State and Local Government Mandate Reduction and Regulatory Compensation Act of 1980

State and Local Government Mandate Reduction and Regulatory Compensation Act of 1980 - Defines the term "major rule" as any agency rule which the agency estimates will have an annual effect on the economy of $100,000,000 or more or otherwise will have a major impact, excluding rules to implement internal revenue laws.

Directs an agency, whenever it is required to publish general notice of proposed rulemaking for a major rule, to prepare and make available to the public an initial regulatory analysis which: (1) describes the need for the rule; (2) identifies existing rules which the proposed rule may duplicate, overlap, or affect; and (3) describes the costs of the rule and the portion of such costs that will be incurred by the Federal Government and State and local governments. Requires the agency: (1) to provide 60 days for public comment on each proposed major rule; (2) to prepare and make available to the public for each adopted major rule a final regulatory analysis which includes a summary of the public comments received on the initial analysis and the agency's responses to such comments; and (3) within one year after the effective date of a major rule, to transmit to the Chairman of the Regulatory Council an analysis of the costs incurred by the Federal Government and State and local governments in carrying out the rule. Directs the Chairman to report annually to the President and Congress concerning such costs.

Directs each agency to establish procedures to permit a State or local government to initiate an agency proceeding to review a major rule. Requires an agency to review a rule upon receiving written notice from such a government and upon confirming in a hearing that: (1) the costs to such government of carrying out the rule exceed specified guidelines; (2) such government is under fiscal and economic stress and the costs of carrying out the rule would adversely affect such government; or (3) such government can obtain the objectives of the rule through less-costly means. Sets forth criteria for determining if a government is under fiscal and economic stress. Directs an agency after reviewing such a rule: (1) to modify the rule to eliminate such excessive costs to a State or local government; (2) to compensate the government for such excessive costs; or (3) to utilize any less-costly means for obtaining the regulatory objective.

Requires the Regulatory Council, in consultation with the Advisory Commission on Intergovernmental Relations, to establish indices of fiscal and economic stress for State and local governments.