Supreme Court Rules on Port’s Concession Agreement

In the lawsuit American Trucking Associations vs the City of Los Angeles, the Supreme Court ruled that certain parts of an agreement that trucking companies must sign before they can transport cargo at the Port of Los Angeles was preempted by federal law.
The American Trucking Association (ATA) challenged five provisions of the agreement:
1) displaying of placards; 2) compliance with truck routes and parking restrictions;
3) financial-capacity; 4) truck-maintenance; and 5) revoking or suspending the right to operate at the Port.

In an opinion delivered by the U.S. Supreme Court, two of the five challenges (displaying of
placards and compliance with truck routes and parking restrictions) were preempted by federal law reversing a judgment by the Ninth Circuit Court of Appeals.

The Federal Aviation Administration Authorization Act of 1994 (FAAAA), 49 U. S. C. §14501(c) (1), preempts a state law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier.

As the Port’s placard and parking requirements relate to a motor carrier’s price, route, or service, the only disputed question is whether those requirements have the force and effect of law. The agreement forced terminal operators—and through them, trucking companies—to alter their conduct by implementing a criminal prohibition punishable by imprisonment. Because of this, the court ruled that the force and effect of law exists.

The Court declined to decide whether or not the Port can enforce the financial-capacity and truck-maintenance requirements upheld by the Ninth Circuit.

Lastly the ATA argued that the Port cannot withdraw a defaulting company’s right to operate at the Port citing Castle v. Hayes Freight Lines, Inc., 348 U. S. 61. As the Port has never used its suspension or revocation power to penalize a past violation of the requirements, the court ruled that, at this juncture, there was no basis for finding that the Port will actually use the concession agreement’s penalty provision as in the Castle case. However, Justice Kagan stated, “There will be time enough to address the Castle question when, if ever, the Port enforces its agreement in a way arguably violating that decision.”

ATA President and CEO Bill Graves stated, “The decision is sure to send a signal to any other cities who may have been considering similar programs which would impermissibly regulate the port trucking industry.”

 

Castle v. Hayes Freight Lines rebuffed a State’s attempt to bar a federally licensed motor carrier from its highways for past infringements of state safety regulations.