ATA files suit to block portions of SoCal ports truck plan
The nation's largest trucking association filed a federal lawsuit Monday seeking to block implementation of a $2.4 billion trucking re-regulation plan developed by the nation's two busiest ports.
Filed in U.S. District Court in Los Angeles by the American Trucking Association, the suit alleges that the five-year trucking plan, jointly created by the adjacent ports of Long Beach and Los Angeles, seeks to preempt federal laws governing interstate commerce by requiring drayage drivers to obtain ports-issued access licenses to enter port facilities. These so-called 'concession agreements' mandated by the ports under the plan are at the heart of the ATA suit. According to the ATA, which represents more than 37,000 U.S. trucking firms, the truck plan also seeks to illegally reverse many aspects of federal trucking deregulation efforts that first became law in 1980.
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'We firmly believe that these concession programs unlawfully re-regulate the port trucking industry to the detriment of motor carriers, shippers, and the businesses and consumers that depend on the products that are handled at those ports,' said ATA President and CEO Bill Graves.
The ports have wrangled with the transportation and shipping industry over details of the plan since the ports first introduced it in April 2007. The suit's filing makes good on more than a year of ATA legal warnings to the ports regarding the non-environmental portions of the plan.
American Shipper has also learned that several transportation groups, including at least one arm of the federal government, are contemplating joining the suit in support of the ATA position. At least one environmental group, the National Resources Defense Council, has said it would seek to join the suit on behalf of the ports.
Despite the disagreements between the plan's proponents and opponents, neither side contests the need to clean up the ports-servicing trucking fleet of nearly 17,000 diesel trucks — a major contributor to the ports being listed as the largest single source of diesel pollution in the Southern California area. The ports' truck plan contains environmental portions, such as a ban on older model year trucks and a container tax imposed by the ports to pay for the truck replacements. The ATA, along with most of the transportation industry, has supported these purely environmental portions since the ports introduced the so-called Clean Trucks Plan.
Late last year, the two ports adopted slightly differing versions of the truck plan — Los Angeles requiring that truckers under the plan be per-hour employees while Long Beach allowed for the continued use of independent owner-operators. Both versions, however, maintain the concession agreements as a key component of the plan.
'We are particularly concerned with the Port of Los Angeles' concession requirement that will lead to a complete ban of the use of independent contractor/owner-operator drivers in servicing that port's operations within five years,' Graves said. 'That requirement, which has nothing to do with the clean air goals of the ports' Clean Truck Program, threatens a well-established trucking industry operational practice that provides efficiencies and the flexibility needed for the trucking industry to effectively serve our customers.'
If successful, the ATA suit could bring to a halt more than a year's worth of political and outside pressure on the ports to reshape the way trucking operates within the Southern California drayage industry. It could also prevent the loss of thousands of truck driver and trucking firm jobs, which the two ports acknowledge will occur under their vision of the truck plan and which Port of Los Angeles officials list as a direct goal of their employee-only version of the plan.
The ports counter that the trucking plan, under development for nearly 20 months, seeks the creation of a stable workforce and an environmentally friendly drayage fleet to service the two ports' marine terminal facilities. Port officials have said numerous times that the truck plan has been reviewed by 'the nation's finest legal minds,' and is 'bulletproof.'
'The trucking system serving our ports is broken and cannot be permanently fixed without a major transformation,' Geraldine Knatz, Port of Los Angeles executive director, said recently.
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The two ports also differ on whether the plan itself could operate without the concession agreements at the heart of the ATA lawsuit. Los Angeles port officials have repeatedly said the concession agreements and labor components are key to the overall truck plan. Long Beach port officials, while hoping to include the concession model in their version of the plan, also admit that the environmental portions of the plan could move forward without the concession agreements.
'We are using the concession model because it has been proven at airports, so we don't think that is particularly precedent setting,' James Hankla, Long Beach Harbor Commission president, told American Shipper last week. 'But, yes, we believe that (the truck plan) is contrary to one (legal) theory, but I think there are other theories that find us very comfortable within the four corners of the law.'
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According to ATA, the court will provide 30 days after the filing for the ports to respond to the allegations. The ATA would have a similar response period to address the ports responses. The judge would then rule on the injunction sought by the ATA against the on-environmental portions of the trucking plan. According to the ATA, though, the group could ask for an expedited decision on the injunction, due to the truck plan's looming start date.
Suit. At the heart of ATA's lawsuit is a simple question of local versus federal authority.
ATA claims the two port authorities are attempting to regulate what is reserved to the federal government in the U.S. Constitution. The ports claim they have the authority to do whatever necessary at a local level to quickly reverse years of neglect on mitigating ports-generated pollution.
