<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:59530.wais]
H.R. 2245, THE FEDERALISM ACT OF 1999
=======================================================================
HEARING
before the
SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,
NATURAL RESOURCES, AND REGULATORY AFFAIRS
of the
COMMITTEE ON GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
ON
H.R. 2245
TO ENSURE THE LIBERTIES OF THE PEOPLE BY PROMOTING FEDERALISM, TO
PROTECT THE RESERVED POWERS OF THE STATES, TO IMPOSE ACCOUNTABILITY FOR
FEDERAL PREEMPTION OF STATE AND LOCAL LAWS, AND FOR OTHER PURPOSES
__________
June 30, 1999
__________
Serial No. 106-29
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
59-530 CC WASHINGTON : 1999
COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio
Carolina ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia DANNY K. DAVIS, Illinois
DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas JIM TURNER, Texas
LEE TERRY, Nebraska THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California ------
PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont
HELEN CHENOWETH, Idaho (Independent)
DAVID VITTER, Louisiana
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
David A. Kass, Deputy Counsel and Parliamentarian
Carla J. Martin, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on National Economic Growth, Natural Resources, and
Regulatory Affairs
DAVID M. McINTOSH, Indiana, Chairman
PAUL RYAN, Wisconsin DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia TOM LANTOS, California
LEE TERRY, Nebraska PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon BERNARD SANDERS, Vermont
HELEN CHENOWETH, Idaho HAROLD E. FORD, Jr., Tennessee
DAVID VITTER, Louisiana
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Marlo Lewis, Jr., Staff Director
Barbara Kahlow, Professional Staff Member
Gabriel Neil Rubin, Clerk
David Sadkin, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on June 30, 1999.................................... 1
Text of H.R. 2245............................................ 5
Statement of:
Blue, Daniel T., Jr., North Carolina State Representative,
president, National Conference of State Legislatures;
Clarence E. Anthony, mayor, South Bay, FL, president,
National League of Cities; Javier M. Gonzales,
commissioner, Santa Fe County, NM, second vice president,
National Association of Counties; and Raymond C. Scheppach,
executive director, National Governors' Association........ 17
Stevens, Nye, Director, Federal Management and Workforce
Issues, General Government Division, General Accounting
Office..................................................... 101
Letters, statements, etc., submitted for the record by:
Anthony, Clarence E., mayor, South Bay, FL, president,
National League of Cities, prepared statement of........... 38
Baker, John S., professor, prepared statement of............. 125
Blue, Daniel T., Jr., North Carolina State Representative,
president, National Conference of State Legislatures,
prepared statement of...................................... 19
Gonzales, Javier M., commissioner, Santa Fe County, NM,
second vice president, National Association of Counties,
prepared statement of...................................... 51
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, prepared statement of................... 94
McIntosh, Hon. David M., a Representative in Congress from
the State of Indiana:
Letters dated June 29 and 30, 1999....................... 2
Prepared statement of.................................... 13
Moran, Hon. James P., a Representative in Congress from the
State of Virginia, prepared statement of................... 84
Scheppach, Raymond C., executive director, National
Governors' Association, prepared statement of.............. 65
Stevens, Nye, Director, Federal Management and Workforce
Issues, General Government Division, General Accounting
Office:
Information concerning Executive Order 13083............. 123
Prepared statement of.................................... 104
H.R. 2245, THE FEDERALISM ACT OF 1999
----------
WEDNESDAY, JUNE 30, 1999
House of Representatives,
Subcommittee on National Economic Growth, Natural
Resources, and Regulatory Affairs,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2247, Rayburn House Office Building, Hon. David M.
McIntosh (chairman of the subcommittee) presiding.
Present: Representatives McIntosh, Ryan, Terry, Walden,
Kucinich, and Ford.
Also present: Representatives Moran of Virginia, and
McCarthy of Missouri.
Staff present: Marlo Lewis, Jr., staff director; Barbara
Kahlow, professional staff member; Luke Messer, counsel;
Gabriel Neil Rubin, clerk; David Sadkin, minority counsel; and
Ellen Rayner, minority chief clerk.
Mr. McIntosh. The Subcommittee on National Economic Growth,
Natural Resources, and Regulatory Affairs will come to order. A
quorum being present, I would like to now ask unanimous consent
that all Members' and witnesses' written statements be included
in the record. Without objection, so ordered.
I also ask unanimous consent that my colleagues, Messrs.
Moran, Portman, Condit, Castle, Davis, and Mrs. McCarthy, all
of whom are original cosponsors of H.R. 2245, the Federalism
Act of 1999, be able to participate in today's hearing. Without
objection, so ordered.
I also ask unanimous consent that those six Members'
written statements be included in the record. Without objection
so ordered.
Finally, I want to inform the Members that I will hold the
hearing record open until July 16th so that we can receive
written comments after the close of today's hearing. Yesterday,
we received a letter of support for the bill from the National
Association of Towns and Townships, which comprises about one-
third of all local elected officials nationally. In addition,
we have a letter that we received today from six of the major
State and local organizations, and I would ask unanimous
consent that those two letters be included in the record.
Without objection, so ordered.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED]59530.001
[GRAPHIC] [TIFF OMITTED]59530.002
[GRAPHIC] [TIFF OMITTED]59530.003
Mr. McIntosh. I want to thank Mr. Terry and Mr. Walden for
coming today. Mr. Kucinich is on his way. Being Wednesday
morning, there are a lot of different hearings that are going
on, so you'll see Members come and go. The six Members who
wanted to join us have all indicated they will be here at some
point or another, and we'll be able to hear from them when they
are here. Mrs. McCarthy was here earlier, and I saw Mr. Moran
in the hall.
Let's get started with this hearing. I think it's an
incredibly important subject. The purpose of today's hearing is
to discuss the need for federalism legislation in general and
the Federalism Act of 1999 specifically.
H.R. 2245, introduced by Congressmen Moran, Portman,
McCarthy, Castle, Condit, Davis, and myself, is a bipartisan
bill to promote and preserve the integrity and effectiveness of
our Federal system of government and to recognize the
partnership that exists between the Federal Government and
State and local governments in the implementation of various
Federal programs. This hearing will allow key State and local
elected officials, the General Accounting Office, and a
professor who is an expert in federalism, although I understand
the professor won't be able to join us today, but his testimony
will be made part of the record. He had a family emergency and
is not able to be here. But it will allow us to discuss the
need for federalism legislation and H.R. 2245 specifically.
[The text of H.R. 2245 follows:]
106th CONGRESS
1st Session
H. R. 2245
To ensure the liberties of the people by promoting federalism, to
protect the reserved powers of the States, to impose accountability for
Federal preemption of State and local laws, and for other purposes.
______
IN THE HOUSE OF REPRESENTATIVES
June 16, 1999
Mr. McIntosh (for himself, Mr. Moran of Virginia, Mr. Portman, Ms.
McCarthy of Missouri, Mr. Castle, Mr. Condit, and Mr. Davis of
Virginia) introduced the following bill; which was referred to the
Committee on Government Reform, and in addition to the Committees on
Rules, and the Judiciary, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
______
A BILL
To ensure the liberties of the people by promoting federalism, to
protect the reserved powers of the States, to impose accountability for
Federal preemption of State and local laws, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federalism Act of 1999''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Constitution created a strong Federal system,
reserving to the States all powers not expressly delegated to
the Federal Government.
(2) Preemptive statutes and regulations have at times been
an appropriate exercise of Federal powers, and at other times
have been an inappropriate infringement on State and local
government authority.
(3) On numerous occasions, the Congress has enacted
statutes and Federal agencies have promulgated rules that
expressly preempt State and local government authority and
describe the scope of the preemption.
(4) In addition to statutes and rules that expressly
preempt State and local government authority, many other
statutes and rules that lack an express statement by the
Congress or Federal agencies of their intent to preempt and a
clear description of the scope of the preemption have been
construed to preempt State and local government authority.
(5) In the past, the lack of clear congressional intent
regarding preemption has resulted in too much discretion for
Federal agencies and uncertainty for State and local
governments, leaving the presence or scope of preemption to be
litigated and determined by the Federal judiciary, producing
results sometimes contrary to or beyond the intent of the
Congress.
(6) State and local governments are full partners in all
Federal programs administered by those governments.
SEC. 3. PURPOSES.
The purposes of this Act are the following:
(1) To promote and preserve the integrity and effectiveness
of our federalist system of government.
(2) To set forth principles governing the interpretation of
congressional intent regarding preemption of State and local
government authority by Federal laws and rules.
(3) To recognize the partnership between the Federal
Government and State and local governments in the
implementation of certain Federal programs.
(4) To establish a reporting requirement to monitor the
incidence of Federal statutory, regulatory, and judicial
preemption.
SEC. 4. DEFINITIONS.
In this Act:
(1) Definitions in 5 u.s.c. 551.--The definitions under
section 551 of title 5, United States Code, shall apply.
(2) Bill.--The term ``bill'' includes a joint resolution.
(3) Director.--The term ``Director'' means the Director of
the Congressional Budget Office.
(4) Local government.--The term ``local government'' means
a county, city, town, borough, township, village, school
district, special district, or other political subdivision of a
State.
(5) Public officials.--The term ``public officials''--
(A) means elected officials of State and local
governments; and
(B) includes the following national organizations
that represent such officials:
(i) The National Governors' Association.
(ii) The National Conference of State
Legislatures.
(iii) The Council of State Governments.
(iv) The United States Conference of
Mayors.
(v) The National League of Cities.
(vi) The National Association of Counties.
(vii) The International City/County
Management Association.
(6) State.--The term ``State''--
(A) means a State of the United States and an
agency or instrumentality of a State;
(B) includes--
(i) the District of Columbia and any
territory of the United States, and an agency
or instrumentality of the District of Columbia
or such territory; and
(ii) any tribal government and an agency or
instrumentality of such government; and
(C) does not include a local government of a State.
(7) Tribal government.--The term ``tribal government''
means an Indian tribe as that term is defined under section
4(e) of the Indian Self-Determination and Education Assistance
Act (25 U.S.C. 450b(e)).
SEC. 5. DEFERENCE TO STATE MANAGEMENT PRACTICES.
(a) Expenditure and Accounting of Federal Funds.--A State shall
expend and account for covered Federal grant funds in accordance with
requirements and procedures under the laws of the State governing State
expenditure of and accounting for State funds, subject to any
requirement that expressly applies under any other Federal statute.
(b) Use, Management, and Disposal of Personal Property Acquired
With Federal Funds.--A State shall use, manage, and dispose of personal
property acquired with covered Federal grant funds in accordance with
requirements and procedures under the laws of the State governing State
use, management, and disposal of personal property acquired with State
funds, subject to any requirement that expressly applies under any
other Federal statute.
(c) Procurement With Federal Funds.--In procuring any personal
property or service with covered Federal grant funds, a State shall
follow the same requirements and procedures that apply under the laws
of the State governing State procurement with State funds, subject to
any requirement that expressly applies under any other Federal statute.
(d) Definitions.--In this section:
(1) Covered federal grant funds defined.--The term
``covered Federal grant funds'' means amounts provided as
Federal financial assistance, other than assistance under a
grant program to which the Grants Management Common Rule (53
F.R. 8034) does not apply on the date of the enactment of this
Act.
(2) Personal property.--The term ```personal property''
means property other than real property.
SEC. 6. PERFORMANCE MEASURES.
Section 1115 of title 31, United States Code, is amended by adding
at the end the following:
``(g) The head of an agency may not include in any performance plan
under this section any agency activity that is a State-administered
Federal grant program, unless the performance measures for the activity
are determined in cooperation with public officials.''.
SEC. 7. REQUIREMENTS FOR AGENCY RULEMAKING.
(a) Notice and Consultation With Potentially Affected State and
Local Governments.--Not later than the date of publication of an
advance notice of proposed rulemaking for a rule promulgated by an
agency, or the equivalent date if such notice is not published, the
head of the agency shall notify and consult with public officials who
may potentially be affected by the rule for the purpose of identifying
any preemption of State or local government authority that may result
from issuance of the rule.
