The National Conference of State Legislatures (NCSL) was a key, driving force behind enactment of the Unfunded Mandates Reform Act of 1995 (UMRA) and remains a strong supporter of the principles underlying the statute. NCSL encourages all federal agencies to adhere to the principles and spirit of UMRA when developing public policy intended to protect and serve the American people.

My testimony will focus strictly on the federal policymaking process. I have three points to make in my statement. First, adherence to UMRA is intended to become a part of the federal policymaking process, for both Congress and federal administrative agencies. UMRA should not be perceived as a roadblock, or even speed bump, impeding the swift development and implementation of public policy. One of the main purposes of UMRA is to provide federal and state officials with critical information that is continually compiled and used during deliberations in all policy areas.

Second, NCSL believes that Congress intended the federal administrative agencies to comply with UMRA during all significant rulemaking actions that were not specifically exempted under Title I Section 4 of the statute or under similar explicit statutory language. All federal agencies must produce the analysis required by UMRA during most rulemaking activities that will place a major financial burden on states.

Third, NCSL has grave concerns about the failure of the U.S. Environmental Protection Agency (EPA) to comply with UMRA during the recent rulemaking process to revise the air quality standards for fine particulate matter and ground level ozone. NCSL fears that EPA's failure to comply with UMRA may set a dangerous precedent for all future federal rulemaking activities. EPA reasons that promulgation of revised national air quality standards is exempt from the provisions of UMRA by court decisions rendered in the 1980's. This reasoning does not agree with the principles and spirit of UMRA nor does it conform to the stated wishes of the Administration to relieve the burden of unfunded federal mandates on the states. Furthermore, EPA's failure to publish this information suggests a deliberate challenge to the applicability of UMRA, given that EPA has already produced much of the analysis required under the act. The regulatory impact analysis that contains much of the cost and economic impact analysis is only available to those who go to EPA offices or have access to the Internet.

With this in mind, NCSL urges all federal agencies to produce and publish the in-depth analysis required under UMRA when promulgating significant regulations. Federal agencies must inform Congress and state officials of the present and future costs of compliance with such regulations.


Mr. Chairman and members of the committee, I am State Representative Brian Flaherty from the State of Connecticut. I serve on the Executive Committee of the National Conference of State Legislatures (NCSL). I offer testimony today on behalf of NCSL. Thank you for the opportunity to discuss the issues surrounding implementation of the Unfunded Mandates Reform Act of 1995.

NCSL is a bipartisan organization that represents America's 7,541 state lawmakers. One of the most important functions of NCSL is to analyze federal legislation and regulations to ensure that state and federal roles are clearly and equitably defined. NCSL facilitates successful development and implementation of federal laws and regulations by expressing to federal officials the needs and concerns of the states. Another critical function of NCSL is to provide state lawmakers with accurate and timely information regarding federal policy and initiatives.

My testimony on behalf of NCSL will focus solely on the implementation of the Unfunded Mandates Reform Act of 1995 (UMRA) and the statute's effect on the federal rulemaking process. I have three points to make in my statement.

First, adherence to UMRA is intended to become a part of the federal policymaking process, for both Congress and federal administrative agencies. UMRA should not be perceived as a roadblock, or even speed bump, impeding the swift development and implementation of public policy. One of the main purposes of UMRA is to provide federal and state officials with critical information to be continually compiled and used during deliberations in all policy areas now and in the future.

Second, NCSL firmly believes that Congress and the President intended the federal agencies to comply with UMRA during all significant rulemaking actions that were not specifically exempted under Title I Section 4 of the statute or are otherwise exempted by explicit statutory language. All federal agencies must produce the analysis required by UMRA during most rulemaking activities that will place a major financial burden on states.

Third, NCSL has grave concerns about the failure of the Environmental Protection Agency (EPA) to comply with UMRA during the recent rulemaking process to revise the air quality standards for fine particulate matter and ground level ozone. NCSL fears that EPA's failure to comply with UMRA may set a dangerous precedent for all future federal rulemaking activities. EPA reasons that it is exempted from the provisions of UMRA by court decisions rendered in the 1980's. This reasoning does not agree with the principles and spirit of UMRA nor is it consistent with the stated wishes of the Administration to relieve the burden of unfunded federal mandates on the states.

