'FEDERALISM'

                            THE WHITE HOUSE

                     Office of the Press Secretary
                         (Birmingham, England)
________________________________________________________________________
For Immediate Release                                       May 14, 1998


                           EXECUTIVE ORDER

                            - - - - - - -

                             FEDERALISM


     By the authority vested in me as President by the Constitution and
the laws of the United States of America, and in order to guarantee the
division of governmental responsibilities, embodied in the Constitution,
between the Federal Government and the States that was intended by the
Framers and application of those principles by the Executive departments
and agencies in the formulation and implementation of policies, it is
hereby ordered as follows:

     Section 1.  Definitions.  For purposes of this order:

     (a) "State" or "States" refer to the States of the United States of
America, individually or collectively, and, where relevant, to State
governments, including units of local government and other political
subdivisions established by the States.

     (b) "Policies that have federalism implications" refers to Federal
regulations, proposed legislation, and other policy statements or
actions that have substantial direct effects on the States or on the
relationship, or the distribution of power and responsibilities, between
the Federal Government and the States.

     (c) "Agency" means any authority of the United States that is an
"agency" under 44 U.S.C. 3502(1), other than those considered to be
independent regulatory agencies, as defined in 44 U.S.C. 3502(5).

     Sec. 2.  Fundamental Federalism Principles.  In formulating and
implementing policies that have federalism implications, agencies shall
be guided by the following fundamental federalism principles:

     (a) The structure of government established by the Constitution is
premised upon a system of checks and balances.

     (b) The Constitution created a Federal Government of supreme, but
limited, powers.  The sovereign powers not granted to the Federal
Government are reserved to the people or to the States, unless
prohibited to the States by the Constitution.

     (c) Federalism reflects the principle that dividing power between
the Federal Government and the States serves to protect individual
liberty.  Preserving State authority provides an essential balance to
the power of the Federal Government, while preserving the supremacy of
Federal law provides an essential balance to the power of the States.

     (d) The people of the States are at liberty, subject only to the
limitations in the Constitution itself or in Federal law, to define the
moral, political, and legal character of their lives.

     (e) Our constitutional system encourages a healthy diversity in the
public policies adopted by the people of the several States according to
their own conditions, needs, and desires.  States and local governments
are often uniquely situated to discern the sentiments of the people and
to govern accordingly.

     (f) Effective public policy is often achieved when there is
competition among the several States in the fashioning of different
approaches to public policy issues.  The search for enlightened public
policy is often furthered when individual States and local governments
are free to experiment with a variety of approaches to public issues.
Uniform, national approaches to public policy problems can inhibit the
creation of effective solutions to those problems.

     (g) Policies of the Federal Government should recognize the
responsibility of -- and should encourage opportunities for -- States,
local governments, private associations, neighborhoods, families, and
individuals to achieve personal, social, environmental, and economic
objectives through cooperative effort.

     Sec. 3.  Federalism Policymaking Criteria.  In addition to adhering
to the fundamental federalism principles set forth in section 2 of this
order, agencies shall adhere, to the extent permitted by law, to the
following criteria when formulating and implementing policies that have
federalism implications:

     (a) There should be strict adherence to constitutional principles.
Agencies should closely examine the constitutional and statutory
authority supporting any Federal action that would limit the
policymaking discretion of States and local governments, and should
carefully assess the necessity for such action.

     (b) Agencies may limit the policymaking discretion of States and
local governments only after determining that there is constitutional
and legal authority for the action.

     (c) With respect to Federal statutes and regulations administered
by States and local governments, the Federal Government should grant
States and local governments the maximum administrative discretion
possible.  Any Federal oversight of such State and local administration
should not unnecessarily intrude on State and local discretion.

     (d) It is important to recognize the distinction between matters of
national or multi-state scope (which may justify Federal action) and
matters that are merely common to the States (which may not justify
Federal action because individual States, acting individually or
together, may effectively deal with them).  Matters of national or
multi-state scope that justify Federal action may arise in a variety of
circumstances, including:

     (1) When the matter to be addressed by Federal action occurs
interstate as opposed to being contained within one State's boundaries.

