Tuesday, May 18, 2010

Federal Court Strikes Down Massachusetts Tanker Laws

May 2010, by Craig H. Allen

Craig H. AllenOn March 31, 2010, the US District Court for the District of Massachusetts struck down portions of the Massachusetts Oil Spill Prevention Act (MOSPA), which were enacted by the state legislature following a 2003 oil spill from the tank barge Bouchard No. 120 into Buzzards Bay. The MOSPA provisions at issue sought to prescribe compulsory escort tug requirements for certain tank vessels transiting Buzzards Bay and manning requirements for tugs towing such vessels. The federal court held that the compulsory state provisions were preempted by Coast Guard regulations promulgated after the spill.

The court’s decision in United States v. Commonwealth of Massachusetts spans some 60 pages, including two lengthy reports and recommendations by a magistrate judge assigned to the case. The case arose from a preemption challenge to the Massachusetts law brought in 2005 by the United States government, which was later joined by the American Waterways Operators (AWO). In the case’s first appearance, the district court ruled against Massachusetts; however, the district court decision was vacated on appeal to the U.S. Court of Appeals for the First Circuit in 2007. The most recent decision came down in response to the appeals court order remanding the case to the district court for further consideration.

In the 2010 decision, the district judge found that on August 30, 2007, the Coast Guard exercised its authority under the 1972 Ports and Waterways Safety Act to promulgate regulations (now codified in 33 C.F.R. § 165.100) that, in the court’s characterization, left “no ambiguity regarding the intention to preempt MOSPA.” In so ruling, the district judge adopted the magistrate judge’s conclusion that “federal regulations have no less preemptive effect than federal statutes, and agency regulations may preempt state regulation expressly or by implication.” Applying the Supremacy Clause of the US Constitution, the court held that the Coast Guard’s regulations were within the agency’s congressionally delegated authority and that they expressly preempted the conflicting MOSPA requirements. The magistrate judge’s opinion went even further, finding that the MOSPA provisions were also invalid because they created an impermissible conflict between federal and state law.

The court’s ruling did not disturb the state’s 24-hour notification provision for single- and double-hulled tank vessels carrying 6,000 barrels or more of oil intending to operate in Buzzards Bay. Although notification is technically voluntary, a barge owner who fails to provide the advance notice is subject to three times the fines that would otherwise apply in the event of an oil spill. A similar penalty applies to owners of double-hulled tankers who do not take a state pilot while transiting those waters (Coast Guard regulations only require pilots on single-hulled tankers). In addition, shortly before the district court issued its decision on the preemption challenge, Massachusetts Governor Deval Patrick announced that the Commonwealth was implementing a “state-sponsored” tug escort service for double-hull tank vessels operating in Buzzards Bay and the Cape Cod Canal. Such double-hull barges are not required to have escorts under the Coast Guard regulations. The state-provided escort tug – provided at no direct cost to the escorted vessel – will be funded by a five-cent tax on every barrel of oil delivered to the state. These reporting, pilotage and escort measures are the subject to a new challenge brought by the AWO on April 7, 2010, on the grounds that they constitute an impermissible indirect regulation of vessel manning and operation.

Although the court ruled in favor of the Coast Guard on the preemption question and enjoined Massachusetts from enforcing the MOSPA provisions, the district judge criticized the Coast Guard for its failure to prepare an environmental impact statement (EIS) or environmental assessment (EA) before promulgating the new rules, or to provide a “meaningful explanation” for declining to do so. In the end, however, the court determined that, even if the Coast Guard erred in its decision not to prepare an EIS or EA, the omission was ultimately harmless because the required impact analysis was conducted as part of the agency’s rulemaking process.

The Massachusetts district court decision did not break new ground on maritime preemption law. Indeed, it closely followed two earlier US Supreme Court decisions striking down Washington state tanker laws (Ray v. ARCO, decided in 1978, and United States v. Locke, a unanimous decision in 2000). What may be surprising for some is the Obama administration’s decision to continue to assert regulatory preemption in a case first filed against a state more than five years ago.

A May 20, 2009 “memorandum” by President Obama to the heads of executive departments and agencies imposed new restrictions on federal agencies regarding any decision to include preemption provisions in their regulations. Although the president’s memorandum was issued nearly two years after the Coast Guard regulations at issue in the Massachusetts case, the president had directed all agencies to review any preemption statements they issued before the memorandum was released, to ensure those statements comply with the new policy. At the same time, the Obama administration’s Ocean Policy Task Force has come out in favor of a “spatial” planning approach for ocean and coastal waters that rejects what the Task Force calls “top-down” planning and is likely to enhance the state’s maritime regulatory role. Nevertheless, those who might have hoped that federal agency preemption would no longer be an issue for state lawmakers and maritime regulatory agencies might do well to study this decision.

Craig H. Allen is the Judson Falknor Professor of Law and of Marine Affairs at the University of Washington. He is a fellow in the Royal Institute of Navigation and the Nautical Institute and an academic member of the US Maritime Law Association.