Rowe v. N.H. Motor Transp. Ass'n (06-457)

Oral argument: Nov. 28, 2007

Appealed from: United States Court of Appeals, First Circuit (May 19, 2006)

CARRIER, TOBACCO, PREEMPTION, POLICE POWER, FREIGHT, FEDERAL AVIATION ADMINISTRATION AUTHORIZATION ACT

Under Maine law, mail-order tobacco product retailers must require their delivery service to verify that the purchaser is not a minor. Delivery services are deemed to know that a package contains tobacco products under certain circumstances. The New Hampshire Motor Transport Association, together with other trade associations representing air and motor carriers of property ("Associations"), have challenged these provisions, arguing that they impinge upon exclusive federal authority over carriers under the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"). The Attorney General of Maine, G. Steven Rowe ("Attorney General"), responds that Congress did not intend the FAAAA to limit state public health regulations such as tobacco controls. The Court of Appeals for the First Circuit agreed with the Associations and invalidated Maine's law. The Supreme Court's holding in this case likely will clarify the line between federal authority over carriers and state authority over public health matters. If the Attorney General prevails, Maine will be able to continue its strategy of controlling mail-order sales of tobacco products by regulating tobacco product transportation. On the other hand, a victory for the Associations would protect carriers from the potentially costly threat of inconsistent state laws. The health of the economically crucial package carrier industry and the health of minors exposed to tobacco products lie in the balance.

Questions presented

1. Whether the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"), 49 U.S.C. §14501(c)(1) and 41713(b)(4)(A), preempts states from exercising their historic public health police powers to regulate carriers that deliver contraband such as tobacco and other dangerous substances to children.

2. Whether the FAAAA preempts states from exercising their historic public health police powers to require shippers of contraband such as tobacco and other dangerous substances to utilize a carrier that provides age verification and signature services to ensure that such substances are not delivered to children.

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Issues

1. Does the Federal Aviation Administration Authorization Act of 1994 ("FAAAA") prevent states from regulating commercial tobacco product transportation?

2. Does the FAAAA prevent states from requiring shippers of tobacco to require their carrier to ensure that the addressee is old enough to purchase tobacco products?

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Facts

In 2003, Maine adopted a law regulating the shipping and delivery of mail-order tobacco products. See N.H. Motor Transp. Ass'n v. Rowe, 448 F.3d 66, 69-70 (1st Cir. 2006) (describing "An Act to Regulate the Sale of Tobacco Products and to Prevent the Sale of Cigarettes to Minors," codified as Me. Rev. Stat. Ann. tit. 22, §§ 1551, 1555-C, 1555-D (2007)). This law applied to both retail sellers and delivery carriers. See 22 M.R.S.A. §§ 1555-C (regulating sellers), 1555-D (regulating delivery carriers). The purpose of these restrictions was to restore tax revenues lost to unlicensed mail-order sellers and to prevent illegal mail-order sales of tobacco to minors. See Rowe, 448 F.3d at 69.

Pursuant to § 1555-C(3)(C), Maine-licensed mail-order tobacco product retailers must require their delivery service to ensure that the addressee of the package containing the tobacco products is the purchaser and that the addressee is old enough to legally purchase tobacco products. See Rowe, 448 F.3d at 70. Under § 1555-D, delivery services may not knowingly deliver tobacco products purchased from an unlicensed retailer. Id. In addition, § 1555-D provides that delivery services are "deemed to know" that a package contains tobacco products if the package has markings to that effect or the shipper is on an official list of unlicensed tobacco retailers. Id.

The New Hampshire Motor Transport Association, Massachusetts Motor Transportation Assocation, Inc., and Vermont Truck & Bus Association, Inc. ("Associations") are trade associations representing air and motor carriers of property. Rowe, 448 F.3d at 69. The Associations object to the effect Maine's tobacco shipping and delivery regulations have had on their members' operations. See Brief for Respondents at 7-13. Alleging that the Federal Aviation Administration Authorization Act of 1994 ("FAAAA") preempts Maine's restrictions, the Associations brought a civil action in the United States District Court for the District of Maine against G. Steven Rowe in his official capacity as the Attorney General of Maine. See Rowe, 448 F.3d at 66, 69. The Associations sought a declaratory judgment that Maine's restrictions are invalid, as well as a permanent injunction barring Maine from enforcing them. N.H. Motor Transp. Ass'n v. Rowe, 377 F.Supp.2d 197, 200 (D. Me. 2005).

