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Pacific Merchant Shipping Association v. Goldstene


August 27, 2009


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


Through the present action, Plaintiff Pacific Merchant Shipping Association ("PMSA" or "Plaintiff") seeks to prevent implementation of regulations recently adopted by the California Air Resources Board ("CARB"), and scheduled to go into effect on July 1, 2009. Plaintiff sues Defendant James Goldstene, as CARB's Executive Director, on grounds that the regulations in question, which seek to specify fuel requirements for seagoing vessels traveling within twenty-four nautical miles of the California coast, are unconstitutional and contrary to federal law. In now moving for summary judgment, Plaintiff seeks declaratory and injunctive relief that the regulations are preempted by the federal Submerged Lands Act, 43 U.S.C. §§ 1301, et seq. CARB opposes Plaintiff's Motion. In addition, the Natural Resources Defense Council, Inc. ("NRDC"), the Coalition for Clean Air, Inc. ("CCA") and the South Coast Air Quality Management District ("SCAQMD"), who have intervened in support of CARB, join in opposing Plaintiff's Motion.

For the reasons set forth below, Plaintiff's Motion will be denied.


On April 16, 2009, the CARB regulations at issue in this matter were transmitted to the California Secretary of State for filing pursuant to California Government Code § 11349.3. Under the terms of the regulations, enforcement will commence on July 1, 2009.

The express purpose of the regulations (hereinafter referred collectively as the "Vessel Fuel Rules" or the "Rules") is to reduce air pollutants affecting the State of California by requiring ocean-going vessels*fn2 to use cleaner marine fuels. Under the Rules, vessel operators are required to use cleaner marine fuels in diesel and diesel-electric engines, main propulsion engines, and auxiliary boilers on vessels operating within twenty-four nautical miles off the California coastline. Cal. Code Regs. tit. 13, § 2292.2(a); tit. 17, § 93118.2(a). Implementation is contemplated in two phases. Initially, beginning in July 2009, vehicle operators must use either marine gas oil (which typically averages 0.3% sulfur and is capped at 1.5%), or marine diesel oil with a sulfur limit of 0.5% or less. Thereafter, by January 2012, both fuels must not exceed 0.1% sulfur. Id. Failure to comply with the regulations subjects vessel owners and operators penalties, injunctive relief and other remedies as provided under California law. Id. at § 2299.2(f)(1); § 93118.2(f)(1).

According to the State of California, ocean-going vessels, which typically utilize large diesel engines, are a significant source of air pollution in California, due in part to their widespread use of low-grade bunker fuel. Bunker fuel consists primarily of thick, tar-like residual fuel formulated from the residues remaining after primary fuel distillation.

Decl. Of Paul Milkey in Support of CARB's Opp'n to Mot. for Summ. J., ¶ 16. As a result of its viscous nature, bunker fuel has to be heated before it can be pumped and injected into an engine for combustion. NRDC/CCA Undisputed Fact ("UF") No. 5. Residual fuel contains an average of about 25,000 parts per million (ppm) of sulfur, as opposed to diesel fuel for trucks and other motor vehicles, which is limited to 15 ppm sulfur. Id. at No. 6. The proposed Vehicle Fuel Rules mandate that ocean-going vessels coming into California ports use distillate fuel with a maximum sulfur level falling between these two extremes.

2006 data generated by CARB suggests that ocean-going vessels traveling within twenty-four nautical miles of California's coast generate approximately 15 tons per day of diesel particulate matter ("PM"), 157 tons per day of nitrogen oxides ("NOx"), and 117 tons daily of sulfur oxides ("SOx"). CARB UF No. 1. This makes SOx emissions from such vessels the single largest source of SOx emissions in the state, responsible for some forty percent of all SOx emitted. Milkey Decl., ¶ 13. Importantly, too, both NOx and SOx are precursors of PM2.5, or fine particulate matter pollution. SCAQMD UF No. 17. The PM emissions from ocean-going vessels are also significant and have been estimated as equivalent on a daily basis to approximately 150,000 big rig trucks traveling 125 miles per day. Milkey Decl., ¶ 13.

