II

106TH CONGRESS

1ST SESSION S. 1214

[Report No. 106–159]

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 SENATE OF THE UNITED STATES

JUNE 10, 1999

Mr. THOMPSON (for himself, Mr. LEVIN, Mr. VOINOVICH, Mr. ROBB, Mr.

COCHRAN, Mrs. LINCOLN, Mr. ENZI, Mr. BREAUX, Mr. ROTH, Mr.

BAYH, Mr. DOMENICI, Ms. COLLINS, Mr. THOMAS, and Mr. ABRAHAM)

introduced the following bill; which was read twice and referred jointly

pursuant to the order of August 4, 1977, to the Committees on the

Budget and Governmental Affairs, with instructions that if one committee reports, the other committee have thirty days to report or be discharged

SEPTEMBER 16, 1999

Reported by Mr. THOMPSON, with amendments

SEPTEMBER 16, 1999

Referred to the Committee on the Budget for a period not to exceed thirty

calendar days

[Omit the part struck through and insert the part printed in italic]

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.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Federalism Account5 ability Act of 1999’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—

8 (1) the Constitution created a strong Federal

9 system, reserving to the States all powers not dele10 gated to the Federal Government;

11 (2) preemptive statutes and regulations have at

12 times been an appropriate exercise of Federal pow13 ers, and at other times have been an inappropriate

14 infringement on State and local government author15 ity;

16 (3) on numerous occasions, Congress has en17 acted statutes and the agencies have promulgated

18 rules that explicitly preempt State and local govern19 ment authority and describe the scope of the pre20 emption;

21 (4) in addition to statutes and rules that explic22 itly preempt State and local government authority,

23 many other statutes and rules that lack an explicit

24 statement by Congress or the agencies of their in25 tent to preempt and a clear description of the scope
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1 of the preemption have been construed to preempt

2 State and local government authority;

3 (5) in the past, the lack of clear congressional

4 intent regarding preemption has resulted in too

5 much discretion for Federal agencies and uncer6 tainty for State and local governments, leaving the

7 presence or scope of preemption to be litigated and

8 determined by the judiciary and sometimes pro9 ducing results contrary to or beyond the intent of

10 Congress; and

11 (6) State and local governments are full part12 ners in all Federal programs administered by those

13 governments.

14 SEC. 3. PURPOSES.

15 The purposes of this Act are to—

16 (1) promote and preserve the integrity and ef17 fectiveness of our Federal system of government;

18 (2) set forth principles governing the interpre19 tation of congressional and agency intent regarding

20 preemption of State and local government authority

21 by Federal laws and rules;

22 (3) establish an information collection system

23 designed to monitor the incidence of Federal statu24 tory, regulatory, and judicial preemption; and
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1 (4) recognize the partnership between the Fed2 eral Government and State and local governments in

3 the implementation of certain Federal programs.

4 SEC. 4. DEFINITIONS.

5 In this Act the definitions under section 551 of title

6 5, United States Code, shall apply and the term—

7 (1) ‘‘local government’’ means a county, city,

8 town, borough, township, village, school district, spe9 cial district, or other political subdivision of a State;

10 (2) ‘‘public officials’’ means elected State and

11 local government officials and their representative

12 organizations;

13 (3) ‘‘State’’—

14 (A) means a State of the United States

15 and an agency or instrumentality of a State;

16 (B) includes the District of Columbia and

17 any territory of the United States, and an agen18 cy or instrumentality of the District of Colum19 bia or such territory;

20 (C) includes any tribal government and an

21 agency or instrumentality of such government;

22 and

23 (D) does not include a local government of

24 a State; and
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1 (4) ‘‘tribal government’’ means an Indian tribe

2 as that term is defined under section 4(e) of the In3 dian Self-Determination and Education Assistance

4 Act (25 U.S.C. 450b(e)).

5 SEC. 5. COMMITTEE OR CONFERENCE REPORTS.

6 (a) IN GENERAL.—The report accompanying any bill

7 or joint resolution of a public character reported from a

8 committee of the Senate or House of Representatives or

9 from a conference between the Senate and the House of

10 Representatives shall contain an explicit statement on the

11 extent to which the bill or joint resolution preempts State

12 or local government law, ordinance, or regulation and, if

13 so, an explanation of the reasons for such preemption. In

14 the absence of a committee or conference report, the com15 mittee or conference shall report to the Senate and the

16 House of Representatives a statement containing the in17 formation described in this section before consideration of

18 the bill, joint resolution, or conference report.

