• 13 July 2009

Federalism Accountability: “Agency-Forcing” Measures

Catherine M. Sharkey - N.Y.U. School of Law

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Federal preemption of state tort law is a multifaceted topic. In Federalism Accountability: “Agency-Forcing” Measures, I tackle the federalism dimension of the contentious preemption debate: Congress’s and federal agencies’ respective abilities to serve as loci of meaningful debate with state governmental entities about the impact of federal regulatory schemes on state regulatory interests. Notwithstanding the dismal track record of federal agencies, which seems to be characterized by total neglect of states’ regulatory interests, my article sides with agencies over Congress and trains its focus on reform of the agency rulemaking process. Given that the 1999 Federalism Executive Order 13,132 provides a blueprint for timely and meaningful consultation with the states, issuance of federalism impact statements, and robust interchanges during the notice-and-comment period, what is needed now is an effective enforcement mechanism.

My article advocates a variety of “agency-forcing” measures designed to enhance the ability of Congress, the executive, and especially the courts, to ensure that agencies abide by executive mandates and other reforms, and to provide a check on overt politicization or inaction on agencies’ part. The article also introduces the concept of “indirect challenges” to agency rulemaking, arising outside of the Administrative Procedure Act’s domain of direct challenges to agency action, at a later juncture when a defendant asserts a preemption defense to state common law tort actions.

On May 20, 2009, President Barack Obama issued a memorandum announcing his administration’s official policy on preemption: “[P]reemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption.”1 The new administration’s pronouncement creates a conducive climate for reforming the agency decisionmaking process along the lines suggested in my article.

The Past: Agency Disregard of State Regulatory Interests

President Obama’s directive to federal agency heads is to review preemptive statements in regulatory preambles and codified rules promulgated over the last ten years and to take corrective action to amend those that are not legally justified. The first part of my article (“Agency Disregard of State Regulatory Interests”) could serve as an appropriate target list. It explores the federal agencies’ dismal track record on accountability and highlights why reform is necessary.

A close look at the circumstances behind the Food and Drug Administration’s (FDA) issuance of the 2006 drug labeling preemption preamble reveals a lack of transparency, procedural irregularity, and utter indifference toward state governmental entities. In its notice of proposed rulemaking in December 2000, the FDA disclaimed any potential preemptive effect.2 With this denial, the FDA relieved itself from the further requirements of the executive mandate on federalism (Executive Order 13,132), which requires consultation with relevant state organizations. Any interested parties that followed FDA involvement in pharmaceutical regulation—particularly those monitoring agency rules with the potential to oust existing state law regulations and common law tort liability—would, moreover, take this as a signal to focus antipreemption efforts elsewhere. It therefore came as a surprise—unwelcome, to say the least—that the final rule issued by the FDA in January 2006 contained an express statement of preemptive intent.3 The FDA’s preemption statement, moreover, materialized in the rule’s preamble, thus eluding detection via the transparent and public process of notice-and-comment rulemaking.

In an act of breathtaking hubris, the FDA included a federalism impact statement (required by Executive Order 13,132) that defended its actions and subtly held state governmental groups to blame for not submitting any comments on the proposed rule. Perhaps in an effort to camouflage its duplicitous, 180-degree change in its position on the rule’s preemptive effect, which it deliberately set out in a preamble and without public comment, the FDA dared to suggest that it consulted with state governmental officials and entities. At best, the FDA was referring to its solicitation of comments during the notice-and-comment period—although it was during that period that the FDA disclaimed any preemptive effect. At worst, the FDA was being disingenuous—the view espoused by state representatives such as the National Conference of State Legislatures (NCSL) and members of Congress led by Representative Henry Waxman. With the benefit of hindsight, the FDA’s 2006 drug labeling preemption preamble can be seen as but one example of agency bait-and-switch tactics, a pattern the FDA has followed again and again in both the drug and food contexts.

