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From SCDigest's On-Target E-Magazine

- June 25, 2013 -

Supply Chain News: Port of LA Drayage Saga Practically Over after Five Years - but Issue is far from Finished

Supreme Court Largely Rules in ATA'S Favor, but Teamsters Now Sending Forces to State Legislatures

SCDigest Editorial Staff

In early June, the US Supreme Court issued a ruling on the five year legal battle between the American Trucking Associations and the Port of Los Angeles over issues that at one level seem obscure, yet were of fundamental importance to the trucking industry an in the end shippers. The legal battle also involved some intrigue over what the issues and interests really were on the port side of the debate.

Nominally, back in 2007 the ports of Los Angeles and Long Beach initially claimed a goal to improve air quality in the region was justification for a series of requirements on drayage drivers (drivers moving containers from the port to rail lines or transload facilities) - including a requirement that all such drivers must be employees of a trucking company.

SCDigest Says:

The Teamster's strategy is now to wage this battle at the state legislature level.

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But was improving the environment really the factor behind that rule and other requirements that would be placed on drayage drivers? Much evidence suggested that the real "driver" here was a move to replace the non-unionized drayage drivers that dominate the market with larger carriers, almost all of which are part of the Teamsters union or could more easily be unionized.

At the time, before 2008, the mayor of Los Angeles was and is Antonio Villaraigosa - a former union organizer. Not long before the announcements by the ports, Villaraigosa was said to have met several times with senior Teamsters officials. All this said to be part of a "blue and green" alliance between labor and environmental groups.

At the heart of the issue is to what degree state and local governments can regulate the trucking industry, an ability now largely limited by Federal Aviation Administration Authorization Act (FAAAA), which quite logically was created to avoid the chaos and costs that would result from different rules in hundreds of jurisdictions across the US. However, that status quo was being challenged by the Port of Los Angeles and Long Beach on this issue, though Long Beach later abandoned its position.

The Port of LA, with the mayor's support, continued on, saying first that environmental concerns should trump the FAAA law; and later that because it was not a government entity but a "market participant" (whatever that is) that it was not bound by the FAAAA limitations.

As we wrote back in 2010 (See Port of LA, Clean Trucks, Owner-Operators, and You):

So, why should you care?

• If this does ultimately go through, either by court decision or amendment of the FAAA, it will ultimately add substantial shipping costs to importers operating in the Port of LA, or other ports that get similar ideas, as they surely would, egged on by the unions. The Port of Oakland, for example, has said it would be very happy to implement a similar program.

• It absolutely can open a door to all kinds of other local regulations anywhere in the name of the environment, causing the type of chaos and costs the FAAA was designed to prevent.

• This is the real kicker - could the movement spread even beyond the ports?

In July of last year, The Trucker magazine wrote the following: "A source who is a former Teamster and port hauler told The Trucker that this move by ports, unions and others would not stop with banning independent haulers from the ports but also would attempt to see that unions take charge of major distribution centers."

"It's not just about local drayage trucks," said the source, who wanted to remain anonymous; "this would affect every truck coming into the ports, all cross-dock operations" and unionize distribution centers."

In other words, this obscure battle was actually quite a big deal forcarriers and shippers.

As the ATA sued to stop the moves, the legal actions and decisions played out over about five years, with each side winning and losing a little, but in general US courts upholding the FAAAA restrictions on local regulation of trucking.

Now, the Supreme Court has weighed in, handing the ATA key victories and for now apparently ending this long legal saga.

"By a 9 to 0 vote, the Supreme Court upheld the ATA's position that regardless of what the port of LA wants to consider itself, it does not have the authority to regulate trucking, per the F4A statute," Curtis Whalen, head of the ATA's intermodal council who took the administrative lead in this fight, told SCDigest this week. Earlier US Court of Appeals rulings were primarily focused on the illegality of the port mandate that would have in effect banned owner-operators from running drayage trucks at the port.

"Such employee mandates are now clearly preempted under the F4A," Whalen added.

(Transportation Management Article Continued Below)

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The Court further threw out some "concessions" the port was requiring drivers to purchase - placards and off-street parking - as also illegal. It did not rule on other powers the port said it had the authority to enforce, such as scrutiny of a driver's finances, since the port had not used that authority.

"This decision is sure to send a signal to any other cities [that] may have been considering similar programs, which would impermissibly regulate the port trucking industry," said Bill Graves, CEO of the ATA.

So is this issue finally over? Perhaps, says Whalen. If the port does not try to use those claimed but unenforced rights, then this issue probably is dead - at the Port of LA at least. If the LA port starts enforcing authority in question, the likely plaintiff in further legal action would be the targeted company, not ATA. But Whalen said he would be optimistic of their success given how the Supreme Court ruled in the concessions that were being required currently.

Whalen also noted that this is LA mayor Villaraigosa's last month in office, and that the ATA and trucking firms in the area are optimistic his successor will be less confrontational over this environmental issue masking in part a labor strategy. And the mayor appoints the head of the port.

That's in part because the air quality around the port has already improved dramatically, ahead of schedule.

Whalen noted the ATA never opposed "clean truck" requirements at a specific truck level, such as requiring all trucks be 2007 models or newer. He said pollution and emissions are down more than 80% since that part of the port program was launched in 2008.

From the Feds to the States

While the specific contention at the Port of LA may be over, largely in the ATA and general trucking industry's favor, this does not mean there are not battles in other locations.

"Labor has now decided to take its strategies to the state level," Whalen says, using its clout to try to get state legislatures to pass laws that define owner-operators as employees of a trucking company (there has also been discussion of such legislation or regulation at a federal level).

Whalen says such a law has in fact recently been passed in the New Jersey legislature, but that governor Chris Christy is likely to veto it.

New York also seemed on the verge of passing such legislation recently, but the language was changed in the relative last days to really water down its effect. But Teamster forces are active in other states seeking similar legal changes, though Whalen said Connecticut actually passed opposite legislation re-affirming that independents are not employees.

So this hugely important battle is not over, though Whalen is optimistic - but far from certain - that the Supreme Court decision would mean such state legislation would also be thrown out under F4A precedent.

SCDigest will keep you posted.

Do you think this was and is an important issue for the industry? Do you see arisk at the state level? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

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