19 (b) CONTENT.—The statement under subsection (a)

20 shall include an analysis of—

21 (1) the extent to which the bill or joint resolu22 tion legislates in an area of traditional State author23 ity; and
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1 (2) the extent to which State or local govern2 ment authority will be maintained if the bill or joint

3 resolution is enacted by Congress.

4 SEC. 6. RULE OF CONSTRUCTION RELATING TO PREEMP5 TION.

6 (a) STATUTES.—No statute enacted after the effec7 tive date of this Act shall be construed to preempt, in

8 whole or in part, any State or local government law, ordi9 nance, or regulation, unless—

10 (1) the statute explicitly states that such pre11 emption is intended; or

12 (2) there is a direct conflict between such stat13 ute and a State or local law, ordinance, or regulation

14 so that the two cannot be reconciled or consistently

15 stand together.

16 (b) RULES.—No rule promulgated after the effective

17 date of this Act shall be construed to preempt, in whole

18 or in part, any State or local government law, ordinance,

19 or regulation, unless—

20 (1)(A) such preemption is authorized by the

21 statute under which the rule is promulgated; and

22 (B) the rule, in compliance with section 7, ex23 plicitly states that such preemption is intended; or

24 (2) there is a direct conflict between such rule

25 and a State or local law, ordinance, or regulation so
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1 that the two cannot be reconciled or consistently

2 stand together.

3 (c) FAVORABLE CONSTRUCTION.—Any ambiguities

4 in this Act, or in any other law of the United States, shall

5 be construed in favor of preserving the authority of the

6 States and the people.

7 SEC. 7. AGENCY FEDERALISM ASSESSMENTS.

8 (a) IN GENERAL.—The head of each agency shall—

9 (1) be responsible for implementing this Act;

10 and

11 (2) designate an officer (to be known as the

12 federalism officer) to—

13 (A) manage the implementation of this

14 Act; and

15 (B) serve as a liaison to State and local of16 ficials and their designated representatives.

17 (b) NOTICE AND CONSULTATION WITH POTEN18 TIALLY AFFECTED STATE AND LOCAL GOVERNMENT.—

19 Early in the process of developing a rule and before the

20 publication of a notice of proposed rulemaking, the agency

21 shall notify, consult with, and provide an opportunity for

22 meaningful participation by public officials of governments

23 that may potentially be affected by the rule for the pur24 pose of identifying any preemption of State or local gov25 ernment authority or other significant federalism impacts
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1 that may result from issuance of the rule. If no notice

2 of proposed rulemaking is published, consultation shall

3 occur sufficiently in advance of publication of an interim

4 final rule or final rule to provide an opportunity for mean5 ingful participation.

6 (c) FEDERALISM ASSESSMENTS.—

7 (1) IN GENERAL.—In addition to whatever

8 other actions the federalism officer may take to

9 manage the implementation of this Act, such officer

10 shall identify each proposed, interim final, and final

11 rule having a federalism impact, including each rule

12 with a federalism impact identified under subsection

13 (b), that warrants the preparation of a federalism

14 assessment.

15 (2) PREPARATION.—With respect to each such

16 rule identified by the federalism officer, a federalism

17 assessment, as described in subsection (d), shall be

18 prepared and published in the Federal Register at

19 the time the proposed, interim final, and final rule

20 is published.

21 (3) CONSIDERATION OF ASSESSMENT.—The

22 agency head shall consider any such assessment in

23 all decisions involved in promulgating, implementing,

24 and interpreting the rule.
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1 (4) SUBMISSION TO THE OFFICE OF MANAGE2 MENT AND BUDGET.—Each federalism assessment

3 shall be included in any submission made to the Of4 fice of Management and Budget by an agency for re5 view of a rule.

