[Federal Register Volume 76, Number 1 (Monday, January 3, 2011)]
[Notices]
[Pages 81-83]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32985]


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  Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / 
Notices  

[[Page 81]]



ADMINISTRATIVE CONFERENCE OF THE UNITED STATES


 Adoption of Recommendation

AGENCY: Administrative Conference of the United States.

ACTION: Notice.

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SUMMARY: The Administrative Conference of the United States adopted the 
attached recommendation at its Fifty-third Plenary Session. The 
recommendation addresses issues relating to Federal agency procedures 
regarding consultation with State and local governments and for 
considering State interests in rulemakings that may result in the 
preemption of State law.

FOR FURTHER INFORMATION CONTACT: Emily F. Schleicher, Designated 
Federal Officer, Administrative Conference of the United States, Suite 
706 South, 1120 20th Street, NW., Washington, DC 20036; Telephone 202-
480-2080.

SUPPLEMENTARY INFORMATION: The Administrative Conference of the United 
States was established by the Administrative Conference Act, 5 U.S.C. 
591-596. The Conference studies the efficiency, adequacy, and fairness 
of the administrative procedures used by Federal agencies in carrying 
out administrative programs, and makes recommendations for improvements 
to the agencies, collectively or individually, and to the President, 
Congress, and the Judicial Conference of the United States (5 U.S.C. 
594(1)). At its Fifty-third Plenary Session, held December 9 and 10, 
2010, the Assembly of the Administrative Conference of the United 
States adopted the attached recommendation. For further information 
about the Conference and its activities, see http://www.acus.gov.
    Recommendation 2010-1, ``Agency Procedures for Considering 
Preemption of State Law,'' addresses issues relating to agency 
procedures for complying with Federal requirements regarding 
consultation with State and local governments and for considering State 
interests in rulemakings that may result in the preemption of State 
law. The goal of the recommendation is not to favor or disfavor 
preemption, but to improve agency procedures in potentially preemptive 
rulemakings. The recommendation reiterates a previous Conference 
recommendation that Congress clearly state its preemptive intent in the 
text of the statutes it charges Federal agencies with implementing. It 
recommends that agencies formulate appropriate internal procedures to 
ensure consultation with representatives of State interests and to 
ensure that agencies evaluate the authority and basis asserted in 
support of a preemptive rulemaking. It seeks to increase transparency 
regarding internal agency policies and recommends ways to improve 
external mechanisms for enforcing the applicable Federal requirements.
    The full text of the recommendation is set out in the Appendix 
below. The recommendation will be transmitted to affected agencies and 
to appropriate committees of the United States Congress. The 
Administrative Conference has advisory powers only, and the decision on 
whether to implement the recommendation must be made by the affected 
agencies or by Congress.
    The Administrative Conference ceased operations in 1995 due to 
termination of funding, but was re-established in 2010, and the Council 
of the revived Administrative Conference held its first meeting in 
August 2010. The December 2010 Plenary Session was the first held after 
the resumption of operations. Recommendations and statements of the 
Administrative Conference are published in full text in the Federal 
Register. The research report on which Recommendation 2010-1 is based 
and a complete listing of past recommendations and statements are 
available at http://www.acus.gov.
    The transcript of the Plenary Session is available for public 
inspection at the Conference's offices at 1120 20th Street, NW., Suite 
706 South, Washington, DC.

    Authority: 5 U.S.C. 591-96.

    Dated: December 27, 2010.
Jonathan R. Siegel,
Director of Research and Policy.

Appendix--Recommendations of the Administrative Conference of the 
United States

Recommendation 2010-1, Agency Procedures for Considering Preemption of 
State Law (Adopted December 9, 2010)

