Improvement (31-MAR-05, GAO-05-454).
The Unfunded Mandates Reform Act of 1995 (UMRA) was enacted to
address concerns about federal statutes and regulations that
require nonfederal parties to expend resources to achieve
legislative goals without being provided federal funding to cover
the costs. UMRA generates information about the nature and size
of potential federal mandates on nonfederal entities to assist
Congress and agency decision makers in their consideration of
proposed legislation and regulations. However, it does not
preclude the implementation of such mandates. At various times in
its 10-year history, Congress has considered legislation to amend
various aspects of the act to address ongoing questions about its
effectiveness. Most recently, GAO was asked to consult with a
diverse group of parties familiar with the act and to report
their views on (1) the significant strengths and weaknesses of
UMRA as the framework for addressing mandate issues and (2)
potential options for reinforcing the strengths or addressing the
weaknesses. To address these objectives, we obtained information
from 52 organizations and individuals reflecting a diverse range
of viewpoints. GAO analyzed the information acquired and
organized it into broad themes for analytical and reporting
purposes.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-454
ACCNO: A20622
TITLE: Unfunded Mandates: Views Vary About Reform Act's
Strengths, Weaknesses, and Options for Improvement
DATE: 03/31/2005
SUBJECT: Cost analysis
Federal aid programs
Federal law
Federal legislation
Federal regulations
Federal/state relations
Financial management
Future budget projections
Intergovernmental relations
Local governments
Policy evaluation
Private sector
Regulatory agencies
Reporting requirements
Government and business
Policies and procedures
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GAO-05-454
United States Government Accountability Office
Report to the Chairman, Subcommittee onGAO Oversight of Government
Management,
the Federal Workforce and the District of Columbia, Committee on Homeland
Security and Governmental Affairs, U.S. Senate
March 2005
UNFUNDED
MANDATES
Views Vary About Reform Act's Strengths, Weaknesses, and Options for Improvement
a
GAO-05-454
[IMG]
March 2005
UNFUNDED MANDATES
Views Vary About Reform Act's Strengths, Weaknesses, and Options for Improvement
What GAO Found
The parties GAO contacted provided a significant number of comments about
UMRA, specifically, and federal mandates, generally. Their views often
varied across and within the five sectors we identified (academic/think
tank, public interest advocacy, business, federal agencies, and state and
local governments). Overall, the numerous strengths, weaknesses and
options for improvement identified during the review fell into several
broad themes, including UMRA-specific issues such as coverage and
enforcement, among others, and more general issues about the design,
funding, and evaluation of federal mandates. First, UMRA coverage was, by
far, the most frequently cited issue by parties from the various sectors.
Parties across most sectors that provided comments said UMRA's numerous
definitions, exclusions, and exceptions leave out many federal actions
that may significantly impact nonfederal entities and should be revisited.
Among the most commonly suggested options were to expand UMRA's coverage
to include a broader set of actions by limiting the various exclusions and
exceptions and lowering the cost thresholds, which would make more federal
actions mandates under UMRA. However, a few parties, primarily from the
public interest advocacy sector, viewed UMRA's narrow coverage as a
strength that should be maintained.
Second, parties from various sectors also raised a number of issues about
federal mandates in general. In particular, they had strong views about
the need for better evaluation and research of federal mandates and more
complete estimates of both the direct and indirect costs of mandates on
nonfederal entities. The most frequently suggested option to address these
issues was more post-implementation evaluation of existing mandates or
"look backs." Such evaluations of the actual performance of mandates could
enable policymakers to better understand mandates' benefits, impacts and
costs among other issues. In turn, developing such evaluation information
could lead to the adjustment of existing mandate programs in terms of
design and/or funding , perhaps resulting in more effective or efficient
programs.
Going forward, the issue of unfunded mandates raises broader questions
about assigning fiscal responsibilities within our federal system. Federal
and state governments face serious fiscal challenges both in the short and
longer term. As GAO reported in its February 2005 report entitled 21st
Century Challenges: Reexamining the Base of the Federal Government
(GAO-05-325SP), the long-term fiscal challenges facing the federal budget
and numerous other geopolitical changes challenging the continued
relevance of existing programs and priorities warrant a national debate to
review what the government does, how it does business and how it finances
its priorities. Such a reexamination includes considering how
responsibilities for financing public services are allocated and shared
across the many nonfederal entities in the U.S. system as well.
United States Government Accountability Office
Contents
Letter 1
Results in Brief 5
Background 7
UMRA Coverage 9
UMRA Enforcement 14
Parties Across All Sectors Raise Other Issues, But Little or No
Consensus Emerges 17
Sectors Also Provide More General Concerns About Federal
Mandates 20
Observations 22
Appendixes
Appendix I:
Appendix II:
Appendix III:
Appendix IV:
Appendix V:
Appendix VI:
Objectives, Scope, and Methodology 27
Parties Providing Input to GAO's Review 31
Participants in GAO Federal Mandates Symposium,
January 26, 2005 34
Parties' Feedback on UMRA and Federal Mandates 36
Summary of Parties' Suggested Options 37
Results of Federal Mandates Symposium Balloting Process 46
Table Table 1: UMRA Themes with Highest Frequency of Comments
This is a work of the U.S. government and is not subject to copyright
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separately.
A
United States Government Accountability Office Washington, D.C. 20548
March 31, 2005
The Honorable George V. Voinovich
Chairman
Subcommittee on Oversight of Government Management, the Federal Workforce
and the District of Columbia Committee on Homeland Security and
Governmental Affairs United States Senate
Dear Mr. Chairman,
Many federal programs and initiatives, in areas ranging from homeland
security to health care and environmental protection, involve shared
responsibilities-and benefits-for the federal government, state, local and
tribal governments, and the private sector. To aid in the implementation
of these programs and initiatives, and to share their costs, federal
statutes and regulations often require nonfederal parties to expend their
resources in support of certain national goals. For example, the Pipeline
Safety Improvement Act of 2002 included intergovernmental and private
sector mandates that, among other things, required operators of natural
gas and hazardous-liquid pipelines to adhere to minimum safety standards,
create an employee qualification program and conduct facility risk
analysis.1 Similarly, the Environmental Protection Agency issued
regulations in 2001 setting new enforceable standards for the maximum
level of arsenic in drinking water that affected both publicly-owned and
privately-owned water systems.2
Determining the appropriate balance of fiscal responsibility between the
federal government, state, local and tribal governments, and the private
sector in carrying out these federal mandates is a constant challenge. As
the budgets of federal, state, and local governments become more
constrained, balancing the costs of legislative actions with increasingly
limited fiscal resources has brought this debate to the forefront. As we
move forward into the 21st Century, we have observed that the federal
government will be pressed by its own long-term fiscal challenges to
1 Pub. L. No. 107-355.
2 "National Primary Drinking Water Regulations; Arsenic and Clarifications
to Compliance and New Source Contaminants Monitoring," 66 Fed. Reg. 6976
(Jan. 22, 2001).
engage in a serious reexamination of what the government does, how it does
business and how it finances its priorities. Such a reexamination can also
usefully consider how responsibilities should be allocated and shared
across state and local governments as well.3
As we rethink the federal role, many in the state and local governments
and business sectors would view unfunded mandates as among the areas
warranting serious reconsideration. The Unfunded Mandates Reform Act of
1995 (UMRA) was enacted to address concerns about federal statutes and
regulations that require nonfederal parties to expend resources to achieve
legislative goals without being provided federal funding to cover the
costs.4 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. However, it does not preclude the
enactment of such mandates. As we approach the 10-year anniversary of the
enactment of UMRA, questions about the effectiveness of this legislation
have been raised by affected parties.
In May 2004, at your request, we reported on the identification of federal
mandates in federal statutes and rules under UMRA. On the basis of our
review of the act's provisions, and an analysis of statutes enacted and
final rules published during 2001 and 2002, we noted that UMRA appears to
have indirectly discouraged or limited mandates in some cases. Our report,
however, also raised questions about the various types of mandates that
are not covered by the act but may have potentially significant fiscal
impacts on affected parties.5 Similarly, the Congressional Budget Office
(CBO), which plays an important role in implementing UMRA provisions
regarding statutory mandates, has reported on the narrow scope of the
act's coverage and difficulties in implementing UMRA.6 Nonfederal
observers, including parties affected by federal mandates, also
increasingly have expressed
3 GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
4 Pub. L. No. 104-4, 2 U.S.C. S:S:658-658g, 1501-71.
5 GAO, Unfunded Mandates: Analysis of Reform Act Coverage, GAO-04-637
(Washington, D.C.: May 12, 2004).
6 CBO is charged with estimating the costs of intergovernmental and
private sector mandates in certain legislation.
concerns about the fiscal burdens of federal mandates and the difficulty
of accurately assessing the true impact of mandates.
You asked GAO to provide more information and analysis regarding these and
other issues related to federal mandates. Specifically, you asked us to
consult with a diverse group of knowledgeable parties familiar with the
act and to report their views with regard to (1) the significant strengths
and weaknesses of UMRA as the framework for addressing federal mandates
issues, including why the parties believed the issues they identified were
significant, and (2) potential options suggested for reinforcing the
strengths or addressing the weaknesses.7 This report discusses those
objectives for each of the broad themes that emerged from our
consultations with the parties. Specifically, this report focuses on (a)
UMRA coverage, (b) enforcement, (c) other UMRA issues, including the use
and usefulness of the information generated under the act, UMRA's analytic
framework, and consultations with state, local and tribal governments, and
(d) broader issues involving federal mandates, including the design and
funding of federal mandates and evaluating those mandates. As requested we
also report for each of those themes, to the extent possible, on the level
of agreement or disagreement among the parties concerning the perceived
strengths and weaknesses and the suggested options for reinforcing the
strengths or addressing the weaknesses. We also provide observations on
the broader implications of the unfunded mandates issues raised by our
sources for the allocation of financial responsibilities in our
intergovernmental system.
