A central theme of environmental law is the division of regulatory authority between states and the federal government. Federal environmental statutes envision an active role for states in implementing and assuring compliance with national standards. Under the Clean Air Act, a quintessential example of cooperative federalism, states are responsible for developing implementation plans to ensure that air quality meets National Ambient Air Quality Standards, which are established by the federal government. 42 U.S.C. §§ 7409, 7410.
States frequently act to address local and regional environmental issues, either as part of the federal framework or independently, sometimes taking measures that are more protective of human health and the environment than mandated by federal law. For a variety of reasons, the range of options available to states seeking to address environmental concerns is both narrower and broader than federal authority. On the one hand, states possess broad and inherent police powers to regulate conduct within their jurisdictions. On the other hand, these state powers must be exercised within the framework of responsibilities and constraints created by federal law.
Some state environmental measures are preempted by federal law. For example, the First Circuit held that Massachusetts’ effort to require the production of “zero-emission” vehicles was preempted by the Clean Air Act. Am. Auto Mfrs. Ass’n v. Comm’r, 208 F.3d 1 (1st Cir. 2000). And the Tenth Circuit recently found that Colorado’s hazardous waste regulations could not be enforced against an army depot in that state because the state regulatory scheme conflicted with a congressional mandate to destroy chemical weapons stored at the site. Colo. Dep’t of Pub. Health & Env’t v. United States, 693 F.3d 1214 (10th Cir. 2012).
Understandably, then, the doctrine of federal preemption is of great importance when it comes to evaluating the interplay of state and federal regulation in the field of environmental law. In its 2012–2013 term, the Supreme Court considered preemption in a variety of contexts. This article focuses on two decisions in which the Court opined on the preemptive reach of the Federal Aviation Administration Authorization Act (FAAAA). The Court arrived at markedly different outcomes—in one case finding preemption and in the other case rejecting preemption—based on a close analysis of the text of a clause in the FAAAA that expressly preempts state and local law. The article then considers other decisions in the same term of the Court that demonstrate a generally pro-preemption outlook, especially when reviewing preemption challenges to state or local enactments based on implied preemption doctrines.
The FAAAA was enacted to prevent burdensome state regulation of the trucking and airline industries. To that end, it contains an express preemption clause: “a state [or] political subdivision of a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).
Before the 2012–2013 Supreme Court term, courts had interpreted the broad language of the FAAAA to have an expansive sweep, preempting virtually any state law that touched upon any aspect of motor carrier services. In one case, the Supreme Court had found that the FAAAA preempted an attempt by the state of Maine to reduce the sale of tobacco to minors by requiring carriers to follow specific processing and delivery procedures while transporting tobacco products. Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364 (2008). The Seventh Circuit held that the FAAAA preempted a manufacturer’s claims against carriers for fraudulent misrepresentation and conspiracy. S.C. Johnson & Sons v. Transp. Corp. of Am., 697 F.3d 544 (7th Cir. 2012).
In American Trucking Associations v. City of Los Angeles, the Supreme Court considered whether the FAAAA preempted certain provisions of the Clean Truck Program run by the Port of Los Angeles. 133 S. Ct. 2096 (2013). The Port is an independent division of the city that is funded entirely by commercial revenue. The Port had been attempting to expand since the 1990s, but opposition and litigation from community and environmental groups interfered with those plans. Opponents claimed that the expansion would increase air pollution and adversely impact residents’ health.
In response to this opposition, the Port adopted a Clean Air Action Plan in 2006 to mitigate the environmental impacts of the Port’s expansion. This initiative included the Clean Truck Program, which specifically targeted emissions from drayage trucks that carry cargo from the Port. The program called for, among other things, replacing and retrofitting old trucks, a progressive ban on high-polluting trucks, and a fee on containers transported in noncompliant trucks to incentivize replacement. These specific elements of the Clean Truck Program were not at issue in this recent Supreme Court litigation.
What was at issue was the “concession agreement” that the Port began requiring drayage providers to enter into beginning in 2008. That agreement specified, inter alia, that the companies would (1) transition to using employee drivers rather than independent owner-operators; (2) submit an off-street parking plan complying with municipal restrictions; (3) ensure the maintenance and safety of the trucks; (4) display placards on all trucks while on Port property, with a phone number for members of the public to report concerns regarding emissions or safety; and (5) demonstrate financial capability. The agreement stated that when a company committed a “minor default,” it would be required to take corrective action, undergo training, and pay the Port’s investigatory costs. If the drayage provider engaged in a “major default,” its access to the Port could be revoked. Finally, a municipal ordinance provided that if a terminal operator granted Port access to a truck without a concession agreement, this would constitute a misdemeanor punishable by a fine of $500 or six months in prison.
