Bush Administration Shielding Big Businesses

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Bush Administration Shielding Big Businesses

Sun, 19 Feb 2006 14:18:17 -0800

 

 

 

 

Bush Administration Shielding Big Businesses

 

http://www.truthout.org/docs_2006/021906B.shtml

A surprise move of providing legal protection for automakers is one in

a series of recent steps by federal agencies to shield leading

industries from state regulation and civil lawsuits on the grounds

that they conflict with federal authority.

 

 

http://www.truthout.org/docs_2006/021906B.shtml

 

Industries Get Quiet Protection from Lawsuits

By Myron Levin and Alan C. Miller

The Los Angeles Times

 

Sunday 19 February 2006

 

Washington - Near sunrise on a summer morning in 2001, Patrick

Parker of Childress, Texas, swerved to avoid a deer and rolled his

pickup truck.

 

The roof of the Ford F-250 crumpled, and Parker didn't stand a

chance. His neck broke and, at 37, he was paralyzed from the chest

down. He sued, and Ford Motor Co. settled for an undisclosed amount.

 

" You can imagine what happens when you're belted in and the roof

comes down even with the door, " Parker said. " Your options are death

or quadriplegia. "

 

Parker's case and hundreds like it are behind a beefed-up roof

safety standard proposed in August by the National Highway Traffic

Safety Administration. But safety regulators tucked into the proposed

rule something vehicle makers have long desired: protection from

future roof-crush lawsuits like the one Parker filed.

 

The surprise move seeking legal protection for automakers is one

in a series of recent steps by federal agencies to shield leading

industries from state regulation and civil lawsuits on the grounds

that they conflict with federal authority.

 

Some of these efforts are already facing court challenges.

However, through arcane regulatory actions and legal opinions, the

Bush administration is providing industries with an unprecedented

degree of protection at the expense of an individual's right to sue

and a state's right to regulate.

 

In other moves by the administration:

 

* The highway safety agency, a branch of the Department of

Transportation, is backing auto industry efforts to stop California

and other states from regulating tailpipe emissions they link to

global warming. The agency said last summer that any such rule would

be a backdoor attempt by states to encroach on federal authority to

set mileage standards, and should be preempted.

 

* The Justice Department helped industry groups overturn a

pollution-control rule in Southern California that would have required

cleaner-running buses, garbage trucks and other fleet vehicles.

 

* The U.S. Office of the Comptroller of the Currency has

repeatedly sided with national banks to fend off enforcement of

consumer protection laws passed by California, New York and other

states. The agency argued that it had sole authority to regulate

national banks, preempting state restrictions.

 

* The Food and Drug Administration issued a legal opinion last

month asserting that FDA-approved labels should give pharmaceutical

firms broad immunity from most types of lawsuits. The agency

previously had filed briefs seeking dismissal of various cases against

drug companies and medical-device manufacturers.

 

In a letter to President Bush on Thursday, Rep. Jan Schakowsky

(D-Ill.) said, " It appears that there may have been an

administration-wide directive for agencies to limit corporate

liability through the rule-making process and without the consent of

Congress. "

 

Administration officials said the initiatives had not been

centrally coordinated.

 

" Under the constitution, federal laws take priority over

inconsistent state laws, " said Scott Milburn, spokesman for the White

House Office of Management and Budget. " Decisions about whether

particular rules should preempt state laws are made agency by agency

and rule by rule. "

 

Preemption initiatives by regulatory agencies have drawn less

public attention than controversial legislative moves supported by the

White House. With administration support, Congress has restricted

class-action suits and banned certain claims against gun makers and

vaccine producers.

 

By embedding similar protections for businesses in regulatory

changes, the administration has advanced Bush's repeated pledge to

rein in what he calls junk lawsuits.

 

On Thursday, for example, when the Consumer Product Safety

Commission adopted a rule to curb mattress fires, it recommended for

the first time that courts bar suits against manufacturers that comply

with the new standard.

 

Schakowsky called the move " part of an unfortunate and troublesome

pattern to undermine consumer rights. "

 

In addition to trying to bar suits over vehicle roof failures, the

highway safety agency in recent months has sought broad legal

protection for manufacturers in two other rules on the grounds that

lawsuits could undermine its safety goals. One rule related to rear

seat belts and the other to visibility requirements for trucks.

 

No similar exemption clauses have been attached to any other

highway safety agency rule changes for 35 years.

 

Industry executives, lobbyists and lawyers have shuttled through

jobs in the highway safety agency and other departments over the

years, but in the Bush administration, auto industry ties have grown

more conspicuous.