'We are challenging only the intrusive and unnecessary regulatory structure being created under the concession plans,” said Curtis Whalen, executive director of the ATA's Intermodal Motor Carriers Conference. 'As Congress recognized when it created price, routes and services preemption, regulatory schemes like the 'concession plans' burden interstate commerce and are bad for the American economy.'
Specifically, ATA's suit alleges that the ports are violating the federal statutory provision (49 U.S.C. ' 14501), which prohibits states or their political subdivisions such as the port authorities from enacting or enforcing a legal requirement that is 'related to a price, route, or service of any motor carrier.'
ATA argues that the ports have done this in numerous places by approving various regulations during the adoption of the full truck plan. These include requirements that trucking firms under the plan:
' Submit detailed truck-maintenance plans to the ports.
' Abide by ports-defined safety and parking plans.
' Adhere to ports-defined equipment marking and tracking.
' Provide detailed financial information to the ports.
' Adhere to ports-defined routing mandates.
' Allow for periodic business reviews and audits by port officials.
The suit also argues that the recent U.S. Supreme Court's unanimous decision in
Rowe v. New Hampshire Motor Transport Association supports ATA's assertion that local authority actions — such as the 'concession agreements' attempts to substitute 'governmental commands for 'competitive market forces' in determining the services that a motor carrier will provide' — are preempted by federal authority.
Implications. The concern of ATA and others in the transportation industry centers on the precedent the Southern California truck plan may set and how it could lead to a major shift in the way trucking is done in the United States.
Proponents of ATA's action believe that if the Los Angeles-Long Beach truck plan is allowed to move forward unopposed, it may lead to a 'patchwork' of local authority rules governing trucking.
The Port of Oakland is already considering a similar truck plan that is being pushed by the same labor and social groups that supported the Los Angeles-Long Beach plan.
If the Los Angeles-Long Beach plan is implemented, 'there is nothing to prevent other jurisdictions from imposing their own requirements, fee programs, and restrictions on who exactly can handle the freight,' said Peter Gatti, National Industrial Transportation League executive director.
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Gatti and others compare the possible scenario to the days before deregulation when truckers faced licensing regulations in each individual state, often leading to trucks bearing dozens of different license plates. 'Except in this situation, instead of 50 different states,' said Gatti, 'you are talking about dozens and dozens of individual cities, each with their own regulations.'
The plan could also lead to lost jobs. Economic experts have said it is fair to assume that each truck represents one job for a truck driver. This means that on Jan. 1, 2010 the plan would eliminate some 6,100 driver positions. This scenario assumes that the ports’ would stick to their banning schedule and be able to fund and obtain all replacement vehicles set out in the plan.
Based on expert estimations, for every four trucks on the road, one person works in a support role behind the scenes. That would mean the ports' truck plan could result in the loss of some 1,500 support jobs in the first 24 months of implementation. These would include dispatchers, clerical support, payroll, customer service, scheduling, safety compliance, accounting, security, human resources and recruiting, according to the California Trucking Association.
An economic impact study of the truck plan commissioned by the ports and available on their Web sites, found that under the current version of the plan, truck driver positions, support jobs and back office staff would all suffer. The ports-commissioned study found that 376 trucking companies would vanish, along with more than 2,250 back office and support jobs. The analysis detailed that half of the truck companies with fewer than 10 trucks, a total of 123 firms, would be put out of business. More than 180 firms with 11 to 25 trucks would be displaced, nearly 65 firms with 25 to 75 trucks would be lost, and eight firms with more than 75 trucks would be eliminated by the truck plan.
The study did not detail how many truck driver positions would be lost as result of eliminating the 376 firms, but a rough estimate using numbers in the analysis suggests at least 4,400 driver positions would be eliminated by the plan.
Truck Plan. The first stage of the truck plan, a ban excluding all pre-1989 model year trucks from entering the ports, is to begin Oct. 1. Additional bans over the next five years would eventually eliminate all trucks servicing the ports that do not meet U.S. EPA 2007 model year emission standards.
The $35-per-TEU container tax, paid for by the cargo owner, would begin collection Oct. 1 and eventually raise $1.6 billion of the estimated $2.2 billion needed by the two ports to replace or retrofit trucks with the cleaner models. Ports-servicing trucking firms, regardless of the type of trucks they have, will be required under the plan to meet the 'concession agreement' criteria to obtain a ports-issued access license and continue operating in the ports after Oct. 1.
The 'concession agreements' are, at least according to Los Angeles port officials, the lynchpin of the two-ports' clean trucks Plan.
