1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 K aye S choler llp Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691) City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected][email protected]Paul L. Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, California 92614-8592 Phone: (949) 622-2700 Email: [email protected]C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email: [email protected][email protected]Counsel for City of Long Beach Defendants City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected][email protected][email protected]Steven S. Rosenthal (SBN 109739) Alan K. Palmer (pro hac vice) Douglas A. Tucker (pro hac vice) Tiffany R. Moseley (SBN 204800) KAYE SCHOLER LLP 901 Fifteenth Street, NW Washington, DC 20005 Phone: (202) 682-3500 Email: [email protected][email protected][email protected][email protected]Bryant Delgadillo (SBN 208361) KAYE SCHOLER LLP 1999 Avenue of the Stars, Suite 1700 Los Angeles, California 90067 Phone: (310) 788-1000 Email: [email protected]Counsel for City of Los Angeles Defendants IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA AMERICAN TRUCKING ASSOCIATIONS, Plaintiff, v. CITY OF LOS ANGELES, et al., Defendants. Case No. CV 08-04920 CAS (CTx) DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
Transcript
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] Paul L. Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, California 92614-8592 Phone: (949) 622-2700 Email: [email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
Steven S. Rosenthal (SBN 109739) Alan K. Palmer (pro hac vice) Douglas A. Tucker (pro hac vice) Tiffany R. Moseley (SBN 204800) KAYE SCHOLER LLP 901 Fifteenth Street, NW Washington, DC 20005 Phone: (202) 682-3500 Email: [email protected]
FOR THE CENTRAL DISTRICT OF CALIFORNIA AMERICAN TRUCKING ASSOCIATIONS, Plaintiff,
v. CITY OF LOS ANGELES, et al., Defendants.
Case No. CV 08-04920 CAS (CTx) DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
Because drayage hauls are shorter than the average non-drayage truck haul,
drayage trucks are disproportionately older and poorly maintained. Knatz Decl. ¶ 24.
As a result, these trucks are especially egregious polluters. Id. ¶ 25. The CTP’s
concession contract provides for the sustained, efficient, and rapid modernization of
drayage trucks at the Ports, and the Ports expect that their concession contracts will
reduce the total number of trucks required for Port drayage. Id. ¶¶ 29, 41.
The concession contracts will also enhance Port safety and security. Knatz
Decl. ¶¶ 33-38; Holmes Decl. ¶ 45. Currently, the Ports do not have good information
regarding which trucks and drivers are entering the terminals. Knatz Decl. ¶ 36;
Holmes Decl. ¶ 38. This information gap is a serious security concern. Knatz Decl.
¶ 37; Holmes Decl. ¶ 40. The CTP’s concession contracts require LMCs to collect
this information and make it available to the Ports through the DTR. Holmes Decl.
¶ 11, Ex. 4; Steinke Decl. ¶ 8, Ex. 4.
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III. LEGAL STANDARD
In the Ninth Circuit, a party seeking a preliminary injunction must satisfy one
of two interrelated tests. Under the first standard, ATA must establish (1) that ATA or
its members will suffer irreparable injury if injunctive relief is not granted; (2) that it
will probably prevail on the merits; (3) that in a balancing of the equities, the Ports
will not be harmed more than ATA is helped by the injunction; and (4) that granting
the injunction is in the public interest. Stanley v. Univ. of Southern California, 13
F.3d 1313, 1319 (9th Cir. 1994). Under the alternative preliminary injunction test,
ATA must demonstrate either (1) a combination of probability of success on the
merits and the possibility of irreparable injury; or (2) that “serious questions” are
raised and that the balance of hardships tips “sharply” in favor of an injunction. Id.
Under the alternative test, even if the balance of hardships tips decidedly in favor of
ATA, ATA nonetheless must show as an irreducible minimum that it has a “fair
chance” of success on the merits. Id.
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IV. THE PORTS ARE LIKELY TO SUCCEED ON THE MERITS
As we will show, the CTP’s concession contract programs are not preempted on
any of the bases asserted by ATA, for three separate and independent reasons.
First, the Ports’ terminals are built on filled-in sovereign state tidelands and, as
a result, a general federal statute like section 14501, which lacks an express statement
limiting the state’s sovereignty over those lands, cannot preempt the Ports’ ability to
control access to those sovereign lands.