 Preamble

    Presidents Reagan and Clinton both issued executive orders 
mandating executive branch agencies,\1\ and urging independent 
agencies,\2\ to take certain measures to ensure proper respect for 
principles of federalism. Executive Order 13132, ``Federalism,'' 
issued by President Clinton on August 4, 1999 (the ``Order''),\3\ is 
still in effect today, and is an amended version of President 
Reagan's Executive Order on Federalism, Executive Order 12612.\4\ 
The Order identifies federalism principles that bear consideration 
in policymaking and specifies procedures for intergovernmental 
consultation, emphasizing consultations with State and local 
governments and enhanced sensitivity to their concerns. The Order 
requires agencies to have ``an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism 
implications.'' \5\ The Order requires agencies to ``provide all 
affected State and local officials notice and an opportunity for 
appropriate participation in the proceedings'' whenever an agency 
proposes to preempt State law through adjudication or rulemaking.\6\ 
It establishes specific procedures for ``any regulation that has 
federalism implications and that preempts State law,'' \7\ requiring 
agencies to consult with State and local officials ``early in the 
process of developing the proposed regulation,'' \8\ and to prepare 
a federalism impact statement (``FIS'').\9\
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    \1\ Exec. Order No. 13,132, Sec.  1(c).
    \2\ Id. at Sec.  9.
    \3\ Exec. Order No. 13,132, 3 CFR 206 (2000), reprinted in 3 
U.S.C. 301 (2006).
    \4\ President Reagan's Executive Order on Federalism adopted, 
nearly verbatim, ACUS recommendations. Compare Exec. Order No. 
12,612, 3 CFR 252, Sec. Sec.  4(d) & (e) (1988), reprinted in 5 
U.S.C. 601 (1994), with Administrative Conference of the United 
States, Recommendation No. 84-5, Preemption of State Regulation by 
Federal Agencies ]] 4, 5 (1984).
    \5\ Exec. Order No. 13,132, Sec.  6(a). The consultation process 
must involve ``elected officials of State and local governments or 
their representative national organizations.'' Id. at Sec. Sec.  
1(d), 6(a).
    \6\ Id. at Sec.  4(e).
    \7\ Id. at Sec.  6(c).
    \8\ Id. at Sec.  6(c)(1).
    \9\ Id. at Sec.  6(c)(2) (requiring a FIS for any regulation 
``that has federalism implications and that preempts State law''); 
id. at Sec.  1(a) (defining ``federalism implications'').

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[[Page 82]]