(b) Identification of Preemption and Federalism Impacts.--
(1) In general.--The head of an agency shall--
(A) publish with each proposed rule issued by the
agency a proposed federalism impact assessment under
paragraph (2);
(B) publish with each interim final rule issued by
the agency a proposed federalism impact assessment
under paragraph (2); and
(C) publish with each final rule issued by the
agency a final federalism impact assessment under
paragraph (2).
(2) Federalism impact assessment.--A proposed or final
federalism impact assessment under this subsection shall
include with respect to the proposed, interim final, or final
rule concerned an identification of--
(A) any provision of the rule that is a preemption
of State or local government authority;
(B) the constitutional basis for each such
preemption;
(C) any provision of statute under which the rule
is issued that is an express preemption of State or
local government authority, and any provision of any
other statute that expressly states that the Congress
intended such preemption;
(D) any provision of the rule that establishes a
condition for receipt of grant funds that is not
related to the purpose of the grant program under which
the funds are provided;
(E) any other provision of the rule that impacts
State or local governments, including any provision
that constitutes a Federal intergovernmental mandate
(as that term is defined in section 421 of the
Congressional Budget and Impoundment Control Act of
1974);
(F) any regulatory alternatives considered by the
agency;
(G) the estimated costs that will be incurred by
state and local governments as a result of issuance of
the rule; and
(H) the extent of the agency's consultations with
public officials who may potentially be affected by the
rule.
(c) Publication.--The head of an agency shall include, in a
separately identified part of the preamble to each proposed rule,
interim final rule, and final rule published by the agency in the
Federal Register, a summary of the proposed or final (as applicable)
federalism impact assessment prepared under this section.
SEC. 8. LEGISLATIVE REQUIREMENTS.
(a) In General.--The report accompanying any bill of a public
character reported from a committee of the Senate or House of
Representatives, or the joint explanatory statement accompanying a
conference report on any such bill, shall include a statement that--
(1) identifies each section of the bill or conference
report that constitutes an express preemption of State or local
government authority, or asserts that the bill does not contain
any such section; and
(2) describes the constitutional basis for any such
preemption;
(3) sets forth the reasons for each such preemption; and
(4) includes the federalism impact assessment by the
Director under subsection (b).
(b) Federalism Impact Assessment by Congressional Budget Office.--
(1) Provision of bill or conference report to director.--
When a committee of the Senate or the House of Representatives
orders reported a bill of a public character, and before a
conference committee files a conference report thereon, the
committee or conference committee shall promptly provide the
bill to the Director and shall identify to the Director each
section of the bill that constitutes a preemption of State or
local government authority.
(2) Federalism impact assessment.--(A) For each bill of a
public character reported by any committee of the Senate or the
House of Representatives, and for each conference report
thereon, the Director shall prepare and submit to the committee
or conference committee a federalism impact assessment that
describes the preemptive impact of the bill or conference
report thereon on State and local governments, including the
estimated costs that would be incurred by State and local
governments as a result of its enactment.
(B) In the case of a bill or conference report that
authorizes a Federal grant program, the federalism impact
assessment shall also identify any provision that establishes a
condition for receipt of funds under the program that is not
related to the purposes of the program.
(c) Absence of Committee Report or Statement of Managers.--In the
absence of a committee report or joint explanatory statement in
accordance with subsection (a) accompanying a bill or conference report
thereon, respectively, the committee or conference committee shall
report to the Senate and the House of Representatives a statement
described in subsection (a) before consideration of the bill or
conference report.
SEC. 9. RULES OF CONSTRUCTION RELATING TO PREEMPTION.
(a) Statutes.--No Federal statute enacted after the effective date
of this Act shall preempt, in whole or in part, any State or local
government law, ordinance, or regulation, unless the statute expressly
states that such preemption is intended or unless there is a direct
conflict between such statute and a State or local law, ordinance, or
regulation so the two cannot be reconciled or consistently stand
together.
(b) Rules.--No Federal rule issued after the effective date of this
Act under any provision of law enacted after that effective date shall
preempt, in whole or in part, any State or local government law,
ordinance, or regulation, unless the statute under which the rule is
issued, or another statute, expressly states that such preemption is
intended.
(c) Favorable Construction.--Any ambiguity in this Act, or in any
other Federal rule issued or Federal statute enacted after the date of
the enactment of this Act, shall be construed in favor of preserving
the authority of State and local governments.
SEC. 10. REPORTS ON PREEMPTION.
(a) Office of Management and Budget Information.--Promptly after
the expiration of the second calendar year beginning after the
effective date of this Act, and every 2 years thereafter, the Director
of the Office of Management and Budget shall submit to the Director of
the Congressional Budget Office information describing each provision
of interim final rules and final rules issued during the preceding 2
calendar years that preempts State or local government authority.
(b) Congressional Research Service Information.--Promptly after the
expiration of the second calendar year beginning after the effective
date of this Act, and every 2 years thereafter, the Director of the
Congressional Research Service shall submit to the Director of the
Congressional Budget Office information describing Federal and State
court decisions issued during the preceding 2 calendar years that
preempt State or local government authority.
(c) Congressional Budget Office Report.--
(1) In general.--Not later than the adjournment sine die of
each Congress, the Director of the Congressional Budget Office
shall submit to the Congress a report on the extent of
preemption of State and local government authority--
(A) by Federal laws enacted during the previous
session of Congress; and
(B) by judicial or agency interpretations of
Federal statutes issued during such session, using--
(i) information regarding agency rules
submitted by the Office of Management and
Budget under subsection (a); and
(ii) information regarding Federal and
State court decisions submitted by the Director
of the Congressional Research Service under
subsection (b).
(2) Content.--The report under paragraph (1) shall
contain--
(A) a cumulative list of Federal statutes
preempting, in whole or in part, State or local powers;
(B) a summary of legislation enacted during the
previous session preempting, in whole or in part, State
or local government authority;
(C) a summary of rules of agencies promulgated
during the previous session of Congress preempting, in
whole or in part, State or local government authority;
and
(D) a summary of Federal and State court decisions
issued during the previous session of Congress
preempting, in whole or in part, State or local
government authority.
(3) Availability.--The Director shall make the report under
this subsection available to--
(A) each committee of the Congress;
(B) each Governor of a State;
(C) the presiding officer of each chamber of the
legislature of each State; and
(D) other public officials and the public through
publication in the Congressional Record and on the
Internet.
SEC. 11. LIMITATION ON APPLICATION WITH RESPECT TO PROHIBITIONS AGAINST
DISCRIMINATION.
This Act shall not apply with respect to any section of a bill, or
any provision of a Federal regulation or statute, that establishes or
enforces any statutory prohibition against discrimination on the basis
of race, color, religion, sex, national origin, age, handicap, or
disability.
SEC. 12. EFFECTIVE DATE.
This Act shall take effect 90 days after the date of the enactment
of this Act.
-
Mr. McIntosh. I want to welcome four State and local
elected officials who represent key organizations. They are,
first of all, North Carolina State Representative Dan Blue, who
is the president of the National Conference of State
Legislatures. Dan has been with us before at this committee,
and I welcome you back. Thank you for coming up to Washington
today. The second is South Bay, FL, Mayor Clarence Anthony, who
is president of the National League of Cities. The third is
Santa Fe, NM, County Commissioner Javier Gonzales, who is the
second vice president of the National Association of Counties.
And the fourth is Mr. Raymond Scheppach, who is the executive
director of the National Governors' Association.
I also want to welcome Nye Stevens, who is Director of
Federal Management and Work Force Issues in the General
Accounting Office. As I mentioned, unfortunately Professor John
Baker will not be here, but I would ask unanimous consent that
his testimony be included into the record.
Finally, the Office of Management and Budget was invited to
testify to express the Clinton administration's views on H.R.
2245. However, instead of testifying today, the administration
decided to submit a statement for the record, and again, I
would ask unanimous consent that that statement be included in
the record.
In May 1998, to give some background, President Clinton
issued Executive Order 13083, which revoked President Reagan's
Executive Order 12612, on federalism, and President Clinton's
own Executive Order 12875. The Reagan order provided many
protections for State and local governments and reflected great
deference to State and local governments. It also set in place
operating principles and required discipline for the executive
branch agencies to follow in all of their decisionmaking which
would affect State and local governments. The Reagan order was
premised on the recognition of the competence of State and
local governments and their readiness to assume even greater
responsibilities in our national political scheme of
government.
In August 1998, after a July hearing before the
subcommittee and the outcry from the seven major national
organizations that represent State and local governments,
President Clinton indefinitely suspended Executive Order 13083
and agreed to work with these national organizations on a
substitute order. This was an outcome that the subcommittee
greatly welcomed.
Now, since January 1999, the administration has held
several meetings with elected State and local officials and the
national organizations that represent them to discuss a
replacement Executive order. We understand from the
representatives of those groups that the administration
continues to want to rescind President Reagan's federalism
Executive order and replace it with an Executive order that
does not include many of the needed protections for State and
local governments. As a consequence, the State and local
representatives approached Congress and asked for a permanent
legislation to protect their interests.
Now, after a series of meetings that really began last
February and have gone on since then, a bipartisan group of
Members together with those national organizations and their
leaderships reached agreement on the substance of the
legislation to include provisions most needed and desired by
them to promote and preserve federalism.
You know, as James Madison wrote in Federalist No. 45, the
powers delegated to the Federal Government are defined and
limited. Those which are to remain in the State governments are
numerous and indefinite. Nonetheless, the political authority
of the States has been challenged through legislation passed by
Congress, regulations issued and other decisions made by the
executive branch, and judicially imposed mandates. There needs
to be an appropriate balance between the powers and duties of
the Federal Government and those of the State and local
governments.
In the past, the absence of clear congressional intent
regarding preemption of State and local authority has resulted
in too much discretion for Federal agencies and uncertainty for
State and local governments, leaving the presence or scope of
preemption to be determined by litigation in the Federal
judiciary.
The Federalism Act of 1999 has a companion bill in the
Senate, S. 1214, the Federalism Accountability Act of 1999.
Both of these bills seek to redress this problem of encroaching
Federal power. They would first promote and preserve the
integrity and effectiveness of our federalist system of
government; second, set forth principles governing the
interpretation of congressional intent regarding preemption of
State and local government authorities by Federal laws and
Federal rules; third, recognize the partnership between the
Federal Government and the State and local governments in the
implementation of certain Federal programs; and fourth,
establish a reporting requirement to monitor the incidence of
Federal statutory, regulatory and judicial preemption.
The Federalism Act of 1999 establishes new principles for
both the legislative branch and the executive branch before
either imposes requirements that preempt State and local
authority or have other impacts on State and local governments.
I want to pause here to let the representatives of the
State and local governments know we heard you loud and clear
last year at the hearing where you brought forth in this
subcommittee the problem that it's not only the executive
action but also actions taken here in Congress that we need to
be mindful of when we try to preserve the federalism principle.
And so, this act is crafted to apply to both the executive and
the legislative branch in the future.
H.R. 2245, which builds on the Unfunded Mandates Reform
Act, requires that the report accompanying any bill identifying
each section of that bill constitutes an expressed preemption
of State and local authority and the reasons for such
preemption. The report also must include a federalism impact
assessment prepared by the Congressional Budget Office which
estimates the costs on State and local governments. Similarly,
the bill requires executive branch agencies to include a
federalism impact assessment in each proposed, interim final
and final rule that is published. The federalism impact
assessment must identify any provision that is a preemption of
State or local government authority and the expressed statutory
provision authorizing such preemption, the regulatory
alternatives considered, and the impacts and the costs on State
and local governments.
The bill establishes new rules of construction relating to
preemption. These include that no new Federal statute or new
Federal rule shall preempt any State or local law regulation
unless the statute expressly states that such preemption is
intended. This will, I believe, go a long way to prevent some
of the costly and unnecessary litigation that's arisen about
the issue of preemption.
