Unfunded Mandates Reform Act

• Author: William Funk - Jeffrey S. Lubbers
• Pages: 1137-1173

1137

UNFUNDED MANDATES REFORM ACT

22

1137

Unfunded

Mandates

Reform

Act

Citations:

2 U.S.C. §§ 1501-1571 (2012); enacted March 22, 1995, by Pub. L. No.

104–4, 109 Stat. 48.

Lead Agencies:

The Office of Information and Regulatory Affairs (OIRA) in the Office

of Management and Budget (OMB), New Executive Office Building, 725

17th St., NW, Washington, DC 20503, (202) 395-4852; Congressional Bud-

get Office, Budget Analysis Division, 430 Ford House Office Building, Sec-

ond and D Streets, SW, Washington, DC 20515-6925, (202) 226-2800.

Overview:

This legislation, which was enacted in 1995 with broad, bipartisan sup-

port, requires Congress and federal agencies (excepting independent agen-

cies) to give special consideration to proposed legislation and regulations

imposing mandates on state, local, and tribal entities. It also contains a spe-

cial provision (added at the end of the legislative process) requiring agencies

to prepare a special statement, in the nature of a regulatory impact analysis,

for any proposed rulemaking that is likely to result in an expenditure by the

private sector in excess of $100 million. The Act thus contains the only broad

regulatory impact analysis requirement currently mandated by statute, and as

such codifies many of the provisions in Executive Order 12,866. The Act’s

impact is, however, somewhat lessened because its provisions for judicial

review of agency compliance with the Act are somewhat limited.

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The Act’s purpose was to help reveal, and ultimately limit, the high (and

often hidden) costs of federal mandates on state and local governments to

undertake regulatory activity without sufficient federal compensation for this

activity.

Title I of the Act modifies the legislative process by requiring any Con-

gressional authorizing committee that approves a bill containing a federal

mandate (with some exceptions) to identify that mandate in its committee

report. The Congressional Budget Office must then estimate the overall im-

pact of such mandates and a point of order can be raised by any member

against a bill that lacks such an estimate or if the bill contains an unfunded

mandate exceeding $50 million burden on state and local governments or

$100 million on the private sector.

Title II of the Act addresses agency regulations containing regulatory

mandates of state, local, and tribal governments and on the private sector.

The key requirement is for a “statement to accompany significant regulatory

actions.” The statement is required in “any general notice of proposed

rulemaking that is likely to result in the expenditure by State, local, and

tribal governments, in the aggregate, or by the private sector, of $100,000,000

or more (adjusted annually for inflation) in any 1 year.”1

The statement must include (1) citation to the law under which the rule is

being promulgated, (2) “a qualitative and quantitative assessment of the an-

ticipated costs and benefits of the Federal mandate. . . as well as the effect of

the Federal mandate on health, safety, and the natural environment,” along

with an analysis of the availability of federal funds to help governments pay

for the mandate, (3) estimates of future compliance costs and of dispropor-

tionate budgetary effects on regions or particular governments or segments

of the private sector, (4) estimates of the effect on aspects of the national

economy, and (5) a summary of the agency’s consultations with elected rep-

resentatives. The agency must also develop a plan to specially notify small

governments of such requirements and develop a process to receive meaning-

ful and timely input from elective officials. In that connection, an exemption

from the Federal Advisory Committee Act is carved out for such consulta-

tions. A summary of this statement must appear in the notice of proposed

rulemaking. However, the Act does allow agencies to prepare the statement

“in conjunction with or as a part of any other statement or analysis . . .”

Before issuing a final rule that was subject to the above requirements, the

agency must “identify and consider a reasonable number of regulatory alter-

1In 2014, the inflation-adjusted amount on the original $100 million

amount was calculated by the Congressional Budget Office to be $154 million.

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UNFUNDED MANDATES REFORM ACT

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natives and from those alternatives, select the least costly, most cost-effective

or least burdensome alternative that achieves the objectives of the rule.”

Judicial review of agency compliance with the Unfunded Mandates Re-

form Act is limited. The Act provides that judicial review of the agency

statements accompanying significant regulatory actions is subject to review

only under 5 U.S.C. § 706(1)—which allows courts to “compel agency ac-

tion unlawfully withheld or unreasonably delayed.” This means that courts

may compel the production of such agency statements but cannot review the

contents of them. In fact, the Act makes clear that “the inadequacy or failure

to prepare such statement (including the inadequacy or failure to prepare any

estimate, analysis, statement or description) or written plan shall not be used

as a basis for staying, enjoining, invalidating or otherwise affecting such

agency rule.”2

The Act requires OMB to submit annual reports to Congress on agency

compliance with Title II of the Act, and OMB has submitted such reports

since 1996.

Legislative History:

In the 103rd Congress, eight bills were introduced that addressed the

issue of unfunded mandates. This was directly in response to the pressure

building over the previous 15 years from state and local governments. Over

those years, Congress continued a pattern of cutting federal funding while

enacting statutes that passed costs onto state and local governments without

providing funding to cover those costs. To demonstrate their dissatisfaction,

the state and local governments declared October 27, 1993, “National Un-

funded Mandates Day.”

S. 993 had the strongest support in the 103rd Congress. It was introduced

by Senator Dirk Kempthorne (R-ID) as the Community Regulatory Relief

Act, and had more than 50 co-sponsors. However, S. 993 was not considered

for a vote, and Congress adjourned without further consideration of the bill.

2See Allied Local and Regional Mfrs. Caucus v. EPA, 215 F.3d 61, 80 (D.C.

Cir. 2000) (holding (1) that the Act precluded review of EPA’s alleged failure to

select the “least costly, most cost-effective or least burdensome alternative that

achieves the objectives of the rule,” [§ 1535(a)], and (2) that although the Act

allowed limited judicial review of compliance with the requirement to prepare a

written cost-benefit analysis, the Act did not apply because EPA estimated the

total cost associated with the challenged rule to be only $32 million per year).