Second, the concession contract programs reflect “proprietary action” rather
than “regulation” as those concepts have been formulated and applied by the Supreme
Court and the Ninth Circuit. Hence they fall within the “market participant” doctrine,
which exempts from preemption any action taken by a state or by a state entity acting
not as a regulator but as the proprietor of state-owned property or a state-owned
business. For purposes of this analysis, it is clear that the concession programs
embody action taken by the Ports as the operators of major commercial enterprises
and as the landlords of the trust property on which those enterprises are situated.
Third, even if the concession aspect of the CTP were somehow viewed as
“regulation,” it nevertheless would not be preempted by section 14501 because it falls
within the “safety” exception for preemption that Congress specifically attached to
that provision.
A. Because the Ports’ Terminals Reside on Sovereign Tidelands, Section
14501 Does Not Preempt the Ports’ Concession Program
The Ports’ terminals are located on sovereign tidelands, granted to the Ports by
the State of California, that are held and managed under the strict dictates of tidelands
trusteeship.2 That attribute of the Ports’ property in and of itself prevents section
(continued...)
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2 As confirmed by two decrees of the Supreme Court, the Ports sit on sovereign tidelands on three different bases. First, the lands are sovereign tidelands because they lie shoreward of the ordinary low-water mark on the Pacific Coast. United States
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14501 from preempting the Ports’ concession program. Tidelands such as those
involved here have a special status in our federal system:
[Because u]nder English common law the English Crown held sovereign
title to all lands underlying the navigable waters [and b]ecause title to
such land was important to the sovereign’s ability to control navigation,
fishing and other commercial activity on rivers and lakes, ownership of
this land was considered an essential attribute of sovereignty.
Utah Div. of State Lands v. United States, 482 U.S. 193, 195-96, 107 S. Ct. 2318,
2320, 96 L. Ed. 2d 162 (1987). Upon independence, each of the original 13 colonies
succeeded to the absolute rights of the English Crown as to such tidelands, subject
only to the federal government’s navigable servitude. Idaho v. Coeur d’Alene Tribe of
Idaho, 521 U.S. 261, 283, 117 S. Ct. 2028, 2041, 138 L. Ed. 2d 438 (1997) (citing
Martin v. Lessee of Waddell, 41 U.S. 367, 410, 10 L. Ed. 997 (1842)).
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v. California, 332 U.S. 804-06; 68 S. Ct. 20-21, 92, L. Ed. 382 (1947) (“California I Order and Decree”); United States v. California, 332 U.S. 19, 67 S. Ct. 1658, 91 L. Ed. 1889 (1947) (“California I”); see United States v. Alaska, 521 U.S. 1, 5, 117 S. Ct. 1888, 1892, 138 L. Ed. 2d 231 (1997) (lands shoreward of the mean low watermark “pass to a State under the equal footing doctrine”). Second, they are sovereign tidelands because they sit on artificial landfill in which “a State extends its land domain by pushing back the sea,” with the result that California sovereignty “extend[s] to the new land, as was generally thought to be the case prior to” California I. United States v. California, 381 U.S. 139, 177, 85 S. Ct. 1401, 1422, 14 L. Ed. 2d 296 (1965) (“California II”); United States v. California, 382 U.S. 448-53, 86 S. Ct. 607-09, 15 L. Ed. 2d 517 (1966) (California II Supplemental Decree); People v. Weeren, 26 Cal.3d 654, 663, 607, P.2d 1279 (1980) (“Fairly read, California II established the State’s ‘boundaries’ for all purposes, political and proprietary, ‘as between Nation and State’”). Third, they are sovereign tidelands because any land of the Ports was created from the “inland waters” of California, which with respect to the Port of San Pedro are those waters “enclosed by the breakwater and by straight lines across openings in the breakwater,” with certain exceptions irrelevant here. California II Supplemental Decree ¶ 7.
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Moreover, states entering the Union thereafter did so on an “equal footing” with
the original states and therefore succeeded to the same ownership rights to their
sovereign tidelands. Coeur d’Alene, 521 U.S. at 283, 117 S. Ct. at 2041; Lessee of
Pollard v. Hagan, 44 U.S. 212, 228-29, 11 L. Ed. 565 (1845). As a consequence, “a
State’s title to these sovereign lands arises from the equal footing doctrine and is
‘conferred not by Congress but by the Constitution itself.’” Coeur d’Alene, 521 U.S.
at 283, 117 S. Ct. at 2041 (quoting Oregon ex rel. State Land Bd. v. Corvallis Sand &
Gravel Co., 429 U.S. 363, 374, 97 S. Ct. 582, 589, 50 L. Ed. 2d 550 (1977)).