The district court granted partial summary judgment for the Associations, holding that the FAAAA preempts § 1555-C(3)(C) and § 1555-D. Rowe, 377 F.Supp.2d at 219-220. The Attorney General appealed to the United States Court of Appeals for the First Circuit. Rowe, 448 F.3d at 69. The First Circuit found that § 1555-C(3)(C) contains an explicit reference to carrier services, and that the portion of § 1555-D imputing knowledge that certain packages contain tobacco products significantly affects carrier services. Id. at 79-83. Therefore, according to the First Circuit, the FAAAA preempts these provisions. Id. The Attorney General appealed this decision to the Supreme Court by petitioning for a writ of certiorari, which the Court granted on ­­June 25, 2007. Brief for Petitioner at 1.

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Discussion

In this case, the Supreme Court will address a seemingly unlikely intersection between state tobacco regulations and the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"). The federal government encourages states to exercise their regulatory authority over tobacco products. See Brief for Petitioner at 3-4. However, the FAAAA limits state regulation of air and motor carriers. See Brief for Respondents at 3-5. Maine's law governing the shipment and delivery of mail-ordered tobacco products affects carrier operations. See N.H. Motor Transp. Ass'n v. Rowe, 448 F.3d 66, 69-70 (1st Cir. 2006). The Court's ruling will likely clarify the FAAAA's scope and determine whether Maine's law and other similar state regulations must yield to exclusive federal authority.

Arguments

The Attorney General of Maine, G. Steven Rowe, claims that the FAAAA does not preempt state public health laws. Brief for Petitioner at 30-34. The Attorney General argues that the Court should interpret the FAAAA's preemption provision in accordance with Congress's overall purpose. Id. at 22-26. Congress's purpose, according to the Attorney General, was to preempt state economic regulation of carriers, not state regulations governing dangerous substances, such as tobacco. Id. at 30-34. Maine's law, the Attorney General argues, is not an economic regulation: Maine enacted the law to protect minors from tobacco. Id. at 7-8. Therefore, according to the Attorney General, preemption of Maine's law would not further the purposes of the FAAAA. Id. at 36.

The New Hampshire Motor Transport Association, Massachusetts Motor Transportation Assocation, Inc., and Vermont Truck & Bus Association, Inc. ("Associations") counter that Maine's law falls within the plain meaning of the FAAAA's preemption provision. Brief for Respondents at 21-22. The Associations argue that Congress mandated an expansive interpretation of the FAAAA's preemption provision by approvingly referring to Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992), a Supreme Court case broadly construing identical language. Brief for Respondents at 26. Moreover, according to the Associations, Congress intended to prevent states from enacting a "patchwork" of potentially inconsistent regulations affecting carriers. Id. at 3-4. The Associations argue Maine's law governing tobacco product delivery frustrates this Congressional purpose. See id. at 30-34.

Implications of Possible Outcomes

The Attorney General frames this case as a challenge to Maine's ability to protect minors from tobacco. See Brief for Petitioner at 2-4. Tobacco is particularly harmful to young smokers and each day nearly 1500 minors in the United States become frequent smokers. See Am. Lung Ass'n Report, http://lungaction.org/reports/key505.html. In 2005, the American Lung Association ranked Maine third for tobacco control (amongst the 50 United States, the District of Columbia and Puerto Rico), and gave Maine an "A" grade for "youth access" restrictions. See Am. Lung Ass'n State Rankings, http://lungaction.org/reports/rank-states05.html. The Associations respond that protection of minors is merely Maine's post-hoc justification for a law intended to protect its tobacco tax revenues, and that Maine can control tobacco in other ways. See Brief for Respondents at 38-45.

The package carrier industry transports billions of packages each year, with a combined value in excess of $6 trillion. Brief for Respondents at 1. A victory for the Associations would secure a largely uniform national regulatory environment for this economically important industry. See id. at 1, 35-36. Carriers would not need to examine packages for compliance with varied state rules. See id. at 2. This would benefit carriers and consumers by facilitating timely deliveries and minimizing costs. See id. at 2, 40-41. States would lose some tobacco control tools, but still could forbid knowing delivery of contraband. Id. at 43-44. States also would retain their ability to regulate buyers and sellers of tobacco products. Id.

On the other hand, if the Attorney General prevails, states could continue to attack illicit mail-order tobacco product sales by regulating transportation. See Brief for Petitioner at 6-9. Such regulations may not unreasonably burden carriers. Id. at 12. UPS delivers approximately 65,000 packages per day in Maine, but identified only 33 packages as potentially containing tobacco products during a five-month period. Id. The Associations note that in order to find those 33 packages, UPS had to examine each package it delivered, specially. Brief for Respondents at 30. However, large carriers like UPS employ advanced computer systems that could easily screen packages. See Brief for Petitioner at 12-13, 49.

