Ocean Carrier Review
Pacific Northwest Ports
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ATA hails Supreme Court ruling on challenge to LA port drayage rules
In an opinion handed down by the U.S. Supreme Court, it agreed with American Trucking Associations and unanimously rejected burdensome operational mandates the Port of Los Angeles had attempted to impose on interstate commerce.
“We are gratified that, at the conclusion of many years of litigation, the highest court in the land unanimously agreed with ATA on these rules. Our position has always been that the Port’s attempt to regulate drayage operators – in ways that had nothing to do with its efforts to improve air quality at the Port – was inconsistent with Congress’ command that the trucking industry be shaped by market forces, rather than an incompatible patchwork of state and local regulations,” said ATA President and CEO Bill Graves. “The decision is sure to send a signal to any other cities who may have been considering similar programs which would impermissibly regulate the port trucking industry.”
At issue was the Port’s attempt to impose so-called “concession agreements” on drayage operators wishing to move goods in and out of the Port. The Federal Aviation Administration Authorization Act prohibits the enforcement of any state or local “law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier.” The question before the Supreme Court was whether certain provisions of the concession agreements that undisputedly “related to a price, route, or service” of motor carriers nevertheless escaped preemption because the Port asserted that it imposed these requirements to serve its “business interest” in expanding the Port, rather than in an effort to regulate the drayage market.
In an opinion authored by Justice Kagan, a unanimous Supreme Court rejected the Port’s contention. The Court concluded that, whatever the Port’s asserted motivation, the concession agreements amounted to “classic regulatory authority” and thus fell within the scope of the FAAAA’s preemption provision. It observed that the concession agreements, while technically contracts between the Port and trucking companies, were not the “result merely of the parties’ voluntary commitments.” Rather, the Port compelled trucking companies to enter into the contracts as a condition of access to the Port, by “wielding coercive power over private parties, backed by the threat of criminal punishment.” By imposing the concession agreements through coercion rather than “ordinary bargaining,” Los Angeles was “performing its prototypical regulatory role.”
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