Supreme Court Holds Washington Tanker Law Preempted

As the federal government increasingly concerns itself with activites posing environmental dangers, federal initiatives increasingly preempt the traditional exercise of local police power to curb these activities.¹ When conflicts between state and federal regulatory efforts inevitably arise, the courts are often called upon to determine the extent to which federal regulation has supplanted this local authority to restrict activities that cause local harm.

On March 6, a divided Supreme Court made a cautious foray into the legal thicket surrounding the question of preemption to determine how far federal regulation of oil tankers had ousted the State of Washington's authority to regulate the size, design, and movement of the large tankers that use Puget Sound. In Ray v. Atlantic Richfield Company (Ray v. ARCO),² the court substantially affirmed³ the ruling of the three-judge lower court, holding that most of the restrictions on tanker design, size, and movement imposed by the Washington Tanker Law were preempted by the federal Ports and Waterways Safety Act (PWSA)⁴ and regulations issued pursuant to it.

The lower court had found blanket preemption of the Washington law by the PWSA on the grounds that the federal law "establishes a comprehensive federal scheme for regulating the operations, traffic routes, pilotage, and safety design specifications of tankers."⁵ The Supreme Court, however, took a provision-by-provision approach that weighed each portion of the challenged law against the PWSA. This careful approach resulted in the rescue of some parts of the Washington law from preemption, which seems consistent with the view held by some that the tendency of the Burger Court in preemption cases is to give greater recognition to local interests than has been the case in recent years.⁶ On the other hand, the fact that five members of the Court dissented from different portions of the opinion may indicate that the decision is of little significance beyond the narrow issue at hand.

Washington Tanker Law

The Washington Tanker Law⁷ was enacted in 1975 to protect Puget Sound, a major West Coast entry point for oil from Alaska and the Persian Gulf, from damage caused by large oil spills. The sound is a confined estuary with limited space for maneuvering large tankers. Tidal and weather conditions, as well as intense pleasure and commercial vessel activity, create additional hazards. The state legislature decided to impose restrictions on tanker traffic to minimize threats to the ecologically fragile sound as well as the activities it supports, such as recreation, scientific research, and food production, estimated to be worth $2 billion.

The Tanker Law consists of three main parts. First, all oil tankers larger than 50,000 deadweight tons (DWT) are required to carry a state-licensed pilot while navigating Puget Sound. Secondly, tankers between 40,000 and 125,000 DWT are required to possess certain design and safety features, such as double bottoms, twin screws, a minimum shaft horsepower, and specific navigation systems and radar. In the alternative, vessels that do not comply with the design standards are exempted from the requirements if they employ tugboat escorts while navigating the sound. Finally, the tanker law flatly prohibits tankers of more than 125,000 DWT from entering the sound.

On the day the Tanker Law became effective, Atlantic Richfield, operator of an oil refinery at the northern end of the sound, filed suit seeking an injunction against implementation of the statute and a declaration that it was preempted by the Ports and Waterways Safety Act and other federal laws and thus unconstitutional under the Supremacy Clause.⁸ A three-judge district court agreed that all operative provisions of the Tanker Law were preempted and enjoined its enforcement.⁹ The Supreme [8 ELR 10071] Court agreed to hear the state's appeal¹⁰ and stayed the injunction in the interim.

Preemption Doctrine

Under the Supremacy Clause of the United States Constitution, federal law in an area which Congress has the power to legislate supersedes conflicting state law. Federal preemption of state authority can arise explicitly, as when Congress declares that state regulation is prohibited in a certain area¹¹ or where there is a direct conflict between federal and state law and compliance with both is impossible.¹² Preemption can also be implicit, however. Courts have generally looked to several factors to determine whether a state law is preempted by implication: is the scheme of federal regulation in the field so pervasive as to indicate that Congress intended to foreclose supplemental state legislation;¹³ has Congress legislated in a field where the federal interest is so dominant as to require uniform federal laws and to preclude enforcement of state laws on the subject;¹⁴ or does the state law stand "as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."¹⁵ The Court has further explained in recent opinions that even when preemption is found, state law should be invalidated "only to the extent necessary to protect the achievement of the aims of" federal law, that is, the court should reconcile the federal and state schemes wherever possible.¹⁶

