Federal Preemption of State and Local Law

There is no specific “preemption” clause in the Constitution. Rather, conventional wisdom holds that the power of Congress to preempt state law derives from the Supremacy Clause, the Commerce Clause, or sometimes from the Dormant Commerce Clause. Perhaps the simplest, but most controversial, account places the locus of the preemption power in the Necessary and Proper Clause. Whatever its doctrinal source, the contemporary preemption analysis typically begins and ends with the intent of Congress. Thus, while it is helpful to have a working familiarity with the constitutional history, practical questions of preemption are often resolved by statutory interpretation.

History of the Preemption Power A. The Supremacy Clause, the Commerce Clause, and the Necessary and Proper Clause

Many commentators consider Gibbons v. Ogden the seminal preemption case, but tension regarding the federal government’s power to preempt state authority is inherent in our federal system of government.

The controversy before the Court in Gibbons v. Ogden was whether the New York legislature had the power to grant a steamboat monopoly to all waters within the state, which had the effect of barring all others from operating interstate lines to New York. The original monopoly was granted to Robert Fulton, who assigned the rights to operate a line between Elizabethtown, New Jersey, and New York City to Ogden. Gibbons owned two steamships that operated the same line, and his ships were licensed under an act of Congress. Ogden won an injunction against Gibbons, effectively neutralizing the federal license, and it was upheld on appeal. The Supreme Court ultimately reversed the decision of the New York courts. After adopting a reading of the word “commerce” broad enough to include not just transporting goods across state lines but also navigating from one state to the next, the Court addressed the scope of the commerce power.

The Court noted that by simply granting Congress a power, the Constitution did not necessarily take it away from the states. To determine whether Congress’s power over interstate commerce deprived the states of the same power, “[t]he sole question is can a State regulate commerce . . . among the States while Congress is regulating it?” Unlike the taxing power, which can be exercised concurrently, the regulation of nationally significant aspects of interstate commerce must be exclusive. What Congress decides to leave untouched can be as important to the effective operation of a “uniform whole” as that which Congress affirmatively regulates. A state regulation of steamship traffic within that state’s borders would not contravene an explicit constitutional provision, but inconsistent state regulations in the field would undermine Congress’s ability to effectively exercise its power over interstate commerce. And the Court noted that “the framers of our Constitution foresaw this state of things, and provided for it by declaring the Supremacy not only of [the Constitution] itself, but of the laws made in pursuance of it. Consequently, any state law that would interfere with the orderly operation of a federal law made pursuant to an explicit constitutional power must give way—even if the federal law doesn’t address the precise activity the state law addresses.

The holding from Gibbons rested primarily on the Commerce Clause, but the range of issues that were raised in the case set the stage for most of the preemption jurisprudence that followed. Here is a summary: The dual sovereignty on which the balance of federalism rests begets tension. While the federal government’s powers are limited to those enumerated, one of the enumerated powers is to make laws “necessary and proper” to carry out the powers explicitly mentioned in the Constitution. At the very least, the Necessary and Proper Clause buys Congress a bit of operational leeway when its powers rub up against the concurrent powers of the states. There are primarily two types of concurrent powers: those that can generally be exercised by more than one sovereign without much conflict, and those that cannot. The power to tax is the former type, and “it is not subject to preemption unless [the states use it] to discriminate against a group or to place undue burden on interstate commerce. Preemption is much more common in the latter group. If Congress has an explicit grant of power, like the power to regulate interstate commerce, it is plenary, meaning that it has no specific conditions or limitations. But unless it is clearly an exclusive power (such as the war-making power), the states generally have the right to exercise the power concurrently. Whenever there is a conflict between a state law and a federal law, the Supremacy Clause nullifies the conflict in favor of the federal law. However, even when there is not a direct conflict between a state law and an affirmatively enacted federal law, a state law can still be invalidated under these preemption principles if the state law impermissibly interferes with Congress’s ability to create a “uniform whole.”