The American Trucking Associations (ATA), representing drayage haulers at the Port, challenged these provisions of the concession agreements as expressly preempted by the FAAAA. In the decision reviewed by the Supreme Court, the Ninth Circuit considered whether each of the five challenged provisions was “related to a price, route, or service.” The court then evaluated if any provision meeting this standard nonetheless might escape preemption by virtue of having been enacted under the Port’s proprietary capacity or falling under one of the FAAAA’s statutory exemptions.
The Ninth Circuit found that the financial capability provision was only tenuously and remotely connected to “rates, routes, and services” and was hence outside the scope of the FAAAA. 660 F.3d 384, 404 (9th Cir. 2011). The court found that while the maintenance provision was in the scope of the FAAAA, it also fell within an enumerated exception from preemption for “the safety regulatory authority of a State with respect to motor vehicles.” Id. (quoting 49 U.S.C. § 15501(c)(2)(A)). The employee-driver provision was found to be within the scope of FAAAA and “tantamount to regulation” in seeking to affect third-party behavior unrelated to the performance of the drayage provider’s obligations to the Port. Id. at 408. ATA did not challenge the Ninth Circuit’s holdings with regard to the financial capability, maintenance, and employee driver provisions before the Supreme Court.
The Ninth Circuit also upheld the provisions requiring the placard and off-street parking plan, but it did so exclusively on the rationale that the enactments, though otherwise regulating matters covered by the FAAAA’s express preemption provision, did not have “the force and effect of law.” Id. at 409. The Ninth Circuit reasoned that the FAAAA preempted only state or local regulation, not the actions of a government entity behaving as a market participant. The court concluded that the Port was acting in its proprietary capacity as a market participant in managing access to the facility and “imposing conditions similar to those that would be imposed by a private landlord in the State’s position.” Id. at 401. According to the Ninth Circuit, the concession agreements were designed to enhance goodwill in the community, an “objectively reasonable business interest, particularly since the community has already proven its ability to stymy Port growth.” Id. at 407.
The Supreme Court Evaluates the FAAAA
The Supreme Court unanimously reversed the Ninth Circuit, holding that the two concession agreement provisions had the force and effect of law. The Supreme Court recognized that the FAAAA distinguished between a state or local government’s exercise of regulatory authority and its own contract-based participation in a market, with the “force and effect of law” language excluding the latter from the scope of the preemption clause. 133 S. Ct. 2096, 2102. However, the Court found that the Port was exercising “classic regulatory authority” in issuing the off-street parking and placard provisions. Id. at 2103. This holding turned on the penalty structure for enforcing the concession agreements: “Contractual commitments resulting not from ordinary bargaining, but instead from the threat of criminal sanctions manifest the government qua government, performing its prototypical regulatory role.” Id. While there was “no reason to doubt” that “the Port acted to enhance goodwill and improve the odds of achieving its business plan—just as a private company might,” the market participant doctrine did not apply because “the Port chose a tool to fulfill those goals which only a government can wield: the hammer of criminal law.” Id. Because the Port “employ[ed] such a coercive mechanism, available to no private party, it act[ed] with the force and effect of law” and such action was preempted by the FAAAA. Id. at 2098.
Although the Court held that the two provisions at issue were preempted, the opinion by Justice Kagan was narrow. The trucking association argued that the FAAAA simply did not contain a market participant exception because the doctrine was not expressly mentioned in the statutory text. Had the Court agreed that no freestanding market participant exception exists unless expressly built into a statutory scheme, there would have been significant implications for many other statutes that likewise do not explicitly mention this carve-out. Instead, by focusing on the issue of criminal penalties, the court avoided reaching this broader question. This decision thus left intact the existing standard that when the state purchases services, “it does not ‘regulate’ the workings of the market.” Bldg. & Constr. Trades Council v. Assoc. Builders & Contractors, 507 U.S. 218, 233 (1993).
ATA had also argued that ports by their very nature were inherently governmental entities—comparable to highways in furnishing access to channels of interstate and international commerce—and therefore the operators of ports categorically could not be treated as market participants. However, the Court instead focused on the inherently governmental penalty measures instituted by the Port without announcing any per se rules about the market participant exception’s applicability based on the type of entity issuing the measures.
