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Supreme Court Overturns Two Provisions of L.A./Long Beach Clean Trucks Plan

Thursday, June 20, 2013
Sandler, Travis & Rosenberg Trade Report

The Supreme Court issued last week a unanimous decision overturning two provisions of the Clean Trucks Plan implemented in 2008 at the ports of Los Angeles and Long Beach. Two other aspects of the CTP were sent back to an appeals court for further consideration. It remains unclear what impact the court’s decision may have on other port cities’ efforts to reduce the environmental impact associated with port trucking.

The CTP, which was designed to reduce air pollution associated with short-haul trucks that carry cargo into and out of the two neighboring ports, includes a requirement that only licensed motor carriers with port-approved concession agreements may access L.A./Long Beach shipping terminals. These agreements included requirements concerning motor carrier financial capacity, driving routes, off-street parking plans to reduce truck idling, application and registration fees, health insurance availability, and truck placards providing contact information for registering public concerns. Trucks not complying with these requirements could be barred from port facilities and terminal operators granting access to prohibited trucks could be subject to fines or jail time.

The American Trucking Association filed suit against the concession agreement requirements on the grounds that they violate a 1994 federal law prohibiting local governments from regulating interstate trucking prices, routes and service. In 2010, a federal judge ruled that the CTP qualifies for an exemption from this law because the ports implemented it as a business entity, not a regulatory body, in order to stay competitive.

The Supreme Court disagreed, stating that the ports “exercised classic regulatory authority” by imposing the placarding and off-street parking plan requirements and backing them up with “a criminal prohibition punishable by imprisonment.” Such use of “a coercive mechanism” that an ordinary commercial enterprise could not mimic constitutes acting with “the force and effect of law,” whether or not it is done to turn a profit. The court remanded for further consideration concession agreement provisions on motor carrier financial capability and truck maintenance.

A number of other ports interested in implementing CTP-type programs to reduce pollution, cut costs and boost competitiveness had put their plans on hold pending the Supreme Court’s decision. While ATA President Bill Graves said the ruling “is sure to send a signal” to such cities about implementing programs that “would impermissibly regulate the port trucking industry,” others said the ruling is actually fairly narrow and leaves intact most aspects of the concession agreements. L.A. officials say they will continue to enforce those provisions, which now appear to be free to be duplicated elsewhere. Other ports may also feel empowered to pursue parts of the CTP that were not challenged in this case, including a ban on cargo trucks manufactured after a certain date. Environmental and public interest groups support the CTP due to concerns about the effects of air pollution around port facilities on public health, while business groups have warned that overzealous regulatory efforts could drive up costs for companies and consumers.

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