When the U.S. Court of Appeals for the 9th Circuit in September ruled the employee driver mandate in the Port of Los Angeles clean-trucks program is a violation of federal pre-emption law, many believed the three-year case would be put to rest.
The employee mandate was an effort by labor-friendly Los Angeles to require that harbor truck drivers, most of them independent contractors, become trucking company employees so the Teamsters union could organize them. Unions by law cannot organize independent contractors.
Because the American Trucking Associations won a major victory when the federal court struck down the employee mandate concession requirement, the ATA could have rested on its laurels. The city and Port of Los Angeles believed the case was finished and said they would not appeal the ruling.
The ATA, however, will take the costly next step of appealing the decision to the U.S. Supreme Court. The ATA is challenging the appellate court’s ruling upholding other port concession rules such as requirements that motor carriers show proof of financial responsibility, have a defined maintenance and repair program, display certain port-generated placards on trucks and refrain from off-street parking.
The 9th Circuit upheld those requirements based on either safety exemptions to the principle of federal pre-emption or the port’s argument that the port itself is a participant in the market. The pre-emption statute states that only the federal government can regulate the routes, rates and services of motor carriers engaged in interstate commerce, with certain exceptions.
The 9th Circuit found the employee driver mandate affects routes, rates and services and therefore does not qualify for an exemption. The employee mandate was potentially the most costly of the port concession requirements that truckers faced.
The ATA, however, adamantly opposes the use of the market participant exemption to weaken federal pre-emption law, said Curtis Whalen, executive director of the ATA’s intermodal conference. The ATA must ensure states do not attempt to carve out special taxing districts for trucking and warehouse operators, as some are attempting, or use environmental goals to allow ports to regulate trucking, as Seattle, Oakland, Los Angeles, Newark, N.J., and New York have advocated, he said.
The ATA views an action as seemingly innocuous as the Los Angeles prohibition against the overnight parking of trucks on city streets as an erosion of federal pre-emption. Extending the port’s jurisdiction outside of its gates makes the port “the big bully on the block” and opens the door to a port authority taking even more egregious steps to regulate trucking, he said.
Using the market participant exemption as a justification to regulate trucking for “the greater good” is dangerous, Whalen said. Defining the market in which a port operates so broadly that it includes almost all activities in which the port is engaged weakens federal pre-emption to the point where there is no federal pre-emption, he said.
The ATA believed it already had won the market participant battle two years ago when the 9th Circuit, in its first handling of the Los Angeles case, said the market at issue was the trucking market, not the port market. Los Angeles may compete against other ports for market share, but because it does not procure trucking services, it does not participate in the trucking market, the 9th Circuit ruled.
In fact, the three 9th Circuit judges who handled the case the first time chided the district court judge for upholding the market participant argument, Whalen said. On the second trip to the 9th Circuit in September, however, three different judges heard the case. Two accepted the market participant argument, and one judge dissented.
Such disagreements up and down the legal chain may work to the ATA’s favor when it asks the Supreme Court to hear this case. The ATA wants the high court to simply quash any attempt by local jurisdictions to claim they are participants in the commercial marketplace as a rationale for regulation.
Los Angeles attorney Cameron Roberts said the Supreme Court could provide clarity not only for Los Angeles, but for all ports now engaged in developing clean-trucks programs.
Roberts believes preserving federal pre-emption over interstate commerce and preventing the market participant argument from weakening federal pre-emption is a worthwhile endeavor for the trucking industry. “The downside risk is low and the upside benefit is high,” he said.