In still another respect, the Court refrained from deciding issues unnecessary to the narrow resolution of the case before it. The Court had also granted review on the question of whether the Port could withdraw a noncompliant company’s right to operate at the Port. Almost sixty years ago, the Supreme Court held that a state could not bar a registered trucking company from state highways. Castle v. Hayes Freight Lines, Inc., 348 U.S. 61 (1954). ATA characterized the port as a “crucial channel of interstate commerce” comparable to state highways. Am. Trucking Ass’ns v. City of Los Angeles, 133 S. Ct. 2096, 2104 (2013). Given the pre-enforcement posture of the case, the Court declined to decide whether the Port could suspend a company’s access since there was no basis at the time to assume that the Port would use the penalty provision for anything more than denying access to contemporaneously noncompliant vehicles—something that the Court recognized that the Port undoubtedly had the power to do (much as a state can take a specific violative truck off the road).
All in all, the decision preserved in large part the authority of states and municipalities to protect their proprietary interests as long as they use tools that could also be employed by private parties. For example, nonregulatory measures such as contracting with outside parties, providing grants, or creating voluntary incentives would be permissible. However, this decision does limit the kinds of measures available to states and municipalities to enforce such programs. While a city could bar individual noncompliant vehicles from certain spaces, it may not be able to raise the specter of farther-reaching consequences such as revoking a repeatedly noncompliant company’s right to access the premises. Contracts between government entities and trucking companies can set forth conditions for access and use but cannot be backed by the threat of criminal punishment.
In the context of environmental regulation, one middle ground for municipalities could be a noncoercive incentive program to reduce emissions modeled after the emission-reduction measure enacted by the city of Dallas for airport taxicabs. To encourage the use of compressed natural gas taxicabs, which emit 70 percent less ozone-generating pollutants than gasoline vehicles, the city granted natural gas-powered taxicabs “head of the line” privileges when picking up passengers. The taxicab trade association challenged the measure under the Clean Air Act, which expressly preempts “any standard relating to the control of emissions from new motor vehicles.” Ass’n of Taxicab Operators USA v. City of Dall., 720 F.3d 534, 536 (5th Cir. 2013) (quoting 42 U.S.C. § 7543(a)). The Fifth Circuit upheld the city ordinance, finding that it was not a “standard” in that it did not create a “mandatory, pollution-related obligation” or a “command, accompanied by sanctions,” but, rather, it provided an incentive for taxicab drivers to transition to natural gas-powered vehicles. Id. at 539. The court determined that the incentive was not a de facto “standard” through indirect economic coercion. While the law “altered the shopping decisions for traditional cab drivers in determining where in the City to operate,” there was no evidence that it “effectively compels a particular course of action.” Id. at 542. Although this policy was not tested under the FAAAA (because it applied to taxicabs rather than trucks), it is an example of a noncoercive incentive program that might well escape preemption because it does not have the force and effect of law.
The Court’s Second Bite at the FAAAA
The second case this past term in which Court opined on the FAAAA was Dan’s City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (2013). In this case, the Court parsed the statutory clause: “related to a price, route, or service of any motor carrier.” 49 U.S.C. § 14501(c)(1). The breadth of this phrase defines one of the contours of FAAAA preemption. This language was not at issue in American Trucking Associations because the district court had determined that the relevant provisions were “related to a price, route, or service” and this fact-finding was not contested on appeal. 660 F.3d 384, 406 (9th Cir. 2011).
In Dan’s City Used Cars, a car owner sued the company that towed his vehicle, alleging that the towing company had not complied with New Hampshire state law governing the storage and disposal of towed cars. The towing company responded that the state law claims were preempted by the FAAAA. In a series of unfortunate events seemingly out of a Lemony Snicket novel, a bedridden car owner was unable to remove his car from a parking lot during a snowstorm. His car was subsequently towed, but he did not learn of it because he was hospitalized soon thereafter. He underwent surgery, endured serious complications, and remained in the hospital for an extended period. During this time, the towing company sought permission from the state to sell the car at auction. When the state identified the owner, the towing company sent him a letter, which was returned by the post office as undeliverable. When the car owner returned home, he finally learned that his car had been towed and would be auctioned. He contacted the company stating that he wished to reclaim his vehicle. The towing company nonetheless proceeded with the auction; when the car failed to attract any bids, the company traded it to a third party. The car owner was not notified of the sale or given any proceeds.