Nor does the FDA stand alone in its transgressions. National Highway Transportation and Safety Administration’s (NHTSA) proposed Roof Crush Resistance rule was emblematic of a consistent pattern and practice whereby NHTSA disclaimed any federalism impact while simultaneously asserting the preemptive effect of the rule.4 NHTSA also bypassed any consultation with relevant state organizations on the ground that the proposed rule lacked “sufficient federal implications to warrant consultation with State and local officials or the preparation of a federalism summary impact statement.” 5

These are but two examples of federal agencies’ documented disregard of congressional and executive mandates to incorporate into their rulemaking processes consultation with relevant state entities and investigation of the potential consequences of their rules on state regulatory schemes. It is the grim background against which my article charts a new path.

The Future: Agency Accountability to State Regulatory Interests

In recognition of the key role that federal agencies have—and ought to have—played in judicial preemption determinations, I have previously proposed an “agency reference model” that “directs attention to a repository of agency information—ideally reflecting a broad range of views, having been vetted by expert and public opinion—focusing on the precise nature of the agency’s regulatory cost-benefit (or risk-risk) determinations as well as the economic consequences of various determinations and the effects of state regulation on federal regulatory schemes.”6 Even the Court’s antipreemption decision in the Wyeth v. Levine7 pharmaceutical case (in which the FDA’s preemption preamble received especially harsh treatment) recognized the significance of input from the relevant federal agency: Agencies have “a unique understanding of the statutes they administer and an attendant ability to make informed determinations about how state requirements may pose an ‘obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’”8 Given the significance of their role, it is imperative that federal agencies be made accountable to state regulatory interests, what I have dubbed “federalism accountability.”

A.     Federalism Executive Order 13,132

The 1999 Federalism Executive Order 13,132 provides a blueprint for reform: timely and meaningful consultation with the states throughout the process, issuance of federalism impact statements that detail the effects upon the states and changes in the federal-state balance, robust interchanges during the notice-and-comment period, including solicitation of comments and responses thereto.9 The spirit of the executive order is even more far-sighted, envisioning a cooperative partnership between states and agencies in the development of rules and regulations. Critical to the success of any such reforms, however, is an effective enforcement mechanism—a serious drawback of the existing executive order.

B.     Agency-Forcing Measures

President Obama’s presidential memorandum admonishes all agencies to adhere to the strictures of Executive Order 13,132 and directs that preemption provisions should be codified in regulations, not inserted in regulatory preambles. It is an executive agency-forcing measure. But like Executive Order 13,132 itself, the presidential memorandum does not create any enforceable rights. The White House could use its Office of Information and Regulatory Affairs’ (OIRA) centralized review to enforce the order. Alternatively, Congress could codify the order. Each of these avenues has been proposed before in this (or a similar) context—thus far, to no avail. Although my article revisits executive and congressional enforcement mechanisms, my main focus is on the comparatively underexplored realm of judicial enforcement.

The United States Supreme Court’s Wyeth v. Levine decision stands as an intriguing exemplar of how courts can force agencies to act (or change their ways). In rejecting a drug manufacturer’s assertion of implied preemption of state failure-to-warn claims, the Court looked askance at the FDA’s “proclamations of pre-emption” in its 2006 drug labeling preemption preamble. The Court specifically mentioned that the FDA’s failure to “offer[] States or other interested parties notice or opportunity for comment” rendered its views on state law “inherently suspect.”10

At the same time, the Court did not in any way abandon its embrace of implied preemption jurisprudence.11 Bent on reconciling its implied preemption holdings, the Court contrasted its propreemption Geier v. American Honda Motor Co., Inc.12 decision, in which the Department of Transportation had promulgated a regulation with “force of law,” with the situation in Wyeth, in which the FDA had put forth its views in a preamble that evaded the notice-and-comment rulemaking procedures. Justice Stephen Breyer concurred separately to emphasize the majority’s concession that agency regulations with “force of law” can preempt. Justice Breyer spelled out that the FDA “may seek to embody [its] determinations [whether and when state tort law acts as a help or hindrance to federal regulatory goals] in lawful specific regulations describing, for example, when labeling requirements serve as a ceiling as well as a floor.”13