6 (d) CONTENTS.—Each federalism assessment shall

7 include—

8 (1) a statement on the extent to which the rule

9 preempts State or local government law, ordinance,

10 or regulation and, if so, an explanation of the rea11 sons for such preemption;

12 (2) an analysis of—

13 (A) the extent to which the rule regulates

14 in an area of traditional State authority; and

15 (B) the extent to which State or local au16 thority will be maintained if the rule takes ef17 fect;

18 (3) a description of the significant impacts of

19 the rule on State and local governments;

20 (4) any measures taken by the agency, includ21 ing the consideration of regulatory alternatives, to

22 minimize the impact on State and local governments;

23 and

24 (5) the extent of the agency’s prior consultation

25 with public officials, the nature of their concerns,
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1 and the extent to which those concerns have been

2 met.

3 (e) PUBLICATION.—For any applicable rule, the

4 agency shall include a summary of the federalism assess5 ment prepared under this section in a separately identified

6 part of the statement of basis and purpose for the rule

7 as it is to be published in the Federal Register. The sum8 mary shall include a list of the public officials consulted

9 and briefly describe the views of such officials and the

10 agency’s response to such views.

11 (f) JUDICIAL REVIEW.—

12 (1) IN GENERAL.—Only a State or local govern13 ment, or its representative organization, that is ad14 versely affected or aggrieved by final agency action

15 under this section may file an action seeking judicial

16 review of compliance with this section.

17 (2) LIMITATION OF REVIEW.—Compliance by an

18 agency with this section shall be subject to judicial re19 view only—

20 (A) in connection with review of final agen21 cy action;

22 (B) in accordance with this subsection; and

23 (C) in accordance with the limitations on

24 timing, venue, and scope of review imposed by

25 the statute authorizing judicial review.
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1 (3) AGENCY DETERMINATIONS.—Any determina2 tion of an agency whether a federalism assessment

3 shall be prepared under this section shall be set aside

4 by a reviewing court only upon a showing that the

5 determination is arbitrary or capricious based on in6 formation available at the time the agency made the

7 determination.

8 (4) OMB DETERMINATIONS.—Any determination

9 by the Director of the Office of Management and

10 Budget that a federalism assessment shall be prepared

11 under this section, or any failure to make such deter12 mination, shall not be subject to judicial review.

13 (5) FEDERALISM ASSESSMENT.—The federalism

14 assessment required under this Act shall not be subject

15 to judicial review separate from review of the final

16 rule to which it applies. The federalism assessment

17 shall be part of the rulemaking record and shall be

18 considered by a court to the extent relevant, only in

19 determining under the statute granting the rule20 making authority whether the final rule is arbitrary

21 or capricious, an abuse of discretion, or is unsup22 ported by substantial evidence where that standard is

23 otherwise provided by law.

24 (6) COURT ACTION.—If any agency fails to per25 form the federalism assessment or undertake any con-
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1 sultation, a court may, giving due regard to preju2 dicial error, remand or invalidate the rule. The ade3 quacy of compliance with the specific requirements of

4 this section shall not otherwise be grounds for re5 manding or invalidating a rule under this section. If

6 the court allows the rule to take effect, the court shall

7 order the agency to promptly perform the federalism

8 assessment.

9 (g) EMERGENCY EXEMPTION.—

10 (1) IN GENERAL.—A rule may be adopted with11 out prior compliance with this section if—

12 (A) the agency for good cause finds that

13 conducting the federalism assessment under this

14 section before the rule becomes effective is im15 practicable or contrary to an important public

16 interest; and

17 (B) the agency publishes the rule in the

18 Federal Register with such finding and a suc19 cinct explanation of the reasons for the finding.

20 (2) COMPLIANCE.—If a rule is adopted under

21 paragraph (1), the agency shall comply with this sec22 tion as promptly as possible unless the Director of the

23 Office of Management and Budget determines that

24 compliance would be clearly unreasonable.
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1 SEC. 8. PERFORMANCE MEASURES.

2 Section 1115 of title 31, United States Code, is

3 amended by adding at the end the following:

4 ‘‘(g) The head of an agency may not include in any

5 performance plan under this section any agency activity

6 that is a State-administered Federal grant program, un7 less the performance measures for the activity are deter8 mined in cooperation with public officials as defined under

9 section 4 of the Federalism Accountability Act of 1999.’’.