To address the objectives, we used a two-step data collection process to
obtain input on UMRA and federal mandates' issues and options from a
diverse and extensive set of organizations and individuals that were
knowledgeable about federal mandates and UMRA.8 First, we obtained
feedback from participating parties about UMRA strengths and weaknesses
and options using a structured data collection approach. We analyzed the
information obtained from those parties and organized it into broad
themes. Second, we supplemented our initial round of information
collection with a symposium on federal mandate issues held at GAO on
7 Throughout this report, we simply use the term "issues" when referring
to strengths and weaknesses in the aggregate.
8 In all, there were 52 organizations and individuals responding to our
request for views, and they are referred to collectively as "parties"
throughout this report.
January 26, 2005.9 The purpose of this symposium was to have a more
indepth discussion about the issues most frequently raised during our
initial data collection effort. The three themes discussed at the
symposium were coverage, enforcement, and funding and design. Twenty-six
individuals representing all five sectors attended.
For purposes of structuring our examination of agreement or disagreement
in the views of participating parties on specific issues and options, we
classified each participating party into one of five sectors-academic
scholars and think tanks (20 parties), business (5 parties), federal (10
parties including executive and legislative branch agencies), public
interest advocacy group (6 parties), and state and local governments (11
parties).10 Although most of the parties providing input represented a
larger set of organizations within their related sector, the information
gathered represents just the views of those parties who chose to
participate in this review. As such, the information provides only a rough
gauge as to the prevalence of opinion about a given issue or option or the
extent to which there is agreement among and within particular sectors. We
conducted our review from August 2004 through February 2005 in Washington,
D.C., in accordance with generally accepted government auditing standards.
(Appendix I provides a more detailed description of our objectives, scope,
and methodology. Appendices II and III identify, respectively, the parties
who contributed to our review and those who participated in the symposium.
Appendix IV, which is available as an electronic supplement, provides a
comprehensive list of the comments and suggested options provided by the
parties.)
9 Forty-nine of the 52 parties provided responses in the initial data
collection effort and the three other parties who were unable to
participate in the first round of data collection were able to participate
in the subsequent symposium.
10 Despite our efforts to solicit a comparable level of input from the
different sectors, fewer identified parties from some sectors chose to
participate in our review than others. However, some parties who chose not
to participate recommended contacts whom we classified in another sector,
which allowed us to partially mitigate the extent of nonparticipation. For
example, business associations recommended parties in the academic/think
tank sector as persons knowledgeable about private sector perspectives on
mandates issues.
Results in Brief Parties from the five sectors-academic/think tank, public
interest advocacy, business, federal, and state and local
governments-identified a number of issues about UMRA and its
implementation that warrant examination. Issues involving UMRA's coverage
were the most frequently raised, by the parties we contacted. Parties
across most sectors thought UMRA's narrow coverage was a significant
weakness that should be addressed. Many suggested broadening UMRA's
coverage including reconsidering UMRA's definitions, exclusions, and
exemptions such as conditions of federal financial assistance and
preemptions of state and local authority. However, a few parties,
primarily from the public interest advocacy sector, said many of the
exclusions were important and that the act's narrow coverage should be
maintained or reinforced by adding exclusions for mandates regarding
health and environmental protection. Two suggestions-excluding private
sector mandates and excluding civil rights-related mandates-were strongly
opposed by parties from several sectors.
UMRA establishes various responsibilities and enforcement mechanisms for
Congress and federal agencies. While mentioned by far fewer parties than
coverage, issues involving compliance with and enforcement of UMRA
requirements were the second most frequently cited across all sectors.
Generally, the Congressional procedures were viewed as having a greater
impact on mandate decision making than those applying to federal agencies.
UMRA sets out rules for both the House and Senate that prohibit
consideration of mandate legislation unless certain conditions are met.
The primary enforcement mechanism for legislative action is the point of
order-a procedural mechanism that can be used by a member of Congress to
challenge a mandate during the legislative process. Parties from various
sectors had mixed views about the deterrent value of the point of order in
the enactment of certain mandates, but most suggested maintaining or
strengthening it, including a suggestion to increase the number of votes
needed to overcome a point of order from a majority to a supermajority.
UMRA also sets out requirements that federal agencies prepare written
statements that identify, among other things, mandates that exceed UMRA's
threshold for regulations. Unlike the Congressional process, however,
there is nothing comparable to the point of order to deter agencies from
imposing mandates at or above the UMRA threshold. Finally, a few parties
commented about the ineffectiveness of UMRA's judicial review provision,
which they said does not provide meaningful remedies even if a court
determines that federal agencies have not complied with UMRA. Although
the parties suggested numerous options to strengthen UMRA enforcement,
none received broad-based support from parties within and across sectors.
The other themes that received a significant number of comments were the
use and usefulness of information (e.g. has it helped decrease the number
of mandates?), UMRA's analytic framework, and the agencies' consultation
with state, local, and tribal governments. All the sectors provided mixed,
but generally positive, comments about the use and usefulness of UMRA
information in policy debates. Comments about the information provided by
CBO were generally positive and parties from the academic/think tank and
state and local governments sectors suggested creating a single entity
within the executive branch to determine if there are covered mandates in
proposed federal regulations, instead of leaving this determination to the
agency alone. Second, parties from all sectors commented about UMRA's
analytic framework, including concerns about how UMRA defines costs and
the inherent difficulty in estimating certain mandate costs. To address
their concerns, some suggested broadening mandate cost estimates to
include indirect costs and others suggested including benefits, where
possible, along with cost estimates. Lastly, parties from all sectors
commented about the inconsistent application of UMRA's consultation
requirements by some federal agencies.
In addition to comments provided about UMRA, parties from most sectors
raised a number of broader policy issues concerning design and funding of
federal mandates and the evaluation of those mandates. While views about
the design and funding varied across sectors, most of the comments focused
on perceived funding gaps between costs of federal mandates and the amount
of funding provided to carry them out. Many observed that there is a lack
of evaluation and research on federal mandates and generally agreed that
retrospective evaluation of federal mandates was needed to ensure that
mandates were achieving their intended goals and to better measure the
actual costs incurred by nonfederal entities.
As we move forward, the issue of unfunded mandates raises broader
questions about the assignment of fiscal responsibilities within our
federal system. Federal and state governments face serious fiscal
challenges both in the short and longer term. As we reported in our report
on 21st century challenges, the long-term fiscal challenges facing the
federal budget and numerous other geopolitical changes challenging the
continued relevance of existing programs and priorities warrant a national
debate to review what the government does, how it does business, and how
it finances its
priorities.11 Such a reexamination includes considering how
responsibilities for financing public services are allocated and shared
across the many nonfederal entities in our system as well.
Background The Unfunded Mandates Reform Act of 1995 was enacted to address
concerns expressed about federal statutes and regulations that require
nonfederal parties to expend resources to achieve legislative goals
without being provided funding to cover the costs. Although UMRA was
intended to curb the practice of imposing unfunded federal mandates, the
act does not prevent Congress or federal agencies from doing so. Instead,
it generates information about the potential impacts of mandates proposed
in legislation and regulations. In particular, title I of UMRA requires
Congressional committees and the Congressional Budget Office (CBO) to
identify and provide information on potential federal mandates in certain
legislation. Title I also provides opportunities for Members of Congress
to raise a point of order when covered mandates are proposed for
consideration in the House or Senate. Title II of UMRA requires federal
agencies to prepare a written statement identifying the costs and benefits
of federal mandates contained in certain regulations and consult with
affected parties. It also requires action of the Office of Management and
Budget (OMB), including establishing a program to identify and test new
ways to reduce reporting and compliance burdens for small governments and
annual reporting to Congress on agencies' compliance with UMRA. Title III
of UMRA required the Advisory Commission on Intergovernmental Relations to
conduct a study reviewing federal mandates.12 Title IV establishes limited
judicial review regarding agencies' compliance with certain provisions of
title II of the act.
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 (intergovernmental mandates) or the private
sector (private sector mandates) or that would reduce or eliminate the
funding
11 GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington D.C.: February 2005).
12 This statutory requirement was not completed. Although a preliminary
report was completed in January 1996, a final report was not released.
Congress terminated funding for the commission in 1996.
authorized to cover the costs of existing mandates. However, some other
definitions, exclusions, and thresholds in the act apply and may vary
according to whether the mandate is in legislation or a rule and whether a
provision imposes an intergovernmental or private sector mandate. For
example, UMRA includes definitional exceptions for enforceable duties that
are conditions of federal financial assistance or that arise from
participation in a voluntary federal program. UMRA also excludes certain
types of provisions, such as any provision that enforces Constitutional
rights of individuals, from its application. When, in aggregate, the
provisions in proposed legislation or regulations equal or exceed UMRA's
thresholds, other provisions and analytical requirements in UMRA apply.
For legislation, the thresholds are direct costs (in the first 5 fiscal
years that the relevant mandates would be effective) of $50 million or
more for intergovernmental mandates and $100 million or more for private
sector mandates, while the threshold for regulations is expenditures of
$100 million or more in any year.13
GAO has issued two previous reports addressing UMRA and federal mandates.
In our May 2004 report we provided information and analysis regarding the
identification of federal mandates under titles I and II of UMRA.14 In
that report, we described the complex procedures, definitions, and
exclusions under UMRA for identifying federal mandates in statutes and
rules. For calendar years 2001 and 2002, we also identified those statutes
and rules that contained federal mandates under UMRA and provided examples
of statutes and 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
February 1998, we reported on the implementation of title II.15 In that
report, we found that UMRA appeared to have had little effect on agencies
rulemaking and most significant rules promulgated were not subject to
title II requirements. Both of these reports had relatively consistent
findings-that only a limited number of statutes and rules have been
identified as federal mandates under UMRA.
13 The dollar thresholds in UMRA are in 1996 dollars and are adjusted
annually for inflation.
