(1) to improve the quality of the deliberations 
of Congress with respect to proposed Federal man-
dates by— 
(A) providing Congress and the public with 
more complete information about the effects of 
such mandates; and 
(B) ensuring that Congress acts on such 
mandates only after focused deliberation on 
their effects; and 
(2) to enhance the ability of Congress and the 
public to identify Federal mandates that may impose 
undue harm on consumers, workers, employers, 
small businesses, and State, local, and tribal govern-
ments. 
SEC. 3. PROVIDING FOR CONGRESSIONAL BUDGET OFFICE 
STUDIES ON POLICIES INVOLVING CHANGES 
IN CONDITIONS OF GRANT AID. 
Section 202(g) of the Congressional Budget Act of 
1974 (2 U.S.C. 602(g)) is amended by adding at the end 
the following new paragraph: 
‘‘(3) ADDITIONAL STUDIES.—At the request of 
any Chairman or ranking member of the minority of 
a Committee of the Senate or the House of Rep-
resentatives, the Director shall conduct an assess-
ment comparing the authorized level of funding in a 
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bill or resolution to the prospective costs of carrying 
out any changes to a condition of Federal assistance 
being imposed on State, local, or tribal governments 
participating in the Federal assistance program con-
cerned or, in the case of a bill or joint resolution 
that authorizes such sums as are necessary, an as-
sessment of an estimated level of funding compared 
to such costs.’’. 
SEC. 4. CLARIFYING THE DEFINITION OF DIRECT COSTS TO 
REFLECT CONGRESSIONAL BUDGET OFFICE 
PRACTICE. 
Section 421(3) of the Congressional Budget Act of 
1974 (2 U.S.C. 658(3)(A)(i)) is amended— 
(1) in subparagraph (A)(i), by inserting ‘‘incur 
or’’ before ‘‘be required’’; and 
(2) in subparagraph (B), by inserting after ‘‘to 
spend’’ the following: ‘‘or could forgo in profits, in-
cluding costs passed on to consumers or other enti-
ties taking into account, to the extent practicable, 
behavioral changes,’’. 
SEC. 5. EXPANDING THE SCOPE OF REPORTING REQUIRE-
MENTS TO INCLUDE REGULATIONS IMPOSED 
BY INDEPENDENT REGULATORY AGENCIES. 
Paragraph (1) of section 421 of the Congressional 
Budget Act of 1974 (2 U.S.C. 658) is amended by striking 
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‘‘, but does not include independent regulatory agencies’’ 
and inserting ‘‘, except it does not include the Board of 
Governors of the Federal Reserve System or the Federal 
Open Market Committee’’. 
SEC. 6. AMENDMENTS TO REPLACE OFFICE OF MANAGE-
MENT AND BUDGET WITH OFFICE OF INFOR-
MATION AND REGULATORY AFFAIRS. 
The Unfunded Mandates Reform Act of 1995 (Public 
Law 104–4; 2 U.S.C. 1511 et seq.) is amended— 
(1) in section 103(c) (2 U.S.C. 1511(c))— 
(A) in the subsection heading, by striking 
‘‘OFFICE OF MANAGEMENT AND BUDGET’’ and 
inserting ‘‘OFFICE OF INFORMATION AND REG-
ULATORY AFFAIRS’’; and 
(B) by striking ‘‘Director of the Office of 
Management and Budget’’ and inserting ‘‘Ad-
ministrator of the Office of Information and 
Regulatory Affairs’’; 
(2) in section 205(c) (2 U.S.C. 1535(c))— 
(A) in the subsection heading, by striking 
‘‘OMB’’; and 
(B) by striking ‘‘Director of the Office of 
Management and Budget’’ and inserting ‘‘Ad-
ministrator of the Office of Information and 
Regulatory Affairs’’; and 
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(3) in section 206 (2 U.S.C. 1536), by striking 
‘‘Director of the Office of Management and Budget’’ 
and inserting ‘‘Administrator of the Office of Infor-
mation and Regulatory Affairs’’. 
SEC. 7. APPLYING SUBSTANTIVE POINT OF ORDER TO PRI-
VATE SECTOR MANDATES. 
