PUERTO RICO DEPARTMENT OF CONSUMER AFFAIRS, ET AL., PETITIONERS V. ISLA PETROLEUM CORPORATION, ET AL. No. 86-1406 In The Supreme Court Of The United States October Term, 1987 On petition for a writ of certiorari to the Temporary Emergency Court of Appeals Brief for the United States as Amicus Curiae This brief is submitted in response to the Court's order inviting the Solicitor General to express the views of the United States. TABLE OF CONTENTS Question Presented Statement Discussion Conclusion QUESTION PRESENTED Whether the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. 751 et seq., as amended by the Energy Policy and Conservation Act (Pub. L. No. 94-163, 89 Stat. 871), prohibits the Commonwealth of Puerto Rico from regulating the prices charged by gasoline wholesalers. STATEMENT 1. In October 1973 war in the Middle East and a resulting embargo on oil exports to the United States caused severe disruptions in the international trade in crude oil and petroleum products (see Pet. App. 8a). In response, Congress enacted the Emergency Petroleum Allocation Act of 1973 (the EPAA), Pub. L. No. 93-159, 87 Stat. 627, 15 U.S.C. 751 et seq., which provided, subject to specified exceptions, for allocation and price regulation of "all crude oil, residual fuel oil, and refined petroleum products produced in or imported into the United States" (Section 4(a), codified as amended, 15 U.S.C. 753(a)). Section 4 of the EPAA directed the President to "promulgate a regulation providing for the mandatory allocation of crude oil, residual fuel oil, and each refined petroleum product, in amounts specified in (or determined in a manner prescribed by) and at prices specified in (or determined in a manner prescribed by) such regulation" (ibid.). The EPAA had explicit preemptive effect, but only to the extent of conflict between federal and state regulation. It provided that "(t)he regulation under section 4 and any order issued thereunder shall preempt any provision of any program for the allocation of crude oil, residual fuel oil, or any refined petroleum product established by any State or local government if such provision is in conflict with such regulation or any such order" (Section 6(b), 87 Stat. 633, 15 U.S.C. 755(b)). Section 4(g) of the EPAA originally provided that "(t)he authority (of the President) to promulgate and amend the regulation and to issue any order under this section, and to enforce under section 5 such regulation and any such order, expires at midnight February 28, 1975, but such expiration shall not affect any action or pending proceedings, civil or criminal, not finally determined on such date, nor any action or proceeding based upon any act committed prior to midnight February 28, 1975" (Section 4(g), 87 Stat. 632, 15 U.S.C. (Supp. IV 1974) 753(g)). Congress amended the EPAA three times to extend the President's authority; the last change set the expiration date at December 15, 1975 (Act of Nov. 14, 1975, Pub. L. No. 94-133, Section 1, 89 Stat. 694). On December 22, 1975, Congress enacted the Energy Policy and Conservation Act (the EPCA), Pub. L. No. 94-163, 89 Stat. 871. The EPCA retroactively amended the EPAA, repealing Section 4(g) and, instead of terminating all federal controls at the same time, mandated a gradual phase-out of the President's regulatory authority (Sections 401-403, 89 Stat. 941-948). It provided that at the end of a 40-month phase-out period the President's regulatory authority would become "discretionary rather than mandatory" and further provided that "(t)he authority to promulgate and amend any regulation or to issue any order under this Act shall expire at midnight September 30, 1981, but such expiration shall not affect any action or pending proceedings, administrative, civil, or criminal, not finally determined on such date, nor any administrative, civil, or criminal action or proceeding, whether or not pending based upon any act committed or liability incurred prior to such expiration" (Section 461, 89 Stat. 955 (Section 18 of the EPAA as amended 15 U.S.C. 760g)). Pursuant to the discretionary authority conferred by this section, President Reagan terminated all petroleum price and allocation controls on January 28, 1981 (Exec. Order No. 12,287, 3 C.F.R. 124 (1982)). 