Obama Curtails Bush-Era Federal Preemption of States By Regulation

By | May 22, 2009

The Obama White House this week undid a Bush administration policy that used federal regulations to undermine various state health, safety and environmental laws.

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

The move involving a policy known as “pre-emption” marks the latest step by President Barack Obama to redo the policies of his predecessor.

“When it comes to pre-emption, we’re saying no more of their approach,” said Kenneth Baer, communications director at the White House Office of Management and Budget. “We’re going back to making it clearer and more orderly and more defensible under the law.”

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.

Trial lawyers who file class-action lawsuits on behalf of millions of consumers praised Obama’s action.

During President George W. Bush’s second term in office, more than 50 federal regulations were proposed or adopted that included language to limit state lawsuits.

Decried by consumer advocates and embraced by industry, the Bush administration’s rule-making authority represented its final act in a long-standing drive to shield companies from lawsuits that carried the threat of large damage awards.

The Obama administration has “overturned actions taken by Bush administration bureaucrats who were influenced by powerful, well-connected corporations,” said Les Weisbrod, president of the American Association for Justice, which represents trial lawyers around the country.

The Bush administration and business groups had some successes in asserting the primacy of federal regulation over rules that might differ from state to state.

In one Supreme Court case, the justices ruled that Food and Drug Administration approval shields medical devices from most lawsuits. The case turned on a provision of federal law prohibiting states from imposing their own requirements on the devices.

In March, however, the Supreme Court forcefully rejected calls for limiting consumer lawsuits against drug makers, upholding a $6.7 million jury award to a musician who lost her arm to gangrene following an injection.

The central issue in that case was the absence of language in the federal law setting out regulation of prescription drugs that forecloses consumer complaints in state courts. Congress has included such language in other areas.

Combined with the Supreme Court decision in March, the Obama administration memo “is the last nail in the coffin for Bush-era pre-emption policy,” said Doug Kendall, president of the Constitutional Accountability Center.

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