The Federalism Accountability Act ( 1999 )

The Federalism Accountability Act
Provisions of the proposed Federalism Accountability Act that would alter the rules under which courts
determine whether Congress has preempted state law by statute or authorized preemption by regula­
tion could have far reaching and unintended consequences and should only be enacted if Congress
determines that existing preemption doctrine has systematically frustrated congressional intent and
that statutory rules of construction would produce better results.
Provisions o f the bill that would instruct courts to resolve ambiguities in federal law in favor of
preserving the authority of the states could frustrate the intentions of Congress and rulemaking
agencies and should not be enacted
July 14, 1999
S t a t e m e n t B e f o r e t h e C o m m it t e e o n G o v e r n m e n t a l A f f a ir s
U n it e d S t a t e s S e n a t e
I am honored to be here today to testify regarding S. 1214, the Federalism
Accountability Act of 1999. Mr. Spotila, representing the Office of Information
and Regulatory Affairs of the Office of Management and Budget, has discussed
the Administration’s concerns with section 7 of the bill, which would require Fed­
eral agencies to prepare and publish federalism assessments for certain Federal
rules. My remarks will focus on section 6, which would establish rules of
construction relating to statutory and regulatory preemption.
Section 6 would establish new rules of construction relating to Federal preemp­
tion of State law. Sections 6(a) and 6(b) would alter the rules under which courts
currently determine whether Congress has preempted State law by statute or
authorized preemption of State law by regulation. Section 6(c) would operate more
broadly, requiring that any ambiguity in the Federalism Accountability Act or in
any other Federal law be construed in favor of preserving the authority of the
States and the people. Although we are still evaluating the potential implications
of these provisions, we believe that each raises questions that warrant careful
consideration.
Under current Supreme Court doctrine, the preemptive force of a Federal statute
is determined by examining Congress’s intentions with respect to preemption.'
Congressional intent to preempt can be stated explicitly, in the terms of a statutory
provision addressing preemption. This is commonly referred to as “ express
preem ption.” In addition, congressional intent can also be conveyed implicitly,
through the establishment of Federal law that conflicts with State law, commonly
known as “ conflict preemption,” or that occupies an entire field and leaves no
room for State lawmaking, commonly known as “ field preemption.” Conflict
preemption occurs where Federal law and State law are in direct conflict or where
1 For a general summary o f Supreme Court doctnne concerning the preemption of State law by Federal statutes,
see English v General Elec. Co., 496 U S 72, 79 (1990) Accord Boggs v. Boggs, 520 U S . 833, 839-41 (1997)
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State law stands as an obstacle to the achievement of Federal objectives. Field
preemption occurs where the creation of a pervasive system of Federal regulation
makes it reasonable to infer that Congress intended to disallow supplemental State
law measures or where Congress legislates in an area where the Federal interest
is so dominant that a Federal system can be presumed to displace State laws on
the same subject. The doctrine of field preemption has formed the basis for Federal
preemption of State law in a number of important areas, including nuclear safety,
collective bargaining, and alien registration.2
Section 6(a) would change the rules under which courts and agencies infer
congressional intent to preempt by statute. Under section 6(a), no Federal statute
enacted after the effective date of the Federalism Accountability Act would pre­
empt State law unless the statute contained an express statement of Congress’s
intent to preempt or there was a “ direct conflict” between the Federal statute
and State law so that the two could not “ be reconciled or consistently stand
together.” This provision would profoundly alter the Federal courts’ longstanding
approach to preemption by Federal statute. It would apparently abolish the doctrine
of field preemption and impose significant new limits on conflict preemption.3
The findings section of the Act notes that this change is made necessary by
Federal court preemption rulings that have applied current doctrine to produce
results “ contrary to or beyond the intent of Congress.” S. 1214, §2(5). It is not
clear, however, which applications of existing preemption doctrine are viewed as
having misinterpreted the intent of Congress. Our review indicates that Federal
court decisions involving field preemption and conflict preemption generally have
demonstrated a strong commitment to the avoidance of preemption that is not
necessary to the achievement of clear statutory objectives. The Supreme Court
has determined, for example, that Federal law occupies the field of nuclear safety
regulation, but does not preempt State regulation of nuclear utilities that does not
bear directly on safety; and that the National Labor Relations Act occupies the
field of collective bargaining, but not the field of labor relations in general.4
In addition, under both conflict and field preemption doctrines, the burden that
must be bome by the proponent of preemption varies with the setting. In areas
of traditional State primacy, the courts require a heightened showing of congres­
sional intent to preempt. Indeed, the Supreme Court has stated that “ [w]hen Con­
gress legislates in a field traditionally occupied by the States, ‘we start with the
2 See Pacific Gas & Elec. Co. v. State Energy Resources Conservation & Dev. C om m ’n, 461 U.S 190, 212-
13 (1983) (nuclear safety), Metropolitan Life Ins. Co. v Massachusetts, 471 U.S. 724, 750-51 (1985) (collective
bargaining); Hines v. Davidowitz, 312 U.S. 52, 67 (1941) (registration o f aliens).
