William H. Rehnquist: We'll hear argument first this morning in Number 91-1326, the District of Columbia v. The Greater Washington Board of Trade. Ms. Murasky.
Donna M. Murasky: Mr. Chief Justice and may it please the Court: When State Workers Compensation laws were enacted beginning some 80 years ago, an active employee's compensation consisted principally if not exclusively of wages for hours worked. Times have changed. In recent years, an increasingly important component of an employee's compensation is comprised of benefits in lieu of higher wages, including health insurance benefits for employees and their families. In 1974, Congress recognized the importance of nonwage benefits when it enacted the Employee Retirement Income Security Act. In ERISA, Congress imposed a modest level of regulation on virtually all employers who provide nonwage benefits to employees, and it preempted State laws relating to such regulated plans. At the same time, however, Congress expressly declined to regulate employers insofar as they had benefit plans maintained solely to comply with State Workers Compensation unemployment compensation and disability insurance laws, and Congress allowed State regulation of such plans to continue. The issue in this case concerns the intersection of ERISA's preemption and Workers Compensation provisions. The case arises because the District of Columbia amended its Workers Compensation law in 1990 to take into account modern compensation practices by providing some level of protection to employees and their families against a loss of health insurance when employees are killed or injured on the job. The Equity Amendment Act requires all employers who provide health insurance benefits to their active workers to provide equivalent health insurance benefits for up to 52 weeks when their employees are eligible to receive Workers Compensation. The court below ruled that although ERISA permits the States to require health insurance as part of Workers Compensation, ERISA does not permit the States to regulate those benefits in the usual Workers Compensation way by pegging them to benefits employees receive as active workers. The District of Columbia believes that this decision is wrong. It believes that the traditional loss replacement method it has adopted for determining health insurance benefits in its Workers Compensation law no more implicates the concerns of ERISA than with the freestanding law that the court below correctly ruled would clearly be permissible under this Court's decision in Shaw v. Delta Air Lines. In Shaw, this Court unanimously ruled that a State disability insurance benefits law was not preempted by ERISA. In that ruling, the Court explained the relates-to language of the ERISA preemption provision in two ways: first, the Court said that relates-to ordinarily means a reference to or a benefit or a connection with an employee benefit plan. On the other hand, the court said that there may be some State actions that affect ERISA-covered plans in two remote peripheral or tenuous a way to warrant a finding that the law relates to the ERISA-covered plan. For the reasons that follow, we do not believe that the Equity Amendment Act relates to ERISA-covered plans. The act does not refer to ERISA-covered plans. Instead, its reference is employees and benefits. It applies to all employers in the District, including employers who are not subject to ERISA at all. It does not regulate the content or administration of ERISA... covered plans, and it does not require employers to alter in any way their ERISA-covered plans.
Anthony M. Kennedy: Is that because you can provide health insurance coverage without having an ERISA plan? You simply buy a policy, group policy for your employees, and that's not ERISA-covered.
Donna M. Murasky: My understanding is that Governments and churches are exempt from ERISA coverage. All private employers are not exempt from ERISA.
Anthony M. Kennedy: So if an employer, say, having 15 people simply wants to cover his employees with health insurance and buys a group insurance policy, that's covered by ERISA.
Donna M. Murasky: Yes. If it is a private employer, he must--
Anthony M. Kennedy: Well then, it does seem that the statutory scheme here does impinge on ERISA-covered plans in almost all cases in that the employer's liability must be determined by the contents of the plan, and any time he changes or she changes the plan in any way, the extent of liability under the statute changes. It seems to me that in effect incorporates an ERISA plan into your statute.
Donna M. Murasky: --I don't believe it does, I think for essentially two reasons. First, let us assume that instead of ERISA being passed in 1974 and the Equity Amendment Act being passed in 1990 the reverse was true, and for 16 years the Board of Trade, for example, has been paying health insurance as Workers Compensation because the Board of Trade otherwise voluntarily provides the benefits to his employers. ERISA then is passed, say, in 1990, and suddenly the Board of Trade has responsibilities to the Federal Government, reporting, disclosure, and fiduciary responsibilities insofar as his health insurance benefits for active workers are concerned. But I think this illustrates that although there is some kind of connection, if you will, between our law, because it governs health plans--
Speaker: Yes.
Donna M. Murasky: --And ERISA because it also governs other health plans, in fact it really operates independently of ERISA and is in no way dependant on ERISA. My second answer--
Antonin Scalia: Well, it doesn't say that it has to depend on ERISA. The language of the statute is that they are preempted insofar as they may now or hereafter relate to any employee benefit plan. Not to ERISA, but any employee benefit plan described in section 1003(a), and it doesn't say relate only to employee benefit plans covered by 1003(a), which is the argument you're making, that it covers ERISA-governed plans but it also covers other plans. It doesn't say relate only to such plans, it says relate to such plans, and you must acknowledge that the benefits here are measured by the level of benefits provided in the plans, in ERISA plans, right?
Donna M. Murasky: --They are measured... the benefits that our law requires are measured by benefits employers otherwise require, and--
Antonin Scalia: Including require in ERISA plans.
Donna M. Murasky: --In some cases I will agree the--
Antonin Scalia: And the statute says, insofar as they may now or hereafter relate to any employee benefit plan.
Donna M. Murasky: --Well, I think what you're getting to is the meaning of relate to, and I don't think this Court has ever ruled... it certainly hasn't ruled that any reference to an ERISA-covered plan or any connection to an ERISA-covered plan means that that statute is invalid. What it has done is to preempt laws and only laws that have one or more of the following features: that they regulate the content of a plan, the administration of a plan, a law that interferes with the administration of a plan or calculation of benefits under a plan, a law that provides... a State law that provides a cause of action for violating ERISA's provisions governing employee benefit plans, a law that imposes reporting disclosure and fiduciary requirement on ERISA-covered plans--
Antonin Scalia: Well, sure, we've never had one that's exactly like this, or else we wouldn't have taken this case, but what you're saying is that it doesn't relate to the plan even though it sets up a scheme in which, when you increase benefits under your ERISA plan, the effect will automatically be, because of the D.C. law, that you must increase benefits under Workmen's Compensation. I find it hard to say that that doesn't relate to the plan--
Donna M. Murasky: --Well--
Antonin Scalia: --In a fairly close and substantial way. Now, maybe it's a bad idea. Maybe the law shouldn't be written that way, but it does say relate to any plan.
Donna M. Murasky: --I think the fact that certain employee benefits provided to active workers in the District are subject to ERISA doesn't change the relationship between our statute and those benefits. The focus of our statute is really on benefits. Whether they're provided pursuant to ERISA-covered plans or whether they're not, if Congress should decide tomorrow, for example, to abolish ERISA insofar as employee welfare benefits are concerned, our law could still be in effect and it would operate independently of ERISA. I mean, that's part... it does operate independently of ERISA. Its focus is on benefits.
Anthony M. Kennedy: That would be true in the State wrongful discharge action that was before the Court in Ingersoll-Rand. You could say the same thing. The cause of action, the termination tort, preceded ERISA, succeeds ERISA, but while it's in force, it relates to ERISA.
Donna M. Murasky: No, I think that Ingersoll-Rand is a very different case. In Ingersoll-Rand, this Court emphasized that if ERISA had never been passed, if there had not been this pension plan that was protected by ERISA, the cause of action would not have existed, and in fact what the employee was trying to do there was to use a State common law cause of action to enforce a federally created right, i.e., the right not to be terminated by an employer in order... so that an employer can avoid his responsibilities under ERISA. Our law is different. It is based upon... I think you need to look at the common law background of our law. Our law replaces a common... you know, a tort system in which an employee who was injured on the job, if he could prove negligence and there were no affirmative defenses available, could recover as damages--
Sandra Day O'Connor: Well, Ms. Murasky, I thought the court said in the Ingersoll-Rand case that a State law that is premised on the existence of an employee benefit plan covered by ERISA is preempted, and I just don't see how you get around Ingersoll-Rand. Are you asking us to overrule that case?
Donna M. Murasky: --I'm not asking you to overrule that case. Our statute is not premised on ERISA-covered plans. What it is premised on is benefits employers provide otherwise to their active employees.
Sandra Day O'Connor: Well, it's premised on a... to the extent that it's measured by--
Donna M. Murasky: That is true.
Sandra Day O'Connor: --The ERISA plan benefits.
