Congress Considers a Less Burdensome Regulatory Process

When the U.S. House of Representatives passed the Unfunded Mandates Information and Transparency bill in February, it took an important step toward ensuring the federal government considers the cost of regulations it places on state, tribal and local governments.

The bipartisan legislation, sponsored by Rep. Virginia Foxx of North Carolina and Rep. Loretta Sanchez of California, targets loopholes in the Unfunded Mandates Reform Act of 1995, also known as UMRA, which allows some regulatory agencies to circumvent public reporting requirements and avoid publicizing regulatory proposals. Similar legislation has passed the House with bipartisan support on four separate occasions. 

In 1995, President Bill Clinton signed the Unfunded Mandates Reform Act into law in an effort to improve regulatory practices and to bring more transparency to regulatory initiatives. The act requires federal agencies to provide a cost-benefit assessment and analyze the macroeconomic effects of a federal mandate before publishing a final rule. For rules estimated to cost more than $100 million, UMRA requires the agency to consider a reasonable number of regulatory alternatives; select the least costly, least burdensome or most cost-effective option that achieves the objectives of the rule; or explain why the agency did not make such a choice.

While well intentioned, the Unfunded Mandates Reform Act had several weaknesses that were exploited by regulators and frustrated the legislation’s objective of keeping unfunded mandates off the backs of local governments and taxpayers. The Unfunded Mandates Information and Transparency bill seeks to remedy these weaknesses by closing loopholes and exemptions, while also adding teeth to the existing law. 

“Americans are better served when regulators are required to measure and consider the costs of the rules they create. The Unfunded Mandates Information and Transparency Act is simply about making government work better for the American people by requiring openness and honesty from Washington,” said Foxx.  “Transparency and accountability are not partisan issues. It’s my hope that the bipartisan manner in which this legislation passed the House will pave the way for swift consideration and passage in the Senate.” 

With a majority of Republicans in the Senate and strong support from interest groups like the U.S. Chamber of Commerce, the odds the Senate may consider this legislation now are increasing, but passage in that chamber is far from guaranteed. Some opponents of the bill argue that it would fail to streamline the regulatory process and may even make it more difficult for agencies to implement laws.

The earlier enacted Unfunded Mandates Reform Act did not apply to all agencies. Moreover, the analysis required by the law applies only to regulations that are subject to a notice of proposed rulemaking, which incentivizes regulators not to seek public comments on rules in order to circumvent UMRA. The General Accounting Office found that nearly half of all final rules are not first published in the Federal Register as a notice of proposed rulemaking. The Unfunded Mandates Information and Transparency bill would fix these problems by targeting all agencies and requiring a cost analysis for all final rules, regardless of whether or not they were subject to a notice of proposed rulemaking. 

The bill allows Congress greater authority to explore the cost of existing rules by granting committee chairs and ranking members the authority to request an agency conduct a retrospective analysis of the costs and benefits of an existing regulation, including studies done outside the federal government. It also requires agencies to include details about their regulatory consultation activities with state, tribal and local governments and the private sector in their annual reports to Congress.  

Additionally, the bill requires the federal government to report how legislative changes to existing grant programs potentially could shift costs to state, tribal and local governments. Grant programs administered by states can be amended by federal legislation, and the Unfunded Mandates Information and Transparency bill requires the federal government to report how such changes would impact state or local government budgets.  

The bill also allows for judicial review by allowing the courts to place a stay on regulations or invalidate rules if the originating agency fails to complete the required statutory analysis. Susan Dudley, former administrator of the Office of Information and Regulatory Affairs, advocated in testimony before the House Committee on Oversight and Government Reform for expanding judicial review in this way to give agencies a greater incentive to carefully consider the “least costly, most cost-effective or least burdensome alternative” when proposing regulations.

“This bill will further protect state and local governments from unfunded mandates that are unnecessary and costly,” said Sanchez in a July 2013 press release. “These unfunded mandates waste time and money for our local government systems. Our bill will require public reporting by federal agencies on these mandates and will hold the federal government more accountable on how mandates may cost local governments.”