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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congress Research Service (CRS)

 

Unfunded Mandates Reform Act: History, Impact, and Issues

Robert Jay Dilger,  Senior Specialist in American National Government

Richard S. Beth,  Specialist on Congress and the Legislative Process

December 12, 2013

http://www.fas.org/sgp/crs/misc/R40957.pdf

[full-text, 57 pages]

 

Summary

The Unfunded Mandates Reform Act of 1995 (UMRA) culminated years of effort by state and

local government officials and business interests to control, if not eliminate, the imposition of

unfunded intergovernmental and private-sector federal mandates. Advocates argued the statute

was needed to forestall federal legislation and regulations that imposed obligations on state and

local governments or businesses that resulted in higher costs and inefficiencies. Opponents argued

that federal mandates may be necessary to achieve national objectives in areas where voluntary

action by state and local governments and business failed to achieve desired results.

 

UMRA provides a framework for the Congressional Budget Office (CBO) to estimate the direct

costs of mandates in legislative proposals to state and local governments and to the private sector,

and for issuing agencies to estimate the direct costs of mandates in proposed regulations to

regulated entities. Aside from these informational requirements, UMRA controls the imposition

of mandates only through a procedural mechanism allowing Congress to decline to consider

unfunded intergovernmental mandates in proposed legislation if they are estimated to cost more

than specified threshold amounts. UMRA applies to any provision in legislation, statute, or

regulation that would impose an enforceable duty upon state and local governments or the private

sector. It does not apply to conditions of federal assistance; duties stemming from participation in

voluntary federal programs; rules issued by independent regulatory agencies; rules issued without

a general notice of proposed rulemaking; and rules and legislative provisions that cover

individual constitutional rights, discrimination, emergency assistance, grant accounting and

auditing procedures, national security, treaty obligations, and certain elements of Social Security.

 

State and local government officials argue that UMRA has restrained the growth of unfunded

federal mandates, but that its coverage should be broadened, with special consideration given to

including conditions of federal financial assistance. During the 112th Congress, H.R. 4078, the

Red Tape Reduction and Small Business Job Creation Act: Title IV, the Unfunded Mandates

Information and Transparency Act of 2012, passed by the House on July 26, 2012, would have

broadened UMRA’s coverage to include both direct and indirect costs, such as foregone profits

and costs passed onto consumers, and, when requested by the chair or ranking Member of a

committee, the prospective costs of legislation that would change conditions of federal financial

assistance. The UMRA provisions in the bill (reintroduced as H.R. 899, the Unfunded Mandates

Information and Transparency Act of 2013, during the 113th Congress), as well as several other

bills considered during the 112th Congress, would have made private-sector mandates subject to a

substantive point of order and would have removed UMRA’s exemption for rules issued by most

independent agencies. Other organizations have argued that UMRA’s coverage should be

maintained or reinforced by adding exclusions for mandates regarding public health, safety,

workers’ rights, environmental protection, and the disabled.

 

This report examines debates over what constitutes an unfunded federal mandate and UMRA’s

implementation. It focuses on UMRA’s requirement that CBO issue written cost estimate

statements for federal mandates in legislation, its procedures for raising points of order in the

House and Senate concerning unfunded federal mandates in legislation, and its requirement that

federal agencies prepare written cost estimate statements for federal mandates in rules. It also

assesses UMRA’s impact on federal mandates and arguments concerning UMRA’s future,

focusing on UMRA’s definitions, exclusions, and exceptions that currently exempt many federal

actions with potentially significant financial impacts on nonfederal entities. An examination of

the rise of unfunded federal mandates as a national issue and a summary of UMRA’s legislative

history are provided in Appendix A. Citations to UMRA points of order raised in the House and

Senate are provided in Appendix B.

 

Contents

An Overview of UMRA, Its Origins, and Provisions ...................................................................... 1

Overview ................................................................................................................................... 1

Origin ......................................................................................................................................... 1

Summary of UMRA’s Provisions .............................................................................................. 3

What Is an Unfunded Federal Mandate? ......................................................................................... 4

Competing Definitions .............................................................................................................. 5

Statutory Direct Orders ....................................................................................................... 7

Total and Partial Statutory Preemptions .............................................................................. 8

Grant-in-Aid Conditions ..................................................................................................... 9

Federal Tax Provisions ...................................................................................................... 10

Federal Court Decisions; Administrative Rules Issued by Federal Agencies; and

Regulatory Delays and Non-enforcement ...................................................................... 10

UMRA’s Definition of an Unfunded Federal Mandate ............................................................ 10

Exemptions and Exclusions .............................................................................................. 11

UMRA and Congressional Procedure (Title I) .............................................................................. 13

UMRA’s Procedures ................................................................................................................ 13

CBO Cost Estimate Statements ............................................................................................... 14

Points of Order for Initial Consideration ................................................................................. 16

Impact on the Enactment of Statutory Intergovernmental and Private-Sector Mandates ........ 19

Congressional Issues for Title I ............................................................................................... 23

Exemptions and Exclusions .............................................................................................. 23

UMRA and Federal Rulemaking (Title II) ..................................................................................... 25

Title II’s Exemptions and Exclusions ...................................................................................... 26

Federal Agency Cost Estimate Statements in Major Federal Rules ........................................ 27

Impact on the Rulemaking Process ......................................................................................... 30

Congressional Issues for Title II .............................................................................................. 32

Exemptions and Exclusions .............................................................................................. 32

Federal Agency Consultation Requirements ..................................................................... 35

Concluding Observations ............................................................................................................... 36

 

Tables

Table 1. CBO Estimates of Costs of Intergovernmental Mandates, 104th-113th Congresses ........ 14

Table 2. CBO Estimate of Costs of Private-Sector Mandates, 104th-113th Congresses ................. 15

Table 3. UMRA Points of Order in the House and Senate, by Congress ....................................... 18

Table 4. UMRA Written Mandate Cost Estimate Statements Issued by Federal Agencies

in Final Rules, 1995-2012........................................................................................................... 28

 

Appendixes

Appendix A. The Rise of Unfunded Mandates as a National Issue and UMRA’s

Legislative History ..................................................................................................................... 40

Appendix B. UMRA Points of Order ............................................................................................. 48

 

Contacts

Author Contact Information........................................................................................................... 52

 

 

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