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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 1996 Decided August 27, 1996

No. 95-5175

COMMONWEALTH OF MASSACHUSETTS,

APPELLANT

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 93cv01581)

Douglas H. Wilkins argued the cause and filed the briefs for appellant. William L. Pardee entered

an appearance.

Sushma Soni, Attorney, United States Department of Justice, argued the cause for appellee, with

whom Frank W. Hunger, Assistant Attorney General, Mark B. Stern, Attorney, Eric H. Holder, Jr.,

United States Attorney, Paul M. Geier, Assistant General Counsel, United States Department of

Transportation, and Peter J. Plocki, Attorney, were on the brief.

Daniel R. Barney, Robert Digges, Jr., and Roy T. Englert, Jr. were on the brief for amicus curiae.

Before: SENTELLE, RANDOLPH, and ROGERS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Concurring opinion filed by Circuit Judge ROGERS.

SENTELLE, Circuit Judge: The Commonwealth of Massachusetts ("Commonwealth" or

"Massachusetts") appeals a District Court's dismissal of its action seeking judicial review of a

declaration bythe Department ofTransportation("DOT")that aMassachusettslicensing requirement

was preempted bythe Hazardous MaterialsTransportationAct ("HMTA"). DOT had found the state

licensing rule, which required hazardous-waste carriers to post at least a $10,000 bond before they

might pick up or drop off hazardous waste in the Commonwealth, preempted according to itsreading

of HMTA's general preemption provision codified at 49 U.S.C. § 5125(a)(2). The District Court

accepted DOT's reasoning that the requirement was preempted because it ran contrary to HMTA's

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goal of more uniform hazardous-waste regulation.

We disagree. Even if we accord DOT's interpretation of HMTA's preemption provision

Chevron deference, we cannot conclude that any permissible reading of HMTA authorizes

preemption of the Commonwealth's requirement. We thus reverse the District Court.

BACKGROUND

In1975,Congress enacted the HazardousMaterialsTransportationAct inaneffort to develop

a national regulatory scheme for the transportation of hazardous substances. See New Hampshire

Motor Transp. Ass'n v. Flynn, 751 F.2d 43, 46 (1st Cir. 1984). Although HMTA, as further amended

in 1990 and as restructured in 1994, established some uniform standards in the interstate

transportation of hazardous materials, the Act does not, by its terms, exclude all state participation

in the regulation of hazardous waste being carried within that state's borders. 49 U.S.C. §§ 5101-

5127; see also New Hampshire Motor Transp. Ass'n, 751 F.2d at 46 (noting that HMTA's original

preemption provision did not uniformly"forbid statesto regulate"). Instead, HMTA, as now written,

has two separate provisions that suggest the role the states may play in promulgating and enforcing

their own hazardous-waste regulations.

In one, 49 U.S.C. § 5119, the statute prescribes a "working group of State and local

government officials" to help the Secretary of Transportation ("Secretary") devise "uniform forms

and procedures" by which all states will "register persons that transport ... hazardous material by

motor vehicle in the State" and "allow the transportation of hazardous material in the State." Id. §

5119(a). That section then orders the Secretary to "prescribe regulations to carry out the

recommendations contained in the report submitted" by the working group. Id. § 5119(c)(1). None

of these § 5119 regulations, however, may take effect until "at least 26 States adopt all of the

recommendations of the report." Id. Once such a state-endorsed, but federally promulgated,

regulation takes effect, HMTA allows an individualstate to "establish, maintain, or enforce [its own]

requirement related to the same subject matter only if the requirement isthe same asthe [Secretary's]

regulation." Id. § 5119(c)(2) (emphasis added).

The second provision of HMTA that explicitly addresses preemption has a less clear scope.