In another unanimous decision, the Supreme Court held that the car owner’s claims were not preempted by the FAAAA. This time, the Court focused on the effect of the last phrase of the express preemption clause, “with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). In the Court’s view, the phrase “massively limits the scope of preemption” of the FAAAA. 133 S. Ct. at 1769 (quoting City of Columbus v. Ours Garage & Wrecker Serv., 536 U.S. 424, 449 (2002) (Scalia, J., dissenting)). The Act defines “transportation” as “services related to the movement” of property, “including . . . storage, handling.” 49 U.S.C. § 13102(23)(B). The Court held that the claims under the New Hampshire Consumer Protection Act were not related to the movement of the car; instead, they addressed the disposal of the vehicle after the towing had ended. The towing company contended that the claims fell within the ambit of transportation because they concerned “storage” and “handling.” The Court, however, construed the definition of “transportation” to include storage and handling services only when rendered in connection to the movement of property, such as temporary storage of an item in transit. 133 S. Ct. at 1779. The Court reasoned that, in enacting the FAAAA, Congress sought to prevent states from interfering with competitive market forces by dictating what services motor carriers should provide. In contrast, New Hampshire’s consumer protection and tort laws regarding storage and disposal of a vehicle did not affect the transportation services or operations of tow truck operators.
When juxtaposed with American Trucking Associations, Dan’s City Used Cars confirms that when dealing with an express preemption provision, one must pay careful attention to the precise words of the statute, which will often be outcome determinative. After all, as the Supreme Court has repeatedly admonished, “[w]hen a federal law contains an express preemption clause,” courts must “focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ preemptive intent.” Chamber of Commerce of United States v. Whiting, 131 S. Ct. 1968, 1977 (2011).
A Pro-Preemption Term Overall
Under the Supremacy Clause of the Constitution, federal law is “the supreme Law of the Land.” U.S. Const. art. VI, cl. 2. The courts have recognized three types of preemption: (1) express preemption, an explicit provision in a federal statute displacing state power; (2) field preemption, where pervasive or dominant federal engagement in an area implies that Congress left no room for state action; and (3) conflict preemption, where compliance with both state and federal law is impossible, or state law is an obstacle to accomplishing the objectives of the federal statute. See, e.g., Altria v. Good, 555 U.S. 70, 76 (2008). The latter two categories are collectively referred to as implied preemption. In a statute such as the FAAAA that contains an express preemption clause, the preemption analysis will often center on that language. However, regardless of whether there is an express preemption provision, implied preemption principles may still apply “because the question of the substance and scope of Congress’ displacement of state law still remains.” Id.
In the 2012–2013 term, the Supreme Court granted review in six cases challenging state or local actions as preempted by federal law. The Court found the challenged action to be preempted in all but one case, Dan’s City Used Cars. The two cases discussed above involved express preemption, where the state or local law was analyzed with reference to the preemption clause in the federal statute. The remaining four cases involve conflict preemption, and in all four cases the state law was struck down—a record that presages an attitude receptive to finding preemption even when Congress has not explicitly articulated a preemptive intent.
Hillman v. Maretta, 133 S. Ct. 1943 (2013), involved the Federal Employees’ Group Life Insurance Act (FEGLIA), which allows employees to designate a beneficiary for insurance proceeds. FEGLIA contained a narrow express preemption clause, but the Court’s finding of preemption relied on a broader notion of conflict preemption. A Virginia statute provided that if a former spouse was listed as the beneficiary, he or she would be liable for the insurance proceeds to whomever would otherwise have received them. The Court held that, because FEGLIA directs that the proceeds belong to the named beneficiary, the Virginia statute frustrated the “deliberate purpose” of Congress in enacting the statutory scheme and, therefore, was preempted.
In Wos v. E.M.A., 133 S. Ct. 1391 (2013), involving a North Carolina statute creating an irrebuttable presumption that one-third of a tort recovery by a Medicaid beneficiary is attributable to medical expenses, the Court held that the state law was preempted by the anti-lien provision of the federal Medicaid statute. The federal statute creates a ceiling and a floor, directing states to seek reimbursement for Medicaid expenses from beneficiaries who recover damages from third-party tortfeasors but prohibiting states from attaching a lien on the property of Medicare beneficiaries to recover benefits paid. Because the irrebuttable presumption could result in the state claiming more of a victim’s tort recovery than properly attributable to medical expenses, the Court found that the state law conflicted with the federal anti-lien provision and was preempted.
In Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013), a design-defect claim under New Hampshire law against a generic drug manufacturer was held to be preempted by a federal law requiring labeling on generic drugs to be identical to the brand name version. The state law required manufacturers to ensure that the drugs they produced were not unreasonably unsafe, based on both their chemical composition and warning label. Since generic manufacturers are prevented under federal law from unilaterally changing their labels, the Court found that it would have been impossible to comply with both the state and federal law. The First Circuit and the Supreme Court dissent both suggested that the manufacturer could have instead stopped selling the product once it had information suggesting it was unsafe, but the Supreme Court majority held that adopting this “stop-selling rationale would render impossibility preemption a dead letter.” Id. at 2470.