     (2) When the source of the matter to be addressed occurs in a State
different from the State (or States) where a significant amount of the
harm occurs.

     (3)  When there is a need for uniform national standards.

     (4) When decentralization increases the costs of government thus
imposing additional burdens on the taxpayer.

     (5) When States have not adequately protected individual rights and
liberties.

     (6) When States would be reluctant to impose necessary regulations
because of fears that regulated business activity will relocate to other
States.

     (7) When placing regulatory authority at the State or local level
would undermine regulatory goals because high costs or demands for
specialized expertise will effectively place the regulatory matter
beyond the resources of State authorities.

     (8) When the matter relates to Federally owned or managed property
or natural resources, trust obligations, or international obligations.

     (9) When the matter to be regulated significantly or uniquely
affects Indian tribal governments.

     Sec. 4.  Consultation.

     (a) Each agency shall have an effective process to permit elected
officials and other representatives of State and local governments to
provide meaningful and timely input in the development of regulatory
policies that have federalism implications.

     (b) To the extent practicable and permitted by law, no agency shall
promulgate any regulation that is not required by statute, that has
federalism implications, and that imposes substantial direct compliance
costs on States and local governments, unless:

          (1) funds necessary to pay the direct costs incurred by the
       State or local government in complying with the regulation are
       provided by the Federal Government; or

          (2) the agency, prior to the formal promulgation of the
       regulation,

               (A) in a separately identified portion of the preamble
            to the regulation as it is to be issued in the Federal
            Register, provides to the Director of the
            Office of Management and Budget a description of the extent
            of the agency's prior consultation with representatives of
            affected States and local governments, a summary of the
            nature of their concerns, and the agency's position
            supporting the need to issue the regulation; and

               (B) makes available to the Director of the Office of
            Management and Budget any written communications submitted
            to the agency by States or local governments.

     Sec. 5.  Increasing Flexibility for State and Local Waivers.

     (a) Agencies shall review the processes under which States and
local governments apply for waivers of statutory and regulatory
requirements and take appropriate steps to streamline those processes.

     (b) Each agency shall, to the extent practicable and permitted by
law, consider any application by a State or local government for a
waiver of statutory or regulatory requirements in connection with any
program administered by that agency with a general view toward
increasing opportunities for utilizing flexible policy approaches at the
State or local level in cases in which the proposed waiver is consistent
with applicable Federal policy objectives and is otherwise appropriate.

     (c) Each agency shall, to the extent practicable and permitted by
law, render a decision upon a complete application for a waiver within
120 days of receipt of such application by the agency.  If the
application for a waiver is not granted, the agency shall provide the
applicant with timely written notice of the decision and the reasons
therefor.

     (d) This section applies only to statutory or regulatory
requirements that are discretionary and subject to waiver by the agency.

     Sec. 6. Independent Agencies.  Independent regulatory agencies are
encouraged to comply with the provisions of this order.

     Sec. 7. General Provisions.

     (a) This order is intended only to improve the internal management
of the executive branch and is not intended to, and does not, create
any right or benefit, substantive or procedural, enforceable at law or
equity by a party against the United States, its agencies or
instrumentalities, its officers or employees, or any other person.

     (b) This order shall supplement but not supersede the requirements
contained in Executive Order 12866 ("Regulatory Planning and Review"),
Executive Order 12988 ("Civil Justice Reform"), and OMB Circular A-19.

     (c) Executive Order 12612 of October 26, 1987, and Executive Order
12875 of October 26, 1993, are revoked.

     (d) The consultation and waiver provisions in sections 4 and 5 of
this order shall complement the Executive order entitled, "Consultation
and Coordination with Indian Tribal Governments," being issued on this
day.

     (e) This order shall be effective 90 days after the date of this
order.




                                   WILLIAM J. CLINTON
                                   THE WHITE HOUSE,
                                   May 14, 1998.




                                   # # #