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That section, 49 U.S.C. § 5125, generally preempts any state or local requirement that makes

simultaneous compliance with HMTA and the state's regulation "not possible;" id. § 5125(a)(1); or

"as applied or enforced, is an obstacle to accomplishing and carrying out this chapter or a regulation

prescribed under this chapter." Id. § 5125(a)(2). The section also addresses a number of other

preemption issues, including specific types ofstate regulation that are automaticallypreempted ifthey

are not "substantivelythe same" asthe corresponding federalrequirements, id. § 5125(b), preemption

waivers, id. § 5125(e), and judicial review of preemption decisions by the Secretary, id. § 5125(f).

Neither this nor any other section of HMTA, however, explicitly addresses whether and how a state

may require a waste transporter to post a bond against which the state may withdraw the amount of

any fines incurred by the transporter for proven violations of the state's waste-transport rules.

Likewise, DOT has not promulgated regulations as to the extent or manner of such state bonding

requirements.

In the absence of federal action in this area of bonding requirements, a number of states,

including Massachusetts, promulgated their own rules. Massachusetts established a bonding

requirement that applies only to transporters of hazardous wastes who wish to pick up waste from

or drop off waste at a location in Massachusetts. See 310 CMR 30.401(4). The regulation requires

that a waste transporter, before it may obtain a license allowing such collection or disposal, must

submit a bond of at least $10,000 in order to "assure that [it] shall faithfully perform all of the

requirements" of its license and of the laws and regulations of Massachusetts. 310 CMR 30.411(3).

If, at some later time, the transporter does not promptly remedy some established violation of

Massachusetts's rules, the Commonwealth may seize part or all of the bond as payment of an

appropriate civil penalty. See id. 30.411(8). Because this bond provides a surety only for the

Commonwealth, and is not a general fund against which other parties may seek indemnity for their

claims against the transporter, the bonding requirement is distinct from other forms of liability

insurance requirements, which Massachusetts governsthrough a separate regulation. See 310 CMR

30.410.

On July 17, 1991, the National Solid Wastes Management Association challenged

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Massachusetts's bonding requirement, as well as those promulgated by Maryland and Pennsylvania,

as preempted. Although neither HMTA nor DOT had spoken to such bonding requirements, the

Research and Special Programs Administration, which is the body responsible for DOT's initial

determination asto whether HMTA preempts a state regulation, nonetheless determined that HMTA

preempted all three rules because the rules "create[d] an obstacle to the accomplishment and

execution of ... HMTA" under what was then 49 App. U.S.C. § 1811(a)(2) (now codified at 49

U.S.C. § 5125(a)(2)). Application by National Solid Wastes Management Association for a

Preemption Determination Concerning Maryland, Massachusetts, and Pennsylvania Bonding

Requirements for Vehicles Carrying Hazardous Wastes, 57 Fed. Reg. 58848, 58855 (1992).

Massachusetts and Pennsylvania moved for reconsideration and, after DOT denied their requests,

sought review by the District Court. Although the District Court agreed with the plaintiffs that it

should not defer to an agency's decision on preemption matters, it nonetheless dismissed their claim

because the state rules frustrated HMTA's general goal of uniform waste regulation and therefore

were preempted. Massachusetts appealed this decision on June 1, 1995. With our approval, the

Association of Waste Hazardous Material Transporters ("AWHMT") also entered the litigation as

an amicus in support of DOT.

DISCUSSION

We need not determine whether an agency's interpretation of a statute on the preemption

question issubject to Chevron analysisin order to decide this case, asthe agency's determination here

cannot be upheld with or without deference. See Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842-45 (1984). Under Chevron, "judicial review of an agency's

interpretation of a statute under its administration is limited to a two-step inquiry." Nuclear Info.

Resource Serv. v. NRC, 969 F.2d 1169, 1173 (D.C. Cir. 1992) (in banc). In the first step, the court

analyzeswhetherit may, "employing traditionaltools ofstatutoryconstruction," clearlyascertainhow

Congressintended the statute to apply to the facts before the tribunal. Chevron, 467 U.S. at 843 n.9.

If the court can affirmatively locate such a clear meaning, it should declare that meaning and reject

any "administrative constructions ... contrary to [this] clear congressional intent" because the

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judiciary, not the agency, "is the final authority on issues ofstatutory construction." Id. If the court

cannot determine such a clear intent, it then proceeds to the second step of Chevron.

