This much is clear: Even supporters of a $2.2 billion effort to clean up the region’s twin sea ports concede that the embattled plan could have to be redrawn.
After three years of legal skirmishes, a Los Angeles federal judge is expected next week to possibly halt or throw out key elements of the program, aimed at cleaning up the region’s biggest single source of air pollution.
“There will be some kind of injunction, but I just don’t know what,” said David Pettit, senior attorney for the Natural Resources Defense Council, which has intervened in the legal battle in support of the plan. “The worst outcome is a total injunction.”
The American Trucking Association, an industry trade group, has sued the ports of Los Angeles and Long Beach contending the Clean Trucks Program violates federal law because it requires trucking companies to obtain a taxi-style concession to service the facilities.
The disagreement is far from academic.
The concession agreements vary at each port, but both require trucking companies to pay initial registration fees of $250 to $2,500 and recurrent annual registration fees of $100 per truck. If the concession agreement is killed altogether, a casualty would be the fees, which could generate about $2 million a year to help run the cleanup program. The plan aims to cut truck-related diesel pollution 80 percent over five years.
And if the judge’s order is more far reaching than expected, hundreds of millions of other fee revenues could be jeopardized.
“There will be no way for the money to flow,” Pettit said. “The ports will not be in as good a place to offer incentives to the companies.”
The L.A. port concession also requires trucking companies to hire drivers, eliminating the independent operators that served the port for decades. Trucking companies have bitterly fought the provision, supported by organized labor and L.A. Mayor Antonio Villaraigosa, as a thinly veiled way to unionize harbor truck drivers.
However, there appears to be a consensus among legal experts that the ports were on shaky ground in establishing concessions instead of simply setting clean-engine standards that truckers would have to meet to service the port.
“It’s pretty obvious that the ATA has a solid argument that the concessions are a violation of federal law,” said Mark J. Andrews, an attorney who manages transportation cases for Strasburger & Price LLP in Washington, D.C.
Funding worries
Attorneys representing the trucking association and the ports are expected to appear before U.S. District Court Judge Christina Snyder in a Los Angeles courtroom April 27 for oral arguments. Last fall, Snyder refused to issue a preliminary injunction against the concession plans, but the ATA appealed to the Ninth Circuit Court of Appeals in Pasadena.
The ATA has argued the concession plans attempted to regulate the “price, route or service” of the trucking operations at the port, a violation of the federal preemption contained in the Federal Aviation Administration Authorization Act.
The appeals court agreed with the trucking association and ruled late last month that at least some elements of the concessions appeared to violate the act. It sent the case back to Snyder for review to determine whether the entire agreement or only certain “egregious” elements, such as the employee hiring provision, should be nixed.
“With the strict order by the Court of Appeals, the judge has no choice but to issue some sort of injunction, but no one knows yet how severe it could be,” Andrews said.
That’s what has the supporters, critics and observers of the truck program nail-biting. No one can exactly predict what Snyder will direct the ports to do, but many agree the plan will have to be changed, at least temporarily.
It’s clear that the L.A. port’s employee driver provision is most threatened, and that would be a loss for organized labor, including Teamsters President James Hoffa, who reportedly personally met with Villaraigosa to shape the plan.
However, Villaraigosa and L.A. port officials also have contended that well-capitalized trucking firms would be in a better financial position to keep new clean rigs maintained in order for cleanup goals to be met.
ATA spokesman Clayton Boyce stressed his association is not challenging the entire program, only elements they view as infringing on federally protected business practices.
“We support the environmental goals of the Clean Truck Program, including the container fee for financing the replacement of older trucks, the banning of older trucks and the truck registry,” Boyce said. “We have only opposed the concession plans.”
The ATA is specifically not opposing the banning of older trucks, the establishment of a truck database and, most critically, the ports’ Clean Truck Fee, a $35 fee per cargo container that is paid by cargo owners and not truckers. The ports are counting on the fee generating up to $1 million a day, with the money subsidizing as much as 80 percent of new truck purchases.
It appears the fee would be maintained if Snyder restricts her ruling to the concession issues, yet the fee is not completely safe. The Federal Maritime Commission, which regulates ports nationwide, is suing over the cleanup plan and contends the fee hurts business.
The commission’s litigation was dealt a blow last week when U.S. District Court Judge Richard J. Leon in Washington, D.C., denied the commission’s request for an injunction of the program, saying it was in “the public interest” not to block the program.
Environmental advocates cheered the ruling, though it will not likely have an impact on the ATA’s case, Andrews said, because the two cases are completely unrelated. The ATA is fighting on the grounds of interstate commerce; the maritime commission is focused on competition at the port.
“The FMC was concerned primarily with different issues than those that brought the ATA into the case,” he said.
Also, the fee could still be overturned despite Leon’s refusal to grant a preliminary injunction if the commission takes the case to trial and wins a permanent injunction.
“That would put us in a risky spot of not having enough funding,” said Art Wong, a Port of Long Beach spokesman.
Funding is vital.
There are 4,200 clean trucks at the ports now, and officials want at least an additional 6,000 in service by 2012, said John Holmes, director of operations at the Port of Los Angeles.
With each new truck costing about $100,000, roughly $600 million will need to be spent on additional vehicle purchases. The truck fee will be critical in subsidizing such a large-scale transformation of the ports’ trucking fleet.
Negotiated settlement
Aside from registration fees, the concession agreement includes several other requirements. Trucks must be equipped with radio frequency identification, or RFID, tags that would allow the port electronically to verify the vehicles’ compliance while working at the terminals.
Also, the agreement requires trucking companies to provide off-street parking outside the port area. That means that if a company just had a small office and had owner-operators working out of their home with trucks parked on the street, it would be ineligible to be a concessionaire.
Both ports also require many financial disclosures, including annual reports, SEC filings and notice of pending legal action. If the company is privately owned, it still must turn over similar documentation.
Fred Johring, president of Golden State Express Inc., a Rancho Dominquez trucking firm, believes the concession agreement is a lot of red tape that won’t help clean up the air. He would like to see it go.
“There is just no other need for another layer of compliance,” said Johring, adding that he and other trucking executives don’t expect a loss of the concession agreement to slow the move to cleaner trucks. “If the concessions go away, that does nothing to clean the air.”
The issue now becomes how long the legal battle will play out. It’s likely that if Snyder issues a temporary injunction, the issue could go to trial, Pettit said. That could extend the legal battle more than a year.
And whichever side loses can appeal to the Ninth Circuit again. But the ports would likely have to appeal to the U.S. Supreme Court because the appeals court firmly opposed the concession plans, according to Mark Elliott, an environmental lawyer and partner at New York-based Pillsbury Winthrop Shaw Pittman LLP.
“The only other choice the parties will have to get their way outside of court is to lobby for Congress to change the Federal Aviation Administration Authorization Act in their favor,” Elliott said. “The ports could get the act amended but that might take a few years and by that time, the plan may be already completed anyway.”
Another route, though unlikely at this point, is a settlement between the ports and ATA. Pettit said that the ports and the association haven’t sat down together yet to compromise, instead preferring to duke it out in court first.
Regardless, port officials contend that they will stand by their plan as it is. S. David Freeman, president of the Los Angeles Board of Harbor Commissioners, said Snyder’s ruling next week won’t be the end of their fight.
“There is a risk that the plan will be enjoined in part temporarily, but that is not the final answer,” Freeman said. “In a sense, with 4,000 clean trucks now at the ports, there has been a fundamental change already in the drayage business that is not going to be reversed by a court or anyone else.”