At the core of the sovereign rights possessed by the states over their tidelands is
their plenary “management and control” of the property, over which they have
“dominion and ownership . . . with the consequent right to use or dispose of any
portion thereof . . . .” Illinois C.R. Co. v. Illinois, 146 U.S. 387, 452-53, 135 S. Ct.
110, 111, 118, 36 L. Ed. 1018 (1892); see Coeur d’Alene, 521 U.S. at 281, 117 S. Ct.
at 2040 (similarly referring to “the State’s control over [submerged lands] long
deemed by the State to be an integral part of its territory”). As a leading California
Supreme Court decision makes clear, the state’s “power to control, regulate and utilize
[navigable waterways and the lands beneath them] is absolute,” except as limited by
the federal government’s power over navigable waters. Colberg, Inc. v. State, 67 Cal.
2d 408, 432 P.2d 3, 9 (1967); see also People v. California Fish Co., 166 Cal. 576,
598, 138 P. 79, 87-88 (1913) (noting the state’s “power as sovereign trustee to adapt
and improve these [tidelands] as it may see fit” and stating that “the powers of the
state as trustee . . . [include] the implied power to do everything necessary to the
execution and administration of the trust”).3
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3 Western Oil & Gas v. Cary, 726 F.2d 1340 (9th Cir. 1984), affirmed per curiam by an equally divided court, 471 U.S. 82, 105 S. Ct. 1859, 85 L. Ed. 2d 61 (1985), is inapposite here, because it determined claims arising under the Constitution itself (the dormant Commerce Clause and the Import-Export Clause). No issue was
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The Ports sit on lands subject to California’s tidelands trust, and virtually all of
the marine terminals to which ATA seeks to compel access without complying with
the concession contract programs are situated on sovereign tidelands that have been
filled in over time. These facts are established not only by the Declarations of the two
Executive Directors of the Ports (Knatz Decl. ¶¶ 5, 7; Steinke Decl. ¶ 2) and by the
California II Supplemental Decree of the U.S. Supreme Court, but also by the terms
of the statutory grants of those lands by the State of California to the cities of Los
Angeles and Long Beach. See 1911 Cal. Stat. Ch. 656; 1929 Cal Stat. Ch. 651; 1951
Title to these sovereign tidelands was granted to the cities, to be administered
by their BHCs in trust pursuant to Cal. Const. Art. I, § 3. City of Long Beach v.
Lisenby, 175 Cal. 575, 166 P. 333 (1917). Thus, the cities undertook to
act[] as one of the subordinate governmental agencies of the state . . .
[and] became possessed of all of the power which the state formerly held
in relation to said lands and all of the rights . . . which the state had prior
to said grant . . . .
Los Angeles v. Pacific Coast S.S. Co., 45 Cal. App. 15, 18, 187 P. 739 (1919). The
power over these tidelands includes the “authority to regulate and control” their use.
Graf v. San Diego Unified Port Dist., 7 Cal. App. 4th 1224, 1230 (1992).
By reason of their special status in our federal system — a status that has
constitutional dimensions — tidelands, including the lands on which the Ports are
presented in that case as to whether Congress had exercised its authority to limit state sovereignty over tidelands, which is the issue presented here. Moreover, Western Oil does not question California’s authority to require persons seeking to traverse its tidelands to enter into appropriate contractual arrangements.
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located, are entitled to extraordinary treatment under federal law. This special status
was confirmed in Coeur d’Alene. There the Supreme Court considered an action
against state officials that would have had the effect of barring those officials “from
exercising their governmental powers and authority over . . . disputed [submerged]
lands and water . . . .” Coeur d’Alene, 521 U.S. at 282, 117 S. Ct. at 2040.
Although injunctive actions against state court officials are of course normally
permitted under the doctrine established by Ex Parte Young, 209 U.S. 123, 28 S. Ct.
441, 52 L. Ed. 714 (1908), Coeur d’Alene held that doctrine to be inapplicable in the
“special circumstances” presented, which implicated Idaho’s “sovereign interest in its
lands and waters,” and the action was held to be barred by the Eleventh Amendment.
