A Little-Noted Memorandum by Obama Undercuts Health and Safety Rules

By Jeff Rosen and Jay Lefkowitz
Thursday, August 6, 2009

With his "stimulus" bill, "cap and trade" solution to global warming, and proposed government takeover of health care, President Obama has made no secret of his desire to expand the size, role and budgets of federal health and safety regulators. Yet this summer, in a largely unreported action, the president took a radical step toward weakening the authority of federal health and safety regulators throughout the government.

The president issued a memorandum to all federal agencies May 20, telling them, in effect, to avoid having their health and safety rules become authoritative over state tort laws, and to consider revoking any rules from the Clinton and Bush years that made federal laws nationally uniform instead of leaving authority with state court juries.

The issue involved is federal "preemption," created in 1789 in Article VI of the Constitution. It says that when the federal government has validly chosen to regulate an area, federal law "shall be the supreme law of the land . . . anything in the constitution or laws of any state to the contrary notwithstanding."

Over time, Congress has passed more and more laws to regulate what are perceived as national problems. It has allocated billions of dollars to fund those federal health and safety agencies that regulate interstate commerce, such as the Department of Health and Human Services, the Transportation Department, the Department of Homeland Security and myriad others. As the coverage of federal law has expanded, courts have found with some frequency that federal law trumps conflicting state tort law.

This is not surprising; a key rationale for federal regulation is for national experts to set uniform standards that must be followed everywhere. Sometimes Congress expressly says it is trumping state law, as with labels for bottled water; other times, as with airbags, courts give priority to federal law based on the constitutional need to prevent the purpose of a federal law from being obstructed by conflicting state requirements.

President Bill Clinton issued an executive order in 1996 telling agencies to say in their rule-making notices what preemptive effect they meant their rules to have, a policy that President George W. Bush maintained. In recent years, federal agencies occasionally supported federal regulations having preemptive effect against tort lawsuits under state law. The Clinton administration supported preemption of state law by Transportation Department airbag regulations and railroad crossing regulations, for example, and the Bush administration supported preemption by Food and Drug Administration medical device regulations.

It may all sound very technical, but the consequences of Obama's new policy are broad and serious. When federal health and safety regulators issue rules, they base them on scientific analysis and conduct cost-benefit analyses of their overall impact. By contrast, state court juries may establish rules based on the unusual facts of a single case that could have terribly detrimental implications if applied more broadly. It is important, therefore, that the work of government health and safety experts has actual legal effect and not be just for "show." Taxpayers are footing the bill for these regulators, and the national standards they issue are supposed to be effective and binding.

So what reason did the president give for telling federal agencies to treat their own rules as advisory or minimal, subject to being overruled by state laws or random jury decisions? Was it a careful review of various enactments of Congress? Was it to comply with direction from the courts? No. The main reason stated in the memorandum was "federalism" -- respect for states' rights -- drawing on Justice Louis Brandeis's famous quote about states as "laboratories" for trying "novel social and economic experiments."

But what Justice Brandeis actually said is that states should be given that latitude only where one state could conduct its "economic experiments without risk to the rest of the country." Obama overlooked that when the tort law of one state would enable local juries to trump national rules and in effect set requirements nationwide, there obviously is "risk to the rest of the country."

Not surprisingly, the position of the president's memorandum was one that had been sought by the plaintiffs' trial bar. Yet the states' rights "experiments" they sought were not to remove the federal role and leave the regulation to the states but, rather, to keep or expand the number of federal regulators and instead render them less effective, less authoritative and subordinate to random juries in any one state. What sense does that make? That is "states' rights" as a pretext for chaos or lawlessness.

Obama's memorandum about federal preemption relied on a rationale that makes no sense and is not required by law. It is remarkable that a White House action this extreme and legally unsound has gone largely unnoticed.

The writers each served as general counsel of the Office of Management and Budget during the administration of George W. Bush. They are litigation partners at Kirkland & Ellis LLP.

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