That's the foundation upon which we must look at the operations of our laws and programs today. How are we doing in preserving the delicate balance, the equilibrium and partnership between the Federal Government and State, local, and tribal governments?

Many of us in the Senate can appreciate this issue from both sides. We have served as either governors, mayors, or State legislators before coming to the Senate. I had the privilege of serving as the President of the Detroit City Council for a number of years before being elected to the Senate. And from that perspective, I know how important the Federal-State relationship is.

That relationship is affected most directly when we at the Federal level preempt State law, either explicitly or implied. If we do it explicitly, then we have to be sure we are not upending the equilibrium of the Federal-State relationship. We need to evaluate whether the Federal preemption is not only useful or beneficial, but whether it's necessary. There are times when most of us have voted to affirmatively preempt State laws, and we did so out of the belief that it was the right thing to do for the benefit of the American people. We have done that with respect to our clean air and clean water standards that know no geographic boundaries; we have done that with regulating trucks and vehicles that drive through any and all States in our Nation; we have done that in the area of communication. I supported those laws and those decisions to preempt.

But all too often we in Congress don't even address the issue of preemption when we legislate. We are silent about our intentions, and that silence requires both the Federal and the State and local agencies-and oftentimes the courts-to read the tea leaves, so to speak, to determine whether or not we in Congress intended to preempt State law. I think in those situations, the State and local governments should have the benefit of the doubt and the presumption should be that if Congress doesn't explicitly preempt, it does not intend to preempt. That's why for several Congresses I have introduced a bill to direct the courts not to find preemption if the statute doesn't explicitly require it. I hope we can make progress on that bill this Congress.

I believe that Federal preemption of State, local or tribal law should be an affirmative, eyes-open action, and not one that we happen to fall into because a court has found an implication somewhere in the legislative history.

For example, I am an original cosponsor of the Feinstein-Levin-Bryan bill, S. 678, which would protect consumers against "title washing" of automobiles. This bill was drafted in close coordination with a number of State attorney generals, including the Michigan Attorney General. We've included a very specific provision about how the bill would interact with State laws and regulations. We recognized in drafting the "title washing" bill that States including Michigan and California already have tough consumer laws on this subject and in this case, as is often true, they provided an excellent model for Federal standards.

I also introduced legislation to deter deceptive sweepstakes mailings, and I cosponsored a bill on the same subject with Senator Collins. We've been careful not to inhibit the States from having their own, more protective laws and to delineate the extent to which we're preserving States' authority. We want to augment, not supersede, their efforts. We want a floor in our Federal laws for consumer protection in this instance, not a ceiling.

With respect to the impact of Federal regulations on State and local government, Senator Thompson and I have introduced the Regulatory Improvement Act, S. 746, which requires cost-benefit analysis and risk assessment of major rules and that agencies seek the opinions and experience of State and local governments when regulating in areas where they would be affected. I appreciate the support of the State and local organizations for this bill. As those organizations know, S. 746 specifically requires Federal agencies, in the rulemaking process, to consider alternatives that will provide flexibility for State and local governments. S. 746 also fosters openness and public participation. I believe the bill is just the type of bill that promotes partnership and maximizes the use of everyone's resources.

I look forward to hearing the testimony of our witnesses today, both the elected officials and the learned scholars who can give us a context of where we've been and where we're likely to be going. It is always good to hear from the representatives of our States, counties, and cities, and discuss how we can work together to make things better for all our citizens, throughout our Nation.

Chairman THOMPSON. I will go ahead and recognize our first panel. We are pleased to have with us today the Hon. Tommy Thompson, Governor of the State of Wisconsin and President of the Council of State Governments. He will be followed by the Hon. Mi

chael Leavitt, Governor of the State of Utah and Vice Chair of the National Governors' Association. We are pleased that you would be here with us today, two of our more outstanding governors. I could think of no one who could better help us wade through these issues than you two gentlemen. We know it is an inconvenience for you, but we sincerely appreciate your being here with us today.

Without further ado, if you have opening comments that you would like to make, please do so, and we will put any prepared statement that you have into the record. Governor Thompson.

TESTIMONY OF HON. TOMMY G. THOMPSON,1 GOVERNOR, STATE OF WISCONSIN, AND PRESIDENT, COUNCIL OF STATE GOVERNMENTS

Governor THOMPSON. Thank you so very much, Mr. Chairman. It is a delight for me, coming from Wisconsin, to address this august body and to address Chairman Thompson as Chairman. I like that very much.