2. Since 1942, Puerto Rico has provided for the regulation of prices of and profit margins on staple commodities sold in its territory (Pet. App. 3a). In 1973, regulatory authority was vested by statute in petitioner Puerto Rico Department of Consumer Affairs (DACO) (ibid.). DACO and its predecessors "regulated the price of gasoline and other petroleum products from 1953 to 1973. * * * Upon the enactment of (the EPAA), DACO suspended its regulatory authority over gasoline prices and profit margins" (ibid.). In 1975, at a time when the EPAA was scheduled to expire on August 31, 1975, "DACO issued Price Regulation 45 which would restore its price controls (on petroleum products) upon expiration of the EPAA" (Pet. App. 3a). Price Regulation 45, as amended, provided that the Secretary of DACO could issue orders fixing prices and profit margins for gasoline, kerosene and diesel oil sold "at all levels of distribution" within Puerto Rico (Pet. App. 36a, 37a-38a) and required that, when no such orders were in effect, 15 days' notice be given to the Secretary before any seller raised its price for a regulated item (id. at 37a). When the EPCA was adopted, DACO amended Price Regulation 45 to provide that "the price regulation authority would not become effective until 'the Federal Price Controls are lifted over the articles here regulated * * * '" (Pet. App. 3a (quoting Price Regulation 45 as amended)). Accordingly, Price Regulation 45 became effective by its terms on January 29, 1981. On March 18, 1986, apparently in response to falling world oil prices, the Puerto Rico legislature imposed on oil refiners an excise tax that varied with the world price of oil (Law No. 5 of March 18, 1986, P.R. Laws; see Pet. App. 49a). On March 26, 1986, the Secretary of DACO issued an order reminding the public of his authority under Price Regulation 45 and reiterating the 15-day notice requirement (Pet. App. 42a-45a). On April 23, 1986, the Secretary of DACO issued two orders. One authorized oil refiners to pass the cost of the excise tax on to gasoline wholesalers but forbade wholesalers from passing the increase on to retailers (Pet. Supp. App. SA25), while the other capped wholesale gasoline prices at their March 31, 1986, levels (Pet. App. 47a). On May 20, 1986, the Secretary issued a third order which "lifted the freeze on gasoline prices. It divided wholesalers into two groups -- minor (Group 1) and major (Group 2). Group 1 wholesalers would be allowed to sell to retailers at a profit of 8.6 cents per gallon, and Group 2 at a profit of 3.6 cents per gallon" (Pet. App. 3a; see id. 49a-57a (May 20 Order)). 3. In May 1986 (before the Secretary of DACO's order of May 20), respondents filed eight actions in the United States District Court for the District of Puerto Rico challenging DACO's orders, which they claimed conflicted with federal law and with various constitutional provisions. The eight actions were consolidated, and on June 4, 1986, the district court entered judgment for respondents (Pet. Supp. App. SA86-SA87), finding "that the price/regulatory orders of March 26, April 23, and May 20, 1986, (were) unconstitutional based on the substantive due process and preemption considerations discussed herein" (id. at SA86). Respondents appealed the preemption decision to the Temporary Emergency Court of Appeals (TECA) and the substantive due process decision to the First Circuit. /1/ A divided panel of TECA affirmed. The majority began by noting that "that primary task in deciding a pre-emption issue is to determine Congressional intent" (Pet. App. 6a) and admitted that the case was "somewhat unusual in that the claimed pre-emption results from the absence rather than the presence of federal authority" (id. at 7a). The court of appeals believed, however, that this Court had held "that pre-emption can occur in these circumstances" (ibid.). After a review of the histroy of federal regulation of oil prices (Pet. App. 7a-10a), the court of appeals turned to this Court's decision in Tully v. Mobil Oil Corp., 455 U.S. 245 (1982). Tully involved a New York statute that "established a two percent tax on the gross receipts of oil companies limited to their revenues derived from their activities within the State" (455 U.S. at 245 (citation omitted)). "Desiring that the tax actually be borne by the oil companies, its intended objects, rather than by consumers, the New York Legislature prohibited the companies from passing on the cost of the tax in the price of their products sold in New York" (id. at 245-246). The oil company plaintiffs in Tully challenged the New York tax on preemption grounds, "claiming that it was in conflict with and therefore pre-empted by federal price control authority under (the EPAA)" (id. at 246). The district court agreed with the plaintiffs and invalidated the tax, and TECA affirmed (Mobil Oil Corp. v. Tully, 499 F. Supp. 888 (N.D.N.Y. 1980), aff'd, 653 F. 2d 497 (Temp. Emer. Ct. App. 1981), vacated and remanded, 455 U.S. 245 (1982)). This Court decided Tully after the President's regulatory authority had expired pursuant to Section 18 of the EPAA. The Court quoted TECA's explanation of the effect of that expiration: "(TECA) noted that the federal statute would expire by its own terms in September 1981, and that expiration of the Act 'will signal the end of federal concern in the area'" (455 U.S. at 246 (quoting 653 F.2d at 502)). The Court said that "(t)he expiration date for the federal statute has come and gone; the only barrier to the enforcement of the antipassthrough provision no longer exists. However, the injunction entered by the District Court and affirmed by TECA did not terminate on October 1, 1981" (455 U.S. at 247). Accordingly, the Court found that "in its present form the declaration of the invalidity of the antipassthrough provision and the accompanying injunction against enforcing it have no current validity and must be set aside" (ibid.). Recognizing, however, that the lower courts in Tully had adjudicated a number of issues relating to the effects of the New York law during the period before the expiration of federal controls, the Court remanded the case to TECA to decide "what effect, if any, the expiration of federal price authority (had) on these collateral matters" (id. at 248 (footnote omitted)). /2/ After describing Tully, TECA in this case decided that "(a)lthough Tully appears to answer the question we now face, the context of its appeal to the Supreme Court and the Supreme Court's recent decision in Transcontinental convince us that Tully is not an appropriate guide for our decision" (Pet. App. 11a). TECA was referring to Transcontinental Gas Pipe Line v. State Oil & Gas Bd., No. 84-1076 (Jan. 22, 1986) (Transco), in which this Court considered whether the Natural Gas Act, ch. 556, 52 Stat. 821, 15 U.S.C. 717 et seq. (the NGA) continued to preempt a state "ratable-take" rule after it was amended by the Natural Gas Policy Act of 1978, Pub. L. No. 95-621, 92 Stat. 3351, 15 U.S.C. 3301 et seq. (the NGPA). The NGPA removed FERC's authority to regulate the price of certain high-cost natural gas. The Court found that the NGA as amended nevertheless continued to preempt the state rule. TECA here read Transco as requiring it to "determine whether by removing federal price control authority Congress intended to allow the states to step in and assume price control authority over gasoline" (Pet. App. 12a). The TECA majority answered that question in the negative, on the basis of its reading of the legislative history of the EPCA. Explaining that the EPCA provided for "a carefully controlled transition to an unregulated market" (Pet. App. 13a), the majority found it "inconceivable that Congress would implement such an extensive and carefully orchestrated termination of federal intervention with the intention that the states step in to regulate" (ibid.). Judge Christensen dissented. He emphasized the temporary, emergency nature of oil price controls: "(t)he very names of the Act and of this Court underscore their transitory nature and purpose" (Pet. App. 20a). He criticized the majority's reading of Tully and Transco (id. at 23a-25a) and discounted the majority's concern that state regulation might "frustrate Congress' goal of allowing market forces to regulate the supply and price of petroleum products," noting that "(t)here are already constitutional limitations on the exercise of (the States') police power * * * and Congress, of course, has the power to deal with any concern of this nature in light of the Supremacy Clause" (id. at 26a). He added that under the decision below TECA would have to continue deciding preemption cases "long after adjudications of the validity and effect of the regulations and programs under ESA and the EPAA have been fully completed" (ibid.). DISCUSSION 1. This case merits review for two reasons. First, contrary to Tully and based on an erroneous reading of Transco, TECA has either found preemption on the basis of a supposed congressional intention that is not embodied in any federal statute, or interpreted a statute that purports only to terminate the President's authority to impose certain federal controls on a field of activity as preempting state and territorial regulation as well; either way, this would be a novel, important, and troubling extension of preemption doctrine. Second, TECA's decision invalidated an important and longstanding policy of the Commonwealth of Puerto Rico. a. In Tully, this Court said that since that expiration date of the EPAA had come and gone, "the only barrier to the enforcement of (inconsistent state