6.1 The Unfunded Mandates Reform Act (UMRA)

‘Federal intergovernmental mandate’ means (A) any provision in legislation, statute, or regulation that (i) would impose an enforceable duty upon State, local, or tribal governments, except (I) a condition of Federal assistance; or (II) a duty arising from participation in a voluntary Federal program... (B) any provision in legislation, statute, or regulation that relates to a then-existing Federal program under which $500,000,000 or more is provided annually to State, local, and tribal governments under entitlement authority, if the provision (i)(I) would increase the stringency of conditions of assistance to State, local, or tribal governments under the program; or (II) would place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding to State, local, or tribal governments under the program; and (ii) the State, local, or tribal governments that participate in the Federal program lack authority under that program to amend their financial or programmatic responsibilities to continue providing required services that are affected by the legislation, statute, or regulation.

‘Federal private sector mandate’ means any provision in legislation, statute, or regulation that (A) would impose an enforceable duty upon the private sector except (i) a condition of Federal assistance; or (ii) a duty arising from participation in a voluntary Federal program; or (B) would reduce or eliminate the amount of authorization of appropriations for Federal financial assistance that will be provided to the private sector for the purposes of ensuring compliance with such duty (Section 421).

The written statement must

• identify the statutory authority under which the rule is to be promulgated;
• assess the benefits and costs of the rule; and
• describe the Agency's consultation with State, local, and tribal government officials during the development of the rule.

If a written statement is prepared for a proposed rule, then the final rule must also include a written statement, updated to reflect any changes in analysis or intergovernmental consultation that has occurred since the proposal stage. The written statement should be prepared as a joint effort between the ISEG analyst and the workgroup.

The statute provides specific directions regarding the contents of the benefit-cost analysis to be included in the written statement. In particular, UMRA requires that the analysis

• analyze the extent to which costs incurred by State, local, and tribal governments can be paid with Federal financial assistance;
• assess the extent to which Federal resources are available to carry out the Federal mandate;
• estimate future compliance costs;
• identify and analyze any disproportionate budgetary effect of the Federal mandate on a particular region of the country; a particular State, local, or tribal government; or a particular segment of the private sector;
• assess the effects of the rule on the national economy, including productivity, economic growth, employment and job creation, and international competitiveness; and
• identify and analyze a reasonable number of regulatory alternatives.

While the information developed to meet the EA requirements of EO 12866 will generally satisfy the analytical requirements outlined above, three basic requirements unique to UMRA need to be met independently of any EA conducted under another authority:

• ISEG analysts will need to conduct a preliminary expenditure assessment to determine whether the rule is likely to impose a mandate of more than $100 million in any one year. EPA guidance recommends that this preliminary assessment be conducted for any rule having consequences for non-Federal governments or the private sector. This preliminary assessment differs somewhat from an assessment conducted to determine whether a rule is economically significant under EO 12866. An economically significant regulation as defined by EO 12866 is any rule likely to have an annual impact of $100 million or more. In contrast, the standard expressed in UMRA requires an analysis of direct expenditures by non-Federal governments or the private sector. The purpose of the expenditure assessment is, therefore, to determine whether direct expenditures by either non-Federal levels of government or the private sector are likely to exceed $100 million in any one year.
• UMRA requires an analysis of possible Federal assistance to State, local, and tribal governments on which the mandate is imposed. This requirement is unique to UMRA and involves Federal budgetary considerations not usually addressed in an economic analysis prepared under EO 12866.
• UMRA specifically requires an analysis of the distribution of impacts across regions of the country, different levels or types of governments, and various sectors of the economy. In contrast, most analyses prepared under EO 12866 assess the impact of the rule on the nation as a whole, rather than on a region-by-region or sector-by-sector basis.

For further guidance on conducting expenditure assessments and impact analyses under UMRA, analysts are referred to the Agency’s Unfunded Mandates Guidance ( EPA, 1995b).