[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Notices]
[Pages 56824-56827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22942]


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FEDERAL MARITIME COMMISSION

[Docket No. 08-05]


City of Los Angeles, CA, Harbor Department of the City of Los 
Angeles, Board of Harbor Commissioners of the City of Los Angeles, City 
of Long Beach, California, Harbor Department of the City of Long Beach, 
and the Board of Harbor Commissioners of the City of Long Beach--
Possible Violations of Sections 10(B)(10), 10(D)(1) and 10(D)(4) of the 
Shipping Act of 1984; Order of Investigation and Hearing

    On November 20, 2006, the governing boards of the Ports of Los 
Angeles and Long Beach voted to approve the San Pedro Bay Ports Clean 
Air Action Plan (``CAAP''). The CAAP is a broad effort aimed at 
significantly reducing the health risks posed by air pollution from 
port-related ships, trains, drayage trucks, terminal equipment and 
harbor craft by at least 45 percent in five years. To that end, each 
port has adopted a Clean Truck Program (``CTP'') as a component of the 
CAAP to address air pollution caused by the short haul truckers that 
transport containers to and from the ports, i.e., the harbor truck 
drayage system. Each port's CTP becomes effective on October 1, 2008.
    The Federal Maritime Commission (``Commission'') is responsible for 
enforcing the requirements of the Shipping Act of 1984, as amended by 
the Ocean Shipping Reform Act of 1998 (``Shipping Act''). 46 U.S.C. 
40101 et seq. As the ports of Los Angeles and Long Beach operate as 
marine terminal operators (``MTOs'') under the Shipping Act, their 
actions, to the extent they impact international transportation, are 
subject to the Commission's jurisdiction and, in particular, to the 
requirements of section 10 of the Shipping Act.\1\
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    \1\ Section 10(d)(1) requires MTOs to establish, observe, and 
enforce just and reasonable regulations and practices relating to or 
connected with receiving, handling, storing, or delivering property. 
46 U.S.C. 41102(c). Section 10(d)(4) provides that an MTO may not 
give any undue or unreasonable preference or advantage or impose any 
undue or unreasonable prejudice or disadvantage with respect to any 
person. 46 U.S.C. 41106(2). An MTO may not unreasonably refuse to 
deal or negotiate. 46 U.S.C. 41106(3).
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    While the Commission appreciates the significant environmental and 
public health benefits of the San Pedro Ports CAAP, it is concerned 
that certain aspects of the ports' CTPs may violate the Shipping Act. 
Accordingly, the Commission has determined to initiate an Investigation 
and Hearing of the Ports' Clean Truck Programs under section 11 of the 
Shipping Act with respect to possible violations under section 10 of 
the Shipping Act.

San Pedro Bay Ports

    The Port of Los Angeles (``POLA''), referred to as the Los Angeles 
Harbor Department, is a self-supporting department of the City of Los 
Angeles, California. POLA is under the control of a five-member Board 
of Harbor Commissioners appointed by the mayor of Los Angeles and 
approved by the City Council, and is administered by an executive 
director.\2\ POLA is the largest container port in the United States. 
POLA's annual loaded container volume for 2007 was 5.7 million twenty-
foot equivalent units (``TEUs'').
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    \2\ For the purposes of this order, the City of Los Angeles, the 
Harbor Department of the City of Los Angeles and the Board of Harbor 
Commissioners of the City of Los Angeles will be referred to as the 
Port of Los Angeles or POLA.
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    The Port of Long Beach (``POLB'') has an administrative structure 
similar to

[[Page 56825]]

POLA. POLB is a public agency managed and operated by the City of Long 
Beach Harbor Department. POLB is governed by the Long Beach Board of 
Harbor Commissioners, whose five members are appointed by the mayor of 
Long Beach and confirmed by the City Council. POLB is administered by 
an executive director.\3\ POLB is the second largest port in the United 
States. POLB's annual loaded container volume for 2007 was more than 
4.9 million TEUs.
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    \3\ For the purposes of this order, the City of Long Beach, 
California, the Harbor Department of the City of Long Beach and the 
Board of Harbor Commissioners of the City of Long Beach will be 
referred to as the Port of Long Beach or POLB.
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    POLA and POLB are located side-by-side in San Pedro Bay and 
together are referred to as the San Pedro Bay Ports. Together they 
would constitute the 5th largest container port in the world. While the 
two ports compete for business, they cooperate on infrastructure 
projects and environmental issues pursuant to agreements filed with the 
Commission. It is reported that approximately 16,800 trucks, affiliated 
with an estimated 600-1,200 licensed motor carriers (``LMCs''), 
transport containers to and from the ports. At present, nearly all of 
the trucks are operated by independent owner operators.