14 GAO-04-637.
15 GAO, Unfunded Mandates: Reform Act Has Had Little Effect on Agencies'
Rulemaking Actions, GAO/GGD-98-30 (Washington, D.C.: Feb. 4, 1998).
UMRA Coverage UMRA's coverage, which includes its numerous definitions,
exclusions, and exceptions, was the issue most frequently commented on by
parties from all five sectors (see table 1).16 Most parties from the state
and local governments, federal, business, and academic/think tank sectors
viewed UMRA's narrow coverage as a major weakness that leaves out many
federal actions with potentially significant financial impacts on
nonfederal parties. Conversely, a few parties, from the public interest
sector and academic/think tank sector, considered some of the existing
exclusions important or identified UMRA's narrow scope as one of the act's
strengths. While there was no clear consensus across sectors on how to
address coverage, some suggestions designed to expand UMRA's coverage had
support from parties across and within certain sectors.
Table 1: UMRA Themes with Highest Frequency of Comments
Theme Number of comments provided
Themes focused specifically on UMRA
Scope of UMRA's coverage of federal actions
UMRA enforcement
UMRA analytical framework
Uses and usefulness of information UMRA generates
UMRA consultation requirements
Themes focused on federal mandate issues and programs in general
Design and funding of federal mandates
Evaluation and research needs regarding federal mandates
Source: GAO.
Note: Comment frequency is provided only as a rough gauge of the relative
prevalence of themes addressed by participating parties comments.
16 Coverage issues were also raised in other literature regarding federal
mandates that we reviewed.
Parties from Most Sectors Shared Concerns That UMRA's Coverage Was Too
Narrow, but Had Mixed Views on How to Address It
UMRA does not apply to legislative provisions that cover constitutional
rights, discrimination, emergency aid, accounting and auditing procedures
for grants, national security, treaty ratification, and certain parts of
Social Security.17 CBO estimates that about 2 percent of the bills that it
reviewed from 1996 to 2004 contained provisions that fit within UMRA's
exclusions. All sectors other than the public interest advocacy sector
said they viewed UMRA's narrow coverage as a significant weakness because
it precludes an official accounting of the costs to nonfederal parties
associated with many federal actions. This issue was described by one
party who noted that any of the exclusions, as well as the exemptions, in
UMRA may be justified in isolation, but suggested that it is their
cumulative impact that raises concerns.
Some parties from the business, academic/think tank, public interest
advocacy, and state and local governments sectors made general comments on
the clarity of certain UMRA definitions and exemptions and whether this
results in different interpretations across agencies. One party who said
UMRA's coverage was narrow often cited UMRA's definitional exceptions for
mandates, including conditions of federal financial assistance (such as
grant programs) or that arise from participation in voluntary federal
programs, saying some laws enacted under these exceptions imposed
significant mandates. A prominent example of a grant condition excluded
from UMRA cited by parties in the state and local government sector is the
No Child Left Behind Act of 2001, which places various requirements on
states and localities, including that their schools measure the progress
of students through annual tests based on challenging academic standards
and that teachers are highly qualified as defined in the act. Other
parties commented about various other definitional issues involving the
exclusion of certain types of costs (indirect costs) and UMRA's cost
thresholds for legislative and regulatory mandates, which result in
excluding many federal actions that may significantly impact nonfederal
entities.18
17 UMRA contains additional definitional exceptions, exclusions, or other
restrictions applicable to the identification of federal mandates in
legislation and 14 such restrictions applicable to the identification of
federal mandates in rules. Often, more than one of these applicable
restrictions applies. See GAO-04-637.
18 We discuss cost definitions and cost thresholds in greater detail in
the analytic framework section of this report.
Other parties cited the general exclusions for appropriations and other
legislation not covered by the act and for rules issued by independent
regulatory agencies, which are also not covered by UMRA. CBO estimates
that 5 of the 8 laws containing federal mandates (as defined by UMRA) that
it did not review before enactment, were appropriations acts.19 A few
parties from academic/think tank and state and local government sectors
commented about UMRA's lack of coverage for certain tax legislation that
may reduce state or local revenues. Even though federal tax changes may
have direct implications for state tax revenue for the majority of states
whose income tax is directly linked to the federal tax base, these impacts
are not considered as mandates under UMRA because states have the option
of decoupling their tax systems from federal law. Finally, parties from
the state and local government sector also identified concerns about gaps
in UMRA's coverage of federal preemption of state and local authority.20
Although some preemptions are covered by UMRA such as those that preempt
state or local revenue raising authority, they are covered only for
legislative actions and not for federal regulations. According to CBO's
2005 report on unfunded mandates, "Over half of the intergovernmental
mandates for which CBO provided estimates were preemptions of state and
local authority."21
19 CBO, A Review of CBO's Activities in 2004 Under the Unfunded Mandates
Reform Act (Washington D.C.: March 8, 2005).
20 Preemption refers to the power of the federal government to enact
statutes that override state laws. This power derives from the supremacy
clause of the United States Constitution, which states that "The Laws of
the United States...shall be the supreme Law of the Land...any Thing in
the Constitution or Laws of any state to the Contrary notwithstanding."
U.S. Const. art. VI, cl. 2. For example, the Internet Tax Freedom Act
prohibits states from enacting a tax on internet access or multiple or
discriminatory taxes on electronic commerce between October 1998 and
November 2004 and preempts any state or local laws enacted during this
period. Pub. L. No. 105-277, Div. C, Tit. XI, S: 1101 (1998) (amended
2004). Title I of UMRA only applies to legislation that prohibits states
from raising revenue, such as the Internet Tax Freedom Act. 2 U.S.C. S:
658(3)(A)(i). Other preemptions of states' regulatory authority are not
subject to UMRA's enforcement scheme.
21 CBO's March 2005 UMRA report.
Despite the widespread view in several sectors that UMRA's narrow coverage
leaves out federal actions with potentially significant impacts on
nonfederal entities, there was less agreement by parties about how to
address this issue. The options ranged from general to specific but those
most frequently suggested were:
o Generally revisit, amend, or modify the definitions, exceptions, and
exclusions under UMRA and expand its coverage.
o Clarify UMRA's definitions and ensure their consistent implementation
across agencies to ensure that all covered provisions are being included.
o Change the cost thresholds and/or definitions that trigger UMRA by for
example lowering the threshold for legislative or executive reviews and
expanding cost definitions from beyond direct to cover indirect costs as
well.
o Eliminate or amend the definitional exceptions for conditions of
federal financial assistance or that arise from participation in voluntary
federal programs.
o Expand UMRA coverage to all preemptions of state and local laws and
regulations, including those nonfiscal preemptions of state and local
authority.
The level of agreement for each suggested option varied across sectors.
The first option came from parties in every sector except public interest
advocacy. Although parties representing businesses did not comment on
preemption during our data collection, the business sector has generally
been in favor of federal preemptions for reasons such as standardizing
regulation across state and local jurisdictions. (See appendix V for a
more complete list of suggested options by theme.)
The results of our January symposium confirmed support for generally
revisiting and expanding UMRA coverage. See appendix VI for a list of the
symposium results. The symposium participants also raised a cautionary
note about potential consequences of some of the suggested options. For
example, if UMRA coverage were expanded by changing exclusions and
limitations or lowering or eliminating UMRA thresholds or including
regulations issued by independent agencies, the workloads of CBO and the
regulatory agencies would increase substantially.
Another issue raised by a few parties that evoked some reaction at the
symposium was whether private sector mandates should be included in UMRA.
Some parties, from the federal agency, academic/think tank and public
interest advocacy sectors, questioned whether private sector mandates
should be included in UMRA. According to one party, the inclusion of the
private sector seems contrary to the intent of the action, which they
viewed to be intergovernmental mandates. Parties from the state and local
government and academic/think tank sectors indicated during our symposium
that they would not support dropping private sector mandates from UMRA.
They pointed out, for example, that intergovernmental and private sector
mandates can be interrelated, in particular that businesses, which can be
affected by private sector mandates, are a key revenue source for state
and local governments.
Some in the Academic/Think Tank and Public Interest Advocacy Sectors View
UMRA's Coverage as a Strength and Take Issue with Certain Recommendations
to Expand or Change Coverage
Contrary to the view that UMRA's coverage was too narrow, some parties
from academic/think tank and public interest advocacy sectors viewed
UMRA's narrow scope as one of its primary strengths. Rather than expanding
UMRA's coverage, these parties said that it should be kept narrow. One
party expressed concern that eliminating any of UMRA's exceptions and
exclusions might make the identification of mandates less meaningful,
saying, "The more red flags run up, the less important the red flag
becomes." Between 1996 and 2004, CBO reports that of the 5,269
intergovernmental statements, 617 had mandates; of the 5,151 private
sector statements, 732 had mandates.22 Of the mandates identified by CBO,
9 percent of the intergovernmental mandates and 24 percent of private
sector mandates had costs that would exceed the thresholds.
Specifically, these parties argued in favor of maintaining UMRA's
exclusions or expanding them to include federal actions regarding public
health, safety, environmental protection, workers' rights, and the
disabled. Unlike the parties that viewed UMRA's exclusions as too
expansive, some
22 According to CBO's 2005 report, The numbers represent official mandate
statements transmitted to congress by CBO. CBO prepared more
intergovernmental mandate statements than private-sector mandate
statements because in some cases it was asked to review a specific bill,
amendment, or conference report solely for intergovernmental mandates.
These numbers also exclude preliminary reviews and informal estimates for
other legislative proposals. Finally, mandate statements may cover more
than one mandate. Similarly, CBO may address a single mandate in more than
one statement.
parties from the public interest advocacy sector and the academic/think
tank sector focused on the importance of the existing exclusions,
particularly those dealing with constitutional and statutory rights, such
as those barring discrimination against various groups.23 During our
January symposium, parties from multiple sectors took issue with any
suggestion that the constitutional and statutory rights exclusions in UMRA
be repealed. One party stated that the concept of unfunded mandates should
not apply to laws intended to protect such fundamental rights. Another
party suggested that the narrow scope of UMRA was generally useful, noting
that, "One of the strengths of UMRA has been that it doesn't try to be
more ambitious than it needs to be." Conversely, parties from most sectors
opposed further limiting UMRA's coverage.
