American Trucking Ass'ns, Inc. v. City of Los Angeles

• Decision Date: 31 October 2011
• Docket Number: No. 10–56465.,10–56465.
• Citation: 2011 Daily Journal D.A.R. 14583,11 Cal. Daily Op. Serv. 12294,660 F.3d 384
• Parties: AMERICAN TRUCKING ASSOCIATIONS, INC., Plaintiff–Appellant, v. The CITY OF LOS ANGELES; the Harbor Department of the City of Los Angeles; the Board of Harbor Commissioners of the City of Los Angeles, Defendants–Appellees,Natural Resources Defense Council; Sierra Club; Coalition for Clean Air, Inc., Defendants–intervenors–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

11 Cal. Daily Op. Serv. 12,294

2011 Daily Journal D.A.R. 14,583

660 F.3d 384

AMERICAN TRUCKING ASSOCIATIONS, INC., Plaintiff–Appellant,

v.The CITY OF LOS ANGELES; the Harbor Department of the City of Los Angeles; the Board of Harbor Commissioners of the City of Los Angeles, Defendants–Appellees,Natural Resources Defense Council; Sierra Club; Coalition for Clean Air, Inc., Defendants–intervenors–Appellees.

No. 10–56465.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 10, 2011.Filed Sept. 26, 2011.Amended Oct. 31, 2011.

Robert Digges, Jr. (argued), Chief Counsel, American Trucking Associations, Inc., Arlington, VA; Stephen S. Anderson, Jr., William Stephen Cannon, Seth David Greenstein, Richard Levine, and Evan P. Schultz, Constantine, Cannon LLP, Washington, D.C.; Christopher Chad McNatt, Jr., Scopelitis, Garvin, Light, Hanson & Feary, LLP, Pasadena, CA, for the petitioner-appellant.

Steven S. Rosenthal (argued), Susanna Chu, David Cousineau, and Alan Palmer, Kaye Scholer LLP, Washington, D.C.; Joy Murakami Crose and Simon Michael Kann, LA City Attorney's Office, San Pedro, CA; Thomas A. Russell and Carmen A. Trutanich, City of Los Angeles, San Pedro, CA, for defendants-appellants the City of Los Angeles and the Board of Harbor Commissioners.

Melissa Lin Perrella (argued) and David Richard Pettit, Natural Resources Defense Council, Inc., Santa Monica, CA, for defendants-intervenors-appellees the National Resources Defense Council, Sierra Club, and Coalition for Clean Air, Inc.Anthony T. Caso, Law Office of Anthony T. Caso, Orange, CA; John C. Eastman, the Claremont Institute Center for Constitutional Jurisprudence, Orange, CA, for amicus-curiae the Center for Constitutional Jurisprudence and Harbor Trucking Association.Kamala Harris and Susan Lea Durbin, Office of the California Attorney General, Sacramento, CA, for amicus curiae the State of California.John R. Bagileo, Law Office of John R. Bagileo, Glenwood, MD; Mark Irving Labaton, Motley Rice LLP, Los Angeles, CA, for amicus curiae the Intermodal Association of North America, Inc.William L. Messenger, National Right to Work Legal Defense Foundation, Springfield, VA, for amicus curiae Raymond Porras, Pilar Orellana, and the National Right to Work Legal Defense Foundation.Paul D. Cullen, Jr., the Cullen Law Firm, PLLC, Washington, D.C., for amicus curiae the Owner–Operator Independent Drivers Association, Inc.Appeal from the United States District Court for the Central District of California, Christina A. Snyder, District Judge, Presiding. D.C. No. 2:08–cv–04920–CAS–CT.

Before: BETTY B. FLETCHER and N. RANDY SMITH, Circuit Judges, and RUDI M. BREWSTER, District Court Judge.^*Opinion by Judge B. FLETCHER; Dissent by Judge N.R. SMITH.

ORDER

The majority opinion filed September 26, 2011, slip op. 18193, is hereby amended as follows:

1. Lines 20-25 at slip op. 18208 are deleted and the following are substituted in their stead: “The district court's factual determinations are reviewed for clear error, and may be reversed only if they are “illogical, implausible, or without support in inferences that may be drawn from the facts in the record.” Hinkson, 585 F.3d at 1251.”

OPINION

B. FLETCHER, Circuit Judge:

Beginning in 2008, the Port of Los Angeles (POLA, or the Port) prohibited motor carriers from operating drayage trucks ¹ on Port property unless the motor carriers entered into “concession agreements” with the Port. The concession agreements set forth fourteen specific requirements covering, among other things, truck driver employment, truck maintenance, parking, and Port security. The agreements were adopted as part of the Port's “Clean Truck Program” (CTP), which includes a progressive ban on older (and higher-polluting) trucks on Port property, a multi-faceted incentive program to support acquisition of clean trucks, and a system of penalties on transport of cargo by older trucks. The Port adopted the CTP in response to community opposition, including litigation, that had successfully stymied Port growth from the mid–1990s through 2007.

