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Businesses Seek Federal Protection as States Strengthen Regulatory Role

November 29, 1987|From the Washington Post

WASHINGTON — Last month, state attorneys general drafting guidelines for more disclosure in airline advertising got word that the airline industry was attempting to cut short their efforts. The airlines were looking for a sponsor for an amendment to pending legislation that would have preempted the right of states to police airline advertising.

The amendment was not offered, but its proposal highlighted the growing tendency of the business community to seek federal protection against state regulation.

In recent years, as the federal government has reduced its regulatory role in a number of areas, some states have become more active. That state activism--coupled with concerns about the difficulty of complying with as many as 50 different standards--has produced a growing passion for federal regulation in parts of the business community.

Running for Cover

Elements of the business community have sought or claimed federal preemption in areas including land use, regulation of pesticides, rules for evacuating the area around a nuclear power plant, product liability, minimum health insurance benefits, warning labels for tobacco products and corporate takeovers--in some cases supported by the same Reagan Administration that pronounced the "new federalism."

"More groups are running for cover," said Christopher Ames, a California deputy attorney general involved in drafting the airline advertising guidelines. "What better situation than to have the states preempted by federal authority when you know it won't be exercised? I think a year from now the trickle will be a substantial river as the states become more and more active."

"It's not surprising, despite the general tendency to favor states' rights notions, business people are more concerned about the bottom line," said Harvard law school professor Laurence Tribe, who has found himself arguing against business interests and the Reagan Administration in favor of local control. "To the extent the bottom line is advanced by getting states and localities off their backs and having to deal only with federal regulations, it's not surprising."

Nor are business interests the only ones to do a turnaround. The flip side of what is going on among businesses is that consumer activists, labor unions and environmental groups that might have looked to the federal government in years past now find that, at least for some issues, the cutting edge of regulation may be at the state level.

Easier to Work With Congress

"In the old days, federal preemption meant that the feds went further on a particular issue than the states wanted to go," said Don Wasserman, collective bargaining director for the American Federation of State, County & Municipal Employees. "Now it's almost the reverse--that the states want to go further than the feds."

Several factors underlie increasing business interest in federal preemption, including the interwoven nature of the economy. "You don't have local markets anymore," said Jeffrey H. Joseph, vice president for domestic policy at the U.S. Chamber of Commerce. "Those business that are in interstate commerce logically would over time tend to favor federal standards," he said.

"A lot of these companies feel it is easier to work with Congress than 50 state legislatures," said Jim Jones, the Republican attorney general of Idaho. "Regardless of the long-term political implications and whether it makes for a healthy federal system, that seems to be the way they're inclined," he said.

"They don't like '50 Ways to Leave Your Lover'--but it's our system," said a lobbyist for state interests.

Business does not support federal preemption across the board. Joseph of the Chamber of Commerce and Jim Carty, the National Assn. of Manufacturers' vice president of government regulation, both cited corporate support for state laws governing takeovers. The investment banking community, however, has argued that state laws that have been used to protect takeover targets should be preempted. Under the Reagan Administration, federal barriers to corporate takeovers, such as federal antitrust laws, have generally not been very high hurdles.

"The people who used to complain about the federal government over-regulating are now claiming that whatever the federal government does prevents the states from doing anything else," said Alan Morrison, director of the Public Citizen Litigation Group. Morrison has argued against federal preemption of tougher state standards.

"The thing that is most egregious of all is not when the federal government does something and argues about whether the state can do more. The most egregious thing is when the federal government does nothing, and the federal government claims doing nothing also preempts the states," he said.

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