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Now, I am not suggesting that the authors agree with my assessment of the DOJ regulation, nor do I necessarily endorse all of their criticism of state de-institutionalization policies. No doubt all of us agree that community mental health services must be improved and the dignity and rights of the mentally must be respected. Indeed, that was the noble and lofty goal of the DOJ regulation. The problem that state legislators face is how to do it. How do we make these community programs work? It's easier said than done. My personal view is that it requires more careful legislation and avoidance of litigation, which can harden the parties into rigid positions and create an incentive for states to make policy primarily with an eye toward avoiding lawsuits and costly consent decrees and only secondarily with an eye toward providing the best service for the mentally ill.

Even if you disagree with me and regard the Olmstead decision as a great triumph for the rights of the mentally ill, surely you can see the advantages of extensive consultation between state elected officials and federal agency officials prior to the promulgation of regulations similar to the DOJ rule on "integrating" services for the mentally ill. State legislators are the ones facing the very difficult task of making community mental health services work better than they have in the past. The last thing we want is more homeless and helpless mentally ill roaming America's city streets.

I frankly doubt that DOJ rulemakers had a sufficiently detailed understanding of how the rule impacted mental health law, policy, and politics in 50 states. It is almost certain they did not understand that, given political and policy dynamics in state capitals, the result might be a

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deterioration of state services for the mentally ill. This is why state elected officials must be

consulted.

Let me give another example. The U.S. Department of the Interior has proposed revisions of regulations governing the secretary's authority to accept title to land to be held in trust for the benefit of Indian tribes and individual Indians. Under the proposed revisions, when an application involves lands located inside the boundaries of a reservation, the secretary will apply a process and a standard reflecting a presumption in favor of acquisition of trust title to such

lands.

NCSL believes that such a change in the "land-to-trust" regulations could have a major impact on state and local government tax revenues and regulatory authority. The problem is that the - Department in issuing the proposed revision did not comply with Executive Orders 12612 or 13083 on federalism, even while acknowledging that "the local tax base may be affected." The refusal to comply with these executive orders is based on a totally unsupported statement that "because the loss of revenue is minimal", the effects on state and local government are "insignificant" within the meaning of E.O. 13083.

NCSL understands that there is significant opposition to the proposed revisions of the "land-totrust" regulation from both Indian tribes and state governments. NCSL further believes that states and tribes have in the past and will in the future work on a cooperative basis to resolve revenue and regulatory issues arising in this context. The first step, however, is for the Department of the Interior to comply with federalism executive orders. All parties need to know

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how much land is potentially affected, how much state and local tax revenue could be lost, and

what the impact would be on state-tribal regulatory issues.

This "land-to-trust" issue, also, highlights the need for passage of S. 1214 and the need for some

kind of enforcement mechanism to ensure that agencies fulfill their obligation to perform federalism assessments.

Time after time, agencies either fail to mention federalism executive orders or decline to perform federalism assessments based on unsupported boilerplate stating that the federalism impact will be "insignificant." It's time, Mr. Chairman and members of the committee, for agencies to stop sweeping federalism issues under the rug, by ignoring cost-shifts to states and by ignoring the preemption of state law inherent in proposed regulations.

Agency ignorance of the federalism and political implications of their actions, however, should come as no surprise. My two examples are not exceptions to the general pattern of agency behavior. As you know, having seen the recent GAO report, agencies have ignored with only a handful of exceptions their obligations under Executive Order 12612 to prepare federalism assessments for final rules. It is such a startling statistic: a quantitative measure of the agencies' lack of concern about the impact of federal rules on state and local governments. As you know, out of 11,414 final rules issued by nonindependent agencies between April 1, 1996 and

December 31, 1998, exactly 5 contained a federalism assessment.

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The Problem of Preemption by Courts: The branch of the federal govemment about which the states are least likely to complain, when it comes to sensitivity to federalism issues, clearly is the judiciary and the U.S. Supreme Court in particular. With the intellectual leadership of Chief Justice William Rehnquist and Justice Sandra Day O'Connor, who incidentally is a former . majority leader of the Arizona Senate, the Court in the 1990s has given new life to long-dormant doctrines of states' rights, especially doctrines of state sovereign immunity. Not surprisingly, this Court has shown a sound understanding of preemption issues. In case after case, the Rehnquist Court has read federal statutes strictly in order to avoid unnecessary preemption of state law. Often, the Court will refuse to preempt absent a "clear statement" of congressional intent or an unavoidable conflict.

Nonetheless, litigants continue to offer, especially to lower courts, creative theories that the state laws, which inconvenience them, have somehow or another been preempted by implication of a federal statute. As Representative Dan Blue of North Carolina, NCSL's President, testified to this committee earlier this year, "implied preemption" is the heart of the problem.

Surprisingly few preemption cases turn on the explicit language of a federal statute and its formal legislative history. Nor do these cases, as frequently as one might imagine, having read the straightforward terms of the Supremacy Clause, turn on a theory of actual conflict: an allegation that it is physically impossible for an individual or corporation to comply with both federal and state law. Rather, as a 1991 report on preemption prepared by the Appellate Judge's Conference notes, "Supremacy clause cases typically call on the courts to discern or infer

The Solution

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The "Federalism Accountability Act of 1999," S. 1214, should limit unnecessary preemption by all three branches of the federal government. The bill would establish procedural rules for Congress to shine a spotlight on preemptive bills. Reports would be required on the scope of each preemptive measure. And every two years, a report would be made to Congress on the cumulative effect of federal preemption. A rule of construction, to guide the courts, would seek to discourage the many findings of implied preemption that are so often raised in litigation, even though there is no direct conflict between federal and state law and even though Congress has not clearly stated in statutory or report language its intent to preempt state law. Federal administrative agencies would be required to notify and consult with state and local elected officials before issuing preemptive regulations. Agencies also would be required to prepare federalism impact assessments for proposed, interim final, and final rules.

The requirements on the federal government in S. 1214 are relatively modest. There is nothing radical about this bill. Nonetheless, similar modest procedural changes in the Unfunded Mandate Reform Act have been helpful in limiting federal mandates or cost-shifts to states and localities. The hope and expectation is that S. 1214, if enacted, will in the same way help limit federal preemption of state and local law.