In thissecond step, a court must determine whether the agency'sinterpretation is a reasonable

resolution ofwhatever ambiguityprecluded a clear declaration of congressionalintent in the firststep.

See Hazardous Waste Treatment Council v. EPA, 886 F.2d 355, 362 (D.C. Cir. 1989) (per curiam),

cert. denied, 498 U.S. 849 (1990). This second inquiry is thus not independent of the first: what a

court may consider a reasonable interpretation largely depends on the nature and extent of the

ambiguity already identified in Chevron's first step. See, e.g., Abbott Labs. v. Young, 920 F.2d 984,

988 (D.C. Cir. 1990), cert. denied, 502 U.S. 819 (1991); State of Ohio v. Department of the

Interior, 880 F.2d 432, 446 (D.C. Cir. 1989) (deciding whether parties have advanced ambiguities

"sufficient to permit" theirreadings); Continental Air Lines, Inc. v. Department of Transp., 843 F.2d

1444, 1450 (D.C. Cir. 1988) (finding agency reading to be the "more natural of the competing

interpretations" advanced in the first step of the Chevron inquiry and thus holding it reasonable).

Because the range of permissible interpretations of a statute is limited by the extent of its ambiguity,

an agency cannot exploit some minor unclarity to put forth a reading that diverges from any realistic

meaning of the statute lest the agency's action be held unreasonable. See, e.g., Natural Resources

Defense Council, Inc. v. Reilly, 976 F.2d 36, 44 (D.C. Cir. 1992) (Silberman, J., concurring).

Of course, what may be thought ambiguous in the first step of Chevron (and thus what may

define a reasonable interpretation in step two) depends on the issue in question. Even a bona fide

ambiguitya point sufficiently unclear that the court cannot affirmatively declare what Congress

intended the statute to meanmay be unclear in only one direction: for example, a court may not

be able to say how Congressintended to regulate particularspeech based only on the text and context

ofthe statute, but the court may stillreject as unreasonable an agency interpretation ofthe statute that

would result in a ban of all such speech, in light of well- established understandings of the First

Amendment. In such cases, traditional presumptions about the parties or the topic in dispute may

limit the breadth of ambiguity and thus affect both the first and second steps of Chevron. In Native

American law, for example, statutes must be "construed liberally in favor of the Indians, with

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ambiguous provisions interpreted to their benefit." Muscogee (Creek) Nation v. Hodel, 851 F.2d

1439, 1444-45 (D.C. Cir. 1988) (quoting Montana v. Blackfeet Tribe, 471 U.S. 759, 766 (1985)),

cert. denied, 488 U.S. 1010 (1989). As a result of this presumption, we have rejected agency

interpretations of statutes that may have been reasonable in other contexts because the agency

interpretationwould not favor the Indians. See id., 851 F.2d at 1445-46. Other time-honored canons

of construction may similarly constrain the possible number ofreasonable waysto read an ambiguity

in a statute, though the application ofthe canon alone may not suffice to make the intent ofthe statute

sufficiently clear for the court to pronounce what Congress intended.

In light of these considerations, and as we review a district court decision to dismiss de novo,

see Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994), we must reverse

the District Court in this case. Although the District Court properly identified the issueswhether

itshould reviewDOT's determinationthat HMTApreempted the Massachusetts bonding requirement

according to the deferentialprinciples ofChevron and whether the agency'sregulation was ultimately

acceptablepertinent to a decision in this matter, we disagree with its result. Even if we review the

agency'sinterpretationofHMTA's preemption provisions deferentially under Chevron, we stillcannot

conclude that its interpretation is a permissible reading of the statute in light of the strong

presumption against federal preemption in matters traditionally regulated by the state.

