The U.S. Supreme Court ruled Thursday in favor of the American Trucking Associations (ATA) in the group’s effort to turn back the Port of Los Angeles' efforts to regulate the drayage trucking industry.
In 2007, the port created a Clean Truck Program that required trucking companies operating at the port to enter into concession agreements.
The concession agreements made a number of requirements on drayage companies including these five: that they be employees instead of independent owner operators; affix a placard to trucks giving a phone number where persons could complain about safety or environmental concerns; submit a plan listing off-street parking locations for each truck when they are not in service; demonstrate “financial capability to perform its obligations”; and have a maintenance plan for each truck.
ATA had already defeated in 2011 the 9th Circuit Court of Appeals the employee driver requirement, but the other four requirements were upheld.
Before the 9th Circuit the ATA argued the driver requirement was preempted by the 1994 Federal Aviation Administration Authorization Act (FAAAA), which says in part a state or local government “may not enact or en¬force a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier... with respect to the transportation of property.”
In its decision Thursday, the Supreme Court also agreed the port could not require trucks to affix a placard or submit a parking plan.
(For more on the decision, including an amusing aside about the soul singer Wilson Pickett, see this article on the SCOTUSblog.
ATA, whose members include many of the drayage companies that move containers to and from the port, successfully argued those requirements were also preempted bt FAAAA.
The 9th Circuit had found rather than regulating the drayage market, the placard and parking provisions advanced the port’s own business interest in managing its facilities, saying they were designed to increase community good-will necessary to facilitate port expansion.
But since the two provisions were related to a motor carrier’s price, route, or service, the Supreme Court said the only question was whether the requirements had the “force and effect of law,” since there is an exception for “contract-based participation in a market.”
While the port argued the concession contract was just a private agreement made to advance the port’s commercial and proprietary interests, the Supreme Court said the port, which is owned by the City of Los Angeles, “exercised classic regulatory authority” including criminal penalties, in imposing the placard and parking requirements.
Terminal operators faced fines or possible imprisonment if they allowed trucks that were not registered under the concession agreement and “that counts as action ‘having the force and effect of law’ if anything does,” the court said. The port “chose a tool to fulfill those goals which only a government can wield, the hammer of criminal law."
ATA had also argued the port was limited by a 1954 Supreme Court decision, Castle v. Hayes Freight Lines,
on how it could enforce the financial-capacity and truck-maintenance that were upheld by the 9th Circuit.
ATA argued the port may not rely on the concession agreement’s penalty provision to suspend or revoke the right of non-compliant trucking companies to operate on the premises.
The court said “the port would not violate Castle
if it barred a truck from operating at its facilities to prevent an ongoing violation of the agreement’s requirements.
“And at this juncture, we have no basis for finding that the port will ever use the agreement’s penalty provision for anything more than that,” the court added.
The court said it would pass on deciding ATA’s Castle
-based challenge: “There will be time enough to address the Castle
question when, if ever, the Port enforces its agreement in a way arguably violating that decision.”
ATA President and Chief Executive Officer Bill Graves said his group was "gratified that, at the conclusion of many years of litigation, the highest court in the land unanimously agreed with ATA on these rules. Our position has always been that the port’s attempt to regulate drayage operators – in ways that had nothing to do with its efforts to improve air quality at the Port – was inconsistent with Congress’ command that the trucking industry be shaped by market forces, rather than an incompatible patchwork of state and local regulations. The decision is sure to send a signal to any other cities who may have been considering similar programs which would impermissibly regulate the port trucking industry.”
A group called the Coalition for Clean Trucks and Ports said, however, the ruling meant "the concessions approach – remains intact. The Port of L.A. may continue to require that cleaner, less polluting trucks serve the port, and that the trucks be properly maintained. The Port of L.A. remains able to bar trucks that do not comply with the landmark environmental program, which has widely been credited with reducing toxic truck emissions by more than 90 percent."
The coalition's press release
quoted Jessica Tovar of the Long Beach Alliance for Children with Asthma as saying the clean truck program "has led to a dramatic improvement in the air quality in harbor communities, allowing children afflicted with asthma to breathe easier. Now we need the trucking company owners – not the drivers – to take responsibility for the maintenance of the trucks so that the air stays clean.”
The coalition statement argued "as many as 90 percent of America’s port truck drivers are misclassified as independent contract drivers" saying they are "beholden to a single trucking company, paid by the load, but saddled with lease payments and operating costs for trucks they don’t own, and high self-employment taxes. With no ability to control the fees drivers receive for the containers they haul, there is rarely money left at the end of the month to properly maintain the trucks. This results in trucks that are poorly maintained and are more likely to produce malignant fumes that affect the air quality in the ports and the neighboring communities." - Chris Dupin