Any ambiguity shall be construed in favor of preserving the
authority of State and local governments. Besides instituting
this new discipline for the legislative and executive branches
and for providing new rules of construction for the judiciary,
the bill also includes other provisions to recognize the
special competence of the States in partnership with the State
and local governments and the Federal Government. The bill
reflects respect for the States, in deference to the knowledge,
experience, and authority of State and local elected officials.
Specifically, the bill provides deference to State management
practices for financial management, property, and procurement
involving certain Federal grant funds. The bill also requires
that, for State-administered Federal grant programs, the
executive branch agencies must cooperatively determine program
performance measures with State and local officials and the
seven major national organizations that represent them.
Let me say that the McIntosh-Moran-Portman-McCarthy-Castle-
Condit-Davis bill is truly a bipartisan bill. It's a product of
the work with the seven major State and local interest groups,
the National Governors' Association, the National Conference of
State Legislatures, the Council of State Governments, the U.S.
Conference of Mayors, the National League of Cities, the
National Association of Counties, and the International City/
County Management Association. And so, with that, I am pleased
today to open this hearing on this legislation.
[The prepared statement of Hon. David M. McIntosh follows:]
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Mr. McIntosh. Let me now ask if my colleague Mr. Terry
would like to make any opening statement before we move to the
first panel.
Mr. Terry. To introduce myself to the panel, I'm an 8-year
member of the City Council in Omaha, NE, and an 8-year member
of the League of Cities. One of the fundamentals of my
philosophy is empowerment of local communities, counties, and
State governments as opposed to the Federal Government. So this
is a type of measure that we in Congress must take to protect
the rights to govern in the local communities--those
governments which can best deliver the services and represent
the constituents because they are truly closer to the people.
That's one of the reasons why I ran for this job. On the
city government I was tired of the Federal Government dictating
everything we did, from the type of road projects to our water
quality, which of course is extremely high anyway. So I enjoy
engaging in this type of discussion and, with H.R. 2245,
engaging in this type of battle.
I appreciate what you've done, Mr. Chairman, and let the
games begin.
Mr. McIntosh. Thank you, Mr. Terry. I particularly
appreciate your perspective having served on local government.
Let me also mention at this point that Mr. Kucinich will
have an opportunity to give his statement, and we'll put that
into the record as soon as he is able to be with us.
But, let's move forward with the first panel. I mentioned
in my introduction who they were, but Representative Blue,
Mayor Anthony, and Commissioner Gonzales, as well as Mr.
Scheppach, please come forward and join us now.
I would ask each of you to remain standing for a minute.
The rules of our full committee are that we must ask each of
the witnesses to be sworn in. So, don't feel that you're being
singled out for that in any way. But if you would please take
the oath with me.
[Witnesses sworn.]
Mr. McIntosh. Thank you. Let the record show that each of
the witnesses answered in the affirmative, and the committee
has already agreed to put your full remarks into the record, so
I would ask you to share a summary of those, emphasize
particular points with us today, and then we can get into the
question-and-answer period.
Representative Blue, again, thank you for joining us again
at the hearing and with this committee. Share with us a summary
of your remarks, if you would.
STATEMENTS OF DANIEL T. BLUE, JR., NORTH CAROLINA STATE
REPRESENTATIVE, PRESIDENT, NATIONAL CONFERENCE OF STATE
LEGISLATURES; CLARENCE E. ANTHONY, MAYOR, SOUTH BAY, FL,
PRESIDENT, NATIONAL LEAGUE OF CITIES; JAVIER M. GONZALES,
COMMISSIONER, SANTA FE COUNTY, NM, SECOND VICE PRESIDENT,
NATIONAL ASSOCIATION OF COUNTIES; AND RAYMOND C. SCHEPPACH,
EXECUTIVE DIRECTOR, NATIONAL GOVERNORS' ASSOCIATION
Mr. Blue. Thank you very much, Mr. Chairman. I appreciate
the opportunity to appear before you again to talk about a
subject which, a little less than three decades ago when I got
into it in law school I thought was some inane, obscure topic
that I would never deal with again. But for the last 12 or 14
years, I have been on behalf of the National Conference of
State Legislatures dealing with the issue of federalism, and we
have gone through a great evolution in that process since the
mid-1980's.
On behalf of the National Conference of State Legislatures
I'm here to support H.R. 2245, the Federalism Act of 1999,
because it is a bill that deals comprehensively with the
problem of Federal preemption of State law.
As a result of Federal preemption, Mr. Chairman, we believe
that a large part of the policy jurisdiction of State
legislatures has been lost, and when we lose that, we lose the
capacity for self-government, local self-government. One of the
advantages we feel very strongly about federalism is that the
laws will be adopted to conform with local needs and
conditions. They will reflect regional and community values,
and we believe that local diversity at the State level and the
local governments is ignored when these laws are preempted and
replaced with a one-size-fits-all national policy without some
of the thought, we think, that is embraced by H.R. 2245
entering the deliberation.
A second advantage that we believe, Mr. Chairman, of
federalism is that it allows greater responsiveness and
innovation. When States are preempted, States and localities
are preempted, they can't serve as laboratories of democracy,
and we believe very strongly, certainly from the standpoint of
States, that 50 different approaches to problem resolution will
yield the most effective for those different States that are
looking at it.
We thank you for first generally identifying the problem of
preemption, and we thank you for a workable bill that we think
allows us to achieve our objective, some of which you have
already articulated. We think that the Federalism Act of 1999,
H.R. 2245, addresses the preemption problem in three ways;
three ways we think are very important. First, by providing
Congress with more information about the preemptive impact of
legislative proposals, I think that we sensitize Congress and
the Members of Congress to the impacts of what they do and how
we have an encroachment on constitutional authority of States,
and also on the encroachment on States being willing to try
different solutions to problems.
We think the second part of the bill, the fact that it
provides for rules of construction urging courts to limit
findings that preemption is implied, goes a long way because,
as you know, the major problem with preemption is not when it's
been expressly found by the Congress. I'll readily acknowledge
that I believe very much in the supremacy clause of the
Constitution, and I know that when Congress acts in an area, if
it determines that it's in the national interest or there is
some reason that it ought to do it, then it clearly has the
right to since the Ogden decision. But the one thing we find
great difficulty with is this whole concept of implied
preemption when Congress has not clearly indicated where it
wants to go, and, in fact, some of the novel and creative
theories that the courts have come up with over the years to
find preemption. So we think that the bill providing for rules
of construction regarding this implied preemption will go a
long way toward addressing the problems that we've identified,
particularly over the last 12 or 14 years.
And third, the bill by providing notice and consultation
procedures in the Federal administrative process we believe
will encourage Federal agencies to first acknowledge that
federalism is a concept that has life, but also will make them
take into account federalism and preemption issues more fully
as they engage in the rulemaking process.
So, Mr. Chairman and Mr. Terry, when we look at the various
aspects of the bill section by section, we're certainly
encouraged that we do have a vehicle to address these issues
that we've identified, to seriously address the issue of
preemption at all levels of the Federal Government, and we
appreciate the fact that this is a bipartisan effort. I don't
think that federalism is something that wears a Republican or
Democratic label, a liberal or conservative label, but is one
that truly acknowledges what the Founding Fathers intended when
they created this system of government which we all say that we
cherish and believe in.
Thank you very much for giving me the opportunity to
testify this morning.
Mr. McIntosh. Thank you, Representative Blue. I appreciate
that very, very much.
[The prepared statement of Mr. Blue follows:]
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Mr. McIntosh. Mayor Anthony.
Mr. Anthony. Thank you very much, Mr. Chairman. I'm pleased
to be here this morning on behalf of my colleagues and the
National League of Cities. The Federalism Act of 1999, H.R.
2245, truly embraces and preserves the cherished principles of
federalism and promotes a new Federal, State and local
partnership in respect to the implementation of Federal
programs.
I'd like to thank the committee for having us today to
share our perspective on behalf of the big seven. It truly
provides us with an opportunity to create a new partnership
that has never existed between all levels of government, and I
applaud you for that perspective here today.
The National League of Cities is the oldest and largest
municipal organization, and we thank you for bringing us here
today on behalf of our membership. What truly brings us here is
nothing less than the pervasive and imminent threat of
preemption by the Federal Government. It is the National League
of Cities' highest priority to put a meaningful check on this
preemption of State and local authority.
Allow me to cite you a few of the invasive actions the
Federal Government has taken in just the last few months. First
and foremost, the legislation signed into law last October
which impedes States' and local governments' ability to tax
sales and services over the Internet in the same manner as all
other sales and services are taxed, despite the fact that no
such limitations would apply to the Federal Government, is one
example. There also has been a bill moving quickly through the
House of Representatives called the Religious Liberty
Protection Act of 1999, which is a massive preemption of State
and local zoning and land use laws. This bill, if enacted into
law, would chill a city's ability to apply neutral zoning laws
that impede an entire community equally to religious land uses
like churches and synagogues. Current law preempts municipal
authority over siting of group homes and preempts a
municipality from applying zoning, environmental, health and
safety statutes to railroads. These are, again, examples of
preemption that exist today.
NLC and other members of the big seven State and local
government groups have been negotiating with the administration
on a new Executive order on federalism that will replace the
existing order. We hope this new Executive order will serve to
enhance the legislation you are considering this morning and
promote our common goals to work together as partners. NLC,
however, believes that legislation is still needed.
Does that mean I'm to stop? I'm sorry. I'm new at this.
Mr. McIntosh. The lights are there to guide you, but
actually your testimony is very important to us, Mr. Anthony.
Take the time you need.
Mr. Ford. Can we follow that rule, too, Mr. Chairman?
Mr. McIntosh. We're going to be a little more strict with
ourselves, although I went way over with my opening statement,
so any time you need.
Mr. Anthony. Let me turn now to H.R. 2245. I do apologize.
I'm kind of learning the rules right now.
This bill provides cities nationwide with the viable means
for alleviating many of the problems associated with Federal
preemption of local laws. Mr. Chairman and members of the
committee, we at the local level want to help create a dynamic
federalism. We believe neutral accountability between and among
the various levels of government is a good thing.
H.R. 2245 represents one of the most important efforts to
fundamentally rethink the nature and relationship of the
Federal system. For example, section 4 of the bill defines a
public official as including the national associations of the
big seven. And I think this is important because oftentimes we
as local government officials are not able to travel to
Washington, and our voices are heard through the big seven.
Section 7 of the bill requires notice and consultation with
State and local elected officials and their representatives,
and, again, that is a very key provision of this bill.
I agree with Representative Blue as it relates to the rules
of construction. We clearly support that section.
I will stop my comments right now. Thank you so much, Mr.
Chairman, and I look forward to answering any questions.
[The prepared statement of Mr. Anthony follows:]
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Mr. McIntosh. Thank you, Mayor Anthony. Let me share with
you your observation about the importance of legislation rather
than relying on Executive orders is very helpful to us because
that will be one question that Members will ask: Do we really
need to pass this bill, or can it be handled in another manner?
So I in particular appreciate your insight into that as well as
the need to have representatives of the seven associations
participate in the consultation.
I'm very mindful that you have a lot on your plate as an
official in local government and city mayor, and that the less
time you need to spend here working with us in Washington is
more time you can help your constituents at home. So I
appreciate that insight as well and doubly appreciate your
coming up today and spending the time.
Let me mention Mr. Ford and Mr. Moran have joined us. Shall
we continue and at the end----
Mr. Moran. I would like to hear from the distinguished
panelists, and then maybe we can have a word to say. Thank you
very much, Mr. Chairman, though, for the opportunity.
Mr. McIntosh. Great. Appreciate that for both of you.
Commissioner Gonzales, thank you for coming. You probably
have traveled the farthest today. So welcome. Feel free to
share with us a summary of your testimony, and we'll put the
entire remarks into the record.
Mr. Gonzales. Thank you, Mr. Chairman and members of the
committee. Once again, thank you for inviting the National
Association of Counties to testify on certainly one of our
highest priorities, federalism and the preemption of State and
local authority. And I will be brief, Mr. Chairman.