legislation) no longer exists" (455 U.S. at 247). In the present case, TECA recognized (Pet. App. 11a) that its decision was contrary to that statement in Tully but held that the Tully discussion was probably dictum and was in any event implicitly rejected in Transco (ibid.). But the Tully statement was not dictum: the Court there vacated TECA's judgment because the district court's injunction extended beyond the EPAA's expiration date, after which the EPAA no longer provided a basis for barring state regulation (455 U.S. at 246). /3/ And Transco did not (sub silentio) overrule or limit Tully: the express basis of preemption in Transco was the continuing existence of a "comprehensive federal regulatory scheme" (Transco, slip op. 12), one feature of which was reliance on the market in certain respects, which the state regulation in question "directly undermine(d)" (ibid.). TECA held that Congress's decision to bring federal regulation of oil prices to an end would preempt state regulation unles TECA were able to find that Congress intended "'an invitation to the States to impose additional regulations'" (Pet. App. 14a (quoting Transco, slip op. 13)), a finding TECA was unable to make. In the absence of affirmative federal legislation to the contrary, TECA's decision appears to bar state regulation in a significant area. Because of TECA's special jurisdiction, this bar is nationwide and cannot be reconsidered by any other court of appeals. Moreover, TECA's theory -- finding preemption either in a supposed congressional intention not embodied in any statute or in the mere decision to terminate federal regulation -- enlarges preemption doctrine in a way that warrants this Court's review. b. The decision below strikes at a long-standing and important policy of the Commonwealth of Puerto Rico (see Pet. App. 3a-4a). Congress has explicitly determined that Puerto Rico should have substantial domestic autonomy (see Act of July 3, 1950, ch 446, 64 Stat. 319 (endorsing "right of self-government of the people of Puerto Rico")). /4/ And if Puerto Rico were a State it would have an appeal as of right from TECA's decision under 28 U.S.C. 1254(2). Although that provision does not apply to Puerto Rico (Fornaris v. Ridge Tool Co., 400 U.S. 41, 42 n.1 (1970)), it is appropriate for this Court to take into account, in exercising its discretion to decide whether to issue a writ of certiorari, the fact that the decision below invalidated a body of law of great importance to a territory that enjoys considerable sovereignty (see, e.g., Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974) (holding Puerto Rico to be a State for purposes of three-judge district court statute)). Cf. Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 377 (1949) (Territory of Hawaii) ("great respect is to be paid to the enactments of a territorial legislature")). 2. On the merits, TECA's decision should be reversed. First, although TECA was correct that "the primary task in deciding a preemption issue is to determine Congressional intent" (Pet. App. 6a), that intent must be embodied in a federal statute; to the extent that TECA based its decision merely on its perception of congressional sentiment rather than on any extant provision of federal law, the decison was manifestly erroneous. Second, the only pertinent provisions of federal law are Section 4 of the EPAA, which granted the President a now-expired regulatory authority and whose express preemptive effect terminated with the end of that authority, and Section 18 of the EPAA, added by the EPCA, which provides that the President's regulatory authority expired on September 30, 1981, but says nothing about barring state regulation. To the extent that TECA based its decision on an inferred intent in Section 18 to bar state regulation as well, such an inference was unsupported by the legislative history and improper under this Court's preemption precedents. Finally, TECA's reading of Transco, as creating a presumption that a statute terminating federal regulation bars state regulation unless Congress affirmatively "intended to allow the states to step in" (Pet. App. 12a), was an incorrect reading of that decision, which was based on the existence of a continuing "comprehensive federal regulatory scheme" (Transco, slip op. 12). a. It is a "familiar and well-established principle that the Supremacy Clause * * * invalidates state laws that 'interfere with, or are contrary to' federal law" (Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 712 (1985) (quoting Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 (1824)). There is no doubt that Congress could