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[Senate Hearing 114-266]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-266

                   THE UNFUNDED MANDATES REFORM ACT:
  OPPORTUNITIES FOR IMPROVEMENT TO SUPPORT STATE AND LOCAL GOVERNMENTS

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
               REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 24, 2016

                               __________

                   Available via http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         U.S. GOVERNMENT PUBLISHING OFFICE 

99-989 PDF                     WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001

        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                    Keith B. Ashdown, Staff Director
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
                     Laura W. Kilbride, Chief Clerk
                   Benjamin C. Grazda, Hearing Clerk

       SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                   JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona                 HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio                    JON TESTER, Montana
MICHAEL B. ENZI, Wyoming             CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska
                     John Cuaderess, Staff Director
                  Eric Bursch, Minority Staff Director
                      Rachel Nitsche, Chief Clerk
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Lankford.............................................     1
    Senator Heitkamp.............................................     3
    Senator Portman..............................................    14
    Senator Ernst................................................    16
Prepared statement:
    Senator Lankford.............................................    33
    Senator Heitkamp.............................................    35

                               WITNESSES
                      Wednesday, February 24, 2016

Hon. Virginia Foxx, A Representative in Congress from the State 
  of North Carolina..............................................     4
Hon. Curt Bramble, President Pro Tempore, Utah Senate, and 
  President, National Conference of State Legislatures...........     7
Hon. Bryan Desloge, Commissioner, Leon County, Florida and First 
  Vice President, National Association of Counties...............     8
Paul Posner, Ph.D., Director, Center on the Public Service, 
  George Mason University, and Former Director of 
  Intergovernmental Affairs, U.S. Government Accountability 
  Office.........................................................    10
Richard J. Pierce, Jr., Lyle T. Alverson, Professor of Law, 
  George Washington University School of Law.....................    12

                     Alphabetical List of Witnesses

Bramble, Hon. Curt:
    Testimony....................................................     7
    Prepared statement...........................................    40
Desloge, Hon. Bryan:
    Testimony....................................................     8
    Prepared statement with attachment...........................    46
Foxx, Hon. Virginia:
    Testimony....................................................     4
    Prepared statement...........................................    36
Pierce, Richard J.:
    Testimony....................................................    12
    Prepared statement...........................................   104
Posner, Paul, Ph.D.:
    Testimony....................................................    10
    Prepared statement...........................................    87

                                APPENDIX

Statement submitted from the Final Big 7 UMITA Letter............    56
National Conference of State Legislatures letter to Hon. 
  Shelanski......................................................   110
Recommended Principles for Regulatory Reform.....................   112
Responses to post-hearing questions for the Record:
    Mr. Bramble..................................................   113
    Mr. Desloge..................................................   119
    Mr. Posner...................................................   125
    Mr. Pierce...................................................   129
    
    
 
                   THE UNFUNDED MANDATES REFORM ACT:
  OPPORTUNITIES FOR IMPROVEMENT TO SUPPORT STATE AND LOCAL GOVERNMENTS

                              ----------                              

                      WEDNESDAY, FEBRUARY 24, 2016

                                 U.S. Senate,      
                        Subcommittee on Regulatory,        
                      Affairs and Federal Management,      
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:33 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. James 
Lankford, Chairman of the Subcommittee, presiding.
    Present: Senators Lankford, Portman, Ernst, and Heitkamp.

             OPENING STATEMENT OF SENATOR LANKFORD

    Senator Lankford. Good morning everyone. We meet today to 
discuss the burden Federal laws and regulations have on State 
and local governments. This is a hearing on the Unfunded 
Mandates Reform Act (UMRA) and some opportunities to be able to 
do some improvement to support it for State and local 
governments.
    The Unfunded Mandates Reform Act of 1995 intended to 
relieve State and local governments of many of the burdens that 
come down from the Federal Government. We will also discuss how 
we can build upon UMRA's successes and the ways that we can 
address some of those.
    The Unfunded Mandates Reform Act was the result of 
bipartisan recognition that many decisions made by the Federal 
Government have significant costs, particularly to State and 
local governments.
    UMRA has provided better quality information to Congress 
and the agencies as we contemplate new requirements that will 
add cost burdens to local governments. But the benefits of UMRA 
on State and local governments have fallen short of their 
intended goals.
    UMRA is complex and contains many exceptions, and as a 
result, Federal actions that affect State and local governments 
do not benefit from the consultation and analysis required by 
UMRA.
    The Government Accountability Office (GAO) has found that 
issued regulations seldom trigger UMRA's reporting and 
consultation requirements. There are many reasons for this. It 
could be because the rule was promulgated by an independent 
agency or the regulation was issued without a Notice of 
Proposed Rulemaking or perhaps the requirement in the 
regulation was considered voluntary as a condition for Federal 
aid or the regulation did not meet the dollar threshold for 
UMRA. All of these complications allow a lot of opportunities 
for a lot of loopholes.
    Implementation of UMRA could be improved. Various experts 
also told GAO that the process used to consult with State and 
local officials needed to be more consistent and that more 
could be done to involve State and local governments in the 
rulemaking process. This goes back to a basic principle that we 
have, that individuals who are affected by a rule should 
actually have a voice when that rule is done.
    I have heard these same sentiments from several officials 
in State and local governments. The very public servants that 
will later implement a regulation are not consulted early 
enough to improve the regulation or are not given enough time 
to make the changes required to be in compliance.
    The provisions of UMRA require us to ask hard questions 
about the balance between our Federal Government and the 
governments closer to the people. We cannot pass the burden to 
them in times of scarce resources without due consideration.
    During my tenure in the House, we held three hearings on 
the effects of UMRA and potential improvements on the statute. 
I look forward to hearing more insights today.
    It is time to revisit UMRA. H.R. 50, The Unfunded Mandates 
Information and Transparency Act (UMITA), proposed by 
Representative Virginia Foxx--who is here as a witness to begin 
this hearing--and its Senate companion, S. 189, introduced by 
Senator Fischer, was conceived to strengthen the original 1995 
UMRA legislation. Representative Foxx, I want to acknowledge 
your leadership on this issue and your tenacity on behalf of 
State and local governments, and I have been honored to work 
with you over the years on this important issue. I know this 
has already passed the House and has been a point of 
conversation of how do we actually move it through the Senate.
    UMITA improves on UMRA by reflecting much of what we have 
already learned since the original UMRA passage. It updates the 
legislation to reflect current Congressional Budget Office 
(CBO) practices, addresses current exceptions to UMRA analysis 
and consultation, allows for analysis of mandates to States and 
local governments as conditions about their grant aid, and it 
codifies the Office of Management and Budget (OMB) directives 
to agencies on how to consult with State and local governments 
in an effort to enhance consistency of these efforts.
    H.R. 50, when it passed the House in February 2015, was 
supported by major stakeholders representing State and local 
governments. I am optimistic about its prospects in the Senate, 
but I do understand full well the challenges that we face.
    I look forward to hearing from our panel today about the 
real costs of Federal decisions on State and local governments, 
how UMRA has worked, and actions that Congress could take to 
create a more thoughtful decisionmaking process about the 
balance between State and local governments.
    With that, I recognize Senator Heitkamp for opening 
remarks.

             OPENING STATEMENT OF SENATOR HEITKAMP

    Senator Heitkamp. Thank you, Chairman Lankford, and thanks 
for calling this hearing. As a former State official myself, I 
completely understand and appreciate, having worked with my 
legislature and having served in State government, the 
challenges that we face every day when we have two regulatory 
regimes and trying to make those balance and understand the 
impacts. And so as I have said before, it is critical that we 
examine this kind of legislation, and it is critical that we 
look at what has worked and what has not worked. And so I am 
grateful for this hearing.
    But we cannot lose sight that regulations are a critical 
part of how the Federal Government keeps our products safe and 
our food safe as well as ensuring a level playing field for our 
businesses.
    To get good regulation, we need a strong regulatory 
process, and part of that strong regulatory process is engaging 
stakeholders early. As Senator Lankford and I know, we look at 
these regulations, and we say we need the regulators to talk 
earlier with industry, labor groups, and other stakeholders 
when they are developing the rules rather than doing this in a 
vacuum and then presenting the rule as a completed effort with 
no real opportunity for comment.
    So I believe strongly that consultation with State and 
local and tribal governments is part of the necessary outreach 
that is critical to this regulatory process. Congress should 
always consider the compliance costs of legislation and how 
States and local and tribal governments will be impacted. 
Appropriate consideration must always be given to how decisions 
are made in Washington and how those decisions affect the 
bottom line back home.
    This analysis and consultation means we can create a safer 
and more equitable Nation without unneeded regulation but with 
the right amount of necessary regulation. And so out of this 
need and out of this discussion, Congress passed in 1995 the 
Unfunded Mandates Reform Act. This law has worked to keep us 
and the executive agencies accountable in their home States and 
in our communities to help ensure that those of us on the Hill 
understand how our actions affect budgets beyond our own. It 
requires agencies to consult with those individuals who have 
boots on the ground and know how those rules could be followed 
and what works and what does not.
    It is important, then, as we approach the 21st anniversary 
of President Clinton signing this bill into law that we take a 
step back and review it a retrospective review, if you will--
that we check that our States and local partners believe that 
we are doing the right thing in terms of making sure that they 
have an opportunity to participate and have an opportunity to 
weigh in, in terms of those additional costs.
    And so I look forward to hearing from these witnesses 
today. I look forward to continuing this dialogue in this 
Committee with Senator Lankford and with all of the Members of 
the Committee who have worked so hard to try and achieve 
bipartisan solutions to maybe some of the more contentious 
issues that we have in Congress. And so I welcome the Honorable 
Congresswoman and look forward to her testimony.
    Senator Lankford. Thank you, Senator Heitkamp.
    I am glad to be able to welcome my colleague, Congresswoman 
Virginia Foxx. She has been a tenacious advocate for this, for 
good reason. This is one of those things that most people do 
not know and do not track, but it has a tremendous impact on 
the day-to-day effect of State and local governments and 
entities around the country when the Federal Government creates 
a new mandate and then expects someone else to pay for it. She 
has been a very clear, articulate spokeswoman for this process 
and has continued to work very hard in the House for its 
reform. So I am glad to be able to receive words that you need 
to say. I know you have to get to a House hearing in just a 
moment, so you will not be able to stay for the full time as 
well, but I am glad to be able to receive whatever statements 
that you would like to make about UMITA and the UMRA process.

