State v. Federal Regulation and the concept of “Preemption”

Preemption. How many more bad connotations can corrupt and undemocratic people attach to a single word/concept?

We all know (with the notable exception of Ms. Palin, of course) about the “Bush Doctrine” of preemptive war and how many lives were tragically lost to it’s sorry comic book bluster and simplistic binary logic. Now the concept of “preemption” is stealthily ruining the United States in courtrooms and regulatory offices. Preemption basically means in its new conceptual application: the preempting of authentic Democracy.

While conducting research on Massey Energy, the Chamber of Commerce and the American Tort Reform Association, I came across a 2007 Washington Post column written by Cindy Skrzycki regarding the “Bush administration’s increasing use of federal health and safety regulations” to preempt or overrule corporate liability claims in state courts. Regarding the case of Merck’s attempts to escape accountability for marketing and continuing to sell the deadly drug Vioxx Skrzycki wrote that:

The fine print of a 2006 Food and Drug Administration rule on prescription labeling that preempts, or overrides, state laws is proving to be a powerful weapon in the courtroom at a time when Merck is fighting thousands of lawsuits from consumers claiming they were harmed by its painkiller Vioxx.

She also went on to note that:

Since 2005, federal agencies, including the Consumer Product Safety Commission, the National Highway Traffic Safety Administration and the Department of Homeland Security, have issued more than a dozen rules that stress the primacy of federal law.

Attorneys argued at the time that removing the option of “suing a company at the state level will result in weaker Federal Regulations” (emphasis mine).  As we’ve seen in the last 2 months with the tragedies at Massey’s Upper Big Branch Mine and BP’s Deepwater Horizon, these companies need far more, not far less, regulation. Preemption in this context is just another tool that companies and their sympathetic Government shills use to erode regulations and distort legitimate Democratic processes like the legal redress of grievances. Think I’m exaggerating? Here is an American Tort Reform Association spokesperson quoted in the same piece condescendingly stressing that “Regulatory experts are better arbiters of what is a potential threat to a consumer than a judge or jury in Michigan” (italics mine). First, note: the callous, arrogant dismissal of the actual citizens of Michigan who would fill those pesky juries. They can’t possibly be expected to know the complexities inherent in the simple equation that they were purposely sold a dangerous or defective product. Second, look at the wink and nudge faith the flack expresses in the infallibilty of “Regulatory experts” like the fine men and women of the Minerals Management Service and the SEC. The MMS and their pathetic scandal-plagued abdication of regulatory duty is the perfect example of why people like the American Tort Reform Association, the Chamber of Commerce, members of the United States Senate and the corporations they represent want the Federal Government to control or “preempt” regulatory oversight at the expense of the states, and why it’s un-Democratic and shouldn’t be allowed or tolerated any longer.

Fast Foward-

Kevin at LittleSis has been doing great work highlighting the blatant influence a revolving door ex-staffer turned financial industry lobbyist named Jonathon Jones is exerting on Senator Tom Carper’s attempt to strip crucial consumer protections out of the Financial Reform legislation. In eerie replay of the WaPo column I outlined above, here is Zach Carter from The Campaign for America’s Future writing about Carper’s amendment which, of course, involves “preemption” and would allow Federal Regulators to block state efforts to enforce laws on banks operating within their boundaries. He characterizes the Carper amendment as a way “to ban states from enforcing their own laws against big national banks like Wells Fargo, Citigroup, and Bank of America.” Carter also notes that “For years, federal bank regulators at the Office of Comptroller of the Currency (OCC) asserted broad powers to preempt state laws, and courts generally backed them.”

Carper also attempted to remove legislation from the bill which would permit shareholders a larger voice in naming corporate boards. But never fear Senator Carper is on the job to ensure this Democratic principle of electing leaders shall not stand! Why? Because according to Carper’s true constituents, the Business Roundtable, this increased power in the hands of shareholders “allows small shareholders with an agenda to disrupt the governance process” (emphasis mine). There it is again. Small. Just like the man from the American Tort Reform Association quoted earlier, this Business Roundtable man cannot hide his contempt for Democratic principles and “small” people like ordinary shareholders or the citizens who might constitute a jury. There’s what they truly think of you. Of us. They don’t even really hide it anymore if you pay attention because they have enough money to buy greedy, corrupt Senators by the dozen who then price and preempt us all right out of the Democratic process.

In case anybody thinks my language regarding the threat to Democratic principles and processes is overblown, the Senate Judiciary Committee had a hearing in September 2007 entitled: “Regulatory Preemption: Are Federal Agencies Usurping Congressional and State Authority?” Skrzycki cited that in her column as well as this letter written by Gerie Voss, Regulatory Counsel for the American Association for Justice who warned that the:

escalating use of stealth preemption will deprive consumers of their right to hold negligent corporations accountable for injuries caused by defective products while these same corporations continue to increase their bottom line

It appears that this warning was ignored.

You have to love how Carper can dare suggest with a straight-face that Federal Regulators can and should be trusted to act in good faith to curb the excesses and illegalities of huge monolithic banks after what we all just lived through a short time ago. Isn’t everybody who had any sort of financial regulatory authority regarding the economic crisis uniformly sticking to the story: we couldn’t have seen it coming.  Nobody anywhere in the world saw this coming.  Except the people at Goldman or Magnetar who were bragging about and subsequently betting on their knowledge of the imminent financial demise that “nobody saw coming.”  It’s disgraceful.  And it’s ongoing insult to the collective intelligence of citizens to act like these Federal Regulators have their interests at heart when facts show they are corrupted by money and/or incestuous revolving door relationships with the supposed targets of their regulatory authority.  State regulators are harder to corrupt and control; hence the need for preemption.


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