Coeur d’Alene, 521 U.S. at 287-88, 117 S. Ct. at 2043. Accordingly, there are
substantial questions presented here as to (1) whether the Eleventh Amendment
permits ATA’s suit to go forward in this Court, and (2) whether Congress, when not
acting in aid of navigation pursuant to its navigation servitude, has the constitutional
power to overcome the states’ plenary control over tidelands and to compel access by
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This Court need not reach those constitutional questions, however, because the
Supreme Court has established a principle with specific application to tidelands cases
that avoids such difficult constitutional issues.4 The Court has ruled that if Congress
intends to take away core incidents of state sovereignty, it must make “unmistakably
clear” that it intends to alter the normal federal-state balance with respect to “historic
powers of the States.” Gregory v. Ashcroft, 501 U.S. 452, 461, 111 S. Ct. 2395, 2401,
115 L. Ed. 2d 410 (1991). See Solid Waste Agency v. U.S. Army Corps of Eng’rs, 531
U.S. 159, 174, 121 S. Ct. 675, 683-84, 148 L. Ed. 2d 576 (2001) (clear statement
4 The Ports specifically reserve their Eleventh Amendment and other
constitutional defenses. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589-90, 111 S. Ct. 1522, 1525, 13 L. Ed. 2d 622 (1991).
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required where statutory interpretation “would result in a significant impingement of
the States’ traditional and primary power over land and water use”); Montana v.
United States, 450 U.S. 544, 551-52, 101 S. Ct. 1245, 1251, 67 L. Ed. 2d 493 (1981)
(clear statement required to diminish a state’s control over fishing and activities on its
navigable waters).5
This rule has full force with respect to tidelands. As a result, transfers of
territorial tidelands by Congress “are not lightly to be inferred, and should not be
regarded as intended unless the intention was definitely declared or otherwise made
very plain.” United States v. Holt State Bank, 270 U.S. 49, 55, 46 S. Ct. 197, 199, 70
L. Ed. 465 (1926).6
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Section 14501, on which ATA wholly relies, contains no expression of any
intent by Congress — much less an “unmistakable” intent — to diminish or affect in
any way the States’ authority to manage their tidelands “as they see fit.” To the
contrary, section 14501 is a statute of general applicability entirely open to the
interpretation that Congress never intended to affect at all the rights of sovereign
5 A discussion of the “unmistakable intent” doctrine appears in two competing
opinions of three judges each, one concurring and one dissenting, in connection with an en banc order of the Ninth Circuit reinstating a panel opinion and judgment that the court had previously ordered heard en banc. John v. United States, 247 F.3d 1032, 1045 (9th Cir. 2001). Since neither opinion constitutes controlling authority, and since the case itself dealt solely with rights to subsistence fishing in navigable waters and not to lands at all, much less sovereign tidelands, those opinions do not merit discussion.
6 The Ports believe that all of the legal principles enunciated in this section apply with equal force to submerged lands granted to California under the Submerged Lands Act of 1953, Pub. L. No. 83-31, 67 Stat. 29, 43 U.S.C. 1311, which confirmed the “right and power [of the states] to manage, administer, lease, develop, and use” the referenced submerged lands. Since the Ports claim their lands under the Constitution and not under the Submerged Lands Act, however, there is no reason for this Court to review the case law under that Act.
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proprietors and landlords over their own real estate. Further, we are aware of nothing
in the legislative history of section 14501 that evidences any intent by Congress to
override sovereign rights in tidelands.
In short, whatever the scope of section 14501 may be in other factual contexts,
it must be read here against the background principles of United States tidelands law
and the public trust doctrine so as not to override the States’ control over their
sovereign tidelands. Thus, the Ports’ limitation on access by drayage trucks, requiring
LMCs to execute concession contracts in order to operate at the Ports, cannot be
deemed preempted by section 14501.
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B. The Concession Contract Aspect of the Clean Truck Program
Reflects Proprietary Rather Than Regulatory Action by the Ports
and Hence is not Preempted by Section 14501
In arguing that the Ports’ concession contract programs are preempted by
section 14501, ATA surprisingly says not a word about the well-established market
participant doctrine. As we will show, the concession contract aspect of the CTP does
not constitute “regulation” as that concept is understood under the market participant
doctrine but instead reflects the proprietary action of the Ports in their capacity as
commercial enterprises and landlords. Consequently, the concession contract
programs are not preempted under section 14501.