Donna M. Murasky: Well, it is measured by whatever benefits employers provide to their employers, whether or not these employers are otherwise subject to ERISA. But to go back to the Workers... the common law analogy I was giving you, I think this would... will make very distinct the difference between the common law action that our statute is trying to replace and the common law action at issue in Ingersoll-Rand. Let's look at a State such as Texas, in which Workers Compensation is not mandatory and employers may opt out of the Workers Compensation system but they're otherwise subject to the common law tort remedies. Everybody who has filed a brief in this case agrees that in a case in which the employer is subject to the common law that Workers Compensation basically replaces, that worker may require, if he's injured on the job, not only his wages but all lost benefits, including health insurance benefits. Everybody agrees upon that. Our statute, what it does, I think, is to make liability attach when there is a work-related injury. Remedy is measured separately, but just as in the common law Workers Compensation law liability attaches if there's negligence, here it simply attaches if there's a work... related injury. We're just measuring a remedy here. Now, if I could follow up, there was a recent district court decision, I think, that may help to answer your question and also illustrate some of the problems that the States are facing in this area. This is a case from Texas... I think it's called Urene against Wyatt Cafeterias... in which you had an employer who opted out of the Workers Compensation plan... Workers Compensation law. The law did impose some requirements on employers who opted out. An employee of Wyatt had a slip and fall and was injured. She brought a negligence action against Wyatt Cafeterias and the court... the employer argued that the common law cause of action was preempted by ERISA because the employer had included in its ERISA-covered plan a provision that governed job-related injuries. The trial court in that case first concluded that this little ERISA plan in effect preempted... preempted the Workers Compensation alternative. On reconsideration, what the court did was to say, look, this is... you know, since the employer has opted out of the Workers Compensation system, this case is no different from an ordinary tort case and the fact that the employer has tried to, I guess, evade its responsibilities under Workers Compensation law by passing this modest provision in its ERISA-covered plan isn't enough to take it... you know, the State law still applies. What the court did on I-consideration also was to say that the plan benefits could be considered, but only as an offset to the damages remedies, but that employers cannot set up grounds for the purpose of evading lawful State requirements. But to go back to what I was saying, the Court has never held a law like this one preempted, and it seems to me that the Court should not attribute to Congress, when everyone I think concedes except for the United States... attribute to Congress an intention of permitting employers to require health benefit... permitting employers to require health benefits as part of Workers Compensation but then saying that the only way you can do it is in a way that is administratively difficult and that doesn't comport with traditional Workers Compensation principles, and that's what the D.C. circuit has held here. Unless there's further questions, I'll--
Anthony M. Kennedy: But you would agree that this is a covered plan, not an exempt plan, so that the analysis of the Shaw case as given in the respondent's brief is essentially correct, would you concede that point?
Donna M. Murasky: --Let me say two things. The Board of Trade's plan, health insurance plan for active workers, is an ERISA-covered plan. However, the benefits that we require pursuant to Workers Compensation can be provided through a separate plan solely for that purpose.
Anthony M. Kennedy: Well, but that's different than in Shaw, because in Delta v. Shaw there was an exempt plan, and--
Donna M. Murasky: Here we--
Anthony M. Kennedy: --And here there is not an exempt plan.
Donna M. Murasky: --Yes, I think we do have an exempt plan... the Workers Compensation plan that the employer sets up.
Anthony M. Kennedy: Well, but not the one that arguably preempts this statute. The health insurance coverage is not exempt.
Donna M. Murasky: Well, I think health insurance coverage can be required, either pursuant to... well, health insurance coverage may be part of either ERISA... covered plans or ERISA-exempt plans.
Anthony M. Kennedy: But it's the former in this case.
Donna M. Murasky: No, I think that our... the Workers Compensation law here--
Anthony M. Kennedy: I'm talking about the employer's plan here in question.
Donna M. Murasky: --The employer's plan here... as far as I know, the employer's plan here simply provided benefits to active workers. That plan was... is subject to ERISA's--
Speaker: It is not exempt.
Donna M. Murasky: --That is not an exempt plan, as far as I know.
David H. Souter: Thank you. To put it in a cruder way, if you lose on the question of whether it relates to, you lose the case, do you concede that?
Donna M. Murasky: No, I don't. As you know, we--
David H. Souter: Then I guess I didn't understand your last answer.
Donna M. Murasky: --Okay. We have made two alternative arguments.
David H. Souter: Well, that's what I thought at first, and then I thought perhaps you were modifying your position. Do you agree that the plan about which... the relationship to which we are arguing is a plan which is covered by 4(a) of the title?
Donna M. Murasky: The employer's underlying plan as far as I know is covered by ERISA.
David H. Souter: Okay, it's covered, and--
Donna M. Murasky: The Board of Trade is not--
David H. Souter: --All right, if it's covered by ERISA, then it seems to me that if you lose on the relationship argument you have nothing left.
Donna M. Murasky: --Well, we have made two arguments. The first is based on the R. R. Donnelley case and its interpretation of Shaw, and on this Court's description of Shaw in Metropolitan Life, and there the Court seemed to say that when we have a Workers Compensation statute at issue, we have a two-step approach. The first step is whether it relates to ERISA-covered plans, and if so, whether it is a... whether an employer can comply with the State law by maintaining a plan solely for that purpose, and here--
David H. Souter: So are you saying that the description, and I'm reading from 514(a) I guess, here, that the two conditions stated in the following description relate to different plans? It says that ERISA shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 4(a). If you lose the relationship argument, we're talking about a plan described in 4(a)--
Donna M. Murasky: --Mm-hmm.
David H. Souter: --We agree there... and not exempt under 4(b). Are you saying that the phrase, not exempt under 4(b), relates not to the ERISA-covered plan but to the requirement of your statute?
Donna M. Murasky: I'm not certain I understand your question.
David H. Souter: All right. It seems to me that the description here described in section 4(a) and not exempt under 4(b) relates or is speaking to, is referring to, the same plan. Do you agree with that?
Donna M. Murasky: The same plan.
David H. Souter: Right. In other words, there's an ERISA plan covered by 4(a). You concede that if you lose the relationship argument we've got an ERISA plan covered by 4(a).
Donna M. Murasky: Well, what I would say is two things--
David H. Souter: Well, let me... is that correct? I don't want to put words in your mouth, but I think that's correct, isn't it? You concede that if we... if you lose the relating-to argument, the plan to which this relates is covered by 4(a).
Donna M. Murasky: --I don't, in part because it seemed to me... well, the second circuit has interpreted Shaw as saying, even though it relates to an ERISA-covered plan, if you have a Workers Compensation law the law treats that differently, and if an employer can comply... comply with a State law by making a separate plan solely for that purpose, that State law is not preempted.
Antonin Scalia: But Ms. Murasky, you have to get that from the statute somehow. I understand your second argument, but I thought your second argument... I thought the way you get there is that you tie it into the relates... to, and you say it doesn't relate to unless you comply with this two-step process rather than a one-step process, then you have some statutory language you can hang the result on, but once you give away the relates-to point, what other statutory text can you possibly rely on for that two-step process? It's just as though we're going to sit here and announce out of nowhere that despite what the statute says we're going to impose a two-step process. We can't do that... or we shouldn't do that.
Donna M. Murasky: Well, I think that certainly this Court in Metropolitan Life described the disability benefits law in Shaw as one that related to ERISA-covered plans, and this Court just as clearly in Shaw said that that statute was not preempted.
Antonin Scalia: You need a two-step process.
Donna M. Murasky: In a two-step process.
Antonin Scalia: So... so it does ultimately go back to the relates-to. You're saying it doesn't relate to unless you comply with a two-step process. That's how I understand your argument.
Donna M. Murasky: Well, the way I understood it was, even if it relates to, and there... that it doesn't make any difference if you can maintain a plan solely for the purpose of complying with the law, and that would distinguish Shaw.
Antonin Scalia: Why? Where do we get authority to say that, just because we don't like the result otherwise?
Donna M. Murasky: Well, I think the Court said it in Metropolitan Life and Shaw.
Byron R. White: Was that an exemption case? It was, wasn't it, Metropolitan Life?
Donna M. Murasky: Shaw certainly was, and Metropolitan Life was an insurance case.
Byron R. White: Yes, but even if... I suppose that some plans that relate to are nevertheless exempt.
Donna M. Murasky: That some... some statutes.
Byron R. White: Some statutes, yes.
Donna M. Murasky: Some statutes that relate to ERISA-covered plans are nevertheless exempt.
Speaker: Yes.
Donna M. Murasky: That I think would cover the saving clause things--
Speaker: Mm-hmm.
Donna M. Murasky: --And if you interpret Shaw in the way that the Second Circuit did, that's also true, but I think that maybe the critical thing here is to... you have to look at the words relate to, and it can't mean every reference and every connection to ERISA-covered plans. For example, State income tax laws... well, ERISA benefit plans play a huge role in our society now. They have economic consequences that Congress must deal with in laws other than ERISA.
Byron R. White: The... you say... one of your arguments is that this employer could comply with District of Columbia law by a separate plan, a plan separate from an ERISA plan.