Federal Express and the Air Transport Association point out that the result in this case likely will affect later interpretations of the identically-worded Airline Deregulation Act ("ADA"). See Brief of Fed. Express Corp. and the Air Transp. Ass'n. of Am., Inc. as Amici Curiae in Support of Respondents at 5. A narrow interpretation of the ADA could expose air carriers (including passenger airlines) to a variety of inconsistent state laws, obstructing their operations and increasing costs. See id. at 14-20.

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Analysis

Statutory Background

The Federal Aviation Administration Authorization Act of 1994 ("FAAAA"), Pub. L. No. 103-305, § 601, 108 Stat. 1569 (1994) limits state regulatory authority over air and motor carriers. See City of Columbus v. Ours Garage and Wrecker Serv., Inc., 536 U.S. 424, 429 (2002). The FAAAA provides in part that: "a State . . . may not enact or enforce a 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) (2007). It further provides that: "a State . . . may not enact or enforce a law . . . related to a price, route, or service of an air carrier . . . transporting property . . . ." 49 U.S.C. § 41713(b)(4)(A) (2007). These provisions preempt any contrary state laws. See Ours Garage, 536 U.S. at 429.

Maine restricts the shipment and delivery of tobacco products in accordance with "An Act to Regulate the Sale of Tobacco Products and to Prevent the Sale of Cigarettes to Minors" ("Tobacco Delivery Law"), codified as Me. Rev. Stat. Ann. tit. 22, §§ 1551, 1555-C, and 1555-D (2007). See N.H. Motor Transp. Ass'n v. Rowe, 448 F.3d 66, 69-71 (1st Cir. 2006). Pursuant to § 1555-C(1), retailers seeking to ship tobacco products to Maine customers must first obtain a Maine license. 22 Me. Rev. Stat. Ann. § 1555-C(1). Under § 1555-C(3)(C) retailers also must require their delivery service to obtain the addressee's signature upon delivery, confirm that the addressee is the purchaser, and verify that the addressee may purchase tobacco products legally. See Rowe, 448 F.3d 66, 69-70 (1st Cir. 2006). Under § 1555-D, delivery services may not knowingly deliver tobacco products shipped by an unlicensed retailer. Rowe, 448 F.3d at 69-70. Delivery services are "deemed to know" that a package contains tobacco products if the package is marked anywhere other than the side opposite the label as containing tobacco products, or if the shipper is listed on a Maine-supplied list of unlicensed retailers. Id. In this case, the Supreme Court will consider whether the FAAAA preempts § 1555-C(3)(C) and the portion of § 1555-D providing that Maine will deem carriers to know that a package contains tobacco under certain circumstances.

Does the FAAAA Preempt State Health and Safety Regulations?

G. Steven Rowe, the Attorney General of Maine, argues that the FAAAA does not limit states' power to enforce health and safety laws. Brief for Petitioner at 32-34. The Attorney General notes that all state laws regulating the transportation of contraband (wild animals, explosives, illegal narcotics, etc.) are literally "related to" carrier services. Id. at 22-23, 23 n.36. However, the Attorney General argues that the Supreme Court should not construe the FAAAA literally. Id. at 22-23. In Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992), the Supreme Court broadly construed identical language in the Airline Deregulation Act of 1978 ("ADA"), but suggested that the ADA might not preempt state laws governing airline involvement in gambling or obscenity. Brief for Petitioner at 27. In N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-56 (1995), the Supreme Court limited the reach of identical language in another federal statute to conform with the statute's objectives. Brief for Petitioner at 22. The Attorney General argues that the Court should apply a similar limited construction to the FAAAA. See id. at 23-30.

The New Hampshire Motor Transport Association, Massachusetts Motor Transportation Assocation, Inc., and Vermont Truck & Bus Association, Inc. ("Associations") respond that Congress intended the FAAAA to broadly preempt state laws affecting carriers. See Brief for Respondents at 21-22. The Associations focus on the plain language of the FAAAA, arguing that Congress dictated a broad scope of preemption by prohibiting "any" state law "related to" carriers. Id. at 22. According to the Associations, this language does not support any distinction between economic and non-economic regulations,. Id. Moreover, the Associations argue the legislative history of the FAAAA indicates that Congress approved of the Court's broad construction of identical statutory language in Morales. Brief for Respondents at 25-27. The Associations claim that Congress's approval of Morales renders later cases (such as Travelers) applying a narrower construction to other identically worded statues irrelevant. Brief for Respondents at 27.

