Let us stipulate that the federal government is having some problems doing careful analysis generally, much less analysis as to how its actions might affect the states.  I believe that my area, tax law, offers some guidance as to how states should proceed.

First, some context.  Over forty states with income taxes conform to federal income tax law.  Such conformity makes administrative sense of course, but going forward it would be wise for states that automatically conform to federal law to add a time delay or default rule (e.g., not conforming) to protect themselves.  This is because the federal government is likely to cut taxes, even as it implicitly increases the fiscal burden on states. States, unlike the federal government, are bound by balanced budget rules.  Thus, states should not get dragged along into losing revenue unless there has been a clear determination that this is a good idea.

States also tend to conform to federal tax regulations—either formally or informally.  Again, this makes sense to fill in gaps and achieve uniformity.  Weighing against this conformity was a tendency for regulations to be too friendly to taxpayers.  It might be presumed that this tendency is likely to get stronger post-Loper Bright.  Further, the federal government is about to embark on a regulation-cutting spree.  I don’t doubt that some of those regulations should be cut, but I doubt very much that the current regime will do so carefully.  The states should therefore buy themselves some time by conforming to federal regulations as of January 1, 2025.

Third, armed with their interpretation of Loper Bright, taxpayers are attacking regulations they do not like.  Some of the ultimate court decisions, even if pro-taxpayer, may well be sound—or at least reasonably wrong.  There is the real possibility, however, that some decisions might be unreasonably wrong and very expensive.

In short, as to federal tax law, states should specify that their conformity to federal statutes, regulations, and case law dates as to January 1, 2025.

What about other areas of law?  Some federal law is likely conformed to as a matter of convenience, such as tax law. If that is the case, then the same reasoning applies.

However, it is also true that, unlike in taxation, the federal government has sometimes preempted states and done so with ceilings.  If the federal government has imposed such preemption then states can and should challenge any unconstitutional or otherwise infirm changes, but this proposal will not help with these problems. 

However, in many cases federal law, even if preemptive, imposes floors—that is, a state law or regulation cannot be less stringent than the federal standard.  If a state conforms to a current federal floor and that floor is lowered then the states will be forced to go down for the ride.  (See, e.g., New York as to water and California as to health insurance.)

And, to be clear, maybe some of the federal changes are good ideas.  I won’t deny that, in many cases, I strongly suspect that this is not likely, if only because not enough care has been put into the federal proposals. But the key to my proposal here is that a lot of changes are coming and that states should give themselves some time to decide what to do.  A state might wish to generally align with the President’s policies without wanting a hole blown through its budget or a loophole created in its environmental laws.

(Note that if states would like to pool expertise and achieve some uniformity without the help of the federal government, then there are lots of models of interstate cooperation that they might draw from.)

In sum, a state bill to generally pause federal conformity should not specify just federal tax law, but all federal law, regulations, and case law.  To quote Chief Justice Roberts in NFIB v. Sebelius: “The States are separate and independent sovereigns. Sometimes they have to act like it.”

Darien Shanske is the Martin Luther King Jr. Professor of Law at UC Davis School of Law.