Wyeth will thus motivate agencies to look inward (and, in line with President Obama’s presidential memorandum on preemption, backward as well). Agencies will be dissuaded from operating on the basis of politically motivated “proclamations of pre-emption”—such as the one offered in the 2006 FDA preemption preamble—that would not withstand judicial scrutiny. Agencies, instead, will be goaded toward notice-and-comment rulemaking, which “offer[s] States or other interested parties notice or opportunity for comment.”14

Courts already have tools to ensure that agencies disclose relevant data and provide reasoned responses to material objections raised during the rulemaking process. Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co.15 articulates a standard of “hard look” review in the context of determining whether a regulation is “arbitrary and capricious” under § 706 of the Administrative Procedure Act (APA). Direct challenges to preemptive rules in the health and safety arena are, however, few and far between. This is in marked contrast to other areas, such as environmental regulation, in which nonprofit governmental organizations take an active role in challenging rules adverse to state regulatory interests. A host of potential reasons may explain this seeming market failure: the absence of clearly identified and effective representatives of state regulatory interests in which common law tort standards (as opposed to state regulations enforced by state-level agencies) are at issue; insufficient financial impact upon the states, which is often what galvanizes participation by state governmental entities; and formidable standing and ripeness barriers. To the extent that the agencies’ insertion of preemptive provisions into preambles to rules (not to mention instances where the agency engaged in the kind of bait-and-switch tactics discussed above) simultaneously diverted the attention of the watchdogs and may have insulated the rules from direct judicial challenge,16 Wyeth could expand the domain of direct challenges to preemption provisions in notice-and-comment rulemakings by virtue of the fact that agencies will be spurred in that direction.

Even more significantly, Wyeth could augur the dawn of a novel form of indirect challenge to agency rulemaking (arising outside of the APA’s domain of direct challenges to agency action) at a later juncture when a defendant asserts a preemption defense to state common law tort actions. Courts have an opportunity to scrutinize both the empirical substrate of the regulatory record compiled by the agency as well as its articulated reasons underlying any interpretive policy.

Wyeth directs that, even in contexts in which Congress has not authorized the agency to preempt state law directly or the agency has not promulgated regulations with “force of law,” the Court looks to the agency’s explanation of how state law affects the regulatory regime. The question becomes “what weight [the Court] should accord the FDA’s opinion.”17 The Court had previously given a nod (if not outright deference) to agency proclamations of preemption in “regulations, preambles, interpretive statements, and responses to comments.”18 In these cases, the Court studiously avoided specifying the level of deference owed agency interpretations on preemption. Several lower courts gave Chevron, or mandatory, deference to the FDA’s preemption preamble.

I have argued that courts could play a role here by conditioning any deference to an agency’s preemption position on that agency’s compliance with the strictures of Executive Order 13,132. A few federal district courts have taken such a hard-line position, rejecting preemption defenses based upon the FDA’s assertion of preemption in the drug labeling context. I have also argued that the agency’s views should be accorded Skidmore “power to persuade” (not Chevron mandatory deference) as a means to encourage agencies to engage in formal notice-and-comment rulemaking processes that, arguably, vet the agency decisionmaking process and make the agency respond to substantive concerns raised by all affected parties. In Wyeth, the Court (at least implicitly) endorsed my position. The FDA’s preemption preamble miserably failed this standard—the Court was unpersuaded by what the agency “said” when it seemed contrary to what it “did.” Put differently, deficits in the agency regulatory record cannot be overcome by embellishment by the agency in the interpretive sphere. By virtue of subjecting agency action and interpretation to Skidmore deference at the preemption juncture, which turns on the “thoroughness, consistency, and persuasiveness” of the agency’s explanation of state law’s impact on the federal scheme, courts establish a framework for indirect challenges to agency rulemaking.

Anticipation of such judicial review at this stage would, moreover, force agencies (prodded by interested parties) not only to adhere to the strictures of the executive order, but also to compile a diligent agency record that would serve as the basis of the court’s evaluation of whether the state tort action seeks to “redo” the analysis conducted by the agency and should therefore be ousted.