        TESTIMONY OF THE HONORABLE VIRGINIA FOXX,\1\ A 
  REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA

    Ms. Foxx. Thank you so much, Chairman Lankford, Ranking 
Member Heitkamp, and distinguished Members of the Subcommittee. 
I particularly appreciate your opening comments today, and, 
Senator Heitkamp, we welcome you as a cosponsor of the bill 
with your eloquent comments. Senator Lankford, you summed up 
the bill so well. I am going to talk about some certain things 
today, but you have done a wonderful job, and I am very 
grateful.
---------------------------------------------------------------------------
    \1\ The prepared statement of Hon. Foxx appears in the Appendix on 
page 36.
---------------------------------------------------------------------------
    I thank all of you for the opportunity to appear before you 
today to discuss the unfunded mandates imposed on State and 
local governments by the Federal Government through the 
legislative and regulatory processes. Like some of you, I 
served as a State Senator and can testify to the difficulty of 
balancing the State's budget when there are dozens of 
complicated unfunded Federal mandates that must be taken into 
account. Those experiences convinced me of the need to bring 
accountability to Federal regulatory structures that so often 
tie the hands of State and local governments.
    In 1995, in a model of bipartisanship, Congress passed the 
Unfunded Mandates Reform Act. It passed the House with close to 
400 votes and the Senate with more than 90 votes and was signed 
by President Clinton, as Senator Heitkamp has indicated.
    UMRA focused on Washington's abuse of unfunded Federal 
mandates and passed on the principle that the American people 
would be better served by a government that regulates only with 
the best information.
    UMRA was designed to force the Federal Government to 
estimate how much its mandates would cost local and State 
governments, which was previously not the case. UMRA was not 
intended to prevent the government from regulating but, rather, 
to ensure that decisionmakers had the best information possible 
when regulating.
    I have always admired the purpose and spirit of UMRA, but 
weaknesses in the law have been exploited in the intervening 
decades and need to be addressed.
    My bill, the Unfunded Mandates Information and Transparency 
Act, seeks to address these shortcomings and will help UMRA 
meet its unfulfilled potential.
    There are five main components to UMITA:
    First, UMITA ends the exemption that most independent 
regulatory agencies have from UMRA's transparency requirements. 
These agencies include the Securities and Exchange Commission 
(SEC) , the National Labor Relations Board (NLRB), and the 
Federal Communications Commission (FCC).
    Second, UMITA treats ``changes to conditions of grant aid'' 
as mandates for cost disclosure purposes. If Federal 
legislation or regulations force States, localities, or the 
private sector to make costly changes in order to qualify for 
Federal grant aid, these costs will be included in UMRA's cost 
analysis. For example, if Congress ever passes another law such 
as No Child Left Behind that changes the rules that States must 
follow to continue receiving Federal funds, then those changes 
and the resulting costs will be disclosed and considered.
    Third, UMITA guarantees the public always has the 
opportunity to weigh in on regulations. Currently, UMRA cost 
analyses are required only for regulations that were publicly 
announced through a formal Notice of Proposed Rulemaking. UMITA 
requires agencies to complete cost analyses for all 
regulations, whether or not such a notice was issued, while 
providing an accommodation for emergency regulations.
    Fourth, UMITA equips Congress, regulators, and the public 
with better tools to determine the true cost of regulations. 
Analyses required by UMITA will factor in real-world 
consequences such as costs passed on to taxpayers and 
opportunity costs when considering the bottom-line impact of 
Federal mandates.
    And, finally, UMITA ensures the Federal Government is held 
accountable for following these rules.
    UMRA contained little in the way of enforcement, so UMITA 
provides that if the transparency requirements are not met, 
States and local governments have access to a judicial remedy.
    It is in these ways that UMITA will ensure public and 
bureaucratic awareness about the costs in dollars and in jobs 
that Federal regulations impose on the economy and local 
governments.
    Let me be clear. UMITA is not an anti-regulation bill. It 
is intended neither to stall nor to prevent the regulatory 
process from working as it should. UMITA is a bill to make our 
regulatory apparatus more efficient, effective, and 
transparent.
    UMITA has bipartisan DNA and is purely about good 
government, openness, and honesty about the cost of 
regulations. These principles do not belong to either party. 
That is why my Democrat colleagues Loretta Sanchez and Collin 
Peterson join me as cosponsors, and it is why the bill passed 
the House with votes from both parties.
    Republicans and Democrats can agree that every unfunded 
mandate the Federal Government imposes should be both 
deliberative and economically defensible. It is my hope that 
this hearing will be a first step toward an improved and more 
transparent regulatory process that eases the burdens passed on 
to State and local governments.
    Thank you for giving me this time and for your 
consideration of H.R. 50.
    Senator Lankford. That is great. Thank you. Representative 
Foxx, I appreciate you being here and getting a chance to walk 
us through this.
    Let us take just a short moment, and we are going to 
transition the witness table and introduce our expert witnesses 
that are here to talk about the bill today.
    [Pause.]
    At this time we will proceed with testimony from our expert 
witnesses. Let me introduce all four of them, and then we will 
swear you in and then get into your testimony as well.
    Senator Curtis Bramble is the president of the National 
Conference of State Legislatures (NCSL), a post he has held 
since August 2013. He is also president pro tem of the Utah 
State Senate, serving in his fourth term. He previously served 
as Senate majority leader. Thank you--you have a very busy 
schedule--for being here as well.
    Commissioner Bryan Desloge is the first vice president of 
the National Association of Counties (NACo). Mr. Desloge is 
from Florida, serves as the Leon County Commissioner. He is a 
board member and past president of the Florida Association of 
Counties. Thanks for being here.
    Paul Posner is the Director of the Graduate Public 
Administration Program at George Mason University. He has 
served as the president of the American Society for Public 
Administration and as chairman of the board of the National 
Academy of Public Administration. He has also served as the 
Director of Intergovernmental Affairs of the Government 
Accountability Office where he led the office's Federal budget 
work. He has written extensively on UMRA and related topics. 
Thank you.
    Richard Pierce is the Lyle T. Alverson Professor of Law at 
George Washington University Law School. He is also a member of 
the Administrative Conference of the United States and has 
taught and researched in the fields of administrative law and 
regulatory practice for 38 years.
    Gentlemen, I would like to thank you for being here in 
front of us today. It is the custom of this Subcommittee that 
we swear in all witnesses before they testify, so if you would 
please stand and raise your right hand. Do you swear that the 
testimony you are about to give before this Subcommittee will 
be the truth, the whole truth, and nothing but the truth, so 
help you, God?
    Mr. Bramble. I do.
    Mr. Desloge. I do.
    Mr. Posner. I do.
    Mr. Pierce. I do.
    Senator Lankford. Thank you. You may be seated.
    Let the record reflect that all the witnesses have answered 
in the affirmative.
    We are using a timing system today. You will see a 
countdown clock in front of you. Your written testimony, I 
appreciate you submitting that in advance. That will be a part 
of the permanent record. Whatever you say orally, you can go 
off of your written record or add to it. Either one is just 
fine.
    There is a countdown clock in front of you, and we would 
like to ask you to stay within the 5-minute time period so we 
can have a maximum amount of time for questions in the days 
ahead.
    Mr. Bramble, you get the privilege of being first in this 
based on your position at the table, so we are honored to be 
able to receive your testimony now.

   TESTIMONY OF THE HONORABLE CURT BRAMBLE,\1\ PRESIDENT PRO 
             TEMPORE, UTAH SENATE, AND PRESIDENT, 
           NATIONAL CONFERENCE OF STATE LEGISLATURES

    Mr. Bramble. So this is the hot seat. Thank you, Mr. 
Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Hon. Bramble appears in the Appendix 
on page 40.
---------------------------------------------------------------------------
    Chairman Lankford, Ranking Member Heitkamp, and 
distinguished Members of the Subcommittee on Regulatory Affairs 
and Federal Management (RAFM), as indicated, my name is Curt 
Bramble, president of the National Conference of State 
Legislatures and president pro tem of the Utah Senate. I appear 
before you today on behalf of NCSL, the bipartisan organization 
representing the 7,383 legislators of our Nation's States, 
Commonwealths, Territories, possessions, and the District of 
Columbia.
    Thank you for the opportunity to discuss the Unfunded 
Mandates Reform Act of 1995 and the opportunities for 
improvement to support State and local governments. NCSL 
applauds the leadership of the Committee for having this 
discussion, as the fiscal impact of Federal actions on State 
and local governments is often overlooked.
    Mr. Chairman, I would also like to specifically thank you, 
Senator Deb Fischer, a former NCSL executive committee member, 
Congresswoman Foxx, and the Ranking Member, Senator Heitkamp, 
for your leadership in seeking to strengthen the provisions of 
UMRA with the introduction of the Unfunded Mandates Information 
and Transparency Act of 2015.
    UMRA was adopted over 20 years ago in an effort ``to curb 
the practice of imposing unfunded Federal mandates on State and 
local governments.'' While at that time it renewed the 
commitment to cooperative federalism and brought attention to 
the growing reliance of mandates as a policy instrument, the 
law's definition of ``intergovernmental mandate'' is limited, 
and as a result, the true impact of Federal actions on States 
in many cases is not reflected in the cost estimates.
    An example is the 1986 law called the Emergency Medical 
Treatment and Labor Act (EMTALA). The cost to the States of 
EMTALA and the Federal requirement of providing health care to 
anyone that presents themselves may be very good policy, but 
the unfunded mandate and the cost is a real challenge sometimes 
for States to meet.
    Mr. Chairman, State legislators across the country view a 
Federal mandate much broader than is now defined in UMRA. We 
would include situations when the Federal Government 
establishes a new condition of grant-in-aid for longstanding 
programs; uses fiscal sanctions to coerce States into taking 
some action, for example, in the transportation arena, if you 
do not do X, you may not get Federal funding; or where it 
intrudes on State sovereignty. These just give you a few 
examples.
    So what is the solution? Provisions in UMITA that 
strengthen the analysis and oversight of intergovernmental 
mandates is a step in the right direction. In Utah, we actually 
have a Federal Funds Commission. We do stress testing to see 
what our State budget would look like without any Federal 
funds.
    In particular, NCSL supports provisions of Senate bill 189 
that allow any Chair or Ranking Member of a Committee in the 
Senate or House of Representatives to request that CBO compare 
the authorized level of funding with the prospective costs of 
carrying out a condition of Federal assistance imposed on the 
States, local governments, or tribal governments. Changes to 
grant requirements for established State and Federal programs 
often result in new prescriptive requirements that shift costs 
to State governments. While statutorily these programs are 
deemed ``voluntary,'' in some cases these are State-Federal 
partnerships that have existed for decades.
    NCSL also supports provisions in UMITA that modify the 
definition of direct cost in the case of Federal 
intergovernmental mandates. On the regulatory side, NCSL 
supports the provisions of Senate bill 189 that expand UMRA's 
reporting requirements to independent regulatory agencies, 
creates a mechanism for congressional requests for a regulatory 
``lookback'' analysis of existing Federal mandates, and 
provides for enhanced agency consultation with State and local 
governments.
    In addition to provisions included in UMITA, NCSL would 
also encourage Congress to consider other reforms of UMRA that 
are outlined in my written testimony.
    Mr. Chairman, NCSL recognizes the need for the Federal 
Government to reduce its annual deficits, curb growth in the 
national debt, and achieve a sustainable fiscal path. 
Provisions in UMITA are critical to ensuring that these efforts 
be made with a full understanding of the fiscal impact on State 
and local governments. This is not about blocking legislative 
or regulatory action. This is about transparency and government 
responsibility and accountability by ensuring the full 
potential impacts of intergovernmental mandates in legislation 
and regulations are known.
    Mr. Chairman, thank you for this opportunity to testify 
before the Subcommittee, and I look forward to answering any 
questions the Members may have.
    Senator Lankford. Thank you. Mr. Desloge.

