Details of Court Ruling Upholding Los Angeles CTP Employee Driver Mandate, Etc.

The Port of Los Angeles (POLA) has stated that it will not take action to enforce previously enjoined provisions such as the employee driver mandate before the Board of Harbor Commissioners meet, in order to consider its next steps, which may include reasonable extensions of time for compliance. The next meeting of the Commissioners will take place on September 16, or 23, 2010.

The American Trucking Associations, Inc. (ATA) has stated that it plans to appeal the District Court’s decision.

(See ITT's Online Archives or 08/30/10 news, 10083008, for earlier BP summary announcing this decision.)

Decision Accepts Employee Driver Mandate, Four Other Requirements

The ATA had challenged five provisions of POLA’s Concession Agreement, claiming they are pre-empted by the U.S. Constitution and the Federal Aviation Administration Authorization Act (FAAAA), and are an undue burden on motor carriers.

However, the court upheld all five rules, which require drayage providers to:

• use only employee drivers, not contractors driving separately owned vehicles;
• maintain trucks and retrofit pollution control equipment on a formal schedule per manufacturer specifications and provide documentation to prove same;
• post placards giving a phone number to report concerns regarding emissions, safety and security compliance;
• demonstrate the financial capability to perform the agreement obligations;
• provide off-street parking for trucks to use while waiting to serve the port.

Court Said Port Was “Market Participant,” Can Impose All Requirements at Issue

The court’s decision gives greater weight than its prior rulings or those of the appeals court did to the argument that the Port operates as a “proprietary department” using its own funds, and is a “market participant” that may impose requirements for monetary reasons, which are thus not state regulations subject to pre-emption by the FAAA. This reasoning underlies the court’s acceptance of the (1) employee driver mandate and (2) off-street parking provisions, which the court recognized are not safety-related and would otherwise be pre-empted by federal law, since they affect price, route and service.

Besides the “market participant” doctrine, the court also reasoned that the remaining provisions at issue, the (3) maintenance, (4) placard, and (5) financial capability requirements, relate to safety considerations, which states can regulate under the safety exception to the FAAAA.

Court Also Cites Air Pollution, Port’s Need to Grow to Meet Increased Volume

The court’s decision cited findings by the EPA, state authorities, and consultants tying high air pollution levels in the region to the use of aging drayage trucks at the port. While recognizing that some progress in reducing air pollution had been gained even without all of the Port’s new requirements in place (because of the partial temporary injunction), the court cited the Port’s need to resolve the pollution problem in order to grow, to compete with other ports, and to meet a demand for cargo-handling capacity that is expected to double in the next decade.

High Costs of Implementation Noted by Court

The court acknowledged the high costs of the requirements, citing $500 million annually as the cost. The employee-driver requirement was estimated to increase drayage operational costs by 167%, while providing off-site parking would cost over $21,000 per truck each year, the court noted.

(According to ATA sources, independent owner-operators that have already invested in clean trucks will be excluded from drayage if they are not employees of drayage service companies registered under the Concession Agreement.)

(See ITT's Online Archives or 03/03/10 news, 10030340, for BP summary of the Appeals Court’s upholding of the District Court’s denial of a complete injunction against the Clean Trucks concession agreement plan, which noted the preliminary injunction against the employee driver mandate, etc.

See ITT’s Online Archives or 05/08/09 news, 09050820, for BP summary of the partial preliminary injunction preventing the employee driver mandate and other provisions from being enforced.

See ITT's Online Archives or 10/20/09 news, 09102005, for BP summary of the Port of Long Beach's settlement with the ATA.)

POLA statements available here.