Donna M. Murasky: Mm-hmm.
Byron R. White: But to comply with it, that separate plan would have to nevertheless... the benefits would nevertheless have to be keyed to the ERISA plan.
Donna M. Murasky: It would have to be keyed to benefits, but let me--
Byron R. White: And so that separate plan would... the statute would nevertheless relate to the ERISA plans through the separate plan, because of the benefit levels.
Donna M. Murasky: --I think that that's construing relates-to too broadly, and let me just address the concept of plan for a second. It seems to me that plan in the case of an ERISA-covered plan is a plan that complies with... it's a document, and it's a plan that sets forth the benefits that are being provided to your active workers, it complies with whatever regulations ERISA imposes on that plan, you send it to the Department of Labor, and that's... that's that ERISA-covered plan. In the employer's Workers Compensation plan you have a separate document in which you set forth the benefits that are required by a Workers Compensation law, and that plan must be subject to the, you know, reporting and disclosure requirements of the State law, but they're too separate documents, and the fact that the benefits in the ERISA-covered document may be the same as the benefits in the Workers Compensation document doesn't constitute a sufficient relationship to. If I may reserve the rest of my time for rebuttal--
William H. Rehnquist: Very well, Ms. Murasky. Mr. Postol, we'll hear from you.
Lawrence P. Postol: Thank you, Your Honor. Mr. Chief Justice, and may it please the Court: As respondent sees this case, it is simply an issue of whether a State may discriminate against an employer based on the fact that employer gives health benefits to its employees, and the answer to that is found in the ERISA statute. Congress made a decision that any State law that relates to--
John Paul Stevens: That's an interesting suggestion, the word discriminate. If they... aren't the benefits under the plan triggered to the wage rates they pay?
Lawrence P. Postol: --The... no, not--
John Paul Stevens: I don't mean under the plan, under the Workmen's Compensation scheme.
Lawrence P. Postol: --Yes. Congress--
John Paul Stevens: So that if you pay higher wages to your employees you'll have to pay higher benefits.
Lawrence P. Postol: --Yes, which--
John Paul Stevens: So that's discriminates against employers who pay high wages.
Lawrence P. Postol: --But not based on the ERISA-covered plan. What Congress did is... and it made a conscious decision. It said States--
John Paul Stevens: Well, it's anybody who gives health benefits, not just ERISA-covered plans.
Lawrence P. Postol: --Yes, but health benefits are an ERISA-covered plan.
John Paul Stevens: But you could give health benefits without having an ERISA-covered plan.
Lawrence P. Postol: No, Your Honor.
John Paul Stevens: Couldn't you buy insurance for your employees without having an ERISA-covered plan?
Lawrence P. Postol: But that insurance is a covered ERISA plan. The giving of the benefits, whether through self-insurance or insurance, is a covered ERISA plan under section 4(a), so that... Your Honor is correct. The State... what Congress did... and it's sort of neat. What they said was, States, you can do whatever you want in Workers Comp with one limitation. You cannot interfere with, you cannot relate to a covered ERISA plan. So you can judge it on wages, as a circuit court below held, you can say you have to give X number of health benefits, which--
John Paul Stevens: Yes, but what if, say, they figured the premiums for the health benefits were 10 dollars an hour for the employees, or something. Could they say that we will treat... for purposes of Workmen's Compensation we will require that you treat an equivalent of... raise your salary level that much for purposes of compensating or figuring the Workmen's Compensation rate?
Lawrence P. Postol: --I don't believe so, Your Honor. As this Court has held, the analysis... and the question is essentially does the law still relate to a covered ERISA plan? This Court has held that if it's a general application statute that has only remote or peripheral effect, then it doesn't relate to it, but if you single out the covered ERISA plan, this Court has always held that if you single out the covered ERISA plan the law relates to it, even if it has a good effect. So that in Mackey this Court struck down a State law that acts exempted to cover the ERISA plan from garnishment, because it singled it out. So that to any extent that the State wants to make liability, whether through equivalent benefit, whether through increasing the average of a wage, to the extent they single out the covered ERISA benefits, there's preemption, and I think the reason for that is, Congress recognized the natural effect, that if in fact you're going to make employers Workers Compensation liability increase, the natural tendency is employer will therefore decrease their covered health insurance.
John Paul Stevens: Well, that's the same idea... they also wouldn't pay higher wages, because they might have to pay higher Workmen's Comp.
Lawrence P. Postol: Yeah, but the connection is direct, and that is that the employer knows, every time I change my covered health insurance, or self insurance, it's going to cost me money in my Workers Compensation scheme, so sure, if it was--
John Paul Stevens: If you raise your wages the same thing's true, too.
Lawrence P. Postol: --But the wages are... will be... well, first of all the wages would be a general application statute not specific to ERISA.
Antonin Scalia: I think your answer is that Congress wanted to encourage health insurance plans. It didn't want to encourage high wages in particular.
Lawrence P. Postol: Well, the... yes. Well, I don't know that they dealt with the wages, but they did deal with the health insurance and they wanted to encourage health insurance. I don't know what their view is on wages. So that any State law that specifically deals with a covered ERISA plan... I mean, Congress made a decision. If they wanted to say, look, any time there's a conflict Workers Compensation always prevails over the ERISA plan, it would have been very easy, they could have just stuck it in to section 514(b), but instead they made a conscious decision, we're going to let Workers Compensation out of our reporting requirements, out of our fiduciary requirements, which made sense because Workers Comp usually has their own laws that regulate those things. But they would not go so far as to allow them to relate to a covered ERISA plan, because to do that would then discourage the employers to give those covered benefits to begin with. And I think it's... that result is unavoidable from the statutory language. I think as your questioning makes clear, the problem with Shaw is that 1) the Shaw statute did not relate to a covered ERISA plan. It dealt with a disability law and it did not in any way relate to a covered ERISA plan, so it's simply not applicable, and even if the Court would uphold that as Justice Scalia noted, there's nothing in the statute that allows for any type of exception, if you will, to the relates-to language, and again, if Congress wanted to do that, it could have put Workers Compensation in section 514(b), and it did not.
Anthony M. Kennedy: Suppose a State says that all employers who have more than 20 employees must provide health coverage with the following minimum benefits--
Lawrence P. Postol: They could do that, because then there'd be no connection to the covered ERISA plan, and in an employer's mind... well, first of all, it would meet the statutory language so therefore it would--
Anthony M. Kennedy: --Well, in each case you'd have to examine the ERISA plan to determine whether or not it met with the requirements of the statute, so there would be a relation--
Lawrence P. Postol: --I don't think so, Your Honor--
Anthony M. Kennedy: --In that sense because under the hypothetical statute you would be immune from liability... suppose there was a punitive sanction for refusal to do this, you'd be immune from liability depending on an interpretation of the ERISA plan. It relates in that sense, it seems to me.
Lawrence P. Postol: --Your Honor, maybe I misunderstood your question. I thought you were referring to the type of statute Justice Wold said would be permissible, which is, you have to give X level of benefits, no mention of the covered... no mention of your health insurance.
Anthony M. Kennedy: You have to give health benefits which meet the following specified minimums.
Lawrence P. Postol: Yes, and the State in its Workers Compensation law specifies what those minimums are.
Anthony M. Kennedy: That's not Workers Compensation. The hypothetical is that it applies to all employers must give health coverage--
Lawrence P. Postol: Oh, irrespective of Workers Comp?
Anthony M. Kennedy: --Yes. General medical coverage for all employers who have more than 20 employees.
Lawrence P. Postol: Then that statute would be preempted, because the giving of those benefits--
Anthony M. Kennedy: So a State cannot require that of all employees... of all employers.
Lawrence P. Postol: --Irrespective of work injuries, they cannot. No, you see, they just said you have to give X level of benefits. Giving those benefits is a covered ERISA plan under section 4(a)'s definition, so therefore the law that required it would relate to a covered ERISA plan and therefore would be preempted. Now, if what they wanted to say is in their Workers Compensation law, they said just for work injuries we're going to give X level of benefits, then that would be permissible, because limiting it to work injuries would make it an exempt plan under section 4(b), and if they then didn't tie that level and trigger the liability to a covered ERISA plan, they would be all right. In this case--
Anthony M. Kennedy: Do we have to accept that my hypothetical would be preempted in order to rule in your favor in this case?
Lawrence P. Postol: --No, Your Honor.
Speaker: What--
Lawrence P. Postol: I really don't think that issue is really addressed in our case. Our case is that we have what as everyone conceded... the health insurance is a covered ERISA plan, so there's no question as to whether whatever it is out there is a covered ERISA plan. It is.
Antonin Scalia: --What about a State law that says Workmen's Compensation award shall be reduced by the... there shall be credited against the amount due from the employer for Workmen's Comp the value of any health benefits provided by the worker... by the employer?