TESTIMONY OF THE HONORABLE BRYAN DESLOGE,\1\ COMMISSIONER, LEON 
COUNTY, FLORIDA, AND FIRST VICE PRESIDENT, NATIONAL ASSOCIATION 
                          OF COUNTIES

    Mr. Desloge. Thank you. Thank you, Chairman Lankford, 
Ranking Member Heitkamp, and distinguished Members of the 
Committee. I am honored to testify today on how the Unfunded 
Mandates Reform Act can be improved.
---------------------------------------------------------------------------
    \1\ The prepared statement of Commissioner Desloge appears in the 
Appendix on page 46.
---------------------------------------------------------------------------
    My name is Bryan Desloge. I am an elected county 
commissioner from Leon County, Florida. I am representing the 
National Association of Counties, which is 3,069 counties 
across the country.
    I would like to share with you three points today to 
consider as you work to update and improve UMRA.
    First, UMRA was established as a framework for improved 
communication and collaboration between the Federal agencies 
and their State and local partners. The process has been 
helpful in raising awareness regarding unfunded mandates. 
However, challenges do exist, and the work today presents us 
with an opportunity to strengthen this.
    UMRA does require that Federal agencies consult with local 
governments in the regulatory process. We have found that there 
are lots of inconsistencies about how this requirement is 
applied. Consistency in the process and meaningful consultation 
in the early stages of rulemaking would increase awareness of 
the real impact of Federal regulations on local governments. It 
is important to note that counties are often responsible for 
implementing and funding policies and programs established by 
the States and Federal Government, and counties play a key role 
in the ultimate success of the process.
    It is in our shared interest that counties be engaged as 
partners throughout the entirety of these discussions and 
actively participate in the planning, development, and 
implementation of the rules. In current practice, we too often 
are limited to the comment period offered to the general 
public. One example I would like to highlight is the 
Environmental Protection Agency (EPA) and the U.S. Army Corps 
of Engineers (USACE) final rule on Waters of the U.S. Counties 
repeatedly requested to be at the table to develop a practical 
rule to protect our water resources, and, unfortunately, the 
EPA refused to meaningfully consult with local governments, and 
this lack of collaboration has resulted in a final rule that 
created more confusion than clarity and significantly expanded 
the EPA's jurisdiction over county-owned and--maintained 
infrastructure.
    We are concerned that agencies are conducting the 
rulemaking process without truly consulting their 
intergovernmental partners. As a result, the rules are not as 
effective as they could be because they lack the informed 
perspective of local leaders. The bottom line is Federal 
regulations are the most effective when they are developed in 
consultation with State and local leaders.
    Second, if the process is not addressed, local governments 
will continue to face increasing fiscal pressure. Counties 
across the country are mandated to provide a growing number of 
services while operating under greater State and Federal 
restrictions on how we generate revenue. In fact, there are 40 
States across the country today that limit the ability of local 
governments to generate revenue. In Florida, the combined 
fiscal impact of Federal and State mandates on counties is 
substantial. Our counties in Florida contributed $281 million 
to the local share of Medicaid costs this year, $57 million 
last year for a portion of the costs for juvenile secure 
detention, $525 million last year for court-related costs, and 
$1.8 billion in fiscal year (FY) 2013 and 2014 for county 
roads, bridges, and tunnels.
    Shifting implementation costs of Federal policies and 
programs on a local government creates budgetary imbalances, 
leaving local governments with a choice between cutting 
services like fire, law enforcement, emergency rescue, 
education, and infrastructure or increasing revenue. Unfunded 
mandates hide from policymakers the true impact of Federal 
programs when the costs of implementing them is shifted on to 
local governments that are already stressed.
    And, finally, our system of federalism requires that there 
is a strong State, Federal, and local partnership to achieve 
common goals. At the end of the day, it is all taxpayer 
dollars, and where it goes and how it comes, we should do a 
better job, I think, of working together.
    Government works best when we all work together, and we 
hope that you will work toward creating policies that not only 
achieve our shared objectives but will also provide adequate 
funding to ensure that no one level is left to shoulder the 
burden of policy implementation. Counties stand ready with 
innovative approaches and solutions to work side by side with 
our Federal and State partners to ensure the health, well-
being, and safety of our citizens.
    Mr. Chairman, we are encouraged by initiatives like the 
Unfunded Mandates Information and Transparency Act, that you 
cosponsored with Senator Fischer and that Representative Foxx 
led in the House. Although UMRA established a framework to 
consider intergovernmental mandates in legislation and 
regulation, UMITA presents the opportunity to improve the 
process even more.
    Thanks for the opportunity to testify. I would be happy to 
take any questions.
    Senator Lankford. Thank you. Mr. Posner.

  TESTIMONY OF PAUL POSNER, PH.D.,\1\ DIRECTOR, CENTER ON THE 
PUBLIC SERVICE, GEORGE MASON UNIVERSITY, AND FORMER DIRECTOR OF 
   INTERGOVERNMENTAL AFFAIRS, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Posner. Thank you, Chairman Lankford, Ranking Member 
Heitkamp, and other Members of the Subcommittee. This hearing 
is an important stocktaking on unfunded mandates, and it will 
deliver much needed attention to this whole area.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Posner appears in the Appendix on 
page 87.
---------------------------------------------------------------------------
    It is hard to believe, given how much we focus on this, 
that before the 1960s, generally Congress displayed 
considerable self-restraint with regard to State and local 
government. Major mandates applied to the private sector were 
exempted from coverage in the State and local sector--Social 
Security, fair labor standards, among others. Most of the 
national expansion that we saw with the New Deal and the Great 
Society occurred through cooperative federalism, through grants 
and collaboration, through the carrot not through the stick.
    Something changed in the late 1960s through the present 
day, and that is shown on page 4 of my testimony, the Advisory 
Commission on Intergovernmental Relations (ACIR) showed the 
rapid growth of preemptions through the following three 
decades, through Democratic and Republican Congresses and 
administrations alike. This is a bipartisan phenomenon.
    I want to just say before we talk about UMRA that there are 
very strong forces at work here that continue to this day to 
promote what I call the ``switch from cooperative to coercive 
federalism.'' One is the way that Members of Congress and other 
national leaders get elected. It used to be there was strong 
collaboration with State and local party leaders. There is 
still that, but now members are increasingly on their own to 
develop coalitions and the like to campaign and get reelected 
for public office, sometimes in competition with State and 
local officials.
    There has been a nationalization of problems deposited on 
the Federal doorstep. Private troubles are increasingly 
converted to public problems deposited on Washington's doorstep 
first, not last resort. Businesses have been converted from 
allies of States to the leaders of the preemption parade.
    State and local governments face extraordinary pressure 
defending these kinds of issues. I was at the National 
Governors Association (NGA) conference this week, and they said 
that the Every Student Succeeds Act (ESSA) was the first 
education bill NGA had been able to take a position on for 20 
years, and that is true with most of the major legislation in 
Washington. The State and local groups have a very difficult 
time reaching agreement, their political leaders from all 
sides, obviously, and mandates are particularly difficult. I 
used to work for the mayor of the city of New York leading our 
work on Federal relations, and I know how he struggled with 
things like special education and environmental policies. It is 
very difficult to take positions against such compelling 
issues.
    Now, against this strong tide, I think UMRA was a modest 
reform that has achieved a modest result, which is not a small 
accomplishment by any means. I think it was cleverly designed. 
It went beyond just providing estimates and information to 
providing a point of order. And it is important to understand 
how that point of order has worked. It has been raised about 60 
times in the House and about 3 times in the Senate since 1996. 
But that is not the way mandates are stopped. Most of those 
points of order did not stop the bills. It is through the 
threat of the point of order, the threat of shame. There is 
still residual concern about State and local costs that members 
often modify bills to stay under that limit or even withdraw 
them entirely, and I have several examples in my statement 
where that has been laid out.
    I think I totally agree with the other witnesses that the 
focus of UMRA has been narrow and focused on direct orders, and 
most of the mandates that really bother State and local 
officials happen through preemptions and grant conditions, 
particularly grant conditions. Grants, maybe widely 
characterized as gifts, are not a gift horse. They are a Trojan 
horse into which are packed many different requirements and 
particularly, as one of the witnesses said here, existing 
grants that are then piled on with retroactive conditions 
become particularly onerous.
    Now, the courts long agreed with the UMRA view that the 
only true mandates are direct orders. But with the Sebelius 
decision under the health reform, they now join the notion that 
it is not just direct orders that commandeer State and local 
resources, in the Court's words. It is grant conditions that 
are onerous on the States, like the Medicaid expansion. 
Whatever you think of it, it was viewed by the Court as a 
mandate that was covered by constitutional issues.
    So I think the UMRA legislation does a lot of good things, 
including, I think, very sensibly extending coverage and 
information to State and local government. The consultation 
needs much more attention than it gets. I have suggested 
creating an Office of Intergovernmental Advocacy like we have 
Small Business Advocacy, because in the past we have learned 
that not only are Federal agencies uneven, but State and local 
governments do not pay as much attention as they should on 
their own. I think they need some help in that department.
    I want to say one more thing. Changes in the law, as well 
intentioned and as important as they are, are not going to 
solve the problem. We need to get the backing of institutions 
that focus on intergovernmental issues and federalism in this 
town, and unfortunately, those have largely been eliminated. In 
1980, we had an Advisory Commission on Intergovernmental 
Relations. We had Intergovernmental Subcommittees in this 
Congress. OMB had a major division focusing on domestic grant 
programs and the like. Even the State and local groups had an 
Academy of State and Local government. All those have shrunk 
and disappeared. In some way, we have a barren institutional 
landscape to support the concerns that we all share, I think 
that you particularly share on this Committee.
    I am concerned that this dissolution of institutions 
reflects a lower priority to federalism as a rule of the game. 
I fear until we change that, nothing significant is going to 
happen.
    Senator Lankford. Mr. Pierce.