Preemption of local authorities is a growing concern to
America's counties. Efforts of the Federal Government and
Congress to dictate policy implementation of traditional county
responsibilities and functions undermines the concept of
federalism and are contrary to the constitutional framework
underlying Federal, State, and local relations.
Mr. Chairman, I wish to congratulate you and the cosponsors
of H.R. 2245, the Federalism Act of 1999. We at the counties
believe the bill will help to achieve a necessary balance in
respecting the supremacy clause of the Constitution while also
addressing the rights of State and local governments to
exercise local discretion.
H.R. 2245 is a natural and necessary sequel to the
enactment of the unfunded mandates reform. It helps to clarify
when preemption is necessary while maintaining adequate
reporting requirements and controls. The National Association
of Counties fully supports the purposes of this legislation:
First, to promote and preserve the integrity and effectiveness
of our federalist system of government; second, to provide
principles governing the interpretation of congressional intent
regarding preemption of State and local government authority by
Federal laws and rules; third, to recognize the Federal, State
and local partnership; and last, to establish reporting
requirements to monitor the incidence of Federal statutory,
regulatory, and judicial preemption.
We are also pleased with the definition of public officials
which includes all our national organizations such as NACo that
represent public officials. NACo supports the requirements set
forth in section 7 of the bill for early consultation with
State and local public officials and the identification of
preemption and federalism impacts. NACo supports the
accountability required under section 8 of the legislation.
Under this section, Mr. Chairman, the executive and legislative
branches are required to identify any preemptions to be
proposed in legislation and their impact on State and local
governments.
We also support section 10 of the bill which requires that
preemption reports be prepared by OMB and CBO after every
Congress. Finally, the rules of construction as proposed in
section 9 of the legislation would effectively help to preserve
the authority of State and local government laws and
regulations. By specifically requiring that a proposed statute
express intent to preempt, courts will have the benefit of
clear and concise language declaring this purpose. Likewise, if
there's no language to that effect, the courts may be able to
discern fairly that there was no intent to preempt, which helps
to reduce interpretive decisions to that effect.
I wish to take the opportunity to comment on another piece
of legislation that Mayor Anthony spoke about which is pending
on the House calendar for debate and is relevant to our
purposes here today. This is the Religious Liberty Protection
Act, H.R. 1691. NACo strongly supports the right to the free
exercise of religion, Mr. Chairman, as guaranteed by the first
amendment of the Constitution. We fear, however, that the bill
may have far-reaching consequences by essentially preempting
local ordinances on zoning, civil rights, child abuse
protection and a myriad of other State and local laws when a
person or institution claims to be professing religious
beliefs. This legislation is much too broad in potential scope
and effect and opens the door to unnecessary litigation. In
addition to land use decisions, State and local governments
could be called into question by religious groups for enforcing
child abuse protections when removing children from homes where
religious practices are used for excessive discipline, a
refusal to pay for child support, a rejection of adequate and
appropriate health care, parental neglect of their children's
education because of purported religious beliefs.
Mr. Chairman, we should be sensitive to the religious
rights of our citizens as contained in the first amendment.
However, we also need to be vigilant in maintaining support for
the public safety, health and welfare and our ability to govern
while striking a balance between all people's rights.
As pertaining to the President's Executive order, Mr.
Chairman, together with the national organizations representing
State and local governments, NACo has entered into serious
negotiations on a new federalism Executive order with the
administration. After the administration indefinitely suspended
Executive Order 13083, we had meaningful debate on the need for
the administration to propose a new Executive order and over
the nature and substance of such an order. The administration
has negotiated in good faith in dealing with this issue and has
agreed to many provisions that help strengthen the Federal,
State and local relationship. We are continuing discussions
while working with you, Mr. Chairman, to ensure that the
federalism issues are enforced at the executive, legislative,
and judicial levels of government.
In closing, Mr. Chairman, NACo appreciates the opportunity
to testify before you today in support of H.R. 2245, and we
look forward to its enactment. Thank you.
Mr. McIntosh. Thank you very much, Commissioner. I do
appreciate again your taking time out from your work at home to
come here and share those with us. They're very helpful in that
testimony.
Mr. Gonzales. Thank you, Mr. Chairman.
[The prepared statement of Mr. Gonzalez follows:]
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Mr. McIntosh. Our final witness for this panel is Mr. Ray
Scheppach, who is with the National Governors' Association. I
appreciate your coming today and sharing with us a view of the
Nation's Governors.
Mr. Scheppach. Thank you, Mr. Chairman. I appreciate being
here on behalf of the Nation's Governors on the Federalism Act
of 1999. I want to thank you and the six sponsors for
introducing this bill.
I'm often asked when I give speeches about the State of
federalism in the United States today. I would argue in a
couple of major areas we've made some significant progress. In
another area, however, I think we're essentially going
backward, and that third area may well become much more
important than the progress we've made in the other two areas.
In terms of areas that we've made progress, we've clearly gone
over the last 5 or 6 years into a major so-called devolution
revolution. And if you look at what's happened on the spending
side of the Federal budget, I think States had actually gained
a considerable amount of flexibility in terms of programs. I'll
point to welfare reform, some additional Medicaid flexibility,
children's health, the highway bill, education flexibility and
tobacco recoupment; and on the regulatory side, a couple of
areas such as unfunded mandates and safe drinking water. So
that's a fairly significant list of very positive changes, I
think, in terms of devolution over the last couple of years.
The second area I think that we've made some significant
progress is in the courts. Again, over this timeframe, the New
York case on compacts of low-level nuclear waste, the seminal
shift of the last two or three decisions by the court in terms
of State sovereignty. Although our majority seems to be
relatively fragile, I think they are important decisions coming
out of the courts.
The third area, however, is this little area of preemption,
and I think we've got to look to some extent at what's happened
recently and project what we think is going to happen, given
some of the changes that are taking place in the economy.
Over the last several years, we've seen an acceleration in
preemption. There's a fairly long list, but I'll just point to
several of them: The Internet Tax Freedom Act and the
Telecommunications Act of 1996 were pretty significant. A lot
of the trade agreements, such as NAFTA, have preempted a lot of
State authority. The National Securities Markets Improvement
Act of 1996 did a fair amount of preemption. It's not
restrained, however, to Congress. The administration through
Executive order has preempted. We can point to the CHIP
program, which allowed for waiver activities, but the
administration has chosen not to provide any waivers. You can
look to an area such as the rules for bypass in Indian gaming
whereby the Secretary's prior promulgated rule that would
essentially allow tribes to come directly to the Federal
Government and bypass the compacting process. So we see it both
in the Congress and in administrative agencies.
I would argue that as we look forward, there are a number
of trends that are taking place that I believe are going to
make this preemption problem much more significant over the
future. Those three trends are essentially--in our domestic
economy, we are in the process of deregulating most industries,
and that is a major trend. Second of all, the rate of
technological change is accelerating; and third, we are really
being fully integrated into the world economy. What all those
three changes mean is that business wants uniformity and
consistency with respect to the rules and regulations under
which it operated. They need it to some extent to compete in a
global environment. Those are legitimate needs, but those
legitimate needs crash up against State sovereignty in many
areas.
When you look at what's on the congressional plate right
now, it's pretty significant in terms of potential additional
preemption. Financial services would preempt banking and
insurance regulations. Electric utility deregulation would
preempt States. There are probably 15, 16 different areas in
technology alone from digital signatures to privacy to a number
of areas that will preempt, and as previously mentioned, a
number of areas in land use and zoning.
So as you project the need for businesses' uniformity with
what's going on now and what we can expect, I think that this
is a growing problem that we all need to be pretty concerned
about.
You might ask what are the costs of that to our sort of
democratic system and our economic system. I would point to
three that I think are fairly significant. It was previously
mentioned that the ability to innovate and experiment will be
substantially reduced at the State and local level. If you look
at what the impact of that is, very seldom does the Congress
actually go into a new area and legislate. I hate to say it,
but you generally follow what has become effective at the State
and local area. If you look at welfare reform, we had 35 States
under waivers move forward in welfare reform. So to eliminate
that, I think, is going to eliminate your ability to really
decide what is effective policy and what isn't effective
policy, and I think that is a real significant loss.
Second, the Federal Government does not protect consumers
very well. There are many instances where after elimination of
State regulation, you don't put in place Federal regulation. I
can point in the health care area to ERISA. There is basically
no consumer protections in ERISA. The Federal preemption
eliminates consumer protections at the State level.
The third area I point to is the ability of Governors to
modify economic development approaches and strategies. I
laughingly say that in rural America, we're going to have an
ATM card machine under a garage. That's going to be the banking
in rural areas if, in fact, Governors and local representatives
have no ability to work with the private sector to ensure that
services are provided across the board. So I think there are
some fairly significant costs if we continue to allow this
preemption.
Let me say that the national Governors strongly supports
the Federalism Act of 1999. I think its focus is really on
three things that are relatively simple and should not be
particularly burdensome to the Congress. I think that first it
puts a spotlight on potential preemptions, and it allows State
and local representatives to sit down with congressional people
to work out what is the best way. The second, if there's
ambiguity, it has deference to States as opposed to Federal
laws, which I think is a plus. And third, it merely does the
scorekeeping. After the fact, after a 2-year period, CBO, in
fact, looks back and tallies up what's happened with respect to
administrative orders, judicial decisions, and congressional
action. So I think it's a relatively simple bill,
straightforward, not particularly burdensome, and yet may
really have a fairly substantial impact.
We look back at the unfunded mandates bill, many of us at
the time never thought that it would work as effectively as it
does. The number of points of order on the floor of the House
and Senate have been fairly minor. But really what's happened
is that Congress has found more effective ways of doing what
they used to do with mandates. And so I think it has been quite
powerful.
There's two areas that I would mention by which we think
the bill could be strengthened, one area in the disclosure
priorities. We think they could be expanded above and beyond
costs to look at specific impacts on economic development,
consumer protections and enforcements as far as the impact
statements; and second, perhaps go back and see whether a point
of order might be possible in the bill. Again, the issue, I
think, was very important in the unfunded mandates bill.
I thank you, Mr. Chairman. Governors support the bill, and
we look forward to proceeding to markup. Thank you, Mr.
Chairman.
Mr. McIntosh. Thank you very much, Mr. Scheppach.
[The prepared statement of Mr. Scheppach follows:]
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Mr. McIntosh. Let me now turn to Mr. Moran, who is one of
the original cosponsors, and thank you for joining us today in
this committee. Thank you for your work. Mr. Ford had told me
earlier you didn't have a statement. Is that----
Mr. Ford. I defer to my distinguished colleague.
Mr. Moran. If you want to make some comments, we'd all like
to hear them.
Mr. Ford. I defer to you. You're cosponsor of the
legislation.
Mr. McIntosh. He's worked a lot in this area. I appreciate
your coming, Jim, and share with us your comments.
Mr. Moran. Well, thank you very much, Mr. Chairman, and
thank you, Mr. Ford. I am proud to be able to join my
colleagues in addition to you, Rob Portman, Karen McCarthy, Tom
Davis, Gary Condit, Mike Castle, in cosponsoring the Federalism
Act, and the comments from the panel today certainly give us
some confidence that this may have some tracks and make a
profound difference in the way that we define the relationship
between the Federal Government and States and localities.
One of the great features of our federalist system of
government is the innovation and flexibility with which State
and local governments seek out and respond to pressing public
needs and concerns. That really is a major factor in the
greatness of this economy and this society. Invariably a new
approach is adopted and tested in a county or State. If it
succeeds, others try it. If it fails, it's easily abandoned.
It's not so easy for the Federal Government to test a new
policy or abandon a failed one, particularly the latter.
Unfortunately, this innovation and creativity at the State
and local level is too often being stifled by actions of the
Federal Government. With many new Federal laws or regulations,
we pay a price by foreclosing or displacing local and State
ability to address the same concern. These Federal initiatives
are often so pervasive that they occupy the field. The courts
have consistently held that the Federal presence is so great
that State regulation in the same field is banned. Tougher
State regulations and even regulations that merely complement
the new Federal initiative can be ruled null and void, and have
been.