NHTSA’s recent withdrawal of its preemption language in the roof crush final rule exemplifies the type of response from agencies anticipated by my article. Without much (if any) fanfare,19 on May 12, 2009, NHTSA quietly removed controversial preemption language, stating that the agency had “reconsidered the tentative position presented in the [proposed rule] . . . . [and] do[es] not foresee any potential State tort requirements that might conflict with [the] final rule.”20 During the notice-and-comment period (as detailed in the final rule), “[c]onsumer advocacy groups, members of Congress and State officials, trial lawyers, consultants and members of academia, and private individuals strongly opposed our view that there could be conflict. The opposing letters from State officials included one signed by 27 State Attorneys General and the National Conference of State Legislatures.”21 In reaching its determination that it “do[es] not currently foresee any potential State tort requirements that might conflict with [the roof crush standard] final rule,” NHTSA repeatedly adverted to the absence of empirical evidence in the agency record to substantiate any conflict between state law tort requirements and the federal regulatory regime.22

To date, NHTSA’s response is far more promising than has been the FDA’s. In 2008, the FDA promulgated a drug regulation (“changes being effected” or “CBE”) that governs when manufacturers can unilaterally change their labels in response to new risk evidence.23 During the notice-and-comment period, members of Congress challenged the proposed CBE rule on empirical grounds. The group requested data on the number of CBE supplements submitted to the FDA since 1982, as well as examples of any cases in which a CBE supplement was used to the detriment of public health (as claimed by the FDA). The FDA’s response hardly instills confidence in its claims regarding the impending dangers of overwarning: of more than 3000 CBEs, the FDA noted four relevant examples in which the FDA rejected manufacturers’ CBE supplemental applications—none of which offered evidence of threatened harm to the public.24 Under my proposed model, the empirical backing for the FDA’s position would be scrutinized by a court, and, in turn, the FDA’s position would likely fail under hard-look review.

Consider, too, drug manufacturer Johnson & Johnson’s request that the agency “reaffirm its practice to provide a full and complete written response to all CBE supplements . . . [t]o enhance transparency and accountability in the safety labeling process.”25 Johnson & Johnson urged the FDA to “provide a comprehensive, written response to the sponsor describing FDA’s grounds for approval, disapproval, or request for modifications to the CBE supplement.”26 The FDA declined to do so, and issued a quick dismissal without elaboration.27 The framework I have proposed would, in fact, require the FDA to provide such comprehensive, written responses that would become part of the official agency record reviewable by courts making preemption determinations.28


In my article, I advance two basic normative claims—albeit against a backdrop that seems to be in considerable tension with achieving them. First, agency disregard of states’ interests is by no means inevitable. Second, and more fundamentally, Congress, the executive, and, most significantly, the courts can ensure that these state regulatory interests are no longer ignored by implementing agency-forcing measures that will steer agencies toward a more responsive, and responsible, course.dingbat



Copyright © 2009 Duke Law Journal.

Catherine M. Sharkey is Professor of Law at New York University School of Law.

This Editorial is based on the following full-length Article:   Catherine M. Sharkey, Federalism Accountability: “Agency-Forcing” Measures, 58 DUKE L.J. 2125 (2009).