The Clean Truck Programs

    Central to each port's CTP is a system to control truck access to 
the container terminals through the issuance of port concessions to 
LMCs. Each CTP presently provides that after October 1, 2008, entry to 
container terminals at the ports will be limited to licensed motor 
carriers that have a concession agreement.\4\ Carriers serving both 
ports must have a separate concession from each port. To obtain a 
concession, an LMC must file an application (with a $2,500 fee for 
POLA, and $250 for POLB, plus an annual fee of $100 per truck in both 
ports) in which it presents an appropriate maintenance plan for trucks 
used at the port; ensures that all trucks comply with safety, 
regulatory and security requirements, and that drivers have obtained 
their Transportation Worker Identification Credential; agrees to 
searches; maintains prescribed insurance levels; equips trucks with 
prescribed devices to allow for the electronic reading of certain data 
concerning the truck; ensures compliance with parking ordinances; 
agrees to hiring preferences for drivers with port experience; and 
agrees to travel only on specified truck routes established by local 
municipalities or the ports.
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    \4\ The concession requirement has been challenged in federal 
court. See American Trucking Associations v. City of Los Angeles, et 
al., No. 08-04920, C.D. Calif. The district court has denied a 
request for preliminary injunction, and this decision has been 
appealed. The outcome of the legal action by the American Trucking 
Associations does not affect the Commission's authority to institute 
this investigation.
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    There are certain differences between the CTPs of the two ports. 
POLA requires that all approved concessionaires transition to providing 
port service only with company-employee drivers. This requirement is 
phased in over a 5-year period commencing January 1, 2009. By December 
31, 2013, all concession drivers at POLA must be company employees. 
Independent owner-operators will not be permitted entry to the 
container terminals. POLB has no similar mandate and will permit 
concessionaires to continue to provide service with either employee 
drivers, independent owner-operators or a combination of both, as is 
presently allowed. POLA also requires concession applicants to submit 
for approval a plan that limits parking to off-street locations. No on-
street parking will be allowed for trucks not in service. POLB, on the 
other hand, requires applicants to submit a parking plan that 
demonstrates either the availability of off-street parking or legal on-
street parking. POLA also requires applicants to submit financial 
statements and a statement of business experience at the port, in 
drayage service, and with owner-operators or driver employees, together 
with references to verify this information. POLB does not have a 
similar requirement.
    The applications of both ports provide that submission of an 
application does not guarantee an award of a concession. There are no 
published criteria or standards governing the granting or denial of 
concessions. Both ports require the LMC to register its drayage 
vehicles in a Drayage Truck Registry (DTR) identifying the vehicle and 
all of its pertinent details, including the model year of the truck and 
its engine. Only vehicles registered in the DTR will be permitted entry 
to the container terminals.
    Also as part of their CTPs, both ports have adopted a truck ban by 
which trucks older than model year 1989 will be prohibited from 
entering terminal premises on and after October 1, 2008. Thereafter, 
the program progressively bans trucks that do not meet 2007 federal 
Environmental Protection Agency (``EPA'') emission standards by January 
1, 2012. Each port has adopted truck replacement programs to assist 
truckers to purchase or upgrade to 2007-compliant trucks through grants 
and lease-to-own plans. State and port funds, as well as funds derived 
from a Clean Truck Fee, will be used to finance the truck replacement 
programs through a Clean Truck Fund maintained by each port.
    Commencing October 1, 2008, a fee of $35 per loaded TEU, or $70 per 
FEU, will be collected from the beneficial cargo owner on every 
container entering or exiting the terminals by truck. Containers 
entering or leaving the ports by rail and those moving between 
terminals at the ports are not subject to the fee. Both ports will 
exempt collection of the fee where the truck hauling the container was 
privately financed and is compliant with the 2007 federal EPA standards 
and meets certain conditions. Each port maintains slight variations 
with respect to eligibility for the exemption depending on whether the 
truck's fuel is diesel or an alternative fuel such as LNG; when the 
vehicle was purchased; whether an old truck was scrapped; and whether 
it was purchased with program funds. Verification of eligibility and 
enforcement of access to the terminals as well as collection of the 
Clean Truck Fee are to be the responsibilities of the MTO tenants of 
the ports. Provisions governing these requirements are published in the 
respective tariffs of the ports.