by enacting otherwise valid legislation, have provided explicitly by statute that states may not regulate gasoline prices as Puerto Rico has done (see, e.g., Jones v. Rath Packing Co., 430 U.S. 519 (1977)), or could have adopted a federal regulatory scheme with which Puerto Rico's law is inconsistent and by which it is therefore implicitly preempted (see, e.g., Michigan Canners & Freezers Ass'n, Inc. v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461 (1984)). Prior to September 30, 1981, the EPAA explicitly preempted state or local laws, but only to the extent that they conflicted with "(t)he regulation under section 4 and any order issued thereunder" (Pub. L. No. 93-159, Section 6(b), 87 Stat. 633, 15 U.S.C. 755(b)). The President's authority under Section 4, which was temporary throughout the EPAA's history, was brought to an end by Section 18 of the EPAA, which provided that "(t)he authority to promulgate and amend any regulation or to issue any order under this Act shall expire at midnight September 30, 1981" (Pub. L. No. 94-163, Section 461, 89 Stat. 955, 15 U.S.C. 760g). As of October 1, 1981, the President's authority under Section 4 has "expire(d)" and Section 18, which caused the expiration, had been fully executed. TECA's opinion nowhere states that any provision of federal law bars the Puerto Rico regulation at issue. Instead, the opinion speaks (Pet. App. 7a) of the "pre-emption effect of the federal decision to deregulate the gasoline market." To the extent that TECA meant that it would be appropriate to give preemptive effect to the supposed congressional sentiment underlying the decision to withdraw from federal regulation, in the absence of any extant provision of federal law that could be said to bar state regulation, the decision was clearly wrong. Preemption is, as this Court has said many times, a question of congressional intent (e.g., California Fed. Savings & Loan Ass'n v. Guerra, No. 85-494 (Jan. 13, 1987), slip op. 7), but that intent must be embodied in a statute. Whatever its intentions, Congress may exercise legislative power only by passing laws (see INS v. Chadha, 462 U.S. 919, 951-958 (1983)), and it is laws duly enacted, not the intentions of Congress standing alone, that are "the supreme Law of the Land." There cannot be a lingering preemptive grin without a statutory cat. b. The only pertinent provisions of federal law are Section 4 of the EPAA, which conferred temporary regulatory power on the President, and Section 18 of the EPAA, added by the EPCA, which provides that the authority to promulgate and amend regulations and issue orders "shall expire at midnight September 30, 1981." But Congress dealt expressly with the preemptive effect of Section 4, and it is clear that such effect terminated with the expiration of presidential authority. /5/ And nothing in the text of Section 18 purports to bar any form of state regulation. The Court's statement in Tully, to the effect that the EPAA's preemptive effect ceased when the President's authority expired, is the obvious and natural reading of Section 18. To the extent that TECA attributed preemptive effect to Section 18, its decision conflicts with Tully and would in any event be erroneous: the legislative history of the EPCA does not support any inference of preemption, and TECA's decision violated the principle that "courts should not lightly infer preemption" (International Paper Co. v. Ouellette, No. 85-1233 (Jan. 21, 1987), slip op. 9 (footnote omitted)). Nowhere in the legislative history of the EPCA did any Committee or Member of Congress, to our knowledge, explicitly suggest that there would be continuing preemption of state law after the President's authority under Section 4 expired; the question of continuing preemption was not mentioned. TECA inferred continuing preemption not from any legislative history directly relating to that subject, but from what it understood to be Congress's over-all purpose. TECA found that "DACO's price controls interfere with and obstruct Congress' goal of letting market forces set prices and allocate petroleum products" (Pet. App. 17a). While there is of course evidence that Congress wanted to gradually terminate the "'comprehensive (federal) regulatory structure'" see Pet. App. 13a (quoting S. Conf. Rep. 94-516, 94th Cong., 1st Sess. 203 (1975)), that evidence simply does not show an intent, not directly indicated anywhere, to bar state regulation. State regulation may (as illustrated by this case) reflect concerns that are absent at the federal level, and may not pose problems that would be posed by uniform nationwide federal regulation, and