   TESTIMONY OF RICHARD J. PIERCE, JR.,\1\ LYLE T. ALVERSON, 
  PROFESSOR OF LAW, GEORGE WASHINGTON UNIVERSITY SCHOOL OF LAW

    Mr. Posner. Thank you, Chairman Lankford, Ranking Member 
Heitkamp, and the other distinguished Members of the 
Subcommittee on Regulatory Affairs.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pierce appears in the Appendix on 
page 104.
---------------------------------------------------------------------------
    I wanted just to start by saying I agree completely with 
what has been expressed by the Chairman and the Ranking Member 
and the other witnesses. UMRA is a very important statute in 
its application to State, local, and tribal governments. I 
frankly do not have any idea why it applies to private 
regulated firms. That strikes me as a complete mismatch. They 
are the most effective participants, most active participants 
in the agency decisionmaking processes, and they are fully 
protected by the series of Executive Orders (EO) that began 
with Executive Order 11291 and continue today that Senator 
Portman knows well. He implemented them for years. This 
statute, the application of this statute to private parties 
seems to me completely duplicative, unnecessary, and 
counterproductive. But in its application, core application to 
county, State, and tribal governments, I think it is terribly 
important.
    Now, turning to this particular bill and the proposed 
changes, with one notable exception, I oppose them as they 
apply to Federal agencies. I am not going to take a position on 
how they might or might not improve things, and I do not have 
enough knowledge of how Congress functions, your rules of 
procedure, to know, to be able to express an informed opinion 
on that.
    As to their application to Federal agencies, I oppose all 
but one because they are either duplicative and potentially 
counterproductive in their unintended adverse effects or are 
directly counterproductive.
    Now, let me begin with the one that I support 
enthusiastically, and that is Section 5, which would extend 
UMRA to independent regulatory agencies. I have expressed my 
view strongly in support of Senator Portman's bill, Senate Bill 
1607, on many occasions. I continue to support it, and really 
all of the same principles that I invoke as my basis for 
supporting that bill apply here equally. It does not matter 
whether it is an independent agency or, how you label the 
agency. What matters is whether the agency imposes an unfunded 
mandate on a State, local, or tribal government. And so I am 
strongly supportive of that.
    When I look at the other provisions and their potential 
applications to agency decisionmaking, it seems to me they fall 
into one of two categories. Many of them are just paraphrases 
of existing requirements, some of which are drawn from court 
opinions, some of which are drawn from Executive Orders or from 
other statutes. I always dislike legislation that attempts to 
reenact existing requirements using new words. What that does 
is create massive uncertainty for decades. Nobody knows what 
those words mean until some court decades later tells you what 
they mean. And in many cases, it comes as a shock to everyone, 
including the Members of Congress who thought they knew what 
this was going to do until they read the court opinion and 
said, ``Oh, dear.''
    So I think anything that simply attempts to paraphrase 
something that is already an existing requirement is 
potentially very problematic and certainly unnecessary, because 
the requirement is already there. In most cases, the 
requirements we are talking about are in Executive Orders 
11291, 12866, 13342, the series that I referred to earlier.
    Some of these provisions I oppose for other reasons. They 
obviously go beyond what 11291, 12866, and 13342 impose, and we 
already have a big problem. It is called ``rulemaking 
ossification.'' Just to give you an illustration, over the last 
few years Federal agencies have failed to comply with over 
1,000 deadlines contained in Federal statutes about rules they 
are supposed to issue. Why? Because of rulemaking ossification. 
The decisionmaking procedures take too long, they are too 
resource-intensive, and the agencies simply cannot comply with 
all of those and do the job of issuing the rules that you have 
told them to issue. Plus all of these requirements apply to 
amendments and to rescissions as well, and there are lots and 
lots of obsolete rules that simply cannot be amended or 
repealed because of rulemaking ossification. I oppose any 
effort by you to impose more burdensome, time-consuming, costly 
decisionmaking procedures on Federal agencies.
    Senator Lankford. Thank you, Mr. Pierce.
    I would like to ask unanimous consent that we move to 
Senator Portman first. He actually has another meeting he has 
to get to quickly as well. Without objection, Senator Portman, 
you are up.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Mr. Chairman, thank you very much, and I 
appreciate the fact that you and Senator Heitkamp are holding 
the hearing and, more importantly for today's purposes, the way 
you conduct yourself at these hearings, including letting 
members ask questions and sometimes before you have had the 
opportunity to do so yourselves, because you are going to be 
here until the end, as Senator Heitkamp once told me, which I 
also like about you guys.
    So as the Republican author in the House of the Unfunded 
Mandates Reform Act, it is difficult to see your child be 
criticized. [Laughter.]
    But I agree with most of the criticism, and in the sense 
that, I do think it was a significant move forward. It was not 
easy, and many of you supported this at the time. And, frankly, 
we never could have gotten it done without the input from State 
and local government, which is really where the pressure was 
applied. It was part of the Contract with America. It was the 
first one that was passed into law. It was Gary Condit and I. 
He was the Democrat, former mayor, and it was also bipartisan 
here in the Senate. As you know, Senator Glenn and others 
helped it. So it is time after 20 years to take a look at it 
and say, ``OK. What worked and what did not work?'' So I agree 
with all that.
    I do think, Professor Posner, you put your finger right on 
where this has been most effective, and it is here nobody pays 
much attention, which is the threat of a point of order being 
raised has changed the entire way we legislate, particularly in 
the House, because that point of order in the House, which was 
the most difficult piece of this, as you know--and the Rules 
Committee fought us on this consistently--has made a huge 
difference. Not only do you get now the CBO analysis we did not 
have before, and, we have all got thousands of different 
analyses of what the costs of these mandates are, but I have 
just got to tell you, for our State and local folks who are 
here, when you want to come up with a bill and you know you 
have to run through that gauntlet and you could be embarrassed 
on the floor of the House, trust me, it makes a difference. And 
it never gets out of committee.
    So that has been the biggest impact probably and maybe, the 
unheralded one until, Paul, you raised it this morning. So 
thank you.
    But I do think there is an opportunity to fix it. I am not 
on UMITA. I have some concerns with some aspects of it, but I 
think it is generally in the right direction.
    I also think the legislation that Senator King and I have 
proposed--and it was bipartisan over the last 3 or 4 years, 
which is called the Regulatory Accountability Act--also gets at 
some of these same issues. And what it says, basically, is that 
the agencies have to bring State and local shareholders in 
early. And I know both the Chair and Ranking Member agree with 
that, and they have legislation that also directly affects 
that. But that is in the Regulatory Accountability Act, and I 
think that is a significant improvement to the current UMRA. 
There have been, as was said, 60 points of order raised, but so 
many that were not raised that provided that threat.
    On the independent agencies, Professor Pierce has been very 
brave. He has taken some slings and arrows from some folks who 
do not want the independent agencies to be under the same rules 
or even similar rules to the executive branch agencies. Let me 
just give you a little data on this.
    In 2014, the last year for which we have the data, nine 
agencies proposed 17 major rules. These are independent 
agencies. Only one of those rules contained a full cost-benefit 
analysis. I can go back to 2013 when none of the 18 major rules 
did. ``Major'' is over $100 million of impact of course. In 
2012, only one of the 21. So I appreciate your standing up on 
this. I know you have taken some heat on it. But it is the 
right thing to do.
    And, by the way, President Obama says it is the right thing 
to do. He does not want it codified necessarily, but we ought 
to codify it, and this is something that I hope--and, again, 
this Subcommittee has been great on this issue. There is just 
this big yawning gap here of the independent agencies, and it 
does relate to what we are talking about here because they do 
not have to live by the same State and local consultation and 
so on. So I appreciate you, Professor Pierce, sticking your 
neck out on that one and continuing to talk about it.
    I have so many questions for you guys. Let me just ask you 
this, Professor Posner, if I could. Your testimony talks about 
the fact that OMB has guidelines for Federal agency 
consultation with State and local governments, and you talk 
about how UMITA seems to codify much of that. What do you think 
the benefits are of codifying that guidance from OMB? And how 
would that help in terms of implementing UMRA in a more 
effective way?
    Mr. Posner. Yes, I think this is a tradition. Codifying 
executive rules and legislation helps give it more leverage 
with the agencies and secures its survival across 
administrations. The Government Performance Modernization Act 
of 2010, for example, codified a lot of the things that OMB had 
already been doing, and it made them kind of more a factor to 
deal with.
    So this is an area, I think, that needs far more attention, 
and it has some notable successes, but it also has many lapses. 
And the old Advisory Commission on Intergovernmental Relations 
used to do this on behalf of the State and locals. They 
collated the State and local comments, delivered them to 
Federal agencies, and tried to serve as a broker.
    Now, they have been eliminated, but one of the things they 
reported is that not only did a lot of Federal agencies never 
come to them with proposed regs, but a lot of the State and 
locals did not respond to the invitation to comment. And so 
that is where I wonder if we need some more proactive 
institution as an intermediary, like an Office of Advocacy, 
like the small business community has to serve as a proactive 
hub to bring Federal statehood organizations on proposed 
regulations.
    Senator Portman. That is well beyond what UMITA does, but--
--
    Mr. Posner. That is right.
    Senator Portman [continuing]. Just to establish a 
structure, as you said earlier, an institution.
    Well, my time has expired. I thank the gentlemen for your 
testimony today and for your advocacy of this issue and the 
pressure on it. Thank you, Professor Pierce, and thank you to 
my colleague from Iowa for your forbearance.
    Senator Lankford. Thank you. Senator Ernst.

