The U.S. Chamber of Commerce, the nation's largest business lobbying group, did not speak softly. Instead, it used its big stick to whack a House federalism bill that would have curbed the power of Congress and the agencies to preempt state laws and regulations.
The chamber--aligned with unlikely allies such as environmentalists, public interest groups and federal agencies--worked for weeks to throw the Federalism Act of 1999 off track. It succeeded. The bill's sponsor, Rep. David M. McIntosh (R-Ind.), abandoned his effort to give states broader authority to challenge federal laws and regulations that business said would create a patchwork of state laws and lawsuits.
For example, businesses loathe state initiatives that create product-labeling provisions different from federal ones, or mortgage requirements that differ from those stated in federal law. They also fear plaintiffs in lawsuits could claim companies are negligent in the design of a product if they only meet federal standards, rather than a more stringent state standard.
The chamber relied on the views of Kenneth Geller, a partner with Mayer, Brown & Platt and former deputy solicitor general, who said the legislation--and a companion bill in the Senate--would have a devastating effect on the public and business.
"Without preemption, national requirements would be haphazardly replaced with a patchwork of state regulations on the design, production, marketing, and sale of products," Geller wrote in an analysis of the legislative proposals. "These bills, as currently drafted, rest on the flawed premise that the preemption doctrine has allowed the federal government to run roughshod over state and local interests."
McIntosh, despite being an avowed federalist and a candidate for governor of Indiana, was persuaded.
"I remain committed in my support for federalism as a principle and for legislation to discipline both the legislative and executive branches before either imposes requirements that preempt state or local authority or have other impacts on state or local governments," McIntosh said.
McIntosh said he hopes the chamber and interests representing state and local authorities will resolve their differences and agree on legislation that could advance next year.
The bill had called for congressional acts to expressly state an intent to override state laws--instead of relying on the concept of federal supremacy as it is laid out in the Constitution--or state statutes would take precedence. But those who were part of the negotiations that led to the bill's disappearance doubt any legislation calling for Congress to expressly preempt state laws will go anywhere if the chamber has anything to say about it. In this case, chamber opposition doomed the bill even before it got to the House Government Reform Committee.
"Our endorsement and support is so critical, and that's why we are the 800-pound gorilla in issues like this and we can turn it around so fast," said James Wootton, director of the chamber's Litigation Reform Project.
Michael Bird, senior federal affairs counsel for the National Conference of State Legislatures, said a compromise that the chamber advanced, dropping the preemption provision, was not something the states could agree to. Nor do they want to promise that they won't lobby for the Senate bill sponsored by Sen. Fred D. Thompson (R-Tenn.), whose Governmental Affairs Committee approved it last month.
"They offered us last seat in economy class, and we wanted to sit in at least first class," Bird said.
State and local governments feel strongly about the legislation because they are living with what they believe is a growing trend of federal laws that trim their influence in areas such as telecommunications, electric utility deregulation, health care, the Internet, international trade and financial services.
Governors argue that limiting state authority hurts consumers, limits states' ability to raise revenue and stymies economic development. For example, under the Internet Tax Freedom Act, passed last year, states without Internet access taxes already in place cannot levy them for three years.
"Sometimes Congress doesn't understand the impact it has on states and consumers," said Ray Scheppach, executive director of the National Governors' Association. "We wanted to put a light on that. If Congress didn't specify its intent, [courts] would side with state government."
The states feel so strongly about Congress and the federal agencies paying them some deference that they supported the House and Senate bills, which go beyond an executive order the Clinton administration issued last month. The order, which was the administration's second attempt to address the issue, said federal rules could only preempt state and local authority when Congress expressly directed. The Office of Management and Budget, under the order, could object to major rules if federalism implications were not considered.
Scheppach said the contentious issue isn't about to go away.
Just this week, the administration's nominee for deputy director for management at OMB, Sally Katzen, was dressed down by key Republicans at her confirmation hearing for the administration's first executive order, which infuriated state proponents and eventually led to the legislation.
As for the prospects of the Senate bill, business may have a tougher fight on its hands to kill that one. Federalism could end up as a provision of another bill with changes that would satisfy environmentalists and the agencies that were with the chamber in opposition to the House bill.
No matter, said Wootton: "We just won't let the bill move an inch."