A number of examples. Just yesterday we reached an
agreement on the conference on Y2K legislation. This is
critically important. It needs to be passed right away. But I'm
told that even in my own State of Virginia, the Y2K legislation
that was passed is tougher, and so we've got a problem. We are
probably going to have a problem with some of the banking
legislation on privacy laws, for example.
One of the major examples is that when Congress amended the
Employment, Retirement, and Income Security Act [ERISA], to
exempt employer-provided health care plans from State
regulations, it did so for the sake of economic efficiency. A
large multistate firm like IBM or General Electric or General
Motors that self-insures, for example, should not have to
comply with 50 different State laws on health care. I tend to
agree, but given the stalemate that we've reached in Washington
on health care reform and the fact that more than 16 percent of
our population, about 40 million people, still lack basic
health care, I think that many of us would welcome State or
local efforts to expand coverage to underinsured people.
So while most of the criticism of legislation like this has
been directed at people saying that this legislation is too
conservative coming from the right wing, here's an example
where that is just to the contrary. Much of what we're doing at
the Federal level is actually precluding much more progressive
legislation that could be accomplished at the State level.
Options to expand health coverage are extremely limited at the
State level now because too great a share of their population
is exempt from State regulation because of ERISA.
It's not just health care. How many mayors would love to
see their industrial brownfields revitalized, but they have to
await congressional action, which never seems to come. It's
been years we've been talking about that, never doing anything,
and it's obvious to anybody watching it that something would
have been done if it hadn't been for the Federal Government
precluding action because we have been--we stopped everything
in its tracks, saying, hold on, we're going to get legislation
that's going to preempt everything you're going to do. We're
going to provide the money and so on, and meanwhile all we get
is stalemate, and nothing is happening.
The Federalism Act we introduced last week seeks to protect
and enhance our Federal system of government. It sets forth a
process and discipline that's intended to make Federal
decisionmakers simply more sensitive to State and local
concerns and prerogatives.
Mr. Moran. In many ways it is analogous to NEPA, requiring
an impact assessment before Federal action can occur. It
doesn't bar Federal action, but it helps to identify the
potential impact of Federal action on State and local
governments and hopefully identify ways to mitigate against the
Federal action's most harmful impacts.
I would be the first to admit that much of the legislation
that Congress considers does include some type of Federal
preemption. It is difficult to find a law that we pass that
doesn't have some form of Federal preemption. So this is pretty
important legislation, and you are going to hear a lot about it
if it gets enacted. And obviously it is going it ruffle a lot
of feathers. But I support strong national standards for
cleaner air and water, fair labor standards, national public
health standards. But given the Congress' right under the
supremacy clause, we should have a procedure to ensure that
Congress is both well informed and held accountable for major
actions that preempt State and local governments.
We also need to set forth a process that provides the
courts with greater clarity on congressional intent when legal
disputes arise between Federal and State law, and so much of
this now is going into the court system. Even the recent
Supreme Court decision, that has profound implications. It was
mentioned by the panel. But I think it demands some reaction
from the Congress, particularly a clarification. And this
legislation would provide this. This would make it clear
exactly what we intended, that if there is preemption, we knew
exactly what we were doing, we had our eyes open when we went
into it. And the requirement that we lay it out in report form,
that we justify why we are doing it, we explain what we are
doing, we are showing we knew what we were doing when we did
it, all of that seems very constructive.
So I know it is not perfect. I think there is going to need
to be some judicial review limitation. We talked about that.
And eventually--the chairman remembers we compromised on that
with the Unfunded Mandate Reform Act. We may go through the
same process with this legislation.
And the requirement for an agency--Mr. Ford was pointing
out that it gives him concern, it gives me concern in terms of
the practicality that an agency has to consult with every
public official affected by the legislation. Well, that is
impractical and it is unrealistic. But if we can get a process
together where we consult with the big seven so that we know
and leave it to you to consult with the State and locals
affected, that is doable. But that is the kind of thing that
needs to be worked out.
I look forward to reviewing all of the testimony here
today, Mr. Chairman, and I think that a lot of the problems
that might be identified are solvable. We can limit the
potential for nuisance lawsuits. We can address the scope of
judicial review. We can enable the Congress to be more
responsible, more accountable, more constructive with this
legislation and that's why I support it, and I appreciate you
having the hearing today.
Thank you, Mr. Chairman.
[The prepared statement of Hon. James P. Moran follows:]
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Mr. McIntosh. Thank you, Mr. Moran, and thank you, again,
for all of your hard work in this area. We really do appreciate
it.
Mr. Ford, did you want to add to that?
Mr. Ford. Yes, sir. I won't be long, Mr. Chairman. I thank
you and I thank my colleague Congressman Moran. I want to
support this legislation, and I appreciate all the comments and
the hard work that the panelists have put forward and certainly
my colleagues, McIntosh, Moran, McCarthy, and Rob Portman, for
whom I have great affection because he is a University of
Michigan graduate like myself. Even though he is in the wrong
party, he is one heck of a guy.
I support the legislation for a number of reasons just to
echo to the extent I can what Mr. Moran has said. The
flexibility and innovation and creativity we are seeing at the
State and local levels around the country, I think we ought to
unleash and really allow you guys to move and do the good work
you are doing without fear of preemption by the Federal
Government. I was a supporter of the Ed flex legislation that
we passed recently that really untied the hand of State
lawmakers and State education policymakers to do what is best
for their students, to allow their teachers and superintendents
to do the good work that all of us here want them to do.
I come from a State, from Tennessee, where we run our own
State Medicaid program. We call it TennCare. But for the fact
that we receive a waiver from HCFA, we would not be able to do
the things that we are doing. It has its strengths and
weaknesses, but we were one of the very first States to have a
comprehensive, or all or nothing, State Medicaid program and as
the director is shaking his head, he is aware of some of the
successes that we have had and some of the failures. But
nonetheless I think it is an improvement from what we had. We
are saving the government--saving the taxpayers money and we
are covering with expanded coverage for more people. But some
people question the quality of the care, and those are issues
that we will have to address.
But I also come from the school of thought that the Federal
Government is not our enemy. I think so often we forget the
environment and health and safety. And where I am from in this
Nation we had an ugly history in how we dealt with people who
look like me and two of the panelists and a lot of women in
this room. And the Federal Government has been an instrumental
force in ensuring that rights and liberties are afforded to all
people. So I do think that we ought to be careful as we talk
about the intrusive and the burdensome regulations and policies
passed and enacted and promulgated by the Federal Government.
The concerns I have have been raised by Mr. Moran. Section
5, I don't think is that big of a concern for me. I think that
many of the agencies are already assessing to determine whether
or not these rules are, what type of burden or what type of
impact they will have on States. So I disagree with some of the
opponents on that front. But with regard to section 7 and the
judicial review issues I do think that those issues perhaps can
be worked out. I am encouraged by Mr. Moran's remarks and my
relationship with Mr. McIntosh leads me to believe that he is
more than willing to try to work through some of those issues,
and I imagine the panelists, based on your comments, you are
eager to see this legislation enacted and I would hope that
eagerness would translate into a willingness to work with all
folks who want to see this thing passed.
I also have concerns about what the Supreme Court recently
did. How it is interpreted I think leaves a lot open--or how it
can be interpreted, Mr. Chairman. I think it leaves a lot open
and I think we ought to be careful and realize that the people
in our districts elected us to do a job too, and not just to
give all the power back to State and local governments. As much
as I would want them to have the ability to do with what they
are doing, whether it is what Governor Engler is doing, or
whether it is what Governor Davis is doing, whether it is what
Mayor Rendell is doing or Mayor Riordan, I want all of those
local officials to have that flexibility to do good things. But
nonetheless we were elected to do a job too, and I am one who
is proud to say I am glad I have this job and I am hopeful that
the people continue to let me do it and I hope to continue to
make an impact for the people in Memphis and around the
country.
I yield back the balance of my time.
Mr. McIntosh. Let me say, Representative Ford, we have
worked well together and you are absolutely right. I would like
to continue to work with you on this and the other bills that
we are working on to make sure we have a truly bipartisan
approach. And specifically, you mentioned the concern about
civil rights, which I think we all share. The bill has an
explicit provision that says those bills will not be affected
by it because that is a purview of the Federal Government, as
it should be after the amendments passed to the Constitution
after the Civil War in which the Federal Government was given
authority to make sure that everyone's rights were protected in
that area. So I appreciate your cognizance and input into that
in particular, and we share that same goal.
Let me just mention two things before we get to
questioning. And in fact you can debit this from my questioning
time so that my colleagues have a chance as well. But from the
testimony, it appeared a couple of things that I think are
important to distill. One is that the federalism principle cuts
across party lines and it cuts across ideological lines.
Several of the examples that were mentioned were ideas that
conservatives liked but yet they preempted State and local
authorities. Others were ideas that liberals like but preempted
State and local authority. And I think all of us would be good
to step back and remember that there was a lot of wisdom in the
Founding Fathers in establishing a federalist system of
government where each of our political or ideological
preferences needs to be put in check here nationally and we
need to focus on making sure that we allow the laboratories to
continue to experiment and find solutions to our problems.
The second was that I think there are ways in which we can
deal with what is perhaps the strongest argument against
federalism, and that is the economic argument that we need
standardization. One of the ways to do that is a model that has
been around for quite a long time and that is the uniform
commercial code that is not a Federal act at all, but it is
adopted in all 50 States and provides a great deal of
standardization for commercial transactions. And I think it
would serve us well here in Washington to remember that many of
the problems we face today could be addressed in that type of
uniform State effort and encourage more of it.
The second is a provision that I put into an amendment I
brought to the floor a couple of weeks ago addressing the issue
of teacher liability. And we had a strong bipartisan vote for
this in the House. In fact, I think we had exactly 300 votes
for it. There was a provision that I thought was very important
that said any State law that went beyond the protection for
teachers against lawsuits would automatically continue to be in
effect and that any State that wanted to adopt a different set
of protections or no protections at all could decide to waive
the provisions and opt out of the whole protection scheme. So
what we effectively did was put in what I think of as a gap-
filling measure at the Federal level, but we left total
discretion for the States to address the issue in a different
manner if they thought that was better.
And, I think we should--and I would hope that one effect of
our bill today would be that in future legislation, Congress
would look to that type of provision where we could legislate a
policy preference, but still create the flexibility for the
States to opt out or have different solutions to it. So that as
Mr. Ford said, we have to do our job and address many of these
questions, but we could at the same time recognize that perhaps
our solution doesn't fit every scenario or every State or every
need for every community and explicitly allow that to occur,
rather than an implicit preemption because we have legislated
at the Federal level.
So I think there are ways in which we can strive to reach
uniformity without the heavy hand of Washington coming in and
dictating what State and local governments need to do on these
policy questions.
With that, let me ask each of the panelists several
questions regarding the bill. But the first one was does your
organization support the specific requirements for agency
rulemaking, such as required early consultation and
identification of preemption of State and local government
authority and the other federalism impacts which are required
by section 7? You are welcome to expand on it but if I could
ask each of you for the record to state if your association
supports those provisions.
Mr. Blue. The National Conference of State Legislatures,
Mr. Chairman, generally supports those provisions. However, I
think as Mr. Moran and Mr. Ford pointed out and as you
acknowledged, and as all of us experience in legislating, we
know that as various members start responding and reacting to
legislation, part of what we do as legislators is try to
accommodate the concerns that they express as long as we can
preserve the basic intent of what the proposed legislation
seeks to accomplish. So as a general proposition, we do. We
know that there are some things that need some fine-tuning and
stuff, and, Mr. Chairman, we know that you will make the
opportunity available to us to work with you as you start doing
that kind of fine-tuning to the bill prior to markup.
Mr. McIntosh. Absolutely. Let me say categorically that as
we consider changes to the bill, one of the things that I would
want to do is keep the coalition together that we have
developed with all of the seven organizations and the
bipartisan cosponsors, so that we can consider those suggested
improvements and perhaps compromises. But thank you, Mr. Blue.