Long Beach and Los Angeles ports are collectively constitute the largest port in the United States. Some forty percent of all national imports are estimated to move though those two California ports. See Decl. of Dr. Elaine Chang in Support of SQAMD's Opp. to Mot. for Summ. J., ¶ 27. Research shows that pollutants discharged offshore migrate to the California coast. Vehicle emissions are likely to be transported onshore from even beyond the twenty-four nautical mile boundary used in the Rules. SCAQMD UF No. 8.

PMSA does not dispute that implementation of the Vessel Fuel Rules, which were adopted following a lengthy process which included consultation with both the public, state and local agencies, and the federal government, is estimated to reduce PM emission by 13 tons per day, NOx by 10 tons per day, and SOx by 109 tons per day. See CARB UF No. 6. For sulfur oxides, that reduction amounts to some ninety percent fewer estimated emissions upon full implementation of the Rules. SCAQMD UF No. 30 PMSA does not contend that compliance with the new Rules is technically impossible or even difficult. NRDC UF No. 22. Only costs are cited. It nonetheless appears that compliance would increase costs of imported goods by an insignificant amount. See NRDC UF No. 23.

From a public health and safety perspective, it is undisputed that twenty-seven million Californians, or eighty percent of the population, are exposed to ocean-going emissions that increase cancer risks. CARB UF No. 4, SCAQMD UF No. 41.

Diesel emissions are known to cause premature death, cancer, aggravated asthma and other respiratory illnesses, and increased risk of heart disease. CARB UF Nos. 10, 11. The problem particularly prevalent in the Southern California area encompassed by the South Coast Air Basin, where over eighty percent of the population is exposed to PM2.5 levels exceeding federal standards. SCAQMD UF No. 22. In fact, CARB has calculated that over fifty percent of the total population-weighted exposure to PM2.5 levels exceeding federal standards in the entire nation occurs in the South Coast Air Basin, although the Basin has only five percent of the nation's population. Id. at No. 23. Not surprisingly, the South Coast Air Basin has consequently been unable to attain national air quality standards.

CARB estimates that directly-emitted diesel particulate matter from ocean-going vehicles causes about 300 premature death statewide every year, not including cancer effects. SCAQMD UF No. 45. In contrast, research indicates that implementation of the Vessel Fuel Rules between 2009 and 2015 alone will prevent some 3,500 premature deaths, nearly 100,000 asthma attacks, and significantly reduce cancer risk. NRDC/CCA UF No. 14.

Plaintiff PMSA is an organization whose members own and operate U.S. and foreign-flagged ocean-going vessels subject to the proposed new Vessel Fuel Rules. As indicated above, PMSA now moves for summary judgment and seeks a judicial determination that the Rules at issue are preempted by the SLA, or are otherwise unlawful. PMSA further requests that a permanent injunction be issued against enforcement of the regulations more than three nautical miles seaward from the California coast.


The Federal Rules of Civil Procedure provide for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). One of the principal purposes of Rule 56 is to dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Under summary judgment practice, the moving party "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact."

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Rule 56(c).

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-587 (1986); First Nat'l Bank v. Cities Ser. Co., 391 U.S. 253, 288-289 (1968).

In attempting to establish the existence of this factual dispute, the opposing party must tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 56(e). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52 (1986); Owens v. Local No. 169, Assoc. of Western Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1987). Stated another way, "before the evidence is left to the jury, there is a preliminary question for the judge, not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed." Anderson, 477 U.S. at 251 (quoting Improvement Co. v. Munson, 14 Wall.442, 448, 20 L.Ed. 867 (1872)). As the Supreme Court explained, "[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts...

Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita, 475 U.S. at 586-87.


A. Vessel Fuel Rules Are Preempted By The SLA, As It Must Plaintiff Has Not Shown As A Matter Of Law That The To Prevail On Summary Judgment

1. Purpose of the SLA

The SLA sets the geographic boundary of the State of California at three geographical miles seaward of the State's coastline. 43 U.S.C. § 1312; United States v. California, 381 U.S. 139, 148 (1965). The SLA was enacted in 1953 to restore state ownership and control over the ocean seabed up to three miles offshore and to promote the harvesting of natural resources, namely oil and gas. 43 U.S.C. §§ 1311, 1312, Judiciary Committee Report, H.R. Rep. No. 83-215 (1953), reprinted in U.S.C.C.A.N. 1385, 1386. Passage of the SLA was precipitated by a 1947 Supreme Court decision holding that the federal government was the exclusive owner of all submerged lands and any minerals found therein. United States v. California, 332 U.S. 19 (1947). Because California's law had previously delineated California's sea boundary as extending three miles into the Pacific Ocean (see People v. Weeren, 26 Cal. 3d 654, 660 (1980)), and because California had entered into leases for the extraction various natural resources from the seabed based on those perceived boundaries, the SLA was enacted to restore state historic ownership of submerged lands.

