Unfunded Mandates Reform Act; Intergovernmental Consultation

DEPARTMENT OF COMMERCE

Office of the Secretary

[Docket No. 960129017-6017-01]

RIN 0690-XX01

Unfunded Mandates Reform Act; Intergovernmental Consultation

AGENCY: Department of Commerce.

ACTION: Notice of proposed statement of policy.

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SUMMARY: The Department of Commerce (DOC) is publishing its Proposed

Statement of Policy on Intergovernmental Consultation under the

Unfunded Mandates Reform Act of 1995 for public comment. DOC's proposed

policy reflects the guidelines and instructions the Director of the

Office of Management and Budget (OMB) provided to each agency to

develop an intergovernmental consultation process with regard to

significant intergovernmental mandates contained in a notice of

proposed rulemaking with input from State, local, and tribal officials.

DATES: Comments on this proposed statement of policy are due on or

before April 15, 1996.

ADDRESSES: Comments may be submitted to the Assistant General Counsel

for Legislation and Regulation, U.S. Department of Commerce, HCHB Room

5876, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.

FOR FURTHER INFORMATION CONTACT: Daniel Cohen, Attorney Advisor, at

(202) 482-4144.

SUPPLEMENTARY INFORMATION: The President signed the Unfunded Mandates

Reform Act of 1995 (the Act) into law as Public Law 104-4 on March 22,

1995. Section 204(a) of the Act requires each agency to develop, to the

extent permitted by law, an effective process to permit timely input by

elected officers (or their designees) of State, local, and tribal

governments in the development of a regulatory proposal containing a

proposed ``significant intergovernmental mandate'' that is not a

requirement specifically set forth in law. 2 U.S.C. 1531, 1534(a). A

``significant intergovernmental mandate'' under the Act is any

provision in a Federal agency regulation that: (1) would impose an

enforceable duty upon State, local, or tribal governments (except as a

condition of Federal assistance); and (2) may result in the expenditure

by State, local, and tribal governments, in the aggregate, of $100

million (adjusted annually for inflation) in any one year.

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See 2 U.S.C. 658(5)(A)(i), 1532(a). DOC does not believe it has

regulations to which the Act applies, nor does it anticipate that the

legal authorities under which it promulgates regulations make future

unfunded mandates, as defined in the Act, likely. Nonetheless, DOC

publishes this notice and invites comments from State, local, and

tribal governments, to conform fully with the spirit, intent and letter

of the Act, and to have in place a process for any unfunded mandate

which could affect the operations of the Department in the future.

Section 204(b) of the Act excepts intergovernmental communications

in certain circumstances from the requirements of the Federal Advisory

Committee Act, 5 U.S.C. App. Those circumstances involve meetings: (1)

exclusively between Federal officials and State, local elected

officials or their designees; and (2) solely for the purposes of

exchanging views, information, or advice relating to Federal programs

established pursuant to a statute that explicitly or inherently

provides for sharing intergovernmental responsibilities or

administration. 2 U.S.C. 1534(b).

Section 204(c) of the Act requires the President to issue

guidelines and instructions for implementing sections 204 (a) and (b).

2 U.S.C. 1534(c). This authority was delegated to the Director of OMB

who published the guidelines and instructions on September 29, 1995 (60

FR 50651).

Paragraph I of the OMB guidelines and instructions provides that

each agency develop, in consultation with State, local, and tribal

governments, the intergovernmental consultation process required by

section 204(a) of the Act. Paragraph I also calls for agencies to

develop the process by making a proposal for comments by State, local

and tribal governments. Accordingly, DOC is sending copies of today's

proposed statement of policy to a list of elected State and local

officials and of associations representing State and local governments

compiled by the Deputy Assistant Secretary for Intergovernmental

Affairs. To ensure that all such officials have the opportunity to

participate and because there may be wider interest in DOC's process

for intergovernmental consultation under the Act, DOC is also

publishing this notice for public comment.

Section 203 of the Act supplements section 204(a). 2 U.S.C. 1533.

It requires that, prior to establishing regulatory requirements that

might significantly or uniquely affect small governments, the agency

shall have developed a plan that, among other things, provides for

notice to potentially affected small governments, if any, and for a

meaningful and timely opportunity to provide input in the development

of regulatory proposals. The Act defines ``small government'' to mean

any small governmental jurisdiction defined in the Regulatory

Flexibility Act, 5 U.S.C. 601(5), and any tribal government. 2 U.S.C.

658(11).

Both the Act and the OMB guidelines and instructions imply that

agencies must make affirmative efforts to notify State, local, and

tribal officials in addition to publishing a notice of proposed

rulemaking in the Federal Register. Today's proposed statement of

policy describes the extent and content of the pre-proposal notice and

opportunity to consult.

The proposed policy differentiates between State elected officials

(or their designees) on the one hand and local elected officials (or

their designees) on the other. DOC will attempt to send notices to the

former, but the latter are so numerous that DOC proposes to give notice

through appropriate associations who represent local governments, and

through the Federal Register.

The Act requires agencies to estimate the dollar impact of

prospective Federal mandates to determine whether they exceed the $100

million annual threshold, and therefore are ``significant,'' as defined

in the Act. The Act requires adjustment of the $100 million figure for

inflation in years after 1995, but it is silent on: (1) how to adjust

for inflation; and (2) whether and how to adjust estimated future

expenditures for the time value of money. Under the proposed policy,

DOC would adjust for inflation using the figures provided in the Annual

Report of the President's Council of Economic Advisers, and discount to

present value using OMB Circular A-94 which currently provides for 7

percent as a discount rate for government-wide use.