UMRA Enforcement Enforcement of UMRA's provisions was the second most
frequently cited issue but with far fewer parties from each sector
commenting. Parties across and within sectors had differing views on both
the mechanisms provided in the law itself and the level of effort
exercised by those responsible for implementing the provisions. With
regard to Congressional procedures, some parties observed that the
opportunity provided for lawmakers to raise a point of order had a
deterrent effect, while others described it as ineffective or
underutilized. With regard to federal regulations, some questioned the
agencies' compliance with the provisions of the act. Finally, parties had
mixed views about the judicial review provision under title IV, which
provides limited remedies against agencies that fail to prepare UMRA
statements, among other things. Parties from various sectors also
suggested options to strengthen the issues raised about UMRA enforcement,
but none was suggested by parties from a majority of sectors.
Mixed Views About the Usefulness and Need to Change Point of Order
Mechanism
One of the primary tools used to enforce UMRA requirements in title I is
the point of order-a parliamentary term used by a member of Congress in
committee or on the floor of either chamber of Congress to raise an
objection about proceeding to vote when a rule of procedure has been or
will be violated. Once raised, an UMRA point of order prevents legislative
23 UMRA does not apply to any provision in legislation or rules that
enforces Constitutional rights of individuals or establishes or enforces
any statutory rights that prohibit discrimination on the basis of race,
color, religion, sex, national origin, age, handicap, or disability.
action on a covered mandate unless overcome by a majority. The point of
order, which provides members of Congress the opportunity to raise
challenges to hinder the passage of legislative provisions containing an
unfunded intergovernmental mandate, was the most frequently cited
enforcement issue with varying views about its effectiveness.
Those representing state and local government and federal agency sectors
said that the point of order should be retained because it has been
successful in reducing the number of unfunded mandates by acting as a
deterrent to their enactment, without greatly impeding the process. One
party commented that the threat of a point of order against a legislative
proposal has caused members and staff to rethink and revise many proposals
that would have likely imposed unfunded federal mandates on the states in
excess of the threshold set in the law. This is consistent with the
information presented in our May 2004 on UMRA, which quoted the Chairman
of the House Rules Committee as saying that UMRA "has changed the way that
prospective legislation is drafted..." We also reported that "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."24
Conversely, parties primarily from academic/think tank, business, and
federal sectors did not believe the point of order has been effective in
preventing or deterring the enactment of mandates. Moreover, others
commented about its infrequent use. In the last 10 years, at least 13
points of order under UMRA were raised in the House of Representatives and
none in the Senate. Only 1 of the 13, regarding a proposed minimum wage
increase as part of the Contract with America Advancement Act in 1996,
resulted in the House voting to reject consideration of a proposed
provision.
Some parties said the point of order needs to be strengthened by making it
more difficult to defeat. One suggested revision was to require a
three-fifths vote in Congress, rather than a simple majority, to overturn
a point of order. This change was believed to strengthen the
"institutional salience of UMRA" and to ensure that no mandate under UMRA
could be enacted if it was supported only by a simple majority. On March
17, 2005 the Senate approved the fiscal year 2006 budget, which included a
provision that would increase to 60 the number of votes needed to overturn
an UMRA
24 GAO-04-637.
point of order in the Senate. As of March 28, the fiscal year 2006 budget
was in conference negotiations with the House of Representatives.
Parties Question Agencies' Compliance with UMRA, But Cited Solutions
Lacked Broad-Based Support
Commenting parties from state and local government, business, and federal
agency sectors questioned some federal agencies' compliance with UMRA
requirements and the effectiveness of enforcement mechanisms to address
this perceived noncompliance. They mentioned the failure of some agencies
to consult with state, local and tribal governments when developing
regulations that may have a significant impact on nonfederal entities,
which is discussed later in the report. Likewise, at least one party of
the business, federal, and state and local government sectors each
expressed concerns about the lack of accurate and complete information
provided by federal agencies, which are responsible for determining
whether a rule includes a mandate and whether it exceeds UMRA's
thresholds.
The perceived lack of compliance with certain UMRA requirements generated
several suggested changes to UMRA to address this problem. The only
suggestion that had support across parties from multiple sectors, however,
was to create a new office within OMB to calculate the cost estimates for
federal mandates in regulations. They suggested that this office have
responsibilities similar to the State and Local Government Cost Estimates
Unit at CBO. However, the parties did not specify whether the office
should exist as an office within OMB's Office of Information and
Regulatory Affairs or exist separately.
Parties Who Find Judicial Review Provision Too Limited Support Revision
A few parties from the federal and academic/think tank sectors commented
that UMRA's judicial review provision does not provide meaningful relief
or remedies if federal agencies have not complied with the requirements of
UMRA because of its limited focus. In general, title IV subjects to
judicial review any agency compliance or noncompliance with certain
provision in the act. Specifically, the judicial review is limited to
requirements that pertain to preparing UMRA statements and developing
federal plans for mandates that may significantly impact small
governments. However, if a court finds that an agency has not prepared a
written statement or developed a plan for one of its rules, the court can
order the agency to do the analysis and include it in the regulatory
docket for that rule but the court may not block or invalidate the rule.
The few parties commenting about judicial review suggested expanding it to
provide more opportunities for judicial challenges and more effective
remedies when noncompliance of the act's requirements occur. However, one
party from the public interest advocacy sector said that a benefit of the
existing judicial review is that the remedy for noncompliance is to
provide the required statement versus impeding the regulatory process.
Similarly, when this issue was discussed at the symposium, a few parties
primarily from the academic/think tank and public interest advocacy
sectors said that efforts to limit or stop implementation of mandates
through legal action might be unwarranted, because as noted earlier, UMRA
was not intended to preclude the enactment of federal mandates. They were
concerned about legal actions being used to slow down the regulatory
process through litigation.
Parties Across All Sectors Raise Other Issues, But Little or No Consensus
Emerges
Parties from all sectors also raised a number issues about the use and
usefulness of UMRA information (e.g., has it helped decrease the number of
mandates?), UMRA's analytic framework, and federal agency consultations
with state, local, and tribal governments, but there was no consensus in
their views about how these issues should be addressed. The parties
provided mixed but generally positive views about the use and usefulness
of UMRA information; the only option that attracted multiple supporters
was a suggestion for a more centralized approach for generating
information within the executive branch. Parties also provided a number of
comments about the UMRA provisions that establish the analytic framework
for cost estimates, which generated a few suggested options. UMRA's
consultation provision generated the fewest comments, which focused
primarily on a general concern about a perceived lack of consistency
across agencies when consulting with state and local governments.
Parties in Most Sectors Had Mixed but Generally Positive Views About the
Usefulness of Information Generated under UMRA and Suggested Few Changes
Parties from all sectors commented about the use and usefulness of
information generated by UMRA. While most of the comments about
information generated under title I were positive, some parties raised
concerns about the quality and usefulness of some of the information and
suggested improvements. While many of the comments were about UMRA
information in general, most of the positive comments from a majority of
the sectors were specific to the usefulness of information generated under
title I by CBO in particular. For example, one party, who characterized
UMRA as a success, credited the act with bringing unfunded mandates to
the forefront of Congressional debates and slowing down the enactment of
new unfunded mandates. Parties from several sectors praised the value and
quality of CBO's analyses of mandates and the attention that CBO's cost
estimates under UMRA bring to the fiscal effects of federal legislation.
However, some parties from academic/think tank, public interest advocacy,
and state and local governments sectors had more mixed views about the
usefulness of information generated under UMRA. One party characterized
the information as "marginally effective" in reducing costly and
cumbersome rules and a few parties shared similar views about legislative
mandates. Specifically, some of these parties commented that while the
information may increase awareness of unfunded or under funded mandates,
UMRA has been less successful in actually changing legislation to reduce
the number of mandates.
The parties from various sectors suggested several options to improve the
use and usefulness of information under UMRA, but there was no agreement
across or within sectors on any particular option. Only the suggestion to
provide for a centralized review of regulatory mandates was suggested by
more than two parties. (As discussed previously, this was also suggested
as a way to improve UMRA enforcement.)
Parties Cite UMRA's Analytic Constraints
Parties from all sectors agreed that UMRA's provisions work to constrain
the analysis of mandate costs, which may impact the quality of the
estimates. For example, parties from the academic/think tank, federal, and
state and local governments sectors commented that the act excludes the
consideration of the indirect costs of mandates, which can be significant
for regulated entities. Moreover, others commented that certain
definitions under UMRA are not clearly understood or easily interpreted,
which can impact estimates. For example, some parties said that terms such
as "federal mandates" and "enforceable duty" are not clearly defined and
thus open to interpretation by the agencies.
Others noted that there can be differences in the cost analyses for
legislative and regulatory mandates in areas such as making determinations
about whether a mandate exceeds UMRA cost thresholds when ranges are used.
For example, CBO has developed its own criteria for applying the act and
has extended its general practice of providing point estimates for
mandates rather than ranges when possible, as it does for its federal
budget estimates. The federal agencies are left to their own discretion in
deciding whether to use estimate ranges for costs and how to apply them to
the
threshold. In one case, which we observed in a prior report, the U.S.
Department of Agriculture (USDA) appeared to have developed a range of
costs associated with implementing its rule on retained water in raw meat
and poultry products. However, USDA provided only a lower bound estimate
of $110 million, but did not quantify median or upper bound cost
estimates. Because the lower bound was so close to the inflation adjusted
threshold of $113 million, it is reasonable to assume that the median or
upper bound estimate would have exceeded the threshold and been a mandate
under UMRA.