There is no indication in either the SLA itself, or within its legislative history, to suggest that Congress intended the SLA to prevent coastal states like California herein from regulating offshore air pollution from ocean-going vessels. Although by its terms, state ownership and control is limited to submerged lands and their overlying navigable waters within three miles of the coastline, available case law indicates that state regulation may extend beyond that boundary under appropriate circumstances.

With respect to pilotage, anchorage and mooring, for example, the Supreme Court has long recognized that such rules are best left to the state absent compelling governmental interest to the contrary. Significantly, in Gillis v. Louisiana, 294 F.3d 755 (5th Cir. 2002), the Fifth Circuit held that Louisiana's regulation of pilotage, even outside the three-mile limit, is not preempted by the SLA. As the Gillis court reasoned: "The Submerged Lands Act addressed only who retains title to submerged lands both within and beyond the three-mile line with particular reference to ownership and exploration of natural resources in the seabed and subsoil. It does not address the regulation of pilotage on the waters above." Id. at 762.

Similarly, in Warner v. Dunlap, 532 F.2d 767 (1st Cir. 1976), the First Circuit rejected an analogous SLA preemption challenge, state that "[s]tates have been permitted to assert their pilotage regulations at distances considerably greater than three miles from their shores.... and there is no statutory or other basis for imposing a three-mile limit on such regulation." Id. at 772.*fn3

The Court is well aware that pilotage, which establishes an integrated system for ship navigation, is different than fuel regulations designed to control offshore pollutants from migrating offshore. Both Warner and Gillis nonetheless stand for the proposition that given the limited purpose of the SLA, it should not be applied mechanically in overriding all state regulation beyond three miles from a state's coastline. With that flexible approach in mind, we now turn to whether the particular Vessel Fuel Rules at issue in this litigation are preempted by the SLA, as Plaintiff contends.

2. Principles of Preemption

Federal preemption of state statutes or regulations can be either express or implied. Express preemption occurs when Congress "explicitly state[s]" that it intends a statute to have that effect.

Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). Here it is undisputed that the SLA does not expressly preempt the Vessel Fuel Rules; rather, Plaintiff's only argument is that the Rules are preempted by implicit field preemption. Field preemption applies only when state law "regulates conduct in a field that Congress intended the Federal Government to occupy exclusively." English v. Gen. Elec. Co., 496 U.S. 72, 79 (1990). "Such an intent may be inferred from a scheme of federal regulation.... so pervasive as to make reasonable the inference that Congress left no room for the State to supplement it, or when an Act of Congress 'touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject." Id. (internal quotations omitted); see also Ray v. Atlantic Richfield Co., 435 U.S. 151, 157 (1978).

In assessing the merit of Plaintiff's field preemption argument, then, the Court's "sole task is to ascertain the intent of Congress." PMSA v. Aubry, 918 F.2d 1409, 1415 (9th Cir. 1990). Field preemption applies only where the congressional intent to preempt state law is "clear and manifest." Sprietsma v. Mercury Marine, 537 U.S. 51, 69-70 (2002). Moreover, a presumption against preemption applies to protect a state's historic police power in protecting the health and safety of its citizenry, unless the clear and manifest purpose of Congress dictates otherwise. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). This is because states have regulated health and safety issues throughout the nation's history. Medtronic, Inc. v. Lohr, 518 U.S. 470, 475 (1996).

PMSA argues, relying on United States v. Locke, 529 U.S. 89 (2000), that this presumption does not apply because the Vessel Fuel Rules bear upon maritime commerce. Locke is factually distinguishable from the present case, however, because the state regulations at issue in that case served precisely the same purpose as analogous provisions of federal law under the Ports and Waterways Safety Act of 1972 ("PWSA"). The issue in Locke was consequently not whether any maritime regulation is inherently federal; instead the Court had to consider the scope of appropriate local regulation under the narrow confines of the PWSA. Fednav, Ltd. v. Chester, 547 F.3d 607, 622 (6th Cir. 2008).