In the last 50 years, the Supreme Court has moved from a tendency to protect local interests to the Warren Court's "solicitude" for federal interests to, most recently, the Burger Court's "considerable receptivity to maintaining the diversity of state and local institutions and interests."¹⁷ The Burger Court's handling of the preemption issue in environmental cases does not, however, clearly evidence such a trend. In City of Burbank v. Lockheed Air Terminal, Inc.,¹⁸ a local flight curfew to control aircraft noise was found to be preempted by the pervasive federal regulatory scheme for controlling such noise.¹⁹ In Askew v. American Waterways Operators, Inc.,²⁰ however, the Court's opinion is redolent with concern for Florida's interest in protecting its coasts and waterways against the hazards of oil spills. The state law regarding compensation for clean-up costs was upheld because the federal statute on the same subject recognized joint federal and state responsibilities in this area and because the state law was found not to conflict with the aims of the federal law.²¹ Whether or not there is any value in attempting to extrapolate a trend from these decisions, in a recent case the Court announced that it will approach questions of preemption under "the assumption that the historic police powers of the States were not to be superseded by the [federal legislation] unless that was the clear and manifest purpose of Congress."²²

The Supreme Court's Decision

The Court's application of the preemption doctrine in Ray v. ARCO is generally consistent with this principle. The careful, provision-by-provision analysis of the Washington Tanker Law did allow it to preserve portions of that law that the lower court had found completely preempted.

In its only unanimous holding, the Court held that the lower court's total nullification of the requirements that all tankers larger than 50,000 DWT must carry state-licensed pilots when navigating Puget Sound was overbroad. In the Court's view, the Washington law conflicted with federal law²³ only to the extent of restricting vessels involved in domestic trade. Thus, the requirement that foreign-trade vessels be manned by state-licensed pilots was not invalid because there was no conflict with federal law.

Design Standards

The Court next turned to the design standards mandated by the Washington Tanker Law, affirming the trial court's ruling that they were preempted by Title II of the Ports and Waterways Safety Act.²⁴ Title II was intended by Congress to provide for vessel safety and the protection of the marine environment. It directs the Secretary of Transportation to issue regulations regarding tanker design, construction, and operation and sets certain inspection and certification requirements. In the Court's view, this indicated that Congress intended to establish uniform standards of nationwide application and that federal certification could not be compromised by state regulation premised on stricter standards.

The Court took care to distinguish two prior decisions dealing with vessel design and safety standards. In one case, federal safety regulations were held not to prevent a [8 ELR 10072] locality from enforcing a regulation dealing with air pollution control that had the effect of requiring structural changes in vessels.²⁵ In that instance, the Court noted, the safety aim of the federal statute did not conflict with the local regulation's goal of smoke abatement. In the second case, the federal law was found to be limited in scope and inapplicable to the safety inspections required by state law.²⁶ In Ray v. ARCO, however, the Court noted that the opposing federal and state statutes were in fact aimed at the same goals — vessel safety and protection of the marine environment — so that because they conflict, the Supremacy Clause requires that the federal law prevail.

Justice Marshall, joined in dissent by Justices Brennan and Rehnquist, disgreed with this holding. Essentially, he found no practical conflict because the state law follows a flexible approach in setting design standards which permits noncompliance if the alternative requirement of tug escorts is met. Since the unanimous response of vessel operators has been, and will be in the foreseeable future, to opt in favor of the alternative requirement because of the expense of redesign and construction, Justice Marshall saw no need to speculate on the theoretical conflict between the statutes.

