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Regulatory Reform Issues
(Released October 1998)


Review Article

The first Congressional Research Service (CRS) Report, Federal Regulatory Reform: An Overview (September 2, 1998) addresses Congressional efforts to reduce the cost and burden of regulations by reforming the regulatory process.

The second CRS report, The Role of Risk Analysis and Risk Management in Environmental Protection (July 20, 1998) looks at efforts to utilize mathematical evaluations of hazards and their potential effects in environmental protection programs of the federal government.

The third CRS report, Federalism Legislation in the 105th Congress: A Descriptive Overview (September 11, 1998) summarizes the debate over the appropriate relative roles of the federal government and states in governing issues such as environmental protection.

The Congressional Research Service is an arm of the Library of Congress and is no way affiliated with the CNIE, CSA or any other organization.

© Copyright 1998, All Rights Reserved, CSA


CRS Reports

Federal Regulatory Reform: An Overview


The 105th Congress is continuing earlier efforts to reduce the cost and burden of regulations by reforming the regulatory process. Although no major regulatory measures were enacted during the 1st session, the 2nd session is expected to focus its efforts on S. 981, a comprehensive regulatory procedural reform bill designed to enhance and consolidate earlier accomplishments. These efforts may prove as contentious as similar efforts in the 104th Congress. The 104thCongress passed several procedural measures designed to reduce regulatory costs while improving the effectiveness and efficiency of the regulatory process but blocked more comprehensive measures that many feared would undermine existing health, safety, and environmental standards.

Current congressional efforts focus on enhancing and consolidating the several major procedural or process reform measures enacted during the 104th Congress. These include agency use of cost-benefit or cost-effectiveness analysis when developing major regulations, which was incorporated into the statute constraining the number of unfunded mandates (P.L. 104-4); congressional review of major regulations, and judicial review of the regulatory flexibility analysis tool designed to reduce the impact of regulations on small businesses (P.L. 104-121); the accounting statement by the Office of Management and Budget on the cumulative costs and benefits of regulatory programs and the costs and benefits of major regulations (P.L. 104-208); and a specific reduction in paperwork burdens over the next 6 years (P.L. 104-13).

The last 20 years have witnessed a significant increase in the number and scope of federal regulations focusing on health, safety, and environmental matters. These "social"regulations, while providing substantial benefits, can also impose significant costs. Congress and the President have taken a number of actions to reduce those costs.

The most significant presidential action occurred in 1981, when President Reagan issued Executive Order 12291, requiring federal agencies to prepare cost-benefit analyses when developing regulations. The Order established a centralized review and clearance procedure in the Office of Management and Budget (OMB) to assure that only cost-effective and necessary regulations were issued. In 1993 President Clinton issued Executive Order 12866, modifying slightly the review and clearance policy, while continuing the cost-benefit analysis requirement and the centralized review and clearance of regulations by OMB.

During the same period, Congress passed legislation abolishing certain economic regulation of various sectors of the transportation, telecommunications, and banking industries, as well as amending the Paperwork Reduction Act (1980) and Regulatory Flexibility Act (1980). Various comprehensive reform bills also were considered, but failed to pass both houses.

Although general agreement exists regarding the need to reduce regulatory costs and burdens, disagreement exists over how it can best be accomplished. Contending parties are split by philosophical differences over the amount of regulation needed, how to determine that need, and how to assure that only the most cost-effective regulations are issued.

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The Role of Risk Analysis and Risk Management in Environmental Protection


The Senate Committee on Governmental Affairs reported the Regulatory Improvement Act of 1998 (S. 981), amended, May 11, 1998. The 105th Congress also is considering other proposals to ensure that environmental programs manage the greatest risks to human health and the environment in a cost-effective manner. Risk-based provisions are included in bills reauthorizing Superfund (e.g., S. 8, Subcommittee-approved H.R. 2727, H.R. 2750, and H.R. 3000).

Risk analysis is the systematic evaluation of hazards and their possible effects. Views on the potential uses of risk analysis differ. Although, most experts and policymakers agree that risk analysis is a valuable tool to inform decisions, they disagree, about the extent to which risk estimates inevitably are biased and should be allowed to influence public policies for health and environmental protection.

Some Members, many academics, and regulated industries argue that risk analysis is objective and reflects sound science. They argue it should be used to target federal programs to address the worst risks to health and the environment first, to achieve risk reduction in more cost-effective and flexible ways that minimize overall economic impacts, and to ensure that risk reduction achieved by regulations is worth the cost.