Lawrence P. Postol: Well, I'm afraid to concede that. I think that would be very problematic for an employer, even though it obviously benefits the employer. This--
Antonin Scalia: Well, you have to go further than that. Problematic, or just bad under your theory, isn't it?
Lawrence P. Postol: --Well, I guess if I were... if I had that case and I had to argue it, what I would argue was that while it is... your hypothetical is it specifically relates to the ERISA plan.
Antonin Scalia: Right. It's a Workmen's Comp plan, very reasonably says, well, you know, if a person is getting health benefits that are of great value from the employer, that should be credited against the amount of Workmen's Compensation that the employer has to pay.
Lawrence P. Postol: I think Your Honor is correct, that law would be struck down, because the minute it becomes specific to the ERISA plan, I think preemption by this Court's rulings is mandatory.
Antonin Scalia: I think you have to say that if you're--
Lawrence P. Postol: Yes. I agree, Your Honor, as much as it hurts to say so.
Byron R. White: --Tell me again if you've already said it, if this employer adopted a separate plan from his ERISA plan and said this is for the specific purpose of... solely for the purpose of complying with the Workmen's Compensation law of the District of Columbia, now, why would it be preempted?
Lawrence P. Postol: This is Justice Kennedy's hypothetical where--
Speaker: Yes.
Lawrence P. Postol: --Well, if they said all employers had to give X level of benefits, those health benefits under ERISA's definition 3(1) and 4(a), those benefits are a covered ERISA plan. In other words, whether the employer does it voluntarily, or the State mandates it, they would come within those definitions.
Byron R. White: Yeah, but a plan that is maintained solely for the purpose of complying with applicable Workmen's Compensation laws or unemployment compensation or disability insurance laws--
Lawrence P. Postol: Okay, I think it's--
Byron R. White: --Are exempt.
Lawrence P. Postol: --Yes. That's it's... I think your example, unless I'm mixing up, is slightly different than Justice Kennedy's. Your example is--
Byron R. White: Well, whether it is or not, you get my question.
Lawrence P. Postol: --Yes, okay. If, in fact, they limited that health benefits solely to people who are on Workers... who are injured workers, then I would agree with Your Honor, it would not be preempted.
Byron R. White: Even though under that plan the benefits would be tied to the level of benefits under the ERISA plan?
Lawrence P. Postol: No. The minute they tie the benefits to the covered ERISA plan... the minute they--
Byron R. White: Well, I know, but this... there's no question that this District of Columbia law is part of the Workmen's Compensation law.
Lawrence P. Postol: --Yes.
Byron R. White: This provision about the level of benefits is part of the law--
Lawrence P. Postol: Yes--
Byron R. White: --And this separate plan is solely for the purpose of complying with that law.
Lawrence P. Postol: --Yes, but as this Court held in Alessi section 4(b) saves plans, not laws. Your Honor is correct, the plan... the benefits that they require is an exempt plan, because they are requiring benefits that are to comply with the Worker's Compensation, but as this Court held in Alessi, the mere fact that the plan is an exempt plan doesn't mean the law that created it is saved from ERISA preemption. Then you have to look at, is that law... does that law in any way relate to a covered ERISA plan, and by tying the benefits in this case to the health insurance, that law then relates to a covered ERISA plan.
William H. Rehnquist: Well, if a statute provides that the employer shall provide 10,000 dollars, something like that, health insurance for all of his employees, something along the lines of Justice Kennedy's hypothetical, at the time the law is passed there's no plan in existence that would provide for that, is there?
Lawrence P. Postol: No, Your Honor.
William H. Rehnquist: So the employer has to go out and somehow put together a plan.
Lawrence P. Postol: Yes, Your Honor.
William H. Rehnquist: And you say that ERISA preempts that.
Lawrence P. Postol: Yes.
William H. Rehnquist: Preempts the State law. Why?
Lawrence P. Postol: Because the benefits... whatever benefits the State required, if they dealt with health benefits, then under the definition of 3(1) and 4(a), those benefits that it requires are a covered ERISA plan. In other words, a covered ERISA plan is not defined as merely what the employer voluntarily provides. A covered ERISA plan is simply defined as certain types of benefits that the employer provides, whether it's voluntary or whether it's mandated.
William H. Rehnquist: Where did that definition come from?
Lawrence P. Postol: Section 31 of ERISA and 4(a), which Your Honor I believe is nicely set out in the Government's Appendix. So that that definition is not key to whether it's voluntary or not, it simply says, if you give certain benefits, one of which is health benefits, and the employer provides them and it affects interstate commerce, then that is a covered ERISA plan.
William H. Rehnquist: And then therefore the State cannot mandate something like that.
Lawrence P. Postol: That's correct, Your Honor.
David H. Souter: Mr. Postol, do you agree that the plan in question here is maintained solely for the purpose of complying with a State Worker's Comp law?
Lawrence P. Postol: Yes, Your Honor.
David H. Souter: Despite the fact that it provides by keying the health benefits it provides something which it need not necessarily provide in order to comply with the Worker's Comp law.
Lawrence P. Postol: Yes. The plan itself is maintained solely for Worker's Compensation, so that plan that the benefits of law requires is an exempt plan, and for that reason, if they simply said we had to give 10,000 dollars a month for injured workers, then that would be permissible, but the minute that a--
David H. Souter: In other words, it's purpose rather than particular requirement that... rather than the mandatory nature or nonmandatory nature of any particular benefit which is dispositive in your view.
Lawrence P. Postol: --Well, I think it's... it's not the purpose, it's that they tie... they trigger the liability and they tie the amount of the liability to a covered ERISA plan.
David H. Souter: Well, that goes to relating to, doesn't it?
Lawrence P. Postol: Yes, but that's the point. The law relates to a covered ERISA plan. The plan they require is an exempt plan, but by defining what that exempt plan is, their definition of it in the law is based on what the covered ERISA plan is and therefore it relates to a covered ERISA plan.
Antonin Scalia: You're saying that the law relates to two plans, it relates to this plan that is created in order to comply with the law, which is an exempt plan, and the fact that it relates to that makes no difference.
Lawrence P. Postol: Yes, Your Honor, that's exactly--
Antonin Scalia: But it also relates to the ERISA-covered plan in that it's... the level of benefits that it demands are key to that--
Lawrence P. Postol: --Yes.
Antonin Scalia: --And that relationship subsists despite the creation of the exempt plan.
Lawrence P. Postol: Yes, Your Honor, and if I could address the relates-to aspect of it, because obviously there are some questions on that--
Byron R. White: What would be the effect of agreeing with you that this law is preempted? What would an employer pay under the... would the Workmen's Compensation law then have... tell the employer what he has to pay if an employer... if an employee is injured on the job?
Lawrence P. Postol: --No. I think what would happen is--
Byron R. White: They'd have to get a new law.
Lawrence P. Postol: --Well, not... not really, Your Honor. First of all, the District of Columbia makes it sound as if this is a tradition. The fact is, 43 States don't do what the District of Columbia does. Six States incorporate the health benefits and average with the wage, and three States... I just learned that Rhode Island has a similar law as the District of Columbia and Connecticut... have this equivalent benefit. 43 States have found no problem with not giving a remedy for lost health benefits. Congress has similarly in the Longshoreman's Act in Potomac Electric. This Court held that there is no remedy for lost fringe benefits, Congress then amended the Longshoreman's Act. Not only didn't they include health benefits, they explicitly said we agree with Potomac Electric and we want to make sure it's not changed. So that it's not a traditional remedy. I don't think that affects the outcome of this case, whether traditional or not, but I think that's an important point to make, and for two reasons. One is that most States realize that, you know, if you pay people enough money not to work, they won't work, and secondly Worker's Compensation is a compromise system, and that is, employer gives up all its defenses, but in return it only gives a limited remedy. Every Worker's Compensation statute does not allow anything for pain and suffering. If I wanted to make... if I wanted to give a complete remedy, I would, but more importantly, Congress made a decision, and their decision was that worker's compensations would not take precedence over our protection of a covered ERISA plan.
Byron R. White: Well, if you win... if you win, I suppose when an employee is injured on the job he will or will not be covered by the existing plan.
Lawrence P. Postol: Well, as a practical matter, Your Honor--
Speaker: Yes.
Lawrence P. Postol: --What will happen is that if an employee wants to continue his health insurance, he will continue it for 18 months under COBRA, but he will have to pay the premium, and that also goes to this question of does this law relate to a covered ERISA plan, and it seems to me our best argument is simply plain English, that to say, you know, if you have a statute that triggers liability and bases the liability on the covered ERISA plan, it has a connection with a reference to, but Congress itself agreed with that, because they enacted COBRA. COBRA is part of ERISA, and COBRA provides for continuation of health benefits, and that was the point in the Government's amici brief in support of us, that there could be little question that this law relates to a covered ERISA plan, because Congress clearly showed that by enacting COBRA. The difference is, Congress wanted the employees to have to pay for the benefits, whereas the District of Columbia would rather have the employers pay for it.