With these three points in mind, NCSL urges all federal agencies to produce and publish the in-depth analysis required under UMRA when promulgating significant regulations in order to inform federal and state officials of the present and future costs of compliance with such regulations. This analysis will facilitate, not hinder, achievement of the federal standards intended to protect and serve the American public.

1. The Purpose of The Unfunded Mandates Reform Act of 1995 (UMRA)

UMRA is an historic piece of legislation that recognizes the threat posed to our constitutional system of federalism by federal legislation that imposes costs and requirements on state and local governments without regard to their ability to comply. NCSL was deeply involved in the crafting of UMRA, and is committed to ensuring that it is faithfully implemented. Our objective is to ensure that the federal government meet the goals of the act, which include:

1. "to strengthen the partnership between the federal government and state, local and tribal governments;"
2. "to promote informed and deliberate decisions by Congress on the appropriateness of federal mandates in any particular instance;"
and
3. "to begin consideration of the effect of previously imposed federal mandates, including the impact on state, local, and tribal governments of federal court interpretations of federal statutes and regulations that impose federal intergovernmental mandates."

With the enactment of UMRA, Congress promised states relief from the burden of unfunded mandates and further promised states that federal agencies would work cooperatively with them to develop regulatory alternatives that are less expensive and more cost-effective. Congress and the Administration made a commitment, with the passage of UMRA, to provide relief from current and future mandates in order to preserve the financial viability of state governments, and ultimately to ensure the successful implementation of federal laws and regulations.

UMRA should not be regarded as a barrier or hindrance to national public policy. UMRA should be viewed as an innovative and contemporary tool to be used during development of federal laws and regulations. If fully implemented, the information generated under the provisions of UMRA will be used by current and future federal and state officials to better understand the roles and responsibilities of all the levels of government. This will ensure successful development, implementation, and administration of national policy.

2. Federal Agency Compliance with UMRA

Title II of UMRA requires federal agencies to prepare and consider estimates of the budgetary impact of regulations containing unfunded federal mandates on state, local and tribal governments, unless clearly prohibited by law. Congress imposed this requirement on federal agencies in order to generate the data necessary for informed congressional and presidential decisions on regulatory and appropriations issues.

That data includes:

1. Qualitative and quantitative assessments of the anticipated costs and benefits of the mandate;
2. Analysis of federal financial assistance and other federal resources available to state, local, and tribal governments;
3. Estimates of future compliance costs;
4. Analysis of any disproportionate budgetary effects on regions, states, localities and tribes;
5. Estimates of the effects on the national economy;
6. Reports of EPA's prior consultation with elected state, local and tribal officials;
7. Summary of submitted comments from the various levels of government; and
8. Evaluation of those comments.

NCSL believes that such data are critical to state, local and tribal governments. Members of Congress as well as the Administration also have a need to know how much the final air quality standards will cost the states in order to make informed legislative and executive decisions regarding the imposition of current and future mandates in all policy areas. Decisions by Congress and the President pertaining to funding of current and future mandates depend on accurate information from federal agencies regarding the financial burden on states and localities.

Congress clearly intended to require all federal administrative agencies to generate analysis during promulgation of significant regulations not exempted under Title I Section 4 of UMRA or similar statutory language that clearly states congressional intent to provide an exemption from UMRA process. Congress intended this analysis to be used to relieve or minimize the burden of unfunded federal mandates on states.

UMRA contains overall principles that federal agencies should follow during promulgation of federal regulations that impose unfunded mandates on states. NCSL asserts that all federal agencies should adhere to the principles and the spirit of UMRA--except in areas where Congress has specifically provided an exemption.

3. A Dangerous Precedent

NCSL has serious concerns surrounding EPA's stated refusal to comply with UMRA during development of the final regulations on new air quality standards for fine particulate matter and ground level ozone. EPA maintains, in the regulatory impact section of the final rules, that it is not required to comply and will not comply with any provisions of UMRA because "it is inconsistent with applicable law."

