REGULATORY IMPACT STATEMENT

As H.R. 3685 merely adds `actual or perceived sexual orientation' to the categories of discrimination already prohibited by federal employment law, does not create any new enforcement structures but merely utilizes those already in existence, and authorizes, but does not require, further regulation by the appropriate agencies to carry out the Act, the Committee has determined that H.R. 3685 will have minimal impact on the regulatory burden.

UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandates Reform Act, P.L. 104-4) requires a statement of whether the provisions of the reported bill include unfunded mandates. (The CBO letter will address this issue.)

EARMARK STATEMENT

H.R. 3685 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e) or 9(f) of rule XXI.

ROLLCALL

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STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) of rule X of the Rules of the House of Representatives, the Committee's oversight findings and recommendations are reflected in the body of this report.

NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of the Rules of the House of Representatives and section 308(a) of the Congressional Budget Act of 1974 and with respect to requirements of Clause 3(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 1974, the Committee has received the following estimate for H.R. 3685 from the Director of the Congressional Budget Office:

Hon. GEORGE MILLER,
Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3685, the Employment Non-Discrimination Act of 2007.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Mark Grabowicz.

Sincerely,

PETER R. ORSZAG.

Enclosure.

H.R. 3685--Employment Non-Discrimination Act of 2007

Summary: H.R. 3685 would prohibit employment discrimination based on sexual orientation. Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 3685 would cost $28 million over the 2008-2012 period for the Equal Employment Opportunity Commission (EEOC) to handle additional discrimination cases. The bill could affect direct spending, but we estimate that any such effects would be less than $500,000 annually. H.R. 3685 would not affect revenues.

H.R. 3685 would prohibit state, local, and tribal governments from discriminating against employees and applicants for employment based on sexual orientation, and it would require those governments to post notices regarding such prohibitions. Those requirements would be intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). However, CBO estimates that the costs of complying with those mandates would not be significant and would not exceed the thresholds established in UMRA ($66 million in 2007, adjusted annually for inflation).

The bill also would impose a number of mandates on private-sector employers, employment agencies, and labor organizations. CBO estimates that the direct cost of those requirements would not exceed the annual threshold specified in UMRA ($131 million in 2007, adjusted annually for inflation) in any of the first five years the mandates would be effective.

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 3685 is shown in the following table. The costs of this legislation fall within budget function 750 (administration of justice).

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                                     By fiscal year, in millions of dollars--                     

                                                                         2008 2009 2010 2011 2012 

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SPENDING SUBJECT TO APPROPRIATION 1                                                               

EEOC Spending Under Current Law:                                                                  

Estimated Authorization Level 2                                           339  351  362  375  387 

Estimated Outlays                                                         338  350  361  374  386 

Proposed Changes:                                                                                 

Estimated Authorization Level                                               4    6    6    6    6 

Estimated Outlays                                                           4    6    6    6    6 

EEOC Spending Under H.R. 3685:                                                                    

Estimated Authorization Level 2                                           343  357  368  381  393 

Estimated Outlays                                                         342  356  367  380  392 

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Basis of estimate: CBO estimates that implementing H.R. 3685 would cost $28 million over the 2008-2012 period, assuming appropriation of the necessary amounts. For this estimate, CBO assumes that the necessary amounts will be appropriated near the start of each fiscal year and that outlays will follow the historical spending pattern of those activities. The bill could affect direct spending, but we estimate that any such effects would be less than $500,000 annually.

Spending subject to appropriation

The EEOC expects that implementing H.R. 3685 would increase its annual caseload (currently about 90,000 cases) by about 5 percent and would require an additional 60 to 80 staff. CBO estimates that the costs to hire an additional 70 employees would reach $6 million annually by fiscal year 2009, subject to the appropriation of the necessary amounts. We expect that enacting H.R. 3685 also would increase the workload for a few other agencies, such as the Merit Systems Protection Board, but any increase in costs for those agencies would not be significant because of the small number of additional cases.

The additional cases resulting from H.R. 3685 also would increase the workload of the Department of Justice's Civil Rights Division and the federal judiciary. However, CBO estimates that increased costs for those agencies would also not be significant because of the relatively small number of cases referred to them.

Direct spending

Enacting H.R. 3685 could increase payments from the Treasury's Judgment Fund for settlements against federal agencies in discrimination cases based on sexual orientation. However, CBO estimates that any increases in direct spending would be less than $500,000 annually.

Estimated impact on state, local, and tribal governments: H.R. 3685 would prohibit state, local, and tribal governments from discriminating against employees and applicants for employment based on sexual orientation, and it would require those governments to post notices regarding such prohibitions. Those requirements would be intergovernmental mandates as defined in UMRA. The costs of the mandates would include the costs of posting notices and modifying employment procedures to avoid discriminatory practices. CBO assumes that the costs of notices would likely be relatively minor and would be made in the course of other routine updates. Similarly, changes to employment procedures likely would build on such things as ongoing training and updates to personnel manuals. Thus, CBO estimates that compliance costs would not be significant and would not exceed the thresholds established in UMRA ($66 million in 2007, adjusted annually for inflation).

Under H.R. 3685, by accepting any federal financial assistance, states would waive their sovereign immunity under the 11th Amendment and would be subject to suit for discriminatory practices. Because UMRA excludes conditions of federal assistance from the definition of an intergovernmental mandate, any costs resulting from potential suits would not be the result of complying with an intergovernmental mandate as defined in UMRA. In any event, the number of such cases likely would be very small, and states would not be subject to punitive damages.

Estimated impact on the private sector: The bill would impose a number of mandates on many private-sector employers, employment agencies, and labor organizations. It would prohibit employers from discriminating against any worker on the basis of sexual orientation in hiring, firing, pay, and other aspects of employment. The bill would also require employers to modify the notices they are required to post regarding federal laws that protect employees from discrimination and set minimum wages. CBO estimates that the direct costs of complying with those mandates would not exceed the annual threshold specified in UMRA ($131 million in 2007, adjusted annually for inflation) in any of the first five years the mandates would be effective.

Estimate prepared by: Federal Costs: Mark Grabowicz; Impact on State, local, and Tribal Governments: Melissa Merrell; Impact on the Private Sector: Nabeel Alsalam.

Estimate approved by: Theresa Gullo, Deputy Assistant Director for Budget Analysis.