Mayor Anthony.
Mr. Anthony. Mr. Chairman, the National League of Cities
agrees with Representative Blue. Consultation during the
rulemaking process is the most critical time to have the big
seven weigh in, because after that it is, as you know, more
difficult. And it is vital that cities know what exact impacts
are going to have on city governments and the rules that are
being promulgated must again have consultation at that stage
and not after.
Mr. McIntosh. Exactly. Thank you. Mr. Gonzales.
Mr. Gonzales. Mr. Chairman, briefly, the National
Association of Counties supports it.
Mr. Scheppach. Yes, NGA supports it. And I would just
stress the fact that the legislation is important because it
affects independent agencies where the Executive order does
not. So I think it is important from that standpoint. And my
sense is that some of the decisions that of the FCC and other
independent commissions are going to be more important over
time.
Mr. McIntosh. Very good point. Very good point. The need
for legislation.
The other aspect on the federalism impact assessments, and
GAO will testify later, but they have shared their written
testimony with me, and they will be pointing out that
oftentimes the agencies have ignored the requirements in the
Executive order to prepare those federalism impact assessments.
Given that, would you all I guess agree or disagree that
that is an important part of the legislation, the requirement
that those be done as part of the regulatory process?
Mr. Blue. We would.
Mr. Anthony. Yes.
Mr. Gonzales. Yes.
Mr. Scheppach. Yes.
Mr. McIntosh. Does your organization support that the
bill's specific requirements be subject to judicial review as
part of the Administrative Procedures Act, as to whether the
agency has used its discretion appropriately or acted
arbitrarily?
Mr. Blue. I think, Mr. Chairman, that this is one of the--
certainly one of the most vexing parts of it because as I said
in my prepared comments, getting a handle on administrative
rulemaking and ensuring that there is an acknowledgment of the
federalism impact is a very difficult thing to do. We don't
want to hamstring the ability of you or the agencies to
effectively do what Congress authorizes them to do. But at the
same time, we think it is very critical that there be some way
to ensure that they are complying with the requirements that
Congress imposes on them.
Let me simply say that some modified form of judicial
review certainly is needed with respect to the administrative
agencies. We have had success in working with in a limited way
what we have in UMRA. But I would suggest that there is some
kind of solution, Mr. Chairman, that would address the problems
raised by the Justice Department, yet at the same time assure
that those things we are trying to achieve with this
legislation indeed are achieved.
Mr. McIntosh. I think there were eight different areas
where we were trying to ensure the agencies had to respond, and
I'll just mention them briefly so that we have got them on the
record: Any preemption of State and local authority; the
Constitutional basis for preemption; the express statutory
provision authorizing regulatory preemption; any crossover
sanction, a provision that establishes a condition for the
receipt of funds that isn't related to the purpose of the
program; any other impacts on the State and local governments;
all regulatory alternatives that they must be considered; the
costs that would be incurred by State and local governments;
and, the extent of consultation with State and local public
officials.
Now, in the testimony one of you I think mentioned that we
might want to go beyond just the costs but also disclose the
impact, Mr. Scheppach, I think mentioned that impacts on
economic development as well, and so we will consider that.
But adding that language perhaps or further defining that
we want to make sure costs include that concept. Are there any
other--I guess, Mr. Blue, you said you thought we should work
in terms of making sure there is some judicial review. Are
those the factors that you would want to make sure were subject
to review?
Mr. Blue. I think, again as Mr. Moran said, modifying it so
that you address the legitimate concerns and interests so that
we don't basically shut down all administrative agency
activity, these are factors that I think are important, and it
may very well be something other than a full APA kind of
review, but some kind of review that either prods an agency to
go back and look at things and tell us what they used in
arriving at where they are. I would be reluctant, Mr. Chairman,
because of my experiences with agencies in North Carolina, to
say that you would stop them in their track from a judicial
standpoint.
Mr. McIntosh. To be candid with you, we thought we were
being pretty kind to them because they have to follow the APA
requirements anyway. At one point we thought about a separate
judicial review provision that would have created a separate
right of action. I'll have to look more closely at the Justice
Department's letter but maybe we need to return to that type of
provision if they are not happy with the APA standard of
review. We thought we were doing them a favor by not creating a
separate form of action. Maybe they don't like that.
Mr. Blue. We are experiencing--experimenting, rather, in my
State, with a modified form of review in our Administrative
Procedure Act. There may be some lessons that we learn from
that that may be helpful. I certainly, again, Mr. Chairman, and
NCSL, as well as the other organizations, and we are all pretty
much in lock step on this, would welcome the opportunity to
work with you to resolve these issues, to get some form of
review that ensures that we can, in fact, achieve what we think
is very important with limiting to some degree just to
disregard the federalism principles in some of the rulemaking
process.
Mr. Anthony. I agree with Representative Blue because the
implied preemptions are the most dangerous preemptions and that
is why judicial review has become one of the most important
elements to our organizations to dialog with you about, to help
come up with some kind of language that would include it in the
legislation.
Mr. McIntosh. I appreciate that. Commissioner Gonzales.
Mr. Gonzales. I don't want to take more time, Mr. Chairman,
other than that we concur with what the legislatures and the
cities have indicated.
Mr. McIntosh. Mr. Scheppach.
Mr. Scheppach. I would just say that some judicial review,
particularly of the process, I think is important. And my
understanding is that there was a SBREFA, which was a Small
Business Act that was done in the last couple of years as an
example of a way in which you may be able to get at the
process.
Mr. McIntosh. Yes, although I have some familiarity with
that, the agencies tended to exempt themselves from it, and EPA
in particular on their particulate and NAAQS rule said this
doesn't apply to us. That rule ended up being thrown out by the
courts for other reasons, but we had a hearing right here and I
think it was in this room, in fact, where the general counsel
from EPA said, well, I'm expecting to get sued anyway so they
will throw in a SBREFA count. So we need to look closely about
whether that has been enough of an enforcement mechanism to
really make the agencies pay attention.
There are some provisions that are making their way through
right now to strengthen that and so maybe a strengthened SBREFA
would be the solution that we could use. We will look at that
and work with all of you to make sure that there is an
effective judicial review provision, but one that resolves any
of the questions that have come up and are with our supporters.
Let's turn now to the legislative requirements. Mr.
Scheppach, you mentioned that you thought it would be good to
try to keep a point of order in the bill. Let me just ask your
colleagues on the panel if they agree with that.
Mr. Blue. The National Conference agrees totally with Mr.
Scheppach on that. I think that some kind of point of order,
similar to the one in UMRA, would again focus Congress on the
issue of preemption. We thoroughly have enjoyed the success
that we at least think we have realized from the point of order
provision in UMRA. And so, Mr. Chairman, we are in full
agreement with Mr. Scheppach on that.
Mr. McIntosh. OK.
Mr. Anthony. Ditto.
Mr. Gonzales. Yes, sir.
Mr. McIntosh. From a Member's perspective it helps focus
the issue very clearly because you are going to have it debated
on the floor and you have to focus as you are writing
legislation whether or not you will be subject to a point of
order. So I think the point is very well taken and we will work
with you as we move toward a markup to try to see what we can
do on that.
Mr. Kucinich, welcome.
Mr. Kucinich. Mr. Chairman, you said the magic word. I am
in a markup in Education, but I just wanted to be here.
Mr. McIntosh. Maybe you and I can pair up there. Would you
like to make any statement at this point?
Mr. Kucinich. I have a statement that I would like to
submit for the record.
[The prepared statement of Hon. Dennis J. Kucinich
follows:]
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[GRAPHIC] [TIFF OMITTED]59530.065
Mr. McIntosh. OK. We will gladly do that. We have unanimous
consent to do exactly that.
We are now just at the question phase with our first panel
and they have given several suggestions about the legislation,
and I was checking out in particular provisions for them.
The next one I wanted to check with you all on was the
crossover sanctions. Basically does your organization support
the bill's requirement that they identify provisions that
establish a condition for the receipt of funds under a Federal
grant program that is not--and let me emphasize the ``not''--
related to the purpose of the program? These are known as
crossover sanctions and it is a way in which the agencies have
used Federal grantmaking power to try to influence policy in
areas outside of the particular grant. My preference would be
to disallow that altogether. What the bill does is require them
to at least identify that that is what they are up to in the
federalism impact assessment. Mr. Blue.
Mr. Blue. That has been one of our biggest gripes at the
State legislative level. And so certainly, even in a limited
form, we support this crossover sanction provision. We
constantly ask how can we be forced to do things unrelated to
the legislation anyhow and so the crossover sanction----
Mr. McIntosh. The word extortion comes to mind, doesn't it?
Mr. Anthony. Yes, we definitely support the bill's
requirement to identify the crossover sanction. This again is
about an equity issue for cities throughout the Nation because
whatever is passed down to the State level then has to be
really implemented by the city halls and county halls of this
Nation.
Mr. Gonzales. I concur with Mr. Anthony, Mr. Chairman,
absolutely.
Mr. Scheppach. Yes, I concur also. I mean the number of
times that I have seen sanctions against highway money is quite
astronomical.
Mr. McIntosh. Exactly. All in the name of good causes but
once again we should allow our colleagues at the State and
local level to do their causes as is their proper role in our
government.
Another area was the rules of construction, and this is a
parallel to the judicial review, but essentially it says that
when the legislation is ambiguous, that there will be most
favorably constructed in terms of deferring to the State and
local governments rather than preempting. This hasn't always
been the case in the history of our country with the courts
sometimes going so far as to actually imply preemption in
congressional acts that were not even considered by the
legislative branch here in Washington.
So we decided it would be important to specify clearly what
type of rule of construction we favored in Congress, which was
granting the maximum deference to the States. Does your
organization support that particular section which I think is
in section 9?
Mr. Blue. We do, Mr. Chairman. I might add one proviso. I
think that again when we get to implied preemption, we don't
seriously question the ability to preempt. When it is
expressed, of course, we can't, or when you have got a direct
conflict. Courts are going to find a way to get into direct
conflict resolution anyhow in the area of preemption. But
whether it comes to ambiguity and gray and fuzzy areas we
believe enough in our process and what we do as State
legislatures to think that it ought to be deferred to. And I am
sure my brethren at the county and city level think likewise.
Mr. McIntosh. Great.
Mr. Anthony. And I agree with Representative Blue. The
courts have also in the last few months talked about the fact
that in Alden v. Maine, Congress has vast power but not all
power. And I think that clearly section 9 of this bill would
help us in looking at and supporting that language.
Mr. McIntosh. I think the courts will pay attention to what
we do legislatively. We have a theory of separation of
government, but we also live in a world where we read the
newspapers and I did study under Professor Scalia before he
became a judge and then a justice, and at some point as we were
discussing the theoretical ability for the government to use
the commerce clause, he said, ultimately the courts can only
hold out so long in interpreting a particular provision if the
popular will as expressed by the legislative and executive
branch is pushing in a certain direction. So, I think it is
helpful for us to reinforce those good decisions that the
courts are coming up with in this legislation. Commissioner
Gonzales.
Mr. Gonzales. Again, the counties concur with the cities on
the merits as they pertain to the rules of construction.
Certainly that is important to all of us to that they exist.
Mr. Scheppach. NGA supports the provision.
Mr. McIntosh. Good. I appreciate that. And, then a couple
of the other ones that I wanted to quickly talk with you about
was the deference to State management practices, which is in
section 5, and in section 6, the cooperative determination of
performance measures. These two are not as widely debated but I
think they are important on a day-to-day level in which the
agencies interact with the States and foster that true
partnership.
Any comments or do your associations support those
provisions?
Mr. Blue. I would defer to Mr. Scheppach and the Governors
on that, Mr. Chairman. Of course, we wrestle a lot with our
executive branches on some of these issues but again as part of
the overall effort by these seven organizations to be on one
accord, I think that the Governors have a much greater feel for
this than legislators do.
