Presidents, preemption, and the states.

• Author: Gilman, Michele E.
• Position: Presidential Power in the Obama Administration: Early Reflections

On May 20, 2009, President Obama issued a presidential memorandum ordering federal agencies to strike preemption language from their regulations unless there is "full consideration of the legitimate prerogatives of the States and ... a sufficient legal basis." (1) The memo was a rebuke to the Bush Administration, which regularly inserted preemption provisions into federal regulations, affecting areas such as health, consumer safety, and the environment. As a result of federal preemption, state laws could not be more protective than the federal standard, and corporations were spared state tort lawsuits and state regulatory regimes. For instance, the EPA preempted the states from addressing climate change through limits on motor vehicle emissions, (2) the FDA decided that its approval of drug labels preempted state tort lawsuits, (3) and the National Highway Transportation Safety Administration ("NHTSA") issued an automotive door lock safety regulation preempting state law. (4) In each of these instances, the evidence suggests that the White House had a hand in making these preemption decisions; they were not solely the result of like-minded political appointees coincidentally pushing preemption to further business interests. (5)

President Obama rested his memorandum on the values of federalism, announcing that "[s]tate and local governments have frequently protected health, safety, and the environment more aggressively than has the national government." (6) The memorandum even reaches back in time; federal agencies must review the last ten years of regulations to assess whether the rules unjustifiably preempt state authority. (7) Not surprisingly, in response to the Obama memo, consumer advocates cheered a return to the "rule of law ... over ... the rule of politics," while business groups warned that companies would have "to navigate a confusing, often contradictory patchwork quilt of 50 sets of laws and regulations." (8) The Obama memo followed on the heels of the Supreme Court's decisions in Altria Group, Inc. v. Good, (9) holding that federal law did not preempt state smoking and health lawsuits based on misleading labeling, and Wyeth v. Levine, (10) holding that federal law did not preempt state tort failure-to-warn lawsuits involving prescription drug labels approved by the FDA. Shortly afterwards, the Court ruled in Cuomo v. Clearing House Ass'n that federal regulations issued by the Office of the Comptroller of the Currency did not preempt state investigations of national bank lending practices. (11) The preemption winds have shifted.

President Obama has announced a stand against unjustified preemption, and early indications suggest that the memo is impacting the output of federal agencies. For his part, President Bush also touted states' rights, for instance, stating before his inauguration: "I realize there's a role for the federal government, but it's not to impose its will on the states and local communities." (12) However, his Administration's actions belied this statement. (13) The preemption controversy is part of broader debates about the values of federalism and how best to protect them. On the one hand, the Tenth Amendment preserves state autonomy by limiting federal power to that not reserved to the states. On the other hand, the Constitution's Supremacy Clause provides that the laws and treaties of the United States "shall be the supreme law of the land ... anything in the Constitution or Laws of any State to the contrary notwithstanding," and courts have placed few limits on Congress' lawmaking powers. Between these foundational principles lies the preemption fault line. Scholars have tracked preemption trends and disputes closely, noting that preemption is currently the "primary threat to state autonomy." (14) There is a lively debate as to whether the best institutional actor to foster federalism is the courts, Congress, or agencies. These scholars ask: who is the best actor to decide whether a problem should be tackled at the federal or state level, or both? Yet despite the centrality of modern Presidents to preemption policy, the role of the President is all but ignored in preemption scholarship. (15)

This Article seeks to fill this gap by highlighting the role of the President in federalism issues. As this Article makes clear, the President can stifle or spur state innovation; foster or imperil federal solutions to national problems. Given that federalism values are enshrined in our constitutional system of government, this Article argues that the President is a key player in ensuring those values are fulfilled or undermined. Part I of the Article examines official executive branch policies regarding preemption and the extent to which those policies have been reflected in agency actions. This Part concludes that recent Presidents (from Reagan through Obama) (16) do not demonstrate a philosophical commitment to federalism, but use federalism rhetoric when it supports their substantive policy aims. The danger is that states may be misled into thinking their interests are being considered by federal actors, when, in fact, they are not. In turn, this can squelch state lobbying and limit opportunities for state participation in federal decision-making. Part II responds to the literature on institutional competence in federalism decisionmaking by placing the President within the debate. While most scholars focus on comparing the relative virtues and vices of agencies, courts, and Congress, this Part shows how the President's influence affects the attributes of these other actors. Part II explains why congressional decision-making about preemption is preferable to presidential preemption. However, given the reality that Congress often does not or cannot address preemption issues ex ante, this Part then examines how the President can impact agency decision-making about preemption. Part III explores ways in which the President can effectively ensure a vibrant role for the states in federalism regimes, while also preserving the benefits of centralized government by using his Article II powers to direct agencies in a managerial, rather than directive, role.

This Article assumes that a distribution of power between the federal and state governments is desirable: the question is who decides? A centralized approach, such as that fostered by federal preemption, ensures uniformity, lessens compliance costs, provides economies of scale, prevents a race to the bottom by states seeking to attract businesses, and contains spillover effects that arise when activity in one state crosses state lines. (17) Conversely, state autonomy preserves the states as policymaking enclaves, allows the states to serve as laboratories of democracy, supports problem-solving that reflects regional differences, encourages citizen participation in an accessible level of government, diffuses power, and serves as a restraint on federal tyranny. (18) Preemption can limit these state-level benefits. (19) Thus, deciding where to draw the line between federal and state authority requires a balancing of the benefits and detriments of each sphere. Again, the issue is who draws this line. This issue is complicated because regulatory power is not neatly carved into separate federal and state layers. Most regulatory programs are built upon a cooperative federalism framework, where the federal and state governments exercise concurrent and overlapping powers. (20) For instance, in environmental laws, Congress typically provides that federal standards create a minimum floor, above which states can regulate in a more protective manner. (21) Likewise, in many public benefits programs, federal funds flow to the states within some broad parameters, but the states have considerable flexibility in program administration, standard setting, and eligibility requirements. Sometimes, the relationship between the federal and state governments is better described as uncooperative, where "states use regulatory power conferred by the federal government to tweak, challenge, and even dissent from federal law." (22) Preemption shifts all of these paradigms by creating a ceiling, or a "unitary federal choice," above which states may not regulate. (23) As a result, the "contested questions arise when state law seeks to go further than federal law." (24) Given the United States' regulatory system of cooperative and competing federal and state relations, it is inevitable that presidential control over federal agencies will have federalism implications.

1. PRESIDENTS AND FEDERALISM

   Typically, Congress legislates with a broad brush and gives specialized decision-making authority to executive agencies. (25) There are several reasons for these statutory delegations to agencies, ranging from the desire to have experts make complicated, technical decisions to an attempt to push politically controversial decisions to the executive branch. (26) With increasing frequency, modern Presidents have asserted their authority to guide agency decision-making, and even to mandate a particular agency outcome. In turn, this directive authority can impact federal-state relations. This Part discusses what Presidents have said about federalism, and then compares their words to their actions. In general, recent Presidents regularly talk about the importance of power-sharing between federal and state governments. However, they will disregard state interests that conflict with their substantive policy goals. States can be effective in lobbying for their interests with federal actors, but only if they have adequate notice that their interests are at stake. As this Part describes, presidential rhetoric about federalism can mask inattention to state interests.

   1. WHAT PRESIDENTS SAY ABOUT FEDERALISM

      All Presidents since Ronald Reagan have maintained official executive branch policies instructing federal agencies to consider how their proposed federal actions impact the...