http://story.news.yahoo.com/news?tm...e=5&u=/usatoday/20031209/pl_usatoday/12062119 Fed-up states defy Washington Tue Dec 9, 7:22 AM ET By Dennis Cauchon, USA TODAY In his six years in Congress, Rod Blagojevich couldn't get anything done about high prices for prescription drugs. In his first year as Illinois governor, he hopes to set national policy. The governor wants Illinois to be the first state to legally import prescription drugs from Canada, a precedent that could unlock the borders to a flood of cheaper drugs. "If you leave it to the president and Congress, history tells us nothing will change," says the Chicago Democrat, who served three terms in the House of Representatives before becoming governor. A new era of activism by state governments has arrived. Unhappy with what's happening in Washington, governors, legislatures and state attorneys general are leading a charge to set the national agenda on issues from health care to pollution control to securities regulation. The New York attorney general has been a leader in the investigation of Wall Street corruption. Northeastern states have sued the federal government over acid rain caused by air pollution generated in the South and Midwest. And many states are attacking high prescription-drug prices. The new initiatives are largely liberal challenges to conservative policies adopted in Washington by the Republican-controlled Congress and White House. The activist states, mostly in the North and West, have the pharmaceutical industry, Wall Street and other institutions on the defensive in a way that threatens to undermine interest groups' political success in the nation's capital. Conservatives have traditionally supported states' rights and limits on federal powers. But as liberals now enjoy success in the states, many conservatives are rethinking their devotion to states' rights. "States are trying to pre-empt Congress on national issues, and it's quite dangerous," says Michael Greve, director of the federalism project at the American Enterprise Institute, a conservative think tank in Washington, D.C., that promotes limited government. Liberals see it differently. "States are now the vanguard of the progressive movement," says Bernie Horn, policy director of the liberal Center for Policy Alternatives in Washington. "In Congress, progressives can only stand in the way of the conservative avalanche. But in states, we're getting things done." Supreme Court Justice Louis Brandeis in 1932 called states the laboratories of democracy. But it was the 1998 tobacco settlements that ushered in this new era of activism, experts say. The $250 billion deal between all 50 states and the tobacco companies showed that states could set national policy in areas where Congress and the administration were reluctant to act. The states sued to recover their costs of providing health care to people suffering illnesses related to smoking. One condition: No new taxes Today, populist issues are catching fire in the states - as long as they don't require new taxes. Thirty-nine states had "do not call lists" for telemarketers before Congress created a federal list that took effect Oct. 1. Oklahoma filed criminal fraud charges against former MCI Worldcom chief executive Bernie Ebbers and five other company officials in August, defying federal authorities who were still investigating. Oklahoma dropped the charges Nov. 20 at the federal government's request but plans to charge the executives again next year. State activism is reshaping many of today's top issues: ** Prescription drugs. More than two dozen states are trying to lower prescription-drug prices. Maine will penalize pharmaceutical companies that refuse to sell drugs to uninsured people at the same discounted prices that Medicaid pays. Variations on the Maine law have passed in Illinois, Hawaii, Montana and New Mexico. Court action has delayed all the programs. Illinois, Vermont, Minnesota and several other states want access to cheaper Canadian drugs. Minnesota Attorney General Mike Hatch began an investigation of Glaxo-SmithKline when it said it would punish Canadian pharmacies that sell to U.S. citizens. ** Securities regulation. New York Attorney General Eliot Spitzer won a $1.4 billion settlement from Wall Street investment banks in December 2002 to resolve conflict of interest charges involving stock recommendations made to the public. More recently, Spitzer and Massachusetts regulators have led an investigation of mutual fund trading abuses. Spitzer has accused the Securities and Exchange Commission of a weak response. His office filed the first criminal charges in the scandal Nov. 25. ** Airpollution. Twelve states sued the federal government in October after the Bush administration relaxed environmental regulations at power plants that burn coal. The pollution causes acid rain in Northern states, they say. That can kill trees and aquatic life. A similar group of states earlier sued the Environmental Protection Agency for failing to regulate carbon-dioxide emissions, which are blamed for global warming. ** Gayrights. Legal rights for homosexuals have made dramatic advances in the states at a time when Congress is focused on other issues. New Mexico this year became the 14th state to ban workplace discrimination against gays by public and private employers. Arizona and Kentucky became the ninth and 10th states to ban discrimination in the public sector only. The Massachusetts Supreme Judicial Court ruled Nov. 18 that gay couples have a right to marry. State officials have many motives for trying to set national policy. Political ambition is a big factor, says Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce, which represents businesses. "The acronym AG stands for both attorney general and aspiring governor," he says. Indeed, Spitzer is a likely candidate for governor of New York in 2006. Conservatives have enjoyed success, too, in winning state approval for policies that have died in Congress, Josten says. Among them are limits on medical-malpractice claims and deregulation of electricity. "Politics is a free-for-all," he says. "It