    Individual agencies are responsible for implementing Executive 
Order 13132, and the Office of Information and Regulatory Affairs 
(``OIRA''), located within the Office of Management and Budget 
(``OMB''), has issued procedural guidelines on ``what agencies 
should do to comply with the Order and how they should document that 
compliance to OMB.'' \10\ These Federalism Guidelines provide that 
each agency and department should designate a federalism official 
charged with: (1) Ensuring that the agency considers federalism 
principles in its development of regulatory and legislative policies 
with federalism implications; (2) ensuring that the agency has an 
accountable process for meaningful and timely intergovernmental 
consultation in the development of regulatory policies that have 
federalism implications; and (3) providing certification of 
compliance to OMB. The federalism official must submit to OMB ``a 
description of the agency's consultation process,'' \11\ that 
``indicate[s] how the agency identifies those policies with 
federalism implications and the procedures the agency will use to 
ensure meaningful and timely consultation with affected State and 
local officials.'' \12\ For any draft final regulation with 
federalism implications submitted for OIRA review under Executive 
Order 12866, the federalism official must certify that the 
requirements of Executive Order 13132 concerning both the evaluation 
of federalism policies and consultation have been met in a 
meaningful and timely manner.\13\
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    \10\ Memorandum from Jacob J. Lew, Director, Office of Mgmt. & 
Budget, to the Heads of Executive Departments and Agencies, and 
Independent Regulatory Agencies, Guidance for Implementing E.O. 
13132, ``Federalism'' (Oct. 28, 1999), at 2, available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/m00-/02.pdf (last visited October 29, 2010) (``Federalism Guidelines'').
    \11\ Exec. Order No. 13,132, Sec.  6(a); Federalism Guidelines 
2.
    \12\ Federalism Guidelines 4-5.
    \13\ Exec. Order No. 13,132, Sec.  8(a).
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    President Obama's official policy on preemption, articulated in 
a May 20, 2009 presidential ``Memorandum for Heads of Executive 
Departments and Agencies'' (``Preemption Memorandum''), provides 
that ``[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.'' \14\ It specifically admonishes department 
and agency heads to cease the practice of including preemption 
statements in the preamble to a regulation without including it in 
the codified regulation. And it further directs agencies to include 
preemption provisions in codified regulations only to the extent 
``justified under legal principles governing preemption, including 
the principles outlined in Executive Order 13132.'' Finally, the 
Preemption Memorandum requests that agencies conduct a 10-year 
retrospective review of regulations including preemption statements, 
whether in the preamble or the codified regulation, ``in order to 
decide whether such statements or provisions are justified under 
applicable legal principles governing preemption.''
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    \14\ Memorandum for the Heads of Executive Departments and 
agencies (May 20, 2009), 74 FR 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 (last visited October 29, 2010).
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    An empirical evaluation of agency practices reveals that 
compliance with the preemption provisions of Executive Order 13132 
has been inconsistent, although President Obama's Preemption 
Memorandum has effectuated a meaningful shift in preemption policies 
within a number of agencies. This evaluation was based on 
statistical analysis of agency rulemaking practices, on particular 
examples of agency rulemakings, on recent interviews with officials 
at the National Highway Traffic Safety Administration (``NHTSA''), 
Food and Drug Administration (``FDA''), Office of the Comptroller of 
the Currency (``OCC''), Consumer Product Safety Commission 
(``CPSC''), Federal Trade Commission (``FTC''), and Environmental 
Protection Agency (``EPA''), and on consideration of legislative 
changes to statutes relevant to agency preemption and an independent 
review of the agencies' respective rulemaking dockets and 
intervention in litigation.
    There appears to be consensus that the requirements of the 
preemption provisions of Executive Order 13132--including 
consultation with the States and the requirement for ``federalism 
impact statements''--are sound. But compliance with these provisions 
has been inconsistent, and difficulties have persisted across 
administrations of both political parties. A 1999 GAO Report 
identified only five rules--out of a total of 11,000 issued from 
April 1996 to December 1998 \15\--that included a federalism impact 
assessment.\16\ Case studies of particular rulemaking proceedings 
have revealed failures to comply with Executive Order 13132.\17\ In 
August 2010, reflecting continued concern with agency practices in 
this area, the ABA House of Delegates adopted a recommendation 
developed by the ABA Task Force on Federal Preemption of State Tort 
Laws, aimed at improving compliance with the preemption provisions 
of Executive Order 13132.\18\
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    \15\ Executive Order 12612 was in effect during this time 
period.
    \16\ U.S. General Accounting Office, GAO/T-GGD-99-93, 
Implementation of Executive Order 12612 in the Rulemaking Process 1 
(1999). The exact number of federalism impact assessments during 
this period is in some doubt but appears to be quite small. See Nina 
A. Mendelson, Chevron and Preemption, 102 Mich. L. Rev. 737, 784 
n.192 (2004) (reporting identification of 9 federalism impact 
assessments from the fourth quarter of 1998); see also id at 783-84 
(demonstrating that federalism impact statements are relatively rare 
and of ``poor quality''). Of course, many rules do not require a 
federalism impact assessment. The number of rules that should have 
included one is unknown, but the very small number that did suggests 
that agencies were ``not implementing the order as vigorously as 
they could.'' GAO report, supra, at 13.
    \17\ See Catherine M. Sharkey, Federalism Accountability: 
``Agency Forcing'' Measures, 58 Duke L.J. 2125, 2131-439 (2009) 
(analyzing several rulemaking proceedings in which an agency's 
notice of proposed rulemaking stated that a rule would have no 
federalism impact, but in which the agency stated that the final 
rule had preemptive effect, in some cases without preparing a 
federalism impact statement or consulting with state officials); see 
also Nina A. Mendelson, A Presumption Against Agency Preemption, 102 
Nw. L. Rev. 695, 719 (2008) (reporting results from a further, 2006 
study of preemptive rules, which disclosed that, out of six 
preemptive rulemakings studied, only three contained federalism 
impact analysis, and only one of the analyses ``went beyond stating 
either that the agency concluded that it possessed statutory 
authority to preempt or that the document had been made available 
for comment, including to state officials'').
    \18\ American Bar Association House of Delegates, Resolution 
117, available at http://www.abanow.org/2010/07/am-2010-117/ (last 
visited Nov. 2, 2010).
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    This Administrative Conference Recommendation is intended to 
improve agency procedures for implementing the preemption provisions 
of Executive Order 13132 and to increase transparency regarding 
internal agency policies and external enforcement mechanisms 
designed to ensure compliance with those provisions. The goal is not 
to favor or disfavor preemption, but to improve agency procedures in 
potentially preemptive rulemakings. The Recommendation is also 
intended to facilitate Federal agency consultation with State 
representatives, such as the ``Big Seven,'' a group of nonpartisan, 
non-profit organizations composed of State and local government 
officials,\19\ and, conversely, to facilitate State officials' 
awareness of and responsiveness to, opportunities to consult with 
Federal officials and to comment in regulatory proceedings that may 
have preemptive effect. Improved communication on preemption issues 
would result if State and local government officials or their 
representative organizations availed themselves of opportunities to 
become aware of whether Federal agencies are engaging in potentially 
preemptive rulemaking proceedings, for example, by monitoring the 
Federal Register or using relevant Internet dashboards, such as are 
available at http://www.reginfo.gov. Agencies can ensure that these 
tools are optimally useful to State representatives by clearly 
posting relevant information on their individual Web sites and 
providing appropriate information for inclusion in the semiannual 
Unified Agenda. Finally, this Recommendation is aimed at both 
executive branch and independent agencies that engage in preemptive 
rulemaking, with the recognition that the executive directives 
described above bind the former and urge voluntarily compliance by 
the latter.
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    \19\ The Big Seven include the Council of State Governments, the 
National Governors Association, the National Conference of State 
Legislatures, the National League of Cities, the U.S. Conference of 
Mayors, the National Association of Counties, and the International 
City/County Management Association.
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    The Conference recognizes the danger of encumbering the 
rulemaking process with too many formal requirements. Therefore, in 
crafting this Recommendation, the Conference has remained mindful of 
the continuing validity of its previous