Tug Escort Provision

Noting that federal design certification does not exempt compliance with otherwise valid federal or state regulations that are not design standards, the Court next upheld the validity of the proviso in the Washington Tanker Law allowing the use of tug escorts as an alternative to compliance with the design standards, viewing it not as a design standard but as an operating rule. Title I of the PWSA²⁷ authorizes the Secretary of Transportation to regulate vessel traffic by establishing, inter alia, size and speed limitations and operating conditions. The Court concluded that since the Secretary had not exercised that authority to promulgate operating rules, which may or may not conflict with the state's rules, there can be no preemption until the federal authority has acted.

In dissent to this analysis, Justice Stevens, joined by Justice Powell, argued that because the tug escort provision is an "inseparable appendage" of the design requirements, the invalidity of one part necessarily infects the other. As the presence of the comprehensive federal program preempted the state design standards, so it should, in his view, prohibit a special and costly penalty for not complying with those standards. The majority had agreed that the tug escort rule was a penalty for noncompliance but emphasized that it was not an indirect method of imposing the prohibited design standards because the cost of tug escorts is substantially less than the cost of refitting tankers to comply with the design standards. The dissent disputed this evaluation, pointing out that the costs incurred by tankers in Puget Sound should be multiplied many times over to reflect the cost of similar tug escort requirements in other ports.

The Court has drawn an important distinction between Title I and Title II of the PWSA. The latter affirmatively requires federal regulation of design standards, and this requirement is the touchstone to prove federal preemption. Title I, however, does not mandate federal action but only authorizes it. Thus, while Congress intended that the federal role be dominant in vessel traffic regulation, it meant to leave state operating rules in place until the federal agency acts to set national standards.

Tanker Size Limitation

Finally, in a holding from which Justices Marshall, Brennan, and Rehnquist dissented strongly, the Court ruled that the flat prohibition from Puget Sound of tankers larger than 125,000 DWT was preempted by Title I and the regulatory actions taken under it. To set the groundwork, the majority first established that a vessel size limitation is included within the kind of traffic control that the Secretary is authorized to make.²⁸ Furthermore, the majority concluded that a provision in Title I which permits states to impose safety standards for "structures" that are higher than federal standards carries a negative implication that state-imposed higher standards for "vessels" are forbidden.²⁹ To support this negative implication of preemption, the legislative history was quoted to the effect that "State regulation of vessels is not contemplated."³⁰

As with the tug escort provision, to the majority the pertinent inquiry was whether the Secretary has acted, pursuant to Title I, to set vessel size limitations for Puget Sound that would directly conflict with and thus preempt application of Washington's Tanker Law. The necessary level of federal action was found within the Secretary's promulgation of the Puget Sound Vessel Traffic System, which was subject to a local Coast Guard rule prohibiting passage of more than one 70,000 DWT vessel through part of the sound in either direction at any one time.³¹ Even though this regulation is far less extensive than the Tanker Law, the Court viewed it as raising a sufficient conflict to preempt the latter.

As if to point up the slenderness of this reed, the majority added several other justifications for its ruling. It argued that the state's size limitation is similar to and therefore conflicts with the Title II design standards, and, in addition, if the state restriction were based upon depth of the sound, it would then be in direct conflict with the action taken by the Secretary pursuant to Title I regarding vessel traffic safety. The majority also asserted that the legislative history of Title I aims at uniformity of regulations. Since many factors must be considered in controlling vessel traffic, including conflicting local problems, the overview and final decision making must be in the hands of one ntional body. Finally, the majority concluded that the limited restriction represented a secretarial decision that no further regulation was appropriate under Title I; therefore, the state may not set up its own restriction.

Dissent

Although he agreed that the Secretary has authority to [8 ELR 10073] establish vessel size limitations for particular waters and that a state may not impose more stringent requirements once the Secretary has acted, Justice Marshall, joined in dissent by Justices Brennan and Rehnquist, found no conflict between the state and federal law. In the first place, the Justice noted, the local Coast Guard prohibition regarding passage of 70,000 DWT vessels is not contained in any written rule or regulation and thus is not a secretarial determination that size limitations are inappropriate or unnecessary. This is a direct challenge to the majority's finding that the federal government had acted, and because it had acted to set a size limitation, it had preempted the inconsistent requirements of the state law.

