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Supreme Court strikes down drayage rules at Port of L.A.
In a victory for trucking interests and supporters of federalism, the U.S. Supreme Court on June 13 threw out a key part
of the Port of Los Angeles’ pollution-reduction program
that established guidelines, restrictions, and penalties on
drayage companies calling on the nation’s busiest seaport.
In a 9-0 decision, the high court
ruled against a truck concession
agreement embedded in the port’s
2008 “Clean Truck” program.
According to the ruling, the agreement is pre-empted by a 1994 federal law that bars a state from
imposing laws and regulations that
affect a trucker’s rates, routes, or
services. The law, known as the
Federal Aviation Administration Authorization Act, effectively deregulated intrastate commerce in the United States.
The ruling ends a nearly five-year legal battle between the
trucking industry and the port and city of Los Angeles over
language in the Clean Truck program, which was devised in
2008 to address community concerns over the impact of port
expansion on traffic, safety, and the environment. The concession agreement required drayage companies to place a
placard on each truck displaying a phone number for reporting concerns. Drayage companies were also ordered to submit a plan listing off-street parking locations for each truck.
The agreement established penalties for alleged violators,
including possible suspension or revocation of the authority to perform drayage services at the port. The port mandated that every drayage company enter into the agreement.
It also made it a crime, punishable by fine or imprisonment, for a terminal operator to grant access to an unregistered drayage truck.
The American Trucking Associations (ATA) sued the port
and the city, arguing the agreement violated rules governing
interstate commerce and had less to do with cleaning up the
environment and more to do with the port’s flexing its regulatory muscle on its own behalf.
operators—and through them, trucking companies—to
alter their conduct by implementing a criminal prohibition
punishable by imprisonment,” she wrote.
When “the government employs a coercive mechanism,
available to no private party, it acts with the force and effect
of law, whether or not it does so to
turn a profit,” Justice Kagan said.
The Supreme Court’s decision in
part overruled a 2011 decision by a
federal appeals court in California
that the agreement was lawful
except for language that required
owner-operators to become port
employees.
“[The Supreme Court decision]
is sure to send a signal to any other cities [that] may have
been considering similar programs, which would imper-missibly regulate the port trucking industry,” said Bill
Graves, president and CEO of the ATA, in a statement. The
group represents the nation’s major motor carriers.
BUSINESS OR STATE AGENCY?
The issue before the high court was if components of the
concession agreement governing a trucker’s rates, routes,
and services could escape federal pre-emption because, as
the port contended, it was acting as a business and not as a
state regulatory body. If the port was considered a business,
the agreements should be exempted from federal pre-emption laws.
Justice Elena Kagan slammed the door on that argument.
In the lead opinion, she wrote that the port “exercised classic regulatory authority” by imposing the placard and parking requirements on drayage operators. “It forced terminal
BACK TO THE DRAWING BOARD
Port officials, who said the program has helped reduce truck
emissions by 90 percent since its enactment, will now have
to re-evaluate their policies. Phillip Sanfield, a port
spokesman, said officials will need to determine how the ruling “affects our current ability to provide a clean, safe, and
secure trucking system consistent with the court’s guidance.”
The Coalition for Clean and Safe Ports, a group of truckers, area residents, and public health advocates, said the heart
of the port’s program remains intact despite the court’s ruling. The port can continue to require that cleaner and well-maintained trucks serve its environs. The problem, according
to the group, is the “misclassification” of port drivers as independent contractors. About 90 percent of port drivers are
beholden to one company for their business and are paid by
the load. Yet they are burdened with lease payments and
operating costs for trucks they don’t own and must pay high
self-employment taxes. With no ability to set the fees for the
containers they haul, there is rarely money left at month’s
end to properly maintain their trucks, the group said.
Joel D. Anderson, president and CEO of the International
Warehouse Logistics Association (IWLA), hailed the decision as affirming Congress’s intent to economically deregu-late transportation at all government levels. In an e-mail to
DC VELOCITY, Anderson, who was the president of the
California Trucking Associations when the 1994 law was
enacted, wrote, “I was pleased to read such clear and expansive justification for the court’s rejection” of the concession
agreement. ;
—M.S.