[[Page 83]]

Recommendation aimed at reducing ``ossification'' of the regulatory 
process.\20\ The Conference recognizes, however, that certain 
principles, including those embodied in the preemption provisions of 
Executive Order 13132, are sufficiently important to warrant 
systematic consideration by agencies engaging in rulemaking. The 
following Recommendation has accordingly been structured both to 
encourage compliance with existing executive directives and increase 
the efficiency of internal agency processes designed to ensure such 
compliance.
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    \20\ Administrative Conference of the United States, 
Recommendation No. 93-4, Improving the Environment for Agency 
Rulemaking (1993).
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Recommendation

    1. The Conference reiterates its previous, related 
recommendation that ``Congress should address foreseeable preemption 
issues clearly and explicitly when it enacts a statute affecting 
regulation or deregulation of an area of conduct.'' \21\
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    \21\ Administrative Conference of the United States, 
Recommendation No. 84-5, Preemption of State Regulation by Federal 
Agencies (1984).
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Internal Procedures for Compliance With the Preemption Provisions 
of Executive Order 13132

    2. Agencies that engage in rulemaking proceedings that may have 
preemptive effect on State law should have internal written guidance 
to ensure compliance with the preemption provisions of Executive 
Order 13132, which should describe:
    a. How the agency determines the need for any preemption;
    b. How the agency consults with State and local officials 
concerning preemption; and
    c. How the agency otherwise ensures compliance with the 
preemption provisions of Executive Order 13132.
    3. Agencies should post their internal guidance for compliance 
with the preemption provisions of Executive Order 13132 on the 
Internet or otherwise make publicly available the information 
contained therein.
    4. Agencies should have an oversight procedure to improve agency 
procedures for implementing the preemption provisions of Executive 
Order 13132. This procedure should include an internal process for 
evaluating the authority and basis asserted in support of a 
preemptive rulemaking. The agency should provide a reasoned basis, 
with such evidence as may be appropriate, that supports its 
preemption conclusion.

Updated Policies To Ensure Timely Consultation With State and Local 
Interests Concerning Preemption

    5. Agencies should have a consultation process that contains 
elements such as the following:
    a. Agencies should use an updated contact list for 
representatives of State interests, including but not limited to the 
``Big Seven.'' The Administrative Conference will maintain such a 
list for use by agencies.
    b. Agencies should maintain some form of regularized personal 
contact in order to build relationships with representatives of 
State interests.
    c. Agencies should disclose to the public when they meet with 
the representatives of State interests in the course of rulemaking 
proceedings that may preempt State law. The disclosure should 
include the identity of the organization(s) or institution(s) that 
participate and the subject matter of the discussion.
    d. Agencies should reach out to appropriate State and local 
officials early in the process when they are considering preemptive 
rules. Such outreach should, to the extent practicable, precede 
issuance of the notice of proposed rulemaking.
    6. Agencies should establish contact with organizations and 
State and local regulatory bodies and officials that have relevant 
substantive expertise or jurisdiction.
    7. Agencies should adopt, as one component of their notice 
practice, a procedure for notifying State attorneys general when 
they are considering rules that may have preemptive effect. This may 
be achieved via direct communication with State attorneys general 
and by contacting an appropriate representative organization such 
as, for example, the National Association of Attorneys General.

Actions by OIRA/OMB To Improve the Process

    8. OIRA/OMB should request agencies to post on their open 
government Web sites a summary of the agencies' responses to the 
directive contained in the Preemption Memorandum to conduct a 10-
year retrospective review of preemptive rulemaking.
    9. OIRA/OMB should update its Federalism Guidelines with respect 
to preemption.
    10. OIRA should include reference to Executive Order 13132 in 
Circular A-4.\22\

    \22\ Office of Info. & Regulatory Affairs, Circular A-4 on 
Regulatory Analysis (2003), available at http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf 
(last visited October 15, 2010).

[FR Doc. 2010-32985 Filed 12-30-10; 8:45 am]
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