The Reagan administration is sharply split over whether it should endorse legislation that would set federal uniform standards for product liability suits, thereby preempting long-held state rights.
The conflict was revealed yesterday when Commerce Secretary Malcolm Baldrige testified before the Senate consumer subcommittee on the need for such legislation. A former chief executive who frequently has stated his support for a federal product liability law, Baldrige had been expected to endorse strongly the current subcommittee effort to write legislation.
However, on last-minute orders from the White House, Baldrige was forced to rewrite his testimony and refrain from any specific endorsement. Instead, Baldrige pointed out that any effort to enact federal standards must consider the states' long-held rights to set the rules for when consumers could sue for damages for injuries incurred from the use of a product.
Given the administration's commitment to federalism, Baldrige noted that, except for "pressing national needs," the states should be "free to adopt their own standards, enforced by state officials in state courts."
Administration and industry sources say White House officials directed Baldrige to change his testimony on Thursday, just one day before he was scheduled to appear. Sources also say the orders came after White House counsellor Edwin Meese expressed concern that Baldrige's testimony was counter to the Reagan administration's federalism program.
Sources say that Meese was alerted to the potential conflict by aides from the White House during the routine Office of Management and Budget review of testimony by administration officials before it is presented in Congress.
Baldrige declined to comment on the change in his testimony when questioned about it after the hearing.
Nonetheless, Baldrige and his aides made it clear that the White House orders did not represent the administration's final say on the controversial product-liability issue, and he and his aides are confident they can win administration support for legislation.
In fact, Baldrige noted, he intends to have the Cabinet Council on Commerce and Trade--of which he is chairman--reconsider the adminsitration's position within the next four weeks. At one point, the administration apparently had considered sending the issue to the Cabinet Council on Legal Affairs--a move that many predicted would have generated vigorous opposition to the legislation, given the legal profession's strong feelings against federal product liability standards.