               OPENING STATEMENT OF SENATOR ERNST

    Senator Ernst. Thank you, Mr. Chairman, and thank you, 
Senator Heitkamp.
    Thank you, gentlemen, for being here today. This is an 
important discussion and one that I am very familiar with, 
having served at the county level as well as at the State 
level. So thank you so much.
    Mr. Posner, you mentioned the Help America Vote Act (HAVA), 
in your written testimony, of which I am intimately familiar 
with because, as a county auditor, I served as the Commissioner 
of Elections at the time that HAVA was being implemented. So 
this was given as an example of a prominent mandate that was 
not considered to be an unfunded mandate under UMRA, and I 
would like to visit with you about that today.
    I actually had some folks from the Iowa Association of 
Counties in my office on Monday, and they brought up this piece 
of legislation. Another one of the visitors that I had was a 
county auditor as well and a member of NACo. So it was good to 
see them.
    But although the act was well intentioned, it did place a 
number of burdens upon the small counties, the rural counties, 
economically challenged counties, which is where I came from, 
and it negatively impacted the already stretched budgets.
    As you know, through the legislation States are required to 
purchase new voting machines, and oftentimes the technology far 
outpaces what States are comfortable with and what they are 
able to purchase on a rolling basis. There is also a number of 
maintenance costs, the programming costs that are always 
ongoing, and it was always very tough for us as a small county 
to absorb these costs in our county budget.
    So if you could talk a little bit about that issue and just 
maybe what we need to do to solve those issues.
    Mr. Posner. You obviously have a lot more experience than 
anybody certainly that I know, and we have done a little work 
in Virginia and have encountered the same issue. Basically, we 
took one of the most voluntaristic parts of our public 
administration system and imposed quite a number of 
requirements in a very short period of time. And I think for 
purposes of this hearing, it was not considered to be an 
unfunded mandate for purposes of UMRA, partly because it 
delivered it in the form of grants and conditions of aid. And I 
think Congress bent over backward to try to avoid having a 
large Federal agency manage this. But even with that, just the 
requirements themselves, as you say, came down in a way that 
really had a lot of unanticipated effects. And I think it is 
one of the reasons why we need to be more cognizant and more 
accountable when we do this up front.
    Senator Ernst. Right.
    Mr. Posner. Exactly the same thing you are talking about.
    Senator Ernst. Thank you, and I appreciate that. The issue, 
of course, grants did flow through our Secretary of State's 
office because that is where elections are housed in Iowa, and 
then on down to the county level. And what happened, a number 
of counties would purchase equipment. It quickly became 
outdated. You move on to the next version and the next version 
and new software and new requirements, new accessories that are 
required. And, unfortunately, all of that is not funded. So the 
unintended consequences after that initial purchase of 
equipment, and that is just one of the many examples that we 
could push forward today. But thank you for that. I appreciate 
it.
    Mr. Desloge, you did mention Waters of the United States 
and, of course, I have been pushing that quite heavily on the 
expanded definition with a number of my Senate colleagues. I 
have significant concerns about the impact, and this was 
another issue that was brought up by the Association of 
Counties members that stopped in the other day. You 
specifically mentioned that the EPA did not meaningfully 
consult counties prior to the proposed rule. Can you walk me 
through NACo's experience and process with the EPA and the 
Corps of Engineers? And were there any efforts by the folks at 
OIRA or OMB to work through these conflicts?
    Mr. Desloge. I can probably address it at about 40,000 
feet. We tried to engage early on and lodged concerns, and the 
devil is in the details. Obviously, we are all about clean 
water, which is the pushback we always got: ``You do not like 
clean water.''
    Senator Ernst. Exactly.
    Mr. Desloge. But there is language in there that will 
cripple us eventually, and I will give you an example in my 
home town. We have a storm going through there today. The 
schools are closed in north Florida, and a couple of inches of 
rain, probably. I promise you, the last 48 hours I have had all 
my public works people out there cleaning out storm water 
conveyances and making sure that nothing is going to flood. We 
have concerns that some of that we are going to have to stop 
and say, well, we need to touch base with the Corps and see if 
need to get a permit for this. So I do not have that kind of 
latitude. So there is a cost, and in this case there is a 
safety issue as well.
    We lodged complaints early on. It seemed that the Corps and 
the EPA were not in tandem on this, and we got kind of 
conflicting messages. We felt like we did not get all the 
information, and in the end we kind of felt like we got run 
over. And, again, the intent is honorable, and the whole issue 
here is this is, I think people start off with the best of 
intentions, but as you get further down the road in the 
implementation, we end up taking the heat. And it is a big one. 
And there are a number more like that if we are not careful. 
Ozone is another one coming in the same kind of scenario. But 
good question, thank you. And thank you for your county 
services.
    Senator Ernst. And I loved my time in county service, so 
thank you so much. And thank you, Mr. Chairman.
    Senator Lankford. Senator Heitkamp.
    Senator Heitkamp. Thanks to all the panel, just very 
reasoned and measured responses, and I think a great 
opportunity to have a dialogue with all of us here. And I do 
not mean to hijack this from the topic, but since I have 
someone from the counties and someone from a State legislature, 
I want to talk about an issue that I think is also critical. 
And maybe, Professor Posner, it goes to an additional issue 
that we could include in an intergovernmental aspect. Senator 
Lankford and I opened up a portal which said Cut----
    Senator Lankford. Cut Red Tape.
    Senator Heitkamp. Cut Red Tape. I always want to say ``the 
red tape.'' Cut Red Tape. And we invited criticism and, we 
invited people to tell us what is working, what is not working. 
A lot of criticism that we got was of State regulation. It was 
of local regulation. It was about duplication between Federal 
regulation and State and local regulation. And that adds to the 
burden, it adds to the confusion, and it certainly adds to the 
costs of achieving a public purpose that we are all trying to 
move toward.
    Now, this is a situation where a fair application of the 
Tenth Amendment, you can say, ``Well, if the States are 
regulating, the Federal Government ought to think twice about 
whether they ought to do it.'' I am a big Tenth Amendment 
person. I hate preemption and--because I think these are the 
laboratories of democracy, which are State governments.
    So when you were talking, Commissioner, about the 
regulation, a lot of what you talked about on consultation 
involved not Federal mandates, but mandates coming from State 
legislatures and from executive agencies.
    My question is really to the Senator: Do you know of any 
model legislation that States have adopted on unfunded mandates 
that deal with just State regulation and pushback from counties 
and cities, from townships, from local government, that really 
can help us inform a model beyond the model that we are working 
with here?
    Mr. Bramble. Thank you for the question. One of the 
challenges, with the premise of the question is that there is a 
different relationship between the Federal Government and the 
States than there is between State governments and the 
political subdivisions within the State. The vast majority of 
States--there are a few States that have a home rule 
difference, but the vast majority of the States, the political 
subdivisions--the cities, the counties, the towns, school 
districts, all of those special service districts, et cetera--
derive their sole authority from State statute. And so the 
comparison saying, well, doesn't the same problem exist in the 
States, where if the State legislature tells its political 
subdivisions what they should do and they do not provide 
funding, is not analogous to the Federal Government.
    Well, Madison in Federalist No. 45 had something to say 
about that. Talking about the proposed Constitution, he said, 
``The powers delegated by the proposed Constitution to the 
Federal Government are few and defined. Those which remain in 
the State governments are numerous and indefinite.''
    Senator Haitkamp. I get all that, and I do truly understand 
the Tenth Amendment and the Eleventh Amendment. But my point 
is--and it is not to say we do not have an obligation here to 
look and see what the Federal-State relationship ought to be. 
But as I have pointed out frequently--and I think if I were a 
county commissioner who had my limitations on my property taxes 
restricted by State legislature, only to receive a mandate on 
my share of the Medicaid expenditure, I might take issue with 
that relationship. I see my commissioner laughing a little bit. 
And I do not mean to cause a fight between local and State 
government, but I have been in State government long enough to 
know that that tension exists.
    What I am trying to get at is, we looked very closely at 
what other models there might be, whether they are 
international or whether they are, within our system itself, on 
how we could do a better job coordinating between all the 
levels and all the branches of government. And so for me, this 
issue is bigger than just Federal unfunded mandates. It is how 
do we work together on a layered basis to actually achieve 
results.
    And I want to go to Waters of the United States. We have 
been litigating Waters of the United States for, what, 30 
years? We have been arguing about what is jurisdictional waters 
under EPA. It is time that Congress do its job and legislate 
what waters are, to create the lane, because without Congress 
legislating, they are going to be wandering around out there in 
my wetlands, in my potholes, for the rest of my life.
    And so, we can deal with the stay that we have now. I have 
legislation. I know it has been endorsed by both the 
organizations. I really appreciate the support. But I want to 
get to Professor Posner's idea about some kind of more 
institutional framework for dialogue and consultation, because 
I agree with you, I do not believe there is enough consultation 
on the front end. I think that is true not only for State and 
local governments; we believe it is true for stakeholders as 
well. And so we have a bill headed up by Senator Lankford to 
require additional, notice before rulemaking begins so that we 
can get comments earlier.
    I begged EPA to reissue the rule, Waters of the United 
States. They said they did enough consultation. I do not agree. 
I do not think the courts of the United States agreed either. 
And so here we are once again creating this great uncertainty 
when maybe that could have been avoided with an institution 
that was greater dialogue on the front end. And we are not here 
to litigate individual legislation. We are here to talk about 
how we can structure the relationship in a way that it actually 
gets rid of the conflict and achieves the result.
    And so I know if I talk to my colleagues about creating yet 
another intergovernmental agency or another agency, the groans 
will come up. You heard it, right? You heard the groan. But, I 
am curious how you react to the groan and what persuasive 
argument you can make for your idea.
    Mr. Posner. Look at all the major Federal systems in the 
world and in the Organisation for Economic Co-operation and 
Development (OECD). We are the only ones without a real 
extensive consultation mechanism. Germany, Australia, Canada 
have very extensive consultations that----
    Senator Heitkamp. And very robust subnational involvement.
    Mr. Posner. Exactly. And staff. They staff it, too. So it 
is not just an honorific kind of an issue.
    I think these kind of things obviously take a lot of work, 
but I think one of the things that happens sometimes in our 
system that you alluded to is we focus on these different 
titles--Title 1, Title 2 of UMRA. Sometimes Congress sets up 
the agencies to have difficult problems because they do not 
adequately consider the impact of legislation on State and 
local government.
    Senator Heitkamp. Right.
    Mr. Posner. I think about the REAL ID Act of 2005 where, 
basically the State motor vehicle administrators have worked a 
bill that Congress approved that was going to use regulatory 