Mr. Scheppach. Yes, I would say we support the two
provisions and I would say particularly the performance is
getting to be a much bigger issue now because most Federal
agencies now are moving toward performance measures. And we
were on three or four big entitlement programs, about 600
categorical grants of well over $225 billion of programs. They
are all moving toward performance evaluations. To have an
agency go out by itself and determine how we are to perform is
inappropriate. This is getting to be a bigger issue. We have
had some positive experiences with the administration and some
negative ones with respect to some agencies. We think this is
important.
Mr. McIntosh. Mr. Gonzales, do you concur?
Mr. Gonzales. Yes, we do.
Mr. Anthony. We do.
Mr. McIntosh. Let me turn to Mr. Kucinich. I will have one
other question at the end, which is do you have any other
changes but we will get to that.
Mr. Kucinich. I appreciate that, Mr. Chairman. I have a few
brief questions and then I will have to return to the markup.
First of all, I want to thank all of the witnesses for being
here this morning. As a former mayor, I can certainly
appreciate your interest in legislation that would ensure that
local and State officials are consulted on matters that affect
their interest. I am concerned, however, that this bill may
overreach in some of its attempts to reach these goals. For
example, according to the General Accounting Office, ``This
bill will require federalism impact assessments for all
proposed and final rules.''
Now, to a mayor--from mayor to mayor here, Mayor Anthony,
is that your understanding of the bill as far as the impact
statements?
Mr. Anthony. Yes, that is my understanding, Congressman.
Mr. Kucinich. The bill, from my reading of it, the bill
doesn't distinguish between substantive rules and rules that
GAO describes as ``administrative'' or ``routine.'' And I'm
concerned that it might have the potential to tie up agency
resources on kind of noncontroversial, nuts and bolts issues.
Let me give an example.
I came across a rule that was published in the June 2nd
Federal Register that would keep a drawbridge in Panama City,
FL, closed for 2 hours on July 4th to prevent a traffic jam
leaving the city's fireworks display. Now, the temporary rule
was issued at the request of the city, yet this rule would
clearly fall under section 7 of the bill. So is this the kind
of rule that you had in mind when this legislation was proposed
or envisioned, Mayor?
Mr. Anthony. Well, of course not because that to me is a
specific area of the State of Florida, for example, that does
not have far-reaching effect on all cities throughout the
Nation.
However, I would think that consultation requirement and
other issues related in this bill should apply to that rule and
Congress and the proposer, Congressperson who proposed the
legislation, would follow the rules of H.R. 2245.
Mr. Kucinich. Did you know, this month I think there were
about four other drawbridge rules issued at the request of
local governments to complete bridge repairs and maintenance.
But without any limitations on judicial review, any aggrieved
party affected by the bridge closing whether it would be
recreational boaters, commercial shippers, a city hundreds of
miles downstream, would be entitled to challenge this rule in
court by claiming that this agency's federalism assessment was
deficient.
Mayor, are you aware that this bill could allow this type
of legal intervention or lawsuit?
Mr. Anthony. I am now, in regards to the way in which you
are applying it to those examples, yes.
Mr. Kucinich. And if I may add, my concern again is that
the same issues would affect literally thousands of
noncontroversial routine rules each year. Whether they are
talking about drawbridge regulations to FAA airworthiness
directives to Securities and Exchange Commission recordkeeping
rules.
Just from your experience as a mayor, do you have any
suggestions for how we could avoid these assessments and
lawsuits for thses kinds of noncontroversial rule? Any ideas?
Mr. Anthony. Congressman, I do. I think that if you look at
and pick out those small rules that clearly are specific to
areas, local concerns, and use those as examples, of course I
find it very difficult to say that you are not correct in those
bills--those rules that you are sharing.
But as a national representative of the League of Cities, I
must say to you that the national policies that we are
dialoguing here, the Internet Freedom Tax Commission, issues
related to telecommunication generally, have been--has had
major impact on national proportion to cities throughout this
Nation without true consultation with local governments. Can I
give you the answer of how those specific rules should go
through the process as all major rules? No, I can't, sitting
here.
One of my--one recommendation that I would have for you,
Congressman, is perhaps as it goes through the process, that
Congress should not adopt such narrowly focused rules for
specific areas of the country or cities. But other than that, I
cannot tell you how it would be handled through this process.
Mr. Kucinich. Thank you, and I want to thank the chairman
for his indulgence and I wish you well as you try to work out
these difficulties. I know the Chair's concern is to try to
make the government work better. I think we are all trying to
do that and I appreciate the effort. Thank you very much.
Mr. Anthony. And Congressman, may I say to you mayor to
mayor, I do appreciate the questions. But if you really think
about it, those bridge rules were promulgated with local
government input because the local government did request the
bridge closure. So, in fact, if we did apply it through
consultation, it would meet that--one of those requirements.
Mr. Kucinich. It is always good to know that sometimes when
you ask for something, you get a little bit more.
Mr. Anthony. I know. I'm sorry.
Mr. McIntosh. And let me say thank you, Mr. Kucinich.
Although I think the problem you identified there on the whole
can be one that will be self-policing essentially in that, if
it truly is not noncontroversial, there won't be somebody who
has an interest to come in and challenge that regulation. But,
if you have got a city downstream, that mayor may think that it
is important that the bridge not be left open, and then you
would want the agency issuing that regulation to have
considered their concerns as well as the city. So I think it
sorts itself out in requiring them to think about the
federalism impact where it is noncontroversial, nobody is going
to challenge on how they did it. Where it is controversial,
they have to make sure they do it correctly.
Mr. Kucinich. Thank you, Mr. Chairman. I think it would be
wonderful if we had a bill that was noncontroversial and helped
us sort out controversy.
Mr. McIntosh. We are working on that. Thanks, Dennis, I
appreciate your coming today and look forward to you joining us
on this bill at the appropriate moment.
Mr. Kucinich. It is always a pleasure to be here, Mr.
Chairman.
Mr. McIntosh. The last question I do have for this panel is
really an open-ended one. You mentioned the point of order
earlier. Are there any other amendments or changes that you
would like us to consider? And as I said earlier, the record
will be kept open until July 16th so, if there are some written
proposals your organization would like to submit, we will also
receive those.
Mr. Blue. Thank you, Mr. Chairman, and again thank you for
your gracious manner in which you have allowed us to discuss
with you and talk about the issues that were of concern to us
up to this point.
The point of order is, I think, something that would
strengthen the bill and as other thoughts occur to us during
the time that the record is open, we will get them to you, and
again, we know that you will make yourself or your staff
available to discuss those with us. Thank you very much.
Mr. McIntosh. Thank you.
Mr. Anthony. Mr. Chairman, I agree. The only issue again is
the point of order issue that we would like to see added as a
part of this legislation. But let me take a point of personal
privilege and thank you so much on behalf of the big seven,
specifically the National League of Cities. Your sensitivity
and assistance, even with your colleague here this morning, is
much appreciated. I think it is our responsibility to help you
at this point get this legislation through the process and
we're committed to doing that. And as I have noticed, there are
more and more mayors, county commissioners, State reps,
Governors, that are now in Congress and we need to pull our
resources together to make sure that we are successful along
with you. And we really do appreciate your sensitivity.
Mr. McIntosh. Thank you. I appreciate that. And I will be
calling on you to help as we move through the markup phase
which I would like to move to rapidly to gather that kind of
support with my other colleagues.
Mr. Anthony. If I am not stuck at a bridge somewhere, I
will help.
Mr. McIntosh. Thank you.
Mr. Gonzales. Mr. Chairman, we have no amendments to offer
and concur with what the legislatures and the cities have
indicated. Also, again, to thank you. I assure you that local
governments across America are faced with huge challenges as we
approach the new millennium, and certainly we need Congress'
support in bringing down barriers to allow us to be innovative
and to offer real solutions to individuals whose lives we
impact on a daily basis, and certainly your efforts in bringing
this legislation forward certainly is going to hopefully
provide the tools or at least the accountability to make sure
that we work in concert to assure the health and safety of our
citizens. It is a privilege to work on this legislation and
support it and actively support it as it proceeds through the
Congress. And you can count on the counties's support as this
goes forward.
Mr. McIntosh. Thank you. Appreciate that.
Mr. Scheppach. No, Mr. Chairman, I mentioned the two things
you are aware of: The point of order and expanding the
information and the impact statement. Other than that, the
Governors appreciate you taking leadership on this and having
this hearing. We thank you.
Mr. McIntosh. Thank you. And I will, Mayor Anthony,
definitely take you up collectively in helping to gather
cosponsors as we move forward to make this legislation become
in fact an act passed by the Congress and signed by the
President. Thank you all, appreciate it very much.
Let me now call the second panel, which is a representative
from the General Accounting Office, Mr. Nye Stevens. Mr.
Stevens, let me ask you to also take the oath.
[Witness sworn.]
STATEMENT OF NYE STEVENS, DIRECTOR, FEDERAL MANAGEMENT AND
WORKFORCE ISSUES, GENERAL GOVERNMENT DIVISION, GENERAL
ACCOUNTING OFFICE
Mr. Stevens. Mr. Chairman, I will try to match the previous
panel in brevity as I summarize our work that relates to the
bill you are considering today, and then I would respond to any
questions you may have on it.
I would like to talk about implementation of the Reagan
Executive order on federalism that you mentioned in recent
years, talk also about the impact of the regulatory provisions
of the Unfunded Mandates Reduction Act of 1995, and then
comment on one agency's experience in cooperatively setting the
kind of performance measures and goals that are contemplated in
section 6 of the bill.
For at least the past 20 years, Mr. Chairman, and certainly
as exemplified by the panel that just spoke, State and local
governments have expressed strong concerns about regulatory
preemption of traditionally non-Federal functions and the
burgeoning costs of complying with Federal regulations and
mandates. And the centerpiece of the Reagan administration's
response to this concern was the promulgation in 1987 of an
Executive order which required agencies to determine which of
their proposed rules had sufficient implications for the
relationships among levels of government to warrant the
preparation of a federalism assessment which would spell out
the effects and the costs and the various burdens associated
with the rule on State and local governments.
I think it is fair to say, Mr. Chairman, that the impact of
this requirement and the Executive order at least in recent
years has been minimal. The Office of Management and Budget has
never issued implementing guidance or instructions and we found
that the federalism assessments are rarely being prepared or
the requirements to make them even acknowledged. We did a
search of the 11,414 final rules that were issued in the 33
months leading up to the beginning of this year and we found
that only 3,000 of them even mentioned or acknowledged the
Executive order in the preamble to the rules.
The Environmental Protection Agency didn't even do that. It
never once mentioned the Executive order in the 1,900
regulations that it issued during this period.
But even when the order was mentioned, it was almost always
sort of a boilerplate assertion that there were no federalism
implications so nothing had to be done about analyzing or
justifying them. The bottom line is that of the 11,400 rules
issued from April 1996 through last year, only 5 actually had a
federalism assessment associated with it.
Now, you might argue that most of these rules were routine
and administrative and unlikely to have federalism implications
as your last point of dialog with the other panel considered.
So we did another cut and we looked at the 117 rules that were
designated as major, usually because they involved costs of
more than $100 million on the economy, and only one of these
had a federalism assessment associated with it. It was the rule
associated with the sale of cigarettes and smokeless tobacco
products to children.
This was in spite of the fact that the effects on State and
local governments for 37 of those rules, were well recognized
in the unified agenda that is put out semiannually and that 21
of them said in their preambles that they would have the effect
of preempting any State or local laws on the subject.
And we took one more step with the major rules. We took
them to the big seven organizations, several of whom you just
heard from, and asked them to look at the rules and give us
their opinion on whether they thought they should have had
federalism assessments. Four of them agreed to look at all 117
of these major rules and at least one of the four said that in
their view a Federal assessment did seem to be warranted for 79
of those 117 rules.
Now, one reason for the very minimal effect the Executive
order seems to have had on the regulatory process is the leeway
that an agency is given to interpret its terms and this is one
area of things the subcommittee might want to concentrate on in
considering whether to set a similar requirement in statute.
EPA's guidance on the order sets a very high threshold for what
Federal implications are. For example, a rule would have to
affect all or most of the States in order to be covered and it
would have to have a purely institutional rather than a
financial impact to be covered.
