This is the accessible text file for GAO report number GAO-05-454 
entitled 'Unfunded Mandates: Views Vary About Reform Act's Strengths, 
Weaknesses, and Options for Improvement' which was released on April 
14, 2005. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

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

Report to the Chairman, Subcommittee on 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: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-454]:

GAO Highlights: 

Highlights of GAO-05-454, a report to the Chairman, Subcommittee on 
Oversight of Government Management, the Federal Workforce and the 
District of Columbia, Committee on Homeland Security and Governmental 
Affairs, U.S. Senate: 

Why GAO Did This Study: 

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.

GAO makes no recommendations in this report.

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.

What GAO Recommends: 

www.gao.gov/cgi-bin/getrpt?GAO-05-454.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Orice M. Williams at 
(202) 512-5837, or williamso@gao.gov.

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

UMRA Coverage: 

UMRA Enforcement: 

Parties Across All Sectors Raise Other Issues, But Little or No 
Consensus Emerges: 

Sectors Also Provide More General Concerns About Federal Mandates: 

Observations: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Parties Providing Input to GAO's Review: 

Appendix III: Participants in GAO Federal Mandates Symposium, January 
26, 2005: 

Appendix IV: Parties' Feedback on UMRA and Federal Mandates: 

Appendix V: Summary of Parties' Suggested Options: 

Appendix VI: Results of Federal Mandates Symposium Balloting Process: 

Table: 

Table 1: UMRA Themes with Highest Frequency of Comments: 

Letter 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.[Footnote 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.[Footnote 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 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 6] Nonfederal observers, 
including parties affected by federal mandates, also increasingly have 
expressed 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.[Footnote 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.[Footnote 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 January 26, 2005.[Footnote 9] The purpose of this symposium 
was to have a more in-depth 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).[Footnote 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.)

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.[Footnote 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.[Footnote 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 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.[Footnote 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.[Footnote 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.[Footnote 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. 

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).[Footnote 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: 

Themes focused specifically on UMRA: Scope of UMRA's coverage of 
federal actions; 
Number of comments provided: 52. 

Themes focused specifically on UMRA: UMRA enforcement; 
Number of comments provided: 42. 

Themes focused specifically on UMRA: UMRA analytical framework; 
Number of comments provided: 23. 

Themes focused specifically on UMRA: Uses and usefulness of information 
UMRA generates; 
Number of comments provided: 25. 

Themes focused specifically on UMRA: UMRA consultation requirements; 
Number of comments provided: 14. 

Themes focused on federal mandate issues and programs in general: 
Design and funding of federal mandates; 
Number of comments provided: 24. 

Themes focused on federal mandate issues and programs in general: 
Evaluation and research needs regarding federal mandates; 
Number of comments provided: 23. 

Source: GAO. 

Note: Comment frequency is provided only as a rough gauge of the 
relative prevalence of themes addressed by participating parties 
comments. 

[End of table]

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.[Footnote 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.[Footnote 18]

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.[Footnote 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.[Footnote 
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."[Footnote 21]

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: 

* Generally revisit, amend, or modify the definitions, exceptions, and 
exclusions under UMRA and expand its coverage. 

* Clarify UMRA's definitions and ensure their consistent implementation 
across agencies to ensure that all covered provisions are being 
included. 

* 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. 

* Eliminate or amend the definitional exceptions for conditions of 
federal financial assistance or that arise from participation in 
voluntary federal programs. 

* 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.[Footnote 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 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.[Footnote 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 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."[Footnote 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 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 and Suggested Options Regarding UMRA 
Consultation Provisions: 

A few parties had comments regarding UMRA's requirement that federal 
agencies consult with elected officers of state, local and tribal 
governments (or their designees) on the development of proposals 
containing significant intergovernmental mandates. Parties from all 
five sectors commented on 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 More General Concerns About Federal Mandates: 

Parties from all sectors also raised a number of broader issues about 
federal mandates--namely, the design and funding and evaluation of 
federal mandates--and suggested a variety of options. 

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.[Footnote 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. 

The following kinds of questions can be raised as part of this 
reexamination of fiscal responsibilities: 

* What governmental activities should fall entirely within the purview 
of the federal or state/local governments and what activities should be 
shared responsibilities?

* 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?

* 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 [Hyperlink, 
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 [Hyperlink, 
williamso@gao.gov] or [Hyperlink, bobert@gao.gov]. Key contributors to 
this report were Tom Beall, Kate Gonzalez, Boris Kachura, Paul Posner, 
and Michael Rose. 

