U.S. GOVERNMENT PRINTING OFFICE

59–530 CC WASHINGTON : 1999

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

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

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

BOB BARR, Georgia

LEE TERRY, Nebraska

GREG WALDEN, Oregon

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

DENNIS J. KUCINICH, Ohio

TOM LANTOS, California

PAUL E. KANJORSKI, Pennsylvania

BERNARD SANDERS, Vermont

HAROLD E. FORD, JR., Tennessee

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

(III)

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

(1)

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:]

2

3

4

5

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:

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(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)).

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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;

8

(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 describVerDate 11-MAY-2000 11:01 Mar 26, 2001 Jkt 010199 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 E:\HEARINGS\59530 pfrm04 PsN: 59530
9

ing 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.

Æ

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.

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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.

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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

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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-CastleCondit-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.

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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

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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.

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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 repVerDate 11-MAY-2000 11:01 Mar 26, 2001 Jkt 010199 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 E:\HEARINGS\59530 pfrm04 PsN: 59530
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resent 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

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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

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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 reVerDate 11-MAY-2000 11:01 Mar 26, 2001 Jkt 010199 PO 00000 Frm 00067 Fmt 6633 Sfmt 6602 E:\HEARINGS\59530 pfrm04 PsN: 59530
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spect 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.

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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.

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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 panelVerDate 11-MAY-2000 11:01 Mar 26, 2001 Jkt 010199 PO 00000 Frm 00091 Fmt 6633 Sfmt 6602 E:\HEARINGS\59530 pfrm04 PsN: 59530
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ists, 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.

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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 finetuning 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

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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.

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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

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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.

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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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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

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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.

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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 farreaching 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?

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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

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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.

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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.

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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.

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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.

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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 advanVerDate 11-MAY-2000 11:01 Mar 26, 2001 Jkt 010199 PO 00000 Frm 00124 Fmt 6633 Sfmt 6602 E:\HEARINGS\59530 pfrm04 PsN: 59530
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tageous 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

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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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