Preemption Watch

April 18, 2005

FEDERAL

Energy

The Federal Energy Regulatory Commission would preempt state and local regulation of liquid natural gas facilities if a provision in the House energy bill passes. In the January 2005 Preemption Watch, we noted that language in support of this preemption was added to the FY 2005 Omnibus Appropriations Bill.

The law (H.R. 359) would put an end to a legal battle between the federal government and the state of California over whether the current law gives FERC the power to preempt local concerns over a proposed Long Beach LNG facility. Massachusetts state and local officials are launching a legal challenge against an import facility in Fall River, Mass. Other states have used zoning and other provisions to reject LNG sites. In Maine, three LNG facilities have been rejected in local votes.

Local concerns about LNG facilities were heightened when a federal report warned of the consequences of a terrorist attack on an LNG transport tanker. Currently the U.S. has four LNG import facilities, located in Massachusetts, Maryland, Georgia and Louisiana. FERC has given approval to three more on the Gulf Coast. LNG’s share of the natural gas market is expected to grow from 3 percent to more than 21 percent by 2025.

Under the proposal, FERC would consult with state and local regulators, but could override their concerns if it chose to do so. Also, it would be “presumptively concluded” that a local agency has approved a proposal if the local agency does not meet the federal deadline for considering the proposal. State and local governments would not have the power to act if they discover problems at a facility during a safety inspection.

The full text of the Liquefied Natural Gas Act of 2005 (H.R. 359) and related information are available from Thomas.

Airport Noise

The Los Angeles Airport is spending $6.5 million on noise studies in the hopes of gaining a federal waiver for air traffic restrictions. Restrictions on aircraft departures between midnight and 6:30 am have already been approved by the Los Angeles City Council, on the recommendation of the LAX/Community Noise Roundtable, comprised of local elected officials and staff, members of community groups, and representatives of Congress, the FAA, and LAX.

The Federal Aviation Administration was given authority over aircraft noise issues in 1968. It was not until the Airport Noise and Capacity Act of 1990, however, that Congress explicitly mandated federal review of all airport noise or access restrictions.

For a history of the legal debate over jet engine noise, see the American Bar Association, Report of the Aviation Committee, 1999 Spring council Meeting.

Place-of-Origin Labeling

The U.S. Supreme Court declined without comment to hear an appeal of the 2004 California Supreme Court ruling that federal law does not trump a state law on wine labeling.

The California law requires wine bearing a Napa place name to contain at least 75 percent Napa grapes. A 1986 federal law set place-of-origin grape levels at 75 percent but exempted 30 existing brands, including three brands using Napa place names. The Napa Valley Vintners Association brought suit, seeking compliance with the state label law.

The law, enacted in 2000, will not be enforced until challenges on other constitutional grounds are heard, including takings and commercial free speech. Arguments are scheduled for the end of April in the state appellate court.

The full text of the California Supreme Court ruling and background information are available from the Napa Valley Vintners Association

The Court is expected to rule shortly on another matter related to wine. At issue is whether out-of-state wine producers and merchants must be given the same right to ship directly to consumers as in-state wine producers and merchants.

Appeals from Michigan and New York pit the 21^st Amendment – which repealed Prohibition and explicitly gives states control over “the transportation of alcoholic beverages” – against the Commerce Clause (Article I, Section 8 of the Constitution). The judiciary has held that the Commerce Clause, by delegating authority over foreign and interstate commerce to the federal government, bars the states from legislating on matters of interstate commerce. The argument in this case is that the specific right contained in the 21^st Amendment trumps the implied prohibition of the Commerce Clause.

Telecommunications

Do Not Call

Indiana is again being forced to defend its Telephone Privacy Program, a do-not-call law enacted in 2001. State legislators filed letters with the FCC, as they had also done in 2003, defending their law, which is among the strictest in the nation because it provides only four exemptions: real estate agents, insurance agents, charities that use their own employees or volunteers to make the calls, and newspapers that use their own employees to make the calls.

The Consumer Bankers Association has petitioned the FCC to override Indiana’s law because it does not include exemptions provided in the federal Do Not Call law: financial and telecommunications industries, and businesses that you have had contact with in the last 18 months.

For more information, see the Indiana Attorney General's Telephone Privacy section.

