California Clean Truck Programs not enjoined by court despite anticompetitive concerns raised by Federal Maritime Commission
On April 15, 2009, the United States District Court for the District of Columbia denied a motion for a preliminary injunction filed by the Federal Maritime Commission to stop certain aspects of the Clean Truck Programs instituted by the Port of Los Angeles (“POLA”) and Port of Long Beach (“POLB”). The POLA and POLB Clean Truck Programs (“CTPs”) are environmental programs aimed at reducing air pollution caused by trucks used for “drayage” or shipping of cargo to and from the Ports. The Ports designed their CTPs in response to December 2007 rules promulgated by the California Air Resources Board (“CARB”) to reduce emissions from diesel trucks at California’s ports. POLA and POLB are neighboring, and competing, ports in Los Angeles County's San Pedro Bay which together form the largest port area in the United States. Approximately 40 percent of the United States’ import and export container traffic flows through the Ports, making them critical components of the nation’s economy. The Ports’ CTPs, while not identical, share similar features, including a rolling ban on older trucks, a Clean Truck Fee of $35 on containers leaving each port, and a concession agreement into which Licensed Motor Carriers must enter to transport cargo to or from the Ports.
The Federal Maritime Commission is an independent federal agency with responsibility for administering the Shipping Act. It has jurisdiction over the rates, practices, and certain agreements of the ports. Its authority includes determining whether agreements between the ports are likely to produce anticompetitive results, including an unreasonable reduction in transportation services or an unreasonable increase in transportation costs under Section 6(g) of the Shipping Act.
The Commission sought to enjoin a provision in the POLA’s program mandating that Licensed Motor Carriers use only employee operators to ship goods. Currently, up to 20,000 independent owner operators ship cargo to the ports of Los Angeles and Long Beach through up to 1,300 Licensed Motor Carriers. The POLA’s employee-mandate provision will prevent these owner-operated trucks from continuing to ship cargo through Los Angeles. The Commission also sought to enjoin certain aspects of both Ports’ Clean Truck Fee exemptions and subsidies that it had determined would likely cause an unreasonable increase in transportation costs and an unreasonable decrease in transportation services. In refusing to enjoin the Ports’ programs, the district court found that while “some [independent owner operators] and some smaller [Licensed Motor Carriers] may be adversely affected by the employee-mandate and the Clean Truck Fees and exemptions, the [Commission] has not established that these changes are likely to result in irreparable harm to overall competition in the drayage market or to the shipping public.” The district court also found that the public interest weighed against enjoining the CTPs. The district court recognized that both parties were “acting to protect the public interest,” with the Ports implementing their programs to reduce high levels of pollution and to increase public safety and the Federal Maritime Commission seeking “to protect the public from anticompetitive agreements that it believes are likely to unreasonably raise rates and decrease services.” Citing the responsibility of the Ports for improving the area’s public health and managing their operations, the court found that the public interest favored denying a preliminary injunction.
The CTPs are also the subject of separate litigation brought by the American Trucking Association (“ATA”). In July 2008, the ATA filed a complaint in the Central District of California and sought to enjoin the programs as preempted by the Federal Aviation Administration Authorization Act (“FAAAA”). The district court denied the ATA’s motion for a preliminary injunction. But on March 20, 2009, the Ninth Circuit Court of Appeals reversed the district court’s decision, citing as one concern “the phasing out of thousands of independent contractors (many or most of them small businessmen who own their own trucks).” The Ninth Circuit has remanded the case to the district court for entry of an appropriate preliminary injunction.