John Paul Stevens: What if an employer had a health plan in which he gave the employees an option of either participating in the plan or receiving a wage increase equivalent to the amount necessary to pay the premiums for that kind of health coverage? Could the District treat that portion of the salary as part of the standard for determining compensation under Workmen's Compensation?
Lawrence P. Postol: Well, Your Honor, as we mentioned in our footnote, and I believe it was page 35, footnote 7, it's conceivable you could try to enact a general application statute, so--
John Paul Stevens: No, no, I'm not talking about... I understand the general application statute. I'm talking about, say in the employer's plan, instead of itself paying the premiums for health coverage it gave the employee the option of taking the amount of the premium as additional wages so the employee could buy his own health coverage, if they did that, could the District treat that additional increment of wages as part of the standard for determining compensation?
Lawrence P. Postol: --Your Honor, I believe the amount... it depends on how they word their statute. If they specifically said--
John Paul Stevens: No, no, this is... the statute is exactly as it is now.
Lawrence P. Postol: --Oh, as it is now?
Speaker: Yeah.
Lawrence P. Postol: And could they then take that--
John Paul Stevens: Well, no, I guess you're right, you have to change the statute, sure.
Lawrence P. Postol: --If they single out Worker's... the ERISA-covered benefits, they lose. There's no way they can do it.
John Paul Stevens: Well, my... do they or don't they in my hypothetical, where the employer gives the employee the option of taking increased wages or letting the employer use the same economic benefit to buy health benefits?
Lawrence P. Postol: If... it depends... if the statute said, you get two-thirds of any value you get from employer--
John Paul Stevens: The statute would say, regardless of which option the employee takes, that amount will be used in the standard for computing benefits.
Lawrence P. Postol: --But... and specifically refers to an ERIS... health benefits.
John Paul Stevens: Well, it refers to the kind of hybrid that I've just hypothesized.
Lawrence P. Postol: I think then it would be preempted--
Speaker: You think it would be.
Lawrence P. Postol: --Because it specifically deals with--
John Paul Stevens: Even for those employees who took the wages.
Lawrence P. Postol: --Yes, Your Honor, and I think it really goes back to this Court's decision in Mackey that if you... if a State specifically has a law that specifically deals with an ERISA-covered plan, that's the end of the discussion. It doesn't matter if it's a good law, a bad law... I mean, Mackey was a good law for ERISA-covered plans.
John Paul Stevens: What about a district law that taxes the receipt of health benefits, would that be preempted?
Lawrence P. Postol: Yes, Your Honor. I mean, I think the only exception besides insurance and securities--
John Paul Stevens: What about one that gives a company a deduction for paying health benefits, a tax deduction? Is that preempted?
Lawrence P. Postol: --I'm afraid yes, Your Honor. I think to the... Congress made a decision, no State law, good, bad, indifferent, can relate to... which is defined as having connection with or a reference to... a covered ERISA plan. I mean, they could have written a statute that says, well, you know, the good laws we'll allow, the bad ones we won't, or if it has an effect or it deals with administration, but they chose not to. Your Honors--
Anthony M. Kennedy: Don't any number of States have laws which measure compensation by including in part of that compensation the benefits an employee receives?
Lawrence P. Postol: --In Worker's Compensation.
Anthony M. Kennedy: No, no.
Lawrence P. Postol: No.
Anthony M. Kennedy: Standard health plans. In other words, many States have laws in which they measure the income of the employee by including, I had thought until I heard the answer to your question, including benefits received from employee plans--
Lawrence P. Postol: I don't--
Anthony M. Kennedy: --And under your view, all of those statutes are preempted.
Lawrence P. Postol: --Your Honor, I'm not sure... well, two things.
Anthony M. Kennedy: Maybe I'm wrong in my hypothesis--
Lawrence P. Postol: Yeah, I'm not sure--
Speaker: --But I had thought--
Lawrence P. Postol: --I'm not sure you're right in your assumption, and secondly, it depends how they tax it. If it's a general, across-the-board tax that says any value you get from employer is taxed, they don't single out ERISA benefits, then I think you end up with a general application statute that has a remote--
Anthony M. Kennedy: --Well, why? I thought the whole theory of your case is, is that if you have to look at the provisions of the plan in order to calculate your tax liability, it automatically relates to the plan and it's preempted.
Lawrence P. Postol: --No. Well, I think if you--
Speaker: That's your whole argument.
Lawrence P. Postol: --No. Our point is, if you single out the ERISA plan for... covered ERISA plan for special treatment, then there's preemption. But for example, in Mackey they had a garnishment law. Obviously, you can't garnish the--
Anthony M. Kennedy: Well, but that isn't quite consistent with the answer that you gave to me and to Justice White and to the Chief Justice when we asked whether or not there could be a statute which is a generally free-floating statute which says you must provide the following health insurance benefits. You say no, that's preempted, because you have to look at the plan--
Lawrence P. Postol: --Well--
Anthony M. Kennedy: --And that seems to me inconsistent with the answer you just gave me now about the tax hypothetical.
Lawrence P. Postol: --No, Your Honor. Maybe I need... obviously, I need to clarify that. If... the general... the statute creating benefits, the benefits themselves are a covered ERISA plan, so the State is saying you must provide a covered ERISA plan, basically, therefore it's preemptive. If it was across-the-board tax law, they're just saying we're taxing everything in sight, we're not giving you any special treatment pro or con to an ERISA statute, I think then you get to the second question, is the effect remote or peripheral, and if the effect is remote or peripheral then the statute stands. But to the extent the State does not single out the ERISA plan for any special treatment, they're okay. Now, the fact is that they may swallow it up, or... you know, may... or may once in a while touch upon it. Then you get to the second issue, is it remote or peripheral?
Anthony M. Kennedy: Well, in the statute before us, the measure of the employer's liability depends on a calculation based on the plan.
Lawrence P. Postol: Yes.
Anthony M. Kennedy: Which is why you say it relates.
Lawrence P. Postol: Yes.
Anthony M. Kennedy: I submit that the same happens in the hypothetical tax statute, where for some employees to figure their tax they have to calculate the benefits they receive from the plan. I don't see the difference.
Lawrence P. Postol: Well, I think the difference is, Your Honor, that they only dealt with health insurance benefits. In other words, they didn't say all benefits that the employer gives... two-thirds. They said, we're going to have special treatment of covered ERISA plans, and so we're going to give this special benefit based only on those employers who give a covered ERISA benefit. It's not that you have to look to the plan, because there clearly are some general application statutes that you have to look to the plan, and yet it's a general application statute. It may have a peripheral remote effect. It's that they singled it out for special treatment. Now--
Speaker: Now... now--
Lawrence P. Postol: --I would submit that even if they hadn't singled it out, we'd probably end up with the same result, because, you know, the health benefits are so great a part of the package the employer gives that if you simply said, give two-thirds of all benefits, you would have more than a remote or a peripheral effect.
William H. Rehnquist: --Well, I-- --Mr. Postol--
Lawrence P. Postol: Yes, sir.
William H. Rehnquist: --It isn't as clear to me as it is to you apparently that 3(1) includes in its definition of plan the situation where the State simply says you shall provide 10,000 dollars health insurance benefits to each and every employee. I think you could read that definition as dealing with plans that were already... the State's effort to affect somehow a plan that was already in existence. I don't think it necessarily covers something simply created by the State.
Lawrence P. Postol: Your Honor, I think the definition simply says certain... these types of benefits and then section 3, 4(a) then says if employer provides these, so--
William H. Rehnquist: Section what?
Lawrence P. Postol: --4(a).
William H. Rehnquist: Well, you say it's clear to you. It isn't to me.
Lawrence P. Postol: Well, Your Honor, I will say this. It doesn't matter for our case, because I don't think there's any dispute that health insurance is a covered ERISA plan, so I don't think this Court--
William H. Rehnquist: Well, but if you're wrong on that point, a State statute which simply brings into existence a benefit isn't the same as a State statute that's dealing with a plan which already confers benefits.
Lawrence P. Postol: --Sure, Your Honor, but in our case we already... the health insurance is not... the covered health insurance is not something the State mandated, so in other words, to come under Your Honor's hypothetical, the State would not only have to first have the law they now want, but they'd also have to have another law that says we are requiring this health insurance. What they are relating to is a voluntary health benefit plan.
