EXECUTIVE OFFICE
OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON,
D.C. 20503
October 28, 1999
M-00-02
MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES, AND INDEPENDENT REGULATORY AGENCIES
FROM: Jacob
J. Lew /S/
Director
SUBJECT: Guidance for Implementing EO., 13132, "Federalism"
President Clinton issued Executive Order No. 13132, "Federalism," on August 4, 1999. The Order takes effect on November 2, 1999. As the preamble indicates, the Order seeks "to ensure that the principles of federalism established by the Framers guide the executive departments in the formulation and implementation of policies." After emphasizing key federalism principle and policymaking criteria, the Order designates specific procedures for intergovernmental consultation and calls for more flexible issuance of government waivers.
Within OMB, the Office of Information and Regulatory Affairs (OIRA) will have primary responsibility for implementing the Order. Under Executive Order 12866, it already coordinates our regulatory review and planning functions. To assist you in complying with the Order, the OIRA Administrator, John T. Spotila, has prepared the attached guidance for you. The guidance describes what agencies should do to comply with EO. 13132 and how they should document that compliance to OMB consistent with E.O. 12866 procedures. Please circulate his memorandum (attached) to the appropriate officials within your agency for immediate attention.
It is important that each agency designate, preferably before November 2, 1999. a federalism official with principal responsibility for the agency's implementation of E.O. 13132. Please notify OIRA of your designation of this federalism official as soon as possible.
Attachment
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF
MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
October 28, 1999
MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES, AND INDEPENDENT REGULATORY AGENCIES
FROM: John T.
Spotila /S/
Administration
Office of
Information
and Regulatory Affairs
SUBJECT: Guidance for Implementing E.O. 13132
President Clinton issued Executive Order No. 13132, "Federalism," on August 4, 1999 (64 Fed. Reg. 43255 (August 10, 1999), the "Order"). The Order emphasizes consultations with State and local governments and enhanced sensitivity to their concerns. It establishes specific requirements that the Federal government must follow as it develops and carries out policy actions that affect State and local governments. As the President stated, "[t]he Executive order on federalism I signed will strengthen our partnership with State and local governments and ensure that executive branch agencies are able to do their work on behalf of the American people."
The Order sets forth "Fundamental Federalism Principles" (Sec.2), "Federalism Policymaking Criteria" (Sec. 3), "'Special Requirements for Preemption" (Sec. 4). "Special Requirements for Legislative Proposals" (See. 5), and specific procedures for intergovernmental consultation and increased flexibility for State and local government waivers Secs. 6 & 7). Please read the full text (see Appendix A).
This guidance is directed to procedural requirements -- what agencies should do to comply with the Order and how they should document that compliance to OMB.
1. When does the Order take effect?
E.O. 13132 becomes effective on November 2,1999 (See. I 0(c))
2. What agencies does it cover?
E.O. 13132 applies to all Federal agencies, except for the independent regulatory agencies (See. I (c)). It encourages independent regulatory agencies to comply voluntarily with its provisions (See. 9). E.O. 13132 adopts the definitions of "agency" and "independent regulatory agency" used by the Paperwork Reduction Act of 1995.
3. What is the role of an agency federalism official and which agencies must have them?
The federalism official has principal responsibility for the agency's implementation of the Order (Sec. 6(a)). Each federalism official must:
· ensure that the agency considers federalism principles in its development of regulatory and legislative policies with federalism implications;
· ensure that the agency has an accountable process for meaningful and timely intergovernmental consultation in the development of regulatory policies that have federalism implications; and
· provide certifications of compliance to OMB.
Each agency and department must have a federalism official (Sec. 6(a)). The federalism official may designate staff to assist in the performance of these duties.
4. When does an agency need to designate its federalism official?
Each agency should do so as soon as possible, preferably before November 2, 1999, the Order's effective date. No later than January 31. 2000, the head of each agency must designate the agency federalism official, and that official must submit to OMB a description of the agency's consultation process. Each federalism official should promptly notify Stuart Shapiro in the Office of Information and Regulatory Affairs (OIRA) (202-395-7316 and SShapiro@OMB.EOP.GOV) of this designation.
5. To what activities does the Order apply?
Section 2 sets forth "Fundamental Federalism Principles" to guide agencies in formulating and implementing policies that have federalism implications. Section 3 sets forth "Federalism Policymaking Criteria!' to which agencies must adhere "to the extent permitted by law." These fedemlism principles and criteria apply to "regulations, legislative comments or proposed legislation, and other policy statements or actions" that have "'substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government" (See. I (a)). The term "States" includes "units of local government and other political subdivisions established by the states!' (Sec. I (b)).