The Port of Los Angeles Incentive Program

    On August 21, 2008, POLA adopted two additional incentives to 
encourage companies operating 2007 or newer compliant trucks to become 
concessionaires and commit to a stated minimum of service at POLA. One 
incentive offers a cash payment of $20,000 for each 2007 EPA-compliant 
truck that is privately funded and committed to service in the port 
drayage market at a minimum frequency of 6 trips per week for 5 years. 
Carriers interested in participating were required to submit a letter 
of interest by September 19, 2008, stating the number of eligible 
trucks operated, the number to be initially committed to port service, 
and the number to be added monthly. The other incentive provides for a 
cash payment of $10 per dray by a 2007 EPA-compliant truck, if the 
truck achieves a minimum target of 600 qualified drays per year in and 
out of POLA and POLB, and 300 of those drays are for POLA cargo. There 
is a per truck limit on this incentive of $10,000 for the year 
commencing October 1, 2008. Incentive payments for both programs will 
be made from the Clean Truck Fund and other port funds. Successful 
applicants

[[Page 56826]]

for the payment will be selected at the sole discretion of the port 
staff.

Commission Authority

    A marine terminal operator is defined as ``a person engaged in the 
United States in the business of furnishing wharfage, dock, warehouse 
or other terminal facilities in connection with a common carrier, or in 
connection with a common carrier and a water carrier subject to sub-
chapter 11 of chapter 135 of title 49, United States Code.'' 46 U.S.C. 
40102(14). Section 10(d)(1) of the Shipping Act states that a 
``[c]ommon carrier, ocean transportation intermediary, or marine 
terminal operator may not fail to establish, observe, and enforce just 
and reasonable regulations and practices relating to or connected with 
receiving, handling, storing, or delivering property.'' 46 U.S.C. 
41102(c). Under section 10(d)(4), ``[a] marine terminal operator may 
not give any undue or unreasonable preference or advantage or impose 
any undue or unreasonable preference or advantage or impose any undue 
or unreasonable prejudice or disadvantage with respect to any person;'' 
46 U.S.C. 41106(2). Section 10(b)(10) of the Shipping Act prohibits a 
marine terminal operator from unreasonably refusing to deal or 
negotiate. 46 U.S.C. 41106(3).
    The Commission is responsible for ensuring that the practices and 
regulations of marine terminal operators are just and reasonable. Under 
Section 10(d), a regulation or practice must be tailored to meet its 
intended purpose. It may have a valid purpose and yet be unreasonable 
because it goes beyond what is necessary to achieve that purpose. 
Distribution Services, Ltd. v. TransPacific Freight Confer. of Japan, 
24 SRR 714, 722 (FMC, 1988). The test of reasonableness as applied to 
MTOs requires that actions and practices ``be otherwise lawful, not 
excessive and reasonably related, fit and appropriate to the ends in 
view.'' Exclusive Tug Arrangements in Port Canaveral, 29 SRR 487, 489 
(FMC, 2002) and West Coast Maritime Association v. Port of Houston, 18 
SRR 783, 790 (1978), 610 F2d 100 (D.C. Cir. 1979), cert. denied, 449 
U.S. 822 (1980).
    Now therefore, it is ordered, That pursuant to section 11(c) of the 
Shipping Act of 1984, 46 U.S.C. 41303(c), an investigation is 
instituted to determine:
    1. Whether Respondent Port of Los Angeles has failed to establish, 
observe, and enforce just and reasonable regulations and practices in 
violation of section 10(d)(1) of the Shipping Act by mandating, on a 
phased-in basis, that LMCs providing drayage service to the Port 
utilize only employee drivers;
    2. Whether Respondent Port of Los Angeles provides an undue or 
unreasonable preference or advantage or imposes any undue or 
unreasonable prejudice or disadvantage with respect to any person in 
violation of section 10(d)(4) of the Shipping Act by implementing, on a 
phased-in basis, a ban on independent owner operators providing drayage 
service at the Port;
    3. Whether Respondent Port of Los Angeles has failed to establish, 
observe and enforce just and reasonable regulations and practices in 
violation of section 10(d)(1) of the Shipping Act or provides an undue 
or unreasonable preference or advantage or imposes any undue or 
unreasonable prejudice or disadvantage with respect to any person in 
violation of section 10(d)(4) of the Shipping Act, by making payments 
to certain selected motor carriers as incentive to provide drayage 
service at the port, but not to others;
    4. Whether Respondent Port of Los Angeles has failed to establish, 
observe and enforce just and reasonable regulations and practices in 
violation of section 10(d)(1) of the Shipping Act or provides an undue 
or unreasonable preference or advantage or imposes any undue or 
