RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY SENATOR GLENN Question 1: The Committee heard from several witnesses that local governments could very soon reach a point where their regulatory burden is so great, they are forced actually to ignore federal law. Doesn't this problem--the problem of an absolute limit to the amount of responsibility local governments can bear--undermine any system of "ideal federalism" such as the one your paper lays out? Answer 1: Federal statutes and regulations may be burdensome to state and local governments both because of the types of requirements that are imposed and because of the number of requirements. Crucial to both types of burden, however, is the ability of governments to fund the necessary programs and compliance activities.1/ Several factors, including income constraints and political will, can limit the fiscal capacities of federal, state and local governments and, in turn, their ability to comply with federal requirements. At some point, federal mandates may outstrip the capacities of state and local governments to fund required programs and activities while maintaining desired levels of other state and local public goods and services. This general problem may be exacerbated by recent tax-limiting referenda, such as California's Proposition 13, as well as other impediments to raising revenue, including those potentially resulting from interjurisdictional competition. Allocating responsibility to lower levels of government without giving attention to the financial abilities of these levels of government to carry out assigned functions, and without providing necessary funding can result in poorly executed programs and responsibilities. Realistically, the issue of burden should be discussed in terms of relative limits to spending--the amount that a jurisdiction is willing to spend on environmental protection relative to other public and private sector spending. Does the existence of relative limits on government spending alter the federalism paradigm? To the extent that these limits are unknown to federal legislators and regulatory agencies, the answer is "yes." Unfortunately, there is no single "perfect" measure of fiscal capacity--that is, of the ability of a government to raise necessary revenues. The limit to government spending depends not only on the levels of income in the jurisdiction, but also on the preferences of the population for environmental spending relative to other types of public and private sector expenditures. If national priorities differ from state and local priorities, then federal delegation of responsibilities may, indeed, constitute a burden on lower levels of government. On the other hand, as discussed in the "Environmental Federalism" working paper, funding is one of the functions that must be assigned to some level of 1. The "Environmental Federalism" working paper presents several economic criteria that can be used to evaluate allocating program and fiscal responsibilities across levels of government. Different levels of government may be better suited to undertake different environmental protection activities as a result, for example, of information requirements, the size of the jurisdiction, or the nature of the problem. government. As such, the decision of which government should fund a program can be made subsequent to assigning program responsibility. Following the same principles that guide other allocation decisions, responsibility should be allocated in order to promote decisions that result in environmental programs and levels of protection that are efficient and equitable. Thus, within the framework of federalism, federal funding to supplement state and locally generated revenues may be warranted to ensure that governments possess adequate resources to implement efficient and equitable programs, that national goals are met, and that the burdens are distributed equitably. On a case by case basis, the need for funding may differ among individual states and localities with disparate income levels and pollution problems. Question 2: Has actual environmental clean-up and protection benefited or been harmed by the transfer of responsibilities to state and local government? Answer 2: In a recent report, Environmental Progress and Challenges: EPA's Update, the U.S. Environmental Protection Agency describes strides in environmental improvement that have occurred since the 1960s, including reductions in atmospheric lead and carbon monoxide concentrations, improvements in sewage treatment, and the restoration and protection of many rivers, streams, and lakes for fishing and swimming activities. While improvements in environmental quality have occurred, it is difficult to determine the extent to which the major environmental statutes have contributed to this cleanup, and whether these improvements have been enhanced or delayed by the allocation of program responsibility embodied in the statutes. The data presented in the federalism paper describe the growth in statutory and other responsibilities during the past decade, as well as the net decline (in real terms) in the operating budget of the U.S. Environmental Protection Agency during the same time period. These trends could suggest that there is increasing risk that the major programs may be inhibited or may not get the scrutiny that they should at both the federal and lower levels of government. Alternatively, the decline in federal funds is less problematic if governments are becoming more efficient, or if problems faced in the early years of program development have now been solved. The types of environmental problems being addressed are changing and all levels of government