 

Before becoming White House chief of staff, Andrew H. Card Jr.

served as a General Motors Corp. vice president and as chief executive

of the top auto industry trade group.

 

The acting head of the highway safety agency, Jacqueline Glassman,

was a senior attorney for DaimlerChrysler Corp. before she became the

agency's chief counsel in 2002.

 

Jeffrey A. Rosen, who became general counsel at the Transportation

Department in 2003, was a senior partner at Kirkland & Ellis, a

powerhouse law firm that has defended GM in numerous product-liability

suits and represents the Alliance of Automobile Manufacturers.

 

Rosen denied using his position to benefit automakers.

 

" We have issued a number of major rules in the two years that I

have been here, " he said. " Some of them are supported by industry,

some are opposed. "

 

Michael S. Greve, a resident scholar at the conservative American

Enterprise Institute, has written that preemption is crucial to

protect the economy from " trial lawyers, ambitious state attorneys

general and parochial state legislatures. "

 

But critics say the preemption push contradicts the conservative

ideals of a limited federal government and states' rights - principles

espoused by Bush.

 

" This is the most aggressive federal government in the history of

the United States, " said California Atty. Gen. Bill Lockyer, a Democrat.

 

Some say the election calendar is spurring the moves.

 

" The message has been clear in the last couple of years that if

industries are going to get protection, they need to get it now, "

because no one knows what will happen in the next election, said

Jonathan Turley, a George Washington University law professor.

 

Rollover accidents kill more than 10,000 people in the U.S. each

year, and seriously injure an additional 16,000. Consumer groups say

better roofs would have saved thousands of victims over time.

 

Automakers counter with the " roof dive " theory - that rollover

victims fall head-first to the roof as it strikes the ground, injuring

themselves whether the roof holds or buckles. Thus, they say, the

value of stronger roofs is practically nil.

 

Brian O'Neill, president of the Insurance Institute for Highway

Safety, called this argument " patently nonsense. " If it were true, he

said, people would be " just as well-off in a rollover in a convertible

as a hardtop. "

 

The highway safety agency always has agreed that roof failures can

cause death and injury. Its roof-crush proposal estimates that 596

deaths and 807 serious injuries a year are linked to roof collapse.

 

Its proposed rule would increase the force a roof must withstand

in a rollover from its current 1.5 times a vehicle's weight to 2.5

times - at a cost per vehicle of about $12. It would cover large

trucks and SUVs of more than 6,000 pounds for the first time. The

agency also is considering requiring stability control systems to

reduce rollover risk.

 

The revised roof rule would create " the strongest ever uniform set

of minimum standards " for automakers in the U.S., Transportation

Department spokesman Brian Turmail said.

 

However, the safety agency is projecting relatively modest

benefits from the upgrade: 13 to 44 deaths and 500 to 800 injuries

prevented a year. One reason: Nearly 70% of existing vehicles already

meet the proposed standard.

 

Critics call this a token improvement. The stiffest criticism,

however, has been reserved for the effort to grant immunity from lawsuits.

 

The safety agency says its push to preempt personal injury

litigation is based on a concern that automakers, fearful of lawsuits,

might beef up roofs to such an extent that the vehicles become

top-heavy and more prone to roll over.

 

John G. Womack Jr., a former acting chief counsel at the safety

agency, said that equating roof strength with weight was a " very

debatable proposition. " Other options are to use high-strength steel

or widen the stance of vehicles to compensate for heavier roofs, he said.

 

Diverse groups - including Public Citizen, a consumer watchdog,

and the National Conference of State Legislatures - have condemned the

provision and questioned the highway safety agency's authority to

protect automakers.

 

Some have complained that if companies could not be held liable

for damages, it would remove incentives for automakers to exceed

minimum safety standards.

 

A bipartisan group of 26 state attorneys general said in a

December letter to the highway safety agency that the lawsuit ban, if

accepted by the courts, would shift significant costs of caring for

seriously injured victims from the industry to taxpayer-funded

programs such as Medicaid. It would also conflict with consumer

rights, they said.

 

" Such an extreme step is unwarranted in the absence of express

congressional intent, " they wrote.

 

Roof-crush suits have resulted in costly settlements and verdicts

against automakers at a time of widespread financial trouble for the

U.S. industry.