Section 425(a)(2) of the Congressional Budget Act 
of 1974 (2 U.S.C. 658d(a)(2)) is amended— 
(1) by striking ‘‘Federal intergovernmental 
mandates’’ and inserting ‘‘Federal mandates’’; and 
(2) by inserting ‘‘or 424(b)(1)’’ after ‘‘section 
424(a)(1)’’. 
SEC. 8. REGULATORY PROCESS AND PRINCIPLES. 
Section 201 of the Unfunded Mandates Reform Act 
of 1995 (2 U.S.C. 1531) is amended to read as follows: 
‘‘SEC. 201. REGULATORY PROCESS AND PRINCIPLES. 
‘‘(a) IN GENERAL.—Each agency shall, unless other-
wise expressly prohibited by law, assess the effects of Fed-
eral regulatory actions on State, local, and tribal govern-
ments and the private sector (other than to the extent that 
such regulatory actions incorporate requirements specifi-
cally set forth in law) in accordance with the following 
principles: 
‘‘(1) Each agency shall identify the problem 
that it intends to address (including, if applicable, 
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the failures of private markets or public institutions 
that warrant new agency action) as well as assess 
the significance of that problem. 
‘‘(2) Each agency shall examine whether exist-
ing regulations (or other law) have created, or con-
tributed to, the problem that a new regulation is in-
tended to correct and whether those regulations (or 
other law) should be modified to achieve the in-
tended goal of regulation more effectively. 
‘‘(3) Each agency shall identify and assess 
available alternatives to direct regulation, including 
providing economic incentives to encourage the de-
sired behavior, such as user fees or marketable per-
mits, or providing information upon which choices 
can be made by the public. 
‘‘(4) If an agency determines that a regulation 
is the best available method of achieving the regu-
latory objective, it shall design its regulations in the 
most cost-effective manner to achieve the regulatory 
objective. In doing so, each agency shall consider in-
centives for innovation, consistency, predictability, 
the costs of enforcement and compliance (to the gov-
ernment, regulated entities, and the public), flexi-
bility, distributive impacts, and equity. 
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‘‘(5) Each agency shall assess both the costs 
and the benefits of the intended regulation and, rec-
ognizing that some costs and benefits are difficult to 
quantify, propose or adopt a regulation, unless ex-
pressly prohibited by law, only upon a reasoned de-
termination that the benefits of the intended regula-
tion justify its costs. 
‘‘(6) Each agency shall base its decisions on the 
best reasonably obtainable scientific, technical, eco-
nomic, and other information concerning the need 
for, and consequences of, the intended regulation. 
‘‘(7) Each agency shall identify and assess al-
ternative forms of regulation and shall, to the extent 
feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance 
that regulated entities must adopt. 
‘‘(8) Each agency shall avoid regulations that 
are inconsistent, incompatible, or duplicative with its 
other regulations or those of other Federal agencies. 
‘‘(9) Each agency shall tailor its regulations to 
minimize the costs of the cumulative impact of regu-
lations. 
‘‘(10) Each agency shall draft its regulations to 
be simple and easy to understand, with the goal of 
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minimizing the potential for uncertainty and litiga-
tion arising from such uncertainty. 
‘‘(b) REGULATORY ACTION DEFINED.—In this sec-
tion, the term ‘regulatory action’ means any substantive 
action by an agency (normally published in the Federal 
Register) that promulgates or is expected to lead to the 
promulgation of a final rule or regulation, including ad-
vance notices of proposed rulemaking and notices of pro-
posed rulemaking.’’. 
SEC. 9. EXPANDING THE SCOPE OF STATEMENTS TO AC-
COMPANY SIGNIFICANT REGULATORY AC-
TIONS. 
(a) IN GENERAL.—Subsection (a) of section 202 of 
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1532) is amended to read as follows: 
‘‘(a) IN GENERAL.—Unless otherwise expressly pro-
hibited by law, before promulgating any general notice of 
proposed rulemaking or any final rule, or within six 
months after promulgating any final rule that was not pre-
ceded by a general notice of proposed rulemaking, if the 
proposed rulemaking or final rule includes a Federal man-
date that may result in an annual effect on State, local, 
or tribal governments, or to the private sector, in the ag-
gregate of $100,000,000 or more in any 1 year, the agency 
shall prepare a written statement containing the following: 
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‘‘(1) The text of the draft proposed rulemaking 
or final rule, together with a reasonably detailed de-
scription of the need for the proposed rulemaking or 
final rule and an explanation of how the proposed 
rulemaking or final rule will meet that need. 