William H. Rehnquist: I can see your point there, but it seems to me that your answer to the hypothetical about the State law requiring furnishing of insurance ben... or health benefits to every employee is not nearly as clearly correct as perhaps some of your other positions.
Lawrence P. Postol: All right. Well, Your Honor, I think my only point then would be that it doesn't matter for the disposition of this case, because what they are relating to is a voluntary health insurance which everyone agrees comes under 3(1) and 4(a).
John Paul Stevens: Let me just go back, because I'm not quite sure what your position is. Could the District in your view pass a statute requiring all employers to provide health insurance for people on Workmen's Compensation?
Lawrence P. Postol: Health... in defining the level of benefits--
John Paul Stevens: Let me just... the statute just says, every employer in the District must provide certain minimum health insurance coverage for its employees who are receiving Workmen's Compensation.
Lawrence P. Postol: --Yes, they could enact such a statute.
John Paul Stevens: They could do that. But why wouldn't that be mandating an ERISA plan, because--
Lawrence P. Postol: Because--
John Paul Stevens: --Every health insurance covered plan is an ERISA plan.
Lawrence P. Postol: --Because that plan is only to comply with a Worker's Compensation law, and therefore it's under that plan.
John Paul Stevens: Oh, I see, so that comes within the exception. Okay.
Lawrence P. Postol: Yes, and it's... I mean, where they went wrong in this case is they wanted to tie the benefits to the covered ERISA plan, and that's the great mistake of this case, because what they will do then is encourage employers not to provide those health insurance benefits to begin with.
Antonin Scalia: Although you say that they can do that so long as they only link it to... didn't mention health insurance benefits specifically. I find that a curious thought. If they had just said, hey, pay to the disabled employee one-third of all benefits of all sorts received from the employer--
Lawrence P. Postol: Oh, that's a different question. Then--
Antonin Scalia: --I thought you said that that would be okay.
Lawrence P. Postol: --No, Your Honor. Again, if I... footnote 7 in our brief, page 35, deals with that, and what I said there was, that's a closer question, because if could... if they just said one-third of all benefits, now I've got a general application statute, but then the second question is, is the effect only remote and peripheral, and I'm not so sure it is, and I would certainly argue, if I had that case, that it isn't, because unlike a tort remedy, where a tort remedy 1) is very infrequent, it's not very predictable, and 2) it's not the employer who pays a tort remedy, it's a tortfeasor. With Worker's Compensation, I know I'm going to have those work injuries, I know how frequently they're going to occur, and I pay for them as employer, so while it's a closer question, I'd still be prepared to argue then that was preempted, but for a different reason... not because it singled out the ERISA statute, but because it would be a general applications statute, but then we get to the second part of the test, and that is, is it remote or peripheral, the effect.
Antonin Scalia: Yeah, but where it's different from this case is that in this case you can say that it does affect ERISA plans because an employer would be disinclined to increase the amount of ERISA benefits.
Lawrence P. Postol: Yes, absolutely.
Speaker: Whereas--
Lawrence P. Postol: But I'm not even sure that's part of the test, because the remote and peripheral, if you will, saving clause only deals with general application statutes. This Court has always said once it's specific, once they single out ERISA coverage, it doesn't matter if the effect is good and bad. The good and bad test only comes... or remote peripheral only comes about... okay.
William H. Rehnquist: --Thank you, Mr. Postol.
Lawrence P. Postol: Thank you, Your Honor.
William H. Rehnquist: Ms. Murasky, you have 3 minutes remaining.
Donna M. Murasky: Thank you, Your Honor. First of all, I'd like to point out that the Equity Amendment Act does not single out ERISA-covered plans for special treatment. It treats ERISA-exempt and ERISA-covered plans in the same fashion, and in this respect it does differ from the statute that this Court considered in Mackey, or the exemption to the garnishment statute. The only place in which our Worker's Compensation law does mention ERISA-covered plans is of course in the provision of our law that permits Worker's Compensation benefits to be integrated with benefits provided under ERISA-covered plans, and that statute is cited at page 9, note 9 of our reply brief. No one has suggested that this aspect of the statute, which does specifically refer to ERISA-covered plans, is preempted by ERISA. 2. I think in this case the Board of Trade is using ERISA as a sword to invalidate valid Worker's Compensation laws and not as a shield. If we were to abolish our Worker's Compensation system and allow employers to be sued based on a showing simply of negligence, and we could even eliminate the affirmative defenses that an employer otherwise would have, all employees who could... who were injured on the job in the District of Columbia and who could establish negligence, or I suppose we could even employee a standard of strict liability, each one of those employees could recover as part of his damages not only wages lost and the cost of treating the injury or illness, but the value of health benefits lost. Our Worker's Compensation merely reflects that. It imposes liability when there's a work-related injury, and the remedy is measured by what an employee otherwise receives. The last point I would like to... two other points. There's some suggestion here that somehow our law is invalid, our amendment is invalid because it's somewhat innovative. The Court rejected a similar argument not only in Metropolitan Life but in the 1988 case of Goodyear Atomic Corporation against Miller. That case is also interesting because it involves a Worker's Compensation law and an unusual one that was applied to the United States itself pursuant to a congressional enactment. I think that case establishes two things: Congress' great deference to the States in managing their own worker's Compensation plans, and that innovative Worker's Compensation laws are not prohibited. Finally, if I could just mention COBRA for a moment, the United States has argued that COBRA affects this Court's analysis in two ways. One is on the relates... to point. It says that because COBRA affects ERISA-covered plans by this continuation of coverage--
William H. Rehnquist: Thank you, Ms. Murasky.
Donna M. Murasky: --You're welcome, Your Honor.
William H. Rehnquist: The case is submitted.


Warren E. Burger: We will resume arguments in number 71-422, Lake Carriers Association against MacMullan. Mr. Solicitor General you may proceed.
Robert A. Derengoski: Mr. Chief Justice and may it please the Court. The Water Resources Act of 1966 and the Water Quality Act of 1970 prescribed to be the national policy that the environment of this country including its waters be cleaned up. In each of these statutes, they have placed upon the states the primary responsibility for implementing that policy. In view in Michigan in the case of the sewage disposal from vessels has enacted a statute which is the ultimate in that area mainly complete retention of sewage and dispose off the (Inaudible) and therefore, I am somewhat surprised at being here. In response to the question of Mr. Justice White at the conclusion of yesterday’s session, I say that the only controversy now existing between the parties in this cause is the question of how this should be accomplished. Michigan says by complete retention and they say, no. In addition, they attacked the statute on numerous constitutional grounds. That is the only controversy. There is no prosecution pending or eminent at this time. We realized sir the futility of a prosecution at this time with inadequate shore size pump-out facilities. But we are working on that and we are making headway until this litigation was commenced. We realized they must have facilities to pump-out before the law could be properly applied. Now, I might go a little further and say insofar as the controversy goes, there is a controversy between the parties in this cause as to what constitutes pollution or clean water. The appellants in this cause evidently say that by the use of certain devices on their vessels by which they can pull -- if I may use the contradictory term clean soil into wide waters. They are aiding and abetting in fulfilling the federal requirements that pollution of our waters be controlled. Michigan says otherwise, we say in effect “thou shalt not dump.” Now, putting in its proper perspective, may it please the Court, the devices which these plaintiffs claim will range in their waste less obnoxious to the waters of the State of Michigan. I would like to point out that the record shows that at the 187 vessels possessed by these appellants, only some 50 have a device of any kind. In other words, about 15%. In other words, you have about 85% of your vessels pouring raw, untreated sewage into the waters of the Great Lakes. Projecting that to the entire Great Lakes fleet of some 422 vessels. The extent of their deprivation is horrendous to be hold. It is a special problem in Michigan. We are surrounded on three sides as the Court knows by waters of the Great Lakes with the longest shoreline in this country except for Alaska. The bulk of Michigan people take their drinking water from the Great Lakes. For example, in Detroit and its suburbs, 3,750,000 people, that was the figure in 1970, take their drinking water from the Detroit River which is one of the bodies of water involved in this litigation. So this seriousness of the situation and the necessity for a total retention requirement by Michigan is also obvious. May it please the Court, probably for the first time in my professional career I was pleased to receive a reply brief for in this brief filed by the appellants, I believe the verity of our cause is proved. They say and for the first time they recognized that Michigan has a problem and they say that the problem is solved by the quarantine regulations issued by the public health service under the guidance of the surgeon general in 1960. Now, I do not intend to be snide or patched in this remark. Brother Elder has conducted himself in accordance with the highest standards of the profession during the conduct of this litigation. By the at least 1960 regulation of the surgeon general was of such significance in this cause. Why was it not before the District Court in the 1971 trial of this case? I read the surgeon general’s requirements Your Honor insofar as at least Michigan is concerned are quite meaningless numbered paragraph 3 for example, exempts from the requirements vessels which have sewage disposal devices. I have just given you the figures showing how few of these vessels have any device whatsoever. Further in number paragraph 1 of the regulations, it says that all vessels moored shall not discharge sewage, etcetera into the waters if there are dockside facilities available for the disposition of same. Well, that is one of the complaints of appellants in this cause that there are no pump-out facilities anywhere. Although under the surgeon general’s regulations, these people just continue to dump and the basic requirement of the surgeon general requirement is that there shall be no disposal of sewage within three miles of a public water intake. Well, Your Honor, that presupposes that the way we use the water, the current and even the sun are just perfect and that the effluent dumped will remain in one spot. Those living at the Midwest would know that such a day has never occurred. And insofar as three-mile pump-out prohibition is concerned at a three mile radius, the Detroit river river from which I said 3,750,000 people take their water supply is that at its widest point in mile and a half.
