Industry Looks to Federal Rules to Preempt State Regulation

Industry Looks to Federal Rules to Preempt State Regulation

Thursday, September 20th, 2007

Growing Economy

BY Nathan Newman

Industry Looks to Federal Rules to Preempt State Regulation

Suddenly, the news is filled with stories about industry lobbyists marching up to Capitol Hill in Washington, D.C., asking to have their industries regulated:

For toys and cars, antifreeze and fireworks, popcorn and produce and cigarettes and light bulbs, among other products, industry groups or major manufacturers are calling for federal health, safety and environmental mandates. Some of those industries are abandoning years of efforts to block such measures, often in alliance with the Bush administration...

What gives?

With toxic toys forcing industry recalls and other threats to public health stirring demands for government action, industry is looking to contain the potential restrictions on their lax practices. States have been taking action to crack down on a range of these public health dangers, so industry is looking to federal rules to water down state regulatory standards and block these state laws.

Increasing Preemption of State Laws: This is nothing new. As a Congressional report last year detailed, the House and Senate voted 57 times in the previous five years to preempt state laws, including legislation to preempt state limits on air pollution, legislation to preempt state regulation of contaminated food, and regulation to block tougher state regulation of Internet "spam." 

Even without new federal laws, industries have used executive branch regulations to strike down state consumer protections. As we detailed in March, the effects of such federal preemption can be profound. As predatory lending expanded across the country, states sought to enact laws to limit such abusive mortgage practices, only to see many of those laws blocked by federal courts based on Bush administration claims that such state laws were preempted by federal law.

Congressional Hearings on Preemption: Some federal legislators recognize the problem and the Senate Judiciary Committee this week held hearings on how federal agencies are dangerously extending preemption doctrine against state laws. As Georgetown law professor David C. Vladeck testified:

Reversing a position held by the agency since its founding, the FDA has recently announced that its approval of a drug’s label immunizes the manufacturer from failure-to-warn claims...

The National Highway Traffic Safety Administration now routinely claims that its regulatory actions preempt state law ”” both state statutory and regulatory law and state damages actions...

The Consumer Product Safety Commission (CPSC) has also joined the Administration’s drive for preemption of state law remedies for injured consumers...

As this list makes clear, this Administration has seized on regulatory preemption as a way to cut back dramatically on State law remedies for those injured by products and services Americans depend on every day for their health and well-being ”” medicines, medical devices, motor vehicles, the mattresses on which we and our children sleep, and the commuter trains millions of us take to work every day.

Hypocrisy of "States' Rights" Conservativism: As we detail below, many in Congress are trying to reverse the Bush administration's decision to block state programs that extend SCHIP health coverage to more working families. Unsurprisingly, industry lobbies like the National Association of Manufacturers want to pretend that right-wing rhetoric around "states' rights" and this Bush administration assault on state laws is somehow consistent.  

But luckily, many state and federal leaders are increasingly demanding that federal laws be designed to create a baseline of consumer protections, while leaving states free to enhance those standards locally and deal with the problems left unaddressed by those federal laws.

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Valuing Families

BY Adam Thompson

Congressional SCHIP Compromise Moving Forward

As we predicted in July, the compromise legislation to reauthorize and expand the State Children's Health Insurance Program (SCHIP) that is emerging in Congress is more like the weaker Senate bill than the House's broader proposal. Still, the compromise would bring total enrollment to 10 million children, up from 6.6 million and cover an additional 3.2 million uninsured children. SCHIP is an important state-federal program and is vital to state efforts to ensure children have the health care they need when they need it. 

The Compromise:  The compromise legislation would provide an additional $35 billion over the next five years for SCHIP, bringing total spending to $60 billion - double what President Bush has said he would permit. The increased funding would be paid for with an increase in the tobacco tax, from 39 ¢ to $1.00. The compromise does not include measures in the House bill to prevent Medicare privatization but Democratic leaders promise to take up that issue later this year.  

Final details of the legislation are still being worked out, such as coverage for immigrants, mental health, and dental care. Additionally, it isn't yet clear which of the President's recent draconian and punitive rules limiting SCHIP programs will be reversed by the compromise. 

The sands appear to be shifting in favor of veto-proof passage in both houses. Some Republicans feel stuck between singing Tammy Wynette's famous refrain and overlooking the President's shortcomings or voting for a wildly popular program that could help them kindle favor with voters in advance of next year's elections. The House could vote as early as Tuesday and if it passes the compromise without amendment, the Senate is likely to do the same and send a veto-proof package to President Bush.

Bush Reiterates Opposition and Veto-Threat: Despite overwhelming support for SCHIP, Bush is reiterating his disingenuous argument that expanded SCHIP programs are crowding-out private insurance and that government-run programs shouldn't replace private coverage. Even though the Administration's own health insurance tax credit proposals would predominantly benefit higher income individuals with health insurance, he continues to complain about more working families getting federal help. Furthermore, a just-released report from the Urban Institute shows that 70% of children who would be covered by the Senate SCHIP bill would come from families with incomes below 200% of poverty.  

Take Action: Families USA's Medicaid and SCHIP Action Center offers easy and quick ways to contact Senators and Representatives to urge full funding of SCHIP and a rollback of the President's new SCHIP rules. There is a brief window of opportunity to influence the legislation since votes are coming as soon as Tuesday and final details of the compromise legislation are still being worked out.

