Inside Agency Preemption

A subtle shift has taken place in the mechanics of preemption, the doctrine that determines when federal law displaces state law. In the past, Congress was the leading actor, and courts and commentators focused almost exclusively on the precise wording of its statutory directives as a clue to its intent to displace state law. Federal agencies were, if not ignored, certainly no more than supporting players. But the twenty-first century has witnessed a role reversal. Federal agencies now play the dominant role in statutory interpretation. The U.S. Supreme Court has recognized the ascendancy of federal agencies in preemption disputes-an ascendancy unchecked by the change in presidential administrations. This Article confronts the profound implications for the administrative rulemaking process caused by the ascendancy of federal agencies in the preemption realm. Stakeholders with vested interests in preemption disputes, such as state governmental organizations, state attorneys general, consumer- and business-oriented organizations, and private litigants, can continue to ignore the preemptive rulemaking processes within federal agencies only at their peril. As this Article further shows, those processes are, in and of themselves, rich areas for investigation. Taking a unique perspective “inside” the preemptive rulemaking processes within five major federal agencies that regulate in areas as diverse as health and safety, banking, and the environment, this Article presents the first look at agencies’ responses to President Obama’s Memorandum on Preemption and their efforts to ensure compliance with the relevant provisions of Federalism Executive Order 13132, which governs preemptive rulemaking. With this empirical grounding in agency practice, the Article addresses possibilities for reform, including a novel attorney general preemption notification provision and a blueprint for external review of newly proposed internal oversight procedures. The specific reform measures are guided by the overarching goals of (1) creating a “home” within agencies for consideration of the federalism values at stake in preemptive rulemaking and ensuring participation in the rulemaking process by suitable representatives of state regulatory interests; and (2) establishing a system of internal agency policing of the empirical and factual predicates to arguments for preemption, coupled with external oversight. This journey inside agency preemption charts preemption’s future path.