 

In 2004, Ford paid $41 million in a case in which a California

appeals court compared the company's use of a fiberglass and metal

roof in the 1978 Bronco to " involuntary manslaughter. "

 

The same year, a San Diego jury awarded damages against Ford of

$367 million, later reduced by the judge to $150 million. In 2003, GM

was hit with a $19.6-million verdict, described as the largest product

liability award in Nebraska history. The San Diego and Nebraska cases

are being appealed.

 

For victims like Parker, the prospect of manufacturer immunity is

an especially bitter pill.

 

The paralyzed Texas man, who had worked as a technician for a

local utility, said he at least gained some financial security through

litigation by extracting a settlement from Ford. Otherwise, he said,

he and his wife " would have been living from hand to mouth. "

 

He criticized the preemption clause, saying it was as if the

industry had " this red phone and they just pick it up and it

automatically dials NHTSA. "

 

The immunity clause was unexpected, even to some in the industry.

 

" Whether this was some conspiracy or whether it was a pleasant

surprise, I really don't know, " said Barry Felrice, director of

regulatory affairs with DaimlerChrysler in Washington.

 

Spokesmen for GM and Ford said that their companies had not

lobbied for the lawsuit ban but that they supported it.

 

Bill Walsh, a former highway safety agency senior executive who

worked on the rule before retiring in 2004, said the immunity language

" was dropped in from out of the blue. "

 

Preempting lawsuits, he said, was " different from how we normally

operated in issuing regulations. "

 

Rosen, the Transportation Department's general counsel, said this

was not the first time the highway safety agency had tried to override

state liability laws.

 

During the 1990s, the agency joined automakers in arguing that

they shouldn't be sued for not installing air bags at a time when the

agency allowed either air bags or automatic seat belts. In 2000, the

Supreme Court agreed that such suits were preempted but said that

compliance with a standard ordinarily " does not immunize a manufacturer. "

 

Card, the White House chief of staff, and Glassman, the agency's

chief counsel, declined to discuss how the roof-crush lawsuit

preemption originated. Rosen said he did not want " to get into the

specifics of who said what to whom. As a legal matter, I'm obliged to

protect the deliberative process. "

 

The Rev. Lawrence Harris of Pittsgrove, N.J., sees the issue from

the vantage point of his wheelchair. Had his claim been preempted

after a devastating accident with his family in North Carolina, he

might not be preaching on Sundays.

 

Harris, then 46, was wearing a seat belt but suffered a fractured

spine in 1997 when his Ford Econoline van rolled over. Except for

minimal movement in his hands, he was paralyzed from the chest down.

 

With the damage award he won from Ford, Harris installed a roll-in

shower and wheelchair lift in his house, hired a caretaker to help him

dress each morning, and modified a van so he could continue as pastor

of Olivet United Methodist Church.

 

Without the lawsuit, he said, " I would not be able to do the

things I'm able to do. " If automakers are immune, Harris said, " where

is the check and balance going to be for them? "

 

Within days of its roof-crush proposal, the highway safety agency

again backed the auto industry in challenging California's efforts to

cut emissions.

 

The Alliance of Automobile Manufacturers had gone to court to stop

the state Air Resources Board from regulating tailpipe emissions of

carbon dioxide and other greenhouse gases, contending the rule was

preempted.

 

Because carbon dioxide emissions drop when less fuel is burned,

the industry attacked the rule as a backdoor attempt to regulate fuel

economy - under federal law, the exclusive domain of the highway

safety agency.

 

The agency agreed. On Aug. 23, it issued new mileage standards for

light trucks, saying that its authority over fuel economy meant that

" a state law that seeks to reduce motor vehicle carbon dioxide

emissions is preempted. "

 

Industry lawyers filed papers the next day in U.S. District Court

in Fresno informing the judge of the agency's position.

 

California's global warming rule, which would first apply to 2009

models, is not all that's at stake in the Fresno case. Ten states have

copied California's emission rule, and all those rules could be wiped

out if the industry wins.

 

Rosen's former law firm, Kirkland & Ellis, represents the Alliance

of Automobile Manufacturers in the suit to block California's global

warming rule. The suit was filed in late 2004, a year after Rosen left

the firm to join the Transportation Department.

 

Transportation spokesman Turmail said Rosen did not discuss the

matter with the law firm. In considering the safety agency's position

on the matter, Rosen acted in the government's interest, Turmail said.

 

Eleven U.S. senators from both parties and 29 House Democrats from

California have urged Transportation Secretary Norman Y. Mineta to

reverse the agency's opposition to the emissions standard.

 

" Rather than attempting to thwart such state efforts, the federal

government should encourage states to develop innovative solutions to

serious public health and environmental problems, " the senators wrote

to Mineta in December.

