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Feds increasingly protect industry from lawsuit exposure

L.A. Times-Washington Post News Service

Near sunrise on a summer morning in 2001, Patrick Parker of Childress, Texas, swerved to avoid a deer.His pickup truck rolled over and the roof of the Ford F-250 crumpled. Parker didn’t stand a chance. His neck broke and, at 37, he was paralyzed from the chest down. He sued, and Ford 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 also tucked into the rule something vehicle makers have long coveted: 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 regulations and civil lawsuits on grounds they conflict with federal authority.Some of these efforts are facing court challenges. But through arcane regulatory actions and legal opinions, the Bush administration is providing industry with an unprecedented degree of protection at the expense of an individual’s right to sue and a state’s right to regulate.In related moves by the administration:n 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 declared in the summer any such rule would be a back-door attempt by states to encroach on federal authority to set mileage standards and should be pre-empted.n 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.n The U.S. Office of the Comptroller of the Currency has 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 has sole authority to regulate national banks, pre-empting state restrictions.n The Food and Drug Administration issued a legal opinion last month asserting that FDA-approved labels should give pharmaceutical companies 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 the president, 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 have not been coordinated centrally.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 pre-empt state laws are made agency by agency and rule by rule.”The pre-emption initiatives represent a separate approach to the administration’s successful legislative push that restricted class-action lawsuits and banned certain claims against industries including gun makers and vaccine producers..By embedding similar protections for businesses in regulatory changes, the administration has advanced President 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 asked courts for the first time to bar lawsuits against manufacturers who comply with the new rule.Schakowsky called the move part of an unfortunate and troublesome pattern … to undermine consumer rights,” in a separate letter to the commission.Besides trying to bar lawsuits over vehicle roof failures, the highway safety agency has sought broad legal protection in two other rules in recent months on 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 beenattached to any other highway safety agency rule changes for 35 years.Industry executives, lobbyists and lawyers have shuttled through the highway safety agency and other departments over the years, but inthe 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 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. until 2002 when she became the agency’s chief counsel.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 Greve, a resident scholar at the conservative American Enterprise Institute, has written that the pre-emption agenda is crucial to protect the economy from “trial lawyers, ambitious state attorneys general and parochial state legislatures.”But critics say the pre-emption push contradictsconservative 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 Attorney General Bill Lockyer, a Democrat.Some say the election calendar is spurring the strategy.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.NHTSA’s push to pre-empt personal injury litigation is based on the agency claim that automakers, fearful of lawsuits, might make roofs too heavy and vehicles, therefore, more prone to roll over.John G. Womack Jr., a former acting chief counsel at NHTSA, said equating roof strength with weight is 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.Groups ranging from Public Citizen, a consumer watchdog, to the National Conference of State Legislatures, have condemned the provision and questioned NHTSA’s authority to protect automakers.Some critics also claimed that costs of caring for seriously injured victims would shift from industry to taxpayer-funded programs such as Medicaid.A bipartisan group of 26 state attorneys general said in a December letter to NHTSA that the lawsuit ban, if accepted by the courts, would shift significant costs to the states and conflict with consumer rights.Such an extreme step is unwarranted in the absence of express Congressional intent,” they wrote.(Begin optional trim)For victims like Patrick 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 pre-emption clause, saying it’s as if the industry has “this red phone and they just pick it up and it automatically dials NHTSA.”(End optional trim)The immunity clause was unexpected, even to some people 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, D.C.Spokesmen for GM and Ford said their companies didn’t lobby for the lawsuit ban, but support it.Bill Walsh, a senior executive at NHTSA who worked on the rule before retiring in 2004, said the immunity language “was dropped in from out of the blue.”Pre-empting lawsuits, he said, was “different from how we normally operated … in issuing regulations.”Rosen, transportation’s general counsel, said this is not the first time NHTSA has tried to override state liability laws.During the 1990s, NHTSA joined automakers in arguing they should not be sued for not installing air bags at a time when the agency allowed either air bags or automatic seat belts. In 2000, the U.S. Supreme Court agreed that such suits were pre-empted, but said that ordinarily compliance with a standard “does not immunize a manufacturer.”Card and Glassman declined to discuss how the roof crush lawsuit pre-emption 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.”Within days of its roof crush proposal, NHTSA again backed the auto industry in challenging California’s efforts to cut emissions linked to global warming.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 pre-empted.Because carbon dioxide emissions drop when less fuel is burned, the industry attacked the rule as a back-door attempt to regulate fuel economy — under federal law, the exclusive domain of NHTSA.NHTSA agreed. On Aug. 23, it issued new mileage standards for light trucks, noting that its authority over fuel economy meant that “a state law that seeks to reduce motor vehicle carbon dioxide emissions is … pre-empted.”Industry lawyers the next day filed papers in U.S. District Court in Fresno, Calif., informing the judge of NHTSA’s stand.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 could be wiped out if the industry wins.Eleven U.S. senators from both parties and 29 House Democrats from California have urged Transportation Secretary Norman Y. Mineta to reverse NHTSA’s opposition. “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 Mineta in December.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 Department spokesman Brian Turmail said Rosen did not discuss the matter with the law firm. In considering NHTSA’s position on the matter, Rosen acted in the government’s interest, the spokesman said.Kirkland & Ellis also represented automakers in another case against California regulators. In 2002, the industry — backed by the Justice Department — challenged a state rule requiring production of a certain number of nonpolluting vehicles.Rosen said he did not participate in that case while still 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 purchase of cleaner-running fleet vehicles such as buses and garbage trucks in Southern California.The Engine Manufacturers Association and Western States Petroleum Association claimed the rule by the South Coast Air Quality Management District was pre-empted 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, however, the Justice Department filed a brief siding with the industry. The high court agreed that the local rules were pre-empted.In the past, said California Attorney General 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 the California law was simple: Tell credit cardholders on monthly bills how long it would take to retire their debt if they paid just 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 Association, 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 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 of the Currency “definitely tipped the balance,” said Gail Hillebrand, a lawyer for Consumers Union, which had backed the state’s position.In 2004 the agency helped to shoot down a California law that would have required customer permission before banks shared their personal information with other business affiliates.Although a U.S. District Court judge upheld the privacy law, an appeals court ruled last year that its major provisions were pre-empted by federal law.Last year, the agency went to court on the side of a banking association to block an investigation by New York Attorney General Eliot Spitzer into possible racial bias in the lending practices of several banks.A federal judge agreed that Spitzer’s investigation “impermissibly infringes on” authority of the Office of Comptroller of the Currency. The state is appealing.Turf battles over banking regulation have occurred in the past, but the OCC has become more aggressive in pushing preemption under Bush.OCC officials say they have zero tolerance for abusive practices and bristle at complaints 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 law 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, who is part of the conservative brain trust behind the pre-emption agenda, said well-connected industry law firms are 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 get things done.Levin reported from Los Angeles and Miller from Washington. Times researcher Janet Lundblad in Los Angeles also contributed to this report. Vail, Colorado


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