The Fazio exception is a colloquial reference to section 311(c) of the Congressional Budget Act of 1974 (CBA). This provision of law gives an exemption to legislation that would otherwise cause a point of order under section 311 (CBA) if that legislation is within the amount of spending authority provided to it by the budget resolution. A section 311 point of order applies against a measure causing the total amount of spending in budget authority or outlays to be exceeded (the aggregate spending level). While the aggregate is set for purposes of section 311, the allocations are set under the section 302(a) (CBA). If those allocations are breached, then it causes a point of order under section 302(f) (CBA). Hence, if no 302(f) (CBA) point of order lays against a bill, then it automatically exempts it from a 311 (CBA) point of order.
The justification for the exemption is that if a committee has not breached its allocation of spending authority, then it was not the reason the aggregate level of spending was exceeded. The aggregate spending level is the sum of any assumed increases in spending plus the spending that is projected to occur under current law.
In 1987, the Senate proposed to repeal the Fazio Exception, though it does not apply in that chamber: See The Historical Note on the Fazio Exception for more information.
The Fazio Anomaly
When the Fazio exception was written, the drafter inadvertently allowed all points of of order under section 311 that would apply against a bill be deactivated. This includes an impermissible loss of revenue that might occur if budget authority is “provided” in legislation and it meets the 302(a) allocation. This first was noticed when a bill designed to defund the discretionary amounts of the Affordable Care Act (so called “Obamacare”), which would have caused revenue loss but not a 302(a) allocation. Though House Budget Counsel had known of the problem for some time before it became publicly known, it had not been fixed before that time, and has not been fixed since because of the politics surrounding Obamacare.
The [Balanced Budget and Emergency Deficit Control Act of 1985] codified the so-called ‘‘Fazio exception’’ at section 311(c) of the Congressional Budget Act.(11) That subsection exempts from the application of section 311 certain measures that, although in breach of the overall budget authority ceiling, would not cause the appropriate allocation of new budget authority made pursuant to section 302(a)(12) of the Budget Act for that fiscal year to be exceeded. Thus, if the enactment of a bill or resolution (in its reported form or the form recommended by a conference report) or the adoption and enactment of an amendment would not cause the bill to exceed that committee’s 302(a) allocation, it would be exempt from 311(a) points of order. The rationale for this exception is to prevent penalizing committees that had avoided breaching their own budget allocations but had, due to overspending by other committees, reported bills breaching the total level of budget authority as established in the most recent concurrent resolution on the budget.(13)
11. 2 USC § 642(c).
12. See § 10.9, infra.
13. Prior to the advent of [the Balanced Budget and Emergency Deficit Control Act of 1985], concurrent resolutions on the budget would occasionally provide this same exception on an ad hoc basis. See § 4, supra, and § 10.4, infra.
Deschler’s Precedents of the U.S. House of Representatives, Volume 18, Chapter 41, § 10, p. 146.