Speaker: Mr. Derengoski.
Robert A. Derengoski: Yes, sir.
Speaker: Does Michigan claim the right under police power to impose these regulations say on or both coming from Duluth to Chicago on the middle of Lake Michigan?
Robert A. Derengoski: Yes, sir we do. If there are controversy of Michigan waters --
Speaker: What’s your definition of Michigan waters?
Robert A. Derengoski: Well, there is -- there is by name boundary line drawn by commission years ago between the States above Wisconsin and Michigan out about approximately the middle of Lake Michigan which is known as the boundary between Michigan and Wisconsin and they are referred to and any federal statute refers to the boundary waters of the state.
Speaker: So Wisconsin has jurisdiction over the west side of the Lake Michigan and rest then Michigan have jurisdiction.
Robert A. Derengoski: Yes, sir. Now, I realized the practical problem. We of course have no jurisdiction in Wisconsin waters. We don’t have sewage dumped in Wisconsin waters anymore than in ours. But the practical situation is that jurisdiction wise we may only enforce a requirement within the perview of Michigan’s boundary waters.
Warren E. Burger: Are these ancient boundary lines shown on the charts that are maintained on the vessels that apply to the Great Lakes?
Robert A. Derengoski: To the best of my knowledge, yes.
Warren E. Burger: They were drawn by the army engineers, were they?
Robert A. Derengoski: Sir, there was a boundary commission between comprised of Michigan and Wisconsin officials over ten years ago wherein this boundary was drawn.
Warren E. Burger: It’s apparently recent one then.
Robert A. Derengoski: Yes, sir.
Warren E. Burger: It’s brought up to date.
Robert A. Derengoski: Ten or 15 years somewhere in there sir.
Warren E. Burger: So, there is one drawn many, many years ago. Was there not?
Robert A. Derengoski: I believe there was. Yes, sir.
Warren E. Burger: By a joint commission that included --
Robert A. Derengoski: In the reply we have cited that the Wisconsin statute which requires total retention just like the Michigan waters or the Michigan statute but then there is an exception in there, for the waters -- vessels engaged in interstate or foreign commerce and that covers every vessel involved in this cause. They are all applying back and forth out between these states. So in appellants underlying that definitely was drawn that Wisconsin has excused than completely from any retention. I say to site to Wisconsin statute to this Court is a citation of the lowest form of pollution control of sewage disposal from vessels.
Speaker: Mr. Solicitor.
Robert A. Derengoski: Yes, sir.
Speaker: On the 50 vessels that have treatment facilities, do they compare with the treatment facilities of the City of Detroit?
Robert A. Derengoski: About 28 of them do. Yes, sir. We contest in the record that the secondary treatment which they claim the -- I think the biogas system provides is as good as the secondary treatment now in fact in Detroit.
Speaker: If they did setup a secondary system as good as Detroit they still couldn’t use it?
Robert A. Derengoski: No, sir.
Speaker: Why?
Robert A. Derengoski: The reasons were sir that these vessels are in moving point of discharge over which there is no control. Now in the sewage outlets from municipalities, we can control that area, inspect it, designate where it will be dumped. Apparently, (Inaudible) throughout the lakes dumping without regard to location, we can’t control that. Some vessel --
Speaker: You can’t control that in the middle of the lake anyway. You can only control the Michigan water.
Robert A. Derengoski: Yes right. Yes, sir. But we would have absolutely no control if some dark night, a vessel of the appellants came skulking on the Michigan shore and dumped a load. I say it’s a matter of control sir --
Speaker: Well, suppose you had the tanks that you require here and they still dumped it, you would have the same problem. I don’t think that is an answer to my question. My question is, if the water that they send out after all of their facilities is just as clean as the water dumped from Detroit. Why do they have to have the tank?
Robert A. Derengoski: Because sir, the actual process of testing this effluent is partly nonexistent on these vessels. We can test it. We know the qualities of the effluent being discharged at the city of Detroit at all times. It takes practically a chemical engineer to perform that function. And none of the answers -- well they claim that secondary treatment which they say, usually 28 of their vessels exist. When the (Inaudible) form of a bacteria comes down to 90%, the remaining 10%, this does not include sir what we call the pathogens. The bacteria which for example give you hepatitis, typhus, typhoid fever, dysentery --
Speaker: But these were same passages that come from Detroit, aren’t they?
Robert A. Derengoski: They are tested for anti --.
Speaker: Well, and that after the treatment is made, that goes into the Michigan water, Lake of Michigan?
Robert A. Derengoski: Yes, sir. In this area, we are now set aside which are total body contact, swimming areas, we have a discharge for sewage area and so forth. But with these vessels, there’s no control over the area in which they would make this dump.
Speaker: Is that just with the offense under the Michigan criminal statute, the failure to provide the retention facilities or the dumping in Michigan waters?
Robert A. Derengoski: Well, actually it provides failure to comply with the statute which makes any holding tank or other total retention device mandatory. That is an offense under the Michigan statute. Yes, sir. But --
Speaker: And what is the penalty?
Robert A. Derengoski: $500.00 fine.
Speaker: So it’s much cheaper to incur the penalty than to comply?
Robert A. Derengoski: According to the figures given by appellants, yes.
Speaker: One last question. Your boundary problem is really no different than that tendant upon, for example, to Mississippi river as between joining states.
Robert A. Derengoski: That’s right sir.
Warren E. Burger: Would you agree Mr. Solicitor that ultimately the solution to this problem requires a uniformity of regulation?
Robert A. Derengoski: That would be the idea. Yes Mr. Chief Justice. But the argument they make concerning the necessity for uniformity, in response with this fashion must take Michigan for the sake of uniformity bring its ultimate and best requirement for this problem and reduce it down to say the lowest Wisconsin. Now, I get the point that parties are driving at. They like to or hoping for federal regulations which as published in the register May 12, 1971 would permit dumping. That’s what they want, they want to continuous dumping even though with treatment facilities and even though in the most of the proposed rule making, they were told that holding tanks, the Michigan requirement would be acceptable under any federal rule issue. Now what? They know that if they complied with the statute they would be inconformity with federal law. Why haven't they gone along to accomplishing things?
Speaker: Mr. Derengoski, the Court below apparently felt there was no case or controversy. But what is Michigan’s position or plan with respect to enforcement as criminal statute. It’s on the books now, is it?
Robert A. Derengoski: Yes, sir.
Speaker: What are you going to do? Suppose this Court affirms the judgment law? What are you going to do time wise with respect to --
Robert A. Derengoski: Timewise here, we realize the need of time for the construction of erection of pump-out facilities that is necessary and there would be no enforcement until the pump-out facilities were available.
Speaker: Do you believe that completely after the --
Robert A. Derengoski: To the Michigan Water Resources Commission to institute and implement the program regarding pump-out facilities, I am sure.
Speaker: But you are insisting that the carriers get ready to perform because perhaps --
Robert A. Derengoski: Yes, sir.
Speaker: Because if you wait until pump-out stations are ready to begin installing tanks then there will be another great delay.
Robert A. Derengoski: Oh! Yes sir.
Speaker: So you have a rather concrete confrontation with these carriers now, don’t you?
Robert A. Derengoski: Yes, sir we do. But we see where no unreasonable demand could be made on these people if within --
Speaker: Under the Michigan law, who will be responsible for providing pump-out stations? The carriers or Michigan?
