Argument recap: Rowe v. NH Motor Transport

The opening moments of the oral argument for petitioner covered familiar ground from the briefs—the argument that one section of the Maine law regulates only retailers, and is thus only indirectly related to carrier services; congressional intent with regard to Morales and broad preemption; the significance of the lack of economic motivation for a regulation versus the regulation’s economic effects; and the Synar Amendment.

The discussion then turned to shipping options available through the U.S. Postal Service, which – for less than five dollars – already offers an addressee-verification service similar to that prescribed by the Maine law. The Post Office does not provide an age verification option (although UPS does). Petitioner’s counsel conceded that the state’s inability to enforce the statute against the Postal Service thus creates a loophole for illegal tobacco shipment that can be closed only by congressional action.

In response to a question from Justice Alito about the patchwork effect of state regulations, petitioner’s counsel responded that respondents concede that complete uniformity is impossible, because states do have the authority to ban the knowing delivery of tobacco to minors.

Counsel briefly discussed the fact that under the terms of a New York settlement, carriers nationwide have already agreed not to ship cigarettes to consumers. The settlement does not cover other tobacco products, and could not be enforced by the state of Maine.

Justice Scalia noted that respondents are challenging a provision of the Maine law that would impute to the carrier knowledge of the illicit nature of a tobacco shipment if the shipper is on a list of unlicensed tobacco retailers. Petitioner’s counsel argued that imputing such knowledge is the only effective way to enforce a ban on deliveries from unlicensed retailers. Justice Breyer responded that Congress could take action, but “if every State does it differently, it’s going to be a nightmare.” He proposed a series of hypothetical regulations, which Petitioner’s counsel distinguished from the Maine law by arguing that a ban on the sale of tobacco without age verification was on the books in Maine prior to the FAAAA and there is no evidence that Congress intended to preempt it.

Justice Stevens asked about Maine’s regulations concerning other items, such as firearms, poisonous substances, and alcohol. Petitioner’s counsel said that Maine does not regulate the shipment of some of these, although it does regulate the shipment of game. Petitioner’s counsel argued that the federal government regulates some dangerous items, like fireworks, with a uniform scheme, but leaves others to the states. He closed by arguing that it would be an absurd result to construe the FAAAA so as to create a “regulatory void” in which the states cannot control tobacco shipments to minors.

Launching her argument on behalf of respondents, counsel immediately established her theme: the burden of a patchwork of non-uniform state regulations would frustrate the purpose of the FAAAA. Justice Ginsburg asked about the burdens imposed by state regulation of alcohol shipments, which is permitted by the Twenty-First Amendment, because carriers are successfully complying with those. Respondents’ counsel argued that Congress intended the FAAAA to foster services responsive to market forces, not to state dictates. In this case, the Maine law would require a new service—a particular form of combined addressee and age verification—that is not already present in the marketplace. In response to a question from Justice Stevens about the hypothetical entrance of a new carrier offering the service, counsel contended that this would be driven by regulation, not pure market competition.

Respondents’ counsel returned to the burden of the Maine law, claiming that reengineering systems to handle the necessary information would take a year and a half. Moreover, every one of 16 million packages delivered in Maine each year would need to be examined for the shipper identification, to avoid delivering tobacco products from an unlicensed retailer. Counsel claimed that this costs $2 per package.

Justice Kennedy questioned respondents’ concession that Maine could prohibit knowing delivery of tobacco from unlicensed retailers. Why was forbidding delivery with actual knowledge not also preempted under respondents’ theory? Counsel answered that such a prohibition would not require any change in services, whereas the imputation of knowledge would force significant changes in the carrier’s procedures for processing packages, since loaders do not currently look for the identity of the shipper when handling boxes.

Justice Scalia was also concerned with why Maine is not preempted from prohibiting knowing delivery of tobacco, since there is the potential for significant non-uniformity under that approach as well. Respondents’ counsel noted that the court below had held that this provision was not preempted, and petitioner had not asked the Supreme Court to review that decision.

Respondents’ counsel closed with a recap of several points from their brief—that there is no health and safety exemption in the FAAAA; that Congress had endorsed the broad preemption of Morales; and that regulating carriers indirectly through regulating retailers falls within the scope of the FAAAA.

The Assistant SG began by arguing that Congress had rejected an alternate version of the FAAAA that had only preempted economic regulation, indicating that Congress intended to broadly preempt even health and safety regulation by the states.

Justice Alito asked if a carrier could “un-preempt” the law by deciding to offer the service on its own. The Assistant SG answered that if a service is widely available, the analysis of the Maine law would be different because Morales asks if the law has a “significant effect.” However, if the service were widely available only in response to the law, that would not count.

Justice Kennedy then raised the New York settlement. Chief Justice Roberts pressed the Assistant SG for an opinion on whether the underlying New York law is also preempted. The Assistant SG suggested that it was not, because it is a law of general applicability which does not require any change in the carrier’s practices. He contrasted this with the imputed knowledge provision of the Maine law, which forces the carriers to pay attention to the identity of the shipper. Justice Ginsburg noted that carriers already have to look for labeling of hazardous substances, but he countered that the handlers are trained to scan for that uniform symbol. Because the carriers ship packages originally submitted through third-party stores such as Staples, the carriers do not currently process information regarding the identity of every shipper.

Rebuttal began with petitioner’s counsel reminding the Court that UPS has a powerful computer system which can keep track of a multitude of things. He also corrected the claim by respondents’ counsel that screening packages for unlicensed tobacco shipments cost $2 for every package delivered in Maine, arguing that this was the cost only for handling those packages which had actually been intercepted and there had only been 33 such packages. Instead, he explained, the cost per package for screening is actually only one cent. Justice Scalia interjected that it would be 50 cents, if each state required different screening, but counsel countered that the screening would only be done once per package.

In response to a question from Justice Souter, petitioner’s counsel said that the screening consists of a human being reading the address label and recognizing a name containing a word such as “tobacco” or “smokes.” Justice Souter pointed out that if an unlicensed retailer did not have an obvious name, the company could only protect itself from liability by having an automated process to compare the name of a shipper against the state list.