Source: https://www.martenlaw.com/newsletter/20130701-scrutiny-initiatives-regulate-trucking
Timestamp: 2019-04-26 00:04:22+00:00

Document:
For the second time this term, on June 13, 2013, the U.S. Supreme Court addressed the scope of the Federal Aviation Administration Authorization Act of 1994 (“FAAAA” or “Act”), which largely deregulated trucking. In American Trucking Associations, Inc. v. City of Los Angeles, the Court held that the Act preempted provisions of the Port of Los Angeles’ Clean Truck Program (“CTP”), which imposed civil and criminal penalties for non-compliance with truck placarding and parking restrictions in the Port.
While factually narrow, the opinion has broader implications. It limits the ability of local and state government, including ports, to take enforcement action to curtail a variety of practices in the trucking industry that contribute to pollution.
The Port of Los Angeles (“Port”) is one of the nation’s largest ports in terms of cargo value and container volume. It handles over $240 billion in cargo, and causes water, air, noise and light issues attendant to most ports. Over two million people live near it. State and federal regulators, as well as groups comprised of physicians, scientists, public health advocates, and environmentalists, have attributed health problems to the Port ranging from increased incidence of asthma and higher cancer risks. Some attribute a majority of the Port-generated pollution to trucking. Accordingly, for over 10 years, the Natural Resource Defense Council (“NRDC”), an environmental group, challenged Port expansion projects. The litigation resulted in project modifications and delays and costing the Port over $80 million in settlement. Partly in response to that litigation, the Port overhauled its business model and, in 2006, adopted a Clean Air Action Plan that included a CTP.
Early on, the CTP banned pre-1989 trucks for short-haul trucks (“drayage” trucks), replacing them with higher efficiency models. By last year, all trucks moving at Port terminal cargo gates met EPA 2007 heavy duty truck emission standards. The Port estimates that, since the CTP’s commencement in October 2008, truck emissions have decreased by 80 percent.
Central to the CTP is a “concession agreement” between the Port and drayage companies. The agreement requires companies to, among other things, use certain placards, submit maintenance and parking plans, agree to abide by regulatory conditions, establish company financial capacity, and address employment terms (i.e., eliminating independent trucking owner-operators and requiring drivers to be part of a large trucking company). The CTP included enforcement provisions in order to ensure that all drayage companies entered into concession agreements. The tariff provided that “no Terminal Operation shall permit access in any Terminal in the Port … to any Drayage Truck unless such Drayage Truck is registered under a Concession [Agreement].” “A violation of that provision—which occurs ‘each and every day’ a terminal operator provides access to an unregistered truck—is a misde­meanor. … punishable by a fine of up to $500 or a prison sentence of up to six months.” Signatory drayage trucking companies would in turn be subject to corrective action requirements, paying Port investigation costs and, in the event of a “Major Default,” suspension or revocation of the company’s right to service the Port.
Members of the U.S. trucking industry have challenged the CTP since its inception, arguing that the FAAAA preempts the CTP and that a 1954 Supreme Court decision prohibits it. Lower courts upheld the CTP and, in 2011, those challenges reached the Ninth Circuit. In a panel decision authored by the late Judge Betty Fletcher, the Ninth Circuit affirmed the lower court, holding that the CTP was not preempted by the FAAA, except for its employee-driver provisions.
The panel interpreted Section 14501(c)(1) of the Act, which provides that “a State [or local government] may not enact or en­force a law, regulation, or other provision having the force and effect of law related to a price, route, or ser­vice of any motor carrier … with respect to the trans­portation of property.” Judge Fletcher’s panel applied a “market participant exception” to the Act’s preemption provision that does not appear in the statute. Despite the CTP’s enforcement provisions, the panel found that the CTP placard and parking requirements lacked the “force and effect of law” because the requirements advance the Port’s business interest. Because the Ninth Circuit held that Section 14501(c)(1) only preempts actions taken by the State when acting in its regulatory capacity, as opposed to in its market participant capacity, it upheld most of the CTP.
The American Trucking Associations (“ATA”) petitioned for certiorari. The Supreme Court granted the petition. It reversed the Ninth Circuit in part and remanded.