negotiation with the Department of Transportation (DOT) to work 
out a national ID--I will call it a national driver's license--
that was hardened. And then Congress literally 3 or 4 months 
after that imposes REAL ID with much more stringent 
requirements and no consultation at all with the State and 
local community and transfers it to DHS, and then they wonder 
why it has taken 10 years to implement it with all the State 
pushback.
    So I think a lot of this consultation--if we had done 
something before Congress even approached that through some 
kind of intergovernmental process, I think we might have been 
better off in the long run. That is the idea.
    Senator Heitkamp. Professor Pierce, you said one of the 
things that you are concerned about is we are not currently 
meeting deadlines in terms of regulation. And I could give a 
concrete example where failure to regulate actually had 
tremendous costs, and that is in the tank car regulation that 
DOT just did. They waited too long. The industry went ahead and 
built a new generation of tank cars. All of those tank cars 
that just rolled off the factory line now have to be 
retrofitted to meet the guidelines. I am not saying that was 
the wrong answer. I am just saying failure to engage and 
regulate actually costs money. So we need to remember that 
regulation many times can be clarifying for industry and can 
achieve a result.
    So what is your response to a commission that would be 
charged with managing this relationship?
    Mr. Pierce. Let me just start by expressing my complete 
agreement with you and with Professor Posner that I think this 
is the core problem, and it is just difficult, really difficult 
for a lot of reasons.
    First, the issues, the substantive issues we are addressing 
here divide everyone. The Supreme Court, Waters of the United 
States--I teach that case every year. The Supreme Court divided 
4-1-4. There were not five Justices in support of anything. 
There were two Justices, each of whom ``was on a different 
side''--the Chief Justice and Justice Breyer--who said, ``You 
have to make a rule, get together and make a rule. Get a rule 
together, and we will support it.''
    Well, I was not sure I believed them when they said that, 
but a decade later we have a rule and, predictably, no one 
likes it.
    When you try to get 50 States to agree today on anything 
important, that is not going to happen. Right now in the 
context of climate change, the initial judicial action of the 
Supreme Court was instigated by a State, and now the reaction 
is 28 other States oppose. So nothing----
    Senator Heitkamp. I think people forget that.
    Mr. Pierce [continuing]. Is going to produce agreement 
among the States.
    Senator Heitkamp. Let us go back to the question, which is 
finding some kind of institutional place for this dialog. Do 
you believe that that would assist in at least getting early 
indication of those conflicts?
    Mr. Pierce. I do not know, because the next problem is each 
State has its own unique governmental structure, and I have 
tried to help Federal agencies who in good faith have tried to 
go out in consultation, and they discover not only do the 
States differ with one another, they differ within. And one 
State institution, the Governor's office, will say, ``Our 
position is X,'' and another State institution says, ``We are 
the ones who control this, and our position is Y and not X.''
    So trying to figure out with whom you consult, and then the 
result when you wind up tallying votes after a lengthy 
consultation process and conclude that 23 States are on one 
side, 23 States are on the other----
    Senator Heitkamp. Now you are just depressing me, so----
    Mr. Pierce. And the others disagree internally on what 
should be done. I do not have an answer to the problem. I agree 
completely that is the problem. [Laughter.]
    Senator Heitkamp. Thank you.
    Mr. Posner. Could I just maybe turn one light bulb on, as 
dim as it is? There have been some examples. The Federal 
Government was threatening to take over the property casualty 
insurance business from the States under Gramm-Leach-Bliley, 
and that prompted the States to get together and do their own 
voluntary codes, which, significantly helped, at least in some 
people's minds, the State of play in the States.
    The other one, which you are familiar with, is a simplified 
sales tax initiative which 25 States bought into, which has 
been a real help.
    Now, you are right. It is not all of them. We have some 
significant States that are outliers, but that provides a 
foundation, and they said it could not be done.
    Senator Heitkamp. We can go back to the Uniform Commercial 
Code, which is a great example of State cooperation to avoid a 
Federal commercial code. I appreciate and understand, having 
come from State government, having refereed these dialogues as 
the Attorney General (AG). But I am looking for systemic 
reforms that, No. 1, we can sell to our colleagues, because our 
really good ideas are having a hard time. Right, James?
    Senator Lankford. Though they are really good ideas.
    Senator Heitkamp. Really good ideas. We really like our 
ideas, and they are having a hard time. And so we need to be as 
persuasive as we can and get consensus on our ideas.
    Senator Lankford. And it is the grand challenge, because 
when you talk about regulations, immediately there is a whole 
group--going back to your statement, Mr. Pierce, it is this one 
whole group that says, ``Oh, my gosh, we need to not do more 
regulations, not make this more difficult,'' and another group 
that says, ``It is already incredibly difficult. We cannot fix 
it unless we streamline it and work our way through the process 
on it.''
    I am interested--Senator Bramble, your comment earlier 
about--let me see if I can get this term right--a Federal 
stress test in Utah that you are trying to evaluate the cost 
of--Federal dollars that are coming to it, what that actually 
costs the State, and I am assuming--is it worth it based on the 
mandates, or as Professor Posner had mentioned before, the 
Trojan horse coming to you of the grant with the requirements 
in the back of it? Is that what that is? Tell me a little bit 
more about that.
    Mr. Bramble. We have what is called a Federal Funds 
Commission, and one of the concerns that we have at the State 
level is you have the State budget that we control, and then 
you have all of the Federal programs that come into the State. 
And for most States, the Federal moneys dwarf the State budget.
    Senator Lankford. Right.
    Mr. Bramble. And so the challenge for the States, if you 
look at what has happened during the economic downturn from 
2009 forward, what happens when Federal funds are not there, in 
the West payment in lieu of taxes is a major issue for our 
States. That is the equivalent of property taxes. When a State 
like mine has roughly 70 percent--it is actually about 68 
percent of the land mass owned and controlled by the Federal 
Government, and the payment in lieu of taxes (PILT), is not in 
the Federal budget, what does that do to the State? And that 
triggered us to take a look not just at that one issue, but 
across the board, what would our State budget look like, what 
would our financial affairs look like with a reduction in 
Federal funding across the board in all the programs? And the 
street test----
    Senator Lankford. Right, which is entirely likely. So let 
me ask this: Have you been able to determine, for instance--I 
am just going to pick a program: education. Most States, 
education dollars coming to their State, between 8 and 10 to 12 
percent of the dollars for education are Federal dollars that 
are coming in. Have you been able to determine, if we said no 
to those Federal dollars, what the cost would be and what the 
difference would be and how do you actually measure that?
    Mr. Bramble. On education in our State it is a little over 
7 percent of the total education budget comes from the Federal 
Government, and we actually have a plan that we could implement 
if those funds were no longer available. The issue is: How 
would the State continue to maintain government services, 
maintain its role without the Federal funds? And it was more 
than just an idle curiosity because of the challenges that the 
Federal Government has with debt, deficit, those kinds of 
things. It seemed to be the responsible thing to do at the 
State level to look and say what would the impact be.
    Senator Lankford. So then the question, have you been able 
to determine what you spend a year on education just fulfilling 
Federal mandates and how that lines up with the dollars that 
are actually coming into the States?
    Mr. Bramble. We have but I do not know what that number is.
    Senator Lankford. That is fine. The reason I ask is this 
has been an interesting conversation among multiple States 
trying to determine, as now, as you mentioned before the Trojan 
horse coming to you and saying, ``Here is a grant, here is an 
opportunity for you to be a partner. We will give you 
additional Federal dollars if you do this.'' There are some 
States that have asked the question, I am spending more, I 
think, fulfilling the Federal mandate than the Federal dollars 
actually coming in for this. But most States do not have the 
resources or the process in place to be able to actually answer 
that question. They think that is true, but they have never had 
the opportunity to be able to actually evaluate it.
    If you all have developed a method to be able to measure 
that, that is something multiple other States would be 
interested in and maybe something that would be of great 
benefit to many States, if that makes sense.
    Mr. Bramble. That is actually part of the process of what 
we call our Federal Funds Commission. What is the cost of the 
unfunded mandates? What are the costs of the Federal programs?
    Senator Heitkamp, if I could go back to your question about 
between the State and the locals, I will put on my hat as a 
Utah Senator rather than president of NCSL to answer that. In 
our State we have an administrative rules committee. We pass 
legislation, and then we authorize the Executive Branch to 
promulgate rules to implement. When those rules are being 
drafted, when there are prospective rules, they go before the 
administrative rules committee, and we take input from the 
stakeholders. And that may be the Utah League of Cities and 
Towns. It may be the Utah Association of Counties. It may be 
the Association of Special Service Districts. It may be 
stakeholders across the spectrum. And whether that rule gets 
implemented, modified, or put on hold is a direct function of 
that input. And then for rules that are already in place, we 
guard jealously the legislative prerogative of setting policy, 
and we expect the Executive Branch to carry out that policy.
    We just had an example that demonstrates that: ultra-low 
NOx water heaters. We have a problem with our air quality in 
Utah because of mountain valleys and inversions. There is 
broad-based support for a requirement that all water heaters, 
new water heaters sold in the State should be these low 
nitrogen--ultra-low NOx. Our Department of Environmental 
Quality issued a rule that required that. It went to the 
administrative rules committee, and that rule is being repealed 
in favor of the legislature. There is a bill before the 
legislature--we adjourn March 10, but there is a bill that is 
being heard today, as a matter of fact, dealing with that 
requirement. And while we repealed the administrative rule 
because we did not believe the department had the authority, 
the legislature is now debating what that authority should be, 
because at the State level we guard that jealously. We do have 
a process for the local political subdivisions to weigh in both 
during the promulgating of the rule and after the 
implementation of the rule.
    Senator Heitkamp. Yes, we have the same kind of rules 
committee in North Dakota. I think that can be a fairly common 
model.
    I have to issue my apologies. I have to run off and give a 
floor speech. But this has been very enlightening, and I know 
we will continue the dialogue. I am sorry.
    Senator Lankford. That is great. I am going to talk about 
retrospective review while you are gone, then. I will stick 
with some of your favorite subjects. [Laughter.]
    Let me bring that up because this is a big deal for Senator 
Heitkamp and me both to deal with retrospective review, and it 
is one of the challenges that we seldom get information. Once 
an estimate is made by CBO and they say this is going to cost 
$95 million or $150 million dollars to the economy--whatever 
the number may be--we are now 5 years past, it is fully 
implemented, it is rolled out. No one ever goes back to ask the 
question, ``Was that correct and is that regulation working as 
effectively as we thought? ''
    So one of the areas I know are in Representative Foxx's 
bill deal with this idea of a lookback from a Committee, for a 
Committee Chairman or Ranking Member to be able to make the 