Robert A. Derengoski: The carriers and under the Michigan statute. The Michigan agency may prescribed which docks, roads, and so forth shall provide pump-out facilities. Now further these litigations, we really have been in amicably in this cooperative effort working with the carriers for the solution of this problem. And may I say our case has been blown out of proportion. The provision for pump-out facilities is no great mechanical accomplishment. We are talking about in any cases riding (Inaudible) from the fault to a municipal sir. That’s all and we know that the case is the cordoned on the line with these pump-out stations, the TV place kind of blend last night, so I started doing a little figure and attached to the jurisdictional statement, are number of charts showing all of the thoughts of cause and the way these vessels may under throughout the Great Lakes. Now, counting each one of these points of call, I found about 40 of them in Michigan at which taking the appellants after word pump-out stations would be required. Ridiculous! I took out one point, where he lists Manistee, Filer City, and Ludington as ports of call which presumably would have to have pump-out stations, I am mad about Manistee in Michigan may it please the Court. It is three miles from Manistee to Filer City and 20 miles to Ludington. New units of stock at all as you pump-out or shore of Michigan there are eight ports of car list in one area in the port here in the area, all within three to five miles of each other. Are they going to stop it or all of them pump-out. So the issue of pump-out stations had been blown out of proportion --
Speaker: Did I understand you correctly that if the federal regulations were now effective, fully effective, say the five years or the three years and whatever it is that run fully effective. Do the federal regulations say state law?
Robert A. Derengoski: I believe it would be preempted, yes sir.
Speaker: And you mean you would be preempted?
Robert A. Derengoski: By the Federal statute.
Speaker: Or you would be preempted but in the sense but let's assume that the federal law permits discharge in the lakes. That you would be complying with the federal law, if you have treatment facilities aboard and dumped only effluent that complied with federal standards?
Robert A. Derengoski: Yes sir, that would be in compliance with federal law.
Speaker: Alright but if you complied with federal law would that be all you had to do? In short, would your Michigan requirement be preempted, would the ships still has to have -- could Michigan still insist that the ships have their holding tanks?
Robert A. Derengoski: That sir, I believe is a debatable question. However --
Speaker: Well, a moment ago you said that federal regulations say that Michigan -- that the Michigan holding tank requirement would satisfy federal law?
Robert A. Derengoski: Would satisfy federal requirements.
Speaker: Well if it would satisfy federal law, it means that it would be -- it doesn’t mean that it is not in conflict with federal law?
Robert A. Derengoski: Yes sir. If all means (Inaudible) have right now installed holding tanks.
Speaker: Yes. But what if one --
Robert A. Derengoski: In good shape federal rights.
Speaker: All right. Well I will put it the other way. Suppose you complied with federal law and then Michigan brought a criminal suit, brought a criminal action against one of the carriers saying you don’t have holding tanks. Would Michigan be permitted to do that under the federal?
Robert A. Derengoski: Not so if the federal regulation provided for discharge.
Speaker: Well, is it clear that the federal law will forbid anymore stringent regulations certainly with forbidden less stringent regulation?
Robert A. Derengoski: Well, actual issue is that federal requirement going to deal in minimum or maximum requirement. We don’t know at this time.
Speaker: Well doesn’t the Act of 1970 provide for preemption?
Robert A. Derengoski: Yes sir, it does. It says that after the effective date of the Act, the states may not enforce their statutes or regulations with reference to the disposal of vessel sewage.
Speaker: Well, isn’t that the answer then and Michigan completely preempted that?
Robert A. Derengoski: Yes, sir.
Speaker: You could not enforce your criminal statute?
Robert A. Derengoski: Well sir, if they have holding tanks which will lead to federal requirement. They were still discharging. I have an idea that we could enforce our statute. Without infringing, can bind the federal requirements concerning same.
Warren E. Burger: When is the effective operative date of the federal program?
Robert A. Derengoski: Oh! Sir we don’t know. They haven’t -- there has been no regulation published yet and under the law it does not become effective for old vessels until five years after issuance of the regulation. And remember, that in this case we are talking about only old vessels. New vessels which has a two-year requirement are those vessels which are constructive after the effective date of the act. Now in the meantime, what is Michigan to do? Or are there some impairment of its waters? Or all this defecation of what nature has given us and another hypothetical, State Congress as they have the right to do pick up to five year requirement and then came with 50 or 20 year requirement. What do we do, stand by and watch Michigan waters become the world’s largest (Inaudible)?
Warren E. Burger: Then I take if you would argue that preemption is not true preemption until you have an effective federal operation as distinguished from an effective date or some statutes.
Robert A. Derengoski: Right sir.
Warren E. Burger: In other words you are not preempted until the federal government is actually doing something?
Robert A. Derengoski: In fact they have told us by their policy to go ahead and work at this. You have the final responsibility. In conclusion, may I say to the Court, that I believe a state has the constitutional right to protect its natural advantages and prevent them from any further impairment. Thank you, sir.
Warren E. Burger: Thank you Mr. Solicitor. Mr. Elder, you have a few minutes left.
Scott H. Elder: Your Honor I will be very brief. We certainly agree that the water should be cleaned up. We are not asking for a license to pollute. But if pollution control is valid in Michigan, it’s valid in every other state. Mr. Derengoski said it’s a problem of control that these vessels are moving sources and therefore the state can’t police them. Who is in a better position to police the pollution than the United States Coastguard which licensed the vessels, inspects the vessels, and has the confident personnel? Our whole purpose here is to promote the pollution control on a uniform basis throughout the entire Great Lakes so that our vessels can install the equipment, whatever it is. Now this Court does not have to decide what the equipment is or what standards are. But I think this Court is to be bound to decide on the basis of the uniform maritime law that this should be applicable throughout the entire Great Lakes so we can go anywhere to any port. Now, the uniform maritime law dictates that in order to carry on commerce, these vessels have to be free to move from port to port. I don’t think this is a question that was ever really reached in the Harman case. We do have one other element here and that is the Boundary Waters Treaty of 1909 between United States and Canada. This in turn calls for uniform regulation and I think as a matter of international law, the individual states such as Michigan and Ohio and so forth are not recognized for purposes of treaties and so forth as separate entities. They are part of the United States and the Boundary Water Treaty entitles our Canadian friends and our own vessels to a right to travel throughout the Great Lakes. Now, --
Speaker: Mr. Elder.
Scott H. Elder: Yes.
Speaker: Do you say this Court never reached in the Harmen case, are you suggesting that Harman case has surely been decided differently than it was or that in fact wasn’t present in the Harman case.
Scott H. Elder: I couldn’t find any evidence in the Harman case where the argument of the uniform maritime law has been raised. I think that case was decided pretty much on the Commerce Clause basis. It is my own personal interpretation at a particular decision, and others may disagree. Finally, one thing I want to point out here, as Mr. Justice Marshall know it, we do have all these people living in Michigan taking their drinking water from the Great Lakes but also the waste created by those people are going right back into the lake through the municipal plants which at best have only primary treatment, and then Michigan in this brief on page 2 the third paragraph says, after talking about these vessels (Inaudible) that it says the municipal systems are normal point of discharge and the water quality for that particular area be set and governed accordingly.
Warren E. Burger: I’m not sure this point on that, how does it help you, if you simply point to the fact that there are other polluters beside the vessels?
Scott H. Elder: Two things, first of all they are not saying the quality of the water according to what it should be, they are saying that according to what a certain source of pollution is an alarming. The second point is that these very same devices and we have on our vessels, mainly the biogase system are recognized and used in shopping centers, in small communities, the very same device is permitted on land in Michigan. Now, we say it’s a violation of the Equal Protection Clause to permit them to go ahead and use them on land and not let us use them on the ships but really, we’re doing less harm than anybody because for the most part of your ships lay out on the lake or away from shore, away from populous areas and we think this is a denial of the Equal Protection laws.
Speaker: But that is untrue on the St. Mary’s River or the other streams that comprise the path from Duluth to Buffalo?
Scott H. Elder: You take a look at Michigan’s law and to the vessels downtown to the St. Mary’s River, the same river is going to be prohibited but how about the vessels upbound to Canadian water. There is no restriction whatsoever in the St. Louis side by side two boats passing through by feet apart. One was prohibited use. The inner suburbans load up on the charts of the rivers and there are only the exhibits that are filed in this case and these vessels move back and forth and these naturals have to turn with whose water they are in?
Speaker: Mr. Elder. How long have your vessels been plying the Great Lakes?
Scott H. Elder: How long? You mean the actual vessels themselves or the companies or what
Speaker: The companies.
Scott H. Elder: Oh! Somewhere back to 1880, 1889 something like that.
Speaker: That is 70 or 80 years, never done anything about this problem?
Scott H. Elder: Oh! Yes. Many of the vessels have installed these biogas systems. Every ship has been constructed on the Great Lakes since 1950, has had a sewage treatment system installed and we got several new vessels under construction right now, which will have a treatment system but we really don’t know what they haev. This base port and here the ships are under construction, and they don’t know what kind of advice they are getting. Now, through the Michigan water -- I see my light.
Warren E. Burger: Your time is up.
Scott H. Elder: Yes.
Warren E. Burger: Thank you, Mr. Elder, Thank you, Mr. Solicitor. The case is submitted.