3 The Supreme Court has stated that conflict preemption and field preemption should not be viewed as “ rigidly
distinct” categories and has suggested that ‘‘Field preemption may be understood as a species of conflict preemption,”
since State law operating within a preempted field can be seen to conflict with Congress’s intent to exclude Slate
regulation. English v. General E le c , 496 U S at 79 n 5 Section 6(a) of S 1214, by confining implied preemption
to situations involving “ a direct conflict” between irreconcilable or inconsistent directives, would appear to foreclose
recognition o f field preemption as a subclass of conflict preemption for purposes of section 6 of the bill.
4 See Pacific Gas & Elec., 461 U S at 212-13 (limited preemption respecting nuclear safety); Metropolitan Life,
471 U S . at 750-51 (limited preemption respecting collective bargaining)
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assumption that the historic police powers of the States were not to be superseded
by the Federal Act unless that was the clear and manifest purpose of Congress.’ ” 5
More importantly, it seems far from clear that increased reliance on express
preemption provisions in Federal statutes will produce better results. It can be
extremely difficult to craft express preemption provisions that produce the desired
balance between Federal and State authority. Detailed express preemption provi­
sions may be prone to overinclusiveness, displacing State law where such displace­
ment is not truly necessary, or underinclusiveness, undermining the effectiveness
of Federal law by failing to displace antithetical State law. Moreover, the problems
with such express preemption provisions are likely to be most acute where the
stakes are highest — that is, where Congress enacts legislation that applies broadly
and over a long period of time. Indeed, some of the harshest criticism of Federal
preemption has focused on perceived excesses of preemption under express statu­
tory provisions contained in such legislation. One noteworthy example is section
514(a) of the Employee Retirement Income Security Act of 1974 (“ ERISA” ),
29 U.S.C. § 1144(a) (1994). That provision, which expressly preempts most State
laws that “ relate to” employee benefit plans covered by ERISA, has been criti­
cized for cutting too wide a swath through State law governing employee benefit
plans.6
It is also important to note that enactment of S. 1214 would not prevent a later
Congress from instructing that the preemptive effects of a particular statute should
be determined, notwithstanding section 6(a), by reference to traditional implied
preemption doctrines. Indeed, one significant set of interpretive problems that
would likely arise in the implementation of this provision — and of the other rules
of construction found in section 6 — would involve disputes as to whether Con­
gress implicitly intended to exempt particular statutes from section 6 of the Fed­
eralism Accountability Act. For example, if a subsequent Congress enacted a law
that established a pervasive Federal regulatory regime and that demonstrated a
clear, though not express, intention to preempt, courts might well conclude that
the later enactment implicitly repealed section 6(a)’s limitations on field and con­
5 California v. AR C America Corp, 490 U.S. 93, 101 (1989) (quoting Rice v Santa Fe Elevator Corp , 331
U S 218, 230 (1947)) Conversely, in fields that implicate certain special and well-established Federal interests,
such as the protection o f Indian self-government, the test for determining whether State authority has been displaced
is less exacting See, e.g.. California v Cabazon Band o f Mission Indians, 480 U.S 202, 215 (1987) (States, in
the absence of congressional authorization, can regulate Indian conduct or Indian lands inside Indian country only
in “ exceptional circum stances” ); White Mountain Apache Tribe v. Bracker, 448 U S 136, 143 (1980) ( “ The tradition
of Indian sovereignty over the reservation and tribal members must inform the determination whether the exercise
o f state authority has been pre-empted by operation o f federal law .” ).
6 See, e g ., Jeffrey E. Shuren, Legal Accountability For Utilization Review in ERISA Health Plans, 77 N.C L
Rev 731, 772 (1999) ( “ ERISA ’s preemption provisions combined with the limited remedies available under ERISA
for breach o f fiduciary duty have shielded [entities that perform utilization review] as well as third-party payers,
from the consequences o f [utilization review] decisions.” ), Jack K Kilcullen, Groping fo r the R eins• ERISA, HMO
Malpractice and Enterprise Liability, 22 A m . J L & Med. 7, 9 -1 0 (1996) (preemption under ERISA “ interferes
with judicial efforts to establish corporate liability” and prevents States from undertaking needed efforts to
“ reformulat[e] traditional concepts of medical malpractice to reach HMOs” ); see also Andrews-Clarke v Travelers
Ins. Co., 984 F Supp 49, 63 (D. Mass 1997) (“ Under any criterion . the shield of near absolute immunity
now provided by ERISA simply cannot be justified.” ).
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flict preemption. Such difficult interpretive issues would introduce a form of
confusion not present under current Supreme Court preemption doctrine.
Section 6(b)’s proposed changes to current regulatory preemption doctrine raise
concerns similar to those raised by section 6(a)’s proposed changes to current
statutory preemption doctrine. The Supreme Court has stated that “ in proper cir­
cumstances, [a Federal] agency may determine that its authority is exclusive and
pre-empt[] any state efforts to regulate in the forbidden area,” City o f New York
v. FCC, 486 U.S. 57, 64 (1988). In describing these “ proper circumstances,”
the Court has rejected the notion that the rulemaking agency must demonstrate
that Congress specifically considered the question of regulatory preemption and
decided to confer this authority on the rulemaking agency. Justice White, writing
for a unanimous Court in City o f New York, described the test of agency authority
to preempt by regulation in the following terms:
It has long been recognized that many of the responsibilities con­
ferred on federal agencies involve a broad grant of authority to rec­
oncile conflicting policies. Where this is true, the Court has cau­
tioned that even in the area of pre-emption, if the agency’s choice
to pre-empt ‘‘represents a reasonable accommodation of conflicting
policies that were committed to the agency’s care by the statute,
we should not disturb it unless it appears from the statute or its
legislative history that the accommodation is not one that Congress
would have sanctioned.” United States v. Shimer, 367 U.S. 374,
383 (1961).
City o f New York, 486 U.S. at 64.
Section 6(b) would apparently alter the Supreme Court standard for determining
whether rulemaking agencies possess the authority to issue preemptive regulations.
Under this provision, a Federal rule issued after the effective date of the Fed­
eralism Accountability Act could not preempt State law unless (1) regulatory
preemption was “ authorized by the statute under which the rule is promulgated”
and the regulation was accompanied by a statement in the Federal Register explic­
itly stating that such preemption was intended, or (2) the regulation directly con­
flicted with State law.
It is difficult to predict how courts might interpret the reference to statutory
authorization in section 6(b)(1). Opponents of new regulations would likely argue
that section 6(b)(1) is quite limited — that statutory authorization to issue preemp­
tive regulations, in this context, can only mean specific and express authorization
to issue such rules. (Rulemaking agencies would need some sort of statutory
authorization to promulgate regulations that preempt by virtue of a direct conflict
under section 6(b)(2); the omission of any reference to authorization in that provi­
sion might be cited as evidence that the authorization referred to in section 6(b)(1)
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must be specific and explicit.) Moreover, opponents of new regulations would
also be likely to argue that this restrictive reading of section 6(b)(1) must prevail
so long as it is merely plausible, since ambiguities in the Act, would have to
be resolved in favor of the States and the people by virtue of section 6(c).
These questions concerning the requirements for issuing preemptive regulations
under section 6(b)(1) would, at a minimum, engender significant confusion and
could produce a substantial volume of litigation. Uncertainty and the threat of
litigation could be especially serious for agencies that are called upon to update
and revise complex regulations under longstanding statutes that lack specific and
express authorizations to issue preemptive rules. The Occupational Safety and
Health Administration ( “ OSHA” ), for example, could confront arguments that
the Occupational Safety and Health Act, although construed in the past to
authorize the issuance of preemptive regulations, lacks the required statutory state­
ment and that new OSHA rules, therefore, can only preempt State law where
the new OSHA requirement directly conflicts with State law.7
Under section 6(c), any ambiguity in S. 1214, or “ in any other law of the
United States” — predating or postdating the Federalism Accountability Act —
would “ be construed in favor o f preserving the authority of the States and the
people.” The potential implications of an instruction of this sweeping scope are
difficult to assess, although the potential for far reaching and unanticipated con­
sequences is pervasive. It is unclear how this provision might affect the reach
of Federal statutes and regulations. How would section 6(c) apply to statutory
and regulatory language that, although ambiguous on its face, has been clarified
by case law or administrative interpretation predating the enactment of section
6(c)? Would section 6(c) require adoption of the narrowest plausible reading of
virtually every statutory or regulatory assertion of Federal power on grounds that
such a reading operates to preserve the greatest authority for the States and the
people? Special difficulties would arise in the interpretation of Federal laws that
limit State authority in ways that arguably enhance the authority of the people.
How, for example, would section 6(c) affect the operation of the Dormant Com­
merce Clause, which forbids States from imposing certain burdens on interstate
commerce in areas where Congress has not acted affirmatively to authorize State
activity? Would ambiguities concerning the scope of a Federal law authorizing
State regulation be resolved in favor the authority of the States to regulate or
the authority of the people to engage in interstate commerce in an environment
free of State regulation? The breadth and generality of section 6(c) create a risk
7 In G ade v. N ational Solid Wastes M anagement A s s ’n, 505 U S. 88 (1992), eight members of the Court agreed
lhat no express statutory provision invests O SH A regulations with the power to preempt “ nonconflicting state law s”
(that is, supplem ental State-law requirements applicable to federally regulated practices). Id at 96-104 (plurality
opinion o f O ’Connor, J.). see id at 117-18 (Souter, J., dissenting). Nevertheless, a majority concluded that OSHA
regulations preempt such nonconflicting State laws, with the plurality basing preemption on the conflict between
such State laws and C ongress’s clear intention to ensure that employees and employers are subject to “ only one
set o f regulations.” Id at 99, see id at 109 (Kennedy, J., concurring in the judgment under an express preemption
rationale).
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that unintentional ambiguities in Federal statutes and regulations, with tenuous
connections to the balance between Federal and State power, could be exploited
in unforeseen ways to frustrate the intentions of Congress and rulemaking agen­
cies.
In short, section 6 of S. 1214, as drafted, would have far reaching effects. Sec­
tions 6(a) and 6(b) would significantly alter the rules under which courts determine
the preemptive effects of Federal statutes and regulations. In our view, systematic
reform of this nature would only be warranted if Congress were convinced that
existing preemption doctrine systematically operates to frustrate congressional
intent (and that statutory rules of construction would produce better results). If,
on the other hand, Congress’s concerns about current preemption doctrine derive
from particular cases or classes of cases, any statutory reform should be tailored
to correct the results in those cases or classes of cases. The potential implications
of section 6(c) are considerably more pervasive. Section 6(c) has the potential
to frustrate congressional intent and agency undertakings wherever questions arise
as to the legal allocation of power between the Federal government and the States.
It should be eliminated.
RANDOLPH D. MOSS
Acting Assistant Attorney General
Office o f Legal Counsel
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