Federal regulatory preemption is an “underhanded means by which unelected federal bureaucrats impose their will on the states,” charges New York Senator Michael Balboni, of the National Conference of State Legislatures’ Executive Committee. (Photo: NCSL)
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The federal versus state insurance regulation debate just beginning to heat up in Washington is part of a larger debate that has been taking place across the country.
“Federal preemption of state authority is a growing concern,” said Georgia Senator Don Balfour, chair of the National Conference of State Legislatures’ Standing Committees. “These unwarranted power grabs by the federal government subvert the federal system, choke off innovation and ignore diversity among states.”
Of particular concern to state legislators is the rise of federal preemptions through the regulatory process. “Federal regulatory preemption is nothing more than a backdoor, underhanded means by which unelected federal bureaucrats impose their will on the states,” said New York Senator Michael Balboni, a member of NCSL’s Executive Committee. “No single, unelected individual should be able to wield such power with the stroke of a pen.”
Insurance regulatory proposals are among those within the states lawmakers’ radar. U.S. Senators John Sununu (R-N.H.) and Tim Johnson (D-S.D.), both members of the banking committee, this month unveiled legislation that would allow life and property casualty insurers to choose federal rather than state regulation under an “optional federal charter” system. The legislation is titled the “National Insurance Act of 2006.”
State insurance lawmakers and commissioners, along with major interests within the insurance industry, oppose the Sununu-Johnson approach.
Beyond insurance
Beyond insurance, there are other proposals that concern states. NCSL released an updated Preemption Monitor report highlighting 72 bills or amendments that would step on the toes of state policy makers.
State legislators point to a rule proposed by the National Highway Transportation Safety Administration to improve automotive roof-crush standards. The rule would preempt all state common and product liability laws that now hold automobile manufacturers to a stricter standard.
States say that the preemptions would cost them $60 million per year in higher costs to care for those who become permanently disabled.
Among other items on their list of attempts to circumvent state liability laws or regulations are proposals for immunity from civil liability for nonprofit charitable organizations; Consumer Product Safety Commission rules on product liability standards; the federal driver license identification act; a waiver of all liability for producers of antifreeze and coolants; legislation to create association health plans that skirt state regulations; bills on notification of breaches of data confidentiality; bills to ban lawsuits in state courts against food manufacturers for obesity claims; immunity for vaccine manufacturers and medical malpractice tort reforms that pre-empty state laws.
“Federal preemption is nothing more than a one-size-fits-all approach to public policy,” says NCSL President-elect and Texas Senator Leticia Van de Putte.
“Our federal system of government was designed so that each state could address the needs of its own people. These blanket solutions to multi-faceted problems just don’t work.”
Topics Trends Legislation
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