The Supreme Court, in its recent decision in Wyeth v. Levine, 129 S.Ct. 1187 (2009) clarified that the proper analysis for determining application of the presumption against preemption is not the absence of federal regulation, but instead the historic presence of state law. Id. at 1195 n.3. The state law being applied here relates to pollution, not maritime commerce. "Air pollution prevention falls under the broad police powers of the states, which include the power to protect the health of citizens in the state.

Exxon Mobil Corp. v. U.S. Envtl. Prot. Agency, 217 F.3d 1246, 1255 (9th Cir. 2000); Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 442 (1960) ("Legislation designed to free from pollution the very air that people breathe clearly falls within the exercise of even the most traditional concept of what is compendiously known as the police power," an area in which the states may act).*fn4

Significantly, too, in enacting the Clean Air Act, 42 U.S.C. § 7401 et seq., Congress itself pointed to state authority in preventing air pollution. As the Ninth Circuit explains:

"States retain the leading role in regulating matters of air quality: "air pollution prevention (that is, the reduction or elimination, through any measures, of the amount of pollutants produced or created at the source) and air pollution control at its source is the primary responsibility of States and local government." 42 U.S.C. § 7401(a)(3).

Exxon Mobil Corp. v. U.S. Envtl. Prot. Agency, 217 F.3d at 1254.

In short, because pollution is an area falling within police powers historically delegated to the states, the presumption against preemption applies in this case. Given that presumption, we now move to whether there is any basis for field presumption that will overcome it.

3. Provides A Basis For Field Preemption In This Plaintiff Has Not Established That The SLA Case

In order to invoke field preemption against a state law, the state law must also have some "direct and substantial effect" on the allegedly preempted field, here navigation and commerce. English v. Gen. Elec. Co., 496 U.S. at 85. Therefore, a federal "interest" in navigation and commerce alone does not suffice, if that interest is not sufficiently pervasive. Id.

No evidence has presented by PMSA that the challenged Rules would in any way impede commerce or navigation. PMSA admits that compliance with the Rules is not technically impossible or even difficult. NRDC/CCA UF No. 22. PMSA has not shown that the required fuel is unavailable. It has not argued that use of cleaner fuel would adversely affect ship operations. Instead, the only impairment identified is the economic impact associated with the increased cost of higher grade diesel. In that regard, PMSA argues that the Rules will cost each ship operator some $30,000.00 per vessel call in California. In placing that figure into perspective, however, any increased cost associated with compliance is less than one percent of the typical cost of a trans-Pacific voyage. Id. at No. 23. That cost has been estimated by CARB to amount to only a $6.00 increase per 20-foot shipping container, a sum that would equate to only an extra 12.5 cents in the cost of a plasma TV. SCAQMD UF No. 58, 59.

Such minimal cost increases hardly constitute a "direct and substantial" effect on international commerce, as they must in order to overcome the presumption against preemption that applies to this case in the first place.

Under these circumstances, Plaintiff has not shown that he is entitled to summary judgment. Moreover, it all but defies logic to argue that the Vessel Fuel Rules regulate commerce at all instead of curbing air pollution. The Rules simply require ships intending to enter California ports to reduce their polluting activities as they approach the California coast. They do not purport to specify who may or may not engage in commerce, or who may or may not navigate in waters beyond the three-mile limit.

B. Rules Are Otherwise Unlawful For Purposes Of Plaintiff Has Not Demonstrated That The Vessel Fuel Establishing Its Entitlement To Summary Judgment

Plaintiff's primary argument in challenging imposition of the Vessel Fuel Rules rests with its contention that California is categorically precluded from enacting Rules extending beyond three miles seaward of its coastline under principles of preemption. As set forth above, the Court disagrees. It thus becomes necessary to consider whether the proposed Rules are otherwise "unlawful and impermissibly regulate navigation and foreign and domestic commerce as delegated to the United States Congress," or are "contrary to law" as Plaintiff contends. See Pl.'s Compl. 14:20-26. Plaintiff has not demonstrated that it is entitled to summary judgment on that basis, either.

