U.S. Supreme Court Strikes Down State Regulations of Oil Tankers

(Sea Venture Volume 19)

On March 6, 2000, the United States Supreme Court unanimously ruled in United States v. Locke that regulations promulgated by the State of Washington regarding oil tankers were pre-empted by the comprehensive federal regulatory scheme already in place. Four regulations were struck down, and the remaining ones were remanded to the district court or the court of appeals to be assessed in light of the considerable federal interest at stake.

As the background for its discussion, the Supreme Court references the "Torrey Canyon" spill of 1967, and the "Exxon Valdez" spill of 1989. The Court noted the inherent serious risks present where the size and frequency of the tankers themselves, along with the vast amount of oil transported in them, have ''but one or two layers of metal between the cargo and the water''.

In Locke, the Court noted that Washington reacted to the "Exxon Valdez" spill by enacting the state regulations at issue. The state legislature created an Office of Marine Safety, which it directed to establish standards for spill prevention plans to provide for ''the best achievable protection'' (BAP) from the damages caused by the discharge of oil.

The organization fighting the regulations was the International Association of Independent Tanker Owners (Intertanko). Intertanko is well known as a trade association whose several hundred members own or operate more than 2,000 tankers worldwide. The court notes that Intertanko represents approximately 80% of the world's independently owned tanker fleet, and about 60% of the oil coming into the United States is carried on Intertanko vessels.

Specifically, Intertanko was seeking declaratory and injunctive relief against the state and local officials responsible for enforcing the BAP regulations. Arguments advanced in favor of striking down the regulations were that the proposed state regulations were already addressed by the federal government, and therefore were in opposition to the standard of national uniformity that was being sought. Additionally, Intertanko argued that the potential of differing regulatory regimes of each local political sub-division would defeat any goal of an international safety standard.

Procedurally, Intertanko challenged the regulations in the district court in the State of Washington, yet the court upheld the state regulations in 1996. An appeal followed, to the Ninth Circuit Court of Appeals, and it was at that point that the United States government intervened on Intertanko's behalf. Regardless, the Ninth Circuit upheld the district court, and held that Washington could enforce its laws, except for one specific regulation concerning navigation and towing equipment. Thereafter, Intertanko sought review by the Supreme Court, oral arguments were held in November 1999, and this decision issued as a result.

The Court noted the historical background and presence of these issues involving jurisdiction over maritime matters from the founding of the Republic. Justice Kennedy, authoring the opinion, noted that ''the authority of Congress to regulate interstate navigation, without embarrassment from intervention of the separate States and resulting difficulties with foreign nations, was cited in the Federalist Papers as one of the reasons for adopting the Constitution.'' The Court examined previous Supreme Court decisions and regulations, and recognized that Congress had enacted a series of statutes relating to the tanker industry, and the United States had ratified international agreements in the area as well.

Of particular benefit in this case to the petitioner Intertanko was the Supreme Court precedent of Ray v. Atlantic Richfield, decided in 1978. In 1972, Congress enacted the Port and Waterway Safety Act (PWSA), and the State of Washington sought to promulgate regulations binding on the tanker industry pursuant to the PWSA. The Supreme Court held in Ray v. Atlantic Richfield that the PWSA and the Coast Guard regulations promulgated under that Act pre-empted the proposed state pilotage requirement, Washington's limitation on tanker size, and the tanker design and construction rules.

The Ninth Circuit declined to rely on Ray because it felt that the two savings clauses contained in OPA '90 had superseded much of the impact of that case. The Supreme Court disagreed, and held that that interpretation of the PWSA as found in Ray is still controlling. A savings clause has the effect of preserving for another entity the right to take some action, or in this case to impose additional liability or requirements. The lower courts had ruled that the presence of the savings language, allowing for extra regimes, extended throughout the whole of OPA '90, and gave ample opportunity for any state to impose regulations it thought prudent. In fact, however, as the Supreme Court noted, placement of the savings clauses in Title I of OPA served to confine their impact to Title I, and not to the whole reach of OPA, and not to the whole subject of maritime oil transport. If Congress were aiming to challenge uniformity in allowing the enactment of various state regulations, the Court ruled, then Congress would not have limited the savings clauses by placing them in Title I.

The Supreme Court then examined some of the Washington BAP regulations to see whether they were justified by conditions that were unique to a particular port or waterway. Four reasons were given why some local rules would be upheld:

1. local rules would pose a minimal risk of innocent non-compliance;

2. they would not effect vessel operations outside of that specific jurisdiction;

3. they would not require an adjustment to systemic aspects of the vessel; and

4. the regulations would not impose a substantial burden once the vessel was in the local jurisdiction itself.

The Court then proceeded to strike the following regulations:

1. Washington imposed a series of training requirements on a tanker's crew. WAC § 317-21-230. The Court struck down this requirement because the training and drill requirements pertained to operation and personnel qualifications and were, therefore, pre-empted by OPA at 46 U.S.C. § 3703(a).

2. Washington imposed English language proficiency requirements on a tanker's crew. WAC § 317-21-250. Again, the state's attempted rule was found to be a personnel qualification pre-empted by § 3703(a) of Title II. In addition, the Supreme Court also relied on the presence of 33 U.S.C. § 1228(a)(7) which addresses an understanding of the English language.

3. Washington imposed a navigation watch requirement. WAC § 317-21-200. The Court struck down this regulation because it was not peculiar to the Puget Sound area. The Court viewed it as a general operating requirement and considered it pre-empted as an attempt to regulate a tanker's operation and manning as found in 33 U.S.C. § 3703(a).

4. Washington required vessels that ultimately reach its waters to report certain marine casualties. WAC § 317-21-130. The Court rejected this proposed regulation because it viewed that Congress intended the Coast Guard to be the sole source of a vessel's reporting obligations, as found under 46 U.S.C. § 6101, and § 3717(a)(4). This encompasses the Coast Guard 2692, for example, of which most vessel owners and operators would be familiar. Additionally, the court viewed the reporting requirement as ''a significant burden in terms of cost and the risk of innocent non-compliance.'' The court viewed it as ''almost impossible for [a Master] to acquaint himself with the laws of each individual State visited'' by a tanker.

There were other BAP regulations present before the Supreme Court, yet the Court deferred ruling on these because it felt that a complete record was not present. Since the United States had not been present in the district court action, it remanded the balance of the regulations, noting that the best venue to addresses the remaining regulations would be either the district court, or the Ninth Circuit Court of Appeals. At either venue, all parties would have an opportunity to develop a full record, and determine which other regulations would be pre-empted in view of the guidelines established by the Supreme Court in this case.

While of particular import to the maritime industry, this case is also noteworthy in other industries. For some time now, various Supreme Court decisions have taken away the power to regulate from the federal government, and have given greater authority to the States. Other industries, such as railroads and the auto industry, have similar pre-emption issues pending before the Court, and are looking to see whether a trend will be established.

With thanks to Ann-Michele G. Higgins of Rawle & Henderson, Philadelphia, PA for preparing this article¹.

¹This article was published on the Steamship website in March 2000