Dated: January 30, 1996

Jane Bobbitt,

Assistant Secretary for Legislative and Intergovernmental Affairs.

Based of the foregoing, DOC proposes this Statement of Policy:

Statement of Policy on the Process for Intergovernmental Consultation

Under the Unfunded Mandates Reform Act of 1995

I. Purpose

This Statement of Policy implements sections 203 and 204 of the

Unfunded Mandates Reform Act of 1995 (Act), 2 U.S.C. 1533, 1534,

consistent with the guidelines and instructions of the Director of the

Office of Management and Budget (OMB).

II. Applicability

This Statement of Policy applies to the development of any

regulation (other than a regulation for a financial assistance program)

containing a significant intergovernmental mandate under the Act. A

significant intergovernmental mandate is a mandate that: (1) would

impose an enforceable duty upon State, local, or tribal governments

(except as a condition of Federal assistance); and (2) may result in

the expenditure by State, local, and tribal governments, in the

aggregate, of $100 million (adjusted annually for inflation) in any one

year. DOC officials may apply this Statement of Policy selectively if

there is a need for immediate agency action that would warrant waiver

of prior notice and opportunity for public comment under the

Administrative Procedure Act, 5 U.S.C. 553.

III. Intergovernmental Consultation

When to begin. As early as practicable in the development of a

notice of proposed rulemaking (for other than a financial assistance

program) that involves an enforceable duty on State, local, or tribal

governments, the responsible Secretarial Officer, in consultation with

the Office of the General Counsel, should estimate whether the

aggregate compliance expenditures will be in the amount of $100 million

or more in any one year. In making such an estimate, the Secretarial

Officer should adjust the $100 million figure in years after 1995 using

the rate of inflation in the Annual Report of the President's Council

of Economic Advisers, and should discount estimated future expenditures

to present value, using the discount rate under OMB Circular A-94.

Content of notice. Upon determining that a proposed regulatory

mandate on State, local, or tribal governments may be a significant

intergovernmental mandate, the Secretarial Officer responsible for the

rulemaking should provide adequate notice to pertinent government

officials: (1) describing the nature and authority for the rulemaking;

(2) explaining DOC's estimate of the resulting increase in their

governmental expenditure level; (3) inviting them to participate in

developing the notice of proposed rulemaking by participating in

meetings with DOC or by presenting their views in writing on the likely

effects of the regulatory requirement or legally available policy

alternatives that DOC should take into account. If the

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authorizing statute for a rule requires publication of an advance

notice of proposed rulemaking, then those content requirements may be

addressed in that advance notice.

How to notify State and tribal officials. With respect to State and

tribal governments, Secretarial Officers should give notice by letter,

making use of mailing lists maintained by the Deputy Assistant

Secretary for Intergovernmental Affairs, that includes, among others,

elected chief executives (or their designees), the National Governors

Association, and the National Conference of State Legislatures. The

Secretarial Officer should also publish a notice in the Federal

Register.

How to notify local officials. With respect to local governments,

the Secretarial Officer should provide notice through the Federal

Register and by letter to the following associations: the National

League of Cities, the National Association of Counties, and the U.S.

Conference of Mayors. If a significant intergovernmental mandate might

affect local governments in a limited area of the United States, the

Secretarial Officer, in consultation with the Deputy Assistant

Secretary for Intergovernmental Affairs, should, if practicable, give

notice by letter to appropriate local officials.

Exemption from the Federal Advisory Committee Act. Secretarial

Officers are encouraged to meet with elected officials (or their

designees) to exchange views, information, and advice concerning the

implementation of intergovernmental responsibilities or administration.

Meetings for this purpose that do not include other members of the

public are exempt from the Federal Advisory Committee Act. 2 U.S.C.

1534(b).

Small government consultation plan. If the proposed regulatory

requirements might significantly or uniquely affect small governments,

as defined in the Regulatory Flexibility Act, 5 U.S.C. Sec. 601(5),

then the Secretarial Officer should summarize the agency's plan for

intergovernmental consultation under section 203 of the Act in the

Supplementary Information section of the notice of proposed rulemaking.

Unless impracticable, the plan should provide for notice by letter to

potentially affected small governments.

Documenting compliance. The Supplementary Information section of

any notice of proposed and final rulemaking involving a significant

intergovernmental mandate should describe DOC's determinations and

compliance activities under the Act. The Supplementary Information

section of the notice of proposed rulemaking should describe the

estimated impact of such a mandate, the assumptions underlying its

calculation, and the resulting determination of whether the rulemaking

involves a significant intergovernmental mandate. It should discuss, as

appropriate, cost and benefit estimates and any reasonable suggestions

received during prior intergovernmental consultations. Any substantive

pre-notice written communications on the proposed rulemaking should be

described in the Supplementary Information, and should be made

available for inspection in the Central Reference and Records Facility,

Room 6204, Herbert Clark Hoover Building, 14th and Constitution Avenue,

N.W., Washington, D.C. 20230. The final rule should contain a response

to significant comments received.

Reporting. Pursuant to OMB guidelines and instructions, the DOC

Office of the General Counsel, with assistance from the Secretarial

Officers, will prepare the annual report to OMB on compliance with the

intergovernmental consultation requirements of the Act (initially due

on January 15, 1996, and annually on that date thereafter).

[FR Doc. 96-3113 Filed 2-12-96; 8:45 am]

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