Congress Applies the Brakes to California Laws

California passes a tough financial privacy law, and Washington moves to scuttle it.

State officials propose strict antipollution standards for certain kinds of engines, and a congressional committee moves to block the new rules.

Gov. Gray Davis signs into law a measure allowing illegal immigrants to obtain drivers’ licenses, and within days legislation is introduced in Congress to deny federal funds to the state unless it repeals the law.

When it comes to California, the Republican-controlled Congress has abandoned its natural tendency to support states’ rights. Congressional Republicans are moving on a variety of fronts to rein in state actions they believe go too far, leaving Democrats to complain about federal interference with state business.

“If anybody had told me that I would be on the floor of Congress arguing states’ rights ... I would have told them they are crazy,” Rep. Maxine Waters (D-Los Angeles) said during a recent House debate.

She was objecting to a measure the House passed that is intended to protect consumers from identity theft but would nullify tougher state laws, including a provision of a new California law that would prohibit companies from sharing customers’ personal financial information with affiliates if a consumer objects.

“This is part of a very troubling trend by Congress to use its authority to preempt state laws that go further than federal law in protecting consumers and the environment,” said Erwin Chemerinsky, a USC law professor. “Congress acting to preempt state laws is not new. But the repeated efforts to preempt more progressive state legislation is new.”

Michael Bird, federal affairs counsel for the National Conference of State Legislatures, said the number of measures seeking to “render the states helpless” was on the rise. “You have more organized interests that are seeking one-stop resolution to their perceived problems,” he said.

It’s not that Congress is necessarily picking on California.

Laws in other states -- dealing with issues such as e-mail spam, predatory lending and securities fraud -- could be preempted by pending federal legislation. State officials have also objected to a provision of the pending energy bill that would allow federal officials to override state decisions in siting of power-transmission lines.

But California’s laws have drawn special attention because the nation’s most populous state is regarded as a trendsetter.

During the recent congressional debate over financial privacy legislation, for example, Rep. Michael G. Oxley (R-Ohio) said that if California could impose its own rules on financial institutions, other states might follow suit and “ultimately, it becomes California setting national standards.”

Congressional Republicans deny their actions violate a core principle of support for states’ rights.

“ ‘States’ rights doesn’t mean the right to hurt other states,” said Sen. Christopher S. Bond (R-Mo.), who has put into a spending bill a measure that would block California from imposing tougher pollution rules on engines used in lawnmowers. He contends the rule would prove costly to engine manufacturers. The measure cleared a committee and awaits the full Senate’s approval.

“California shouldn’t have the right to fix California problems by killing 5,100 jobs in Missouri and 22,000 jobs in 23 states across the country,” he said.

Sen. Dianne Feinstein (D-Calif.) said in response: “It would be a major mistake for the federal government to step in and tell states that they cannot protect their citizens from air pollution.”

In the case of financial privacy and antispam legislation pending before Congress, lawmakers and business groups said a national standard was necessary to prevent state laws that could drive up costs and stifle the economy.

“Is the Internet located entirely within the state of California?” said Louis Mastria, director of public and international affairs for the Direct Marketing Assn., which prefers federal to state regulation of commercial e-mail. “If this were a state-specific issue, OK. But it’s not.”

His group favors federal legislation that would allow commercial e-mail but require companies to cease the mailings if customers asked to be taken off their lists. California’s new antispam law makes it illegal to send e-mail that advertises goods or services to California residents unless the recipient requested it or had a prior business relationship with the advertiser.

Roger Pilon, vice president for legal affairs at the Cato Institute, a libertarian think tank in Washington, D.C., said: “If 50 states had 50 different emission standards, the cost of an automobile would be astronomical.”

Travis Plunkett, legislative director of the Consumer Federation of America, said industry’s argument about the difficulty of dealing with 50 states’ laws and regulations was disingenuous. The financial services industry, for example, “doesn’t want to deal with rigorous new state consumer-protection laws,” Plunkett said.

While acknowledging a general belief in the “sanctity of uniformity,” Bird, the state legislatures conference’s federal affairs counsel, said allowing states to experiment with different approaches to problems was “one of the beauties of the American federal system.”

Rep. Thomas G. Tancredo (R-Colo.), author of a bill that would deny federal highway funds to states that allow drivers’ licenses to be issued to illegal immigrants, has portrayed the issue as one of national security.

Contending that a driver’s license can be subject to misuse, he said, “When the actions of one state put the safety of people living in the other 49 at risk, the federal government is compelled to act.”