Since the early days of our nation, few issues have been more enduring than the tension between the federal government and states. Ultimately, our Founding Fathers created a system that allocates power between the federal government and sovereign states, giving states wide latitude in their regulatory and taxing powers as long as they do not interfere with interstate commerce, international trade and foreign affairs. And while complex, it reflects the historical evolution of a broad federalist system that has survived over 228 years of shifting institutions, cultures, social norms and business practices. Unfortunately, an aggressive federal government is establishing preemptive legislation limiting the traditional role of states as the laboratories of democracy and as innovators of public policy.
At times in our nation's historythe Civil War, the Progressive Era, the New Deal and the Great Societyunique challenges have led to marked changes in the balance between the regulatory powers of states and the federal government. Once again, we find ourselves in the midst of a major revolution as technology and globalization drive change. During this time, there has been relative stability in terms of which level of governmentfederal, state or localmakes decisions regarding funding and administering public programs, and the number of unfunded mandates has decreased in the last decade partly due to the Unfunded Mandate Reform Act of 1995. In the meantime, however, the federal government has increasingly followed a strategy of almost wholesale preemption of state regulatory authority.
Since the mid-1990's, federal preemption has arisen in a wide range of areas including international trade, telecommunications, healthcare, financial services and food safety. More than half of the federal preemptions have been enacted since 1969 and the frequency has accelerated in the last decade. Given many of the bills that are currently pending in Congress, this unfortunate trend shows little sign of losing steam. If passed, these bills, in combination with previous preemptions in the last decade, would dramatically curtail state regulatory authority like never before in our nation's history.
With the increasing importance of international standards and multi-state and multi-national businesses, some increased federal responsibilities are appropriate and reasonable. It is, however, important to use preemptive powers judiciously as there are a significant number of major risks. First, federal regulations and authority are rigid and difficult to change and threaten the flexibility of our federalist system. Second, there is an advantage in allowing states to be innovative and to experiment with alternative approaches in order to develop best practices. Third, preemption limits the states' ability to coordinate regulatory policy with economic development priorities and it effectively shifts power from state and local elected officials to federal bureaucracies and the courts. Fourth, when the federal government preempts states, it seldom puts in place mechanisms protecting consumers to the degree state government has done in the last 30 years.
This zeal to preempt state authority must stop. States and the federal government should work together to develop alternative regulatory models. If the federal government continues with wholesale preemption of state regulatory authority, the outcome will be a very rigid and inefficient system. It is important to step back and reevaluate this approach. While not perfect, there are alternative models, outlined below, that provide a number of benefits of a single standard while at the same time still allowing for the experimentation our forefathers always envisioned. Perhaps most important these alternatives maintain the flexibility so critical and fundamental to our federalist system.
ESTABLISH FEDERAL STANDARDS WITH STATE ENFORCEMENT
CREATE FEDERAL MINIMUM STANDARDS WITH STATE ENFORCEMENT
ENCOURAGE MULTI-STATE AGREEMENTS
These alternatives are only suggestions and represent a gateway into a much larger dialogue that states and the federal government must undertake. We cannot afford to continue the current practice of federal preemption. If our current economic revolution is coupled with a blanket preemption of state authority, our federalist system will be seriously threatened. It is time to see where we have been and to chart a new path toward where we are going as a nation. The brilliance of our forefathers was creating an inherently flexible system that has allowed our nation to emerge from periods of change as a better, stronger and more perfect union.
Raymond C. Scheppach, Ph.D., is the executive director of the National Governors Association. The views expressed here are those of the author and do not necessarily represent those of the National Governors Association.