Some parties expressed frustrations with the inherent uncertainties of
estimating mandate costs. In particular, some parties commented that cost
estimates are sometimes difficult or not feasible to calculate because
they rely on future actions. That is, CBO sometimes finds that cost
estimates for legislative mandates are difficult or not feasible to
prepare, which can happen because CBO's analysis is generally done before
bills are approved and regulations needed to implement them have been
developed. For example, in 2004, CBO reported that of the 66
intergovernmental mandates, 2 could not be estimated; of the 71 private
sector mandates, 10 could not be estimated. In many of these cases, CBO
reported that the costs could not be determined because it had no basis
for predicting what regulations would be issued to implement them.
The parties offered a variety of suggested options to address their
concerns about estimation, but only a few had support across or within the
sectors. There was, however, some overlap between options suggested
addressing UMRA coverage and enforcement issues and options to address
estimation issues. For example, some parties suggested revising UMRA's
cost or expenditure definitions and thresholds, including revisiting the
exclusion of indirect costs from UMRA estimates, which may affect both the
actual estimation process and whether a legislation or regulation will be
identified as containing a federal mandate at or above UMRA's thresholds.
Parties from several sectors suggested examining or monitoring the
implementation of UMRA's estimation process for federal agencies'
regulations through an independent agency.
Sectors Had Few Comments A few parties had comments regarding UMRA's
requirement that federal and Suggested Options agencies consult with
elected officers of state, local and tribal governments Regarding UMRA (or
their designees) on the development of proposals containing significant
intergovernmental mandates. Parties from all five sectors commented
onConsultation Provisions the consultation provisions, and these comments
generally focused on the
quality of consultations across agencies, which was viewed as
inconsistent. A few parties commented that UMRA had improved consultation
and collaboration between federal agencies and nonfederal levels of
government. A few commenters also raised concerns that UMRA's consultation
provisions focus on state, local and tribal governments, but exclude other
constituencies that might be affected by proposed federal mandates. While
several parties primarily from the state and local government sector
suggested options for improving consultation, the only one mentioned by
more than 2 parties was a suggestion for agencies to replicate CBO's
consultation approach for legislative mandates, which some parties
characterized as collaborative.
Sectors Also Provide Parties from all sectors also raised a number of
broader issues about
federal mandates-namely, the design and funding and evaluation ofMore
General federal mandates-and suggested a variety of options. Concerns
About
Federal Mandates
Several Potential Design and Funding Issues Surfaced, But No Options With
Broad Appeal to Address Them
Specific comments about the design and funding of federal mandates varied
across sectors. Most often, the comments focused on a perceived mismatch
between the costs of federal mandates and the amount of federal funding
provided to help carry them out. Some parties from several sectors
suggested that the problem they are concerned about is not so much
unfunded federal mandates as underfunded mandates. When this issue was
addressed at the symposium, a few parties pointed out that this issue is
broader than UMRA, dealing with such issues as how to address the
imbalance between mandate costs and available resources, how to generate
the resources to meet these needs, and how to address the incentives for
the federal government to "over leverage" federal funds by attaching (and
often revising) additional conditions for receiving the funding. Some
parties also raised concerns about the varying cost of some mandates
across various affected nonfederal entities, mismatches between the
funding needs of parties compared to federal formulas, and the effects of
the timing of federal actions and program changes on nonfederal parties.
Parties, primarily from the academic/think tank sector, suggested a wide
variety of options to address their concerns, but there was no broad
support for any option. Parties across four sectors suggested providing
waivers or offsets to reduce the costs of the mandates on affected parties
or "off ramps" to release them of some responsibilities to fulfill the
mandates in a given year if the federal government does not provide
sufficient funding. However, when this was discussed at the symposium,
parties said that compliance with federal mandates should not be made
contingent on full federal funding. They said, for example, that it is an
appropriate role for the federal government to require compliance with
certain mandates even if they are not fully funded. These parties also
said that state and local governments do not always comply with mandates
under existing laws. Some of the symposium participants also pointed out
potential pitfalls of "off ramps" noting that they could actually provide
an incentive to under fund mandates and that it might be difficult to
manage who would determine that federal funding does not cover the costs
of a mandate in a given year and how that determination would be made.
During the symposium, the option of building into the design of federal
mandates "look back" or sunset provisions that would require retrospective
analyses of the mandates' effectiveness and results was discussed.
Most Sectors Commented on Evaluation and Research Needs Regarding Federal
Mandates Sectors
About half the parties, representing all sectors except federal agencies,
commented on the evaluation of federal mandates and offered suggestions to
improve mandates, whether covered by the act or not. This issue received
the most focus from parties in the academic/think tank sector, who felt
that the evaluation of federal mandates was especially important because
there is a lack of information about the effects of federal mandates on
affected parties.
Four issues emerged from the comments provided by the various sectors
concerning evaluations. First, parties from four of the five sectors
commented about the lack of evaluation of the effectiveness (results) of
mandates and the implications of mandates, including benefits, non-fiscal
effects and costs. According to some parties, if mandate-related
evaluations were conducted more often, policy decisions regarding
mandates, both specifically and collectively, could meaningfully consider
mandate costs, benefits and other relevant factors. Second, they expressed
concerns about the accuracy and completeness of mandate cost estimates.
This concern was raised primarily by parties in the public interest
advocacy and business sectors. While they agreed that estimating costs was
difficult, they felt examining the quality of the estimates was necessary.
Third, parties primarily from the academic/think tank and state and local
governments sectors raised issues about the impacts and costs of federal
mandates. They noted that while much attention has been focused on the
actual costs of mandates, it is important to consider the broader
implications of federal mandates on affected nonfederal entities beyond
direct costs, including a wide range of issues such as opportunity costs,
forgone revenues, shifting priorities, and fiscal trade-offs. Finally, a
few parties were concerned about whether some agencies have compromised
the effectiveness of certain regulations by designing them to ensure that
their costs do not meet or exceed UMRA's cost threshold.
Parties across the sectors suggested that various forms of retrospective
analysis are needed for evaluating federal mandates after they are
implemented. First, parties in all sectors except the federal sector
suggested retrospective analyses on the costs and effectiveness of
mandates, including comparing them to the estimates and expected outcomes.
Second, parties in the state and local sector suggested conducting
retrospective studies on the cumulative costs and effects of mandates-the
impact of various related federal actions, which when viewed collectively,
may have a substantial impact although any one may not exceed UMRA's
thresholds. Third, parties in the academic/think tank sector suggested
examining local and regional impacts of mandates. According to one party,
mandate costs could have a significant effect on a particular state or
region without exceeding UMRA's overall cost threshold. Finally, parties
in the academic/think tank sector suggested analyzing the benefits of
federal mandates, when appropriate, not just costs.
Observations As Congress begins to reevaluate UMRA on its 10-year
anniversary, some of the issues raised by the various sectors we contacted
may provide a constructive starting point. While the sectors provided a
wide variety of comments, their views were often mixed across and within
certain sectors. Given the wide-ranging view of opinions, it will be
challenging to find workable solutions that will be broadly supported
across sectors that often have differing interests and perspectives.
Although parties from various sectors generally focused on the areas of
UMRA and federal mandates that they would like to see fixed, they also
recognized positive aspects and benefits of UMRA. In particular, they
commented about the attention UMRA brings to potential consequences of
federal mandates and how it serves to keep the debate in the spotlight. We
also found it notable that no one suggested repealing UMRA. One challenge
for Congress and other federal policy makers is to determine which issues
and concerns about federal mandates can be best addressed in the context
of UMRA and which ones are best considered as part of more expansive
policy debates.
When considering changes to UMRA itself, one issue stood out, UMRA's
narrow coverage. This was clearly an issue for certain parties within all
sectors based on the comments. The various definitions, exceptions, and
exclusions were a source of frustration for many who responded to our
review, especially those most affected by federal mandates. Although the
parties in most sectors generally agreed that UMRA's coverage should be
expanded given its narrow focus, parties in the public interest advocacy
sector disagree. Even among those that believe that UMRA's coverage is too
narrow, identifying suggested options that had broad-based support was
challenging. Most parties simply suggested revisiting, amending, or
modifying UMRA to expand coverage. Others provided more specific
suggestions, including expanding UMRA to cover conditions of financial
assistance, such as grants, and all preemptions of state and local
authority. However, certain proposed changes were strongly opposed by
certain parties in the public interest advocacy and academic sectors, such
as dropping the exclusions for civil rights-related provisions. Likewise,
parties from the business and state and local governments sectors opposed
any further narrowing of UMRA.
On broader policy issues concerning federal mandates, most parties
supported the need for more evaluation and research on federal mandates.
More retrospective analysis to ensure that mandates are achieving their
desired goals could enable policymakers to better gauge the mandates'
benefits and costs, determine whether the mandates are providing the
desired and expected results at an acceptable cost and assess any
unanticipated effects from the implementation of mandate programs. Such
analysis could be done not only for individual mandates but also for the
cumulative, aggregate costs and other impacts that major mandates may be
having for the budgetary priorities of regulated entities, such as state
or local governments. Such information could help provide additional
accountability for federal mandates and provide information which could
lead to better decisions regarding the design and funding of mandate
programs. Some suggested that the design of mandates could incorporate
"look back" or sunset provisions that would require retrospective analyses
of mandate results periodically.
As we move forward, the unfunded mandates issue raises broader questions
about the assignment of fiscal responsibilities within our federal system.
The federal government, as well as states, faces serious fiscal challenges
both in the short and longer term. In February 2005, we issued our report
on 21st century challenges. Given the long-term fiscal challenges facing
the federal budget as well as numerous other geopolitical changes
challenging the continued relevance of existing programs and priorities,
we called for a national debate to review what the government does, how it
does business and how it finances its priorities.25 Such a reexamination
should usefully consider how responsibilities should be allocated and
shared across the many nonfederal entities in our system as well.
