before they do it. This language in the bill will make the agencies "look outside the box" for help and information, thereby avoiding unsound rules. Critics of the current federalism legislation have raised the specter of unfettered judicial review under the proposed Rule of Construction. We reiterate, however, that this section was designed to streamline the judicial process. Currently the courts must grasp at legal straws in cases where there is neither an express federal preemption of state or local law contained in a federal statute nor a direct conflict between the federal and state or local laws. The Rule of Construction eliminates the guesswork and makes very clear that absent express preemptive language or a direct conflict, there is no federal preemption. S. 1214 and its companion in the House, H.R. 2245, alleviate from the courts the burden of having to step into the shoes of the federal Congress to determine what Congress intended to do when writing laws. Under S. 1214, Congress must now explicitly state any intention to preempt State or local rights and responsibilities. Any remaining uncertainty in this Act or any statute or rule enacted after this Act would be resolved in favor of maintaining State and local authority. Last, but certainly not least, Section 9 of the bill provides cities with an overall check on the federal government's preemption activities. It requires the Director of the Office of Management and Budget (OMB) to submit to the Director of the Congressional Budget Office (CBO) information describing each provision of interim final rules and final rules issued during the preceding calendar years that preempts State or local government authority. CBO must then submit to the Congress a report on preemption through Federal statutes, rules, court decisions, and legislation reported out of committee during the previous session of Congress. Again, this extra check will help all levels of government track federal activities dealing with preemption and provides information to local governments on this critical issue. Thank you Mr. Chairman and members of the Committee for your kind attention this afternoon. I would be happy to answer any questions. Testimony of Ernest Gellhorn Professor of Law, George Mason University, before the United States Senate Committee on Governmental Affairs concerning The Federalism Accountability Act of 1999 (S. 1214) - July 14, 1999 Summary The cost of federal regulation on the economy is estimated as exceeding half a trillion dollar annually. Much of this cost is borne by state and local governments. Thus, sound policy supports S. 1214 that an analysis of the impact of proposed rules on such governments should be included in agency rulemaking proceedings. S. 1214, the Federal Accountability Act, would create an "action forcing" command to agencies engaged in rulemaking that they publish "federalism assessments" before issuing any rules that have a "federalism impact." As the experience with the National Environmental Policy Act of 1969 demonstrates, forcing such an assessment by agencies can make agencies sensitive to federalism concerns and lead to more rational and reasonable rules. On the other hand, where such policies are not enforced by judicial review, as illustrated by Executive Order 12612 (on federalism) and by the Regulatory Flexibility Act before 1996 (on small business impacts), which were universally ignored by the agencies, agency compliance is problematical and probably unlikely. The simplest solution, of course, is for agencies to comply with current federalism requirements because S. '1214 would be unnecessary. However, without judicial review, fullscale compliance is not likely. On the other hand, full judicial review under the Administrative Procedure Act would create a substantial burden undercutting the benefits sought by S. 1214. Thus, I urge a middle ground for the addition of limited judicial review to S. 1214 patterned after the Unfunded Mandates Reform Act of 1995 and the proposed Regulatory Improvement Act of 1998 (S. 981). First, the federalism analysis required by S. 1214 should be made part of the record for purposes of review of a final rule under the APA. Second, judicial review of the rule under the APA's arbitrary and capricious test should be limited to the procedures used by the agency and the content of its federalism impact analysis. Third, remand or invalidation of a rule should be available only if an agency fails to consult with state/local governments or otherwise fails to perform an impact analysis. No other aspect of S. 1214 should be subject to judicial review. Finally, at least eight other general analytical requirements cabin agency rulemaking in addition to those imposed by the APA and agency-specific statutes. Not all are consistent; some may now be unnecessary. We need an impact analysis of various impact requirements. These should be reviewed by this Committee and a single statute should encompass all in an omnibus bill. Testimony of Ernest Gellhorn Professor of Law, George Mason University, before July 14, 1999 Mr. Chairman, thank you for the opportunity to participate in this hearing on S. 1214, the Federalism Accountability Act of 1999. Currently I am a professor of law at George Mason University. I have practiced law for fifteen years and been a law teacher or law school dean for twenty-five, and have written over 100 articles and four books in Administrative Law, Government Regulation and Antitrust Law. My practice has involved me in arguing cases on Administrative Law before Federal appellate courts, including the U.S. Supreme Court. I have served as a public member of the Administrative Conference of the United States and chaired its Rulemaking Committee from 1986 to 1995. I also have served as Chair of the Section of Administrative Law and Regulatory Practice of the American Bar Association in 1990-91 and am currently a delegate to the ABA House of Delegates. The Federalism Accountability Act proposes to adopt a rule of construction applicable to all legislation adopted by Congress limiting preemption of State or local government law unless expressly stated or unless there is a direct conflict between the new statute and local law. It also outlines a similar “action forcing" command to agencies engaged in rulemaking that they undertake and publish "federalism assessments" before issuing any rules that have a "federalism impact." My comments focus the effect of S. 1214 on administrative rulemaking Background: APA Rulemaking Requirements Rulemaking plays a critical role in administrative regulation. It is more efficient than case-by-case adjudication because rules give regulated parties advance guidance and can address many issues in a single proceeding. A clear general rule can promote quick and uniform compliance and also provide affected persons and firms with protection against unknowing failure to conform. As the Supreme Court has said, “[w]hen a government official is given the power to make discretionary decisions under a broad statutory standard, case-bycase decision making may not be the best way to assure fairness. . . . [The use of rulemaking] provides [affected parties] with more precise notice of what conduct will be sanctioned and promotes equality of treatment among similarly situated [persons]." Dixon v. Love, 431 U.S. 105 (1977). In additional, the procedures of rulemaking proceedings can put all affected parties of notice of impending changes in regulatory policy, and give them an opportunity to be heard before the agency's position is final and enforceable. Thus, it is important not to burden agency rulemaking with unnecessary or conflicting obligations. The rulemaking process is neither pro or anti-regulation agency rules can support as well as undermine federalism. Additions to the rulemaking process should be carefully crafted to ensure that they are clear and simple - and that their benefits exceed their costs. The Addition of Analytical Rulemaking Requirements Both the President and Congress have added a substantial number of procedural and substantive requirements for rules having a significant impact on the economy or affecting important interests. Beginning with the Nixon presidency, each Administration has provided |