Chairman THOMPSON. I have been trying to claim relationship, but nobody will believe me.

Governor THOMPSON. You have done an outstanding job, and Senator Collins and, of course, Senator Voinovich, who left the ranks of being a governor and now is an outstanding U.S. Senator. It is always a pleasure to see my good friend, George, again.

Of course, we are all very sympathetic and saddened by the two individuals that died in Armenia yesterday, late last evening, as well as the terrible tornadoes in the Midwest, in Kansas and Oklahoma. But it is a pleasure for both Governor Leavitt and myself to have this privilege to address this august Committee on a very important issue of federalism. Mr. Chairman, federalism and devolution, as you well know, represent a cornerstone of our Nation's underlying democratic principles, and you, Mr. Chairman, have led the fight in this and we applaud you from the State level.

The Tenth Amendment to the Constitution of the United States recognizes the uniqueness that continues to exist and thrive at each and every State in America. More importantly, the Tenth Amendment acknowledges that the States have the authority as well as the ability to minister to their own needs. When our forefathers debated how our Nation would be governed, they devised a clear set of principles that defined the roles as well as the responsibilities of the Federal Government and State Governments. Yet, over time, adherence to those principles have suddenly eroded.

Recently, a shift from the "Washington knows best" attitude ushered in the first change in the majority in the U.S. House of Representatives, and along with the distinguished Chairman and other U.S. Senators, formed a partnership called the new-found federalism. A strong component that helped fuel the shift of power can be directly attributable to a platform that clearly emphasized a return of power as well as control to the State level. After the elections in 1994 and then after the elections in 1996, it somehow slowed down. The discussion of devolution did not appear as often as it did in 1994 and 1995, but we were able to get some legislation passed,

which was led by you, Senator Thompson, and, of course, urged on at that time by Governor Voinovich.

To this end, Mr. Chairman, it is with a sense of optimism for reform and historical gravity that I address this august body. I strongly commend you for your appreciation and attention to the issue of federalism, for when granted the power and the flexibility, States and local governments have proven to be the innovators of the ideas and reforms that are improving the lives of all Ameri

cans.

Throughout our history, State and local governments have acted as the laboratories of democracy. State and local governments continually amaze us with innovation and decisive action when they are allowed to flourish unfettered by excessive Federal restraint.

It is critical, then, that we closely examine the relationship and responsibilities respective to our governing bodies and review the impact Federal restrictions have on the States' ability to govern effectively. More importantly, as we enter a new millennium, we must reinvigorate the partnerships among the Federal, State, and local governments to ensure the American people are the benefactors of a strong united effort to address and solve the problems that face our great country.

As President of the Council of State Governments, I speak to you today on behalf of an organization whose individual members are involved daily in conducting the people's business at the State level. CSG is comprised of State leaders from all 50 States and U.S. territories, representing all three branches of government. CSG's membership is the living embodiment of the vibrancy of American federalism. CSG has consistently been a strong proponent of the federalist model.

Our commitment to sharing those principles was reinvigorated at a summit convened in November 1997, following the enactment of the very far-reaching Unfunded Mandates Reform Act of 1995. At the prompting of Governor Michael Leavitt, the meeting, held in conjunction with the American Legislative Exchange Council, the National Conference of State Legislatures, and the National Governors' Association, was convened to recommend State reaction to the historic devolution of shifting responsibilities from the Federal to the State Governments. Then, as now, States faced a variety of challenges and opportunity as they approach varying degrees of Federal restriction.

The summit produced an 11-point plan aimed at improving balance and greater accountability to that State and Federal partnership. I have attached a copy of the 11 points advocated at the conclusion of that meeting to my written testimony, but I would like to quickly summarize those objectives and provide a few brief examples of how Federal restrictions and interference is impacting our ability to institute positive reform in our respective States.

The principles voted on and passed at that meeting include asking Congress to limit and clarify Federal preemption of State law and Federal regulations imposed upon States, streamline block grant funding, and simplify the financial reporting requirements. I could never understand who reads all of these reports that you ask us to send to you. I am sure that there is somebody out here that does.

us.

Chairman THOMPSON. Senator Lieberman reads most of them for

Governor THOMPSON. I am sure you do.

Senator LIEBERMAN. Actually, they are behind us.

Governor THOMPSON. Just like I do as Governor, all the reports that come to me.

As Governor of the State of Wisconsin, I have dealt with a wide variety of Federal restrictions that prevent my State from reaching its full potential and advancing the best interests of our citizens. From welfare reform to health care, States like my own of Wisconsin have become America's laboratories of reform, instituting dozens of innovative initiatives that have made our programs models for the Nation.

