Unfunded mandates - the regulatory problem.

• Author: Zimmerman, Christopher
• Position: Unfunded Mandates Reform Act

Passage of the unfunded mandates act was hailed as victory for state and local governments. Now, however, it appears that federal agencies may be removing the bite from the law, tooth by tooth.

Each agency shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector..."

- Title II, Sec. 201 Unfunded Mandates Reform Act of 1995

Passage of the Unfunded Mandates Reform Act in 1995 was hailed as an historic victory for state and local governments. No one claimed that it would halt the federal practice of imposing regulations without funding. But, by requiring an estimate of the cost to state and local governments to accompany legislation imposing new mandates, it would at least make it more difficult, forcing the issue into the open and making cost consideration part of the discussion when new laws are debated.

Concern over federal mandates was never limited to Congress. Frequently, battles won in the legislative struggle would be overturned by agency rules. Having dissuaded Congress from imposing a particular mandate (or imposing it in a certain way), state and local officials might find the same objectionable provision included later on by the agency issuing regulations for the new statute. Thus, it was important for states that the executive branch be included under the law.

Title II of the act took aim at regulatory mandates by imposing a "fiscal note" requirement on agencies. They, too, would have to publish estimates of the costs to state and local governments when promulgating new rules. The president's Office of Management and Budget (OMB) would have to report annually on agency compliance. So how's it working? The results so far are underwhelming.

Two years after its enactment, the mandates reform law seems to have had less impact on federal agencies than it has had on Congress. Whereas the point-of-order provisions have been invoked and (perhaps more importantly) threatened on a number of occasions, to this point OMB has named only two proposed regulations as imposing federal mandates on state or local governments. (Another 27 have been identified with private sector mandates.)

To some it appears that federal agencies are taking the bite out of the law, tooth by tooth. Of course, it's possible that federal agencies have gotten religion on unfunded mandates and ceased issuing them. Some observers argue that the terms of the law are not...