Other Members, some academics, and many environmentalists argue that excessive reliance on risk analysis, especially quantitative analysis, to evaluate problems and solutions ignores other important facets of policy decisions, such as timeliness, fairness, effects on democratic rights and liberties, practicality, morality, reversibility of effects, regulatory stability, flexibility, or aesthetic values. Critics charge that quantitative methods cannot assess very long-term or newly discovered threats. They also believe that quantitative cost-benefit analyses undervalue environmental and health benefits, exaggerate costs, and focus on relatively widespread but individually small costs and risks rather than on much larger costs and risks to smaller, and often more vulnerable, groups.

The quality of risk analysis depends on adequacy of data and validity of method. For environmental hazards and most health and ecological effects, there are few data, and methods are controversial.

S. 981, as reported, addresses all risk analyses that the Office of Management and Budget determines have a potentially significant policy impact, as well as risk and economic analyses of proposed and final environmental rules with expected annual cost of at least $100 million. S. 981 has bi-partisan support, but also faces significant opposition. Senator Lott introduced a risk-only version of the bill, S. 1728, on March 6, 1998. The House Judiciary Committee reported H.R. 1704 March 13, 1998 (H.Rept 105-441), and the House Committee on Government Reform and Oversight approved the bill May 21, 1998. It proposes establishing a Congressional Office of Regulatory Analysis to analyze major rules and non-major rules at the request of a Member of Congress.

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Federalism Legislation in the 105th Congress: A Descriptive Overview


Since ratification of the Constitution established a union of states under a federal system of government, two questions have generated perennial debate: What is the nature of the Union? What powers, privileges, duties, and responsibilities does the Constitution grant to the national government and reserve to the states? American Federalism balances a national government empowered with certain authority, duties, and responsibilities with state governments and individual rights. One scholar referred to the balance as one of "permanent points of tension."

Since President Franklin D. Roosevelt's New Deal, the federal government's role in domestic policies has expanded into areas previously considered the purview of states and localities. This expansion has been accompanied by cooperation as well as acrimony. Some have characterized the change as intrusive, unconstitutional, and inefficient; others argue that considerable social benefits have been achieved because of the shift. Court decisions, economic conditions, and social and political events have all shaped today's federalism environment.

In recent years, some have argued that greater authority should be exercised by the states and that the federal role should be circumscribed. To this end the 104th Congress passed legislation that 1) encourages Congress to consider the costs of federal legislation and regulations to nonfederal units of government and the private sector (Unfunded Mandates Reform Act of 1995, P.L. 104-4); and 2) reformed federal welfare authority to allow States and localities to administer income support programs (Personal Responsibility and Work Opportunity Act of 1996, P.L. 104-193). The welfare reform amendments transformed the entitlement program into a block grant (Temporary Assistance for Needy Families) and gave states greater administrative discretion.

Despite these examples of devolution, certain authorities were maintained at the federal level by the 104th Congress. Welfare reform requires that states establish registries to track absent parents and meet requirements concerning unwed mothers. Other legislation requires that states adhere to federal sentencing requirements in order to receive prison construction funds (Section 114 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996, P.L. 104-134), and imposed national standards governing chemical residue allowed on food (Food Quality Protection Act of 1996, P.L. 104-170).

The Supreme Court has become a focal point in defining the boundaries of American federalism. Advocates of "state centered federalism" have successfully challenged the constitutionality of federal legislative actions and authority under the interstate commerce, state sovereign immunity, and reserved powers provisions of the Constitution. Two decisions issued in June 1997 are pertinent. The Court upheld a constitutional challenge to the Brady Handgun Control Act of 1993, in Printz v. U.S., and in Boerne, Texas v. Flores, held the Religious Freedom Restoration Act to be unconstitutional, in part, because it infringed on state rights.

The 105th Congress will continue to debate actions that could fundamentally reconfigure contemporary federalism.

Most Recent Developments

The Senate, on September 2, 1998, approved the conference report to accompany H.R. 629, the Texas Low-Level Radioactive Waste Disposal Compact. The legislation would grant congressional approval of an interstate compact that provides for interstate transportation of low-level radioactive waste from Maine and Vermont to Texas. Critics contend that the compact ignores environmental dangers that will affect low-income residents of the area in which the waste would be stored. Supporters contend that state and local officials in all affected states approve of the compact and that it resembles 9 similar compacts previously approved by Congress.

On August 5, 1998, the President suspended Executive Order 13083, "Federalism." The suspended executive order, issued May 14, 1998, would have established new Administration policy regarding the balance of powers among the federal government and the states. Congress also took action. On August 4, 1998, the House passed appropriations legislation (H.R. 4276) for the Departments of Commerce, Justice, State and related agencies with an amendment that prohibits funds to be used to implement the Executive Order. A similar provision was approved by the House on July 29, 1998, in the VA/HUD appropriations legislation (H.R. 4194).