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Strengthening Communities

BY J. Mijin Cha

Art Therapy Helps Children Recover from Trauma of Katrina

It has been over two years since Hurricane Katrina devastated the gulf coast region and while reconstruction is nowhere near complete, several studies have documented the extreme long term trauma displaced children still experience. Last week, dozens of drawings, sculptures and photographs created by the children of Katrina went on display at the New Orleans Museum of Art. Katrina Through the Eyes of Children is the result of an art therapy project undertaken in one of the FEMA trailer sites known as Renaissance Village. After visiting the trailer village, it became apparent that many survivors were suffering from severe psychological devastation from the trauma of the storm and its aftermath. Through financial support from the For All Kids Foundation, a team of art therapists made bi-monthly visits to the community and provided the survivors with much needed support.

Art therapy uses the creative process of making art to improve and enhance the physical, mental, and emotional well-being of individuals and can be used to assess and treat a variety of mental issues, including trauma and loss. Art created by children traumatized by Katrina often includes triangles, which instead of representing a house as a place of safety, shows the view of the roof -- the only place visible after severe flooding.

Art therapy has also been used to help children with severe disabilities in other places express themselves in complex creations. The state hospital in Napa, CA uses art therapy to help patients express themselves in a non-violent, appropriate way. Art therapy is also used in schools to help students distracted by emotional issues, learning disabilities, speech or language disorders, behavioral disorders, and/or illness -- barriers that even a well-trained, experienced teacher may be unable to get beyond to affect a student’s learning. Art therapy is particularly well suited for children because it offers ways to express themselves that are less threatening than strictly verbal means. As states look to redefine the health care debate, art therapy programs are an important tool to give individuals a way to express their mental anguish in ways that are nurturing and healing.

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Research Roundup

CEO pay at large companies averaged $10.8 million in 2007, more than 364 times the pay of the average U.S. worker, with the top 20 private equity and hedge fund managers pocketing an average of $657.5 million each, or 22,255 times the pay of an average worker, according to a new report by the Institute for Policy Studies and United for a Fair Economy.  The report suggests ending tax subsidies for excessive executive pay, increasing income tax rates on the very wealthy, and denying government contracts to companies with wastefully high CEO pay.

One reason health care costs keep increasing is the explosion in employment in the health insurance industry, which has increased an astounding 52% in the last 10 years according to the Economic Policy Institute. This percentage increase dwarfs the percentage growth in actual caregivers -- doctors, nurses and others providing direct services -- which has been only 26%.

Adding to evidence that the supposed costs to taxpayers from undocumented immigrants is overblown, lawmakers in Arkansas received a report from state agencies that only a tiny proportion of state money goes to undocumented immigrants. In fact, the Arkansas Department of Health found that only $199,000 out of its $191 million budget went to maternity, newborn care, and immunizations for undocumented families and that processing identification documents to screen them out would cost $1.3 million, almost 10 times as much.

In a new strategy document, Our Youth, Our Economy, Our Future, the Campaign for Youth proposes a national investment strategy for "disconnected youth," defined as low-income youth suffering high drop-out rates and high levels of youth unemployment. The program emphasizes better coordination of existing programs and a stronger focus on creating "on ramps" for youth to reach higher-skill, higher-wage career opportunities.

In its 2007 Urban Mobility Report, the Texas Transportation Institute finds, unsurprisingly, that congestion is increasing all over the country, costing Americans 4.2 billion wasted hours and 2.9 billion gallons of wasted fuel for a financial cost of $78 billion. The report argues that it will take a combination of solutions to deal with the problem, from fixing choke-points to increasing mixed-use development and higher density in order to decrease commute times.

In The State of Responsible Business, the Ethical Investment Research Services (EIRIS) finds that North American companies significantly lag behind European companies in responsible business practices related to the environment, human rights, and labor standards, partly due to a weaker regulatory environment in the United States.

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Industry Looks to Federal Rules to Preempt State Regulation

Progressive States Network's Stateside Dispatch - Backwards Conservatism: Feds Routinely Move to Limit State Power

Progressive States Network's Stateside Dispatch - Predatory Lending Bubble: How the Feds Preempted State Law

Stateline - Congress tackles states' agenda

NCSL - Preemption Monitor

U.S. Senate Judiciary Committee - "Regulatory Preemption: Are Federal Agencies Usurping Congressional and State Authority."

U.S. House - Minority Staff of Government Reform Committee - "Congressional Preemption of State Laws and Regulations"

Center for Responsible Lending - Federal Preemption Favors Predatory Lending

Congressional SCHIP Compromise Moving Forward

Progressive States Network's Stateside Dispatch - Bi-Partisan SCHIP Deal, But Bush Promises Veto

Progressive States Network's Stateside Dispatch - Bush Blocks SCHIP, States and Congressional Leaders Vow to Fight Back

Families USA - Kids Waiting for Coverage: How Many Are in Your State?

Urban Institute - SCHIP Reauthorization: How Will Low-Income Kids Benefit under House and Senate Bills?

Art Therapy Helps Children Recover from Trauma of Katrina

The Child Trauma Academy - The Impact of Katrina on Children

School Art Therapy - Why is art therapy used in schools?


The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
J. Mijin Cha, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Communications Associate

Please shoot us an email at if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

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