As we rethink the federal role, many in the state and local or business
sector would view unfunded mandates as among the areas warranting serious
reconsideration. Unfunded mandates potentially can weaken accountability
and remove constraints on decisions by separating the enactment of benefit
programs from the responsibility for paying for these programs. Similar
objections, however, could also be raised over 100 percent federal
financing of intergovernmental programs, since this could vitiate the kind
of fiscal incentives necessary to ensure proper stewardship at the state
and local level for shared programs.
Reconsideration of responsibilities begins with the observation that most
major domestic programs, costs and administrative responsibilities are
shared and widely distributed throughout our system. The fiscal burdens of
public policies in areas ranging from primary education to homeland
security are the joint responsibility of all levels of government and, in
some cases, the private sector as well. As we reexamine the federal role
in our system, there is a need to sort out how responsibilities for these
kinds of programs should be financed in the future. Sorting out fiscal
responsibilities involves a variety of considerations. Issues to be
considered include the fiscal capacity of various levels of government to
finance services from their own resources both now and over the long term
as well as the extent to which the benefits of particular programs or
services are broadly distributed throughout the nation. Moreover,
consideration should also be given to the fiscal capacity of various
levels of government and other entities to finance their share of
responsibilities in our system, both now and over the longer term.
25 GAO-05-325SP.
The following kinds of questions can be raised as part of this
reexamination of fiscal responsibilities
o What governmental activities should fall entirely within the purview of
the federal or state/local governments and what activities should be
shared responsibilities?
o If the federal government "mandates" activities to be undertaken by
state/local governments, under what circumstances is it appropriate for
the federal government to finance them and what share of the costs should
be borne by federal and nonfederal sources?
o Are the potential revenue sources available to the various level of
government adequate to finance their responsibilities?
Because issues involving UMRA and unfunded mandates are part of a broader
public policy debate to be had by Congress, we are making no
recommendations in this report.
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 Ranking
Member, Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia, Committee on Homeland Security
and Governmental Affairs, U.S. Senate; the Chair and Ranking Member of the
Government Reform Committee, House of Representatives; the Directors of
OMB and CBO and 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 or Tim Bober at (202) 512-6806 or [email protected] or
[email protected]. Key contributors to this report were Tom Beall, Kate
Gonzalez, Boris Kachura, Paul Posner, and Michael Rose.
Sincerely yours,
Orice M. Williams Director Strategic Issues
Appendix I
Objectives, Scope, and Methodology
For this report, you asked us to provide more information and analysis
regarding the Unfunded Mandates Reform Act of 1995 (UMRA) and federal
mandates in general. Specifically, you asked us to consult with a diverse
group of knowledgeable parties familiar with the act and to report their
views on (1) the significant strengths and weaknesses of UMRA as the
framework for addressing federal mandates issues, including why the
parties believed the issues they identified were significant, and (2)
potential options suggested for reinforcing the strengths or addressing
the weaknesses. For both of those central objectives, you also asked that
we report, to the extent possible, on level of agreement among the various
individuals and organizations, which we refer to as "parties" throughout
the report.
To address our objectives, we primarily used a structured data collection
approach to obtain feedback from a diverse set of organizations and
individuals knowledgeable about the implementation of UMRA and/or federal
mandate programs. To identify prospective parties, we first built upon our
recognition of knowledgeable parties based on our past work on unfunded
mandates by conducting extensive literature reviews on federal mandates
issues. Second, as we contacted the individuals, we asked each of them to
recommend other knowledgeable parties for us to contact. In total, 52
individuals and organizations participated in the review. (See app. II for
the list of organizations and individuals who provided information
responding to our research questions.)
The parties provided us their input through a variety of means, including
group meetings, individual interviews, and written responses. We sought
and obtained viewpoints from organizations and individuals across a broad
spectrum of interested communities that we classified into five sectors
for purposes of structuring our analyses. These sectors were: academic
centers and think tanks; businesses; federal agencies (including executive
and legislative branch agencies); public interest advocacy groups; and
state and local governments. (For a comprehensive list of their comments
and suggested options, see appendix IV, which is available as an
electronic supplement to this report.)
We reviewed all the information provided by those various parties and
organized it on the basis of the topics they addressed. To facilitate
analysis and discussion of the considerable amount of information provided
by the sources, we first itemized the input, to the extent possible, into
a set of discrete separable points. In some instances, if a party's
comments were part of a more lengthy discussion addressing a larger issue,
we kept the
Appendix I
Objectives, Scope, and Methodology
material together to avoid losing the context of the input. Next, we
identified seven broad topical areas or themes, which we used to classify
the specific comments, observations, issues, and options that were
provided:
1. uses and usefulness of information UMRA generates,
2. UMRA coverage of federal actions,
3. UMRA enforcement,
4. UMRA's analytic framework,
5. UMRA consultation requirements,
6. design and funding of federal mandates, and
7. evaluation and research needs regarding federal mandates.
These themes were further characterized as falling into one of two sets.
The first five themes captured input specifically on UMRA and its
provisions, and the remaining two themes captured input that was focused
on issues about federal mandates in general.
We then analyzed and independently coded the resulting master table on the
parties' input using the themes listed above.1 Any differences in the
coding were discussed and a team consensus code determined. If the party's
input touched on more than one theme (for example, options might have been
suggested regarding both enforcement of UMRA and how to improve
estimates), we assigned multiple codes. Therefore, items with multiple
codes are repeated under each relevant theme subsection in this document.
This coding into themes was not intended to be precise or to limit
suggested options to only certain topics. The coding was simply intended
to help group together items that included input relevant to a given
topic.
To ensure that our organization and characterization of the information
that the parties provided accurately reflected their views, we provided
each
1 Some of the parties' feedback did not fit within any of the seven more
distinct themes. We coded that information as "other".
Appendix I
Objectives, Scope, and Methodology
contributor an opportunity to review our summary of their input. They
generally concurred with the accuracy of our characterization of their
views and, in a few instances, supplemented or clarified their original
comments by providing additional information, which we incorporated into
our master list of parties' responses. (Again, see app. IV, which is an
electronic supplement for a complete list of the information provided by
all of the contributing parties.)
We supplemented the information obtained through this broad data gathering
effort with a half-day symposium held at GAO on January 26, 2005,
involving 26 experts from across all five sectors. (See app. III for a
list of the symposium participants.) The overall objectives of the
symposium were to provide an opportunity for the participants from
different sectors and viewpoints to engage each other, to discuss in more
depth the issues and options previously identified, to identify additional
options for augmenting strengths or addressing weaknesses, and to
elaborate on the relative priorities of the options suggested. To meet
these objectives in the limited time available, the discussions at the
symposium were structured to focus mainly on the three themes that
appeared to attract the greatest number and/or variety of comments during
our initial data collection, as well as to address themes from both the
UMRA-specific and general mandate sets: UMRA coverage, UMRA enforcement,
and the design and funding of federal mandate programs.2 To encourage open
and candid input from the various parties, we are not attributing any
input from either our general data collection effort or the symposium to
specific organizations or individuals.
While our initial data collection effort and the symposium collectively
yielded information of considerable breath and depth on UMRA and
UMRA-related issues and options, the information we gathered only
represents the views of those organizations and individuals who chose to
participate in this review. For this reason and related issues, this
information provides only a rough gauge as to the prevalence of opinion
about given issues or options or the extent to which there is agreement
among and within particular sectors about those issues and options.
Despite our efforts to solicit a comparable level of input from the
different sectors, fewer identified parties from some sectors chose to
participate in our review than others. When parties who chose not to
participate
2 We also provided time for an "open forum" to give participants an
opportunity to discuss any other UMRA or mandate-related issues and
options they wished to raise.
Appendix I
Objectives, Scope, and Methodology
recommended other contacts that they considered as knowledgeable about
UMRA and mandates issues, we sought the participation of the recommended
contacts, which allowed us to partially mitigate the extent of
non-participation.
Also, given the variety of methods and sources used to collect the views,
we structured our analyses of prevalence and agreement to avoid double
counting the same response provided by different representatives of an
organization at different points in time. We did this by categorizing the
input on an identified issue or option that we received from a specific
entity, whether it came from multiple sources or a single source, as the
view of a party. To illustrate this categorization process, a reference to
"one party" may represent the views of many representatives of a given
organization obtained through a number of meetings or interviews, while
another such "one party" reference may represent the views of one person
through a single written response.3 Similarly, in examining the comments
classified each theme, if the same issue was identified as a strength by
one party and a weakness by another party, we counted the comments as
applying to the same issue. While these steps help address some of the
difficulties in examining the prevalence of views and agreement between
parties, it is a very imprecise assessment.
We conducted our review from August 2004 through February 2005 in
Washington, D.C., in accordance with generally accepted government
auditing standards.
3 Unless noted otherwise, our reported "counts" in the body of this report
refer to the number of parties who gave a particular response. However, we
do report all responses by all representatives of an organization in
appendix IV.
Appendix II
Parties Providing Input to GAO's Review
Organizations Note: Multiple officials and/or staff members of these
organizations may have contributed information for our review.
1.
2.
3.
4.
5.
6.
7.
8.
9.
