March 27, 2014
The federal government, through laws and regulations, sometimes imposes requirements—known as federal mandates—on state, local, and tribal governments and entities in the private sector to achieve national goals. In 1995, lawmakers enacted the Unfunded Mandates Reform Act (UMRA) in part to ensure that, during the legislative process, the Congress receives information about the potential effects of mandates as it considers proposed legislation. To that end, UMRA requires CBO, at certain stages in the legislative process, to assess the cost of mandates that would apply to state, local, and tribal governments or to the private sector. This report, which is part of an annual series that began in 1997, summarizes CBO’s activities in 2013 under UMRA.
How Is a Mandate Defined in UMRA?
UMRA defines a mandate as any provision in legislation that, when enacted, would do one of the following:
- Impose an enforceable duty on state, local, or tribal governments or on private-sector entities;
- Reduce or eliminate an authorization of appropriations to cover the costs of complying with existing mandates;
- Increase the stringency of conditions that apply to the provision of funds to state, local, or tribal governments through certain large mandatory programs or make cuts in federal funding for those mandatory programs if the affected governments lack the flexibility to alter the programs.
Duties that arise from conditions of federal assistance or that are tied to participating in voluntary federal programs generally are not considered mandates as defined in UMRA.
What Does UMRA Require of CBO?
The law requires CBO to prepare mandate statements for bills and joint resolutions that are approved by authorizing committees. When requested, the agency also reviews legislation at other stages in the legislative process for intergovernmental and private-sector mandates. As a part of its review of legislation, CBO must determine whether the aggregate direct costs of the mandates would be greater than the statutory thresholds established in UMRA and identify any funding that the bill would provide to cover those costs. In 2013, the thresholds, which are adjusted annually for inflation, were $75 million for intergovernmental mandates and $150 million for private-sector mandates.
How Many Bills Reviewed by CBO in 2013 Contained Mandates?
CBO found that most of the legislation the Congress considered in 2013 contained no mandates as defined in UMRA. Of the 437 bills CBO reviewed in 2013, 39 (9 percent) contained intergovernmental mandates and 53 (12 percent) contained private-sector mandates. Both percentages are lower than the averages for the 2009–2012 period, which were 15 percent for intergovernmental mandates and 19 percent for private-sector mandates. Most of the mandates that CBO identified in 2013 would not have imposed costs that exceeded the thresholds. Only one bill included an intergovernmental mandate with estimated costs above the threshold, and 10 bills contained private-sector mandates that would have imposed costs that were estimated to exceed the threshold.
Occasionally, CBO cannot determine whether the cost of the mandates in a bill would exceed the annual cost thresholds. In most cases, the reason for that conclusion is uncertainty about the scope of a mandate—the number of people or entities affected, the extent of the requirements they would face, or both. Such uncertainty generally arises because of insufficient information about the contents of regulations that a bill might require. Legislation might give a federal agency broad discretion in issuing regulations, and without information on the scope of the regulations to be issued, CBO cannot estimate with any confidence the cost of the bill’s requirements at such an early stage. In 2013, CBO could not determine the annual costs of private-sector mandates in 4 bills (1 percent of the bills reviewed).
How Many Public Laws Enacted in 2013 Contain Mandates?
In addition to examining bills during the legislative process, CBO reviews public laws enacted each year for intergovernmental and private-sector mandates. Of the 72 public laws enacted in 2013, 3 (4 percent) contain intergovernmental mandates and 8 (11 percent) contain private-sector mandates.
Public laws generally contain fewer intergovernmental mandates than private-sector mandates. In the 17 years since UMRA became effective, CBO has identified 13 laws with intergovernmental mandates that have costs estimated to exceed the statutory threshold. The last such law was enacted in 2010; none of the public laws enacted in 2013 contain intergovernmental mandates with costs estimated to exceed the statutory threshold. Since 1996, CBO has identified private-sector mandates with costs estimated to exceed the threshold in 92 public laws, including 3 laws enacted in 2013. Those 3 laws contain 5 private-sector mandates, three of which extended government fees, one that increased premiums for mandatory federal insurance, and one that regulated dispensers of pharmaceuticals.