Home » Case Summaries » 2011 » Pacific Merchant Shipping Association v. Goldstene, 639 F.3d 1154 (9th Cir. 2011)


Pacific Merchant Shipping Association v. Goldstene, 639 F.3d 1154 (9th Cir. 2011)



Plaintiff, Pacific Merchant Shipping Association (PMSA), appealed the denial of its motion for summary judgment in its action against Defendant, James Goldstene, Executive Officer of the California Air Resources Board (CARB).[1] The action was brought, and judgment entered, in the United States District Court for the Eastern District of California. On appeal, the United States Court of Appeals for the Ninth Circuit declined to find that the dormant Commerce Clause[2] or general maritime principles[3] preempted California’s Vessel Fuel Rules,[4] and affirmed the district court’s denial of PMSA’s motion for summary judgment.

Ocean-going vessels are a leading source of air pollution in California, and the largest source of sulfur dioxides (SOx), in part because they use low-grade bunker fuel.[5] From 2006 data, CARB determined that ocean-going vessels traveling within 24 nautical miles of the coast generated 15 tons of particulate matter (PM), 157 tons of nitrogen oxide (NOx), and 117 tons of SOx. As a result, this harmful pollution affects the lives of 27 million Californians,[6] with the most severe health issues concentrated in the South Coast Air Basin.[7] CARB promulgated the Vessel Fuel Rules[8] to reduce PM, NOx, and SOx emissions and their concomitant health problems. The rules became effective on July 1, 2009.[9] The South Coast Air Quality Management District claimed that without the Vessel Fuel Rules, it would be unable to bring the South Coast Air Basin into compliance with federal air quality standards,[10] thus leaving California subject to serious federal sanctions.[11]

The Vessel Fuel Rules aim to reduce air pollutants from ocean-going vessels in a number of ways. The Vessel Fuel Rules primarily apply to ocean-going vessels making California port calls, which travel within the “Regulated California Waters”—an area within 24 nautical miles of the California coast.[12] Vessels merely travelling through the region—so-called “innocent passage”—are exempt from the rules.[13] The Vessel Fuel Rules envision a two-stage implementation process that reduces permissible sulfur content in two stages by January 2012.[14] Owners and operators of regulated vessels are required to maintain detailed records of the location of the vessel at various times, and the type and amounts of fuel used, or else face sanctions.[15] Finally, the rules terminate upon a determination by the Executive Officer of CARB that the federal government is enforcing equally stringent rules.[16] 

Prior to this litigation, PMSA claimed that the Clean Air Act (CAA)[17] and the Submerged Lands Act (SLA)[18] preempted the Marine Vessel Rules—a precursor to the Vessel Fuel Rules at issue here.[19] In that earlier case, the Ninth Circuit determined that the CAA preempted the emissions standards comprising the Marine Vessel Rules. Accordingly, the court found it “unnecessary” to determine whether the SLA preempted the rules.[20] CARB subsequently drafted the Vessel Fuel Rules to replace these preempted rules.

On April 27, 2009, PMSA filed a complaint alleging that the SLA and the Commerce Clause preempted application of some Vessel Fuel Rules[21] beyond California’s three-mile territorial boundary. Accordingly, PMSA requested a permanent injunction barring the implementation or enforcement of the Vessel Fuel Rules in federal waters. The district court denied PMSA’s summary judgment motion and granted the request for an interlocutory appeal. The Ninth Circuit reviewed the district court’s decision de novo, and affirmed.

The Ninth Circuit acknowledged the “highly unusual and challenging” task of balancing the Supremacy Clause, dormant Commerce Clause, maritime law preemption doctrines, and international relations with California’s sovereign police powers to adopt laws to protect its residents.[22] The court began its analysis by considering the history of the SLA. Congress passed the SLA in 1953, in response to several United States Supreme Court rulings holding that the federal government has “paramount rights in and powers over” the three-mile belt of land along the United States’ coast.[23] The SLA granted coastal states the rights to submerged lands extending three-miles seaward of the states’ coasts, but retained federal control over submerged lands further seaward.[24] The SLA effectuates this transfer in several ways, most pertinently by granting plenary approval to any coastal state’s claim of a seaward boundary extending up to three geographical miles from the coastline.[25]

The court first addressed PMSA’s argument that the SLA preempted the Vessel Fuel Rules under the doctrine of field preemption.[26] According to PMSA, because the SLA established a three-mile territorial boundary for California where none previously existed, the SLA implicitly (1) granted states only limited authority to regulate within that three-mile boundary, and (2) outright precluded states from regulating with any effect outside that boundary.

