Legislating preemption.

Author:Sharpe, Jamelle C.
 
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ABSTRACT

Federal preemption is perhaps the most important public law issue of the day. The stakes in preemption cases are enormous, as preemption determines whether the federal government or the states control regulatory policy in a host of politically controversial contexts. Congress clearly has primary constitutional authority in setting federal preemption policy, but, for numerous political and practical reasons, cannot be solely responsible for its implementation. Determining which organ of the federal government is best at implementing preemption policy has therefore become the central preoccupation of the academic literature. While this comparative institutional analysis is certainly important in allocating preemption policy-making business, it has elided a very important issue: Congress has an interest not only in what substantive preemption policy should be, but also in who should be primarily responsible for implementing it. In other words, there is a strategic delegation choice to be made by Congress for which current institutional choice approaches to preemption do not fully account.

This Article addresses the delegation issue by providing a framework for how Congress should be "legislating preemption." It identifies two previously overlooked challenges posed by delegating preemption implementation responsibility to the federal courts instead of to federal agencies. First, Congress has only weak policing tools when it delegates to federal courts, and therefore has little opportunity to correct the judiciary when it strays from Congress's preemption policy preferences. Second, in its preemption jurisprudence, the Supreme Court has adopted what this Article terms a Centralization Default, which leads it to generally disfavor anti-preemption arguments when Congress does not provide clear instructions to the contrary. The Article then proposes that Congress respond to these challenges by drafting broad standards and creating favorable legislative history when preemption policy coincides with the Centralization Default. By contrast, Congress should draft clear rules when it wants to overcome the Centralization Default. After developing the "legislating preemption" framework, the Article uses the Dodd-Frank Act's national bank preemption provisions to illustrate what happens when Congress does not apply the framework. As the Article shows, Congress 's failure to account for its weak post-delegation policing tools or the Centralization Default will likely lead to more federal preemption than Congress intended.

TABLE OF CONTENTS INTRODUCTION I. CONGRESSIONAL MANAGEMENT OF PREEMPTION A. Doctrinal Considerations B. Practical and Political Considerations C. Delegation and Monitoring Considerations 1. Limitations on Congress's Choice of Delegate 2. The Importance of Congressional Monitoring II. PREEMPTION AND LEGISLATIVE CONTROL OVER JUDICIAL INTERPRETATION A. Influence over Judicial Interpretation B. Implied Remedies and Clear Statement Default Rules 1. Implied Statutory Remedies 2. The Clear Statement Rule C. The Centralization Default III. LEGISLATING PREEMPTION IN CONTEXT: THE DODD-FRANK ACT A. Congressional Responses to Expanded National Bank Preemption B. The Dodd-Frank Act's Institutional Choices C. Monitoring and the Centralization Default CONCLUSION INTRODUCTION

Once an arcane backwater of constitutional jurisprudence loved almost exclusively by law professors, preemption has become the focus of the country's most contentious political issues. From immigration to gay marriage, from tort reform to financial reform, the propriety of displacing state law with federal law is quite possibly the most important public law question of the day. When framed in more practical terms, the enormity of the stakes in preemption cases becomes unmistakably clear: preemption determines which level of government--federal or state--gets to control regulatory policy in a complex federal system. (1) It should therefore come as no surprise that the Supreme Court has significantly increased its involvement in preemption issues over the past twenty years. Indeed, the Court docketed five preemption cases for the 2010-2011 Term alone. (2)

Despite this new interest in preemption, little attention has been given to a persistent and fundamental puzzle that it presents: how horizontal allocations of governmental power--as between Congress, the Supreme Court, and the administrative state--affect vertical distributions of governmental power--as between the federal government and the governments of the several states. In other words, how does assigning preemption decision making to one federal body or another make it more or less likely that federal law will trump state law? In other areas dealing with allocations of federal and state power, such as those implicating the dormant Commerce Clause and abstention, courts and commentators assume with little discussion that the federal judiciary is ultimately responsible for making difficult federalism choices. As this Article demonstrates, however, preemption is different. While it is routinely acknowledged that the Constitution invests Congress with the authority to set preemption policy, the oddity and implications of Congress's power over such an important aspect of "Our Federalism" (3) is routinely overlooked.

Until recently, such an oversight was perhaps understandable. Historically, Congress has done little to second guess the Court's preemption decisions. (4) Whether because of apathy, mistake, or the inability to build majority coalitions, Congress has left the final decision-making authority for preemption issues largely in the hands of the federal courts. (5) The Court has, in turn, proven increasingly sympathetic to claims of preemption in recent years, (6) thereby allowing defendants otherwise subject to suit under state law to escape liability. This has shaken Congress out of its typical disengagement with preemption matters. In response to several of the Court's recent preemption decisions, Congress has entered the preemption fray with uncharacteristic vigor. (7) Most notably, President Obama recently signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). (8) Among other things, this sweeping legislation attempts to reverse the twenty-year expansion of federal preemption in the area of national banking and federal thrift regulation. (9)

The question that this Article addresses, and one that has thus far received no significant attention in the literature, is how Congress can best achieve its federal preemption policy-making goals. If Congress has any interest in what its substantive preemption policies should be, it must also be interested in who is primarily responsible for implementing those policies. Given that preemption involves a host of detailed, context-specific, and often unanticipated policy judgments, Congress has no choice but to delegate some responsibility for its development and management to other governmental departments. (10) More specifically, Congress must make a strategic choice to select the Court, (11) administrative agencies, or some combination of the two to fill out the details of its preemption preferences. Determining how to make this choice is not straightforward. Recent institutional choice approaches to preemption have analyzed and compared the institutional competencies of Congress, the Court, and administrative agencies. Such analyses have suggested, for example, that the Court is better suited to make some preemption policy because it is better equipped to answer constitutional federalism questions. (12) They have also suggested that agencies may be preferable because of their greater familiarity with the statutes they enforce, their superior understanding of the industries they regulate, or their greater analytical sophistication. (13) What these approaches hold in common is their assumption that Congress has "punted" the preemption issue to courts or to agencies, and hence the analysis of preemption should begin with the capacities of courts and agencies to resolve preemption problems.

While comparative institutional advantage is certainly an important factor in allocating preemption policy-making business, it cannot be the only factor. But it is here that the typical institutional choice approach elides something very important: Congress has an interest not only in what substantive preemption policy should be, but also in who should be primarily responsible for implementing that policy. In other words, there is a delegation choice to be made by Congress for which the literature does not fully account, and this choice is informed by distinctly congressional interests.

In making the delegation choice, Congress depends a great deal on its ability to monitor and influence judicial and agency implementations of its preemption policies. Such monitoring helps Congress to maximize policy conformance and to minimize policy drift. Generally speaking, Congress has access to an array of formal and informal mechanisms to police delegations of policy-making authority to administrative agencies. Through committee hearings, promised budget appropriations and threatened cuts, letters, and phone calls, members of Congress have numerous means by which to guide agency decision making after enacting legislation. (14)

However, the policing mechanisms Congress uses to rein in agency policymaking are mostly inapplicable to the federal judiciary. (15) In fact, when dealing with courts, Congress is generally limited to two such mechanisms--the creation of legislative history and the threat of legislative override--neither of which is effective in most situations. (16) As a result, Congress can assert little post-enactment control when it delegates policy-making power to federal courts. Nevertheless, the federal courts are frequently left to implement Congress's preemption policies. Whether Congress specifies...

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