Ninth Circuit Confirms California's Jurisdiction Over Vessel Fuel Standards Out to 24 Miles

New Development

On March 28, 2011 the U.S. Court of Appeals for the Ninth Circuit rejected an appeal by the Pacific Merchant Shipping Association ("PMSA"), a mutual benefit corporation comprised of owners and operators of U.S. and foreign-flag vessels, in which it sought to prevent the state of California from expanding its enforcement of vessel fuel standards to 24 miles, well beyond the state's traditional 3-mile territorial limit. Unless PMSA successfully appeals this decision to the U.S. Supreme Court, a vessel en route to a California port will continue to need to switch to low-sulfur fuel once the vessel is within 24 miles of the California coast. As the Court itself stated in its opinion, "We are clearly dealing with an expansive and even possibly unprecedented state regulatory scheme. However, the severe environmental problems confronting California (especially Southern California) are themselves unusual and even unprecedented."

Background

Over the last few years, the state of California, led by its state agency known as the California Air Resources Board ("CARB"), has attempted to implement and enforce state regulations intended to reduce certain air emissions from oceangoing vessels. CARB has sought to enforce these regulations within 24 miles of the California coast, well beyond the traditional state territorial limits of 3 miles from the coastline. A series of court challenges and decisions resulted in CARB modifying these rules to require vessels calling in California ports to use low-sulfur fuel, rather than specifically regulating the air emissions from those vessels. On June 30, 2009, the U.S. District Court held, among other things, that the California low-sulfur fuel rules were not preempted by U.S. federal law and that states were allowed to adopt their own fuel mandates. PMSA appealed the District Court's ruling.

What Does This Mean for Vessel Owners and Operators?

Unless PMSA chooses to appeal this latest decision to the U.S. Supreme Court and is successful in its appeal, it appears unlikely that any changes will be made to these California vessel fuel rules. The rules currently...