The Ninth Circuit began its analysis by acknowledging, like the district court had, the existence of a general presumption against preemption.[27] PMSA argued that a presumption against preemption was not applicable in the instant case because the Supreme Court’s decision in United States v. Locke[28] suggested that no such presumption exists when state laws regulate in an area with “a history of significant federal presence.”[29] The Ninth Circuit countered that a more recent Supreme Court decision, Wyeth v. Levine,[30] dismissed a similar argument as a misunderstanding.[31] In Wyeth, the Court explained that the presumption against preemption arises from the fact that states are “independent sovereigns in our federal system,” and explained that the existence of federal regulation does not inherently rebut the presumption.[32] The Ninth Circuit concluded that the Vessel Fuel Rules were ultimately concerned with the prevention and control of air pollution—an area of state concern[33]—rather than with maritime commerce, conduct at sea, or the definition of state boundaries—fields occupied by the federal government. Accordingly, the district court correctly started with a general presumption against preemption.

Second, having recognized a presumption against preemption, the Ninth Circuit considered whether the SLA nevertheless preempted the Vessel Fuel Rules. The court rejected offhand PMSA’s argument that the Vessel Fuel Rules amounted to a territorial claim by California. The court distinguished CARB’s mere attempt “to regulate conduct beyond the state’s territorial boundaries because of the serious harmful effect . . . on the state and its residents,” from an attempt to “invade or interfere” with federal powers to set territorial boundaries or claim national territorial rights.[34] 

The court surveyed a series of Supreme Court cases recognizing the federal government’s paramount rights in and power over the marginal seas, to admit states, to set state boundaries, and to regulate navigation.[35] However, those federal rights and powers are not infringed when Congress authorizes a state to exercise police powers within the marginal seas.[36] PMSA argued that the Vessel Fuel Rules not only applied within California’s marginal seas, but also to vessels traveling in federal waters beyond the three-mile boundary. The Ninth Circuit applied the effects test,[37] and determined that California could enact “reasonable regulations to monitor and control extraterritorial conduct substantially affecting its territory.”[38] The court also found support for its conclusion in the Restatement of Foreign Relations, which explained that states may regulate conduct occurring outside its boundaries if (1) the conduct has a substantial effect within the territory, and (2) the regulation is reasonable.[39]

The court noted that the validity of a state law applied to extraterritorial conduct depends on the contacts between the harmful conduct and the state itself. In an earlier Ninth Circuit case, the fact that seamen and maritime employees were California residents, were interviewed and hired in California, and paid California taxes provided sufficient contacts to uphold a California overtime law against claims of federal preemption.[40] By contrast, the Ninth Circuit found insufficient contacts to withstand preemption in a case involving Alaska labor law, where the employees primarily worked outside the territorial waters of Alaska, were not Alaska residents, and were hired and began work in Seattle, Washington.[41] The Ninth Circuit surveyed other court opinions that, in applying the effects test, similarly upheld state laws that regulated conduct on the high seas so long as such conduct affected state interests.[42]

The Ninth Circuit also approved of the district court’s reliance on two federal circuit court decisions finding that the SLA did not impinge upon states’ rights to regulate conduct occurring outside their territorial borders. In both cases, federal statutes authorized states to regulate the piloting of ships beyond the three-mile boundaries established by the SLA—pilots subsequently challenged the state regulations on the theory that the SLA implicitly confined state regulation to the marginal seas.[43] The United States Court of Appeals for the First Circuit explained that the issue of a state’s territorial limits, defined by the SLA, was distinct from the state’s ability to control navigation.[44] The United States Court of Appeals for the Fifth Circuit reached a similar conclusion, holding that the SLA only addresses “who retains title to submerged lands both within and beyond the three-mile line,” and had no bearing on regulation of navigation on the water.[45]

Ultimately, the “clear weight of this case law” convinced the Ninth Circuit that PMSA overestimated the SLA’s scope.[46] The court held that the SLA was concerned with the narrow issue of who owned submerged lands, and did not create a territorial zone of exclusive federal authority. The court further held that state laws regulating conduct outside of the state’s territorial waters should generally be upheld if it satisfies the effects test.

The court next applied the effects test to the Vessel Fuel Rules. The court found genuine issues of material fact precluding summary judgment in favor of PMSA. The conduct regulated by the Vessel Fuel Rules not only implicated state environmental and health concerns, but also economic concerns in light of the importance of shipping to California. The court catalogued the specific environmental effects of emissions from ocean-going vessels, and noted that the Vessel Fuel Rules should significantly reduce those effects.