Secondly, the dissent noted that Title I requires consideration of local practices in drawing up federal vessel traffic regulations.³² Since there was no indication that the Coast Guard rule was drawn up prior to the Tanker Law, it could be inferred that the two restrictions were not inconsistent. Finally, the dissent disagreed that there was a basis for preemption under Title II. Justice Marshall saw Washington's prohibition against tankers larger than 125,000 DWT not as a finding that tankers above that size are generally unsafe but as a local measure responding to unique local problems: the navigational problems in Puget Sound and its susceptibility to damage from large oil spills.

Conclusion

In Ray v. ARCO, the Supreme Court rejected the lower court's broad-brush application of the preemption doctrine and instead took a provision-by-provision approach to evaluate the Wasington Tanker Law. This approach impliedly reflects doubts as to whether Congress had intended preemption of all state oil tanker regulation, and the Court attempted to see whether any part of the Washington law could survive in harmony with existing federal tanker regulatory requirements.³³ What is significant about a piecement analysis is that it is more likely to result in a finding to no preemption. Because, as was the case in Ray v. ARCO, claims of preemption of local environmentalregulations will generally arise only when the state rules are stricter than the federal rules, a sensitivity to the local regulations can mean greater protection for the environment.

There is little in the Court's opinion that is subject to criticism with the exception of the holding on vessel size limitation. On this question, Justice Marshall's dissent appears persuasive in a number of respects. The local Coast Guard rule regulating passage of large-size tankers does not appear to constitute a sufficient level of federal involvement to preempt completely a state law tailored to unique local conditions. In addition, the Coast Guard rule and the Washington limitation could conceivably exist in harmony if the former were viewed merely as a traffic control measure and the latter as an upper limit on vessel size to prevent truly massive oil spill disasters. Furthermore, Washington's restriction does not have the onerous effect of completely foreclosing the delivery of oil to Puget Sound terminals; the reasonable alternative of using smaller tankers is always available.³⁴

Although the Supreme Court concluded that the local Coast Guard rule was sufficient federal action to preempt the tanker size rule, this will not be the last word. On March 14, the Department of Transportation issued a navigation rule prohibiting the entry of oil tankers larger than 125,000 DWT into Puget Sound for a period of 180 days. During the pendency of the Ray v. ARCO litigation, operators had refrained from using oil tankers exceeding 125,000 DWT, and the new "rule is necessary to maintain the current de facto level of protection of … Puget Sound … from environmental harm resulting from vessel or structure damage." The rule also noted that "the Coast Guard has not yet taken action to limit the size of vessels entering Puget Sound." Additional traffic regulations will provide "a continuing scheme for controlling vessel operation in Puget Sound and to avert reduction in environmental protection that could otherwise occur."³⁵

1. Pursuant to the Supremacy Clause, U.S. CONST. art. VI, cl. 2.

2. 435 U.S. __, 46 U.S.L.W. 4200, 8 ELR 20255 (U.S. Mar. 6, 1978).

3. The Court affirmed preemption of several of the most important provisions and reversed a preemption finding against two other provisions of lesser importance.

4. 33 U.S.C. §§ 1221-1227, ELR STAT. & REG. 41718, 46 U.S.C. § 391a.

5. Atlantic Richfield Co. v. Evans, __ F. Supp. __, __, 7 ELR 20071 (W.D. Wash. Sept. 23, 1976).

6. See Note, The Preemption Doctrine: Shifting Perspectives on Federalism and the Burger Court, 75 COLUM. L. REV. 623 (1975).

7. WASH. REV. CODE § 88.16.170 et seq.

8. For an extensive summary of the complaint and briefs filed with the district court, see Atlantic Richfield Co. v. Evans, No. 75-648, ELR PEND. LIT. 65397 (W.D. Wash., filed Sept. 8, 1975).

