Court Ends Port Owner-Operator Ban

This story appears in the March 30 print edition of Transport Topics.

A federal appeals court has thrown out the Port of Los Angeles’ ban on owner-operators and questioned the legality of concession requirements at the adjacent Long Beach port for drayage operators to file financial statements and give hiring preferences to experienced port drivers.

The appeals court — acting on a lawsuit filed by American Trucking Associations — ordered U.S. District Judge Christina Snyder of Los Angeles to reconsider many of the concession requirements of both ports and quickly issue a preliminary injunction blocking implementation of some, or all, of the requirements.

The Los Angeles owner-operator ban would have required all drayage drivers to be employees of companies that the port would certify, opening the possibility that they could join unions, which they cannot do as independent contractors.

The 9th U.S. Circuit Court of Appeals said many provisions of the ports’ programs to reduce emissions are an “attempt to reshape and control the economics of the drayage industry” and a “rather blatant attempt to decide who can use whom for drayage services, and is a palpable interference with prices and services.”

The March 20 ruling reversed a lower court’s denial of a request by ATA for a preliminary injunction to block the ports’ business organization concessionaire requirements, directing the federal district court to grant the injunction.

Robert Digges, ATA’s deputy chief counsel, said he expected an injunction soon that would immediately lift a ban on independent owner-operators as drayage truckers at the port complex, the largest in the U.S.

“The latest information we had was there were only about half as many concessionaries serving Los Angeles port as had been estimated prior to the beginning of the concession plans,” Digges said. “Once the injunction is in place, those carriers are free to go back in and begin competing at the ports.”

The ruling by the circuit court also could open the door for drayage operators who have been harmed by the concession provisions to seek financial damages in court, Digges said.

The appeals court left intact the rest of the ports’ clean trucks plans that went into effect in October, banning entry to all pre-1989 trucks and levying a $35 per 20-foot-equivalent container fee. By 2012, the two ports will allow only 2007-model or newer trucks to perform drayage services.

ATA’s lawsuit did not challenge the phase-in of lower-emission trucks nor the container fee that will help carriers pay for newer trucks and retrofits.

Although ATA alleged that both ports’ concession requirements accompanying the diesel emission reduction plans were unconstitutional, it was most concerned with a phased-in requirement banning independent operators at the Port of Los Angeles.

The appeals court agreed.

“The Port of Los Angeles concession agreement does overreach considerably more than does the Port of Long Beach concession agreement,” the appeals court said. “However, each is likely to result in a least some irreparable harm to the motor carriers, and, on balance, the district court abused its discretion when it denied a preliminary injunction as to significant parts of the agreements.”

ATA’s lawsuit, filed in July, argued that the ports’ concession plans “unlawfully re-regulated the federally deregulated trucking industry.”

The appeals court said the “far-reaching” concession agreements contained in both ports’ clean trucks plans require motor carriers to give hiring preferences to drivers with port service histories, compel publicly held companies to disclose annual reports and privately held companies to disclose balance sheets, income tax statements and pending legal actions.

In a March 20 statement, Los Angeles Mayor Antonio Villaraigosa said he was pleased that the “centerpiece components” of the clean-trucks program were not struck down.

“Our clean-truck program is reducing toxic port truck pollution at an accelerated pace, and today’s ruling by the 9th Circuit Court of Appeals does not challenge the truck ban schedule or truck fees that are helping us successfully battle this health crisis,” Villaraigosa said.

“The decision today does not change the legal status of our clean-trucks program or any other requirements currently in effect at the port,” said Richard Steinke, executive director of the Port of Long Beach. “The port will continue to study the decision and appropriate next steps of the court of appeals, and anticipates that further proceedings will be held promptly before the district court.”

Environmental groups were not pleased with the ruling.

The decision “places in jeopardy the clean air goals at the ports, as well as every port infrastructure expansion project that relies on clean trucks,” said David Pettit, director of the Natural Resources Defense Council’s Southern California Clean Air Program. “We’re going to vigorously fight to protect these truck plans in court.”

A Teamsters union official, who supported the Los Angeles concession plan, called the appeals court ruling “disappointing.”

“It’s in some ways just outrageous because it perpetuates the subsidization of this port trucking system by drivers, by the environment, by communities and by safety inefficiency,” said Chuck Mack, director of the Teamsters ports division. “They’re all casualties in this current system.”