Opinion ID: 200320
Heading Depth: 3
Heading Rank: 2

Heading: Legislative Intent to Preempt

Text: 37 The Secretary's second major argument is that Congress did not intend to preempt the challenged scheme, which either falls outside the scope of the preemption clause of the FAA Authorization Act, or is preserved under other provisions of federal law. So, the reasoning goes, the district court construed too broadly the scope of the FAA Authorization Act's express preemption provision, which provides that no state may 38 [E]nact or enforce a law, regulation, or other provision having the force and effect of a law related to a price, route, or service of an air carrier ... when such carrier is transporting property by aircraft or by motor vehicle. 39 49 U.S.C. § 41713 (emphasis added). In determining the scope of this provision, we look to Congress's intent, which is revealed in the language of the provision, as well as the structure and purpose of the statute. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992)(interpreting the statutory predecessor to § 41713). 17 Setting aside those portions of the statute that indisputably apply to the facts of the current case, 18 the crux of the matter is whether the laws at issue are related to a price, route, or service of UPS. 40 The phrase related to has a broad meaning in ordinary usage: to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association or connection with. Id. (quoting Black's Law Dictionary 1158 (5th ed.1979)). When used in a preemption provision such as § 41713, it has a similarly broad reach. State laws and regulations having a connection with or reference to an air carrier's prices, routes or services are preempted under § 41713. See id. at 384, 112 S.Ct. 2031. A sufficient nexus exists if the law expressly references the air carrier's prices, routes or services, or has a forbidden significant effect upon the same. Id. at 388, 112 S.Ct. 2031. This interpretation is consistent with the purpose animating the FAA Authorization Act and Airline Deregulation Act, which sought to prevent states from interfering with the goal of federal deregulation of air transportation by imposing regulations of their own. See id. at 378, 112 S.Ct. 2031. 41 In his attempt to circumscribe the breadth of this interpretation, the Secretary suggests that only statutes and regulations that seek to set, control or manipulate an air carrier's prices, routes, or services are preempted by the FAA Authorization Act. This narrower interpretation would read the related to language out of the statute, an approach expressly rejected by the Supreme Court. 19 See id. at 385, 112 S.Ct. 2031 (Had the statute been designed to pre-empt state law in such a limited fashion, it would have forbidden the states to ` regulate rates, routes and services.'). 42 The challenged scheme both refers to and has a forbidden significant effect on UPS's prices, routes or services. Section 9066 — the linchpin of the scheme — forbids delivery unless and until a recipient produces a certificate from the Secretary. Compliance with this provision significantly affects the timeliness and effectiveness of UPS's service, which includes the delivery of packages on an express or time-guaranteed basis. Likewise, the prepayment mechanism imposes extensive requirements that must be met before a carrier may make a lawful delivery. These requirements create a substantial burden on UPS, in the form of additional labor, costs, and delays. The undisputed record, as chronicled by the district court below, shows that this burden directly and significantly affects UPS's routes and services, which depend upon an orderly flow of packages. United Parcel Service, 210 F.Supp.2d at 38-40. The costs of this scheme necessarily have a negative effect on UPS's prices. See Federal Express Corp. v. California Pub. Util. Comm'n, 936 F.2d 1075, 1078 (9th Cir.1991) (Terms of service determine cost. To regulate them is to affect the price.). In view of the uncontroverted record, we must conclude that the challenged scheme falls within the scope of the FAA Authorization Act's preemption provision. 43 Against the weight of this authority, the Secretary argues for a presumption against preemption. This presumption only arises, however, if Congress legislates in a field traditionally occupied by the states. United States v. Locke, 529 U.S. 89, 108, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000) (citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). The Secretary does not dispute that there has been a longstanding federal presence in the field of air transportation. Instead, he says that the relevant field is state taxation. We think our earlier analysis of the Butler Act puts to rest the question of whether our task is to determine the validity of a Commonwealth tax. On the contrary, our task is to determine the preemptive effect of the FAA Authorization Act within the field of air transportation. No presumption against preemption is appropriate in this case because of Congress's significant — and undisputed — presence in the field of air transportation. 20 44 In the face of the specific substantive pre-emption provision of the FAA Authorization Act, Morales, 504 U.S. at 385, 112 S.Ct. 2031, the Secretary also asks us to conclude that the challenged scheme survives by virtue of other provisions of federal law or the FAA Authorization Act's legislative history. First, he points to 26 U.S.C. § 7653, a provision of the Internal Revenue Code that subjects articles manufactured in the mainland United States to a tax at the port of entry in Puerto Rico that is equal to (in rate and amount) the tax imposed upon articles manufactured in Puerto Rico. Like Section 3 of the Federal Relations Act, this provision prevents discriminatory taxation in favor of merchandise produced in Puerto Rico. Cf. 26 U.S.C. § 7652(a)(1) (subjecting articles of Puerto Rican manufacture entering the mainland United States to a tax equal to the internal revenue tax imposed in the United States upon the like articles of domestic manufacture). It is not a blanket authorization for Puerto Rico to regulate the delivery of goods. Indeed, Puerto Rico allows the unrestricted delivery of taxable merchandise through the U.S. mail. 45 The Secretary also looks to the FAA Authorization Act's legislative history for support for his position, in particular a statement that nothing in this amendment is intended to change the application of State tax laws to motor carriers. H.R. Conf. Rep. No. 103-677 at 85 (1994), reprinted in 1994 U.S.C.C.A.N. 1676, 1757. Even if we were bound by this fragment of the legislative history, the Secretary's interpretation of it is not consistent with its plain language, or with the overall purpose of the legislation. The taxes at issue in the case before us are generally applicable excise taxes, not taxes on motor carriers. Moreover, the regulatory authority retained by the states was not to be used as a guise for continued economic regulation as it relates to prices, routes or services. H.R. Conf. Rep. No. 103-677 at 84 (1994), reprinted in 1994 U.S.C.C.A.N. 1676, 1756. 46 Finally, the Secretary contends that the challenged scheme survives under the Federal Anti-Head Tax Act, 49 U.S.C. § 40116(e) (formerly 49 U.S.C. § 1513(b)), a provision that he characterizes as a savings clause. This statute prohibits the states from imposing a tax or head charge on air transportation, including taxes on air passengers and gross receipts from air transportation. See id. § 40116(b). The provision on which the Secretary relies, § 40116(e), preserves the right of the states to collect those taxes not otherwise barred by the statute. Far from a clear manifestation of congressional intent to permit Puerto Rico's ban on delivery, this broad provision merely preserves certain rights of taxation already held by the states. It creates no new rights for Puerto Rico, and adds nothing to the analysis where, as here, the right of Puerto Rico to levy and collect the excise tax is undisputed. 21