EPA says it is not required to produce the in-depth analyses called for under UMRA. We find this response alarming, particularly in light of EPA's preparation of, but refusal to publish, much of the analysis required under UMRA. EPA's reliance on potentially self-serving agency interpretation of case law predating the enactment of UMRA to avoid publishing such data ignores the clear intent of Congress. It amounts to a direct challenge to Congress and to the states. It reinforces the view that federal regulators have little concern for the financial consequences of federal regulations imposed on states. Moreover, EPA's action could encourage other federal agencies to follow this precedent of avoiding, by one means or another, meeting their full responsibilities under UMRA.

By its own admission, EPA has failed to follow provisions of Title II of UMRA in the rulemaking process for the new air quality standards. This is a disservice to Congress and to the states, both of which have an urgent need for these and all other mandate cost estimates. NCSL believes that EPA must publish the complete analysis required by UMRA in order to inform Congress of the amount of money states and localities will need to cover the cost of state compliance.

Absent a clear statement by Congress that it intended to exempt Clean Air Act regulations from UMRA process, neither EPA nor any other federal agency should presume that it is prohibited from adhering to UMRA when promulgating significant federal regulations, including setting national ambient air quality standards. Title I, Section 4 of UMRA clearly lists the categories of federal law that are excluded from its coverage. Neither the Clean Air Act nor national air quality standards are listed among those exemptions.

Section 201 of UMRA requires EPA to assess the full cost of state and local compliance with regulatory actions to revise the national ambient air quality standards for particulate matter and ozone. NCSL concurs with EPA's assessment that the aggregate economic burden of the final air quality standards will exceed $100 million. Therefore, the rules are considered "significant regulatory actions" that trigger further federal action under UMRA to reduce the burden on states, either by increasing appropriations or relieving regulatory costs.

Section 202 of UMRA requires EPA to disclose all federal funding and other resources available to states for implementation of the revised standards. This information allows states and localities to learn of innovative sources of federal funds. EPA assures states that federal funds will be provided to cover the costs associated with installing and operating monitoring stations, as well as costs associated with developing new state air quality improvement plans. However, EPA reluctantly reveals that all promises of federal funds hinge on congressional appropriations. EPA has not revealed any other sources of federal funds, or such sources that are not already dedicated to other state air quality projects and programs, that could be used in the event Congress did not appropriate the funding necessary to cover the cost of compliance.

Section 204 of UMRA requires EPA to work closely with state legislators and other elected state and local officials during development and implementation of any changes to the national ambient air quality standards. NCSL lauds EPA's formation of the Federal Advisory Committee (FACA) to provide regular and continued dialogue among state and local stakeholders on issues surrounding the final rules. Among the participants is a state senator from Minnesota who has attended and participated in past meetings and plans to continue participating in future meetings.

NCSL is also pleased with EPA's coordination of the Clean Air Act Advisory Committee to provide intergovernmental information sharing and dialogue on all issues surrounding the Clean Air Act. Listed among the members of the committee is a state senator from Maryland. NCSL understands that the state senator participates in advisory committee meetings and is content with the efforts that EPA is making to continue regular dialogue with state and local officials.

Section 205 of UMRA requires federal agencies to assess and consider all options and to adopt the least expensive and most cost-effective alternative regulatory route. Congress clearly intended to require EPA to consider cost issues and implementation problems when promulgating new air quality standards. Again, neither national ambient air quality standards nor the Clean Air Act are explicitly exempted under Title I Section 4 of UMRA, or similar statutory language that clearly states congressional intent to provide an exemption from UMRA process.

Congress and the Administration must have the detailed analyses required under UMRA in order to fulfill their obligation to provide federal funding for state compliance with the revised standards. The imposition of new air quality standards without additional federal funds contradicts the commitment of the Administration and Congress to reduce the burden of unfunded mandates on states.

Mr. Chairman and members of the committee, I urge you to do everything in your power to ensure that EPA and all other federal agencies comply with UMRA. The effective implementation of UMRA is essential not only in the context of Clean Air Act rulemaking activities but for all other federal administrative proceedings unless Congress has made a clear statement that a particular policy area is exempt. In passing UMRA, I am sure that you did not intend Title II to be an empty gesture and that you did not intend the "inconsistent with applicable law" language in Title II to be a loophole to allow EPA to avoid its compliance responsibilities. I believe and the members of NCSL believe that Congress intended for federal agencies to adhere to the requirements of UMRA.

Thank you for this opportunity to testify.

Judiciary Homepage