  1. Memorandum for the Heads of Executive Departments and Agencies (May 20, 2009), in 74 Fed. Reg. 24,693, 24,693-94 (May 22, 2009), available at http://www.gpo.gov/fdsys/pkg/FR-2009-05-22/pdf/E9-12250.pdf#page=1.
  2. Requirements on Content and Format of Labeling for Human Prescription Drugs and Biologics; Requirements for Prescription Drug Product Labels, 65 Fed. Reg. 81,082, 81,103 (proposed Dec. 22, 2000) (“{T}his proposed rule does not contain policies that have federalism implications or that preempt State law.”).
  3. Requirements on Content and Format of Labeling for Human Prescription Drug and Biological Products, 71 Fed. Reg. 3922, 3934 (Jan. 24, 2006) (codified at 21 C.F.R. pts. 201, 314, 601) (“FDA believes that under existing preemption principles, FDA approval of labeling under the act, whether it be in the old or new format, preempts conflicting or contrary State law.”).
  4. Federal Motor Vehicle Safety Standards; Roof Crush Resistance, 70 Fed. Reg. 49,223, 49,245 (proposed Aug. 23, 2005) (codified at 49 C.F.R. pt. 571) (“The proposal would not have any substantial impact on the States, or on the current Federal-State relationship . . . .”).
  5. Id.
  6. Catherine M. Sharkey, Products Liability Preemption: An Institutional Approach, 76 GEO. WASH. L. REV. 449, 485 (2008).
  7. Wyeth v. Levine, 129 S. Ct. 1187 (2009).
  8. Id. at 1201 (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)).
  9. Exec. Order No. 13,132, 3 C.F.R. 206 (2000), reprinted in 3 U.S.C. § 601 (2006).
  10. Wyeth, 129 S. Ct. at 1201.
  11. Justice Clarence Thomas stands alone among the Justices in rejecting the doctrine of implied obstacle preemption. Id. at 1217 (Thomas, J., concurring) (“I can no longer assent to a doctrine that pre-empts state laws merely because they ’stan{d} as an obstacle to the accomplishment and execution of the full purposes and objectives’ of federal law, as perceived by this Court.” (alteration in original) (quoting Hines, 312 U.S. at 67)).
  12. Geier v. Am. Honda Motor Co., Inc., 529 U.S. 861 (2000).
  13. Wyeth, 129 S. Ct. at 1204 (Breyer, J., concurring).
  14. Id. at 1201 (majority opinion).
  15. Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983).
  16. As a strategic matter, moreover, consumer advocates may have consciously avoided any invitation to the courts to find that an agency did have authority to issue the preemption statement or, even worse, that the agency statement was correct or warranted deference. Instead, such advocates may have focused exclusively on injured consumers seeking to litigate their tort suits afterward.
  17. Wyeth, 129 S. Ct. at 1201.
  18. Medtronic, Inc. v. Lohr, 518 U.S. 470, 495-96 (1996); id. at 505-06 (Breyer, J., concurring); see also Geier, 529 U.S. at 883.
  19. NHTSA’s press release on the final rule did not draw any attention to the preemption language. See Press Release, U.S. DOT Doubles Roof Strength Standard for Light Vehicles (Apr. 30, 2009), available at http://www.dot.gov/affairs/2009/dot5809.htm. Even more surprisingly, almost no attention has been paid by industry interest groups, state governmental entities, or other stakeholders.
  20. Federal Motor Vehicle Safety Standards; Roof Crush Resistance; Phase-In Reporting Requirements, 74 Fed. Reg. 22348, 22,349 (May 12, 2009) (to be codified at 49 C.F.R. pts. 571, 585).
  21. Id. at 22,353.
  22. Id. at 22,381-82.
  23. Supplemental Applications Proposing Labeling Changes for Approved Drugs, Biologics, and Medical Devices, 73 Fed. Reg. 49,603 (Aug. 22, 2008) (codified at 21 C.F.R. pts. 314, 601, 814).
  24. Letter from Stephen R. Mason, Acting Assistant Comm’r for Legis., FDA, to Sen. Edward M. Kennedy, Chairman, S. Comm. on Health, Educ., Labor, & Pensions 4 (Mar. 7, 2008), available at http://www.regulations.gov/fdmspublic/ContentViewer/objectId=09000064804019ec&disposition=attachment&contentType=pdf.
  25. Letter from Kathy Schroeher, Assoc. General Counsel, Johnson & Johnson, to Div. of Dockets Mgmt., FDA 1 (Mar. 13, 2008), available at http://www.regulations.gov/fdmspublic/ContentViewer?objectId=09000064803fbc40&disposition=attachment&contentType=pdf.
  26. Id. at 4.
  27. Supplemental Applications Proposing Labeling Changes for Approved Drugs, Biologics, and Medical Devices, 73 Fed. Reg. at 49,607.
  28. To preserve their ability to mount a preemption defense, drug manufacturers and other interested parties should be able to challenge such refusals by the agency to create the necessary agency record.

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