6. What are the Order's preemption requirements?
Under Section 4, "Special Requirements for Preemption,," agencies must act in strict accordance with governing law in taking action that preempts State law. Agencies must:
· construe Federal statutes to preempt State law only where the exercise of State authority directly conflicts with the exercise of Federal authority under the Federal statutes or there is other clear evidence that Congress intended to preempt State law,
· construe Federal statutes to authorize the issuance of regulations that preempt State law only where the exercise of State authority directly conflicts with the exercise of Federal authority under the Federal statutes or there is other clear evidence to conclude that Congress intended the agency to have the authority to preempt State law through rulemaking;
· restrict regulatory preemption of State law to the minimum level necessary to achieve the objectives of the applicable Federal statute;
· consult, to the extent practicable, with State and local officials if the agency foresees the possibility of a conflict between State law and Federally protected interests; and
· provide all affected State and local officials notice and an opportunity to participate in the proceedings when an agency proposes to preempt State law through agency adjudication (for example, a regulatory permitting process) or a rulemaking,
The Order also establishes a process to ensure that agencies adhere to the "'Special Requirements for Preemption!' in Section 4. For any draft final regulation with federalism implications that is submitted for OIRA review under E.O. 12866, the fedemlism official must certify that the requirements of E.O. 13132 concerning both the evaluation of federalism policies and consultation have been met in a meaningful and timely manner (See. 8(a)).
OIRA will require such certifications beginning on November 2, 1999, for all draft final rules with federalism implications submitted for OIRA review under E.O. 12866. (See Appendix B for a recommended certification format.) We understand that a final rule to be submitted for review beginning on November 2, 1999, may have been promulgated as a Notice of Proposed Rulemaking (NPRM) prior to August 4, 1999 (the date E.O., 13132 was signed). To the extent, for example, that the intergovernmental consultation process had not occurred as called for by E.O. 13132, the certification should so state. Agencies must publish a copy or summary of the certification in the preamble to the final rule.
7. What does the Order require concerning agency development of proposed legislation?
Under Section 5, "Special Requirements for Legislative Proposals,," agencies must not submit to the Congress legislation that would:
· directly regulate the States in ways that would interfere with functions essential to the States' separate existence;
· attach to Federal grants conditions that are not reasonably related to the purpose of the grant, or
· otherwise preempt State law, unless such preemption is consistent with the fedemlism principles and policymaking criteria stated in Sections 2 and 3 of the Order (see Question 6, above).
The Order establishes a process to ensure that agencies consider the "Special Requirements for Legislation'" stated in Section 5. In transmitting for OMB clearance proposed legislation with federalism implications, the federalism official must certify that the "Special Requirements for Legislative Proposals" set forth in Section 5 have been met (See. 8(b)). OMB's Legislative Reference Division will require such certifications beginning on November 2, 1999, for all proposed legislation with federalism implications that is submitted for OMB review. (See Appendix C for a recommended certification format.)
8. What does the Order require concerning agency development of regulations?
Agencies must have "an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications" (See. 6(a)). The consultation process must involve "State and local officials" (See. 6(a)).
· E.O. 13132 defines this phrase to mean "elected officials of State and local governments or their representative national organizations" (See. l(d)). We understand that many agencies consult routinely with their professional counterparts in State and local governments (often civil servants, not elected officials). The agencies must include elected State and local government officials or their representative national organizations in the consultation process. We also encourage agencies to contiE.O. 13132 defines this phrase to mean "elected off
· E.O. 13132 supplements, but does not supersede the requirements contained in E.O. 12372. "Intergovernmental Review of Federal Programs" Secs. 3(a) & 10(a)). E.O. 12372 seeks to improve the intergovernmental partnership between the Federal Government and the States. It asks Federal agencies to rely on State and local processes for consultation with elected State and local government officials that would provide the non-FederaI funds for, or that would be directly affected by, proposed Federal assistance E.O. 13132 supplements, but does not supersede the requirements contained in E.O. 12372. "Intergovernmental Review of Federal Programs" Secs. 3(a) & 10(a)). E.O. 12372 seeks to improve the intergovernmental partnership between the Federal Government an
Before January 31, 2000, the agency's federalism official must submit to OMB "a description of the agency's consultation process" (See. 6(a)). Each federalism official should send these descriptions to Stuart Shapiro in OIRA (395-7316 and SShapiro@OMB.EOP.GOV). Each
description should indicate how the agency identifies those policies with federalism implications and the procedures the agency will use to ensure meaningful and timely consultation with affected State and local officials. This consultation process expands on the consultation procedures in Section I of E.O. 12875 (58 Fed. Reg. 58093 (October 28, 1993)). (E.O. 13132 revokes E.O. 12875.)
The Order establishes specific procedures for intergovernmental consultation 'in two circumstances - if a rule imposes unfunded mandates or if a rule preempts State law.
· Subsection 6(b) establishes the specific procedures for unfunded mandates. Subsection 6(b) defines a mandate as "'any regulation that has federalism implications, that imposes substantial direct compliance costs on State and local governments, and that is not required by statute." Subsection 6(b)(1) permits an agency not to follow the specific procedures if the Federal government funds the direct costs of complying with the mandate.
