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From SCDigest's On-Target E-Magazine

Nov. 9 , 2011


Logistics News: ATA to Seek Supreme Court Review of Areas it Lost in the Port of LA Decision on Drayage Regulation


ATA Executive Committee Gives Unanimous Approval for Continued Legal Action in Potentially Significant Case; Potential Impact on Shippers Still Very Real


SCDigest Editorial Staff


In the on-going legal saga between the Port of Los Angeles and the American Trucking Associations, the ATA has decided in will in fact appeal the decision of the Ninth Circuit Court of Appeals in California in late September, which gave the ATA an important partial victory with regard to regulation of drayage trucking at the port, but a loss in some other areas. (See ATA Largely Wins in Federal Appeals Court Ruling on Drayage Truck Rules at Port of LA.)

SCDigest Says:

The Port has argued that it should be allowed to issue such regulations beyond federal rules because it is a "market participant," not just a government authority.
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The legal action has been going on for several years, as the Port has sought a number of restrictions and regulations on drayage drivers bringing containers into and out of the Port. The changes were enacted under a "Clean Trucks" program launched by Port authorities, said to be focused on reducing pollution and greenhouse gas emissions.

There are a number of signs that the new rules were as much or more about a labor agenda as the environment.

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.

The rules included what in effect would have been a ban on owner-operators, who today make up the majority of drayage service providers, from operating at the ports, under the notion that smaller firms would be unable to keep up with new equipment purchases, maintenance and other factors necessary to meet emissions limits.

Owner-operators are also non-union. The result would have been larger tracking companies directly providing the services rather than hiring independents; many/most of those larger firms are of course unionized.
The ATA sued the port in 2008, saying the regulations pre-empted laws that give the federal government the sole authority to regulate trucking. It cited that the approach could ultimately lead to a patchwork of local regulations under the name of protection the environment that would tremendously add to logistics complexity and costs, and possibly increased unionization if the rules in LA were not challenged.

A number of court decisions on the matter went back and forth since then, with one federal judge ruling in favor of the Port, but delaying implementation of the rule on independents drivers pending expected appeal.

The Ninth Circuit Court of Appeals then in September struck down the provision banning owner-operators, saying 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."

However, it let stand several "concessions" requirements that force the drivers to report to submit for port review financial, maintenance and off street parking information.

That partial victory for both sides left each with some decisions. In federal courts, appeals for initial circuit court rulings can be made to a wider panel of judges in the same appeals court, or taken to the Supreme Court.

Both the ATA and the Port have declined a further appeal within the 9th Circuit, but the ATA announced last week it was taking just the areas of the decision it lost in the September decision to the Supreme Court.

Curtis Whalen, the head of the ATA's intermodal council and who has been heading up the effort for the organization, told SCDigest at the time of the September decision that "though we are happy with main part of the court's ruling, we will decide whether to make an appeal on the other areas on the merits while frankly weighing in part the legal costs of continuing in the effort."

Whalen, however, told us this week that "given the fact that the court’s market participation-concession contract ruling would serve as a very bad precedent for diminishing the federal routes, rates, and services preemption provision that is of major importance to the trucking industry, ATA is now preparing to take this case to the Supreme Court."

(Transportation Management Article Continued Below)




The Port has argued that it should be allowed to issue such regulations beyond federal rules because it is a "market participant," not just a government authority.

Whalen added that "Our legal team believes that the two justices who voted to allow, via an expansive view of market participation, what would otherwise be port regulatory activity and preempt federal law concerning the specifics of the ports concession contract misapplies long standing case law."

He also said that given the dissenting opinion written by the panels Chief Judge that concurred with ATA’s position that the concession agreement should indeed be preempted, ATA lawyers believe there is an excellent chance that the Supreme Court will indeed take the case and reverse the circuit court's ruling as it relates to these provisions.

In the previous interview, Whalen noted that while the information reporting requirements and Port review of that information for now did not appear to be causing independent drivers real issues, that may have just been the result of the Port being conservative as the Appeals Court decision awaited.

"The Port could achieve its original goals simply by being very aggressive and onerous with regard to these reporting requirements," he said, in a sense previewing why the ATA may indeed see the need to keep moving the case forward.

Allowing this “expansive view of market participation stand sets bad precedent going forward and would diminish the federal preemptive powers over rates, routes and service that is important to the industry,” ATA spokesperson Sean McNally added last week.

Whalen says "Our initial filing is required within three months of the 9th Circuit’s ruling (September 26) and I expect we will not wait until the very end to file. After that the port files a response, then we file a reply, then the court decides whether to take the case. Then if they do, this would be heard maybe in the fall of 2012."

Do you think the ATA should have made this appeal? Do you think this really is an important issue, or is it overblown? Let us know your thoughts in the Feedback section below.

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