B. Dormant Commerce Clause

These latter cases—when a state or local law is invalid though not in overt conflict with a particular federal law—arise under the Dormant Commerce Clause. The phrase is taken from a line from Gibbons, when Justice Marshall noted that the regulation of interstate commerce must either be wielded by Congress, or it must “lie dormant.” In other words, state and local governments must respect Congress’s prerogative not to regulate. After Gibbons, the first major case to address the dormant commerce power was Cooley v. Board of Wardens. That case dealt with Pennsylvania’s authority to require any ship entering or leaving the Port of Philadelphia to hire local pilots. In upholding the Pennsylvania law, the Court drew a distinction between areas of interstate commerce of such national importance that Congress’s power must be exclusive and those of local concern that remained within the general police power of the individual states.

However, the Supreme Court provided almost no guidance to lower courts to determine specifically what kinds of activities were of national importance or which were sufficiently local to permit a state’s concurrent exercise of the commerce power.

The test that we use today came from Southern Pacific Co. v. Arizona. The Arizona Train Limit Act forbade operating passenger trains of more than 14 cars and freight trains of more than 70 cars. The Court noted that the relevant federal law, the Interstate Commerce Act, did not by its terms preempt the state regulation. Nonetheless, the Court found that the Arizona law unduly burdened interstate commerce and was therefore invalid.

This balancing test has received significant criticism, mainly regarding how to weigh a burden on interstate commerce against the significance of a local interest. Detractors argue that the values are simply incommensurate. Arguments against often promote simple discriminatory/nondiscriminatory test: if a local regulation discriminates against out-of-staters, it should be invalid; otherwise, it should stand.

Preemption, for our purposes, occurs whenever a state’s exercise of power is voided either because federal action has left no room for state action on the subject, or because state action would frustrate an important federal purpose. This broader kind of preemption challenge could be based on the express or implied intent of Congress or on any of the constitutional provisions discussed previously.

II. Mechanics of Statutory Preemption

The Court’s modern preemption analysis was most explicitly stated in Gade v. Solid Waste Management Association. The language from Gade appears in almost all subsequent preemption cases:

Pre-emption may be either expressed or implied, and is compelled whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose. Absent explicit pre-emptive language, we have recognized at least two types of implied preemption: field pre-emption, where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, and conflict pre-emption, where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

A. Express Preemption

Congress expressly preempts state law when it includes language like this in a statute: “No state shall adopt or enforce any law, rule, regulation, standard or other provision having the force and effect of law relating to [________________].” If it is addressed in the statute itself, the preemption is express. In a perfect world, when Congress includes a preemption clause in a statute, there would be nothing left to argue about. But for many reasons, some political and some practical, Congress will inadequately address the scope of preemption, and the courts will still have to deal with it. For example, despite an express preemption clause, the Supreme Court had to address whether and to what extent the Federal Cigarette Labeling and Advertising Act, as amended by the Public Health Cigarette Smoking Act of 1969, preempted state tort claims. Those claims related specifically to representations—for example, failure to warn—were preempted by the labeling law. Warranty-based claims were not preempted.

B. Implied Preemption

When Congress fails to address the relationship of a given law with the state laws it may bump up against, preemption may nonetheless be “compelled whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose.” Implied preemption has three primary forms: field preemption, where the federal government’s involvement in a given field is so pervasive as to preclude state involvement of any kind; conflict preemption, where a state regulation is voided because it competes with a federal regulation; and obstacle preemption, where courts “seek to remove a barrier to the accomplishment of a federal objective.” When a court actually addresses a preemption issue, however, it rarely relies on only one strand of analysis.

C. Field Preemption

Nuclear power is perhaps the paradigm example of the federal government’s domination of a given field, but Congress expressly preempted local regulation of nuclear power in the Atomic Energy Act and its amendments. Commentators have compared the federal domination of atomic energy to the federal domination of ocean fishing. In Southeastern Fisheries Association v. Chiles, the Eleventh Circuit observed that Congress’s establishment of Exclusive Economic Zones (formerly known as Fishing Conservation Zones) to regulate fishing outside a state’s territorial waters “outlined a fairly complete and pervasive scheme.” Confronted with such a scheme, the Court noted in dicta that Congress “must have intended to occupy the field of fishery management within the [Exclusive Economic Zones].”