request and say let us go back and revisit that regulation. Did 
it meet the target costs that we expected? And is it 
accomplishing what it said it was going to accomplish? The 
logical question is: If it is not working or if it is costing 
10 times as much, maybe there needs to be a change in the 
statute or maybe it needs to be revisited in the regulation.
    Comments on that from anyone on the process? Because that 
is a major part. Mr. Desloge.
    Mr. Desloge. Yes, I do not think you are going to want to 
do that for everything, but if you said, when State and local 
governments stepped in and said, ``This is not working for us, 
your estimates are way off,'' that could trigger that. I think 
you would put an onerous kind of burden if you tried to do it 
on every piece of regulation that came down the pike. But, yes, 
it would give us, at least at a local level, a chance to argue 
our case and say, ``Hey, this really did not turn out the way 
we thought it would.'' And I think that would be beneficial for 
us.
    Senator Lankford. OK. Mr. Pierce.
    Mr. Pierce. I certainly agree with you completely that 
retrospective review is a very important function, and I am 
sure you know, each of the last three Presidents has issued an 
Executive Order that requires every Executive Branch agency to 
engage in that process.
    Senator Lankford. But do they?
    Mr. Pierce. No, because they do not have the resources 
because of rulemaking ossification, because it takes too many 
resources to perform that function at the same time they are 
unsuccessfully attempting to issue the rules that you say have 
to be issued, amend the rules that need to be amended. They 
simply do not have the resources to perform those functions, 
and the particular mechanism in this piece of legislation 
raises very serious constitutional questions under a series of 
Supreme Court opinions in which the Court has basically said 
the task of Congress is to legislate. And when a Member or even 
a Committee of Congress gets into the business of directing a 
Federal agency to do something, it at least raises serious 
questions of constitutionality.
    Senator Lankford. So the basic oversight role of Congress 
is also there, and that has been supported by multiple Supreme 
Court cases as well, that any committee could reach into an 
agency, as this Committee has done multiple times, and say, 
``Here is a list of questions, and we need information and 
facts.'' And that agency then provides us the facts and the 
details. This type of retrospective review asks the question: 
``This is the estimate that you made as an agency 5 years ago. 
Did it prove to be correct?'' That is an oversight role. If an 
agency gave an estimate that was far out of bounds, we would 
want to know why and how can we change that process so that we 
get a more accurate look at it or to be able to evaluate the 
fact that you created a regulation in hopes that it would do 
XYZ, it did not, it did ABC instead. I think that is a fair 
part of oversight.
    Mr. Pierce. I agree with that. I would just go back to they 
do not have anything like the resources necessary to--that is a 
very difficult task.
    Senator Lankford. Yes, sir.
    Mr. Pierce. And it takes a lot more than the resources they 
now have to do it.
    Senator Lankford. All right. Mr. Posner.
    Mr. Posner. This reminds me a little bit of something that 
Senator Portman, when he was head of OMB, did under the Bush 
Administration called Program Assessment Rating Tool. They 
tried to review every one of the 1,500 programs in the Federal 
budget, 300 every year. It was far too much. It beat everybody 
up. Nobody could pay attention to it.
    I certainly support the retrospective process. I think you 
might want to organize it more on a priority basis, as was 
suggested, maybe by a portfolio. So maybe one year you look at 
all agencies regulating food safety and you do a regulatory 
lookback on them and kind of a reassessment of how well all 19 
agencies are doing inspecting food, for example. That might be 
a way to rationalize that process and avoid some of the 
problems that we were just discussing.
    Senator Lankford. For Senator Heitkamp and me, one of the 
things that we have proposed is for major rules, as they go out 
the door, that there is a scheduled time for retrospective 
review and no longer than 10 years, and so that everyone knows 
when the rule is finalized, we also know exactly what year it 
will be reviewed, and every 10 years it is reviewed. And it 
could be 5, it could be 10, it could be 7. The agency sets that 
time period--it is a predictable time period--to be able to 
have some review, and so, again, they can budget for it, they 
can schedule it, and they know when it is coming.
    We have talked a lot about the impacts on State and local 
governments and, for the Unfunded Mandates Reform Act when it 
was passed, the loopholes that are in it, areas where it did 
not trigger this type of disclosure, which, as you have all 
mentioned, is informational basically to Congress, so that 
Congress, when they are making a decision, they can have good 
information. Those loopholes that are out there, can anyone 
identify any particular bills or conversations that have 
happened where one of these unfunded mandates got through and 
it did not trigger some of the review? Senator Bramble?
    Mr. Bramble. Yes, I have a couple of them. One general 
problem is that the UMRA criteria starts from the basis that if 
it is already an unfunded mandate, then it is only the 
incremental change that would be subject to the criteria of 
fitting whether there is additional review. But two specific 
examples:
    One is the Individuals with Disabilities Education Act. The 
Federal Government did not maintain its commitment to fund 40 
percent average per pupil expenditure. The mandate continued. 
It did not trigger UMRA because it was in place already, and 
the fact is that the Federal Government is not adequately 
funding it but the requirements are still there, and States 
still have to comply with the act.
    For the REAL ID Act, we have the same kind of situation, 
and I think that it provides an example of one of the loopholes 
where, if it is a mandate that is a funded mandate, when the 
funding dries up, there is no triggering UMRA in those cases.
    Senator Lankford. OK. Let me ask the where and who 
question. Dr. Posner, you had mentioned before about trying to 
do this intergovernmental process. That begs the question of 
where does that land best that it is most effective. You had 
mentioned outside groups that had done that here in this town 
and tried to raise that information to all bodies. The White 
House, the Congress, different groups have been out there. 
Where is the place that it would be most effective to make sure 
if we are going to have intergovernmental conversations it 
actually has impact? Is that in OMB's area? Is that here in 
Congress? Where is that?
    Mr. Posner. Well, the one that was eliminated in 1995 was 
an independent commission appointed by the President and 
approved by the Congress, which included 30 Cabinet 
Secretaries, State legislators, county board supervisors, 
mayors, and Governors. And I think that had a formative role on 
certain areas--general revenue sharing formation, the Reagan 
federalism program, and several others. I think that may be a 
good place for it.
    I think they also need to be populated in the various 
policymaking circles. So Congress had a Subcommittee on 
Intergovernmental Relations in both the House and the Senate 
that worked with the ACIR on issues, so that is the way things 
get done. As we know, it is not just one hand clapping.
    And so I think that is what we are missing, is that 
population of the intergovernmental perspective, in both the 
Congress and the executive at the very least.
    Senator Lankford. OK. Senator Bramble.
    Mr. Bramble. Mr. Chairman, this is a document, 
Congressional Budget Office cost estimate, on H.R. 3821 dated 
February 11, 2016. Let me read from it: ``For large entitlement 
programs like Medicaid, UMRA defines an increase in the 
stringency of conditions or a cap on Federal funding as an 
intergovernmental mandate if the affected governments lack 
authority to offset those costs while continuing to provide 
required services.''
    And then it goes on to say, ``Because States have 
flexibility within the Medicaid program to offset their 
financial and programmatic responsibilities in order to reduce 
costs, CBO concludes that the new conditions or resulting costs 
would not constitute an intergovernmental mandate.''
    Medicaid is the second largest expenditure in the State of 
Utah, second only to education, and most States find that. And 
yet Medicaid itself does not trigger UMRA, and changes to 
Medicaid do not trigger UMRA. Under the Affordable Care Act, 
the Medicaid expansion, the 90/10 split--our State is one of 16 
or 17 that have not expanded Medicaid. But that major Federal 
mandate in health care does not even trigger the UMRA criteria.
    Senator Lankford. Mr. Desloge.
    Mr. Desloge. And I will take it a step further, because 
what happens is at the State level, when they are dealing with 
the Medicaid issues, in Florida at least, they offset and the 
county level picks up a percentage of that. And it is debated 
all the time in the courts as far as how they get to the 
percentage, and it has been a battle between the State 
government and us on an ongoing basis. We ran up a half a 
billion dollar backlog of disputed bills. You have people 
moving in and out of the State. And so, we are not a Medicaid 
provider, yet the State had figured out that they were going to 
ask us to shoulder part of it.
    So I hate to say it, but it flows downhill, and we are kind 
of where the buck stops in local government. And we want a seat 
at the table, and I commend you for this. I think this is a 
great tune-up of existing legislation. And we would just like 
the opportunity to be there early and be there throughout the 
process, and we do not think we will add any regulatory or 
additional burden. But I think you are spot on with where you 
are heading with this.
    Senator Lankford. OK. Dr. Posner, can you talk about your 
Trojan horse conversation earlier about grant conditions and 
such? You said some of those are coming much later. You take 
the grant money, and then suddenly you find out after the fact 
here is what that means.
    Mr. Posner. Yes, on Medicaid requirements that are imposed 
after the fact. There is actually a Pennhurst decision that 
Justice Rehnquist authored that was about the Vocational 
Rehabilitation Act, which at the time was a billion-dollar-a-
year program. Long after the States had become partners in 
managing this program, the Federal Government imposed 
additional requirements. And the Court ruled that was 
unconstitutional. It was a retroactive rule that burdened the 
States.
    Increasingly, it seems that major Federal grant programs 
like highways or education are vulnerable to having new Federal 
conditions imposed. For example, when Congress decides to slap 
on the 21-year-old drinking age and a 55-mile-an-hour speed 
limit and drunk driving tolerance levels, you wonder whether 
the purpose of Congress is to fund the substantive activity or 
to use it as a vehicle for delivery of regulatory mandates. 
And, increasingly, it seems more like the latter.
    So those are the kinds of things we are talking about 
where, since 1956, we have had a cooperative relationship 
financially where the Federal Government collects the gas tax 
and redistributes it, but with now this overlay of regulatory 
mandates that have largely maybe overtaken the point of the 
program.
    Senator Lankford. OK. Let me read a quote to you. This 
comes from--and this has been an ongoing, long-term 
conversation about this bill and about any other changes to 
unfunded mandates reform. When I was serving in the House, 
Susan Dudley came and testified early on before this piece of 
legislation was even written, and we were talking about just 
the problems of the Unfunded Mandates Reform Act. In 2011, to 
one of my questions, she answered this--or she made this 
statement: ``To broaden the coverage, Congress could consider 
aligning UMRA language with that of Executive Order 12866'' 
your comment before--``and/or extending it to include 
independent regulatory agencies, which are not currently bound 
by the Executive Order either. To make the Executive Branch 
more accountable for the goals of UMRA, Congress could provide 
OMB oversight authority beyond certifying and reporting on 
agencies' actions. Congress might also want to expand judicial 
review under UMRA so that, for example, an agency's failure to 
justify not selecting the most cost-effective or least 
burdensome alternatives could be grounds for staying or 
invalidating the rule.''
    Mr. Pierce, you had made a comment about that earlier, that 
you had some concerns in that area of, again, ossification and 
making this much more difficult, as you had mentioned before. 
