OF JOHN D. GRAHAM, PH.D.
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
OFFICE OF MANAGEMENT AND BUDGET EXECUTIVE
OFFICE OF THE PRESIDENT OF THE UNITED STATES
COMMITTEE ON GOVERNMENT REFORM
UNITED STATES HOUSE OF REPRESENTATIVES
March 8, 2005
Mr. Chairman, and Members of this Committee. I am John D. Graham, Ph.D.,
Administrator, Office of Information and Regulatory Affairs (OIRA), Office
of Management and Budget. I appreciate this opportunity to testify before
you today on the Unfunded Mandates Reform Act of 1995 (the Act).
As you know,
an important reason for the enactment of the Act was to ensure that Congress
and the Executive Branch better understand and consider the impacts of
laws and regulations on our intergovernmental partners. This Administration
is firmly supportive of the principles behind the Act. In fact, we have
worked to increase the opportunities for our intergovernmental partners
to participate fully in the regulatory process.
a role in the implementation of Title II of the Act, which addresses the
Executive Branch. Title II begins with a general directive for agencies
to assess, unless otherwise prohibited by law, the effects of their rules
on other levels of government and on the private sector. Title II also
describes specific analyses and consultations that agencies must undertake
for rules that result in expenditures of $100 million in any year (adjusted
annually for inflation) by State, local, and tribal governments in the
aggregate, or by the private sector. Such rules must be accompanied by
written statements that describe in detail the required analyses. The
analyses are to include consideration of a reasonable number of alternatives
and, except in certain circumstances, the selection from among them of
the “least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule.” This analytic approach
is at the heart of OIRA’s role in the implementation of the Act,
as it is generally consistent with our own regulatory review requirements
under Presidential Executive Order 12866 (1993). When reviewing regulatory
actions from Federal agencies, we work to ensure that the rulemaking complies
with the Act’s consultation and analysis requirements. However,
in keeping with the spirit of the Act, we work with agencies to reduce
regulatory burden, regardless of whether the expenditures imposed by a
particular regulatory action rise to the Act’s threshold.
The Act also
directs OMB to send copies of required agency analyses to the Congressional
Budget Office (CBO), and to submit an annual report to Congress on agency
compliance with Title II. Our 2004 submission to CBO covered rules that
met the $100 million threshold from 2002 through 2003. It contained rules
from the Departments of Agriculture, Energy, Health and Human Services,
Justice, Labor and Transportation, and the Environmental Protection Agency.
All were private sector mandates.
In our 2004
Report to Congress, we determined that, in Fiscal Year 2003, Federal agencies
issued 17 rules that were subject to the Act because they require expenditures
in any year by State, local, and tribal governments, in the aggregate,
or by the private-sector, of at least $100 million in any one year (adjusted
annually for inflation).
of Agriculture issued one proposed rule, the Department of Health and
Human Services issued five proposed rules and three final rules, the Department
of Justice issued one proposed rule, the Department of Transportation
issued two proposed and two final rules, and the Environmental Protection
Agency issued six proposed and two final rules. There were no rules meeting
the Act’s threshold based on their estimated impact on State, local,
or tribal governments, in the aggregate. All of the rules (both proposed
and final) were covered by the Act because of anticipated expenditures
by the private sector.
we recognize that State, local, and tribal governments are often burdened
by Federal regulation, either through direct requirements to incur costs
or through a loss of flexibility to perform their government functions.
Our intergovernmental partners play a vital role in the provision of government
services. They have the major role in providing domestic public services,
such as public education, law enforcement, road building and maintenance,
water supply, and sewage treatment. However, over the past two decades,
State, local, and tribal governments increasingly have expressed concerns
about the difficulty of complying with Federal mandates without additional
The Act requires
agencies to “develop an effective process” for obtaining “meaningful
and timely input” from State, local, and tribal governments in developing
rules with significant intergovernmental mandates. The Bush Administration
has worked to involve State and local governments earlier in the rulemaking
process so that the consultation envisioned by the Act is meaningful.
As a result,
the scope of consultation activities undertaken by Federal departments
such as Homeland Security, Agriculture, Commerce, Education, Health and
Human Services, Interior, Justice, Labor, Transportation, and the Environmental
Protection Agency demonstrate this Administration’s commitment to
building strong relationships with our intergovernmental partners based
upon the constitutional principles of federalism embodied in the Act.
Federal agencies are actively consulting with State, local, and tribal
governments to ensure that regulatory activities are consistent with the
requirements of the Act. This year’s report shows an increased level
of engagement, as several agencies have begun major consultation initiatives.
are striving to increase flexibility in the implementation of programs
by issuing regulations that allow for alternative compliance approaches.
For example, in the Food Stamp High Performance Bonus Final Rule, USDA
sets goals for improved performance in administering the program but doesn't
mandate how States must achieve them. Instead, the rule creates awards
for the best and most improved performers in a few separate areas.
A new proposal
from HHS on the Child Care and Development Fund (CCDF) would revise the
program regulations to permit States to designate multiple public and/or
private entities as eligible to receive private donations that may be
certified as child care expenditures for purposes of receiving Federal
CCDF matching funds. This increased flexibility will allow States to decrease
their own contributions to CCDF by leveraging local resources.
OMB has developed guidelines to assist Federal agencies in complying with
the Act that are based upon the following general principles:
consultations should take place as early as possible, beginning before
issuance of a proposed rule and continuing through the final rule stage,
and be integrated explicitly into the rulemaking process;
should consult with a wide variety of State, local, and tribal officials;
should estimate direct costs and benefits to assist with these consultations;
- the scope
of consultation should reflect the cost and significance of the mandate
consultation requires trust and significant and sustained attention
so that all who participate can enjoy frank discussion and focus on
key priorities; and
should seek out State, local, and tribal views on costs, benefits, risks,
and alternative methods of compliance, and whether the Federal rule
will harmonize with and not duplicate similar laws in other levels of
much has been done to effectively implement the Act, more work remains
in order to ensure that State, local, and tribal governments truly feel
like intergovernmental partners in the rulemaking process. I look forward
to working with Congress toward this important goal. That concludes my
prepared testimony. If you have any questions, I would be happy to answer