Coast Guard stumbles as it tries to preempt Massachusetts state law

The Massachusetts Oil Spill Prevention Act (OSPA) was enacted following an oil spill in Buzzards Bay.  [As the appellate court notes, Buzzards Bay is a scenically beautiful body of water.  See also http://en.wikipedia.org/wiki/File:Buzzards_Bay_map.png.]  OSPA requires a tugboat escort for all tank vessels transiting Buzzards Bay that carry 6,000 or more barrels of oil.  Further, the OSPA requires a navigation watch on all tow vessels transiting Buzzards bay and carrying 6,000 or more barrels of oil that shall consist of at least 1 licensed deck officer or tow vessel operator, who shall serve exclusively as a lookout, and that additionally three licensed officers or tow vessel operators shall be on a tow vessel when it is escorting a tank barge.

The Coast Guard attempted to claim that its regulations preempt OSPA, and sued to negate the state law.  Perhaps recognizing a weakness in their argument, with the case pending before the district court, the Coast Guard changed the legal seascape by promulgating a final rule relating to navigation in Buzzards Bay (the 2007 Rule).  This rule, unlike the version previously before this court, purported expressly to preempt the challenged provisions of OSPA.  The case bounced around between judges, and finally the Coast Guard renewed its motion for an injunction.  The State then filed a counter-claim that argued that the Coast Guard, in the process of promulgating the 2007 Rule, had violated both the Administrative Procedure Act (APA) and NEPA.  After a series of motions, the District Court found a NEPA violation but held it was harmless because "the substance of the Coast Guard's actual rulemaking analysis was the functional equivalent of what an environmental impact statement would have generated."

In United States et al v. Coalition for Buzzards Bay et al, 2011 U.S. App. LEXIS 9927 (First Cir.: 5/17/11), the Court of Appeals noted that during the rulemaking process, the Coast Guard failed to comply with its obligations under the NEPA.  The Coast Guard attempted to nullify plainly stated provisions of its own longstanding NEPA procedures.  During the time when rulemaking was underway, there was ferocious and widespread opposition to the Coast Guard's approach to the regulation of oil barges in the area.  The Coast Guard knew of this opposition and knew that much of it implicated the not implausible fear that environmental harm would ensue should the protections afforded by the Massachusetts Oil Spill Prevention Act be eliminated and the proposed federal standards adopted.  The error was one of function, not merely of form.  The administrative record, viewed as a whole, did not show that the Coast Guard ever analyzed, or even adequately studied, the environmental impact of its proposed action.  Consequently, its failure to prepare either an EIS or an environmental assessment was not harmless.

The Court of Appeals thus reversed the District Court's entry of summary judgment in favor of appellees, vacated the injunction against the enforcement of state law, and remanded the case for further proceedings consistent with the Court of Appeals statement of the appropriate legal standards to be applied.