The court based this conclusion on statutory provision in which “Congress claims for the United States ‘sovereign rights and exclusive management authority over all fish [except highly migratory species] within the exclusive economic zone.’ ”¹ Further, Congress declared that its policy was to “assure that the national program involves and is responsive to the affected states.” The act set national standards for fishery management and established regional fishery councils, with the purpose that the councils “ ‘participate in, and advise on, the establishment and administration’ of the fishery management plans.” While Congress never expressly mentioned preemption, the language from the statute itself, including its statements of policy, indicated that Congress intended to occupy the field. The court found it especially important that Congress intended for the states to have input on the national scheme, but left ultimate authority with the federal government.

D. Conflict Preemption

If intent to occupy the field cannot be implied because the scheme did not “entirely displace” state regulation, state law is “nevertheless preempted when it actually conflicts with federal law.” In Florida Lime & Avocado Growers v. Paul, the Supreme Court upheld a California law that required avocados entering the state be more mature than the federal rules. Federal rules forbade harvesting avocados until they reached at least 7 percent oil, while California would only accept avocados that had reached 8 percent. The Court first explained the rule: “A holding of federal exclusion of state law is inescapable and requires no inquiry into congressional design where compliance with both federal and state regulations is a physical impossibility for one engaged in interstate commerce.” ⁵ Here, it was possible to comply with both standards because the federal rule did not forbid harvesting after 7 percent. If it had, then Florida growers could not have complied with both standards simultaneously, and the California law would have failed. Finding no conflict other than the Florida growers’ desire to harvest earlier than allowed in California, the Court upheld the law.

E. Obstacle Preemption

The other main form of implied preemption is commonly referred to as obstacle preemption, which the Court addressed in Hines v. Davidowitz. When a state regulation “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” it will be preempted. In Hines, the Court considered the Pennsylvania Alien Registration Act, which, among other things, required adult aliens to register every year with the Department of Labor and Industry and carry an alien identification card at all times so they could furnish it at the demand of law enforcement. Before the preemption analysis, the Court first acknowledged that, while the

Constitution did not explicitly make the power to establish a uniform “Rule of Naturalization” exclusive to Congress, “[o]ur conclusion is that . . . the power to restrict, limit, regulate, and register aliens as a distinct group is not an equal and continuously existing concurrent power of state and nation, but that whatever power a state may have is subordinate to supreme national law.” Note first that regulating immigrants is a power shared concurrently between the national and state governments. There is some room, though not much, for states to establish policies regarding the status of immigrants. Certain such policy issues are up for debate, and few more publicly than the issuance of driver’s licenses to undocumented immigrants. Most states do not allow it but for a handful of states including Oregon, Washington, and California and the federal District of Columbia.

By contrast, when Congress exercises its authority to achieve a national, uniform system of documentation for immigrants, a state law, though not in explicit conflict (as it would be physically possible to comply with the federal law and the Pennsylvania Alien Registration Act), must give way. The Court held:

The federal government, in the exercise of its superior authority in this field, has enacted a complete scheme of regulation and has therein provided a standard for the registration of aliens, states cannot, inconsistently with the purpose of Congress, conflict or interfere with, curtail or complement, the federal law, or enforce additional or auxiliary regulations.

The Pennsylvania law impeded Congress’s efforts to create a uniform alien registry that was consistent with the United States’ foreign-relations interests. It was an obstacle, though the Court’s reasoning relied heavily on field preemption, as well.

Hines is one of the cases most frequently cited as the origin of obstacle preemption. The best case for illustrating the principle is Nash v. Florida Industrial Commission, in which a Florida law obstructed the National Labor Relations Act (NLRA). Florida barred from unemployment insurance anyone who had filed an unfair labor practices grievance with the National Labor Relations Board. A key purpose of the NLRA was to encourage employees to file these grievances with the NLRB. The Florida law penalizing those who pursued their rights under the NLRA was an obstacle and therefore preempted.

