Unfunded Mandates Reform Act

AuthorWilliam Funk - Jeffrey S. Lubbers
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.
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.
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
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.
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).

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