never cuts one way, either for Republicans or Democrats." Testing new ideas States have traditionally experimented with laws before the federal government has embraced them. "It's one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory and try novel social and economic experiments without risk to the rest of the country," Brandeis wrote. States had antitrust laws, welfare programs and child-labor laws before the federal government did. Twenty-five states had background checks or waiting periods for gun buyers before the federal Brady Law required it in 1994. What's different today, says Greve, the conservative scholar, is that states are trying to tax and regulate businesses outside their borders. One of his biggest complaints is state attorneys general - the top lawyers in state governments - joining multistate lawsuits against Microsoft, drug companies and other businesses. "An attorney general can jump into an issue, put on a white hat and lead a crusade while everyone else sits around doing nothing," he says. "The result usually is bad policy that legislatures don't even vote on." Greve says price controls on prescription drugs are likely to come from the work of state attorneys general, not Congress. "Price regulation will be signed and sealed in some courthouse in Carson City (Nev.) rather than in Washington, D.C.," Greve says. "This is an end-run around Congress." States have been influencing national policy for more than a century. "It's an old story," says Timothy Conlan, a professor at George Mason University and an expert on state and federal relations. "What's different today is that the sides have flipped. You didn't have conservatives making these complaints when liberal Democrats were dictating the agenda in Washington." States' rights gained the most attention in the 1950s and 1960s, when Southern states trying to preserve racial segregation fought federal actions to enforce civil rights measures. Experts agree that states have been more effective trying to set national policy recently. The reason: State governments are more professional than in the past and have access to an increasingly powerful federal court system. "State attorneys general are feistier, adventuresome and willing to push the envelope," says William Gormley Jr., public policy professor at Georgetown University. "They've become national actors because they can use the federal courts." Maine leads the way Not every state is chafing at federal attitudes. Some states, especially in the South and mountain states, are pleased that the federal government is moving toward less regulation, not more. Governors in several Western states, for example, endorse the Bush administration's move to eliminate or weaken restrictions on oil and gas drilling and other activities on federal lands. In states that are challenging federal policies, officials say the problem is Congress, not the states. "It's easy to explain why states are doing this: the federal government isn't doing its job," says Maine State. Sen. Sharon Treat, the Democratic majority leader. Maine has been among the most aggressive states in tackling national issues, through legislation and lawsuits. It joined 11 other states in suing the Bush administration in October for interpreting an old law so that coal-fired power plants can replace equipment without installing new pollution controls. This means that power plants in the South and Midwest will keep producing pollution blamed for causing acid rain in the Northeast. The EPA proposed rules last week to reduce such pollution. "What are we supposed to do, let our citizens get sick or die because the EPA won't enforce the Clean Air Act?" Maine Attorney General Steve Rowe says. "Are the American people better off because attorneys general have acted? You bet they are. What bothers people is we're getting results." Maine's biggest victory came in May. The U.S. Supreme Court by a 6-3 vote upheld a Maine law that punishes pharmaceutical companies who don't sell discounted prescription drugs to the uninsured. The pharmaceutical industry had won a lower court order stopping the program. The groundbreaking Maine Rx Plus program is scheduled to start Jan. 1. It will let about 275,000 uninsured residents buy brand-name drugs at prices about 15% lower than retail prices and generic drugs about 60% lower. To do this, the state requires companies to sell drugs to the uninsured at the discounted price paid by Medicaid, the government program that provides medical care for the poor. If the uninsured can't buy at discounted prices, the state will keep the companies' drugs off its list of preferred medicines. "It's a bad law," says Marjorie Powell, a lawyer at the Pharmaceutical Research and Manufacturers Association, a drug industry trade organization. "It says that Medicaid patients, who are the sickest and poorest, can't get the drug their physicians prescribe unless another unrelated group gets a discount." The successes for liberal causes are especially surprising because Republicans in 2002 scored their greatest victory at the state level in 50 years. They control more state legislatures than Democrats for the first time since 1952. But Democrats are exercising power where they have it and winning support in other states from moderate Republicans, who are more numerous in state legislatures than in Congress. Because the new initiatives seldom require spending much money, they are able to cross ideological lines more easily. Connecticut State Rep. Lenny Winkler, a Republican who is assistant minority leader, persuaded the Legislature to go beyond the unpaid family leave Congress authorized in the Family and Medical Leave Act. Under a state law that she helped enact, Connecticut businesses and governments must let workers use accumulated sick time for up to two weeks of paid family leave. Winkler's Republican colleagues were surprised that she was pushing the idea, and business groups thwarted it for three years. But Winkler, 60, is not only a legislator; she's also an emergency room nurse. "I'm in the real world," she says, "and I saw how this was needed."