## Facts

- California’s Air Resources Board adopted “Vessel Fuel Rules” requiring ocean-going vessels to use low-sulfur marine fuels while operating within 24 nautical miles of California’s coastline (“Regulated California Waters”).
- The rules generally applied only to vessels calling at California ports and exempted vessels merely transiting through the zone (innocent passage).
- Compliance was phased: beginning July 1, 2009, vessels had to use specified cleaner fuels with sulfur limits; by January 2012, covered fuels could not exceed 0.1% sulfur.
- California justified the rules as a public-health and environmental measure to reduce ship-generated air pollution affecting onshore air quality and related health harms.
- Pacific Merchant Shipping Association (PMSA) sued for declaratory and injunctive relief, arguing the rules were preempted (including by the Submerged Lands Act), violated the Commerce Clause, and conflicted with general maritime law.
- The district court denied PMSA’s motion for summary judgment and certified an interlocutory appeal; the Ninth Circuit accepted the appeal.

## Issues

1. Whether the Submerged Lands Act, by setting California’s seaward boundary at three miles, preempts or otherwise bars California from regulating vessel fuel use within 24 nautical miles of the coast.
2. Whether the Commerce Clause and Supremacy Clause prohibit California from requiring low-sulfur fuels for vessels engaged in interstate and foreign commerce beyond the three-mile territorial sea but within the 24-mile regulated zone.
3. Whether the Vessel Fuel Rules violate the dormant Commerce Clause or conflict with general maritime law.

## Decision

- The Ninth Circuit affirmed the district court’s denial of PMSA’s motion for summary judgment.
- The court held the Submerged Lands Act did not preempt the Vessel Fuel Rules merely because they applied beyond three miles from shore.
- The court concluded California could regulate vessel fuel use within 24 nautical miles based on substantial in-state air-quality effects and traditional police-power interests.
- The court held PMSA failed to show the rules discriminated against interstate or foreign commerce or imposed burdens clearly excessive in relation to the asserted local benefits.
- The court rejected the claim that general maritime law barred the fuel rules on this record.

## Legal Principles

- The Submerged Lands Act primarily addresses state ownership and boundaries for submerged lands and does not, by itself, allocate exclusive federal regulatory jurisdiction over all conduct beyond the three-mile limit.
- In areas of traditional state police power, including public health and air-quality regulation, courts apply a presumption against preemption absent a clear congressional command.
- A state may regulate conduct occurring outside its territorial waters when the regulation targets substantial effects within the state and does not amount to an assertion of territorial sovereignty.
- Under dormant Commerce Clause analysis, nondiscriminatory regulations are sustained unless their burdens on interstate or foreign commerce are clearly excessive relative to the local benefits.
- State environmental regulation affecting maritime actors is not invalid under general maritime law absent a demonstrated conflict with established maritime rules or a substantial interference with maritime commerce.

## Conclusion

The Ninth Circuit allowed California’s low-sulfur vessel fuel requirements to remain in effect during further proceedings, holding that the rules were not preempted by the Submerged Lands Act and were not shown to be invalid under the Commerce Clause, foreign-commerce concerns, or general maritime law because they targeted significant in-state air-pollution effects without discriminatory or clearly excessive burdens on commerce.


Pac. Merch. Shipping Ass’n v. Goldstene, 639 F.3d 1154 (9th Cir. 2011)