1. Background and Development of the Market Participant
Doctrine
As the Ninth Circuit has stated;
[T]he market participant doctrine distinguishes between a state’s role as a
regulator, on the one hand, and its role as a market participant, on the
other. Actions taken by a state or its subdivision as a market participant
are generally protected from federal preemption.
Engine Mfrs. Ass’n v. S. Coast Air Quality Maint. Dist., 498 F.3d 1031, 1040 (9th Cir.
2007). The doctrine has its roots in four Supreme Court decisions issued during the
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last quarter of the twentieth century and has been further delineated and applied by the
Ninth Circuit in Engine Manufacturers and other decisions. All of those decisions
draw on the fundamental principle that “[c]onsideration under the Supremacy Clause
starts with the basic assumption that Congress did not intend to displace state law.”
Maryland v. Louisiana, 451 U.S. 725, 746, 101 S. Ct. 2114, 2129, 68 L. Ed. 2d 576
(1981). As the Supreme Court has made clear, in arguably nonregulatory contexts
courts should be “reluctant to infer pre-emption.” Bldg. & Constr. Trades Council v.
Associated Builders & Contrs., 507 U.S. 218, 224-25, 113 S. Ct. 1190, 1194, 122
L. Ed. 565 (1993) (“Boston Harbor”).
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a. Supreme Court Decisions
The first case in which the Supreme Court identified and applied an exception
to preemption principles for proprietary conduct by a state was Hughes v. Alexandria
Scrap Corp., 426 U.S. 794, 96 S. Ct. 2488, 49 L. Ed. 2d 220 (1976). Hughes involved
a Maryland plan for ridding the state of abandoned automobiles. Under the plan,
licensed scrap processors who came into possession of inoperative cars over eight
years old (“hulks”) could, if they met certain documentation requirements, claim a
“bounty” from the state. Because the documentation requirements were more onerous
for out-of-state scrap processors than for Maryland processors, an out-of-state plaintiff
filed suit claiming that the program violated the negative or dormant Commerce
Clause. The Court held that the Maryland plan did not involve “regulation” of the sort
that had been found, in earlier decisions, to run afoul of the Commerce Clause:
Maryland has not sought to prohibit the flow of hulks, or to regulate the
conditions under which it may occur. Instead, it has entered into the
market itself to bid up their price.
Hughes, 426 U.S. at 806, 96 S. Ct. at 2496. And the Court continued:
Nothing in the purposes animating the Commerce Clause prohibits a
State, in the absence of congressional action, from participating in the
market and exercising the right to favor its own citizens over others.
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Id. at 810, 2498. For these reasons, the Court upheld the Maryland plan against the
Commerce Clause challenge.
Four years later, in Reeves, Inc. v. Stake, 447 U.S. 429, 100 S. Ct. 2271, 65
L. Ed. 2d 244 (1980), Hughes was applied to sustain against Commerce Clause attack
a policy of a cement plant, owned and operated by the state of South Dakota, that
discriminated as between in-state and out-of-state purchasers of cement. The Court
found that South Dakota clearly was a market participant and that “[t]here is no
indication of a constitutional plan to limit the ability of the States themselves to
operate freely in the free market.” Reeves, 447 U.S. at 437, 100 S. Ct. at 2277.
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In White v. Mass. Council of Constr. Emplrs., 460 U.S. 204, 103 S. Ct. 1042, 75
L. Ed. 2d 1 (1983), the Court similarly upheld as not barred by the Commerce Clause
an executive order, issued by the mayor of Boston, requiring all construction projects
funded in whole or in part by city funds to be performed by a work force at least half
of which were residents of the city. The Court held that the executive order reflected
proprietary rather than regulatory action by the city, since it involved only projects as
to which city funds were being expended. In replying to an objection that the
executive order effectively applied to persons not doing business with the state
because it “regulate[d] employment contracts between public contractors and their
employees,” the Court’s opinion acknowledged that “there are some limits on a state
or local government’s ability to impose restrictions that reach beyond the immediate
parties with which the government transacts business.” However, the Court went on
to hold that the executive order nonetheless fell within the market participant doctrine:
We . . . think the Commerce clause does not require the city to stop at the
boundary of formal privity of contract . . . . [T]he mayor’s executive
order covers a discrete, identifiable class of economic activity in which
the city is a major participant. Everyone affected by the order is, in a
substantial if informal sense, “working for the city.”
White, 460 U.S. at 211, 103 S. Ct. at 1046, n.7.