9. Atlantic Richfield Co. v. Evans, __ F. Supp. __, 7 ELR 20071 (W.D. Wash. Sept. 23, 1976). See Comment, Preemption Once More: Washington's Tanker Law Enjoined But Stays Afloat, 7 ELR 10012 (1977).

10. Evans v. Atlantic Richfield Co., injunction stayed pending appeal, 429 U.S. 1035, prob. juris. noted, 430 U.S. 905 (1977). For an extensive summary of the briefs filed with the Supreme Court, see Ray v. Atlantic Richfield Co., No. 76-930, ELR PEND. LIT. 65500 (U.S., appeal docketed Jan. 5, 1977).

11. See, e.g., Clean Air Act § 209(a), 42 U.S.C. § 7543(a), ELR STAT. & REG. 42248; Noise Control Act § 6(e)(1), 42 U.S.C. § 4905(e)(1), ELR STAT. & REG. 41503.

12. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963).

13. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

14. Id.

15. Jones v. Rath Packing Co., 430 U.S. 519, 540-41 (1977).

16. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U.S. 117, 127 (1973).

17. 75 COLUM. L. REV., supra at 623.

18. 411 U.S. 624, 3 ELR 20393 (1973).

19. It has been argued that this decision is of limited precedential value because of the fact that the airport in question was privately owned rather than owned by a municipal proprietor. See Comment, Airport Noise Regulation Reconsidered: The Footnote that May Swallow Burbank, 6 ELR 10203 (1976).

20. 411 U.S. 325, 3 ELR 20362 (1973).

21. See also New York State Dep't of Social Services v. Dublino, 413 U.S. 405, 423 n.20 (1973), in which the Court indicated that preemption should be found, where statutes establishing a regulatory scheme anticipate federal and state coordination, only where the conflict is "of substance and not merely trivial or insubstantial."

22. Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977).

23. In this instance, it was not the PWSA but rather two century-old federal statutes that created the preemptive effect. 46 U.S.C. §§ 215, 364.

24. 46 U.S.C. § 391a.

25. Huron Portland Cement Co. v. Detroit, 362 U.S. 440 (1960).

26. Kelly v. Washington, 302 U.S. 1 (1937).

27. 33 U.S.C. §§ 1221-1227, ELR STAT. & REG. 41718.

28. 33 U.S.C. § 1221(3)(iii), ELR STAT. & REG. 41718.

29. 33 U.S.C. § 1222(b), ELR STAT. & REG. 41718.

30. H.R. REP. NO. 92-563, 92d Cong., 1st Sess. 15 (1971).

31. The size limitation is reduced to 40,000 DWT in periods of bad weather.

32. 33 U.S.C. § 1222(e)(7), ELR STAT. & REG. 41718.

33. Also, this analytical approach may indicate a concern for local interests that appears consistent with the evaluation of the Burger Court's decisions on preemption by other commentators. See Note, supra note 6.

34. It is far from settled whether there is an increased risk of oil spillage from fewer, larger tankers or a greater number of smaller tankers. Ray v. Atlantic Richfield Co., 8 ELR 20261 n.27.

If the state rule leaves a reasonable alternative for the accomplishment of the same purpose, this clearly is not the "microcosmic approach" to the state's regulating one item, radioactive effluents from a nuclear power plant, in a panoply of intertwined activities that would stultify achievement of a broad goal, the use of atomic energy for the production of electric power, that was criticized in Northern States Power Co. v. Minnesota, 447 F.2d 1143, 1 ELR 20451 (8th Cir. 1971), aff'd mem., 405 U.S. 1035 (1972).

35. 43 Fed. Reg. 12255 (Mar. 23, 1978). See also letter from Senator Warren Magnuson to Transportation Secretary Brock Adams (Mar. 9, 1978) requesting him to exercise his authority under 33 U.S.C. § 1221(3)(iii) to establish vessel size limitations. "Adequate Federal regulations could fill the gap created by the Court's action in this case and protect Puget Sound, as well as othersimilarly situated bodies of water."