Mr. Moss. Mr. Chairman, not to invite a question on this, but also not to leave any misimpression, I should tell you that I have been present during a number of the discussions with the State and local governments which I regarded as very fruitful.

Chairman THOMPSON. How is it going?

Mr. Moss. I think we have had a very positive interchange, and we are working very hard, and I think we remain hopeful that we are going to be able to reach

Chairman THOMPSON. Have you decided, in trying to come up with an order that requires consultation with them, that you ought to consult with them?

Mr. Moss. Yes, Mr. Chairman.

Chairman THOMPSON. We have gotten over that hurdle.
All right. Is that a vote? [Pause.]

I am going to recess here just very briefly in order to go vote, and we will come right back. I am sorry. I was hoping we would be able to keep going, but it doesn't look like we are going to be able to. So we will recess hopefully just very briefly to have an opportunity to vote.

[Recess.]

Chairman THOMPSON. Let's come back to order here very briefly. Senator Roth has come in, and he has an introduction to make which will allow us to get started on our second panel. So, gentlemen, we want to thank you for being with us, and we will-I don't think we need to ask the whole second panel to come up, but you may go, if you would. Senator Roth will make an introduction to lead off our next panel.

OPENING STATEMENT OF SENATOR ROTH

Senator ROTH. I want to thank the Chairman for his courtesy. Please come up, Governor Carper. For me it is a great pleasure to introduce a distinguished Delawarean to the Committee today. And appearing as a witness for the second panel is Tom Carper. Tom is governor of the State we all affectionately call "the small wonder."

Now, I have known Governor Carper for many years, and we have had the opportunity of working on many issues of great importance to our beautiful State.

Tom has a very distinguished background. He served as Delaware's State treasurer from 1977 to 1983. In 1983, he came to Washington as a Congressman and spent almost a decade in that office before assuming the governorship in 1993.

Currently, the governor serves as chairman of the National Governors' Association, and his background as well as his responsibilities in this new role gives him a unique insight into the topic before our Committee today, the important issue of federalism.

Like many of us here, Governor Carper understands the special role of State government and the need to keep these governments strong and vital. He is such an expert on this area that he agrees with me and supports the Federalism Accountability Act.

So it is a great pleasure to welcome you here today, Governor Carper, and have you before our Committee. We look forward to

Governor CARPER. Mr. Chairman, thank you very much. I feel like this is a home game as opposed to an away game, and I am delighted to be here with you. It is great to see George Voinovich who preceded me as chair of the NGA and to see Senator Levin, whose brother I served with in the House on the House Banking Committee for a while.

I just want to say to you and to others on this Committee and the Senate, Democrats and Republicans alike, who have sponsored this particular bill that you are holding a hearing on, many thanks, many thanks.

I would ask permission, Mr. Chairman, if the full text of my statement might be entered into the record, and I would just like to summarize it if I could.

Senator ROTH. That will be fine. We will have to recess because we do have a vote on the floor. And so I am going to recess and go back, and the Chairman will return in just a few minutes.

Governor CARPER. That will give me time to rewrite my testimony. [Laughter.]

Senator ROTH. Again, we welcome you here.

Governor CARPER. Thanks. You are good to be here. I appreciate it, sir.

Senator ROTH. The Committee is in recess.

[Recess.]

Chairman THOMPSON. We will reconvene and turn to our second panel. The first witness will be the Hon. Thomas Carper, governor of Delaware, the chairman of the National Governors' Association, who has been introduced.

He will be followed by the Hon. John Dorso, Majority Leader of North Dakota House of Representatives, who is testifying on behalf of the National Conference of State Legislatures. Majority Leader Dorso testified before our Committee in May on the federalization of crime, and we are pleased to have him again with us.

The final witness on this panel will be the Hon. Alexander Fekete, who is the Mayor of Pembroke Pines, Florida, who is testifying on behalf of the National League of Cities.

Governor, I know you have to leave soon, so I thank you for being with us today, and we would be pleased to hear any statement you have to make.

