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Monday, May 25, 2009

Law - Obama issues policy memo on federal pre-emption; perhaps pre-empting new regulatory czar

Recall this entry from Sept. 11, 2007, headed "Regulatory Preemption: Are Federal Agencies Usurping Congressional and State Authority?" And this one from Dec. 1, 2007.

Then there is this long list of ILB entries on the Supreme Court's ruling this spring in the case of Wyeth v. Levine, and the lead-up to the ruling.

As reported in a number of stories late last week, including this one by Alicia Mundy and Brent Kendall in the Wall Street Journal that begins:

In a sweeping order Wednesday, President Barack Obama called for a rollback of Bush administration regulations designed to protect companies from product-liability lawsuits in state courts.

The memo didn't name specific industries but it could affect a wide range of consumer products subject to both federal and state regulation.

Companies have long complained about having to deal with 50 different state rulebooks, and the Bush administration aggressively took up the issue. It encouraged federal agencies to issue rules pre-empting state laws and declared that a single federal standard held sway.

In a two-page memo, President Obama reversed that stance. He said federal agencies and departments should claim that state law is pre-empted by federal law only when there is a well-defined legal basis. He ordered agencies to review regulations from the past 10 years to see if the government had improperly asserted federal pre-emption.

Here is the 2-page executive order. Here is an AP story by Peter Yost, dated May 20th. A few quotes:
WASHINGTON (AP) -- The Obama White House on Wednesday undid a Bush administration policy that used federal regulations to undermine a wide range of state health, safety and environmental laws.

Many of the federal regulations limited the ability of injured consumers to sue companies in state courts. * * *

In a memo to government department heads, Obama said that pre-emption of state law should be undertaken only with full consideration of the legitimate prerogatives of the states.

The Bush administration rule-making effort also had undercut state financial regulation and state consumer protections in many fields.

Often, the pre-emption language was written into the preamble of federal regulations without the public first having an opportunity to comment on it.

The new approach will look both backward and forward.

The Obama administration will ask agencies to go back and find Bush-era regulations that contain pre-emption language in the preambles or in the body of the regulations and that are not justified by law.

Under the new approach, the administration will drop the Bush administration's approach of putting pre-emption language into the preamble of a regulation, unless it also is contained in the regulation itself. And any pre-emption language in the regulation itself has to be legally justified.

The May 13th WSJ had an article by John D. McKinnon on nominee Cass Sunstein. It is interesting that the new administration did not wait for Sunstein's confirmation to announce this major policy change. Some quotes from the earlier story:
Harvard law professor Cass Sunstein cruised through Tuesday's Senate confirmation hearing on his nomination to be White House regulatory czar, heartening business interests who see him as a potential ally in an administration expected to step up rule making.

In academic writings, Mr. Sunstein has advocated requiring agencies to demonstrate that new regulations' benefits clearly outweigh their costs, a policy long advocated by conservatives but viewed with suspicion by liberals who have seen it as a way to kill or weaken rules. * * *

Mr. Sunstein was nominated in April to run the obscure but powerful Office of Information and Regulatory Affairs, or OIRA, within the White House Office of Management and Budget.

Created by Congress in 1980 as a central clearinghouse for new agency rules, OIRA has been criticized by consumer advocates for delaying or watering down regulations, particularly under Republican administrations. Some left-leaning groups, including OMB Watch and the Center for Progressive Reform, have raised concerns that OIRA might maintain that role under Mr. Sunstein.

At Tuesday's hearing, Mr. Sunstein sought to allay concerns that he will be hostile to new rules and sympathetic to business. He tempered his advocacy of cost-benefit analysis, saying there are areas in which new regulations could be justified even when the economic upside can't be demonstrated. As an example, he cited rules requiring equal access for people with disabilities.

Cost-benefit analysis shouldn't put regulation "in an arithmetic straitjacket," he said. * * *

Mr. Sunstein also said he favors requiring agencies to explain why they are imposing rules that aren't justified by a cost-benefit analysis. And he said he would seek to maintain OIRA's central position in reviewing new regulations.

Much of what OIRA does is determined by executive order. If he is confirmed, Mr. Sunstein would be able to heavily influence the content of orders and their subsequent interpretation and implementation.

Posted by Marcia Oddi on May 25, 2009 05:21 PM
Posted to General Law Related