The Ninth Circuit next considered whether the dormant Commerce Clause or the doctrine of maritime law preempted the Vessel Fuel Rules.[47] Under the dormant Commerce Clause, a state law may be unconstitutional because of its effect on interstate or foreign commerce.[48] State laws may also be unconstitutional under general maritime law preemption if they contravene the general characteristics of uniform maritime law.[49] The court determined that the Vessel Fuel Rules did not directly regulate commerce or interfere with general maritime law because that was not their central purpose.[50] Accordingly, the court determined that any incidental impacts must be analyzed under a balancing test between state and federal interests.[51] 

In applying the balancing test for the dormant Commerce Clause and general maritime law, the Ninth Circuit first recognized the importance of uniformity with respect to environmental regulation on the high seas. However, the court concluded that these interests were too attenuated to justify invalidating the Vessel Fuel Rules. Because the Vessel Fuel Rules contain a sunset clause, the court predicted that the Vessel Fuel Rules would terminate once the heightened standards under the ECA go into effect.[52] By contrast, the court found that California had “an especially powerful” interest in controlling the effects of air pollution. While acknowledging the “expansive and possibly unprecedented” regulatory scheme envisioned by the Vessel Fuel Rules, the court nevertheless found that the severe environmental problems confronting California were themselves unprecedented. Accordingly, the Ninth Circuit declined to find that the dormant Commerce Clause or general maritime principles preempted the Vessel Fuel Rules and affirmed the district court’s decision to deny PMSA’s motion for summary judgment.

[1] Goldstene was joined by Defendant Intervenors Natural Resources Defense Council, Inc., Coalition for Clean Air, Inc., and South Coast Air Quality Management District.

[2] U.S. Const. art. I, § 8; Willson v. Black Bird Creek Marsh Co., 27 U.S. 245, 252 (1829) (recognizing Congress’s “power to regulate commerce in its dormant state”).

[3] See generally Brittan J. Bush, The Answer Lies in Admiralty: Justifying Oil Spill Punitive Damages Recovery Through Admiralty Law, 41 Envtl. L. 1255 (2011) (add explanatory parenthetical).

[4] See generally Cal. Code Regs. tit. 13, § 2299.2(b) (2009); Id. at tit. 17, § 93118.2(b) (2009).

[5] Bunker fuel has approximately 25,000 parts per million (ppm) of sulfur in comparison to diesel fuel with 15 ppm. Pac. Merch. Shipping Ass’n v. Goldstene, 639 F.3d 1154, 1159–60 (9th Cir. 2011).

[6] CARB estimated that 300 premature deaths result from PM emissions from vessels, excluding cancer effects. Id. at 1160.

[7] The South Coast Air Basin consists of Orange County and the non-desert portions of Los Angeles, Riverside, and San Bernardino counties. Id. The South Coast Air Basin has long been in noncompliance with federal air quality standards, and the South Coast Air Quality Management District claimed that compliance would be impossible without these regulations. Id.

[8] See supra note 4.

[9] Pac. Merch. Shipping Ass’n, 639 F.3d at 1158.

[10] The South Coast Air Basin must achieve national ambient air quality standards for PM2.5 by 2014, or it may risk the reduction or termination of federal transportation funding. Id. at 1160.

[11] See Clean Air Act, 42 U.S.C. § 7509(b) (2006).

[12] Cal. Code Regs. tit. 13, § 2299.2(b) (2009); id. at tit. 17, § 93118.2(b) (2009).

[13] See id. at tit. 17, § 93118.2(c) (exempting “ocean-going vessel voyages that are comprised of continuous and expeditious navigation through any Regulated California Waters for the purpose of traversing such bodies of water without entering California internal or estuarine waters or calling at a port, roadstead, or terminal facility”); see also Pac. Merch. Shipping Ass’n, 639 F.3d at 1158 (describing such ships’ travel as “innocent passage”).

[14] Cal. Code Regs. tit. 13, § 2299.2(a) (2009); id. at tit. 17, § 93118.2(a) (2009).

[15] Id. at tit. 17, § 93118.2(e)(2), (f) (2009).

[16] Id. § 93118.2(j).

[17] Clean Air Act, 42 U.S.C. §§ 7401–7671q (2006).

[18] Submerged Lands Act, 43 U.S.C. §§ 1301–1315 (2006).

[19] Pac. Merch. Shipping Ass’n v. Goldstene, 517 F.3d 1108, 1109 (9th Cir. 2008).

[20] Id. at 1115.

[21] Specifically, PMSA challenged the application of Cal. Code Regs. tit. 13, § 2229.2 (2009) and Cal. Code Regs. tit. 19, § 93118.1 (2009).

[22] Pac. Merch. Shipping Ass’n, 639 F.3d 1154, 1162 (9th Cir. 2011).

[23] United States v. Cal. (California I), 332 U.S. 19, 22 (1947); see also United States v. La. (Louisiana I), 339 U.S. 699, 701 (1950).