are facing budget pressures. These developments imply that the partnerships and approaches that have worked in the past may not continue to work in the future, and that different divisions of responsibility may be necessary to deal with these problems effectively. For example, the emphasis in environmental protection appears to be shifting from dealing with national environmental problems, such as the "criteria air pollutants," to problems with transnational implications, such as acid rain and global warming, and to more localized or regional concerns, such as radon, groundwater contamination, and household waste disposal. At the same time, many of the easier decisions to control national pollution problems have been made. As a result, the more mature protection programs may be at turning points. For example, the increasing costs of controlling air pollutants, such as ozone, require difficult choices for both federal and state or local officials and test the existing relationships between these governments. TESTIMONY OF JOAN CLAYBROOK, PRESIDENT, PUBLIC CITIZEN ON THE REGULATORY PROCESS October 3, 1988 Mr. Chairman; Members of the Committee: My name is Joan Claybrook, and I am President of Public Citizen, a non-profit consumer advocacy organization founded by Ralph Nader, which has over 50,000 members nationwide. Appearing with me today is David C. Vladeck, a senior attorney at Public Citizen Litigation Group, who has litigated a number of cases involving the Office of Management and Budget's interference with the rulemaking process. Thank you for the invitation to appear before you today to comment on the impact of Executive Order 12498 on the regulatory process. As the Committee is no doubt aware, this Administration has centralized control of the administrative process in the Office of Management and Budget ("OMB") to an unprecedented degree. Executive Order 12498 completes the shift in the locus of regulatory decision making begun by Executive Order 12291 from the regulatory agencies to OMB. Under these two Executive Orders and the Paperwork Reduction Act, OMB now exercises extensive control over the administrative process from start to finish. With this power, OMB has managed to repeatedly cut back on health and safety regulations, both by weakening regulations and delaying their issuance. Executive Order 12498 plays a key role in giving OMB this control over the administrative process. Taken alone, Executive Order 12498 accords OMB the power to shape the agenda of all Executive Branch agencies, since it directs OMB to review on an annual basis each agency's regulatory policies, goals, and objectives for the coming year and information concerning all significant regulatory actions underway or planned. OMB may return part or all of a proposed regulatory program that it views as inconsistent with the Administration's policies and priorities or out of line with the requirements of section 2 of Executive Order 12291, namely, that administrative decisions must be based on "adequate information concerning the need for and consequences of proposed government action" and that agency priorities "will maximize the aggregate net potential benefits to society when the societal costs and benefits are compared." With its control over an agency's budget, including an agency's resources for research, data gathering, surveys, and other types of information development, there is little likelihood that agencies will fight with OMB on any particular regulatory initiative. But Executive Order 12498 cannot be examined in isolation. While it focuses on the development of an agency's priorities, Executive Order 12291 and the Paperwork Reduction Act give OMB enormous control over the agency's final work product. Under Executive Order 12291, all executive branch agencies must send proposed and final regulations to OMB for pre-publication review. OMB can prevent an agency from publishing a final rule until OMB has given the agency its comments and the agency has responded to OMB's satisfaction. Since the Executive Order neither imposes enforceable time limits for the completion of OMB review nor limits the number of times OMB can disapprove the agency's action, the Order gives OMB de facto veto power over all agency rulemaking. OMB's authority over agency regulations is further bolstered by the Paperwork Reduction Act of 1980, 44 U.S.C. § 3501 et seq., which gives OMB authority over regulations that require the collection of information. The Act confers on OMB the authority, under certain circumstances, to curb an agency's efforts to furnish itself with information if OMB concludes that the collection of information is "not necessary for the proper performance of the functions of the agency." 44 U.S.C. §§ 3504 (h), 3508. The Act prescribes a procedure to be followed by an agency that contemplates promulgating a rule containing "collection of information requirements." No later than publication of a Notice of Proposed Rulemaking involving such requirements, the agency must submit a copy of the proposed rule to OMB. § 3504 (h) (1). OMB then has sixty days in which to file public comments on the "collection of information requirement[s]" in the proposed rule. § 3504 (h) (2). In publishing a final rule, the agency must "explain how any collection of information requirement contained in the final rule responds to the comments, if any, filed by the Director [of OMB] or the public, or explain why it rejected those comments." § 3504 (h) (3). Within sixty days after the publication of the final rule, OMB may disapprove any collection of information requirement contained in the rule if it finds the agency's response to its comments was |