Emphasizing the dichotomous proprietary vs. regulatory framework, Respondents Los Angeles and NRDC argued that the CTP, while having environmental benefits, was in fact developed for business reasons. Below, the district court agreed, holding that the CTP’s concession agreement was “essentially proprietary” so was not preempted by the Act.
functions as part and parcel of a governmental program wielding coercive power over private parties, backed by the threat of criminal punishment. That counts as action “having the force and effect of law” if anything does. The Port here has not acted as a private party, contracting in a way that the owner of an ordinary commercial enterprise could mimic. Rather, it has forced terminal operators—and through them, truck­ing companies—to alter their conduct by implementing a criminal prohibition punishable by time in prison.
Several amici weighed in, predominantly on the side of ATA. The United States and Center for Constitutional Jurisprudence focused on the constitutional questions underlying the case, while the Owner-Operator Independent Drivers Association, California Construction Trucking Association, Chamber of Commerce of the United States, and Airlines for America emphasized the wide-ranging adverse economic consequences and regulatory disruptions that upholding the CTP could cause.
In the alternative, ATA argued that the Port could not enforce the CTP by revoking a drayage company’s right to operate at the Port. The argument rested on Castle v. Hayes Freight Lines, Inc., 348 U. S. 61 (1954), which held that a state “could not bar a federally licensed motor carrier from its highways for prior violations of state safety regulations.” The Supreme Court declined to address the Castle question, however, due to the pre-enforcement posture of the case. It noted that, while the financial capacity and truck maintenance requirements of the CTP remain valid, if the Port enforces them, they could then be challenged.
Justice Thomas wrote separately to suggest that the operative provisions of the Act, governing intrastate commerce, may run afoul of the Commerce Clause. Because Respondents did not preserve a constitutional challenge to the Act, however, he joined the majority opinion in full.
The scope of the FAAAA’s preemption has been interpreted and applied variously by state agencies and reviewing courts, and extends beyond just ports. Generally, federal preemption by the FAAAA restricts an array of state and local regulatory efforts aimed at trucking, including the scope of local government commercial recycling programs. In Washington State, for example, the Act preempts, inter alia, regulation of commercial recycling collection by local governments.
According to the Washington Utilities and Transportation Commission (“WUTC”), “[n]either the [W]UTC nor any local government has authority over the collection of commercial recycling. As part of [the Act], recyclables from … commercial establishments are defined as property[.] This effectively preempts state and local governments from regulating commercial recycling services.” Accordingly, the WUTC has limited its regulation of the collection and transport of commercial recycling in the same manner that it has limited regulation of the collection and transport of other forms of property. By contrast, solid waste collection falls squarely within the regulatory province of local governments. But a narrowed regulatory regime reflecting FAAAA preemption of local regulation of property is well established in Washington and other states.
The question of federal preemption of certain state and local environmental initiatives has arisen frequently of late, partly due to various local efforts—in the absence of comprehensive federal legislation—to address climate change at the local level.
The American Trucking opinion will likely influence legal strategies of industry and environmental plaintiffs challenging local regulations, as well state programs that may affect motor carriers and thereby implicate the FAAAA. The Port of Los Angeles can continue implementing some elements of its Clean Trucks Program. Other provisions of the CTP with air quality implications, such as truck maintenance requirements, remain intact. The Port could potentially revise and avoid preemption of other provisions by removing their civil and criminal penalties and any other hallmarks of regulatory state action.
If noncompliance would not result in significant consequences, however, the effectiveness of such a regulatory scheme is questionable. These and other variables will guide Port authorities and other state and local entities nationwide seeking to “green” their facilities while avoiding FAAAA preemption.
For more information, contact Jessica Ferrell or another member of our Climate Change or Permitting practice groups.
 Unless otherwise cited, all factual assertions in this section are summaries of statements made in the Justice Kagan’s opinion and, at times, Supreme Court filings for this case by the parties and amici. In those cases, each assertion is attributed to its proponent. The opinion and all Supreme Court filings in the case are available here.