Under the so-called "effects test", California may enact reasonable regulations to monitor and control conduct that substantially affects its territory. In addition to failing to show the requisite direct and substantial effect on maritime commerce that Plaintiff must establish to invoke field preemption, Plaintiff has also failed to adequately rebut California's argument (and that of Intervenors) that the Vessel Fuel Rules target pollution substantially affecting the State and are reasonable in light of the demonstrable effects linked to that pollution. Plaintiff has therefore not shown that the Vessel Fuel Rules, even to the extent they apply on an extraterritorial basis, are unlawful.

There is no question that California can exercise its police power within three nautical miles of its coastline. The only issue is whether that police power, in the form of environmental regulation, can also extend seaward between three and twenty-four nautical miles.

It should be initially noted that such regulations are not contrary to precepts of international law. Modern international law permits coastal states to establish "requirements for the prevention, reduction, and control of pollution of the marine environment as a condition for the entry of foreign vessels into their ports."*fn5 It is uncontroverted that the Vessel Fuel Rules at issue herein are limited to vessels visiting California ports.

The Rules accordingly appear consistent with traditional principles of international law allowing the imposition of port entry conditions.*fn6

Under United States law, when state regulations have extraterritorial effects, the propriety of such regulations are judged against the effects test described above, which is designed to ensure that regulations with applicability beyond the geographic confines of a particular state are reasonable and directed at conduct that has a substantial effect in the state. See, e.g., Strassheim v. Daily, 221 U.S. 280, 284-85 (1911).*fn7

The effects test consequently requires that two issues be addressed: first, whether the Rules regulate conduct that has a substantial effect within California, and second whether the regulation is reasonable. See Restatement (Third) of Foreign Relations Law of the United States, § 402(1)(c), § 403. As already summarized in the Background section of this Memorandum and Order, the effects on California from ocean-going vessel pollution are both substantial and beyond any reasonable doubt.*fn8

The State has submitted evidence indicating that emissions from vessels traveling within three and twenty-four nautical miles from the California coast is blown in to California. Decl. of Daniel E. Donohoue in Support of CARB's Opp'n to Mot. for Summ. J., ¶ 7. The emissions from such vessels expose twenty-seven million people, or eighty percent of the state's population, to cancer risks of at least ten in a million. Id. at ¶ 12; SCAQMD UF No. 22. Particulate pollution caused by vessel exhaust also contributes significantly to the risk of premature death, respiratory illness and heart disease. CARB UF Nos. 10, 11. The problem is particularly pronounced in Southern California with its concentration of major shipping ports of entry.

Just as significantly, the benefits from implementation of cleaner fuel requirements appear equally plain. As indicated above, PMSA does not dispute research showing that implementation of the Vessel Fuel Rules between 2009 and 2015 alone will prevent some 3,500 premature deaths, nearly 100,000 asthma attacks, and significantly reduce cancer risk. NRDC/CCA UF No. 14. On a percentage basis harmful emissions will be reduced by as much as ninety percent. SCAQMD UF No. 30. Given these tangible and far-reaching benefits, the Court is wholly unable to conclude that the Rules at issue are unreasonable. Because the effects on California of ocean-going vessel pollution are equally plain, Plaintiff cannot establish any illegality on the basis of the effects test, and the Rules withstand summary judgment on that basis.*fn9

Nor do the provisions of the Clean Air Act doom the Vessel Fuel Rules. Although the Act does preempt states from adopting "emission standards" for marine vessels without federal authorization, such authorization is not required for "in use requirements" such as sulfur limits on fuel for existing, "inuse" marine vessels and their engines. 55 U.S.C. § 7543; Engine Mfrs Ass'n v. EPA, 88 F.3d 1075, 1094 (D.C. Cir. 1996). Additionally, the Vessel Fuel Rules in their present form avoid preemption issues by imposing a direct fuel mandate as opposed to an emissions standard.

While PMSA did successfully argue Clean Air Act preemption under an earlier version of the Rules setting such standards,*fn10 it makes no Clean Air Act challenge to the present case.


For all the foregoing reasons, Plaintiff's Motion for Summary Judgment is DENIED.*fn11 In the opinion of the Court, however, this Order qualifies for immediate appellate review as involving "a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). This Court hereby certifies this Order as meeting those prerequisites.


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