TESTIMONY OF HON. THOMAS R. CARPER,1 GOVERNOR, STATE OF DELAWARE, AND CHAIRMAN, NATIONAL GOVERNORS' ASSOCIATION

Governor CARPER. Mr. Chairman, thanks very much. Could I ask that my printed statement be entered into the record?

Chairman THOMPSON. It will be made part of the record.

Governor CARPER. Thanks very much. Thank you for inviting us to come and letting us be here.

This is sort of the second bite out of the apple that the governors have had. Mike Leavitt of Utah was here I think earlier in the year and testified, and we appreciate the second chance. It is just great to be with Senator Voinovich. It is hard to call him Senator. He still thinks like a governor, and we are delighted that he is here.

1 The prepared statement of Governor Carper appears in the Appendix on page 306.

It is great to be with you. Sometime during my testimony you will hear me speaking, but you will see his lips moving. [Laughter.]

It has been that way for a while, hasn't it, George?

Senator VOINOVICH. Governor, I would like to say thank you for being here today, and I just want to say that there are some wonderful things that have happened in this session of the U.S. Congress because of the wonderful relationships that your organization and the other organizations and the Big 7 have developed with the leadership here in the Senate and in the House. Hopefully, we will keep following through with this legislation.

Governor CARPER. I hope so. I just want to say particularly to you, but to others as well, education flexibility, and your colleague from Tennessee, Bill Frist, was very good in that, tobacco recoupment, all kinds of issues, thank you very much for what you are doing.

I was sitting in the audience when some of the discussion from the last panel got off on the Executive Order that the administration has been working on. Senator Voinovich was then a governor. In fact, we were, I think, in Milwaukee getting ready for a governors meeting when the word came out that the administration was about to issue a new Federal Executive Order on federalism. We got on the phone and called the folks back here in the administration, asked them to back off-he says you haven't consulted with us at all, not the governors organization or any other organization to our knowledge, and we just asked them to back off and give us a chance to sort of revisit the issue. And they have been good about doing that, and we have had a real long conversation. And I think for the most part we have narrowed and eliminated our differences. There is still a difference on a key issue, and that is, I think, the 4(b) preemption. But other than that, I think they have met us halfway, and I am well pleased.

I am pleased to have a chance to come before you today, and I just want to sort of summarize my testimony for about the next 45 minutes. [Laughter.]

Not really.

Chairman THOMPSON. We are used to that.

Governor CARPER. When you had Mike Leavitt here, you had the governor who knows about this stuff. You got me, and I have learned from him and from George Voinovich.

I would like to share with you a couple points. First, is thank you for being our partner. Thank you for regarding us as a full partner, and we are real supportive of this legislation, as you know, and are delighted to see it has bipartisan support. We hope you can come up with something that the President can sign and that we can all benefit from.

If you look at the last decade, most recently education flexibility legislation, what you did on unfunded mandates, what you have done on child care, what you have done on welfare reform and some other areas, you have actually sort of devolved power back to the States. We think that is good, putting the power closer to the people and trying to hold us accountable, and that is the way it ought to be.

While devolution has sort of occupied center stage during the last

fare, and that is preemption of State and local laws. Sometimes we focus on the administration doing the preempting, but the Congress preempts, too. I used to be a Congressman, was for 10 years. I did my share of preempting. And, in fact, one of my primary antagonists was Senator Levin's brother, Sandy, and we did war on the House Banking Committee. I was trying to preempt some State laws. We were trying to work on-the issue of how long it takes you to get access to your money, your checking accounts, after you deposit a check? We call it clearing times, and I was trying to preempt some State laws. Sandy was trying to stop that or slow it down. In the end, we preempted and I think we came up with a good national policy.

So I sit before you today as one who has done a little preempting, but who sits as governor

Chairman THOMPSON. A reformed sinner. [Laughter.]

