Paypal will not except an item total of $0, even if there is a shipping fee. The Item total must be at least 1 cent.
you would need to get creative with the discounts so that the shipping is 6.50 only if the order total is above $40. if it is 40 or less, set the discount to total price + 0.01
and the shipping to use 6.49
this will way if the order is less the 40, the item total is 0.01, but the shipping is 6.49 giving the same 6.50 total cost.