It is extremely helpful in many areas if you know that there is 
a way to be able to restrain an agency to say if you do not 
follow the rules, as with the Clean Air Act and Clean Water 
Act, outside entities can step in and say, no, you have to 
actually follow the rule itself and the guidelines.
    What is the barrier if, when the Federal Government is 
promulgating a rule, they do not consult, they do not engage as 
they are asked to do, States and counties can step in and say 
at least you have to consult us, slow down the process? The 
judicial review being the stick, I guess, that the States could 
use to be able to say you did not consult us.
    Mr. Pierce. Yes, let me try that one. Let me start by 
saying that Susan is a colleague and a good friend, and I agree 
with her on most everything, including the desirability of 
trying to make 12866 and whatever you folks do with UMRA fit 
together nicely.
    Senator Lankford. And that is a lot of the conversation of 
codifying this. We have done it now for two decades. Let us go 
ahead and make it the standard, because each administration 
says that is the Executive Order. But they also know, ``OK, if 
we are busy, we are not going to follow it because it is not 
really statute. We will generally follow it, but at times we 
will not.''
    Mr. Pierce. Once you get the courts involved, you are 
really unleashing something over which neither you nor the 
Executive Branch have any control at all. And I have no idea 
what they would do with that, and in many circumstances it has 
unintended adverse effects far worse than the intended 
beneficial effects. And that comes back to why I am concerned 
about efforts to codify provisions of 12866, for instance, 
where, sure, a new President could change it, but we have had a 
string of Presidents of both parties who have said, ``We like 
it,'' and have kept it the way it is and kept the courts out of 
it, which to me is one of the strengths they implemented. And 
that allows them to sit down and talk with agencies and have a 
dialogue with Federal agencies and tell a Federal agency, ``I 
want you to go talk to the folks in Utah,'' or the folks 
wherever.
    Senator Lankford. Right.
    Mr. Pierce. Courts cannot do that. Courts are blunderbusses 
that come in 5 years after the fact and say, ``It was all 
wrong. Start all over.'' I do not like that.
    Senator Lankford. No, and I would agree. But when you can 
get some clarification, once the courts have gone through the 
painful process of multiple years and you get a clarification 
and everyone agrees on this is really the process, or Congress 
comes back and says, ``That is not what we intended. We are 
going to fix it and provide some clarity to it.'' The key 
aspect is right now with 12866 there may be consultation, but 
it may not be in a way that people felt like they were 
consulted. I have had several agencies that a rule would come 
out, and I would say, ``Did you consult anyone on this?'' And 
they would say, ``Yes.'' And I would say, ``Who?'' They would 
say, ``Well, we have a group that we work with and consult.'' 
``Well, how was the process done?'' ``We do consultation.'' 
``With who?'' ``This group that we consult.'' ``Who is on the 
list?'' ``Well, we do not really put their names out.''
    OK. Well, the people that were affected by it never felt 
like they had a voice to really say, so suddenly a guideline or 
a rule comes out, it is fairly significant, that changes either 
their staffing, their budgeting, or materials, and they never 
got a voice. Someone did, but no one who is the someone. So 
allowing the agencies to define the someone at times gets a 
little too loose.
    Mr. Pierce. I agree, and I agree with Professor Posner's 
point very early on in the hearing that you cannot really solve 
that with legislation. It is too complicated, too variable. I 
have been working on the Clean Power Plan coordination process. 
There are about eight agencies in every State that have some 
role in the process of implementation, assuming that that rule 
is ultimately upheld and implemented, trying to figure out 
which agencies--they are all--they differ. They differ in their 
powers; they differ in their perspectives on what should be 
done. Trying to find them and say, OK, EPA usually works with 
the natural resource agencies. Well, in the case of this 
particular rule, the most important agencies are the public 
utility commissions. Well, seven of them are elected. The 
Governor has no power over them. The people are the only ones 
who have power over them. Others report to this--they each 
have--trying to figure out who to consult with in a very 
complicated 50-State system and within each State, seven, eight 
agencies with overlapping or conflicting power, it is a very 
difficult process. I do not think you are going to be able to 
solve it with legislation, and I am not sure how else to solve 
it.
    One suggestion is you could bring in, at least for informal 
consultation--my former colleague at Columbia who runs the 
American Law Institute that was responsible for getting the 
uniform code, Lance Liebman has been working on this for 
decades. His experience is it has gotten much harder. The 
things they were able to do in getting States to agree 20, 30 
years ago, they cannot get that level of agreement. They cannot 
even get States to agree on who within the State is----
    Senator Lankford. What about something just as basic for 
major rules like an Advanced Notice of Proposed Rulemaking? So 
it is Federal Register, publicly announced, everyone knows, now 
you are not having a matter of chasing down who is the right 
person within the State; it is a public announcement. But we 
get it in before the rulemaking actually begins. We give 
greater consultation early on in the process. So before there 
is text written and everyone is fighting about that word has 
this thing, it gives the ability for States, counties, affected 
parties--whether that be independent businesses, whatever it 
may be--they can actually rush in and say, ``Have you 
considered the tribal impacts of this? Before you write the 
rule, think about this.''
    Mr. Pierce. Advanced Notices of Proposed Rulemaking 
certainly can be beneficial, and agencies sometimes use them 
with good benefit. They definitely add to the time required to 
make a decision. They add to the complexity. And, also, what 
you are suggesting assumes that there is not a draft until the 
agency issues--that is not true.
    Senator Lankford. Correct.
    Mr. Pierce. And because of the way the courts have defined 
the requirements of a Notice of Proposed Rulemaking--the courts 
have defined that, not the way Congress defined it 70 years 
ago. They have redefined it in such a way that, as a practical 
matter, the first notice has to be the final, because if you 
make any change, you have to justify it to the satisfaction of 
the court. So the easy way to minimize the burden and risk of 
judicial review is by making all of the decisions before you 
ever put anything in writing, and most agencies--EPA is a good 
example. They have hundreds of meetings through which they come 
up with the initial draft. All you would be doing is backing 
that process up and saying all those meetings have to take 
place before the issuance of the Advanced Notice of Proposed 
Rulemaking because the courts would just come in and say if you 
have made a change, you have to justify it.
    The easy way around that is do not make changes, which 
means as a bottom line make all your decisions before you ever 
issue the notice.
    Senator Lankford. Which we are back to the same issue then.
    Mr. Pierce. Yes.
    Senator Lankford. You do not get public consultation. The 
county never gets an opportunity to be able to speak to it 
because they have a group of folks that they normally work with 
and a group of attorneys that hash the issues, and they say, 
``We think this is the tightest language that we can make it 
work.''
    Mr. Pierce. In the informal process, that I think is 
exactly right, and it is a big problem. In the formal process, 
they certainly have the right to come in with comments, and 
there has been a lot of empirical studies that show that they 
simply do not. They choose in most cases, for whatever reason--
and I am sure a lot of this is resource problems at the State 
and local level. They choose, they say, ``Oh, somebody just 
told me some Federal agency is proposing to do something we 
care about, and we have a right to comment on it.'' We do not 
have the personnel, we do not have the time, we do not have the 
resources. And often just trying to figure out, is this the 
Governor or the Attorney General? In many cases, they dislike 
each other intensely and have completely conflicting views. And 
so if we say something on behalf of the Governor, well, the 
Attorney General is just going to come in and say, ``That is 
all wrong.'' Can we clear it with--this is a horrendously 
difficult practical problem that I know you appreciate it.
    Senator Lankford. I do.
    Mr. Pierce. It needs to be solved, and I think we all 
appreciate it, but I do not have a good solution.
    Senator Lankford. Right. It is also why federalism is so 
important that the majority of these rules and issues should be 
handled on a State level, State to State rather than the 
Federal. But the things that are Federal, that is a whole 
different issue.
    Mr. Pierce. Thirty-eight types of gasoline in the United 
States today is a problem.
    Senator Lankford. We can talk about--now that some other 
folks here that are strong advocates for it are gone, we can 
also talk about ethanol requirements as well. But that is a 
whole different---- [Laughter.]
    Dr. Posner.
    Mr. Posner. Just a quick footnote on this. I think the 
Earth and the Moon and the stars on consultation were aligned 6 
years ago with the Recovery Act. It was tremendously urgent to 
get the money out the door, and I think GAO did a lot of 
studies on this. That was a peak where Governors, mayors, the 
President, the Vice President, the agency heads, all were 
focused on that one program. And the administration did a 
remarkable job in working with both the program people within 
the agencies as well as at the top, the Vice President and the 
Budget Director. They did weekly phone calls with States, State 
representatives and Governors, and I think everybody felt good 
about what happened. And there was also tremendous visibility 
to that spending, so, you had that reinforcement that everybody 
was kind of under the gun and the glare of publicity and 
transparency, a lot of information was being floated. And the 
system worked. So that was under a lot of stress.
    I think what we are talking about here is much more 
complicated when you are talking about rules and the like. But, 
there have been extraordinary periods where this has come 
together, and it might be worth studying that to see what 
lessons we can learn.
    Senator Lankford. The accountability on the back side of 
that was also very important.
    Senator Bramble, if there are any final comments, I will 
allow you to make them. But votes have just been called. You 
know exactly what that means as far as timing. So we will wrap 
up here in just a moment. Senator Bramble.
    Mr. Bramble. Thank you. I just want to comment very quickly 
on the consultation. It is also a matter of timing. Some 
agencies, in talking with staff at NCSL and colleagues across 
the country, the timing can be critical. If an agency calls 12 
hours before the rule is effective and then claims that, 
``Well, we reached out to the State,'' that really does not 
count. They may check the box and say, ``We consulted 
immediately before it became effective,'' but that is not the 
kind of consultation that works.
    Senator Lankford. Right. And that is the reason we have the 
courts to say, ``Clearly the law was not followed as it was 
intended to be followed,'' and now what happens? And I get the 
dynamic of it. But with no stick in the process and no voice 
that comes back, you struggle with how do you actually maintain 
enforcement consistency on this.
    Before we adjourn, I would like to announce to folks that 
on March 17, the Subcommittee will hold a hearing examining the 
degree of deference, another issue we can talk about at length 
at some point, the Federal courts and their granting of 
deference to regulatory agencies and examining that agency 
deference and what happens in the days ahead and the trends 
that we are facing on that.
    This concludes our hearing today. I would like to thank our 
witnesses very much for your testimony. Your written testimony 
is obviously a part of the full long-term record. The hearing 
record itself will remain open for 15 days until the close of 
business on March the 10 for the submission of additional 
statements or questions for the record.
    With that, this hearing is adjourned.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]

                            A P P E N D I X

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