Neither the Supreme Court nor this one has ever definitively decided whether an agency's

determinationthat an explicit preemption provision in a statute it administers blockssome state action

is reviewed according to Chevron. See, e.g., Illinois Commerce Comm'n v. ICC, 879 F.2d 917, 921

(D.C. Cir. 1989) (recognizing that the question of whether courts should extend Chevron deference

to an agency's interpretation of an explicit preemption provision remains open); City of New York

v. FCC, 814 F.2d 720, 725-26 (D.C. Cir. 1987) (expressly not deciding whether an agency received

Chevron deference for its interpretation of a new statutory provision that may or may not have

terminated the agency's prior practice of preemption), aff'd, 486 U.S. 57, 64, 67 (1988) (cautioning

that courts should not disturb the reasonable accommodation of conflicting policies by an agency

administering the statute without ever explicitly referencing Chevron); cf. Smiley v. Citibank (South

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Dakota), N.A., 116 S. Ct. 1730, 1735 (1996) (expressly not deciding the question of whether a court

should defer to an agency's interpretation that a statutory provision, which does not explicitly

authorize preemption, nonetheless preempts some state rule).

We thus assume, without deciding, that the principles of Chevron encompass an agency's

interpretation of an explicit preemption provision, and proceed to examine DOT's application of

HMTA's preemption clauses to Massachusetts's rule. DOT claims that any state rule of the sort

promulgated byMassachusetts poses "anobstacle" to accomplishingHMTA's generalgoalofuniform

waste regulation under 49 U.S.C. § 5125(a)(2). It further contends that, in contrast to a traditional

narrow reading of preemption clauses,seeCommonwealth Edison v. Montana, 453 U.S. 609, 633-34

(1981), the test that was codified in § 5125 had been long understood to preempt even state rulesthat

simply interfered with a goal of federal hazardous-waste regulation. See, e.g., Harmon, 951 F.2d at

1580. Having thus established some support for its reading of the statute, DOT largely relies on

deference to carry the day.

It does not. DOT's interpretation of HMTA, while perhaps not conclusively forbidden by the

statute itself, could not be deemed reasonable in light of the text and structure of §§ 5119 and 5125

as well as the traditional presumption against the federal preemption of state rules in areas of

traditional state regulation. See, e.g., Hawaiian Airlines, Inc. v. Norris, 114 S. Ct. 2239, 2243

(1994); Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518 (1992). As the regulation of how waste

may be picked up or dropped off in a state must be thought an area of traditional state control, see,

e.g., National Solid Wastes Management Ass'n v. Killian, 918 F.2d 671, 676 (7th Cir. 1990)

(observing that "[e]nvironmental regulation has long been recognized as an "historic police power[

] of the States,' " (quoting Huron Cement Co. v. City of Detroit, 362 U.S. 440, 442 (1960)), aff'd,

505 U.S. 88 (1992); In re Quanta Resources Corp., 739 F.2d 912, 913-21 (3d Cir. 1984) (viewing

disposal of wastes in a state as primarily a matter of concern for that state), aff'd, 474 U.S. 494

(1986), even if we defer, we cannot conclude that a reading of § 5125 that could easily preclude

most, if not all,such localregulation in the name of uniformity reasonably resolves any ambiguity that

might lurk in the statute.

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1. Chevron: Step One

In fact, we would be almost compelled to reject DOT's reading of § 5125(a)(2) at the first

step of Chevron's analysis. Although the text of the provisionwhich precludes any "obstacle to

accomplishing and carrying out [HMTA] or a regulation prescribed under [HMTA]"does not

clearly define its scope, see id., substantial evidence elsewhere in § 5125 and throughout HMTA,

especiallywhen read in light of "traditionaltools ofstatutory construction," Chevron, 467 U.S. at 843

n.9,suggeststhat the clear intent of the section wasto preempt only state rulesin explicitly described

categories,state rules with which a party cannot comply if it complies with HMTA, orstate rulesthat

otherwise pose an obstacle to fulfilling explicit provisions, not general policies, of HMTA.