unreasonable prejudice or disadvantage with respect to any person in 
violation of section 10(d)(4) of the Shipping Act, by denying access to 
terminal facilities to drayage carriers absent port-approved 
arrangements to park their vehicles on off-street premises;
    5. Whether Respondents Port of Long Beach and Port of Los Angeles 
have failed to establish, observe and enforce just and reasonable 
regulations and practices in violation of section 10(d)(1) of the 
Shipping Act, or give an undue or unreasonable preference or advantage 
or impose any undue or unreasonable prejudice or disadvantage with 
respect to any person in violation of section 10(d)(4) of the Shipping 
Act, by exempting from the $35/TEU Clean Truck Fee those beneficial 
cargo owners whose cargo is moved by privately financed, 2007 compliant 
trucks, while imposing fees on those beneficial cargo owners whose 
cargo is moved by publicly financed 2007 compliant trucks and trucks 
manufactured between 1989 and 2006;
    6. Whether Respondents Port of Long Beach and Port of Los Angeles 
have failed to establish, observe and enforce just and reasonable 
regulations and practices in violation of section 10(d)(1) of the 
Shipping Act by requiring motor carriers providing container drayage 
service at the ports to submit an application for a concession, but not 
publishing standards or criteria by which such application will be 
granted or denied;
    7. Whether Respondent Port of Los Angeles violated section 
10(b)(10) of the Shipping Act by refusing to deal or negotiate with 
motor carriers otherwise authorized to provide drayage service at the 
port who conduct their port operations using independent owner-
operators;
    8. Whether, in the event one or more violations of section 10 of 
the Shipping Act are found, civil penalties should be assessed and, if 
so, the identity of the entities against whom the penalties should be 
assessed and the amount of the penalties to be assessed;
    9. Whether, in the event violations are found, appropriate cease 
and desist orders should be issued.
    It is further ordered, That a public hearing be held in this 
proceeding and that this matter be assigned for hearing before an 
Administrative Law Judge of the Commission's Office of Administrative 
Law Judges at a date and place to be hereafter determined by the 
Administrative Law Judge in compliance with Rule 61 of the Commission's 
Rules of Practice and Procedure, 46 CFR 502.61. The hearing shall 
include oral testimony and cross-examination in the discretion of the 
presiding Administrative Law Judge only after consideration has been 
given by the parties and the presiding Administrative Law Judge to the 
use of alternative forms of dispute resolution, and upon a proper 
showing that there are genuine issues of material fact that cannot be 
resolved on the basis of sworn statements, affidavits, depositions, or 
other documents or that the nature of the matters in issue is such that 
an oral hearing and cross-examination are necessary for the development 
of an adequate record;
    It is further ordered, That the following entities be designated as 
Respondents in this proceeding:
    City of Los Angeles, California; Harbor Department of the City of 
Los Angeles; Board of Harbor Commissioners of the City of Los Angeles; 
City of Long Beach, California; Harbor Department of the City of Long 
Beach; Board of Harbor Commissioners of the City of Long Beach;
    It is further ordered, That the Commission's Bureau of Enforcement 
be designated a party to this proceeding;
    It is further ordered, That notice of this Order be published in 
the Federal Register, and a copy be served on all parties of record;
    It is further ordered, That other persons having an interest in

[[Page 56827]]

participating in this proceeding may file petitions for leave to 
intervene in accordance with Rule 72 of the Commission's Rules of 
Practice and Procedure, 46 CFR 502.72;
    It is further ordered, That all further notices, orders, or 
decisions issued by or on behalf of the Commission in this proceeding, 
including notice of the time and place of hearing or prehearing 
conference, shall be served on all parties of record;
    It is further ordered, That all documents submitted by any party of 
record in this proceeding shall be directed to the Secretary, Federal 
Maritime Commission, Washington, DC 20573,in accordance with Rule 118 
of the Commission's Rules of Practice and Procedure, 46 CFR 502.118, 
and shall be served on parties of record; and
    It is further ordered, That in accordance with Rule 61 of the 
Commission's Rules of Practice and Procedure, the initial decision of 
the Administrative Law Judge shall be issued by September 24, 2009 and 
the final decision of the Commission shall be issued by January 22, 
2010.

Karen V. Gregory,
Secretary.
[FR Doc. E8-22942 Filed 9-29-08; 8:45 am]
BILLING CODE 6730-01-P