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Focus: Transportation Management

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From SCDigest's On-Target E-Magazine

Sept. 28, 2011


Logistics News: ATA Largely Wins in Federal Appeals Court Ruling on Drayage Truck Rules at Port of LA


Key Provision Shot Down that Would have Ultimately led to Complete Unionization of Port Drivers, with National Implications; Some Emissions Rules Upheld


SCDigest Editorial Staff


In the on-going saga of the Port of Los Angeles' efforts to place regulations on drayage drivers nominally in the cause of a cleaner environment but also well connected to union interests took another important turn this week, as a federal appeals court threw out a key provision of the so-called Clean Trucks program..

SCDigest Says:

The ATA was quick to realize that what may have seemed like a local issue had much larger ramifications if the Port was successful. It could potentially pave the way for a wave of local regulations in the name of the environment
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In a legal battle between the Port and the American Trucking Associations (ATA) that has lasted several years, the Port has been trying to impose a series of costs and other regulations on drayage drivers relative to a goal of reducing truck emissions. The Port has argued in part that the lower income, independent drivers that dominate drayage movements today cannot afford to make the improvements necessary in terms of new equipment and maintenance to keep the air clean.

However, such rules would mean that there is local regulation of the trucking industry, barred under federal law to prevent a patch work of different local regulations that would be almost impossible for carriers to navigate. The Port's argument has been that emissions and related health concerns were such important issues that local action was necessary and justified.

In a unanimous opinion by the three-judge panel, The U.S. 9th Circuit Court of Appeals on Monday agreed with the ATA, saying the rules would be "tantamount to regulation" and therefore cannot be enforced.

The appellate court concluded that "while the port may impose conditions on licensed motor carriers seeking to operate on port property, it cannot extend those conditions to the contractual relationships between motor carriers and third parties." It specifically rejected the port's contention that hiring drivers at higher wages would ensure stability in the drayage business. The port, it said, "may not obtain that stability by unilaterally inserting itself into the contractual relationship between motor carriers and drivers."

That reversed a lower court ruling last year in favor of the Port, saying it should be able to make rules relative to its operations "as any landlord would."

However, that judge stayed the ruling pending appeal, and noted in her own opinion that her reasoning was "novel" in its logic.

The court did. however, uphold other portions of the rules, including a plan to replace aging trucks with newer, less polluting vehicles. But these types of programs have been successfully implemented in other ports without the effective elimination of independent drivers and smaller trucking firms.

“By striking down the Port’s unjustified ban on owner-operators, the Court has upheld the rights of trucking companies to structure their businesses to maximize efficiency and productivity,” said ATA president Bill Graves said. “By throwing out the ban, the court has ensured that competition, not government regulation, will establish motor carrier's rates, routes, and services. This is a win for all involved; trucking companies; small business owner-operators; freight shippers; and ultimately average American consumers. The historic gains in air quality at the Port clearly show that the interests of clean air have been served without running independent contractors out of the Port."

While the rules seemed to be specifically related to the environment, it was clear there was another agenda in play, and one that could have ramifications for shippers across the country. By eliminating the mostly independent drayage drivers, the void would have been filled by larger, unionized carriers.

(Transportation Management Article Continued Below)



“This plan was never about clean air, it was about promoting special interests of a few well-connected labor groups,” Graves said. “Successful clean trucks plans in Long Beach, Seattle and the Ports of New York and New Jersey have shown you can improve air quality without forcing owner-operators out of your port."

The provision was pushed aggressively by the International Brotherhood of Teamsters and the Los Angeles County Federation of Labor. It was also backed Los Angeles Mayor Antonio Villaraigosa, whose background is as a labor organizer.

Early in the controversy, A 2008 study by economist Dr. John Husing of Los Angeles found that the shift away from independents to larger trucking firms for drayage could increase service costs by as much as 167%. A similar study by Boston Consulting Group found costs would increase by at least $500 million annually from LA area ports.

However, the ATA was quick to realize that what may have seemed like a local issue had much larger ramifications if the Port was successful. It could potentially pave the way for a wave of local regulations in the name of the environment, not only causing havoc for carriers and shippers but seeking changes that might serve union interests. One report said that the ultimate goal was not only to unionize drayage activities in other ports, but even reach back into distribution center operations.

In addition to the Court battle, there have been some union-inspired ideas for legislation in Washington DC that would allow local regulation of transportation in the name of the environment. So far, those efforts have not gotten very far.

The ATA has said it is looking closely at the full ruling, and will decide whether to appeal the rules that were upheld by the court. It is also possible the Port will appeal the ruling.

However, our guess is that this will end the matter, with a partial victory for the Port, but an ultimate win for the ATA in which the most worrisome aspects of the rules have been shot down.

What is your reaction to this most recent ruling at the Port of LA? Do you think this is an important issue in the end for all shippers, or just of local concern? Let us know your thoughts at the Feedback button below.

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