American Trucking Associations, Inc. (ATA, a national association of motor carriers),² challenges the concession agreements, arguing that they are preempted by the Federal Aviation Administration Authorization Act (FAAA Act), 49 U.S.C. § 14501 et seq. After obtaining a preliminary injunction against several provisions of the concession agreements, ATA challenged five specific provisions at trial. The district court held that none of the challenged provisions fell within the scope of FAAA Act preemption, first because some did not relate to motor carriers' rates, routes, and services, and second because the State adopted the entire agreement (and the challenged provisions in particular) in its capacity as a market participant, rather than a market regulator. See 49 U.S.C. § 14501(c)(1). The district court further held that the FAAA Act's exemption for regulation “genuinely responsive to motor vehicle safety” saved from preemption the provision requiring motor carriers to create and administer regular maintenance plans. See 49 U.S.C. § 14501(c)(2)(A).

ATA appeals. We have jurisdiction under 28 U.S.C. § 1291. We affirm the district court in large part, but reverse its decision that the employee-driver provision of the concession agreement falls within the market participant doctrine and is not preempted.

I.

A.

The Port of Los Angeles is an independent division of the City of Los Angeles, managed by the Board of Harbor Commissioners (BHC or the Board). It “occup [ies] land that was granted by the State of California ... via the California Tidelands Act, and the Port[ ] hold[s] the land in trust for the benefit of the people of California.” Am. Trucking Ass'ns, Inc. v. City of L.A., 559 F.3d 1046, 1048–49 (9th Cir.2009) ( ATA–II ). The Port is not, however, taxpayer-supported; it depends entirely on property leases and fees for its revenue, and manages its funds independent of the City. The Port develops terminal facilities and then leases those facilities to shipping lines and stevedoring companies.³ It handles more shipping container and cargo volume than any other port in the country, and competes with other ports for business.

Terminal operators unload cargo from ships docked at the Port into marine terminals. From the marine terminals, drayage trucks transport cargo to customers (or to off-Port long-distance trucks or railroads for further transport). “A supply of drayage trucks and drivers is integral to cargo movement at the Port.” Cargo owners, ocean carriers, railroads, and other transportation providers arrange for drayage services through Licensed Motor Carriers (LMCs or motor carriers). Prior to 2008, most LMCs serving the Port did not own or operate drayage trucks; rather LMCs contracted with independent owners and operators of trucks to actually provide the drayage services. The Port does not directly contract for any drayage services.

Around 1997, the Port developed plans to expand its cargo terminal facilities in order to accommodate more (and larger) ships. See Natural Res. Def. Council, Inc. v. City of L.A., 103 Cal.App.4th 268, 126 Cal.Rptr.2d 615, 618 (2002). Those plans have been stymied by legal opposition from community and environmental groups, which claimed that the Port's expansion would increase air pollution, that such pollution would adversely effect the health of people in the surrounding communities,⁴ and that the Port did not comply with environmental laws in planning its expansion. Id. In 2002, a California appellate court enjoined construction of a new terminal facility for the China Shipping Line Company, concluding that the Port had failed to comply with the requirements of the California Environmental Quality Act. Id. at 628. The Port settled that suit in 2003 for more than $80 million. Similarly, in 2007, environmental and community groups threatened to seek an injunction of the Port's plan to expand its TraPac Terminal. The Port entered into a settlement agreement in April 2008, requiring it to establish a five-year community mitigation plan to offset the environmental impact of the proposed expansion.

In response to the opposition to Port expansion, the Boards of Harbor Commissioners for Los Angeles and Long Beach adopted a Clear Air Action Plan (CAAP) in November 2006.⁵ In the CAAP, the Port announced its intention to “grow green” and achieve a 45% reduction in total emissions by 2012. The Ports stated that they “recognize that their ability to accommodate the projected growth in trade will depend upon their ability to address adverse environmental impacts ... that result from such trade.”

Recognizing that trucks are a major source of air pollution at the Port, the CAAP introduced the Clean Truck Program, which was “designed to reduce emissions from the heavy duty trucks involved in port drayage to improve the health of people living in the communities surrounding the [Port].” The CAAP directed Port staff to “undertake a 5–year, focused effort to replace or retrofit the entire fleet of over 16,000 trucks that regularly serve our Port....” From November 2006 through February 2008, the Ports worked to develop the Clean Truck program. The Ports held a number of public meetings, consulted with stakeholders, and hired consultants to evaluate ideas for implementation.

In October 2007, the Port adopted the first part of its Clean Truck Program: a progressive ban on older, higher-polluting trucks, with the goal that by 2012 all trucks visiting the Port frequently or semi-frequently will meet the United States Environmental Protection Agency's 2007 emissions standards. The ban forbids terminal operators to allow non-compliant trucks to enter Port property. In December 2007, the Port also implemented a Clean Truck Fee, which functions as a penalty to incentivize rapid replacement of older trucks. The fee is charged to terminal operators, not to motor...