In Re Ballard Shipping Company, Etc. v. Beach Shellfish
25 Envtl. L. Rep. (Envtl. Law Inst.) 20141, 32 F.3d 623, 1994 A.M.C. 2705 (1994)
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Rule of Law:
A state law that provides remedies for purely economic losses resulting from maritime oil pollution is not preempted by general federal maritime law if the conflicting federal rule did not originate in and does not have exclusive application in admiralty, and the state law addresses a strong local interest without excessively burdening maritime commerce.
Facts:
- On June 23, 1989, the oil tanker M/V World Prodigy, owned by Ballard Shipping Co., ran aground in Narragansett Bay, Rhode Island.
- The accident caused a spill of over 300,000 gallons of heating oil into the bay.
- The State of Rhode Island closed Narragansett Bay to all shell-fishing activities for two weeks during and after the cleanup.
- A group of shellfish dealers, who purchase shellfish from fishermen to resell, suffered severe economic losses due to the suspension of their operations.
- The shellfish dealers did not suffer any direct physical injury to their persons or property.
- The ship's captain had entered the bay without a local pilot on board, in violation of state law.
Procedural Posture:
- Ballard Shipping Co. filed a petition in admiralty in the U.S. District Court for the District of Rhode Island seeking limitation of or exoneration from liability.
- A group of shellfish dealers filed claims in the admiralty proceeding against Ballard for economic losses under federal maritime law and the Rhode Island Environmental Injury Compensation Act.
- Ballard moved to dismiss the dealers' claims, arguing they were barred by the federal maritime rule announced in Robins Dry Dock & Repair Co. v. Flint.
- The district court (trial court) granted Ballard's motion to dismiss, holding that federal maritime law preempted the state statute.
- The shellfish dealers (appellants) appealed the dismissal to the U.S. Court of Appeals for the First Circuit, with Ballard Shipping Co. as the appellee.
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Issue:
Does federal maritime law, specifically the rule from Robins Dry Dock barring recovery for purely economic losses, preempt a Rhode Island statute that expressly allows such recovery for damages caused by an oil spill?
Opinions:
Majority - Boudin, Circuit Judge.
No. The federal maritime rule barring recovery for purely economic losses does not preempt the Rhode Island statute because the state law does not materially prejudice a characteristic feature of maritime law or unduly interfere with its harmony and uniformity. The court applies the three-prong test from Southern Pacific Co. v. Jensen. First, the court determines that the Robins Dry Dock rule, which prohibits recovery for purely economic loss unaccompanied by physical injury, is not a 'characteristic feature' of maritime law as defined by the Supreme Court in American Dredging. A rule is a 'characteristic feature' only if it originated in admiralty or has exclusive application there. The Robins rule was a general tort principle applied in both land-based and maritime cases, not a doctrine unique to admiralty. Second, the court balances state and federal interests to assess whether the state law interferes with the 'harmony and uniformity' of maritime law. Rhode Island has a weighty police power interest in protecting its waters and providing remedies for pollution damage to its citizens. The federal interest is in protecting maritime commerce from potentially excessive or inconsistent liability regimes. The court finds that while the state law imposes a burden, this burden is not excessive, especially since the recently enacted (though not retroactive) federal Oil Pollution Act of 1990 (OPA) also allows recovery for such economic losses, indicating a congressional judgment that such liability does not unduly burden maritime commerce.
Analysis:
This decision significantly narrows the preemptive force of judge-made federal maritime law, affirming states' authority to legislate in areas of strong local concern like environmental pollution. By adopting the restrictive definition of a 'characteristic feature' from American Dredging, the court makes it much harder to argue that a general tort rule applied in admiralty should preempt a contrary state statute. Furthermore, the court’s reliance on the non-retroactive Oil Pollution Act as evidence of congressional policy provides a powerful analytical tool, suggesting that subsequent federal legislation can inform the judicial balancing of state and federal interests in preemption cases, even where the statute itself does not apply.
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