High-Speed Internet

On March 25, the FCC ruled to preempt state laws that require telephone companies to sell stand-alone high-speed internet service. The decision means households cannot choose separate carriers for voice and DSL services. BellSouth – the largest local carrier in the Southeast – petitioned the FCC in August 2003 to preempt state rules requiring carriers to offer stand-alone DSL. Phone companies around the country want to offer high-speed internet exclusively in conjunction with local telephone calling plans, as a way to stem the loss of customers to cellular phones and voice-over-internet protocol (VOIP).

FCC Commissioners Jonathan Adelstein and Michael Copps voted against the ruling, saying the commission used the "heavy hammer of preemption" without considering consumers' interests. "If it is permissible to deny consumers DSL if they do not also order analog voice service, what stops a carrier from denying broadband service to an end-user who has cut the cord and uses only a wireless phone?" they asked.  "What prevents a carrier from refusing to provide DSL service to a savvy consumer who wants stand-alone broadband only for VoIP?"

Federal Communications Commission 05-78 (BellSouth Telecommunications Request for Declaratory Ruling that State Commissions May Not Regulate Broadband Internet Access Services by Requiring BellSouth to Provide Wholesale or Retail Broadbands Services to Competitive LEC UNE Voice Customers, WC Docket No. 03-251).

STATE

Minimum Wage

Madison, Wisconsin is defending its minimum wage ordinance against legal and legislative challenges.

Last spring, the city passed an ordinance to increase the minimum hourly wage to $5.70 this year and $7.75 by January 2008. A coalition of restaurant owners, grocers, and manufacturers is challenging the ordinance, arguing that state legislators intended the state’s $5.15 minimum wage to be a ceiling. City officials say the state law is a floor that local governments have authority to exceed.

Milwaukee followed Madison’s lead after the Democratic governor and Republican-controlled legislature failed to reach an agreement on a statewide minimum wage increase, and other cities are considering similar moves. Republican legislators say they expect to reach a compromise with the governor in the coming months. In the meantime, a bill to ban local minimum wage ordinances is advancing through the state Senate (SB 147).

For more information on municipal living wage ordinances, see the New Rules Equity Sector – Living Wage.

Firearms

Both houses of the Kansas’s legislature voted to preempt local firearms laws and make uniform laws on transporting firearms in the state. Supporters of the bill think they have enough votes to override a gubernatorial veto. The governor has not yet acted on the bill.

The law would prohibit local governments from adopting any law on purchase, transfer, ownership, storage or transportation of a firearm that is more restrictive than the state law. It explicitly allows cities and counties to adopt ordinances on transportation of firearms that are less restrictive than the state standard.

In keeping with a 2004 federal preemption of state laws, active and retired law enforcement officers would have the right to carry concealed weapons. But it does not prohibit cities from otherwise regulating carrying of firearms.

Kansas Senate Bill No. 195, as Amended by the House Committee of the Whole (final version).

Community Growth and Development

New Mexico’s legislature is considering HB 805 and SB 1005, which would require cities to average their infrastructure costs across the entire city when calculating impact fees. Currently, New Mexico cities – like most cities, and as U.S. Supreme Court rulings dictate – assess impact fees on new developments based on the cost of extending city services to them.

For example, Albuquerque assesses $8,000 in impact fees for a new house built on the city’s undeveloped fringe, and $1,300 for the same house built in the city’s downtown. One reason for these differential impact fees is that there are 4,500 empty seats in schools in older neighborhoods, and little enrollment growth overall, but the district has budgeted $120 million for new schools at the urban fringe (Albuquerque Journal, February 3, 2005).

If the pending legislation passes, builders would be charged the same impact fees in areas that already have streets, utilities, and fire services as in those that have no existing infrastructure.

Oil & Gas Drilling

It’s not just for ANWR. As prices rise, small wells are becoming increasingly attractive to oil companies. Last year Ohio enacted a state law (HB 278) that bans cities and villages from regulating oil and gas drilling. In September, state regulations that had previously applied only to rural areas became the law in cities across the state.

Since then, drilling has gotten underway in the Cleveland suburbs, including the Knollwood Cemetery in Mayfield Heights. One company that specializes in urban drilling says since they law’s passage they have sunk holes in eight communities that previously banned or restricted drilling. Companies now apply to the state for a permit, and are required only to notify the community and neighbors directly affected by the drilling. (State law requires that a driller acquire the rights to 20 acres around the well, which is why most drilling is occurring in golf courses, cemeteries, and parks.)

A bill has been introduced in the 2005-2006 session that would repeal the provision (HB 299).