 

Kirkland & Ellis also represented automakers in another case

against California regulators. In 2002, the industry - backed by the

Justice Department - challenged a state rule that required production

of a certain number of non-polluting vehicles.

 

Rosen said he did not participate in that case while he was with

the law firm. The case was settled when the state agreed to remove

language that the industry said amounted to regulating fuel economy.

 

The Bush administration also helped two industry groups overturn a

regulation requiring the purchase of cleaner-running fleet vehicles

such as buses and garbage trucks in Southern California.

 

The Engine Manufacturers Assn. and Western States Petroleum Assn.

claimed the rule by the South Coast Air Quality Management District

was preempted by federal law. Their challenge was rejected in federal

district court and by a federal appeals court.

 

When the case went to the U.S. Supreme Court, the Justice

Department filed a brief siding with the industry. The high court

agreed that the local rules were preempted.

 

In the past, said California's Atty. Gen. Lockyer, when industries

challenged state regulations, " the federal government abstained from

those lawsuits. "

 

Now, he said, there's " a policy of rubber-stamping whatever

business wants, and that's too bad. "

 

The idea behind another California law was simple: Tell credit

cardholders on monthly bills how long it would take to retire their

debt if they paid the minimum amount.

 

But major banks issuing most of the nation's credit cards didn't

like it. In a 2002 court challenge, they attacked the state's credit

disclosure law with help from a powerful ally.

 

The U.S. Office of the Comptroller of the Currency joined forces

with the American Banking Assn., Citibank and other plaintiffs,

arguing in a friend-of-the-court brief that the law interfered with

federal authority to regulate national banks, and with powers granted

to the banks by their federal charters.

 

A federal judge blocked the law from going into effect, and the

state lost a subsequent appeal.

 

Intervention by the comptroller's office " definitely tipped the

balance, " said Gail Hillebrand, a lawyer for Consumers Union, which

had backed the state's position.

 

In recent years, the comptroller's office on many occasions has

helped national banks and their subsidiaries fend off investigations

or enforcement actions by state officials on preemption grounds.

 

In 2004, for example, the agency helped to shoot down a California

law that would have required customer permission before banks shared

their personal information with business affiliates.

 

Although a U.S. District Court judge upheld the privacy law, an

appeals court ruled last year that its major provisions were preempted

by federal law.

 

Last year, the agency went to court on the side of a banking

association to block an investigation by New York Atty. Gen. Eliot

Spitzer into possible racial bias in the lending practices of several

banks.

 

A federal judge agreed that Spitzer's investigation " impermissibly

infringes " on the authority of the comptroller's office. The state is

appealing.

 

Turf battles over banking regulation have occurred in the past,

but the Office of the Comptroller of the Currency has become more

aggressive in pushing preemption under Bush.

 

Agency officials say they have zero tolerance for abusive

practices and bristle at complaints that they might be chasing off

state watchdogs to the detriment of consumers.

 

The banks " have an enormous body of consumer compliance laws and

regulations that we apply to them at the federal level, " said Julie L.

Williams, the agency's senior deputy comptroller and chief counsel.

 

But Arthur E. Wilmarth Jr., a George Washington University

professor specializing in banking law, said, " The OCC hasn't been,

shall we say, a very zealous enforcer on the consumer side. States

have been far more vigorous. "

 

Greve, the American Enterprise Institute scholar who has been a

mainstay of the conservative brain trust promoting preemption, said

well-connected industry law firms were part of a policy network

providing legal and political rationale for the effort.

 

He called them " a merry band of Washington lawyers who know how to

push the buttons " and get things done.

 

Official Ties to Industry

 

Bush administration officials with previous ties to the auto industry:

 

Andrew H. Card Jr. was General Motors Corp.'s vice president of

government relations. He represented GM on matters of public policy

before Congress and the administration. From 1993 to 1998, Card was

president and chief executive of the top auto industry trade group. He

is now White House chief of staff.

 

Jacqueline Glassman was a senior regulatory counsel at

Daimler-Chrysler Corp. She is now the acting head of the National

Highway Traffic Safety Administration.

 

Jeffrey A. Rosen was a senior partner at Kirkland & Ellis, a law

firm that has defended GM in numerous product-liability suits and

represents the Alliance of Automobile Manufacturers. He is the general

counsel at the U.S. Department of Transportation.

 

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Levin reported from Los Angeles and Miller from Washington. Times

researcher Janet Lundblad in Los Angeles also contributed to this report.

 

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