Sincerely yours,

Signed by: 

Orice M. Williams: 
Director: 
Strategic Issues: 

[End of section]

Appendixes: 

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 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.[Footnote 26] 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 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.[Footnote 27] 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 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.[Footnote 28] 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. 

[End of section]

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. American Association of People with Disabilities (AAPD): 

2. American Federation of State, County, and Municipal Employees 
(AFSCME): 

3. American Public Power Association (APPA): 

4. The Arc of the United States: 

5. Association of Metropolitan Sewerage Agencies (AMSA): 

6. Center on Budget and Policy Priorities (CBPP): 

7. Congressional Budget Office (CBO): 

8. Congressional Research Service (CRS): 

9. 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): 

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: 

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: 

[End of section]

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: 

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: 

[End of section]

Appendix IV: Parties' Feedback on UMRA and Federal Mandates: 

This e-supplement is available on our Web site at [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-497SP]. 

[End of section]

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: 

* Provide for more centralized review of regulatory mandates. 

* Analyze benefits, as well as costs, of mandates. 

* Apply the Data Quality Act criteria to information generated under 
UMRA: 

* Congress should track "unfunded mandates," defined broadly. 

* Congress and OMB should develop more expertise on regulations and how 
to govern them. 

* The most important point is to clarify in advance what consequences 
federal actions will have. 

* Although additional program evaluation of federal mandates would 
help, this was not the initial intent of UMRA. 

* 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. 

* It would be useful for the GAO to provide an annual report 
documenting the total budgetary shortfall of unfunded mandates. 

* Make the potentially affected nonfederal parties aware when there is 
a finding that proposed legislation contains a mandate. 

* 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: 

* Generally amend, modify or revisit the definitions, exceptions, and 
exclusions under UMRA and "close loopholes."

* Eliminate/amend exceptions for conditions of federal financial 
assistance and participation in voluntary programs. 

* Expand UMRA to cover appropriations bills and other legislation 
currently not covered. 

* Expand UMRA to cover changes in conditions of existing programs. 

* Cover rules issues by independent agencies. 

* Amend UMRA to include federal tax actions that reduce state revenues. 

* Amend UMRA to include federal preemptions. 

* Amend/eliminate the national security exclusions. 

* Amend/eliminate the civil rights exclusions. 

* Change cost thresholds and definitions for purposes of identifying 
mandates that trigger UMRA's threshold. 

* 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. 

* Expand the definition of mandates to include those that fail to 
exceed the statutory threshold only because they do not affect all 
states. 

* 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. 

* 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. 

* UMRA should authorize CBO to identify and estimate the costs of 
potential mandates in final agency rules. This would be a purely 
informational function. 

* 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. 

* Under title II, amend the limitation of UMRA not applying to rules 
without a notice of proposed rulemaking. 

* 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. 

* Establish an institutional entity whose responsibilities include 
analysis of federal policies and actions that affect state and local 
governments. 

* [Require] substantive reporting on legislative, government-sought 
judicial and regulatory preemptions regardless of cost thresholds. 

* Don't expand UMRA's coverage; keep it narrow. 

* Retain the current rights exclusions. 

* Add new exclusions. 

* Drop or differentiate coverage of private sector mandates. 

* Clarify definitions under UMRA and ensure consistency of 
implementation. 

3. UMRA Enforcement: 

* Maintain the current point of order mechanism. 

* Strengthen the point of order mechanism. 

* Reconsider the usefulness of the point of order mechanism. 

* Require roll call votes for legislation imposing an unfunded federal 
mandate. 

* 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. 

* Open the CBO methodology for comment, perhaps through the Federal 
Register or by requiring an independent examination of the process used 
by CBO. 

* 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. 

* It is not certain that fixing or simplifying UMRA's procedures would 
address the underlying purposes of the act. 

* Generally strengthen enforcement of agency compliance with title II. 

* Reassign oversight responsibilities for agencies' compliance with 
title II. 

* Apply the Federal Data Quality Act to agencies' UMRA analyses. 

* Create more accountable means of estimating mandate costs. 

* 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 State and Local Government Cost Estimates Unit at the 
Congressional Budget Office. 

* Revisit the provisions of title II. 

* 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. 