Yet, I have had to travel to Washington, as most governors do, to solicit on bended knee the permission to implement landmark reforms. I am not alone. My experience and the experiences of other State leaders have made the boundaries of the devolution debate clearer today than ever before. Time and time again, we have developed and passed legislation to deal with our unique problems, only to be rebuffed by the Federal Government. Let me briefly describe some more recent issues to illustrate the frustration at the State level.

The integrity of the 1996 welfare reform agreement is threatened by attempts by some people in Congress-nobody on this Committee, I am happy to be able to announce-and the administration to reduce the funding and to restrict the flexibility of welfare-related programs, including the temporary assistance for needy families, more commonly referred to as the TANF block grant. In 1996, Congress, the governors, and the administration entered into an historic welfare reform agreement. In exchange for assuming the risk involved with accepting the primary responsibility for transforming the welfare system from one of dependency to self-sufficiency, governors agreed to 5 years of guaranteed funding, along with new flexibility to administer Federal programs. In my own State of Wisconsin, we reduced the welfare caseload by over 91 percent.

Any attempt to change welfare reform-related programs or the funding, to me, is a serious violation of that commitment and of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and certainly would undermine the States' welfare reform efforts. In Wisconsin and throughout America, welfare reform has demonstrated that States can best solve the problems when given the flexibility and support. Congress gave the States the freedom to design their own welfare replacement programs, as well as the block grants to support them. As a result, hundreds of thousands of families are climbing out of poverty and pursuing their piece of the American dream.

Then 3 weeks ago, 3 years after the act was passed, the Department of Health and Welfare in Washington passed the rules saying a lot of the things we are doing are just not proper. Even though we were moving and doing things, the rules reduced our flexibility, 3 years after a lot of us had already had the act up and running. CSG and the Nation's Governors urge Congress and the administration to reject any proposals that reduce the funding or restrict

But I would like to compliment you, Senator, and all of the Members on this Committee because much has been accomplished since the 1997 meeting, but much more remains to be done. I was very happy yesterday with our bipartisan meeting, in which you were there, Senator Thompson and Senator Voinovich. I thought it was a wonderful bipartisan meeting in which we were able to put our case on the table and you responded, I think, very eloquently.

So already in the 106th session of Congress, the House has passed H.R. 350, the Mandates Information Act, H.R. 409, the Federal Financial Assistance Improvement Act, and H.R. 439, the Paperwork Reduction Act.

The Mandates Information Act clarifies the point of order provision of the Unfunded Mandates Reform Act, applying the orders to any cut or cap in entitlement programs, such as Medicaid, food stamps, and child nutrition, unless States are given new or expanded flexibility to manage the cut or cap.

The Federal Financial Assistance Improvement Act will require the Office of Management and Budget to develop uniform common rules for 75 cross-cutting regulations, and under this legislation, OMB must also develop electronic filing and management of grants to reduce the paperwork.

Just 2 weeks ago, this very Committee held hearings on S. 746, the Regulatory Improvement Act. The Council of State Governments believes that S. 746, cosponsored by at least three Members of this Committee, is a very good move in the right direction. It will provide needed consultation with State and local officials when Federal agencies promulgate new regulations and will require risk assessments and cost-benefit estimates for such regulations.

Additional proposals and ideas that are circulating that may further impact the current state of federalism, on March 10, 1999, the "Big 7" State and local organization principals signed a letter that was forwarded to Congress in support of the Regulatory Right-toKnow Act of 1999. By calling for an annual report to Congress by the President and the Office of Management and Budget, which analyzes the impact of Federal rules on Federal, State, and local governments, this bill encourages the open communication between the Federal agencies, State and local governments, the public, and Congress regarding Federal regulatory priorities.

As you know, Mr. Chairman, the staff of the "Big 7" State and local organizations have also been collaborating with staff members of this Committee in an attempt to fashion legislation to protect and to reiterate the partnership between Federal, State, and local units of government. CSG believes that it is important to bring such legislation to fruition, and among the principles we would like to see embodied in such legislation would be prior consultation with State and local elected and appointed leaders in drafting the Federal legislation, the regulations, and the Executive Orders with an inter-governmental impact.

Federalism partnership legislation should provide a Federal assessment through federalism impact statements and provide a form of judicial review for enforcement. Ultimately, CSG believes a true federalist partnership must reflect the intentions of the Tenth Amendment, whereby States were granted deference when the Constitution failed to explicitly empower the Federal Government.