F. Complete versus Partial Preemption

Whether preemption is express or implied is the first determination a court must make. Once preemption is found, a court must determine its scope. (In theory, though rarely in practice, a finding of express preemption should render the question of scope moot due to the presumption that Congress means only what it says—and no more.) There is a continuum from absolute preemption, which completely strips a state of jurisdiction over covered matters, on one extreme, to rather permissive partial preemption regimes that allow states to adopt or exceed basic federal standards, on the other. On the permissive side are statutes like the Water Quality Act of 1965— the first partial preemption statute—which in its current form sets minimum standards but allows states to submit a plan that, if approved by the Environmental Protection Agency, effectively delegates regulatory authority to the state. Similarly, Congress may set maximum regulatory standards that the states may not exceed. The Employee Retirement Income Security Act, however, represents the opposite extreme. It completely preempts state regulation of employee benefit plans; it even goes so far as to claim exclusive federal jurisdiction over most claims arising under the statute.

G. Savings Clauses

Congress sometimes does the opposite of preemption. Savings clauses preserve certain aspects (often tort claims) of state law, but these clauses do not get along well with preemption clauses when they appear side by side. The savings clause is usually a concession offered to congressional opponents of preemption. As they often come up late in the bargaining process, they are rarely well thought out. In Geier v. American Honda Motor Co., the Court addressed a conflict between a clause in the National Traffic and Motor Vehicle Safety Act that appeared to “save” common-law tort claims from compliance-with-a-federal-standard defense, but in the case at bar, allowing the state claim to proceed would conflict with a Department of Transportation regulation. The Court “decline[d] to give broad effect to saving clauses where doing so would upset the careful regulatory scheme established by federal law.”

III. Limits on the Federal Preemption Power

Congress’s power to regulate interstate commerce had progressively expanded until United States v. Lopez, the first case since the New Deal era to strike down a federal law for exceeding the scope of the Commerce Clause. Prior to that case, the high-water mark was set by Wickard v. Fillburn, which introduced the “aggregation” concept to Commerce Clause decisions: the federal government had the power to regulate ostensibly intrastate activity if the aggregate effect of that activity, considered on a national scale, had a substantial impact on interstate commerce. In Lopez, the Court now noted that the Constitution “with[held] from Congress a plenary police power that would authorize enactment of every type of legislation.” The United States argued that the Gun-Free School Zone Act, which provided criminal penalties for firearm-possession in a school zone, was within the commerce power because gun violence in schools adversely affected educational outcomes on a national level. In the aggregate, the negative impact on student performance had a substantial relationship to interstate commerce. The Court declined to follow the government’s lead: “To uphold the Government’s contentions here, we would have to pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States.”

The Act that the Court considered fatally lacked significant findings by Congress that guns in schools had a substantial impact on interstate commerce, nor did the act contain a jurisdictional statement that would limit its application to situations involving interstate commerce. The law then was amended to include the following statement: “It shall be unlawful for any individual knowingly to possess a firearm that has moved in or that otherwise affects interstate or foreign commerce at a place that the individual knows, or has reasonable cause to believe, is a school zone.” ⁹ The amended act was challenged and upheld by the Eighth Circuit in 1999.

In United States v. Morrison, the Supreme Court relied on Lopez to strike down the portion of the Violence against Women Act (VAWA) that provided a civil remedy in federal court to victims of gender-based violence—even if no criminal charges were filed.⁷¹ Unlike the statute at issue in Lopez, the VAWA was accompanied by congressional findings supporting the link between gender-based violence and economic activity. But like Lopez, the VAWA sought to regulate noneconomic activity on the grounds that the aggregate impact substantially affected interstate commerce, and the act lacked a jurisdictional statement.

B. Congress Cannot Regulate the States as States

Congress cannot commandeer state governments or government officials to effectuate its policies, even when the policy is squarely within the federal power to regulate Congress. In order to achieve uniformity, Congress must actually preempt state and local laws—any effort to compel states or municipalities to regulate according to scheme is unconstitutional (other than the soft coercion of conditional federal grants). Congress has quite a bit of latitude to shape state and local regulations by doling out federal money and attaching policy conditions to the receipt of those funds.