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Finally, in 1993, the Court again addressed the market participant doctrine —
applying it this time in a statutory preemption context — in Boston Harbor. That case
involved a Massachusetts state agency whose task it was to clean up Boston Harbor.
In an effort to avoid labor strife during the ten-year course of that environmental
project, the agency negotiated an agreement with various labor unions and required
contractors bidding for portions of the work to comply with the agreement. The
plaintiffs in the case claimed that such a requirement was preempted by the National
Labor Relations Act (“NRLA”), but the Court disagreed. Noting that the NRLA
preempted only state “regulation” in certain areas, the Court stated as follows:
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A State does not regulate . . . simply by acting within one of these
protected areas. When a State owns and manages property, for example,
it must interact with private participants in the marketplace. In so doing,
the State is not subject to pre-emption by the NRLA, because pre-
emption doctrines apply only to state regulation.
Boston Harbor, 507 U.S. at 227, 113 S. Ct. at 1196 (first emphasis added). Applying
this principle, the Court concluded that the state agency’s requirement constituted
proprietary conduct, not regulation, and hence was not preempted: the agency “was
attempting to ensure an efficient project that would be completed as quickly and
effectively as possible at the lowest cost.” Id. at 232, 1198.
b. The Engine Manufacturers Decision
In the Engine Manufacturers case, the Ninth Circuit applied the market
participant doctrine to a situation involving procurement by state agencies. The
decision addressed the possible preemption of certain “fleet rules” issued by the
SCAQMD. The only portion of those rules on which the court ruled, however, was
the provision requiring “state and local governmental entities to purchase, procure,
lease, or contract for use of vehicles meeting specified air pollution criteria . . . .”
Engine Mfrs., 498 F.3d at 1045. In challenging that provision, the plaintiffs
contended that it was preempted by the federal Clean Air Act of 1955, Pub. L. 110-
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243, 69 Stat. 322, 42 U.S.C. 7401. The court held otherwise, concluding that the
procurement of vehicles by state and local governments represented proprietary rather
than regulatory state activity.
As a preface to its analysis, the court noted that “[i]n the statutory preemption
context, the market participant doctrine is based on the proposition that ‘pre-emption
doctrines apply only to state regulation.’” Engine Mfrs., 498 F.3d at 1040 (emphasis
added). The court then applied the two-part standard it had articulated in Chamber of
Commerce v. Lockyer, 463 F.3d 1076 (9th Cir. 2006), rev’d on other grounds sub
nom. Chamber of Commerce v. Brown, 128 S. Ct. 2408, 171 L. Ed. 2d 264 (2008),
“for distinguishing ‘proprietary’ from ‘regulatory’” state action in procurement
situations:
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[S]tate action qualifies as proprietary in either of two circumstances.
First, state action is proprietary if it “essentially reflect[s] the
[governmental] entity’s own interest in its efficient procurement of
needed goods and services, as measured by comparison with the typical
behavior of private parties in similar circumstances” . . . . In these
circumstances, the market participant doctrine “protects comprehensive
state policies with wide application from preemption, so long as the type
of state action is essentially proprietary” . . . . Second, state action is
proprietary if “the narrow scope of the challenged action defeat[s] an
inference that its primary goal was to encourage a general policy rather
than address a specific proprietary problem.”
Id. at 1041 (quoting from Lockyer, 463 F.3d at 1084). The court also observed that
“[a]long with three other circuits, we have held that the market participant doctrine’s
protection of state proprietary action includes proprietary action by states’ political
subdivisions.” Id. The decision concluded as follows:
[T]hese [fleet rule] provisions directing state and local governmental
entities to . . . procure . . . vehicles meeting specified air pollution criteria
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constitute direct state participation in the market.
Id. at 1045.
2. The Ports’ Concession Contract Programs Are Proprietary
Rather than Regulatory Action and Hence Are Not Preempted
The concession aspects of the CTP constitute proprietary rather than regulatory
action and hence are within the market participant doctrine. Although ATA implicitly
asserts that the concession programs involve the “regulation” of trucking and are
designed to achieve regulatory objectives unconnected with the Ports’ commercial
activities, that contention is untenable in light of governing case law and the facts
applicable to the development and substance of the CAAP and the CTP.