Would Preemption of the Tobacco Delivery Law Serve the FAAAA's Objectives?

Congress's purpose in enacting the FAAAA, according to the Attorney General, was to prevent states from imposing economic regulations on carriers, particularly tariffs, price controls, commodity restrictions, and barriers to entry. Brief for Petitioner at 30-34. The Attorney General claims that Maine's Tobacco Delivery Law is a public health regulation, intended to keep tobacco products away from minors, not an economic regulation. See id. at 22, 24. Therefore, the Attorney General argues that Congress did not intend that the FAAAA would preempt it. See id. at 33-34.

The Associations disagree, arguing that Congress's purpose in enacting the FAAAA was to facilitate a free-flowing national transportation system. See Brief for Respondents at 41-42. According to the Associations, individual state restrictions on the transportation of certain goods, such as Maine's tobacco delivery law, thwart the Congressional objective by creating a "patchwork" regulatory environment that obstructs commerce. Id. at 35-36. The Associations also note that while the Attorney General has characterized the Tobacco Delivery Law as a public health regulation, it is equally a tax collection regulation, and thus economic in nature. See id. at 38.

Does § 1555-C(3)(C) Relate to Carrier Services?

The Associations argue that § 1555-C(3)(C) impermissibly "relates to" carrier services in two ways: first, it explicitly refers to carrier services, and second, it has a significant impact on carrier services. See Brief for Respondents at 29-30. The Attorney General frames his argument similarly, but argues that § 1555-C(3)(C) does neither. Brief for Petitioner at 42-46.

According to the Associations, § 1555-C(3)(C) refers to carrier services by requiring shippers to only use carriers providing certain services. Brief for Respondents at 29-30. The Attorney General responds that § 1555-C(3)(C) does not explicitly refer to carrier services because it governs to a broader category of delivery services. Brief for Petitioner at 42-43. For example, § 1555-C(3)(C) applies to a retailer hiring a bicycle service to deliver tobacco products, but a bicycle service does not meet the FAAAA definition of a carrier. Brief for Petitioner at 42-43.

The Associations contend that § 1555-C(3)(C) has a significant impact on carrier services because it prevents carriers from delivering tobacco products in Maine unless they implement addressee verification services. Brief for Respondents at 32-34. The Attorney General argues that § 1555-C(3)(C) does not have a substantial impact on carrier services because it does not affect the competitive balance between carriers, and carriers may freely chose whether or not to participate in the Maine tobacco product delivery market. Brief for Petitioner at 44-45.

Does § 1555-D Relate to Carrier Services?

According to the Associations, § 1555-D clearly refers to carrier services by deeming that carriers know packages contain tobacco products under certain circumstances. Brief for Respondents at 29. The Attorney General relies on his general argument, discussed above, that the FAAAA does not apply in this context. See Brief for Petitioner at 48.

The Associations argue § 1555-D has a significant impact on carrier services because it requires carriers to implement special and time-consuming procedures to detect packages containing tobacco products. Brief for Respondents at 30-32. In particular, according to the Associations, the procedures required to comply with § 1555-D depart from carriers' otherwise uniform national practices, delaying packages and increasing costs. Brief for Respondents at 30-32. The Attorney General argues any such effects to be minimal. See Brief for Petitioner at 48-50. The Attorney General indicates that UPS already specially processes packages containing firearms and alcohol in order to comply with state laws. Id. The Attorney General accordingly argues that the impact on carriers' operations is not substantial enough to warrant preemption of state laws such as § 1555-D that regulate dangerous substances. See Brief for Petitioner at 48-50.

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Conclusion

The Court's decision in this case likely will clarify the intersection between exclusive federal authority over carriers and states' traditional power to enact and enforce public health regulations. This is no abstract question because it affects the free flow of commerce on the one hand, and the health of potential underage tobacco users on the other. If the Associations prevail, carriers will enjoy a relatively uniform national regulatory environment, but states will have to find other ways to attack the massive public health problem of youth smoking. If the Attorney General prevails, states will retain a useful tool supporting their efforts to collect tobacco taxes and keep tobacco away from minors, but carriers could face a new set of burdensome state regulations each time they cross a state boundary. Either result will likely inform future interpretations of the Airline Deregulation Act, setting the bounds of state authority over passenger airlines.

Authors

Prepared by: Bryan Hall

Edited by: Ferve Ozturk

Additional Sources

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