Congress may be well aware of these differences in a given case (see Pet. App. 26a (Christensen, J., dissenting)). Moreover, both the role of the States in the federal system and practical considerations bearing on the interpretation of federal statutes suggest the contrary presumption, that Congress does not intend to require state regulatory policy to track federal regulatory policy unless it affirmatively indicates that intention. As Judge Christensen pointed out in dissent below (see Pet. App. 26a), Congress can easily affirmatively prohibit state regulation that it believes would defeat proper federal objectives. It is much more sensible to require it to do so than to presume preemption and require Congress to negate that presumption. That is why this Court has always made "the basic assumption that Congress did not intend to displace state law." Maryland v. Louisiana, 451 U.S. 725, 746 (1981) (citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Here, the legislative history on which TECA relied does not demonstrate an intent to displace state law; it certainly is not enough to overcome the contrary presumption required by this Court's cases. See, e.g., California Fed. Savings & Loan Ass'n v. Guerra, slip op. 8; R.J. Reynolds Tobacco Co. v. Durham County, No. 85-1021 (Dec 9, 1986), slip op. 9; Commonwealth Edison Co. v. Montana, 453 U.S. 609, 633-634 (1981) (preemption on basis of general national policy not favored); Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142 (1963)). c. The explanation for TECA's decision appears to lie in what it took to be this Court's instructions in Transco: "As in Transcontinental, we must determine whether by removing federal price control authority Congress intended to allow the states to step in and assume price control authority over gasoline" (Pet. App. 12a). But TECA's reading of Transco reflects a fundamental misunderstanding of that case. In Transco, this Court analyzed the congressional purpose underlying, and found preemption on the basis of, a continuing federal regulatory program, not the expiration of regulatory authority. The Court had previously held in Northern Natural Gas Co. v. State Corporation Comm'n, 372 U.S. 84 (1963), that the Natural Gas Act (NGA) provided a "comprehensive scheme of federal regulation" (id. at 91) that preempted a state "ratable-take order." Thereafter, in the Natural Gas Policy Act of 1978 (NGPA) Congress amended the NGA, lifting federal price regulation of certain "high-cost" natural gas (see Transco, slip op. 11). The question in Transco, which involved a "virtually identical regulation," was "whether Congress, in enacting the NGPA, altered those characteristics of the federal regulatory scheme which provided the basis in Northern Natural for a finding of pre-emption" (Transco, slip op. 8). The Court ruled that ratable-take orders continued to be preempted. It noted that the NGPA was "'a comprehensive statute to govern future natural gas regulation,'" (Transco, slip op. 11 (quoting Public Service Comm'n v. Mid-Louisiana Gas Co., 463 U.S. 319, 332 (1983)), and "(did) not constitute a federal retreat from a comprehensive gas policy" (ibid.). It then found that the Mississippi ratable-take rule "(ran) afoul of other concerns identified in Northern Natural" (id. at 13) because it disturbed "the uniformity of the federal scheme" and "would have the effect of increasing the ultimate price to consumers" (ibid.), both subjects of concern to ongoing federal regulation. In sum, the Court in Transco based its conclusion on its understanding of a "comprehensive federal regulatory scheme" (id. at 12). When the Court said, in Arkansas Elec. Coop. v. Arkansas Public Service Comm'n, 461 U.S. 375, 384 (1983), cited by TECA at Pet. App. 7a, that "'a federal decision to forgo regulation in a given area may imply an authoritative federal determination that the area is best left unregulated,'" it was discussing a field in which Congress has passed comprehensive legislation explicitly allocating regulatory authority between state and federal agencies (id. at 378-380). The same was true in Transco. A comprehensive federal regulatory scheme within which one area has been deliberately left unregulated obviously may (if that is determined to be Congress's intention) preempt state regulation in that area. The present case is quite different: TECA concluded here that Congress had intended to preempt despite the absence of any continuing federal involvement in the field. Transco did not warrant that leap. /6/ The rule TECA derived from Transco would reverse the normal presumption regarding