Governor CARPER. Reformed, that is right. What is it? Hate the sin, love the sinner. But there are times when it is appropriate to preempt, and I think what you are trying to do here is to say if there is a Federal law that we pass and if you got a State law over here that is inconsistent, before the Federal law preempts the State law, you have got to say here in Congress we mean to preempt you. And if you don't and we end up in court, then we sort of say to the courts, in that case you cede to the States. You basically yield to the States. And that is pretty much the way we think it ought to work.

Federal preemption of State laws has occurred as a result of not any kind of malicious desire on the part of anybody here in this body or across the Capitol to undermine State sovereignty. There is sometimes the unintended byproduct of other issues, and, unfortunately, that can be the same for States regardless of whether the motives are good or bad. Sometimes we have ended up with State and local authority decision-making reduced. We have seen a little bit of centralization of power here in Washington. Maybe more than is in the interest of our country.

As I said earlier, it is not just the agencies that preempt, but the Congress does as well.

I just learned this in preparing for my testimony. There is a service in the congressional legislative website. It is called Thomas. That is provided, and some of our folks looked it over to see if we could find the preemption in the titles of any bills that are coming before Congress. I am told it came up with 115, which is pretty impressive, 115. I don't know where they came up with the name Thomas.

Chairman THOMPSON. Just 1 day's work sometimes. [Laughter.] Governor CARPER. I would like to sit here before you today and say I think this situation is going to get better with respect to preemption. My guess is as we go forward and have more international competition and folks are trying to respond quickly to technological developments and people are trying to maximize opportunities that are created by deregulation and businesses seek to streamline legal and regulatory requirements, my guess is we might end up with greater problems with preemption. And I can understand businesses not wanting to contend with a whole myriad of State and local codes with our statutes and our rules that pre

vent them from being able to respond effectively to changes in the marketplace.

However, just as Federal laws and oversight serve important purposes that include preventing monopolies, raising revenues, and also financing Social Security, we think the State and local laws fulfill a variety of critical functions, too.

State and local taxing authorities provide funds. You know this as well as I do. We do it for education. We do it for the roads that you help us to build, for law enforcement, for health care, and for environmental protection, too. State banking, insurance, and security laws impose capital adequacy requirements and underwriting standards, licensing procedures that safeguard consumer deposits and investments and protect against fraud and against abuse.

We have State utility regulators that are trying to ensure our citizens get high-quality water and electric and sewage and telephone service and they get it at reasonable prices.

The important role of State laws and our regulatory responsibilities shouldn't be forgotten in the midst as we scramble to accommodate businesses and react to the forces of globalization, the forces of technology, and the forces of deregulation. Our States and our citizens, people you represent, too, stand to benefit as much as businesses from the changes that are being made, but not at the cost of continuing Federal preemption of State laws.

I want to thank you for the work that has been done on unfunded mandates, and I know that was done by a previous Congress, previous leadership of the NGA, but we are grateful for it. The legislation we are discussing here today is actually pretty similar to the unfunded mandates legislation that was enacted about 4 years ago. That legislation has been successful because it provides better information and analysis about unintended consequences of Federal action before they happen. I will say that again: Before they happen instead of after they happen. And your preemption bill is not dissimilar to that. It focuses on, as I understand it, providing information and ensuring consultation prior to action by either the Congress or by any Federal agency taking action with federalism implications.

I am happy to tell you today NGA supports your bill, S. 1214, Mr. Chairman. We urge you to schedule markup as soon as possible, maybe after this testimony is over today, maybe later this week, or maybe next month. But we would like for you to-we would encourage you to move forward with all due diligence.

There are a couple of changes we would like for you to think about making to the bill, and let me just mention them briefly.

First of all, I think in Section 5 the analysis required in Committee or conference reports you might want to consider expanding that a bit. We think it is important for Federal officials to understand the effects of legislative and regulatory preemptions on costs, on economic development, on consumer protection, and State and local enforcement authorities. We would ask you to keep that in mind with respect to Section 5.

Additionally, I think you have got a point of order. I think the unfunded mandates law includes a point of order. I don't believe