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The delicate balance - federal preemption and regulation of state and local governments.

Throughout the world, nations are turning to the United States as a model for their emerging local democracies. As the former central powers of Europe, Africa, South America and Asia give up control of local governments, every aspect of these intergovernmental systems is subject to review and reform. Nations undergoing change are attempting to define the appropriate balance of power among the levels of government as they sort out the division of responsibilities and the wherewithal to pay for the costs of governing.

How ironic it is that at the same time others are looking to the American federal system for guidance, many scholars and policy makers in the United States are questioning recent trends in the relationships among the various levels of governments and calling for change. With alarming frequency the federal government is preempting state and local powers, mandating certain programs for states and localities to carry out and finance, and regulating state and local activities. In the eyes of many, the American federal system is out of balance.

The concern about loss of state and local government autonomy has prompted several actions at the federal level.

* Seventeen members of the House of

Representatives introduced H.R. 3344 in

September 1991 to establish a National

Commission on Intergovernmental Mandate

Reform that would document

federal mandates, estimate their costs,

establish criteria for totally or partially

eliminating mandates or reforming them

to relieve burdens on state and local

governments and make recommendations

to the Congress and the President.

* Representative Doug Barnard (D-GA)

has introduced a bill (H.R. 1547) that is

designed to ensure that federal legislation

imposing costs on state and local

governments is not passed without

analysis and debate of its consequences

and to provide for the reimbursement of

certain costs. Another Barnard bill (H.R.

1546) would permit a House member to

raise a point of order against most bills

that would impose unreimbursed costs.

* In November, Senators Carl Levin

(D-MI) and Dave Durenberger (R-MN)

introduced S. 2080, a bill that would

require any federal statute to state

explicitly Congress' intent to preempt

state and local government powers

before the courts and federal agencies

could invalidate or prohibit any state or

local government law, ordinance or

regulation. The House companion, H.R.

4613, has been introduced by Representative

Craig Thomas (R-WY).

* President Bush, in his 1992 State of the

Union address, ordered a 90-day moratorium

on new regulations and review of

existing rules. He also said,

We must put an end to unfinanced

federal government mandates. These

are the requirements Congress puts

on our cities, counties and states--without

supplying the money. And if

Congress passed a mandate, it

should be forced to pay for it, and

to balance the cost with savings elsewhere.

After all, a mandate just

increases someone else's burden--and

that means higher taxes at the

state and local level.

* More recently, Senator Connie Mack

(R-FL) has introduced mandate relief

legislation. S.2349 would require the

federal government to pay for certain

costs of mandates and S. 2348 would

permit a senator to raise a procedural

point of order and stop any legislation

on unfunded mandates from coing to the

floor for a vote.

GFOA Policy Positions

GFOA policy positions support the efforts of federal lawmakers to control federal preemption and limit costly regulations and mandates.

In a position adopted in 1990 in response to efforts to expand the federal Railroad Revitalization and Regulatory Relief Act, which grants special property privileges to the railroad industry and preempts state and local government taxing authority, GFOA said,

Federal intervention in areas that

rightfully belong to state and local

governments cannot be condoned.

Where the federal government has a

legitimate policy concern, it should

work with state and local governments,

who are partners with the

national government in our federal

system of government.

This policy is rooted in the Constitutional principle of balance of power. Since the Constitution assigns certain responsibilities to the federal government and reserves the balance to the states, GFOA feels the federal government should not unduly limit states' autonomy and usurp state and local governments' authority to perform their functions and meet the needs of their citizens who are also the citizens of the United States.

On the subject of regulatory relief, a 1984 GFOA policy supports reductions in the burdens of federal mandates by

* reimbursing state and local governments

for the direct costs they incur in complying

with new regulations,

* requiring a reduction in existing costs

either by reimbursement of the costs or a

reduction of the regulatory requirement


* requiring the President to prepare an

annual report estimating total costs

incurred by state and local governments

in complying with regulations.

Similarly, GFOA is concerned about the impact of mandates on state and local governments that impose costs by reducing these governments' revenue base or requiring programs or minimum service levels. To ease these burdens, GFOA policy recommends that

* a fiscal note accompany proposed legislation

to disclose and assess the fiscal

burden being mandated,

* adequate time be provided so that

affected governments can make the

resource and administrative

accommodations necessary to comply

with the mandate and

* funding be provided or an alternative

revenue source be authorized by the

mandating jurisdiction to defray the

mandated costs.