C. Limits on the Conditions Attached to Federal Grants

The two most important cases relating to the limits of congressional power to spend money for the general welfare are Penhurst State School and Hospital v. Halderrnan and South Dakota v. Dole. In Halderrnan, a developmentally challenged resident of the Penhurst State Hospital sued, alleging substandard conditions. Halderrnan argued that the Developmental Disabilities Assistance and Bill of Rights Act created substantive rights to “appropriate treatment” in the “least restrictive environment.” The Court found that the Act was a routine federal funding bill, and the policies announced in the bill of rights section of the bill did not create enforceable rights. The Court declined to imply a cause of action because Congress did not explicitly condition receipt of federal funds under the act on instituting any specific policies. Importantly, the Court noted that the act provided Pennsylvania a total of $1.6 million, a sum “woefully inadequate to meet the enormous financial burden of providing ‘appropriate’ treatment in the ‘least restrictive’ setting.” The holding was supported by a firm rule of statutory construction “that Congress must express clearly its intent to impose conditions on the grant of federal funds so that the States can knowingly decide whether or not to accept those funds.” That rule is especially important when the supposed obligations on the state are broad and largely indeterminate.

In South Dakota v. Dole, the Court confronted a federal transportation funding bill that required each state to set the legal drinking age at 21 years or lose 5 percent of its federal highway funds. South Dakota allowed 19-year-olds to purchase beer containing up to 3.2 percent alcohol. It sued in federal court to obtain a declaratory judgment that the conditions attached to the funding exceeded Congress’s power under the Taxing and Spending Clause. The Court upheld the law and outlined the five limitations on Congress broad spending power. First, “the exercise of the spending power must be in pursuit of ‘the general welfare.’ ” There was no argument that setting a standard drinking age was not in pursuit of the general welfare, as ample data showed that “the differing drinking ages in the States created particular incentives for young persons to combine their desire to drink with their ability to drive, and that this interstate problem required a national solution.” Second, when Congress desires to condition receipt of federal funds, it must do so unambiguously, and the Court noted that “[t]he conditions upon which States receive the funds, moreover, could not be more clearly stated by Congress.” Third, the conditions must be related “to the federal interest in particular national projects or programs,” and South Dakota never contended that was “unrelated to a national concern.” The Court then noted that South Dakota never seriously disputed these first three factors.

The controversy surrounded the fourth and fifth factors. The fourth factor states that the conditions must not be independently barred by the Constitution. Here, South Dakota argued that the drinking age violated the Twenty-First Amendment, specifically that the amendment effectively bars Congress from regulating alcohol. The Court rejected that argument and clarified that the limitations on Congress’s power to indirectly regulate are “less exacting” than when Congress regulates directly. Ultimately, the fourth factor stands for the unexceptionable proposition that the power may not be used to induce the States to engage in activities that would themselves be unconstitutional. Thus, for example, a grant of federal funds conditioned on invidiously discriminatory state action or the infliction of cruel and unusual punishment would be an illegitimate exercise of the Congress’ broad spending power.

The fifth and final factor is that the conditions may not be “coercive.” The Court noted that, here “Congress has offered relatively mild encouragement to the States to enact higher minimum drinking ages than they would otherwise choose. But the enactment of such laws remains the prerogative of the States not merely in theory, but in fact.”

The Court in Dole characterized Congress’s use of federal grants as “relatively mild encouragement:” Raise the drinking age to 21, or lose 5 percent of federal transportation funds. The Court confronted a very different kind of encouragement in National Federation of Independent Businesses v. Sebelius when it reviewed two major provisions of the Affordable Care Act: the individual mandate and the Medicaid expansion. Medicaid is a joint venture between the federal government and the states, and it is voluntary. If the states opt in, they receive at least half of their operating budgets in federal grants if they offer medical coverage meeting certain minimum federal standards to families with dependent children, the elderly, and people with disabilities. Every state has opted in. Under the Affordable Care Act, however, states were required to expand coverage to all adults with incomes up to 133 percent of the federal poverty level. States were given the “choice” to comply with the expansion or forfeit the entirety of their federal Medicaid funding. The Court called that not-mild encouragement but “a gun to the head.” Ultimately, the individual mandate was upheld, but the states were allowed to opt out and keep their original levels of funding.

Excerpted from the book Municipal Law Deskbook (Chapter 1). ©2015 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.