American Association of People with Disabilities (AAPD)
American Federation of State, County, and Municipal Employees (AFSCME)
American Public Power Association (APPA)
The Arc of the United States
Association of Metropolitan Sewerage Agencies (AMSA)
Center on Budget and Policy Priorities (CBPP)
Congressional Budget Office (CBO)
Congressional Research Service (CRS)
Council of State Governments (CSG)
10. Federal Funds Information for States (FFIS)
11. International City/County Management Association (ICMA)
12. Mercatus Center
13. National Association of Counties (NACO)
14. National Association of Protection and Advocacy Systems (NAPAS)
15. National Association of State Budget Officers (NASBO)
16. National Conference of State Legislatures (NCSL)
17. National Governors Association (NGA)
18. National League of Cities (NLC)
Appendix II
Parties Providing Input to GAO's Review
19. Natural Resources Defense Council (NRDC)
20. Office of Advocacy, Small Business Administration
21. Office of Management and Budget (OMB)
22. OMB Watch
23. Regulatory Brown Bag (regulatory staff from the Departments of
Justice, Labor, Transportation, and Veterans Affairs, the Environmental
Protection Agency, and the Federal Communications Commission)
24. U.S. Chamber of Commerce
25. U.S. Conference of Mayors (USCM)
Individuals 1. Bob Adler, University of Utah
2. Katherine Baiker, Dartmouth College
3. Bob Behn, Harvard University
4. Richard Belzer, Regulatory Checkbook
5. Neil Bergsman, State of Maryland (former Maryland Budget Director)
6. Howard Chernick, Hunter College, CUNY
7. Timothy Conlan, George Mason University
8. David Driesen, Syracuse University
9. Michael Greve, American Enterprise Institute
10. Thomas Hopkins, Rochester Institute of Technology
11. Elizabeth Keating, Harvard University
12. Cornelius Kerwin, American University
Appendix II
Parties Providing Input to GAO's Review
13. John Kincaid, Meyner Center for the Study of State and Local
Government
14. Greg Lashutka, Nationwide
15. Bill Leighty, Virginia Governor's Office
16. Mark Ragan, Nelson A. Rockefeller Institute of Government
17. Andrew Reschovsky, University of Wisconsin-Madison
18. Brian Riedl, The Heritage Foundation
19. Stephen Slivinski, Cato Institute
20. Claudio Ternieden, American Association of Airport Executives
21. Jim Tozzi, Center for Regulatory Effectiveness
22. Edward Zelinsky, Cardozo Law School
Appendix III
Participants in GAO Federal Mandates Symposium, January 26, 2005
1. Keith Bea, Congressional Research Service
2. Richard Belzer, Regulatory Checkbook
3. Neil Bergsman, State of Maryland
4. Richard Beth, Congressional Research Service
5. Jay Cochran, III, Mercatus Center
6. Timothy Conlan, George Mason University
7. Curtis Copeland, Congressional Research Service
8. David Driesen, Syracuse University
9. Patrice Gordon, Congressional Budget Office
10. Teri Gullo, Congressional Budget Office
11. Thomas Hopkins, Rochester Institute of Technology
12. Cornelius Kerwin, American University
13. Greg Lashutka, Nationwide
14. Iris Lav, Center on Budget and Policy Priorities
15. Bruce Lundegren, U.S. Chamber of Commerce
16. Paul Marchand, The Arc of the United States
17. Alysoun McLaughlin, National Association of Counties
18. Eric Olson, Natural Resources Defense Council
19. Scott Pattison, National Association of State Budget Officers
20. David Quam, National Governors Association
21. Mark Ragan, Nelson A. Rockefeller Institute of Government
Appendix III Participants in GAO Federal Mandates Symposium, January 26,
2005
22. Molly Ramsdell, National Conference of State Legislatures
23. Amy Scott, Council of State Governments
24. Robert Shull, OMB Watch
25. Claudio Ternieden, American Association of Airport Executives
26. Yvette Tetreault, Federal Funds Information for States
Appendix IV
Parties' Feedback on UMRA and Federal Mandates
This e-supplement is available on our Web site at
http://www.gao.gov/cgibin/getrpt?GAO-05-497SP.
Appendix V
Summary of Parties' Suggested Options
Once the strengths, weaknesses and options were identified and reviewed,
GAO developed a thematic framework for classifying and organizing this
information.
Below is a summary list of the options provided by participating parties
organized by theme. The list of options presented under each theme is
intended to be a complete accounting of the suggested options associated
with that theme. The lists are not in any particular order and do not to
reflect the relative frequency with which participating parties identified
the same or similar option. Options appear on these lists if mentioned by
even one participating party. See appendix I for further information about
the procedures followed in the organization of this information and
associated qualifications concerning its use. See appendix IV e-supplement
for a detailed listing of options as suggested by participants as part of
their response to perceived strengths and weaknesses.
1: Uses and Usefulness of Information UMRA Generates
o Provide for more centralized review of regulatory mandates.
o Analyze benefits, as well as costs, of mandates.
o Apply the Data Quality Act criteria to information generated under UMRA
o Congress should track "unfunded mandates," defined broadly.
o Congress and OMB should develop more expertise on regulations and how
to govern them.
o The most important point is to clarify in advance what consequences
federal actions will have.
o Although additional program evaluation of federal mandates would help,
this was not the initial intent of UMRA.
o Research into the scope and scale of unfunded mandates will not be
informative unless and until the law has adequate incentives for
compliance and accounting.
o It would be useful for the GAO to provide an annual report documenting
the total budgetary shortfall of unfunded mandates.
Appendix V
Summary of Parties' Suggested Options
o Make the potentially affected nonfederal parties aware when there is a
finding that proposed legislation contains a mandate.
o Enhance the work of CBO's State and Local Government Cost Estimates
Unit by providing the unit more timely access to bills and joint
resolutions that may impose unfunded federal mandates.
2: UMRA Coverage of Federal Actions
o Generally amend, modify or revisit the definitions, exceptions, and
exclusions under UMRA and "close loopholes."
o Eliminate/amend exceptions for conditions of federal financial
assistance and participation in voluntary programs.
o Expand UMRA to cover appropriations bills and other legislation
currently not covered.
o Expand UMRA to cover changes in conditions of existing programs.
o Cover rules issues by independent agencies.
o Amend UMRA to include federal tax actions that reduce state revenues.
o Amend UMRA to include federal preemptions.
o Amend/eliminate the national security exclusions.
o Amend/eliminate the civil rights exclusions.
o Change cost thresholds and definitions for purposes of identifying
mandates that trigger UMRA's threshold.
o Expand the definition of an unfunded mandate to include all open-ended
entitlements, such as Medicaid, child support, and Title 4E (foster care
and adoption assistance) and proposals that would put a cap on or enforce
a ceiling on the cost of federal participation in any entitlement or
mandatory spending program.
o Expand the definition of mandates to include those that fail to exceed
the statutory threshold only because they do not affect all states.
Appendix V
Summary of Parties' Suggested Options
o Broaden the definitions in UMRA to apply to federal processes that do
not result in published rules but have the effect of a mandate. A wider
definition of UMRA's applicability is needed to address such processes.
o UMRA hasn't been as successful in dealing with previous mandates as in
discouraging new mandates, but I am not sure how UMRA could be changed to
address that.
o UMRA should authorize CBO to identify and estimate the costs of
potential mandates in final agency rules. This would be a purely
informational function.
o UMRA should authorize CBO to identify and estimate the costs of
potential mandates in U.S. Supreme Court rulings. The information provide
by CBO analyses of judicial intergovernmental mandates would allow the
Congress to provide compensatory funding to state and local governments
and/or to amend statutes that produce unintended judicial mandates.
o Under title II, amend the limitation of UMRA not applying to rules
without a notice of proposed rulemaking.
o The Joint Committee on Taxation, responsible for performing costs
estimates of tax legislation, should provide additional information on the
costs of mandates outside of UMRA's strict definition, as CBO endeavors to
do.
o Establish an institutional entity whose responsibilities include
analysis of federal policies and actions that affect state and local
governments.
o [Require] substantive reporting on legislative, government-sought
judicial and regulatory preemptions regardless of cost thresholds.
o Don't expand UMRA's coverage; keep it narrow.
o Retain the current rights exclusions.
o Add new exclusions.
o Drop or differentiate coverage of private sector mandates.
Appendix V
Summary of Parties' Suggested Options
o Clarify definitions under UMRA and ensure consistency of
implementation.
3. UMRA Enforcement o Maintain the current point of order mechanism.
o Strengthen the point of order mechanism.
o Reconsider the usefulness of the point of order mechanism.
o Require roll call votes for legislation imposing an unfunded federal
mandate.
o Put some backbone into the UMRA requirements that committees provide.
information, e.g., set up a hurdle for consideration of legislation if
committees leave out required information.
o Open the CBO methodology for comment, perhaps through the Federal
Register or by requiring an independent examination of the process used by
CBO.
o There may be a need to "toughen up" UMRA. Making the "roar" of UMRA a
little bigger might at least increase attention to these issues. However,
it is not certain one could get Congress to pay more attention
legislatively, nor can you legislate Congress from imposing mandates. In
short, it is not certain that there are any procedural fixes that could
address the problem of unfunded mandates.
o It is not certain that fixing or simplifying UMRA's procedures would
address the underlying purposes of the act.
o Generally strengthen enforcement of agency compliance with title II.
o Reassign oversight responsibilities for agencies' compliance with title
II.
o Apply the Federal Data Quality Act to agencies' UMRA analyses.
o Create more accountable means of estimating mandate costs.
o Improve title II, including enhanced requirements for federal agencies
to consult with state and local governments and the creation of an office
within the Office of Management and Budget that is analogous to the
Appendix V
Summary of Parties' Suggested Options
State and Local Government Cost Estimates Unit at the Congressional Budget
Office.
o Revisit the provisions of title II.
o The Office of Information and Regulatory Affairs should return a rule
that is not in compliance with UMRA to the agency from which it came. If
an agency is unsure whether a rule contains a significant mandate, it
should err on the side of caution and prepare a mandates impact statement
prior to issuing the regulation.
o Expand judicial review provisions
4. UMRA Analytical Framework
o Implement some form of third-party, independent review of the UMRA
estimates, data, and processes.
o Revisit the exclusion of indirect costs from UMRA estimates.
o Expand the title II definition to include more than just expenditures
for purposes of triggering the UMRA threshold.
o Consider new approaches to address uncertainties in the estimation of
potential effects of mandates.
o Analyze the benefits, as well as the costs, of federal mandates in UMRA
estimates.
o Examine/monitor the implementation of the UMRA estimation process and
mandate determinations by different agencies.
o Amend UMRA so that Federal regulatory agencies would not be allowed to
avoid congressional mandates by mischaracterizing the cost of a
rulemaking.
o Congress should amend UMRA to lower the fiscal impact threshold for
federal agency intergovernmental mandates from $100 million to $50
million.
o UMRA estimates should be done on a regional/local level basis also, not
just at an aggregate national level.
