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State Attorneys General remind the federal government about importance of federalism

Updated: Jul 21, 2023

Attorneys General in 26 states (including Idaho, Montana, and Wyoming) are asking the federal government to respect federalism and not increase the threat of further regulations through rule-making. According to a press release by Idaho Attorney General Raúl Labrador:

“The Office of Management and Budget’s proposal to change the way federal agencies conduct cost-benefit analysis will be used by federal bureaucrats to justify unnecessary spending and new regulation. A thorough cost-benefit analysis requirement places an important check on federal administrative powers and protects Americans against bad policy.”

The letter from the state Attorneys General says this about the proposed OMB changes (in part):

“As a general matter, we are concerned that the Administration is attempting to manipulate the regulatory process by, among other things, adjusting the discount rate and adjusting the time horizon of regulatory analysis so that the putative benefits of regulation always outweigh the costs.

. . . First, the States take issue with revisions that downplay the importance of federalism and the role of States in effective and efficient regulation. Second, the proposal improperly shifts the focus from the effect regulations have on Americans to global effects.

. . . Cost-benefit analysis should provide an accurate portrayal of the effects that proposed regulations will have on those who are affected by them. The proposed draft Circular A-4 makes several changes that, if implemented, would decrease the utility of cost-benefit analysis while increasing the power and flexibility of federal regulators. The federal government’s chief guidance on cost-benefit analysis should not be reworked to allow this Administration more power to micromanage the lives of Americans.

. . . the implication is that agencies should feel free to disregard federalism concerns unless Congress has explicitly ordered the agency to consider them. This turns federalism on its head. The federal government should always consider federalism costs and benefits in ensuring that agency action does not violate the coequal sovereignty of the States, and the draft should be revised to make clear that this analysis is mandatory.

. . . OMB’s decision to decrease the emphasis on federalism and the role and importance of States in effective regulation is not the only shift in the proposed revisions. The proposed draft also reverses the current requirement in Circular A-4 that cost-benefit analyses focus primarily on the effect of regulations on Americans. It replaces that longstanding position with a new emphasis on global perspectives for regulatory issues with effects outside U.S. borders.

The draft’s revised discussion of the globalist scope of cost-benefit analysis illustrates the federal government’s confusion about its role and responsibilities. But the Constitution could not be clearer on the government’s fundamental purpose: serving the American people. Regulations promulgated by agencies of the United States government should be concerned primarily with United States citizens and residents, not least of which because they will be the ones footing the bill.”

The Regulatory Studies Center at George Washington University compared the current OMB rule and proposed changes. According to the RSC:

“Compared to the original document, the draft Circular is less deferential to state, local, and territorial governments, and to other ways to address the identified problem. The 2003 Circular states that the analyst ‘should consider other means of dealing with the failure before turning to Federal regulation.’ The revised version merely states that ‘[i]t can be informative to consider other means of addressing the need for regulatory action you have identified in addition to, or instead of, Federal regulation.’

. . . The revised Circular goes further in emphasizing the potential costs of leaving regulation to state, local, territorial, and tribal governments. The revised document suggests that, even if they are able to do so, state and local governments may not effectively address an issue. The document states that ‘analysis may indicate that Federal action is the best approach’ if state and local governments ‘are failing to appropriately address a problem,’ and in order to prevent a ‘race to the bottom’ between jurisdictions.”

Here is how the Constitution Annotated, a resource provided by Congress, describes federalism:

“Another basic concept embodied in the Constitution is federalism, which refers to the division and sharing of power between the national and state governments. By allocating power among state and federal governments, the Framers sought to establish a unified national government of limited powers while maintaining a distinct sphere of autonomy in which state governments could exercise a general police power.”

The promise to the states and citizens that the powers of the federal government would be limited is guaranteed by the Tenth Amendment:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

As pointed out by the state Attorneys General, the proposed OMB changes to the federal rule-making process need a rewrite to embrace the constitutional promise of federalism while respecting the authority of state decision-making.

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