The Unfunded Mandates Reform Act: A Primer

The Unfunded Mandates Reform Act: A Primer

June 16, 2023
The Unfunded Mandates Reform Act: A Primer
Congress enacted the Unfunded Mandates Reform Act of
years, into multiple grant programs with greater
1995 (UMRA, P.L. 104-4) to “strengthen the partnership
congressional directives). Referring to these trends, the
between Federal, State, local, and tribal governments by
report argued, “Over the last decade or so, State and local
ensuring that the impact of legislative and regulatory
governments have gotten less of the Federal carrot and
proposals on those governments are given full consideration
more of the Federal stick.”
in Congress and the Executive Branch before they are acted
upon,” the law’s accompanying Senate report stated.
Defining “Unfunded Mandates”
UMRA defines an “unfunded mandate” as a provision in
To do this, UMRA targeted so-called “unfunded mandates,”
legislation, statute, or regulation that:
or federal legislation and/or regulation that either imposes a
cost on state, local, or tribal governments or impedes those
• would impose an enforceable duty on either a state,
entities’ ability to collect revenue without a corresponding
local, or tribal government or on the private sector; or
funding mechanism from the federal government. UMRA’s
• would reduce or eliminate the amount of authorization
definition of unfunded mandates also includes mandates
of appropriations for federal financial assistance to a
affecting the private sector. Among other things, UMRA:
state, local, or tribal government or to the private sector
•
for the purposes of complying with a previous mandate.
defines unfunded mandates;
•
UMRA does not define “enforceable duty.” However, CBO
requires that the Congressional Budget Office (CBO)
(which UMRA tasks with providing cost estimates for
estimate the direct costs to state, local, and tribal
mandates in reported legislation) has interpreted the term to
governments and the private sector of mandates in
refer to actions by public and private entities that would be
certain legislative proposals whose anticipated effects
either required or prohibited by federal law or regulation.
exceed specific dollar thresholds;
• allows Members of Congress in both chambers to bring
Provisions in legislation, statute, or regulation that
a point of order for certain legislation containing an
“increase the stringency of conditions of assistance” or
intergovernmental mandate (which can result in the
“place caps upon, or otherwise decrease” federal funding
chamber declining to consider the legislation); and
for existing intergovernmental grants with annual
•
entitlement authority of $500 million or more could be
directs certain federal agencies to assess the costs,
considered an intergovernmental mandate. This applies if a
benefits, and compliance costs of mandates included in
state, local, or tribal government “lack authority under that
some regulatory proposals whose anticipated effects
program to amend their financial or programmatic
exceed specific dollar thresholds.
responsibilities to continue providing required services that
This In Focus summarizes UMRA’s major provisions,
are affected by the legislation, statute, or regulation.”
found in Titles I and II of the law. For a comprehensive
discussion of UMRA, see CRS Report R40957, Unfunded
Exceptions and Exclusions
Mandates Reform Act: History, Impact, and Issues.
Title I of UMRA provides certain exceptions to its
requirements and definitions. In most cases, enforceable
Background
duties that arise as a condition of receiving federal
The concept of unfunded mandates—and their reform—
assistance or from participation in a voluntary federal
gained prominence with some groups in the 1970s and
program are not considered mandates. (Federal courts have
1980s. Groups such as the National League of Cities and
defined federal grant assistance as voluntary under
National Governors Association lobbied for financial relief
UMRA’s provisions.)
from what they considered burdensome federal
requirements on state and local governments. According to
UMRA does not apply to rules from independent regulatory
a 1998 article in the journal Public Administration Review,
agencies or rules issued with no notice of proposed
by the mid-1990s, major state and local government
rulemaking. UMRA exempts legislative provisions and
advocacy groups “had been pursuing anti-mandates
rules relating to individual constitutional rights,
legislation ... for the better part of a decade.”
discrimination, emergency assistance, grant accounting and
auditing procedures, national security, treaty obligations,
UMRA’s Senate report suggests some Members of
and elements of Social Security legislation.
Congress agreed with these groups. During this period,
there was a shift in how some federal aid was distributed
CBO Legislative Mandate Cost Estimates
(e.g., in 1986 Congress reorganized the general revenue
Title I of UMRA requires that for all bills or joint
sharing program, which had transferred $83 billion from the
resolutions reported by an authorizing committee, CBO
federal government to state and local governments over 15
must submit a statement that:
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The Unfunded Mandates Reform Act: A Primer
• includes whether CBO estimates that the direct cost of
• assessing the mandate’s anticipated costs and benefits;
any intergovernmental mandates equals or exceeds $50
• estimating future compliance costs of the mandate and
million (adjusted annually for inflation—the 2023
any disproportionate budgetary effects on particular
threshold was $99 million) in the fiscal year in which
regions, state and local governments, or segments of the