An examination of § 5125 itself demonstrates that the provision's obstacle test likely did not

intend to preempt with a broad brush. That provision expressly identifies five types of state

regulation regarding the actual transportation of hazardous wastes that would be preempted by

HMTA, unless the state's version was "substantively the same" as a federal provision. 49 U.S.C. §

5125(b)(1). The section goes on to permit states to impose their own fees "related to transporting

hazardous material," but only "if the fee is fair and used for a purpose related to transporting

hazardous material." Id. § 5125(g)(1). Both the explicit prohibition of certain state packaging,

documentation and classification rules and the explicit regulation ofstate fee rules directly contradict

DOT's claim that HMTA's general goal of uniformity automatically precludes all state rules, like

bonding requirements, that might affect interstate commerce and might vary from state to state. Cf.

Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 99-101 (1992) (noting that one

provision of a statute should not be interpreted in a way inconsistent with the necessary implications

of another).

Additionalelements of the statutoryscheme also counsel against the expansive reading offered

by DOT. Section 5119, the other preemption provision of HMTA, does not permit DOT to override

state procedures for the "transportation of hazardous material" in a state until 26 states approve the

recommendations of a working group regarding such regulations. 49 U.S.C. §§ 5119(a)(1)(B) & (c).

To read, as DOT suggests, § 5125 to allow DOT to preempt a state bonding requirement for

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transporters picking up or dropping off waste in that state before 26 states approve the working

group'srecommendations would border on rendering § 5119 superfluous. Such a result runs contrary

to common sense and to established canons of statutory interpretation. See, e.g., Smith v. United

States, 508 U.S. 223, 233-34 (1993); Gade, 505 U.S. at 99-101; United Savings Ass'n v. Timbers

of Inwood Forest Assocs., 484 U.S. 365, 371 (1988); cf. Cipollone, 505 U.S. at 517-18 (refusing

to read a preemptive effect into "substantive" provisions of a statute when Congress had provided

an express preemption provision in that statute).

DOT's interpretation also runs afoul of another established canon of statutory construction:

the established presumption against preemption in matters of traditionalstate control. The Supreme

Court itself has demanded that courts "be reluctant to find pre-emption" in these matters, dictating

that "pre-emption will not lie unlessit is "the clear and manifest purpose of Congress,' " as evidenced

by the text and structure of the statute at issue. CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664

(1993) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). As the text and

structure of HMTA, including § 5125, hardly demonstrates that it is "the clear and manifest purpose

of Congress" to preempt state bonding requirementsthrough § 5125, the long-standing presumption

against preemption, reinforced by this precedent, would seem to demand that we reject an

interpretation that would preempt not only Massachusetts's rule, but virtually all other state

regulation.

Nonetheless, the fact that a number of circuits have held that the obstacle test in § 5125

precludes other types ofstate requirements, albeit requirementsthat were far more sweeping in scope

than the focused rule enacted by Massachusetts, suggests that the plain wording of the statute alone

may not clearly bar DOT's current reading. See, e.g., Chlorine Inst., Inc. v. California Highway

Patrol, 29 F.3d 495, 497-98 (9th Cir. 1994) (holding a series ofstate requirements, including escort

vehicles, special communications equipment, and self-contained breathing apparatus, before a party

may even transport certain chemicals through that state to be preempted); Northern States Power

Co. v. Prairie Island Mdewakanton Sioux Indian Community, 991 F.2d 458, 461-62 (8th Cir. 1993)

(holding a tribal scheme requiring every party who wished merely to transport radioactive waste

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across tribal land to obtain a separate license to be preempted); Harmon, 951 F.2d at 1580-82

(declaring requirements for a state permit, which a transporter had to obtain before it could even

transport nuclear waste through the state, to be preempted); but see Chlorine Inst., Inc., 29 F.3d at

