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Brooks Schuelke
Brooks Schuelke
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Federal Preemption Part 4: Tort Reform By Rulemaking

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In our series on federal preemption, we’ve looked at an overview of federal preemption and examples of express preemption and implied preemption. Today, we’ll look at one of the most egregious forms of preemption — preemption by rulemaking.

Unlike express and implied preemption, preemption by rulemaking occurs when federal regulatory agencies use their own rulemaking power to try and preempt state laws. Over the last several years, the Bush administration has been very aggressive about pushing for preemption through rulemaking.

The first big push occurred in 2004 when the Office of the Comptroller of the Currency (OCC), the federal agency responsible for regulating federally chartered banks, issued a series of regulations stating that state laws, both statutory and common law, do not apply to national banks "if they obstruct, impair, or condition a national bank’s exercise of its lending, deposit-taking, or other powers granted to it under federal law."

The push increased significantly in 2006, when a Democratic controlled Congress made it clear that they wouldn’t continue to push through Bush’s tort reform agenda. Since then, the Food and Drug Administration, the Consumer Products Safety Commission and the National Highway Transportation Safety Administration have led the way in adopting rules that try to establish that their rules preempt any state law causes of action. In many cases, these agencies have been establishing rules and adding statements that these rule preempt any different state law regulations — including state law causes of action. Since then, numerous courts across the nation have been citing these rules in upholding preemption defenses for defendants.

So why is this egregious? Typically, for express or implied preemption, the statutes at issue go through formal vetting by both parties at the Congressional level. Rulemaking preemption is an end-run around the powers of Congress. As with the case of the Bush administration, the executive branch can quietly pass these rules without much public debate and without a vetting by both parties. That’s clearly a dangerous trend that threatens consumers.