Appendix V
Summary of Parties' Suggested Options
o Federal agencies should look into the cost-benefit ratio of their
mandates.
o Other agencies should consider emulating CBO's approach of more
centralized reviews of statutes and direct contacts with state and local
governments when preparing estimates.
o Enhance the work of CBO's State and Local Government Cost Estimates
Unit by providing more timely access to bills and joint resolutions that
may impose unfunded federal mandates.
o Require UMRA-like estimates when major changes in grant conditions
and/or formulas occur.
o Clarify what constitutes a mandate and whether a bill's effect on the
costs of existing mandates should be counted as a new mandate cost when
the bill itself contains no new enforceable duty.
5. UMRA Consultation Requirements
o Replicate on the regulatory side approaches CBO uses for reviews of
statutory mandates.
o Bring more uniformity and consistency to the consultation process.
o Do more to involve State and local governments early in the rulemaking
process.
o Provide more training and education to agencies' regulatory staffs and
their contractors who prepare many of the rulemaking studies and
materials, such as regulatory impact analyses.
o State and local governmental authority to reject mandates or litigate
based on noncompliance with clear statutory criteria would dramatically
improve states' ability to ensure that federal agencies take seriously
their duty to consult.
o More parties may need to be covered by the consultation provision
(e.g., not just focused on state, local, and tribal governments).
o Intergovernmental communications should be documented and made part of
the rulemaking proceeding while deliberation about the proposal is still
going on. If not, the decision making process is opaque.
Appendix V
Summary of Parties' Suggested Options
o To avoid elevating the position of one particular voice in the debate,
amend the consultation provisions of UMRA so the act does not require
federal agencies to consult with state, local and tribal governments
before a regulation is proposed.
6. Design and Funding of Federal Mandates
o Ensure sufficient federal funding for mandated services
o Provide state and local governments waivers, offsets, etc.
o Compliance with federal mandates should not be made contingent on full
federal funding.
o Cap the costs of mandates on state and local governments.
o Provide more flexibility in the design of mandate programs.
o Design federal mandate programs with sunset provisions.
o Restrict the preemption of state laws.
o Something bigger than just amending UMRA is needed to address this
policy issue. Question whether an entitlement approach and model for
federal funding (as with the Medicaid program) makes sense as public
policy for providing federal assistance. An eligibility-based system
becomes an entitlement program under which costs are hard to control. In
contrast, a block grant model lets states experiment with flexible
approaches and cap some costs. However, it is questionable whether there
would ever be a way to modify the federal model for these programs so they
weren't entitlements.
o This dilemma can't be solved by just another federal statute or
amendment to UMRA. Discipline is the only real solution to curbing the
practice of Congress adding, and often changing, lots of conditions that
come with federal programs and funding.
o Most states have created a budget that is dependent on the federal
funding, and measures need to be taken to wean the state system off the
federal revenue.
o The federal government should consider using a "zero-based budgeting"
approach to funding for federal mandates. Such an approach would flip
Appendix V
Summary of Parties' Suggested Options
the usual arrangement so that states would get no federal funds (e.g.,
federal highway funds) until they do what is required under federal
statutes.
o There hasn't been sufficient consideration of user fees. For example,
if there is a permitting program that is delegated to the states, the
applicants should bear the cost of the permitting process, not the states.
o Incongruous to require cost-benefit analysis for regulations but only
require cost estimate for legislation. Address the incongruity of
requiring cost-benefit analysis for regulations but only requiring cost
estimates for legislation.
o Cost-effectiveness of UMRA has not been explored. Explore the
costeffectiveness of UMRA.
7. Evaluation and Research Needs Regarding Federal Mandates
o Do retrospective analyses of the costs and/or effects of mandates.
o Do a study/provide data on the cumulative impact of federal mandates.
o Do studies/provide data on the local/regional impacts of mandates.
o Analyze benefits, as well as costs, of federal mandates.
o Federal agencies should look into the cost-benefit ratio of their
mandates.
o It might help to provide more training and education to agencies'
regulatory staffs and their contractors who prepare many of the rulemaking
studies and materials, such as regulatory impact analyses.
o A first step in getting states to do what laws mandate is simply to
report, in a straightforward way, what states are or are not doing (e.g.,
have a "national scorecard" or central point of contact where one could go
to get such information).
o GAO's report on UMRA should try to bring a little more clarity to the
mandates issue. It would be valuable to discuss conceptually what an
unfunded mandate is and identify the associated federalism issues.
Appendix V
Summary of Parties' Suggested Options
o Do research on whether the statute [UMRA] has changed agencies'
regulations.
o Help Congress and the general public to recognize that these numbers
[the UMRA estimates] are soft.
o We question whether the federal agencies that are imposing the mandates
should also evaluate the mandates. We advocate third-party review of the
benefits of agency mandates, and their cost estimates or some similar
mechanism to have someone look at the agencies' mandates, estimates and
data./
Appendix VI
Results of Federal Mandates Symposium Balloting Process
GAO conducted two information collection efforts to arrive at our findings
regarding UMRA and federal mandates' strengths, weaknesses and options.
The first was an effort focusing on 52 organizations and individuals that
are knowledgeable about UMRA and federal mandates. We solicited
information from these parties regarding the strengths, weaknesses and
options. On the basis of our analysis of the information provided by these
parties, we identified seven major themes.
The second information collection effort was a symposium held on January
26, 2005. All the parties we contacted during our initial data collection
phase were invited to attend. In addition, we sent each of them a
discussion draft presenting all of the issues (strengths and weaknesses)
and options suggested to address those issues. The symposium was divided
into four sessions with three of the four sessions focused on the themes
most frequently cited. Sessions 1 and 2 focused on UMRA-specific themes
(coverage and enforcement, respectively), Session 3 dealt with broader
federal mandates issues (design and funding), and Session 4 was an open
session for other issues that participants wanted to raise.
Each session was opened with a brief overview provided by GAO and was
followed by an open discussion among the participants. To obtain a general
sense of which suggested options had the greatest or least amount of
support among the symposium participants, we used a balloting process at
the end of each session. We provided the participants a ballot that was to
be completed at the end of each session. Each ballot listed the options
suggested for that theme collected during our initial information
collection effort. Second, the participants were asked to review the
ballot and provide any additional options during the course of the
discussion that they wanted to be added to the ballot and considered in
the balloting process. At the conclusion of a session, we asked each
participant to identify (a) the three options having their greatest
support and (b) the three options they could not support.
The results of that balloting for the symposium sessions are presented
below. As mentioned previously, all the suggested options on the ballot
were provided by the parties we contacted during the initial data
collection phase or added by participants during the symposium. In accord
with the voting instructions, we present for each session the top three
options getting the most votes. These results reflect the views of
symposium participants only and are provided to convey a general sense of
their preferences. Due to variation in vote tallies for each of these
options, these
Appendix VI
Results of Federal Mandates Symposium
Balloting Process
results should not be construed as showing options achieving a consensus
among symposium participants.
Symposium Session 1: UMRA Coverage
Options that participants indicated had their greatest support:
o Generally amend, modify or revisit the definitions, exceptions, and
exclusions under UMRA and "close loopholes."
o Amend UMRA to include federal preemptions.
o Move to definition of whether it will cost state and local governments
money to comply-so as to include federal tax changes that affect state
revenue system, requirements that are a condition of federal fiscal
assistance and similar issues.
Options that participants indicated they could not support:
o Don't expand UMRA's coverage; keep it narrow.
o Amend or eliminate the civil rights exclusions in UMRA.
o Add new exclusions for mandates regarding public health, safety,
environmental protection, workers' rights, and disability.
Symposium Session 2: UMRA Enforcement
Options that participants indicated had their greatest support:
o Create an office within the OMB that is analogous to the State and
Local Government Cost Estimate Unit at CBO.
o Require program legislation to contain mandate cost authorizations;
provide that a mandate (including mandate pursuant to regulations) not
funded at the authorized level for a fiscal year is held in abeyance
unless the funding or obligations are altered to remove the inconsistency.
o Add processes for accounting for cumulative effects of regulatory
activities in similar fields, (e.g., environmental regulations) including
a requirement to collect data on actual costs.
Appendix VI
Results of Federal Mandates Symposium
Balloting Process
Options that participants indicated they could not support:
o Maintain the current point of order mechanism (i.e., keep the status
quo).
o Empower the states to either reject mandates on their own authority or
litigate congressional and/or agency noncompliance with clear statutory
criteria.
o Cap the magnitude of actual state and local outlays at a level equal to
the Congress's or an agency's prior estimate of those burdens to eliminate
incentives to underestimate the impacts and provide a level of discipline
to determinations of whether proposals contain significant unfunded
mandates.
Symposium Session 3: Design and Funding of Federal Mandate Programs
Options that participants indicated had their greatest support:
o Restrict the preemption of state laws.
o Consider the effects of the timing of federal actions and program
changes on state governments. Recognize that states (and the populations
served by federal-state programs) are very diverse.
o Create a mechanism, similar to section 610 of the Regulatory
Flexibility Act, where agencies would evaluate the effectiveness of a
mandate after a certain period of time (e.g., 5 or 10 years).
Options that participants indicated they could not support:
o As an option for addressing the funding of mandates, consider waivers
or swaps. Amend UMRA so that, if a mandate is legislated, then state and
local governments gain certain waiver rights or a regulatory "off ramp"
when faced with costly mandates.
o Remind states that participation in some of the federal mandate
programs is voluntary and, therefore, states can opt out of the programs
if participation is considered too costly.
Appendix VI
Results of Federal Mandates Symposium
Balloting Process
o The federal government should consider using a "zero-based budgeting"
approach to funding for federal mandates. Such an approach would flip the
usual arrangement so that states would get no federal funds (e.g., federal
highway funds) until they do what is required under federal statutes.
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