Studies of Federal-State-Local Relations

The expansion of federal authority over state and local governments is the subject of three forthcoming studies from the Advisory Commission on Intergovernmental Relations (ACIR), a permanent national bipartisan body representing the executive and legislative branches of federal, state and local government and the public which monitors the operation of the American federal system and recommends improvements.

The first report, Federal Preemption of State and Local Authority, scheduled for release this summer, updates previous reports recommending limitations on federal preemption. The purpose of the new work is to carry forward previous studies by

* defining federal preemption clearly,

* presenting a new inventory of federal

preemption statures,

* setting forth topologies of federal preemptions

and the mechanisms used to

implement them,

* recording the view of certain state

officials concerning the topic,

* drawing conclusions about the appropriate

scope of federal premption and

use of implementation mechanisms and

* offering new recommendations for

soothing the inevitable tensions that

surround federal preemptions.

According to the ACIR, federal preemption has several aspects. It may mean to

* prohibit or invalidate the exercise of

powers in the United States Constitution

reserved to states and the powers delegated

to local governments by states,

* mandate substitution of federal standards

or procedures for state or local

government standards or procedures,

* require the creation, elimination or alteration

of any program, service or

function of state or local government, or

* condition the receipt of federal funds by

state or local governments on the

adoption of uniform implementation

standards or procedures.

In a 1987 study on preemption, ACIR found that federal preemption, while a necessary feature in the design of a federal system, ought to be minimized and used only as necessary to secure the effective implementation of a national policy adopted pursuant to the Constitution.(1) To this end, the ACIR has sought to develop safeguards to protect state and local governments from an excessive amount of federal preemption.

Another dimension of American federalism under review by the ACIR is intergovernmental regulation. An update of its 1984 report, Federal Regulation of State and Local Governments: Regulatory Federalism--A Decade Later, is expected this fall. The purpose of this update is to

* raise important questions about regulatory


* review the elements and impact of relief


* inventory new regulatory statutes,

* examine the costs of new regulatory

statutes and

* probe the judiciary's role in intergovernmental


Since the 1970s there has been a rapid rise in intergovernmental regulation with the number and specificity of requirements changing. Even though the federal government has sought to restrain intergovernmental regulation, the adoption of new regulatory enactments has not diminished. According to ACIR, four types of regulation can be identified:

* crosscutting requirements--requirements

applied to many or all federal grants

across-the-board to advance national

social and economic goals;

* crossover sanctions--grant conditions

that impose federal fiscal sanctions in

one program area for failure to comply

with federal requirements under another

--separately authorized--program;

* partial preemptions--federal laws establishing

minimum national regulatory

standards under which administrative

responsibilities may be delegated to

states and localities; and

* direct orders--direct legal requirements

imposed by the federal government upon

states and localities, enforced by civil or

criminal penalties.

This leads to the subject of mandates. A federal mandate is any legal requirement--Constitutional provision, statutory provision or administrative regulation--requiring state and local governments to undertake a specific activity and/or provide a service meeting minimum federal standards. The issue of reimbursement of costs incurred by state and local governments as a result of federal mandates is the subject of a third ACIR study, Federally Induced State and Local Government Costs, expected by year end.

Strategies for Limiting Preemption

One of the first steps toward better understanding federal preemption and federal regulation of state and local governments and mandated costs is to inventory existing laws and monitor recent developments. The National Conference on State Legislatures (NCSL) is performing such a service through the publication of Mandate Monitor, a guide to all congressional bills imposing costly mandates on state and local government. Published on a regular basis, the monitor provides a database that records the changing status of legislation containing federal mandates on state and local government. As of March 1992, NCSL has tallied 137 mandate bills in the 102nd Congress.

Restoring balance in the federal system will take time. The imbalance of the federal budget has been one of the major causes of the acceleration of federal power over state and local governments. Without the money to put programs in place, the federal government has relied on mandates without money to achieve its policy goals. Relief is probably a long way off, but there is growing recognition at the federal level of the burdens being shifted to state and local governments. In the meantime, individual state and local governments can document the cost impact of mandates and share that information with federal policy makers.


(1) Federal Preemption of State and Local Authority," Intergovernmental Perspective, Winter 1988, p. 23.

Author Cathy Spain is director of the GFOA Federal Liaison Center. For more information about the ACIR studies call 202/653-5540. Subcriptions to the Mandate Monitor are available by calling 202/624-8695.
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Author:Spain, Cathy
Publication:Government Finance Review
Date:Jun 1, 1992
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