[24] United States v. La. (Louisiana III), 446 U.S. 253, 256 (1980).

[25] Submerged Lands Act, 43 U.S.C. § 1312 (2006); see also People v. Weeren, 607 P.2d 1279, 1283 (Cal. 1980) (recognizing that California law previously delineated the sea boundary to extend three miles seaward from the California coast).

[26] Implicit field preemption arises when Congressional intent leaves no role for state or local input or in an area, such as foreign affairs, where the federal interest is so dominant that it will preclude any state action. Barber v. Haw., 42 F.3d 1185, 1189 (1994) (quoting Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 605 (1991)).

[27] See Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

[28] 529 U.S. 89 (2000).

[29] Id. at 108 (declining to apply the presumption against preemption to state law regulating in the field occupied by the Port and Waterways Safety Act of 1972).

[30] 555 U.S. 555 (2009).

[31] Id. at 571–72.

[32] See id. at 565 n.3 (internal quotations omitted).

[33] See Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 442 (1960) (noting that legislation designed to address air pollution “clearly falls within the exercise of even the most traditional concept of . . . the police power”).

[34] Pac. Merch. Shipping Ass’n, 639 F.3d 1154, 1168 (2011).

[35] See United States v. Me., 469 U.S. 504, 513 (1985); United States v. La. (Louisiana II), 363 U.S. 1, 35 (1960); California I, 332 U.S. 19, 35–36 (1947).

[36] California I, 332 U.S. at 36; see also Toomer v. Witsell, 334 U.S. 385, 393 (1948) (allowing the state to maintain its sponge fishery as it was within its police power).

[37] The effects test allows individual states to exercise extraterritorial jurisdiction based on effects within the state. Strassheim v. Daily, 221 U.S. 280, 285 (1911).

[38] Pac. Merch. Shipping Ass’n, 639 F.3d at 1170.

[39] Restatement (Third) of Foreign Relations Law of the U.S. §§ 402(1)(c), 403 (1987).

[40] Pac. Merch. Shipping Ass’n v. Aubry, 918 F.2d 1409, 1424–25 (9th Cir. 1990).

[41] Guller v. Golden Age Fisheries, 14 F.3d 1405, 1409 (9th Cir. 1994)

[42] See State v. Jack, 125 P.3d 311, 322 (Alaska 2005) (affirming State’s jurisdiction over a criminal assault on an Alaskan ferry in Canadian waters); Weeren, 607 P.2d 1279, 1285 (Cal. 1980) (affirming conviction of California residents with state fishing licenses for violating California commercial swordfish regulations by using spotter aircraft registered in state to catch fish outside California’s territorial waters); State v. Stephansky, 761 So. 2d 1027, 1036 (Fla. 2000) (affirming State’s power to criminally charge a citizen on a cruise ship because it affected Florida’s tourism industry).

[43] See Warren v. Dunlap, 532 F.2d 767, 772 (1st Cir. 1976); Gillis v. La., 294 F.3d 755, 761 (5th Cir. 2002).

[44] Warren, 532 F.2d at 772.

[45] Gillis, 294 F.3d at 761.

[46] Pac. Merch. Shipping Ass’n, 639 F.3d 1154, 1174 (9th Cir. 2011).

[47] See S. Pac. Co. v. Jensen, 244 U.S. 205, 216 (1917) (recognizing that a state regulation is invalid if it “works material prejudice to the characteristic features of the general maritime law, or interferes with the proper harmony and uniformity of that law in its international and interstate relations”).

[48] The Supreme Court requires a two-tiered approach to determine if a state regulation runs afoul of the dormant Commerce Clause. Pac. Merch. Shipping Ass’n, 639 F.3d at 1177 (citing Or. Waste Sys. Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93, 99 (1994)). If the state regulation directly burdens interstate commerce or discriminates against out-of-state interests, it is presumptively invalid. Id. If, however, the state regulation merely has an “incidental effect” on interstate commerce, the state regulation is subjected to a balancing test. Id. Under this balancing test, a state regulation is preempted if the burdens it imposes on interstate commerce outweighs the putative benefits to the extent that the state regulation is unreasonable or irrational. Id.

[49] Id. at 1178.

[50] See Kleenwell Biohazard Waste & Gen. Ecology Consultants, Inc. v. Nelson, 48 F.3d 391, 395–96 (9th Cir. 1995).

[51] See In re Exxon Valdez, 484 F.3d 1098, 1101 (9th Cir. 2007) (applying such a balancing test in the context of maritime law).

[52] The sunset clause provides for the termination of the Vessel Fuel Rules when the federal government adopts and enforces requirements that will achieve equivalent emission reductions. Pac. Merch. Shipping Ass’n, 639 F.3d at 1180.

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