preemption. Under TECA's rule, when Congress terminates federal regulation of an area it would be presumed to have forbidden state regulation as well unless there is some affirmative indication to the contrary. This approach is incorrect and rests on a misreading of Transco. When Congress wishes to bar state regulation in a field subject to federal regulation, it can easily do so affirmatively. Requiring Congress instead to negate or partially negate preemption in connection with every enactment, modification, or repeal of a federal regulatory statute, whenever Congress does not wish to require total state conformity, would be impractical, contrary to precedent, and inconsistent with the role of the States in the federal system. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Solicitor General RICHARD K. WILLARD Assistant Attorney General LOUIS R. COHEN Deputy Solicitor General JAMES M. SPEARS Deputy Assistant Attorney General JOHN HARRISON Assistant to the Solicitor General JOHN F. CORDES BURCE G. FORREST Attorneys AUGUST 1987 /1/ TECA originated in the Economic Stabilization Act Amendments of 1971, Pub. L. No. 92-210, Section 2, 85 Stat. 749 (the ESAA), which amended the Economic Stabilization Act of 1970, Pub. L. No. 91-379, Tit. II, 84 Stat. 799 (the ESA) to specify implementing procedures for the President's temporary authority under the ESA to control wages, prices and rents throughout the economy. Under the ESA as amended by the ESAA, TECA was to hear appeals "in cases and controversies arising under (the ESA controls) or under regulations or orders issued thereunder" (Pub. L. No. 92-210, Section 2, 85 Stat. 749 (Section 211(b)(2) of the ESA as amended)). When the EPAA was enacted the President's authority to impose mandatory controls had not expired and TECA was still in existence. Section 5(a)(1) of the EPAA extended TECA's jurisdiction to EPAA litigation, providing that cases and controversies under the EPAA allocation regulation were to be treated as if they arose under the ESA (Pub. L. No. 93-159, Section 5(a)(1), 87 Stat. 633, 15 U.S.C. 754(a)(1)). The courts of appeals have held that TECA has exclusive jurisdiction to decide preemption issues under the EPAA (Pet. App. 4a-6a; see, e.g., Mobil Oil Corp. v. Tully, 639 F.2d. 912, 915-916 (2d Cir.), cert. denied, 452 U.S. 967 (1981)). On January 23, 1987, the First Circuit stayed its proceedings pending the issuance of TECA's mandate in this case (see Tenneco Oil Co. v. Department of Consumer Affairs, No. 86-1590 (1st Cir.)). Pursuant to a stay granted by TECA on February 6, 1987, TECA's mandate is stayed until this Court rules on the petition (see Rule 41(b), Fed. R. App. P.). This brief does not discuss any possible ground of objection to Puerto Rico's regulatory scheme other than preemption. /2/ On remand, TECA remanded the case to the district court for further proceedings (Mobil Oil Corp. v. Tully, 689 F.2d 186, 187 (1982)). The suit was settled before the district court entered any further orders (No. 80-CV-543 (N.D.N.Y.)). /3/ Although we believe the Tully statement was necessary to the Court's disposition of the case, the case had not been briefed on the merits and the effect of the expiration of federal regulatory authority does not appear to have been raised explicitly. /4/ Congress's power to displace local Puerto Rican law does not derive solely from the Supremacy Clause. Article IV, Section 3, gives Congress the power to "make all needful Rules and Regulations respecting the territory * * * belonging to the United States." But the question in this case -- whether Congress has legislated in a way that preempts Puerto Rican regulation -- would be no different if a State rather than Puerto Rico were involved: preemption is a question of congressional intent, and no one has suggested that Congress had different intentions with respect to Puerto Rico than with respect to the States. /5/ Section 6(b) of the EPAA preempted provisions of state and local law that were "in conflict with" the President's regulation under Section 4 or any order issued thereunder (87 Stat. 633). Section 18, by terminating the President's authority, eliminated the possibility of any such conflict and therefore terminated the preemptive effect as well. /6/ When Congress repeals a federal law that has preemptive effect, or provides that such a law will expire, it can, of course, also provide that state and territorial law will continue to be preempted even after substantive federal control has been lifted. But Transco does not authorize a court to presume that a repealing statute has such effect when Congress does not say so.