Tuesday, September 27, 2011

American Trucking Associations, Inc. v. The City of Los Angeles

Sep 26: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-56465. Appealed from the United States District Court for the Central District of California.
    Beginning in 2008, the Port of Los Angeles (POLA, or the Port) prohibited motor carriers from operating drayage trucks on Port property unless the motor carriers entered into "concession agreements" with the Port. The concession agreements set forth fourteen specific requirements covering, among other things, truck driver employment, truck maintenance, parking, and Port security. The agreements were adopted as part of the Port's "Clean Truck Program" (CTP), which includes a progressive ban on older (and higher polluting) trucks on Port property, a multi-faceted incentive program to support acquisition of clean trucks, and a system of penalties on transport of cargo by older trucks. The Port adopted the CTP in response to community opposition, including litigation, that had successfully stymied Port growth from the mid-1990s through 2007.
    American Trucking Associations, Inc. (ATA, a national association of motor carriers), challenged the concession agreements, arguing that they are preempted by the Federal Aviation Administration Authorization Act (FAAA Act), 49 U.S.C. § 14501 et seq. After obtaining a preliminary injunction against several provisions of the concession agreements, ATA challenged five specific provisions at trial. The district court held that none of the challenged provisions fell within the scope of FAAA Act preemption, first because some did not relate to motor carriers' rates, routes, and services, and second because the State adopted the entire agreement (and the challenged provisions in particular) in its capacity as a market participant, rather than a market regulator. The district court further held that the FAAA Act's exemption for regulation "genuinely responsive to motor vehicle safety" saved from preemption the provision requiring motor carriers to create and administer regular maintenance plans.
    ATA appealed. In a split decision, the majority Appeals Court affirmed the district court in large part, but reversed its decision that the employee-driver provision of the concession agreement falls within the market participant doctrine and is not preempted. The Majority said further, "The district court meticulously identified and applied the governing law. We affirm the district court's holdings that the financial capability, maintenance, off-street parking, and placard provisions are not preempted. We reverse the district court's conclusion that the employee-driver provision is saved from preemption by the market participant doctrine, and remand for further proceedings consistent with this opinion."
    The dissenting justice said, "I must dissent from the majority opinion because: (1) the market participant exception to preemption does not apply. Drayage services (not port services) form the relevant market, and the Port of Los Angeles (the Port) acts as a regulator of drayage services. (2) Even assuming the Port qualifies as a proprietor, the off-street parking provisions are preempted, because they affect parties unrelated to contractual obligations to the Port. (3) The placard provision is preempted and not saved by the market participant doctrine or the safety exception, because California cannot revoke access to channels of interstate commerce and identification requirements on motor carriers are expressly preempted under 49 U.S.C. § 14506(a)."
    American Trucking Associations President and CEO Bill Graves issued a release hailing the decision as a decisive victory for the trucking industry and consumers. He said, "By striking down the Port's unjustified ban on owner-operators, the Court has upheld the rights of trucking companies to structure their businesses to maximize efficiency and productivity. By throwing out the ban, the court has ensured that competition, not government regulation, will establish motor carrier's rates, routes, and services. This is a win for all involved; trucking companies; small business owner-operators; freight shippers; and ultimately average American consumers. The historic gains in air quality at the Port clearly show that the interests of clean air have been served without running independent contractors out of the Port.

    He said, "This plan was never about clean air, it was about promoting special interests of a few well-connected, labor groups. "Successful clean trucks plans in Long Beach, Seattle and the Ports of New York and New Jersey have shown you can improve air quality without forcing owner-operators out of your port." ATA Chief Counsel Robert Digges said, "We are evaluating the rest of the court's ruling. While the court upheld our argument on the central issue, we will be deciding whether a further appeal is warranted. We firmly believe the other challenged provisions of the Concession Agreement should have been preempted as explained in a strong dissent by the panel's Chief Judge. Should we appeal, that dissent will be very helpful to our effort."

    Access the complete opinion and dissent (click here). Access a release from ATA (click here). [#Air, #Transport, #CA9]
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