In the last days of the Bush Administration, expect it to engage in lots of rulemaking. Many businesses will seek new rules for their industries now, fearing that less favorable outcomes will occur if they chance it with the Obama Administration. This business-initiated regulation will seek “ceiling preemption,” meaning that the federal rules will supersede and cap strong state regulations.

Preemption has a profound effect on consumer protection, because frankly speaking, Congress rarely takes the time to pass consumer protection laws. It has other important business, and there is a horde of lobbyists who get upset when consumer laws are even considered.

In light of a new report released by Rep. Waxman’s Committee on Government Reform, Alicia Mundy writes in the Journal that preemption became very popular in FDA rulemakings:

The administration began adding language to more than 50 regulatory rulings that pre-empt state standards and lawsuits at several agencies in 2005.

The first such ruling at the FDA appeared in January 2006, surprising outside observers because the language hadn’t appeared in earlier public drafts.

The report finds that:

…key FDA career officials strongly objected to Bush Administration drug labeling regulations that would preempt state liability lawsuits, asserting that the central justifications for the regulations were “false and misleading” and warning that the changes would deprive consumers of timely information about drug hazards.

No surprise. And expect much more of this. It will be difficult to clean this up. Practically speaking, undoing these rules will only be possible where there is political will to do so. So many other important issues will take priority first.

Comments

  1. #1 D. C. Sessions
    October 30, 2008

    This obviously bears on the Wyeth case coming before the USSC this term. I’d love to see you and PalMD debate this one; I don’t know his take on it but suspect that you’re not totally in agreement.

    My views on State product liability law are perhaps a bit influenced by having been a resident of Alabama at one time.

  2. #2 Chris H.
    October 30, 2008

    @D.C. Sessions–how did AL shape your views? I lived in GA for 7 years; the lack of highway safety there was shocking, but I didn’t have experience w/ consumer issues.

  3. #3 D. C. Sessions
    October 30, 2008

    @D.C. Sessions–how did AL shape your views?

    Alabama allows individual plaintiffs to claim damages as though they were representing a class action, both compensatory and punitive. The poster-child case was of a man who bought a BMW which, it turns out, had been scratched in transit and had paint repair [1]. He found out and sued for the misrepresentation of the car as “new.”

    In discovery, it developed that the practice is in fact a common one, and therefore the Court determined that the total damages amounted to a sum per car times the number of cars so repaired nationwide going back to the statute of limitations, multiplied for punitive and exemplary. All went to one man (and, of course, his lawyers.) It was not a small sum.

    The question raised at the time was whether other BMW, Mercedes, Cadillac, etc. owners could all get similar amounts. If not, why were they cut out of the Bonanza?

    [1] This appears to be the common practice in the auto industry.

  4. #4 The Perky Skeptic
    October 30, 2008

    Gah, I remember that case! Alabama is insanely plaintiff-friendly. Used to live there, myself. In light of lawsuits like that, I can honestly understand industries seeking this kind of ceiling preemption. It does make me nervous, however, when consumer health and drug labeling regs enter the picture. What happens if someone dies as a result of the changes in federal regs? Does the patient’s family have any recourse to take someone to court?

  5. #5 D. C. Sessions
    October 31, 2008

    PS: BMW v. Gore, reversed in part by the Alabama Supreme Court on jurisdictional grounds, reversed additionally in part by the United States Supreme Court on grounds of excessive punitive award.

    I’m glad this caused me to look it up. Alabama is still very plaintiff-friendly but it looks like the worst has been leashed.

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