Title I of the Unfunded Mandates Reform Act of 1995 (UMRA) attempts to ensure that the Congress has information about the potential direct costs of federal mandates before it enacts legislation. UMRA thus requires the Congressional Budget Office (CBO) and the Congress's authorizing committees to develop and report information about the existence and costs of mandates in proposed legislation. The law also establishes mechanisms to bring that information to the attention of the Congress before legislation is considered on the floor of the House or Senate.
 

Defining Mandates and Their Costs

Under UMRA, a mandate is any provision in legislation or in a statute or regulation that would impose an enforceable duty on state, local, or tribal governments or the private sector, or that would reduce or eliminate the amount of funding authorized to cover the costs of existing mandates. Duties that are imposed as a condition of federal assistance or that arise from participation in a voluntary federal program are not mandates. In the case of some large entitlement programs under which $500 million or more is provided annually to state, local, or tribal governments, a new condition on or reduction in federal assistance would be a mandate only if states lacked the flexibility to offset the new costs or the loss of federal funding with reductions elsewhere in the program.

The scope of UMRA is further narrowed by the fact that legislative provisions dealing with constitutional rights, discrimination, emergency aid, accounting and auditing procedures of grants, national security, treaty ratification, and title II of Social Security (Old-Age, Survivors, and Disability Insurance benefits) are excluded from UMRA's procedures.

UMRA defines "direct costs" as amounts that mandated entities--governmental or private-sector--would be required to spend to comply with the enforceable duty, including amounts that states, localities, and tribes "would be prohibited from raising in revenues." Direct costs exclude amounts that mandated entities spend to comply with applicable laws, regulations, or professional standards in effect when the federal mandate is adopted. Moreover, in calculating a mandate's direct costs, such costs must be offset by any direct savings that the mandated entities would receive from compliance with the mandate or from other provisions of the same legislation that govern the same activity as that affected by the mandate.
 

Mandate Cost Statements: CBO's Role

The law requires CBO to provide a statement to Congressional authorizing committees about whether a reported bill contains one or more federal mandates. If the total direct costs of all mandates in a bill are above a specified threshold in any of the first five fiscal years in which the mandate is in effect, CBO must provide an estimate of those costs (if feasible) as well as the basis for its estimate. The statutory thresholds, expressed in 1996 dollars, are $50 million for intergovernmental mandates and $100 million for private-sector mandates, adjusted annually for inflation.

CBO's mandate statement must also include an assessment of whether the bill authorizes or otherwise provides funding to cover the costs of any new federal mandate. In the case of intergovernmental mandates, the cost statement must, under certain circumstances, estimate the appropriations needed to fund such authorizations for up to 10 years after the mandate takes effect.

Authorizing committees must publish CBO's mandate statements in their reports or in the Congressional Record before a bill is considered on the floor of the House or Senate. Conference committees must, "to the greatest extent practicable," ensure that CBO prepares statements for conference agreements or amended bills if they contain mandates that have not previously been considered by either House or if they impose greater direct costs than the version considered earlier. At the request of a Senator, CBO must estimate the costs of any intergovernmental mandates contained in an amendment that the Senator might wish to offer.

The Congress may also call on CBO to prepare analyses at other stages of the legislative process. At the request of the Chairman or Ranking Minority Member of a committee, CBO is required to help the committee analyze the impact of proposed legislation, conduct special studies of legislative proposals, or compare a federal agency's estimate of the costs of proposed regulations to implement a federal mandate with the estimate that CBO made when the law was enacted.
 

Enforcement Mechanisms

Section 425 of UMRA sets out rules for both the House and Senate that prohibit consideration of legislation unless certain conditions are met. For all reported legislation, consideration is not "in order" unless the committee has published a mandate statement prepared by CBO. That is, UMRA prohibits the Congress from considering a reported bill if the committee has not published such a statement about the costs of any mandates.

For reported legislation containing intergovernmental mandates whose direct costs are estimated to exceed the threshold, UMRA's rules preclude consideration unless the legislation provides direct spending authority or authorizes appropriations sufficient to cover those costs. An authorization of appropriation will not be sufficient unless the authorized amounts are specified for each year (up to 10 years) after the mandate's effective date and the legislation provides a way to terminate or scale back the mandate if the federal agency determines that the appropriated funds are not sufficient to cover those costs.

Finally, although UMRA does not specifically require CBO to analyze the cost of mandates in appropriation bills, it is not in order to consider legislative provisions in such bills--or amendments to them--that increase the direct costs of intergovernmental mandates unless an appropriate CBO-prepared statement is available.

Those rules are not self-enforcing, however: a Member must raise a point of order to enforce them. In the House, if a Member raises a point of order, the full House votes on whether to consider the bill, regardless of whether there is a violation. If a point of order is raised in the Senate, the bill may not be considered unless either the Senate waives the point of order or the Chair of the Senate overrules it.