Supreme Court Nixes Port of L.A. Drayage Truck Requirements

“We are gratified that, at the conclusion of many years of litigation, the highest court in the land unanimously agreed with ATA on these rules,” said American Trucking Associations President Bill Graves in a press release (here). The ATA represents the drayage companies at the Port of L.A., and brought this suit against the City of Los Angeles. “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,” he said.

“For nearly five years, the Clean Truck Program has played a critical role in reducing harmful emissions by more than 90 percent from trucks operating at the Port of Los Angeles,” said a Port of L.A. spokesman in a prepared statement. “An important component of the Clean Truck Program has been our concession agreements with trucking companies that call at the Port of Los Angeles,” he said. "We are reviewing the Supreme Court ruling in order to determine how it affects our current ability to provide a clean, safe and secure trucking system consistent with the Court’s guidance.”

Drayage Requirements are Illegal Local Trucking Regs, Says Court

The Port of L.A. adopted the Clean Truck Program in 2007, in response to pollution concerns from surrounding communities. A proposed expansion of the port had been stymied for 10 years due to these environmental concerns. The Clean Truck Program worked by requiring “concession agreements” from companies involved in drayage, or the short-haul conveyance of goods in and out of the port. The two provisions before the Supreme Court required drayage companies to (1) submit a plan listing off-street parking locations for trucks when not in service, and (2) put a placard on each truck with a phone number for reporting environmental or safety concerns. These provisions weren’t enforced directly on the drayage companies -- instead, terminal operators faced potential fines and jail time for doing business with drayage operators that hadn’t entered into concession agreements.

In arguments before the court, the City of Los Angeles acknowledged the provisions affected the “price, route, or service” of motor carriers, but argued that the provisions aren’t regulations that have “the force and effect of law,” as the FAAAA prohibits for state and local governments. Instead, the requirements were related to the port’s business interest in expanding its facilities, the city said -- they were necessary to assuage the communities surrounding the port. And in any case, the criminal sanctions would be brought against terminal operators, not the drayage operators, so they couldn’t be said to impose legal requirements against the truckers.

In a unanimous decision, the high court ruled both provisions violate the FAAAA’s prohibition on state and local regulation of motor carriers. The court found that the potential criminal penalties associated with noncompliance give the requirements legal force and effect. The penalties force drayage companies to change their behavior under threat, it said. “That counts as action ‘having the force and effect of law’ if anything does,” said Justice Kagan in the Court opinion. The port’s business intentions are irrelevant, because it can choose another means to achieve them. “When the government employs such 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,” Kagan said. And the fact that the penalties would apply to terminal operators instead of drayage companies is irrelevant, the court said. The penalties are still an effective, if indirect, means of coercing action, it said.

The court declined to decide whether its past precedent bars enforcement of two other Clean Truck Program requirements related to financial capacity and truck maintenance. In its 1954 ruling in Castle v. Hayes, the Supreme Court said states can’t take action that would effectively suspend or revoke an interstate carrier’s federally-granted right to operate. But that ruling didn’t prohibit states from taking off the road trucks that are currently in violation of trucking regulations, the court said. Until it is clear how the port intends to enforce those regulations, it can’t be known whether enforcement is in violation of the Castle standard, it said.

The National Federation of Independent Businesses hailed the decision. “Today’s ruling is a victory for small business owners who ship and haul goods in interstate and international commerce,” said Karen Harned, executive director of the National Federation of Independent Businesses’ Small Business Legal Center in a press release (here). NFIB worried that if the Supreme Court upheld the rules, other ports would follow suit and a patchwork of new local rules would strangle interstate commerce. “The Supreme Court realized that the Port of Los Angeles imposed undue and unconstitutional burdens on trucks coming in and out of the port, increasing the burdens, costs, and barriers,” she said.

L.A. Mayor Antonio Villaraigosa said the ruling wouldn't impact the city's determination to regulate pollution from the port. "The program to improve air quality at the Port of Los Angeles is the most extensive effort to clean up a port in the world, helping to make L.A. the cleanest and greenest big city in the US,” said Villaraigosa in response to the ruling. “Our Clean Truck program has reduced harmful truck emissions by 91%. We are reviewing the Supreme Court's decision, but we intend to continue our efforts to clean LA's Port to the extent the law allows."