10 ‘‘(g) When developing a performance plan under this

11 section that includes a State-administered Federal grant

12 program, the agency shall consult with public officials as

13 defined under section 4 of the Federalism Accountability

14 Act of 1999.’’.

15 SEC. 9. CONGRESSIONAL BUDGET OFFICE PREEMPTION

16 REPORT.

17 (a) OFFICE OF MANAGEMENT AND BUDGET INFOR18 MATION.—Not later than the expiration of the calendar

19 year beginning after the effective date of this Act, and

20 every year thereafter, the Director of the Office of Man21 agement and Budget shall submit to the Director of the

22 Congressional Budget Office information describing in23 terim final rules and final rules issued during the pre24 ceding calendar year that preempt State or local govern25 ment authority.
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1 (b) CONGRESSIONAL RESEARCH SERVICE INFORMA2 TION.—Not later than the expiration of the calendar year

3 beginning after the effective date of this Act, and every

4 year thereafter, the Director of the Congressional Re5 search Service shall submit to the Director of the Congres6 sional Budget Office information describing court deci7 sions issued during the preceding calendar year that pre8 empt State or local government authority.

9 (c) CONGRESSIONAL BUDGET OFFICE REPORT.—

10 (1) IN GENERAL.—After each session of Con11 gress, the Congressional Budget Office shall prepare

12 a report on the extent of Federal preemption of

13 State or local government authority enacted into law

14 or adopted through judicial or agency interpretation

15 of Federal statutes during the previous session of

16 Congress.

17 (2) CONTENT.—The report under paragraph

18 (1) shall contain—

19 (A) a list of Federal statutes preempting,

20 in whole or in part, State or local government

21 authority;

22 (B) a summary of legislation reported from

23 committee preempting, in whole or in part,

24 State or local government authority;
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1 (C) a summary of rules of agencies pre2 empting, in whole or in part, State and local

3 government authority; and

4 (D) a summary of Federal court decisions

5 on preemption.

6 (3) AVAILABILITY.—The report under this sec7 tion shall be made available to—

8 (A) each committee of Congress;

9 (B) each Governor of a State;

10 (C) the presiding officer of each chamber

11 of the legislature of each State; and

12 (D) other public officials and the public on

13 the Internet.

14 SEC. 10. FLEXIBILITY AND FEDERAL INTERGOVERN15 MENTAL MANDATES.

16 (a) DEFINITION.—Section 421(5)(B) of the Congres17 sional Budget Act of 1974 (2 U.S.C. 658(5)(B)) is

18 amended—

19 (1) by striking ‘‘(i)(I) would’’ and inserting ‘‘(i)

20 would’’;

21 (2) by striking ‘‘(II) would’’ and inserting

22 ‘‘(ii)(I) would’’; and

23 (3) by striking ‘‘(ii) the’’ and inserting ‘‘(II)

24 the’’.
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1 (b) COMMITTEE REPORTS.—Section 423(d) of the

2 Congressional Budget Act of 1974 (2 U.S.C. 658b(d)) is

3 amended—

4 (1) in paragraph (1)(C) by striking ‘‘and’’ after

5 the semicolon;

6 (2) in paragraph (2) by striking the period and

7 inserting ‘‘; and’’; and

8 (3) by adding at the end the following:

9 ‘‘(3) if the bill or joint resolution would make

10 the reduction specified in section 421(5)(B)(ii)(I), a

11 statement of how the committee specifically intends

12 the States to implement the reduction and to what

13 extent the legislation provides additional flexibility, if

14 any, to offset the reduction.’’.

15 (c) CONGRESSIONAL BUDGET OFFICE ESTIMATES.—

16 Section 424(a) of the Congressional Budget Act of 1974

17 (2 U.S.C. 658c(a)) is amended—

18 (1) by redesignating paragraph (3) as para19 graph (4); and

20 (2) by inserting after paragraph (2) the fol21 lowing:

22 ‘‘(3) ADDITIONAL FLEXIBILITY INFORMA23 TION.—The Director shall include in the statement

24 submitted under this subsection, in the case of legis-
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1 lation that makes changes as described in section

2 421(5)(B)(ii)(I)—

3 ‘‘(A) if no additional flexibility is provided

4 in the legislation, a description of whether and

5 how the States can offset the reduction under

6 existing law; or

7 ‘‘(B) if additional flexibility is provided in

8 the legislation, whether the resulting savings

9 would offset the reductions in that program as10 suming the States fully implement that addi11 tional flexibility.’’.

12 SEC. 11. EFFECTIVE DATE.

13 This Act and the amendments made by this Act shall

14 take effect 90 days after the date of enactment of this

15 Act.

Æ