the mandate would first occur or in any of the four
private sector; and
following fiscal years; and
•
• estimating the mandate’s effect of the national economy.
includes whether CBO estimates that the direct cost of
any private sector mandates equals or exceeds $100
For regulatory actions requiring such a statement, UMRA
million (adjusted annually for inflation—the 2023
directs the issuing agency to identify and consider a
threshold was $198 million) in the fiscal year in which
“reasonable number” of alternatives and select the least
the mandate would first occur or in any of the four
costly, most cost-effective, or least burdensome option. The
following fiscal years.
same exemptions and exclusions identified earlier also
apply to UMRA’s regulatory requirements. In addition,
CBO must estimate the amount of direct costs resulting
agencies that are otherwise prohibited by law from
from the mandate. UMRA defines “direct costs” as the
considering cost estimates in adopting a rule and rules that
aggregate amount that either state, local, or tribal
have not had a notice of proposed rulemaking are exempt
governments or the private sector would be required to
from UMRA’s requirements.
spend to comply with the mandate or, in the case of state,
local, and tribal governments, the aggregate amount of
Issues for Congress
revenue those governments would be prohibited from
Some have suggested that UMRA’s scope should be
raising due to the mandate. CBO must identify any increase
broadened in several respects. For example, the National
in federal appropriations or other spending that has been
Conference of State Legislatures has argued that federal
provided to fund the mandate. The mandate is considered
programs under UMRA’s exemptions and exclusions can
unfunded unless estimated costs are fully funded.
still impose costs on state, local, and tribal governments.
Since UMRA does not include these costs as “mandates,”
UMRA also allows CBO to study the budgetary and
they do not require a CBO cost estimate.
financial impact of any legislative proposal containing a
federal mandate at the request of the chair or ranking
Relatedly, a 2011 Government Accountability Office
member of a House or Senate committee.
(GAO) report “consistently found that agencies’ rules
Points of Order
seldom triggered UMRA.” GAO noted that the most
common reasons for this were rules not meeting UMRA’s
Title I of UMRA provides Members of Congress in both
expenditure threshold; rules not having a notice of proposed
chambers the chance to raise two points of order. Members
rulemaking; participation in the program was voluntary; or
may raise a point of order for any reported bill or joint
the rule was issued by an independent regulatory agency.
resolution containing either an intergovernmental or private
sector mandate but for which the reporting committee has
A 2005 GAO report that gathered feedback on UMRA
not published a CBO mandated cost estimate.
noted that state and local governments expressed concern
about UMRA’s directive that CBO estimate only the direct
Even if the informational requirement of the first point of
costs of a mandate. These respondents argued that the
order is met, a point of order against consideration may still
indirect costs of federal mandates, such as forgone business
be raised for any legislative proposal or conference report
profits and the resulting missed tax revenue, can have
that would increase the direct costs of an intergovernmental
significant effects on state and local governments.
mandate (but not a private sector mandate) above UMRA’s
annual thresholds. Unlike the informational point of order,
Congress may consider whether to amend some of
this point of order can be raised for any legislative proposal
UMRA’s exemptions and exclusions. Some bills in recent
or conference report, not only for a reported bill or joint
Congresses have sought to do so. In the 115th Congress, the
resolution.
Unfunded Mandates Information and Transparency Act of
2018 (H.R. 50), which passed the House, would have
Because federal mandates are created through authorization
expanded UMRA’s definition of direct costs, eliminated the
bills, UMRA’s points of order generally do not apply to
regulatory analysis exemption for independent regulatory
bills reported by the House and Senate committees on
agencies, and allowed a point of order against consideration
appropriations. However, if an appropriations bill,
to be raised for legislation containing a private sector
resolution, amendment, or conference report contains
mandate above UMRA’s thresholds and not, as UMRA
legislative provisions that would either increase the direct
allows, solely for legislation containing an
costs of a federal intergovernmental mandate that exceeds
intergovernmental mandate. Legislation seeking to amend
the threshold, or cause those costs to exceed the threshold, a
similar aspects of UMRA was introduced in the 116th
point of order may be raised against the provisions.
Congress (H.R. 300 and S. 4077), the 117th Congress (H.R.
Regulatory Requirements
701 and S. 170), and the 118th Congress (H.R. 3230).
UMRA’s Title II requires federal agencies to publish a
statement before promulgating a notice of proposed
Adam G. Levin, Analyst in Economic Development Policy
rulemaking likely to cause an intergovernmental or private
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sector mandate requiring expenditures of at least $100
million in any one year (adjusted annually for inflation):
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The Unfunded Mandates Reform Act: A Primer

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
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