The truck plan, which grew out of the two ports' efforts to expand funding for a harbor-area truck replacement program administrated by the local Gateway Cities Council of Governments, was re-envisioned after a meeting between Los Angeles Mayor Antonio Villaraigosa and International Brotherhood of Teamsters president James Hoffa Jr. in the summer of 2006. At the meeting, according to participants, Hoffa presented Villaraigosa with the Teamsters' outline of a plan to overhaul, and eventually unionize, the drayage fleets at ports around the nation.
The Teamsters plan sought to do away with independent owner-operators in the ports and change all drivers to per-hour employees. In Los Angeles and Long Beach, independent owner-operators make up more than 80 percent of the drayage drivers, and by law independent owner-operators are not allowed to organize or be organized.
In November 2006, the two ports released their joint omnibus environmental package, the Clean Air Action Plan, which rolled up numerous potential and existing environmental programs into a single overarching program. Included in the CAAP were several different versions of a truck replacement plan for the ports. However, the CAAP's recommended version of the truck plan, and the formal truck plan released in April 2007 by the two ports' governing boards, mirrored the Teamsters plan.
The truck plan evolved from a simple funding tool to bolster an existing truck replacement program, to a complex plan requiring the ports to exercise authority over the local trucking industry, including the employee status of the ports-servicing drivers.
'Instead of dirty trucks, loose security and underpaid drivers, we are moving to cleaner air, tighter security and a well-paid, stable workforce,' said Los Angeles Harbor Commission President S. David Freeman on passage of the plan's $35-per-TEU container tax in December.
Pollution. The bottom line is that if the two ports do not cut their pollution, they face one of two scenarios: lawsuits that will prevent any further development of the ports and/or the loss of all federal funding for infrastructure development that is also key to future growth at the two ports.
In 2001, the NRDC successfully sued the Port of Los Angeles over port development and received massive concessions toward environmental programs. A direct result of the Los Angeles suit was the cessation of development on both sides of the port complex for nearly three years as port officials attempt to redesign projects to avoid litigation.
The threatened loss of government money due to non-compliance with federal air quality standards has also played a major role in the development of the ports' environmental plans.
The U.S. Environmental Protection Agency, which ranks the Southern California region as one of the worst violators of federal clean air standards, mandated that polluters (including the ports) had until the end of 2007 to develop plans to reach federal standards by 2010. A possible one-time extension could stretch the date for full attainment to 2015.
Penalties for non-compliance are steep: the loss of all federal funding for infrastructure development. Port officials consider this federal money to be 'critical' for future port-area infrastructure development.
According to California state air quality regulators, the ports of Long Beach and Los Angeles represent the largest single point source of diesel emissions in Southern California. These emissions, coming from ships, trains, trucks and yard equipment, fall into three types: diesel particulates, seen as soot; nitrogen oxides (NOx), a precursor of smog and the respiratory irritant ozone; and sulfur dioxides (SOx), another contributor to smog.
Trucks account for 10 percent of the ports' diesel particulate emissions, 26 percent of the NOx emissions, and 1 percent of the SOx generated by port-generated activity, according to the ports' 'Clean Air Action Plan Technical Report.'
When viewed as percentages of the entire region, the ports' trucking fleet generates 1.2 percent of the Southern California region's entire diesel particulates, 2.4 percent of the NOx, and 0.45 percent of the region's SOx.
Plan's Opponents. Opposition to the ports truck plan began almost as soon as the first details were laid out by port officials.
In June 2007, two months after the ports' released the plan, the California Trucking Association wrote a private letter to the ports saying they 'do not have the legal authority to regulate how trucking services are to be provided. This authority resides with the State and Federal agencies under their respective laws. Moreover, trucks that provide services to the ports are engaged in interstate commerce, and their right to have access to and conduct business in the ports is protected under the U.S. Constitution's Interstate Commerce Clause.'
Shortly afterwards, the Association of the California Recycling Industry and the Pacific Coast Council of Customs Brokers & Freight Forwarders Association each issued letters of opposition to the truck plan in separate letters addressed to the respective mayors of the two port cities and their port executives.
The plan 'will detrimentally impact the flow of trade, injure local businesses, create inefficiencies which will undermine environmental objectives, and particularly injure small business in the greater Los Angeles area,' predicted the PCC in its letter. The group, which represent over 6,000 industry professionals engaged in international logistics along the West Coast, also raised the specter of possible legal violations of the plan.