Background And Analysis

Over the 210 years since the U.S. Constitution was drafted in 1787, public officials and others have debated time and again how to allocate responsibility, authority, and power between the states and the federal government. Ratification of the Constitution did not settle the debate. Ambiguities in constitutional language and decisions by the Supreme Court have kept the question in the congressional arena for more than two centuries. This issue brief discusses how that debate, as embodied in legislation before the 105th Congress, may affect the balance of responsibility, authority, and power between the states and the federal government.

Federalism is a system of governance in which sovereignty is shared between two or more levels of government. On some matters the national government is supreme; on others the state, provincial, or regional governments are supreme. Three essential features characterize a federal system of governance:

  • two or more levels of government act simultaneously on the same territory and the same citizens;
  • each level of government has its own authority and sphere of power, though they may overlap;
  • and neither level of government can abolish the other.
The Constitution of the United States recognizes both a national government and state governments. The Constitution vests responsibility and authority for certain functions, such as foreign affairs and national defense, solely in the national government. Other powers, such as the power to regulate interstate commerce and the power over copyrights and patents, are delegated to the national government, but the states are not constitutionally barred from sharing in these powers. The Constitution grants the national government the authority to enact laws "necessary and proper" to carry out its delegated authority and responsibilities, and it further strengthens the power of the national government by declaring the U.S. Constitution, laws, and treaties to be supreme when federal and state authority conflict or, even in the absence of conflict, simply when Congress chooses to exercise exclusive power.

The Constitution does not delineate the role and powers of the states beyond requiring a republican (representative) form of government and prohibiting a change in state borders without the consent of Congress and the affected states. It reserves to the states and people unspecified powers not granted to the national government. Further, it grants to the people certain protections and rights that cannot be abridged by federal or state governments.

In recent years, advocates who emphasize the role of the states have won a number of legislative and Supreme Court victories. They favor the view that the Constitution created a league of sovereign states and a federal government with limited powers and responsibilities. They espouse the authority of each state government to establish its own standards or protections for its residents. They share the Jeffersonian or anti-federalist view that the "mass of human affairs may be best managed" by states and their counties and localities. The assumption is that even if states and their units of local government are not able to govern perfectly, the administration of government at those levels is preferable to that of a centralized federal government.

Advocates who emphasize the role of the national government espouse the need for consistent national domestic policies and minimum national standards. Proponents of this view share Madisonian or Hamiltonian concerns about factional state politics and the tyranny of local majorities (For example, see a paper on the Twentieth Century Fund's web site at They favor the view that the Constitution grants broad authority to the national government. To support their position they point to such constitutional provisions as

  • the supremacy clause of Article VI;
  • provisions of Article I, Section 8, related to the "general welfare of the United States," laws "necessary and proper," and the regulation of commerce "among the several States"; and
  • the "equal protection" and "due process" clause of Amendment XIV, Section 1.
The issues surrounding the balance of power between state governments and the federal government are sometimes debated in absolute terms: one is a proponent either of state dominance or of national dominance. But since the enactment of New Deal legislation sixty years ago, it is often argued that effective federalism involves gradations and mixes of federal and state authority. Some federal block grant programs, for example, seek to balance national and state concerns by establishing national goals while giving states considerable discretion and autonomy in program implementation.

Contemporary congressional debate about federalism-related issues will take place within the context of the federal budget. Efforts to reduce the federal budget deficit and balance the budget will have a significant impact on intergovernmental fiscal relations. Supporters of a balanced federal budget argue that congressional approval of a constitutional amendment to require a balanced budget by the year 2002, if ratified by the states, would lead to economic expansion. Opponents contend that it would constrain federal spending and shift fiscal pressure to states and other subnational units of government. State and local policymakers would be left to grapple with such options as restricting eligibility and access to certain benefits, increasing state and local taxes and spending in order to fill the gap, or abandoning certain activities completely. For example, governors attending the National Governors Conference in early February 1997, voiced concern that a proposal to place a cap on the federal share of Medicaid spending would result in increased state expenditures.

In formulating domestic policies, the 105th Congress has wrestled with balancing federal and state responsibilities, duties, and prerogatives while providing for greater state autonomy in some areas and less in others. Proposals to devolve certain authorities to the states or their local governments, to require matching funds from grantees, eliminate federal funding, or enact unfunded mandates may gain support because they would reduce federal expenditures. Policymakers concerned with balancing the federal budget may support legislation that devolves authority and funding responsibility to states. However, Congress may also act in favor of national concerns. For example, the agreement in the closing days of the 104th Congress to auction part of the communications spectrum used by public safety agencies was approved over the objections of state and local representatives because those funds were needed to pay for expenditures sought in the omnibus reconciliation act of 1996 (P.L. 104-193). The 105th Congress may revisit the issue of spectrum sales.

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