‘‘(2) An assessment of the potential costs and 
benefits of the proposed rulemaking or final rule, in-
cluding an explanation of the manner in which the 
proposed rulemaking or final rule is consistent with 
a statutory requirement and avoids undue inter-
ference with State, local, and tribal governments in 
the exercise of their governmental functions. 
‘‘(3) A qualitative and quantitative assessment, 
including the underlying analysis, of benefits antici-
pated from the proposed rulemaking or final rule 
(such as the promotion of the efficient functioning of 
the economy and private markets, the enhancement 
of health and safety, the protection of the natural 
environment, and the elimination or reduction of dis-
crimination or bias). 
‘‘(4) A qualitative and quantitative assessment, 
including the underlying analysis, of costs antici-
pated from the proposed rulemaking or final rule 
(such as the direct costs both to the Government in 
administering the final rule and to businesses and 
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others in complying with the final rule, and any ad-
verse effects on the efficient functioning of the econ-
omy, private markets (including productivity, em-
ployment, and international competitiveness), health, 
safety, and the natural environment). 
‘‘(5) Estimates by the agency, if and to the ex-
tent that the agency determines that accurate esti-
mates are reasonably feasible, of— 
‘‘(A) the future compliance costs of the 
Federal mandate; and 
‘‘(B) any disproportionate budgetary ef-
fects of the Federal mandate upon any par-
ticular regions of the Nation or particular 
State, local, or tribal governments, urban or 
rural or other types of communities, or par-
ticular segments of the private sector. 
‘‘(6)(A) A detailed description of the extent of 
the agency’s prior consultation with the private sec-
tor and elected representatives (under section 204) 
of the affected State, local, and tribal governments. 
‘‘(B) A detailed summary of the comments and 
concerns that were presented by the private sector 
and State, local, or tribal governments either orally 
or in writing to the agency. 
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‘‘(C) A detailed summary of the agency’s eval-
uation of those comments and concerns. 
‘‘(7) A detailed summary of how the agency 
complied with each of the regulatory principles de-
scribed in section 201.’’. 
(b) REQUIREMENT FOR DETAILED SUMMARY.—Sub-
section (b) of section 202 of such Act is amended by in-
serting ‘‘detailed’’ before ‘‘summary’’. 
SEC. 10. ENHANCED STAKEHOLDER CONSULTATION. 
Section 204 of the Unfunded Mandates Reform Act 
of 1995 (2 U.S.C. 1534) is amended— 
(1) in the section heading, by inserting ‘‘AND 
PRIVATE SECTOR’’ before ‘‘INPUT’’; 
(2) in subsection (a)— 
(A) by inserting ‘‘, and impacted parties 
within the private sector (including small busi-
ness),’’ after ‘‘on their behalf)’’; and 
(B) by striking ‘‘Federal intergovernmental 
mandates’’ and inserting ‘‘Federal mandates’’; 
and 
(3) by amending subsection (c) to read as fol-
lows: 
‘‘(c) GUIDELINES.—For appropriate implementation 
of subsections (a) and (b) consistent with applicable laws 
and regulations, the following guidelines shall be followed: 
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‘‘(1) Consultations shall take place as early as 
possible, before issuance of a notice of proposed rule-
making, continue through the final rule stage, and 
be integrated explicitly into the rulemaking process. 
‘‘(2) Agencies shall consult with a wide variety 
of State, local, and tribal officials and impacted par-
ties within the private sector (including small busi-
nesses). Geographic, political, and other factors that 
may differentiate varying points of view should be 
considered. 
‘‘(3) Agencies should estimate benefits and 
costs to assist with these consultations. The scope of 
the consultation should reflect the cost and signifi-
cance of the Federal mandate being considered. 
‘‘(4) Agencies shall, to the extent practicable— 
‘‘(A) seek out the views of State, local, and 
tribal governments, and impacted parties within 
the private sector (including small business), on 
costs, benefits, and risks; and 
‘‘(B) solicit ideas about alternative meth-
ods of compliance and potential flexibilities, and 
input on whether the Federal regulation will 
harmonize with and not duplicate similar laws 
in other levels of government. 
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