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It is undeniable that the Ports’ concession contracts reflect their conduct as
commercial enterprises and participants in the market (among others) for the provision
of terminal facilities to commercial MTOs and ocean carriers.7 The CTP is a product
of the Ports’ recognition that in order to grow and to continue to compete successfully
in that market, they need to address major environmental and security issues. Knatz
Decl. ¶¶ 21-22, 33-36. The concession programs reflect the Ports’ efforts to secure
trucking services — services critical to their commercial operation — in a way that
will further those objectives. Hence those programs fall squarely within the market
participant doctrine.8
7 We note that the Ports are regulated, along with other “person[s] engaged . . .
in the business of providing wharfage, dock, warehouse, or other terminal facilities,” by the Federal Maritime Commission (“FMC”). 46 U.S.C. § 40102(14). See generally 46 U.S.C. § 40101 et seq. The FMC’s regulatory scheme applies to the Ports not as governmental regulators but as participants (along with numerous private entities) in certain markets, such as the market for the provision of terminal facilities to seagoing carriers.
8 The fact that the Ports operate on sovereign tidelands is fully consistent with the fact that they are also market participants, since the market participant doctrine by definition applies to governmental — usually sovereign — entities.
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It is worth noting, in addition, the doubly clear basis for applying the market
participant doctrine to section 14501. Quite apart from the ordinary sweep of the
doctrine, section 14501 explicitly preempts only a state “law, regulation or other
provision having the force and effect of law.” (Emphasis added.) As the Fifth Circuit
noted in Cardinal Towing & Auto Repair, Inc. v. City of Bedford, Texas, 180 F.3d 686
(1999), in an observation endorsed by the Ninth Circuit in Tocher v. City of Santa
Ana, 219 F.3d 1040, 1050 (9th Cir. 1999), “[n]ot only does the text of the statute
allow for a proprietary [exception] analysis, [but] by excluding government actions
without the force of law it seems to invite it.” Cardinal Towing, 180 F.3d at 695.
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a. Proprietary Conduct by a State Agency Need Not
Involve Procurement in Order to Fall Within the Market
Participant Doctrine
It is unclear how ATA will seek to avoid application of the market participant
doctrine, as it was silent about the doctrine in its motion papers. However, we believe
one position ATA might take would be to focus on Engine Manufacturers’ reference
to “procurement” and to contend that the concession contract programs fall outside the
market participant doctrine because they supposedly do not involve procurement.
Such a contention would be wrong on two counts. First, the market participant
doctrine clearly applies in situations not involving procurement. And second, the
concession programs do in fact involve procurement as that concept has been applied
in the principal market participant decisions.
To begin with, the market participant doctrine, both as authoritatively described
and as applied, is applicable when state agencies act as commercial enterprises,
regardless of whether the conduct in question involves procurement. To be sure, the
first part of the Engine Manufacturers discussion of the doctrine refers to a state
entity’s “interest in the efficient procurement of needed goods and services.” Engine
Mfrs., 498 F.3d at 1041. But that reference merely reflects the fact that Engine
Manufacturers — like Cardinal Towing, a case from which Engine Manufacturers
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drew its formulation of the doctrine — involved procurement (specifically, the
procurement of tow-truck services by city law enforcement authorities).
Engine Manufacturers clearly recognized that the doctrine applied more
broadly. For example, the court noted that the “. . . doctrine is based on the
proposition that ‘pre-emption doctrines apply only to state regulation,’” id. at 1040-
1041, and it described the doctrine generally without reference to procurement:
The market participant doctrine distinguishes between a state’s role as a
regulator, on the one hand, and its role as a market participant, on the
other. Actions taken by a state or its subdivision as a market participant
are generally protected from federal preemption.
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Id. Nor does the Supreme Court’s statement of the market participant doctrine in (for
instance) Boston Harbor make any reference whatever to procurement:
When a State owns and manages property . . . it must interact with
private participants in the marketplace. In so doing, the State is not
subject to pre-emption by [a federal statute] because pre-emption
doctrines apply only to state regulation.
507 U.S. at 227, 113 S. Ct. at 1196.
This is not merely a matter of phraseology. The definitive refutation of any
contention that a state agency’s conduct must involve procurement in order to fall
within the market participant doctrine is that the Supreme Court has applied it in a
non-procurement context. In Reeves, 447 U.S. at 437, 100 S. Ct. at 2277, the Court
addressed the conduct of a state enterprise — South Dakota’s state-owned cement
plant — and held that it fell within the proprietary exception to preemption. But that
conduct had nothing to do with procurement. Instead, it involved discrimination in
connection with the sale of cement — discrimination against out-of-state purchasers.