In Arizona v. Inter Tribal Council of Arizona, 133 S. Ct. 2247 (2013), the Supreme Court considered whether Arizona’s requirement that voter registration applications be accompanied by evidence of citizenship was preempted by the National Voter Registration Act, which requires states to “accept and use” a federal form. The Elections Clause of the Constitution empowers Congress to preempt state regulations governing federal elections. The Court concluded that, in the context of the National Voter Registration Act, the phrase “accept and use” did not simply mean that states would willingly receive the federal form, but that they should accept it as sufficient. The Court held that Arizona’s requirement that voter applicants provide additional information beyond the federal form conflicted with the federal statute and was preempted.
Amidst this slew of preemption findings, this Supreme Court term continued the trend of declining deference to the presumption against preemption. Historically, when Congress legislates “in a field which the States have historically occupied,” courts “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). However, in a 2011 plurality opinion, the Supreme Court shifted to reading the Supremacy Clause as a non obstante provision that “suggests that federal law should be understood to impliedly repeal conflicting state law.” Pliva v. Mensing, 131 S. Ct. 2567, 2580 (2011). In contrast to the presumption against preemption, this new reading directed the Court to “look no further than the ordinary meaning of federal law” rather than “strain[ing] to find ways to reconcile federal law with seemingly conflicting state law.” Id. (internal quotation marks omitted).
The presumption against preemption was not mentioned in either of the FAAAA cases. Nor did it have much prominence in three of the four implied preemption cases. In Wos v. E.M.A., North Carolina contended that the challenged state action fell within the state’s traditional authority to regulate tort actions, but the Court held that the challenged law was not within the state’s exercise of its general authority to regulate its tort system because it singled out Medicaid beneficiaries. 133 S. Ct. at 1400. Arizona also tried to lean on the presumption against preemption in defending its voter registration law in Arizona v. Inter Tribal Council of Arizona, but the Court stated that the principle did not apply to Elections Clause legislation. 133 S. Ct. at 2256.
The presumption’s absence was most notable in Mutual Pharmaceutical Co. v. Bartlett. Courts have historically applied the presumption against preemption with particular force when assessing state or local measures regarding health and safety. In a 1985 case holding that federal regulations governing the collection of blood plasma did not preempt local ordinances imposing additional donor testing and recordkeeping requirements, the Court unequivocally stated “the presumption that state or local regulation of matters related to health and safety is not invalidated under the Supremacy Clause.” Hillsborough Cnty. v. Automated Med. Labs, 471 U.S. 707, 716 (1985). The Supreme Court again recognized the “historic primacy of state regulation of matters of health and safety” in holding that federal law did not prevent states from providing traditional remedies for violations of common law duties that paralleled federal requirements. Medtronic v. Lohr, 518 U.S. 470, 485 (1996). However, the presumption was not mentioned in the majority opinion of Bartlett, even though that case was also about state health and safety measures. Indeed, the presumption was discussed only in the dissent. 133 S. Ct. 2466, 2486 (Sotomayor, J., dissenting).
Only in Hillman v. Maretta did a majority opinion affirm the existence of the presumption against preemption—though even there it did so in the limited context of domestic relations, as that field has traditionally been governed by state law. After acknowledging that state family law must “do major damage to clear and substantial federal interests before the Supremacy Clause will demand that state law be overridden,” the Court nonetheless found the state law to be preempted: “family law is not entirely insulated from conflict pre-emption principles, and . . . must give way to clearly conflicting federal enactments.” 133 S. Ct. 1950.
Environmental measures are often designed to protect human health and improve product safety. As the sway of the presumption against preemption in this realm declines, courts may increasingly find state measures to be preempted. This overall pro-preemption trend could make it difficult for states and localities to pass innovative environmental measures that are more protective than federal environmental regulation. While the federal environmental statutes envision cooperative federalism to protect human health and the environment, state power can be impeded by statutes directed at achieving other objectives.
As the twin examples of American Trucking Associations and Dan’s City Used Cars illustrate, it is difficult to generalize outcomes; preemption findings are based on case-specific fact-finding and a careful parsing of the statutory text. And beyond the statutory text, courts may apply implied preemption principles in determining whether the state law interferes with congressional intent. States and localities retain significant authority to address environmental problems but should be cognizant of the risk of preemption when their efforts overlap with federal regulation in other fields.