* Expand judicial review provisions: 

4. UMRA Analytical Framework: 

* Implement some form of third-party, independent review of the UMRA 
estimates, data, and processes. 

* Revisit the exclusion of indirect costs from UMRA estimates. 

* Expand the title II definition to include more than just expenditures 
for purposes of triggering the UMRA threshold. 

* Consider new approaches to address uncertainties in the estimation of 
potential effects of mandates. 

* Analyze the benefits, as well as the costs, of federal mandates in 
UMRA estimates. 

* Examine/monitor the implementation of the UMRA estimation process and 
mandate determinations by different agencies. 

* Amend UMRA so that Federal regulatory agencies would not be allowed 
to avoid congressional mandates by mischaracterizing the cost of a 
rulemaking. 

* Congress should amend UMRA to lower the fiscal impact threshold for 
federal agency intergovernmental mandates from $100 million to $50 
million. 

* UMRA estimates should be done on a regional/local level basis also, 
not just at an aggregate national level. 

* Federal agencies should look into the cost-benefit ratio of their 
mandates. 

* 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. 

* 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. 

* Require UMRA-like estimates when major changes in grant conditions 
and/or formulas occur. 

* 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: 

* Replicate on the regulatory side approaches CBO uses for reviews of 
statutory mandates. 

* Bring more uniformity and consistency to the consultation process. 

* Do more to involve State and local governments early in the 
rulemaking process. 

* 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. 

* 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. 

* More parties may need to be covered by the consultation provision 
(e.g., not just focused on state, local, and tribal governments). 

* 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. 

* 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: 

* Ensure sufficient federal funding for mandated services: 

* Provide state and local governments waivers, offsets, etc. 

* Compliance with federal mandates should not be made contingent on 
full federal funding. 

* Cap the costs of mandates on state and local governments. 

* Provide more flexibility in the design of mandate programs. 

* Design federal mandate programs with sunset provisions. 

* Restrict the preemption of state laws. 

* 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. 

* 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. 

* 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. 

* 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. 

* 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. 

* 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. 

* Cost-effectiveness of UMRA has not been explored. Explore the cost- 
effectiveness of UMRA. 

7. Evaluation and Research Needs Regarding Federal Mandates: 

* Do retrospective analyses of the costs and/or effects of mandates. 

* Do a study/provide data on the cumulative impact of federal mandates. 

* Do studies/provide data on the local/regional impacts of mandates. 

* Analyze benefits, as well as costs, of federal mandates. 

* Federal agencies should look into the cost-benefit ratio of their 
mandates. 

* 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. 

* 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). 

* 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. 

* Do research on whether the statute [UMRA] has changed agencies' 
regulations. 

* Help Congress and the general public to recognize that these numbers 
[the UMRA estimates] are soft. 

* 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. 

[End of section]

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 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: 

* Generally amend, modify or revisit the definitions, exceptions, and 
exclusions under UMRA and "close loopholes."

* Amend UMRA to include federal preemptions. 

* 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: 

* Don't expand UMRA's coverage; keep it narrow. 

* Amend or eliminate the civil rights exclusions in UMRA. 

* 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: 

* Create an office within the OMB that is analogous to the State and 
Local Government Cost Estimate Unit at CBO. 

* 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. 

* 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. 

Options that participants indicated they could not support: 

* Maintain the current point of order mechanism (i.e., keep the status 
quo). 

* Empower the states to either reject mandates on their own authority 
or litigate congressional and/or agency noncompliance with clear 
statutory criteria. 

* 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: 

* Restrict the preemption of state laws. 

* 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. 

* 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: 

* 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. 

* 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. 

* 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. 

(450339): 

FOOTNOTES

[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). 

[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. §§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. 

[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. 

[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 
non-participation. For example, business associations recommended 
parties in the academic/think tank sector as persons knowledgeable 
about private sector perspectives on mandates issues. 

[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. 

[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). 

[16] Coverage issues were also raised in other literature regarding 
federal mandates that we reviewed. 

[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. 

[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, § 
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. § 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. 

[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. 

[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. 

[24] GAO-04-637. 

[25] GAO-05-325SP. 

[26] Some of the parties' feedback did not fit within any of the seven 
more distinct themes. We coded that information as "other". 

[27] 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. 

[28] 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. 

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading. 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director,

NelliganJ@gao.gov

(202) 512-4800

U.S. Government Accountability Office,

441 G Street NW, Room 7149

Washington, D.C. 20548: