Summary
President Obama issued a memorandum which stated that federal agencies could pre-empt state laws. However, federal pre-emption can only occur when there is a sufficient legal basis for such displacement.
This is a return, hopefully to the policy established by the Regan Administration and reverses Bush Administration regulatory practice.
States rights will likely receive a boost across a broad spectrum of regulations.
Analysis
There has long been concern that many federal regulations pre-empt states right to regulate and protect. Yet as President Obama noted, in many areas the states have been far more aggressive and progressive than the federal government in areas such as health, safety and environmental policy.
The memo instructs federal agencies to review all regulations created in the past 10 years and determine if pre-emption clauses are justified. If not the agency must amend the rule to remove the pre-emption passage.
Under the Bush Administration , pre-emption strategy was used to reduce the amount of litigation faced by business and protect companies from the affects of inconsistent state, local or regional standards.
Basically the president's move will not result in a mass of litigation, but recognizes that there is a narrow class of cases and issues that the federal government has direct interest in and spoken directly and precisely on an issue.
As the dust settles and the impact of the memo becomes clear companies will have to meet a number of different and varied regulations. However, pre-emption will remain in all probability a justifiable defense in such areas areas as FDA, DOT, and other key regulations that broadly impact domestic and international commerce, and other issues where a strong even application is necessary.
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This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
