WASHINGTON, D.C. — The Port of Los Angeles defended its drayage concession program in the U.S. Supreme Court today, while the American Trucking Associations, backed by the federal government, said the concession program is illegal and should be scrapped faster than a smoke-belching 1990s-model truck.
Do the program’s requirements amount to a regulation and interfere with interstate commerce, as ATA and the federal government argue, or are they contract provisions between private or semi-private businesses, as the port contends?
If ATA and its federal allies and the nation’s largest port can’t agree, the nine justices of the Supreme Court may not either. “Of course, states and cities have the authority to set parking regulations,” Justice Stephen Breyer said. “Isn’t there room (in the statutes granting such authority) to address environmental regulations?”
“It seems to me the answer is no,” said Justice Antonin Scalia, who warned the attorney for Los Angeles, Steven S. Rosenthal, that basing the port’s argument on its nature as a commercial enterprise leaves “a very high hill for you to climb.”
Rosenthal struck out for the hill’s summit early in his argument. “At issue are conditions in a contract between commercial actors,” the drayage truckers, terminal operators and the port, he told the court. “The owner of the land” — in this case the Port of Los Angeles — “has to have some type of control” over access to that property by motor carriers, he said. “As a business, we should be allowed to do what Wal-Mart or any other entity would do to advance its business,” Rosenthal said.
Scalia, at least, didn’t seem to buy the comparison between the nation’s largest retailer and the nation’s largest container port. “Do market participants impose civil and criminal penalties?” Scalia asked. “No,” Rosenthal said. “Ah,” said the judge.
That’s the main reason the ATA argues the concession requirements are not just provisions of a private contract but an attempt to usurp federal regulatory authority over trucking. “The port is evoking the full punitive power of the state to impose conditions on motor carriers,” said Daniel N. Lerman, an attorney for the ATA.
“That’s what Congress was trying to prevent” in the 1994 Federal Aviation Administration Authorization Act, which extended federal authority over intrastate trucking, effectively eliminating state economic regulation of motor carriers.
The parking and placarding restrictions expressly violate the 1994 FAAA law, which pre-empts regulation of motor carrier “price, route or service” by states or cities, according to ATA.
“The port actions have the force and effect of law under any reasonable interpretation,” Lerman said. That penalties are imposed not on truckers but terminal operators is irrelevant, said John F. Bash, assistant to the solicitor general at the U.S. Department of Justice, who argued the federal case. “What if a state created an agreement with each trucker saying if you don’t sign this we’ll throw anyone you do business with in jail? That would still be a violation,” he said.
The Port of Los Angeles introduced the concession program in 2008 as part of a clean-trucks plan to cut air pollution. In order to work the port, drayage companies would need to sign concession agreements that required them to fulfill certain requirements, including using only employee drivers, not owner-operators.
The ATA sued, and the 9th Circuit U.S. Court of Appeals struck down that provision of the concession program in 2011, but kept three other requirements. The ATA sued again, challenging that part of the appellate court decision. Under the program, carriers must submit an off-street parking plan for all permitted trucks, display placards on its trucks and prove they have the financial resources to meet their obligations under the agreement — notably buying and maintaining clean diesel trucks. Penalties for default include suspension or revocation of the concession agreement — the port could, in theory, exclude a drayage carrier.
The port hasn’t actually barred any carriers from its gates, Rosenthal said. “We haven’t used revocations, and we haven’t used suspensions,” he said. “We’re really talking about future options.” Those options would still violate an older legal precedent set by the Supreme Court six decades ago, the ATA argued.
In Castle v. Hayes Freight Lines, the high court in 1954 ruled a state — Illinois in the case — cannot entirely bar federally licensed trucks from its highways as punishment for noncompliance with a state law limiting the weight of freight.
The ATA claims the Castle decision applies to the Port of Los Angeles — a key conduit for commerce — as much as it would to state highways. The attorney for Los Angeles tried to draw a distinction between the port and highways. Running a port is “substantially different than running public roads,” Rosenthal said. He even said Castle should not serve as a legal precedent in today’s deregulated world.
“The decision was predicated on a very specific regulatory regime under the Motor Carrier Act of 1935,” the attorney said. “That regime died several decades ago, and we would argue that Castle died with that regime.” The regulatory regime may be as dead, but Castle lives, ATA attorney Lerman said. “The decision was based on statute and that statute is still there,” he said, even if it was changed drastically in 1980.
The future of the concession program — whether regulation or commercial agreement — now rests with the nine justices. A decision is expected before the court's current session ends in June.