Tobacco case could limit state powers

Forty state laws regulating Internet sales of tobacco products – and many more governing the sale and shipment of dangerous products from explosives to wild animals – are at stake in a challenge to a Maine law that the U.S. Supreme Court heard Wednesday (Nov. 28).

Paul Stern, a Maine deputy attorney general, told the high court during the hearing that states had stepped in to regulate tobacco delivery to consumers because the federal government had not, leaving a “regulatory void.”

“Maybe Congress wanted a regulatory void,” interrupted Justice Antonin Scalia.

The case “poses a very, very serious question that goes far beyond this case, which is: To what extent can the states enact laws … to protect the health and safety of their population, especially children?” Laura Kaplan, a lawyer for the California attorney general’s office, said in a telephone interview.

California is one of 38 states, plus the District of Columbia and Puerto Rico, backing Maine’s position in the case, one of four cases now under high court review that raise the question of whether a state law is superseded by a federal one.

In a friend-of-the-court brief written by Kaplan, the states claim their “police powers” – that is, their ability to protect the public’s health, safety and general welfare – allow them to place restrictions on how tobacco is shipped and sold.

But delivery companies, like UPS and FedEx, say the regulations run afoul of federal law that puts the federal government in charge of package carriers.

Lawyers for the transport companies say the federal law is designed to avoid a situation where delivery services have to keep track of every state’s regulation for every type of potentially dangerous product.

“Forcing carriers to stop at each state’s border to determine whether and how they can provide their transportation and delivery services for particular goods would fundamentally, and impermissibly, disrupt the timely and cost-effective flow of packages to our businesses and homes,” they wrote in a brief for the high court.

Under the 2003 Maine law, tobacco retailers who sell their products online must register with the state, use only authorized carriers to deliver their goods and clearly mark packages containing tobacco.

The carriers, in turn, cannot accept tobacco shipments from unauthorized retailers. They must deliver the packages only to the intended recipients, collect a signature and verify the age of recipients if they appear to be under 27 years old, under the law.

The shipping companies say states can’t burden them with extra requirements on the services they provide, because the Federal Aviation Administration Authorization Act of 1994 (FAAAA) prohibits it. Congress passed the law to ensure that package companies had to obey the same laws, whether they moved their goods by ground or by air.

In the law, Congress specified that the FAAAA supersedes any state law dealing with the prices, routes or services of motor or air carriers.

A federal trial judge in Maine and a Boston-based federal appeals court both decided that the federal law trumps state police powers and declared Maine’s restrictions invalid.

Robert Diggs, a lawyer for the American Trucking Association, said a similar ruling by the Supreme Court could stop other indirect attempts to regulate trucking. For example, it could thwart attempts by ports in California to limit their business to “clean” companies with trucks that limit their emission, he said.

The U.S. Chamber of Commerce and the American Trucking Association, both backing the delivery companies in a friend-of-the-court brief, argue that laws like Maine’s would hamper the operations of delivery companies and the businesses that rely on them.

In fact, the groups, say laws that now apply chiefly to tobacco products could extend to the shipment of many other items that state lawmakers may deem hazardous, including soft drinks, junk food, cosmetic contact lenses, herbal remedies, diet aids, graphic magazines and violent video games.

But states question how hard it would be for carriers to comply. Kaplan noted, for example, that UPS already reached an agreement with New York state to stop shipping cigarettes to private individuals, to comply with the Empire State’s ban. The accord still allows retailers to receive shipments of cigarettes, though.

There’s also more at stake for states than just public safety. Controlling the distribution of cigarettes ensures that customers pay appropriate tobacco taxes, which takes on even more significance because so many states have been raising those taxes.

Payment of tobacco taxes is important both because states rely on the revenue for their budgets and because the steeper prices prevent underage smoking, Kaplan said.

She noted that the number of online tobacco vendors has jumped dramatically in recent years, from 88 in January 2000 to 772 in January 2006.

The high court has taken an unusually high number of cases that deal with federal preemption of state laws this term (which began in October), said Robin Conrad, executive vice-president of the National Chamber Litigation Center, the U.S. Chamber’s public interest law firm.

The justices agreed to hear Riegel v. Medtronic , a New York case that seeks to determine whether injured patients can sue medical device manufacturers using state law for malfunctions of equipment approved by the U.S. Food and Drug Administration. A third case called Warner Lambert Co. v. Kent , involves a Michigan law allowing suits against drug manufacturers who defraud the FDA.

A fourth case, Chamber of Commerce v. Brown , could jeopardize a California law that prohibits companies receiving state money from using those funds to influence union elections. Businesses claim the regulations run afoul of the federal National Labor Relations Act.

The justices are expected to rule on all of the cases by June. The tobacco case is Rowe v. New Hampshire Motor Transport , No. 06-457 .