It would have to have that impact on State and local
governments to bring it under the Executive order's terms and
none of the 1,900 rules that EPA issued seemed to have been
able to surmount that very high set of hurdles.
In commenting on our findings on this work, Mr. Chairman,
OMB said that adherence to the Executive order was probably
affected by the fact that during the period of our review they
were considering their own Executive order on federalism, the
one that you had a hearing on and that was later rescinded.
None of the agencies actually mentioned that to us as a factor
when we talked to them about it. And in any case, the Executive
order seems to have been developed in a closed enough sense
that it probably didn't affect the thousands of people in the
bureaucracy working on these 11,000 rules, so we didn't find
that terribly convincing.
OMB also said that passage of the Unfunded Mandates Reform
Act of 1995, or UMRA, was a more important vehicle for
considering State and local government effects than the
federalism Executive order. We happen to have also looked at
the regulatory provisions of UMRA, not the legislative review
provisions, during its first 2 years and we found that that too
had very little effect on the rulemaking process in the
agencies. Many of the rules did not have a notice of proposed
rulemaking that triggered the law, others didn't reach a
threshold of the $100 million in expenditures, which is a more
exacting threshold than $100 million in costs, needed to
trigger the UMRA regulatory requirements.
The requirement that agencies develop an intergovernmental
review process or consultation process appears to have been
applied in only four rules at EPA and none in any of the other
agencies.
The consultation provision in the bill in H.R. 2245,
section 6 seems to have more teeth in it than the UMRA one and
it forbids agencies from including in their annual performance
plans under the Results Act any performance goals or measures
that have not been developed in cooperation with public
officials. The Office of Child Support Enforcement learned this
lesson the hard way as is spelled out in one of our reports. It
only became a successful partnership between the Federal and
the State governments when OCSE began to include State and
local officials in the planning process. And having done that,
and done that fairly well, we believe it could now be a model
for the kind of intergovernmental cooperation that section 6
seems to contemplate.
I will stop there and respond to any questions you may have
on the work.
[The prepared statement of Mr. Stevens follows:]
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Mr. McIntosh. Thank you. I have to say quite frankly, I was
shocked and appalled in reading your testimony at how
inappropriate the agencies have been acting in disregarding
that Executive order.
I have got several questions. One, could you provide for us
some examples of the rules that were identified by the State
and local government organizations that should have been
covered by the Executive order to give us a flavor----
Mr. Stevens. Yes, as you know at least one of the
organizations thought that 79 of these 117 majors should have
included a federalism assessment. One of these was an OSHA rule
on respiratory protection programs, basically respirators and
breathing protections, and that has a strong effect on local
governments because firemen are the principal users of these
things and most of the firemen of course are at the local
level. OSHA indicated in the preamble to the rule that it would
require 25 States to adopt a comparable standard within 6
months and then they also said in the unified agenda earlier
that the rule would affect State governments, local
governments, tribal governments and at every other level. But
they did say that no federalism assessment was required for the
rule.
The Council of State Governments, the National Association
of Counties, the National League of Cities all disagreed for
the obvious reason that this, as you know, would have major
effects on the States and that the firemen to whom it was
primarily directed are primarily local employees.
There was also the NAAQS rule, the one that you mentioned
yourself. Although the standards had to be implemented by the
States, EPA did not mention the Executive order in their rule.
The National Association of Counties said that the indirect
costs of complying with new permits and revising existing
permits in developing regulatory enforcement changes would be
substantial on them. But the level of cost does not seem to
have mattered to EPA. It wasn't one of those standards that
they even considered the amount of money that it would cost
States to implement these things; only institutional
relationships were within their guidance.
Mr. McIntosh. Let me followup on that one very quickly.
Surely some of the 1,900 EPA regulations went directly to
institutional requirements, because wouldn't they be setting
out guidelines for their enforcement of different rules?
Mr. Stevens. Well, it had to meet four standards really,
that was just one. Whether it had major financial impacts
wasn't one of the standards. One of the standards was that it
had to affect many States. A single State or a small cluster of
States wouldn't have qualified. And, it had to have a direct
causal effect, be aimed at the States for it to have qualified.
And also, there is even a sort of a fifth requirement and that
was that they didn't have to do a federalism assessment
according to their guidelines if it was traceable to a statute
or even implied by a statute.
And it was hard for us to imagine that they put out any
kind of rule that didn't have at least some relationship to a
statute. So I guess we--having read those guidelines--were not
terribly surprised that of those 1,900 none of them really
passed that test.
Mr. McIntosh. Exactly. It has been a long time, but I
remember being one of the staffers reviewing that Executive
order for President Reagan and I don't recall any of those
standards being stated there or even considered as something
that would----
Mr. Stevens. In fact, one of these is in direct
contradiction to the Executive order, which is that States
individually or collectively if they are affected, a federalism
assessment is in order.
Mr. McIntosh. And certainly we intended in this to consider
financial costs as well as institutional effects.
Mr. Stevens. Yes, and other agencies do. I think EPA is an
extreme in that case.
Mr. McIntosh. Do you think that the judicial review
provisions will help to correct that?
Mr. Stevens. All I could say in that regard, Mr. Chairman,
is that we have examined the SBREFA changes that you mentioned
a moment ago, and I think it is fairly clear from the agency's
points or from what the agencies tell us, that bringing the
Regulatory Flexibility Act provisions under judicial review has
indeed caused the agencies to pay more attention to it. They
are taking it more seriously knowing that the courts are
looking over their shoulders. It is not ignored as routinely as
it in many cases was before. So in that sense, it has had an
impact, yes.
Mr. McIntosh. Another question was prompted by your
statement of OMB's excuse for why nobody is following the
Executive order, that, well, they are not following it because
we have been thinking about changing it. Did you have a chance
or an opportunity to look at the rules under the standards of
the proposed Executive order that was subsequently suspended to
see how many of the rules would have been required under that
new Executive order to address the question of federalism?
Mr. Stevens. No, we didn't do that, Mr. Chairman. I really
couldn't talk about that.
Mr. McIntosh. Would that be something that, without a great
deal of difficulty, you might check at least some of the most
egregious examples of where they failed to do it to see if
perhaps even under the new standard they were contemplating the
agencies weren't following or doing their duty in terms of
looking at federalism as a concern?
Mr. Stevens. That's something we could certainly look at
and get back to you, Mr. Chairman, on whether that would be
feasible.
Mr. McIntosh. Let me just ask a general question. Do you
have any suggestions--and you have got several wording changes
you recommend in your written statement, but, in addition to
those, do you have any specific additions or revisions or
deletions that you would recommend for the bill?
Mr. Stevens. Well, we did have a suggestion that bears on
one of the last questions that you got to with the other panel
and that is whether all rules should be covered. There is a
categorization of rules, I think it is in five parts. There is
``substantial,'' ``significant,'' and that the bottom category,
I think there is one called ``routine and frequent'' and a
category called ``administrative'' that are uncommonly likely
to cause major effects--to affect relationships between
governments. And it seems to me that somehow exempting those
from the process should be possible and probably advantageous
to avoid just having a boilerplate declaration: ``no federalism
implications.'' If you write that 11,000 times or however many
rules there are, you might get so used to writing it out that
you wouldn't consider it----
Mr. McIntosh. Start turning it over to other rules. I
understand that.
Mr. Stevens. One other matter. We also suggested that a
determination be made up front as to whether there were
federalism implications so that an agency would have to commit
itself, yes or no, which they don't have to do now. If there
weren't any they would be on record as having said there
weren't any. But, if there were any, they would have to commit
to do a federalism impact assessment. Seems to us that would be
another dividing line that could cut down the paperwork
associated with this potentially.
Mr. McIntosh. And, you might make it difficult for them to
reach that conclusion there are none if the record reflects
that commenters have indicated there are.
Mr. Stevens. That is reasonable, yes.
Mr. McIntosh. Maybe you could do it in a way that says are
there or have there been any comments saying there would be?
Mr. Stevens. Well, the regulatory agenda which comes out
twice a year has a required field: Governments affected. And
that is one of the things we use because very often it says
State governments, local governments, tribal governments and
then when they actually put the rule out they say there are no
federalism implications.
Mr. McIntosh. Great. Great. One other matter, on the
regulatory preemption, do you think the provisions in section 7
would be sufficient in terms of making the agencies address the
question of federalism before they issued rules that were
preempting State and local authority?
Mr. Stevens. Perhaps. I think it will partly depend on what
the understanding of preemption comes to be. It is not defined,
I believe, in the bill. We have seen examples in other
regulatory matters where, when it is left entirely to the
agencies to define this, they often do it in terms that allow
them the greatest administrative flexibility and perhaps a
clearer understanding of what is preemption and what isn't
preemption would help. However, that is a major legal question:
it would cut down on the flexibility to do that.
Mr. McIntosh. You think a definition of preemption might be
helpful in foreclosing loopholes that might arise?
Mr. Stevens. As a nonlawyer I could say that. I imagine it
is not as easy to do as I suggested.
Mr. McIntosh. We looked at possible definitions and it is a
difficult one to tackle. But perhaps there is a way of leaving
some flexibility but saying these certain things are the core--
certainly within the core of what preemption is and if you
regulate in these areas you know that you have preempted or you
are treading on State and local authority.
Mr. Stevens. Mr. Copeland of my staff has just given me an
example of a rule that--no federalism assessment was made for
this rule, but it's got a whole section on preemption. It says,
at least one State has passed a law--this is on organ sharing
and transplants and that sort of thing--``at least one State
has passed a law that appears to limit organ sharing policies
and national organ sharing system based primarily on medical
need with geographical considerations having less weight than
at present is an allocation criteria and would be thwarted if a
State required that prior to sharing an organ with any other
State there would be a written agreement.''
Over a page of discussion here of preemption, but no
federalism assessment.
Mr. McIntosh. No federalism impact. That would be an
excellent example of where the acknowledgment is that there is
a federalism concern, is that we should require as a matter of
law that they move forward.
Mr. Stevens. Yes.
Mr. McIntosh. We will look at that question on making sure
what triggers it. If not explicitly preemption, then maybe we
need to set some thresholds that these things certainly do fall
within it. There may be other broader definitions of preemption
as well.
I have no further questions. Let me turn to my colleague,
the vice chairman of the subcommittee, Mr. Ryan. First,
welcome. And if you would like to put any statement in the
record or make a statement now would be appropriate.
Mr. Ryan. I must apologize for being late. I was
unavoidably detained. But I would like to echo my colleague,
Harold Ford's support for it and I would like to join my
colleague Lee Terry, who just announced his cosponsorship, and
I would ask you to add my cosponsorship to the bill. It is
unfortunate that the administration is going against the grain
on federalism, and I hope with this legislation we can reverse
this trend of Federalizing so many of these functions, and I
hope we can work to get passage on this bill.
Thank you.
Mr. McIntosh. Thank you, Mr. Ryan. I appreciate it. One of
the things that came out in the testimony earlier from some of
the State and local officials is that federalism doesn't always
cut in one direction in terms of philosophy and ideology, but I
think it is an important overriding principle that we have to
share the same faith that our Founding Fathers had that the
States will be, in fact, the right level of government to reach
a decision on these many of the critical issues, even if some
of the States wouldn't reach the same decision that you and I
would on a particular issue.
I have no other questions, Mr. Stevens. I thank you for
your study of this, and if it is possible, we are going to keep
the record open until July 16th, if you could take a look at
that suspended Executive order and see if even there the
agencies wouldn't have met that test had that been in effect
during that 3-year period, which tells me that they were
completely asleep at the switch at OMB if they weren't even
giving guidance about whether they were contemplating moving in
that direction.
Mr. Stevens. Yes, sir.
[The information referred to follows:]
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Mr. McIntosh. Thank you very much. With that the
subcommittee is adjourned. Thank you.
[Whereupon, at 12 noon, the subcommittee was adjourned.]
[The prepared statement of Mr. Baker and additional
information submitted for the hearing record follow:]
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