Federalism

The Federalism Accountability Act of 1999 (S. 1214) addresses issues affecting intergovernmental relations, including the rules of construction regarding preemption, legislative requirements, agency rulemaking requirements, and performance measures for state-run federal grant programs. This testimony focuses on the agency rulemaking and performance measurement requirements. GAO discusses two earlier initiatives by Congress and the executive branch that were, like section 7 of the bill, designed to highlight the impact of federal rules on state and local government. Past GAO work showed the limited effect of those initiatives, which suggests a need for this section of the proposed legislation. GAO also points out similarities and differences between the bill and the executive order. Finally, GAO comments on the experience of one agency in setting the type of goals and performance measures with states in a federal grant program that are contemplated in section 8 of the bill.

GAO noted that: (1) during the past 20 years, state, local, and tribal governments as well as businesses have expressed concerns about congressional and regulatory preemption of traditionally nonfederal functions and the costs of complying with federal regulations; (2) the executive and the legislative branch have each attempted to respond to these concerns by issuing executive orders and enacting statutes requiring rulemaking agencies to take certain actions when they issue regulations with federalism or intergovernmental relations effects; (3) two prime examples of these responses are Executive Order 12612 and the Unfunded Mandates Reform Act of 1995 (UMRA); (4) GAO's work showed that Executive Order 12612 had relatively little visible effect on federal agencies' rulemaking actions during this timeframe; (5) agencies covered by the order mentioned it in the preambles to about 26 percent of the 11,414 final rules they issued between April 1996 and December 1998; (6) however, mentioning the order in the preamble to a rule does not mean the agency took any substantive action; (7) the agencies usually just stated that no federalism assessment was conducted because the rules did not have federalism implications; (8) the preambles to only 5 of the 11,414 final rules that the agencies issued between April 1996 and December 1998 indicated that a federalism assessment had been done; (9) many of the final rules that federal agencies issue are administrative or routine in nature and therefore unlikely to have significant federalism implications; (10) the criteria the agencies used to determine whether federalism assessments were needed varied among the agencies; (11) Office of Management and Budget officials told GAO that they had taken little specific action to ensure implementation of the executive order, but said the order is considered along with other requirements as part of the regulatory review process under Executive Order 12866; (12) GAO reported that requirements in title II of UMRA appeared to have had only limited direct impact on agencies' rulemaking actions in the first 2 years of the act's implementation; and (13) GAO believes that working with state and local governments or their representative organizations to develop goals and performance measures in federal grant-in-aid programs can strengthen the intergovernmental partnerships embodied in those programs.