Unfunded Mandates

During the past 20 years, state, local, and tribal governments have raised concerns about the costs associated with federal regulations. As a result, Congress has passed several statutes to overhaul the process federal agencies use to develop and issue regulations. Some of these statutory requirements are found in title II of the Unfunded Mandates Reform Act of 1995. GAO found that title II has had little direct effect on federal agencies' rulemaking during the first two years of its implementation. GAO reached this conclusion for three reasons. First, many of the act's requirements did not apply to the most economically significant rules promulgated during this period. Second, the act contains exemptions that allowed agencies to avoid taking actions if they determined that the actions were duplicative or not "reasonably feasible." Third, the act required agencies to take certain measures that they were already required to take or had completed or that were already under way.

GAO noted that: (1) the enactment of title II of UMRA appears to have had only limited direct impact on agencies' rulemaking actions in the first 2 years since its implementation; (2) most of the economically significant rules promulgated during UMRA's first two years were not subject to the requirements of title II; (3) title II contains exemptions that allowed agencies not to take certain actions if they determined that the actions were duplicative or not reasonably feasible; (4) written statements were not on file at the Congressional Budget Office for 80 of the 110 economically significant rules promulgated in the first 2 years of UMRA's implementation; (5) GAO concluded that UMRA did not require written statements for 78 of these 80 rules; (6) some of the rules did not have an associated notice of proposed rulemaking; (7) many did not impose an enforceable duty other than as a condition of federal financial assistance or as a duty arising from participation in a voluntary program; (8) others did not result in expenditures of $100 million by the state, local, and tribal governments, in the aggregate, or by the private sector in any 1 year; (9) the written statements that agencies prepared for 30 of the economically significant rules appeared to meet most of the UMRA requirements for those statements; (10) in almost every case, the written statements were not separate documents specifically prepared to comply with UMRA but were the rules themselves and any associated economic analysis; (11) also, sections 202 and 205: (a) give agencies discretion in how they can comply with the requirements; and (b) are similar to requirements in previous statutes and Executive Order 12866, which was issued in 1993; (12) during the first 2 years of UMRA's implementation, the requirement in section 204 of the act that agencies develop a process to consult with state, local, and tribal governments before promulgating any significant federal intergovernmental mandate appears to have applied to no more than four Environmental Protection Agency rules and no rules from other agencies; (13) section 203 small government plans were not developed for any of the 73 final rules promulgated during the first 2 years of UMRA implementation; (14) officials in the four agencies that GAO contacted said none of their final rules had a significant or unique effect on small governments; and (15) the Office of Management and Budget designated three UMRA pilot programs in two agencies, but none of these efforts appears to have been initiated because of UMRA.