Obama's Memo on Preemption -- Striking a Blow for Good Government

by Bill Funk

May 22, 2009

On Wednesday, by the stroke of a pen, President Obama reversed a major Bush administration policy, striking another blow for good government. For eight years the Bush administration sought to accomplish tort reform by stealth and indirection with several agencies proclaiming in preambles to regulations that the regulations preempted state tort law. These agencies included the National Highway Traffic Safety Administration, the Federal Railroad Administration, the Consumer Product Safety Commission, and most notably the Food and Drug Administration. The FDA's broadest claim -- that its drug labeling regulation preempted state tort law -- was rejected by the Supreme Court earlier this year in Wyeth v. Levine.

In a November 2008 White Paper, CPR Member Scholars called for the President to amend or strengthen the existing Executive Order on Federalism to reverse this Bush policy and to re-establish the presumption that federal regulations protecting health, safety, and the environment do not preempt state tort law. The President has now done this.

In a memorandum to heads of executive departments and agencies, the President recognized that federal and state laws have historically operated concurrently to provide independent safeguards to the public, with state laws often providing greater protection than federal law. His memorandum quoted from Justice Louis Brandeis’ famous remark that “a single courageous state may, if its citizens choose, serve as a laboratory” in which to test out new ideas. President Obama noted in strong words that, despite the Executive Order on Federalism that existed throughout the Bush administration, agencies had announced that their regulations preempted state law, including state tort law, without either explicit congressional authorization or a factual basis in their record for such a claim.

To ensure that such announcements would no longer occur, the President directed that henceforth agencies should not include statements in their preambles claiming their intent to preempt state law unless the actual regulation itself contains provisions that explicitly preempt state law. Moreover, agencies should only promulgate such preemptive regulations when they would be legally justified under traditional policies, including those in the Executive Order on Federalism, which in essence restates the presumption against preemption.

This change is notable because by requiring that an agency wishing to preempt state law must do so in the text of the regulation, it in effect requires that the agency have a record basis for such action. No longer will an agency be able simply to assert in its preamble without evidentiary support that it intends its regulation to preempt state law and then ask courts to defer to its expert judgment. In addition, if the agency does adopt a regulation that by its terms preempts state law, that action will enable a state or other adversely affected person to challenge that regulation in court and subject the agency’s justification to judicial review. There was a harbinger of this change when NHTSA announced its long awaited roof crush resistance standard at the end of April. When the Bush administration proposed this rule, it announced in its preamble the intent to preempt state tort law, but the final rule just issued by the new administration expressly concluded that the agency did not foresee any conflict between the rule adopted and state tort law, rejecting the earlier statement.

Finally, the President’s memo requires agencies to review all regulations issued in the past ten years that purport to preempt state law to determine if they meet the standards announced in the memo and the Executive Order on Federalism. If they do not, the agencies are to take appropriate action.

This is the second major Obama memo reversing a Bush regulatory policy. The earlier memo reversed the Bush policy of minimal compliance with the Freedom of Information Act. It is evidence of the power of the President to take decisive action to undo some of the damage done by the previous administration. We in CPR are waiting with great interest to see the product of the new administration’s review of Executive Order 12866 on regulatory reform. Will it too reverse the previous administration’s policy, a policy of using cost-benefit analysis and OMB review to stymie and minimize regulations to protect health, safety, and the environment? We hope so.

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William Funk is the Lewis & Clark Distinguished Professor of Law at Lewis & Clark Law School in Portland, Oregon.

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