June 30, 2011, Cheryl Hanna: Preemption Primer

At the heart of Entergy’s case is that federal law preempts Vermont from taking any action that would result in Vermont Yankee’s closure.  Earlier this week, Vermont Law School held a panel on the case, and in light of that discussion, I thought that it would be helpful to provide our readers to have a primer on preemption.  In particular, I thought our readers might find it useful to review some basic concepts about preemption. Since the case is likely to be decided in United States Supreme Court, I also look at some recent preemption trends in the Court.

The preemption doctrine derives from the Supremacy Clause of the Constitution which states that the “Constitution and the laws of the United States…shall be the supreme law of the land…anything in the constitutions or laws of any State to the contrary notwithstanding.”  This means that any federal law–even a regulation of a federal agency like the Nuclear Regulatory Commission–trumps state law.

The courts generally recognize three theories of preemption.  The first is conflict, or impossibility preemption. If it is impossible for a regulated industry to comply with both federal and state law, then federal law trumps.  The second theory is express preemption.  This is when Congress has made clear that it intends federal law to override any state laws.  The third theory, and the one that it is much more difficult to prove, is known as implied preemption.   While Congress has not expressly preempted state law, it intended to “occupy the field.” Therefore, even if a state law does not directly conflict with a federal law, and even if there is no express language of preemption, if enforcing the state law would frustrate the purpose of the federal field occupation, then the state law is unenforceable.  It is this third theory that Entergy argues makes Vermont’s intent not to issue a certificate of public good unconstitutional.

At the heart of any preemption claim is the relationship between the state and federal government – a concept often referred to as federalism.  Yet, what makes preemption so interesting, and confusing at times, is that preemption claims are almost always brought by industry trying to avoid being either sued by an injured party, or regulated by a state.  Industry has been very aggressive in the past few years in raising preemption challenges to state laws, arguing that it is unfair and inefficient that it has to answer to two masters.  Rather, industry would much rather be regulated by only the federal government instead of being subjected to the laws, and the lawsuits, of fifty different states.

The other funny thing about preemption is that it tends to make strange bedfellows.  Generally speaking, it is conservatives who are most adamant about a limited role for the federal government and a more expansive role for the states.  When federal law trumps state law, the rights of states, and hence the people, are infringed upon by the feds.  Yet, it is often conservatives, or at least conservative business interests, that prefer federal preemption to the rights of states.

Preemption has been one the most active areas of litigation in the Supreme Court, with no less than five cases being decided this term.  In reviewing these and other preemption cases, a few observations are relevant to the Vermont Yankee case:

First, the fact that the federal government or the Nuclear Regulatory Commission hasn’t yet weighed in on the case is insignificant.  Trust me, we will hear from Washington sooner or later. In almost every preemption case to reach the Supreme Court, if the federal government doesn’t weigh in on the side of one party, the Court will ask its position. That is because preemption is, at its heart, about federal power, so the Court wants to know what the Feds think about their control of a particular area.

Remember the case of Diane Levine, the Barre woman who lost her arm but won her case against Wyeth for failing to warn of the dangers of an off-label use of a drug? When attorneys asked the Court to hear her case, the Court requested that the Solicitor General weigh in and tell the Court what it thought about the FDA’s role in regulating warning. Similarly, the Federal government simply can’t avoid getting involved in Vermont Yankee. The Court is certain to require it to do so.

Second, industry usually prevails in preemption cases. Of course there are exceptions to this. Most notably this term was the case in which businesses claimed that Arizona’s attempt to regulate illegal immigration more stringently that Homeland Security was preempted by federal immigration laws. Arizona won, with the help of all the conservative justices, including Justice Kennedy.  But that case was much more about the politics of immigration than it was about federal preemption. Also, there was a case this term in which a family sued Mazda for failing to put a shoulder belt in a minivan.  Mazda lost despite its claim of federal preemption, but decision was unanimous, and the law pretty clear.

I consider both the Arizona and the Mazda cases outliers. In the cases that are a closer calls, and where both sides have a colorable argument, Justice Kennedy, so often the swing vote, nearly always sides with industry.  Three cases this term, including one that involved field preemption, and one that was argued by Entergy’s lawyer Kathleen Sullivan, ended with all the conservative justices, and even some liberal ones, siding with business.  One case, AT&T Mobility v. Concepcion, decided by a 5 -4 vote, is particularly relevant because the Court invoked the idea that if a state decision interfered with the fundamentals of a federal scheme, then it was preempted under the Constitution even where there was no expressed preemption.  Similarly, in Bruesewitz v. Wyeth, Sullivan’s case, the Court, in a 6 – 2 decision, relied both on the language of a statute and its general purpose to hold that federal law preempted families from suing the makers of childhood vaccinations.  Finally, on the last day of the term, the Court decided PLIVA, Inc. v. Mensing.  Here again, a 5-4 majority of the Court favored the interests of generic drug makers over individuals harmed by a failure to warn.

The bottom line is that the Supreme Court appears very open to preemption arguments, including field preemption, especially when a decision by a state would undermine federal power of a highly regulated national industry.  Of course none of these cases are dispositive of how the Court would rule on Vermont Yankee.  But it is crucial to understand that Vermont’s reliance on Pacific Gas & Electric paints an incomplete picture of where the Court is evolving on questions of federal preemption.  It is no longer 1983.  The Court is more conservative, and the preemption doctrine has expanded since that time.  And the Court has recently expressed displeasure with the Vermont legislature’s attempt to curtail the speech of pharmaceutical companies in its recent decision of Sorrell v. IMS Health. The Court clear that it didn’t like state lawmakers targeting industries it didn’t like. This suggests that if the Entergy lawsuit does end up before the Supreme Court, neither the current doctrine of preemption, nor the sentiment of the Justices, is likely to be on the side of the state. That doesn’t mean Vermont won’t ultimately prevail, but it does mean that the case is a difficult one, at best.