498-99 (O'Scannlain, J., specially concurring) (demonstrating that, except for precedent, the state

requirement at issue in that case should not have been preempted). And despite CSX Transportation's

requirement that preemption must be a clear purpose of a statute before it may occur, we do not read

that case to imply that a court should automatically reject an agency's finding of preemption based

on a preemption statute on the first step of Chevron simply because the text of the statute does not

explicitly direct such preemption. This view conforms to the Court's language in City of New York,

which implied that a court should defer to an appropriate agency's interpretation of a preemption

statute according to the standards of Chevron. See 486 U.S. at 64. Even the CSX Transportation

Court examined several agency regulations for some "affirmative indication" that they intended to

preempt state rules on a particular subject, and that Court did not rule that the state regime escaped

preemption until this search discovered no such affirmative intent. 507 U.S. at 667-68. As the

Supreme Court in CSX Transportation did not rule against preemption until it had at least examined

whether the relevant agency had put forth a reasonable interpretation that would have commanded

preemption, we will do likewise.

2. Chevron: Step Two

Finally, even if we afford to the Department the deference it claims, and if we then pass the

first step of Chevron, we would still not hold the Department's interpretation reasonable. In light of

the powerful and well-established presumption against extending a preemption statute to matters not

clearly addressed in the statute in areas oftraditionalstate control, we cannot credit an interpretation

of an explicit preemption provision, such as the one of § 5125 offered by DOT, that would even

preclude a rule that only affects those parties who wish to load or unload such waste within a

particularstate, and maysweepinglypreclude state rulesinmanyareas of hazardous-waste regulation

within that state. We are particularly reluctant to accept such a reading of such a provision when its

implications would render superfluous at least two other segments of that provision's statutory

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schemein this case, the list of expressly preempted provisions in § 5125(b)(1) and the framework

established for making state rules consistent in § 5119(c).

Moreover, we cannot accept such a dubiously broad reading when the seeming goal of the

statute that the agency seeks to "accomplish[ ]" through preemption is not even clearly grounded in

that statute. 49 U.S.C. § 5125(a)(2). Although DOT alleges that it must preempt Massachusetts's

rule because HMTA, in its preamble, seeks a "greater uniformity" in waste regulation, see Northern

States PowerCo., 991 F.2d at 461 (quoting Hazardous Materials Transportation UniformSafetyAct

of 1990, Pub. L. No. 101-615, § 2, 104 Stat. 3244, 3245 (1990)), the limited goal of "greater

uniformity" is a far cryfromDOT'simplicit claimthat HMTA demands absolute uniformityinmatters

of bonding requirements. Such a claim lacks credibility in light of numerous indications to the

contrary in the statute itself. In particular, the presence of § 5119, which expressly established that

federal standards may not override state procedural requirements until 26 states approve the

recommendations of a working group on the subject, precludes any such expansive assessment of

HMTA's goals. As DOT's interpretation necessarily conflicts with other HMTA provisions and does

not preempt only those state rules essential to the "accomplishing" of HMTA, id. § 5125(a)(2), we

cannot conclude that its interpretation of § 5125 is reasonable.

CONCLUSION

DOT's interpretation is impermissible, even if measured against the deferential standard of

Chevron. See Illinois Commerce Comm'n, 879 F.2d at 921. Not only does HMTA not specify

absolute uniformity as its goal, neither § 5125 nor HMTA in general suggests that either preempts

all state bonding requirements regarding the pick up or drop off of hazardous wastes in that state

simply because they may preclude absolute uniformity. We therefore reverse the District Court.

ROGERS, Circuit Judge, concurring: I concur in the court's conclusion that the agency's

interpretation of the Hazardous Materials Transportation Act, 49 U.S.C. § 5125(a)(2) as

"demand[ing] absolute uniformity in matters of bonding requirements," Op. at 13, cannot be

reconciled with the statutory language or structure. Op. at 8-9. Resolution of this appeal requires

no more. Hence, the question of the proper standard of review of an agency's interpretation of an

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express preemption statute, see Smiley v. Citibank (South Dakota), N.A., 116 S. Ct. 1730, 1735

(1996) (distinguishing between an agency'sinterpretation of the substantive meaning of a statute and

the question of whether a statute is pre-emptive), remains open. See Op. at 7-8.

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