In September 2007, the Pacific Merchant Shipping Association and the NIT League wrote to the Federal Maritime Commission asking the agency to examine the ports' truck plan for what the groups describe as 'legal, logistical and anticompetitive impacts that will cause immediate economic harm.' The effort was later joined by ATA.
Despite meeting on the industry group concerns, the FMC board did not formally act on the requests but did send staff to collect data and details about the truck plan from the ports.
Just three days after the ATA letter to the FMC, a coalition of nearly three-dozen state and national trade groups wrote to Long Beach and Los Angeles city and port officials on Oct. 5 slamming the truck plan.
Later in October, U.S. Maritime Administrator Sean Connaughton wrote a letter to the two port, concerned 'that the environmental benefits of reducing truck-source emissions not be lost or diluted by needless litigation or inadvertent impairment of the flow of the nation's commerce.'
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In March 2008, ATA returned to the FMC, formally asking the agency to block an antitrust waiver that would allow the ports to discuss development of the concession agreements with the West Coast terminal operators. The FMC complied until the ports provided answers to more than 50 detailed questions regarding the CAAP and truck plan. Following the ports responses, the FMC decided to forego an immediate decision on the waiver and allow the ports and terminal operators to meet. However, the FMC warned the ports that the action was not an approval and that the agency could at any time, as further details of the truck plan are made available to the FMC by the ports, block the antitrust waiver or take the ports to court.
American Shipper has learned the NIT League is preparing to join the ATA suit.
'We have two committees, our Highway and our Ocean committees, directly focused on this plan,' Gatti said. 'They see a myriad of complications resulting from this (ports') effort going forward. If you are going to approve this in a piecemeal fashion, which the ports have done, it raises a whole host of issues that other jurisdictions can follow to impose similar regulations in a similar piecemeal-type fashion.
'How do you bring any kind of strategy to your supply chain when you could be faced with similar type initiatives anywhere and everywhere that your freight moves?' he said.
Plan Supporters. Ironically, the Long Beach and Los Angeles ports began as supporter of the truck plan and not its developers.
In 2002, the two ports, not wanting to get tied down to the complications of managing such a plan, began providing financial supporting for a local truck replacement headed up by the gateway Cities Council of Governments. The ports contributed millions to the program before work began in 2005 to develop a separate ports-run truck plan.
While very little was made of the ports' truck plan when it was included in the multivolume CAAP document released in November 2006, numerous groups offered support when the ports formally announced the truck plan in April 2007.
The Coalition for Clean and Safe Ports, an early supporter of the ports' truck plan, comprises nearly three-dozen social justice, labor and environmental groups including the Teamsters, the American Lung Association, the Los Angeles Alliance for a New Economy, and the Sierra Club.
The group argues the truck plan's environmental and non-environmental components are inextricably linked, with trucking firms forced under the plan to take responsibility for the welfare of their drivers and the emissions from the trucks. Only by creating a stable and well-paid employee-only workforce, the group has argued, can the new trucks provided by the plan be maintained and operated in the long-term.
The most notable supporter of the plan is the National Resources Defense Council, which also plans to join the ATA suit as an intervener on the ports' behalf.
The NRDC has won numerous concessions from the ports in the past decade, including a 2001 lawsuit that eventually led to the ports' efforts to actively develop a wide-ranging environmental mitigation program.
Local Impact. The ATA suit also signals the promise of change for the local truckers and trucking firms that actually work in the two ports. Trucking firms in the harbor-area have reported since last year that advanced business planning has stalled due to the uncertainty created by the ports slow and piecemeal adoption of the plan. Some truckers have reported losing property leases due to their inability to plan forward without details of the plan. Others have reported parking broken trucks out of fear that repair costs may be lost if the trucks are ultimately banned. Still other firms have encouraged drivers not to buy new trucks, backed up by anecdotal evidence from area truck sellers, for fear that a new truck may not meet the final standards of the ports' truck plan.
Of primary concern to local drivers and trucking firms, though, is when the ports will release the details of the applications to receive grants to replace their existing trucks. Most concerned are those with pre-1989 trucks that are set to be banned from the ports on Oct. 1. The first round of money for new trucks is coming from a state transportation bond and truckers and trucking firms have been told that the grant process will move forward despite the lawsuit.
'Among all the drivers you will the find a consensus that cleaning the air is a top priority,' said Patty Senecal, who oversees California governmental affairs for the International Warehouse Logistics Association and is also an executive of a Los Angeles-area drayage and trucking firm.
The main thing, Senecal said, is that the ATA suit will not hold up the grant applications. 'These grants need to move forward so we don't lose the money to the state,' she said, 'and to quell the uncertainty of the drivers and the businesses.'