· Subsection 6(c) establishes the specific procedures for "any regulation that has federalism implications and that preempts State law."
The specific procedures are identical for regulations that impose unfunded mandates or preempt State law, Agencies must adhere to these specific procedures "to the extent practicable and permitted by law" (Secs. 6(b) & (c))
· Each agency must consult, to the extent practicable and permitted by law, with State and local officials "early in the process of developing the proposed regulation'' (Sees. 6(b)(2)(A) & (c)(1)). These consultations should seek comment on compliance costs or preemption as appropriate to the nature of the rulemaking under development. The timing, nature, and detail of the consultation involved should also be appropriate to the nature of the regulation involved.
· When an agency submits a draft final regulation to ONM for review under E.O. 12866 prior to promulgation of the final regulation, the agency must include in "a separately identified portion of the preamble to the regulation" a "federalism summary impact statement" (Sees. 6(b)(2)(B) & (c)(2)).
· The "federalism summary impact statement" must include
-- “a description of the extent of the agency's prior consultation with State and local officials;
-- “a summary of the nature of their concerns and the agency's position supporting the need to issue the regulation; and
-- “a statement of the extent to which the concerns of State and local officials have been met" (Secs. 6(b)(2)(B) & 6(c)(2)).
· To the extent that an agency has carried out intergovernmental consultations prior to publication of the Notice of Proposed Rulemaking (NPRM), we strongly recommend that the agency help State and local governments, and the public as a whole, by including a "federalism summary impact statement'' in its preamble to the NPRM.
· When submitting a draft final regulation to OMB for review, each agency must provide a copy of any formal policyrelated correspondence from State and local officials, and must, on request, make available a copy of any other written communications submitted to the agency by State and local officials (Secs. 6(b)(2)(C) & 6(c)(3)).
9. Will these consultations be subject to the Federal Advisory Committee Act?
No. The exemption to the Federal Advisory Committee Act provided in Section 204(b) of title II of P.L. 104-4, the "Unfunded Mandates Reform Act of 1995" (UMRA), remains in effect. As OMB stated in its guidelines for implementing Section 204(b):
· In accordance with the legislative intent, the exemption should be read broadly to facilitate intergovernmental communications on responsibilities or administration,
· This exemption applies to meetings between Federal officials and employees and State, local, or tribal governments, acting through their elected officers, officials, employees, and Washington representatives, at which "views, information, or advice" are exchanged concerning the implementation of intergovernmental responsibilities or administration, including those that arise explicitly or implicitly under statute, regulation, or Executive order. The scope of meetings covered by the exemption should be constThis exemption applies to meetings between Federal officials and employees and State, local, or tribal governments, acting through their elected officers, officials, employees, and Washington representatives, at which "views, information, or advice" are exchanged concerning the implementation of intergovernmental responsibilities or administration, including those that arise explicitly or implicitly under statute, regulation, or Executive order. The scope of meetings covered by the exemption should be constThis exemption applies to meetings between Federal officials and employees and State, local, or tribal governments, acting through their elected officers, officials, employees, and Washington representatives, at which "views, information, or advice" are exchanged concerning the implementation of intergovernmental responsibilities or administration, including those that arise explicitly or implicitly under statute, regulation, or Executive order. The scope of meet
10. What does the Order provide concerning flexibility for State and local waivers?
The waiver provisions in Section 7 are substantially identical to those stated in Section 2 of E.O. 12875. The Order directs agencies to "review the processes under which State and low governments apply for waivers of statutory and regulatory requirements and take appropriate steps to streamline those processes" (Sec. 7(a)). It also sets forth the circumstances under which agencies must consider an application by a State for a waiver of statutory or regulatory requirements. It encourages flexibility in granting waivers, but does not change applicable Federal waiver review criteria, including the principle of budget neutrality. It also sets a target completion date of 120 days after the filing of a complete waiver application for an agency decision. These provisions apply "only to statutory or regulatory requirements that are discretionary and subject to waiver by the agency" (Sec. 7(d)).
11. When will OMB report on agency implementation of this order to State and local officials?
No later than Friday, May 1, 2000, the OMB Director and the Assistant to the President for Intergovernmental Affairs plan to confer with State and local officials to ensure that this Order is being properly and effectively implemented (Sec. 8(c)).
Under UMRA Section 208, OMB must publish an annual report on agency compliance with the requirements of Title 11, including agency compliance with Section 204, "State, Local, and Tribal Government Input." Our request next year for a description of your UMRA Section 204 consultations will include a request for a summary of your efforts to comply with this Order as well.
12. With whom should we consult when we have questions concerning E.O. 13132?
If your staff have questions concerning this Order, please contact Swart Shapiro in OIRA (395-7316 and SShapiro@OMB.EOP.GOV).