The Politics Of Preemption: The Role Of State And Federal Government In Environmental And Consumer Protection Under The Bush Administration

10/8/2003

Executive Summary

States have long been the laboratories for innovative public policy, particularly in the realm of environmental and consumer protection. State and local legislatures, being smaller and often more nimble than the federal government, can develop and test innovative policies to address problems identified by local constituents. If a certain policy works, other states can try it. If the policy fails, the state or local government can quickly modify the policy without having affected residents in all 50 states. Traditionally, Congress and the federal government have acted to protect the environment and consumers only after several states have taken the lead and provided the momentum for regulatory change.

Ironically, it is the success of state-level efforts to protect the environment and consumers that give rise to federal efforts to preempt state law. Throughout U.S. history, politicians and academics have vigorously debated the balance of power between state and federal government and the realms in which states are allowed to exercise authority over the federal government. The contemporary debate about the rights of states vis-à-vis the federal government, however, has little to do with which level of government best serves the people and more about how those in power—particularly at the federal level—can advance the agenda of the special interests that helped elect them to office.

Before his inauguration, President George W. Bush summarized his thoughts about the principle of states’ rights: “While I believe there's a role for the federal government, it's not to impose its will on states and local communities.” As the record shows, however, the Bush administration’s ideological commitment to states’ rights has been one of convenience rather than purity. When its corporate campaign contributors are faced with strong consumer and environmental protections at the state level, the Bush administration is quick to call for “uniform” national regulations that trump state law. When federal regulation seems too burdensome to industry, the Bush administration calls for more“local control” and states’ rights—effectively devolving regulation to local officials eager to please oil, timber, drilling and other corporate interests.

Examples of this ideological double-speak abound.

• On environmental policy, the Bush administration has proposed weakening the widely popular Roadless Area Conservation Rule to protect 58.5 million acres of pristine forests in order to give local officials—and therefore the timber industry—more control over logging in our national forests. This call for more “local input” ignores the 1.6 million citizens, representing every state, who commented in favor of the roadless rule and the 600 public hearings attended by local citizens during the rule-making process. Conversely, the Bush administration’s utility-supported rollbacks to the Clean Air Act’s New Source Review program will impede, or even preclude, the ability of states and municipalities to implement air pollution programs that are stronger than federal requirements.

• On consumer policy, the Bush administration has long since abrogated its commitment to states’ rights. Under pressure from large banks, the Treasury Department’s Offices of the Comptroller of the Currency (OCC) and Thrift Supervision (OTS) have already ruled that tough state laws to curb usurious mortgage lending practices, such as the one passed in Georgia in 2002 and others, do not apply to nationally-chartered banks. In August 2003, OCC also proposed a sweeping rollback of most state authority to impose consumer protection rules on not only national banks, but also their nonbank operating subsidiaries, which have traditionally been regulated by the states. Now, belying a campaign promise to strengthen privacy protections, the Bush administration is calling on Congress to preempt states from implementing strong financial privacy laws such as the one enacted in California in August.

• On energy policy, the Bush administration is trying to have it both ways. The administration has worked to give state officials—and therefore the oil industry—more control over oil and gas development on federally-managed public lands by making it easier to skirt environmental reviews required under federal law. Conversely, the administration is quietly rewriting federal rules to limit states’ authority to control oil and gas drilling off their coasts. Similarly, at the behest of electric utilities, the Bush administration has opposed a federal renewable portfolio standard requiring more power generation from renewable energy sources, saying that this is best left to the states. At the same time, the administration is supporting efforts to usurp state authority over the siting of transmission lines and grant private entities, such as utilities, the power of eminent domain to seize private property to build new transmission networks.

This tendency to play both sides—calling for states’ rights on the one hand and federal preemption on the other—is a dangerous combination. Because Congress rarely acts to protect the environment or consumers without impetus by the states—unless compelled by crisis or scandal—the administration’s preemption of state law in effect dissuades states from developing innovative policy solutions to pressing environmental and consumer problems. Federal law becomes a ceiling, rather than a floor from which states can improve and expand upon existing regulation. As the Bush administration then weakens federal law in other areas to accommodate big oil companies, the timber industry, the financial services industry, and other interests, the remaining framework of environmental and consumer laws may fail to adequately safeguard those it was designed to protect.