 Litigation by NRDC and other plaintiffs over Port of Los Angeles pollution continues. Earlier this month, NRDC, the City of Long Beach, the South Coast Air Quality Management District, and an environmental justice group filed lawsuits challenging the adequacy of the CEQA review conducted for a rail transfer project that would serve the Los Angeles and Long Beach ports. The $500 million rail transfer project was proposed by BNSF, and would transfer cargo between trucks and rail cars north of both ports. Plaintiffs challenge, inter alia, the adequacy of environmental review of air pollution, noise, traffic, public health, and disproportionate impacts on low-income and minority neighborhoods. NRDC also alleges violations of state and federal civil rights laws. See E. Yard Cmmtys. for Envt’l Justice v. Los Angeles, Cal. Super Ct. No. BS143454, filed June 7, 2013; SCAQMD v. Los Angeles, Cal. Super Ct. No. BS143381, filed June 7, 2013; Long Beach v. Los Angeles, Cal. Super Ct. No. BS143356, filed June 5, 2013.
 Port of Los Angeles, CTP Fact Sheet (Jan. 1, 2012); see also http://www.portoflosangeles.org/ctp/idx_ctp.asp.
 Amer. Trucking Assns., Inc. v. City of Los Angeles, 569 U.S. ____ (Slip Op. June 12, 2013).
 Amer. Trucking Assn’s., Inc. v. City of Los Angeles, 660 F.3d 384 (2011).
 49 U. S. C. §14501(c)(1); -(a).
 Amer. Trucking, 569 U.S. ___ (Slip Op. at 7).
 M. Sidran, et al. (WUTC), Report on Revenue Sharing in the Regulated Solid Waste Industry, at 18 (submitted to the Washington State Legislature on February 21, 2006); WUTC, Recycling Revenue Sharing: A Staff Summary of the Implementation of RCW 81.77.185 (SHB 2308) at 7 (May 2003) (“[the FAAA Act] pre‑empted any [local] regulation of rates, routes, or services for commercial recycling.”).
 Id.; WAC 480-70-006(5)(b) (“The FAAA preempted state regulation of rates, routes and services of property carriers … .”); WAC 480-70-011(2)(b) (“The following collection and hauling operations are not regulated by the [WUTC] as solid waste: … A carrier collecting or transporting recyclable materials from a drop box or recycling buy-back center, or collecting or transporting recyclable materials by or on behalf of a commercial or industrial generator of recyclable materials to a recycler for use or reclamation. This type of operation is regulated under chapter 81.80 RCW as transportation of general commodities.”); see also Letter from C. Washburn (WUTC) to Kathy Kiwala (Clark County) Re: Clark County Solid Waste Management Plan TG-000977 (August 9, 2000) (“Commercial recycling is regulated under RCW 81.80 because it has been designated as property, not solid waste.”).
Echoing the WUTC’s position, the Washington Department of Ecology (“Ecology”) has explained that commercial recycling is “not solid waste and will be regulated in our state under the motor carrier provisions of Title 81.80 RCW. The Federal government preempted states’ right[s] to regulate motor freight rates, routes and services in 1994 under the FAAA [Act]. Although cities may enter into non-exclusive contracts with service providers, local businesses may choose to make other collection arrangements.” Ecology, Washington State Solid Waste Plan Issues Identification, Pub. No. 01-07-001, Issue Paper No. 4, Collection, at 2 (Feb. 2001).
 See Ventenbergs v. City of Seattle, 163 Wash.2d 98 (2008) (regulation of garbage is within municipal police powers); AGG Ents. v. Washington County, 281 F.3d 1324 (9th Cir. 2002), cert. denied, 537 U.S. 822 (2002) (mixed solid waste is not property under the FAAA Act, and the Act does not preempt the “traditional state and local function” of waste hauling with respect to mixed solid waste); Washington Utilities and Transp. Cmm’n v. Haugen, 94 Wash. App. 552 (1999) (same, with respect to biomedical waste).
 See, e.g., M. Sidran, supra n.17 at 18; see also Letter from C. Washburn (WUTC) to Kathy Kiwala (Clark County), supra (“the [FAAAA Act] pre-empted state or local regulation of transportation of property (including nonresidential recycling), in terms of where a company can operate, how much they charge, and what kinds of property they can transport.”); but see AGG Ents., 281 F.3d at 1330, n.4 (“We express no opinion whether Congress intended to preempt regulation of source separated recyclables.”).

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