Similarly, the Second Circuit held in Sprint Spectrum L.P. v. Mills, 283 F.3d
404 (2d Cir. 2002), that a contract under which a school district leased certain of its
property for use by a communications company fell within the market participant
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doctrine. The school district there was not procuring anything. Instead, it was merely
seeking to earn a return from the lease of its property to a private company for use as a
cellular communication tower.
Clearly, therefore, the Ports’ concession contract programs fall within the
market participant doctrine regardless of whether they involve procurement. But in
fact, as we will show, they do involve procurement as that concept has been applied in
the relevant decisions. Before we reach that issue, however, we will address two other
possible arguments ATA might make in seeking to avoid the force of the market
participant doctrine.
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The first of these possible contentions is that the concession contract programs
are part of ordinances enacted by the Ports’ BHCs and the Los Angeles City Council,
enforceable through criminal sanctions, and that they therefore must be regulatory.
But any such contention would be inconsistent with Engine Manufacturers. In Engine
Manufacturers, the court rejected an argument that the fleet rule in question was
“regulatory rather than proprietary because [it was] enforceable by criminal sanctions
and fines.” Id. at 1048. The court stated, “[W]e do not see how action by a state or
local government that is proprietary when enforced by one mechanism loses its
proprietary character when enforced by some other mechanism.” Id.
Second, ATA may suggest that the POLA concession plan is regulatory because
its effect goes beyond the persons with whom the Port is contracting — the LMCs —
and affects the LMCs’ drivers, who must eventually become employees. But this
contention is precluded by the Supreme Court’s decision in White.
There, Boston’s city-resident preference requirement extended not only to the
contractors with whom the city directly did business, but also to contractors handling
any project on which city funds were expended and to the employees of those
contractors. But when it considered whether those facts took the city’s requirements
beyond the “limits on a state or local government’s ability to impose restrictions that
reach beyond the immediate parties with which the government transacts business,”
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the Supreme Court held that they did not. This was so, the Court said, because the
proprietary exception to preemption does not “require the city to stop at the boundary
of formal privity of contract,” and that the city’s requirements covered “a discrete,
identifiable class of economic activity in which the city is a major participant.” White,
460 U.S. at 211, 103 S. Ct. at 1046, n.7.
So too here, the Ports’ concession programs affect a “discrete, identifiable class
of economic activity” in which they are “major participant[s].” Id. And just as all
those affected by Boston’s residence requirement were “in a substantial if informal
sense ‘working for the city,’” so also, to the extent that they are involved in drayage
activity at the Port, are all persons affected by the concession plan “in a substantial if
informal sense” working for the Port. Id.
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b. The Concession Contract Part of the CTP Falls Within
the Procurement-Related Aspect of Engine
Manufacturers
If they are deemed to have “wide application,” see Engine Mfrs., 498 F.3d at
1041, the concession contract plans would qualify as proprietary action under the first
part of the Lockyer/Engine Manufacturers test, which references “procurement.” This
is because they reflect the Ports’ own commercial interest in procuring the drayage
services that will serve critical operational needs. Concession agreements will, after
all, be “master” contracts between the Ports and LMCs specifying certain key terms
on which the LMCs will provide Port-related services.
It is useful in analyzing this issue to consider initially how Engine
Manufacturers applied the concept of “efficient procurement.” The court there
considered an objection that the fleet rule in question was not concerned with
“efficient procurement” of vehicles under Lockyer inasmuch as air quality objectives
were obviously at the heart of the provision. But the court rejected that contention:
[Plaintiffs] read the word “efficient” too narrowly. “Efficient” does not
merely mean “cheap.” In context, “efficient procurement” means
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procurement that serves the state’s purposes — which may include
purposes other than saving money — just as private entities serve their
purposes by taking into account factors other than price in their
procurement decisions.
Engine Mfrs., 498 F.3d at 1046-47. In this respect the court observed that “two
prominent private fleet owners, FedEx and UPS, have, for their own purposes,
adopted programs to introduce less-polluting vehicles into their fleets.” Id. at 1047.
And the decision added:
That a state or local governmental entity may have policy goals that it
seeks to further through its participation in the market does not preclude
the doctrine’s application, so long as the action in question is the state’s
own market participation.
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Id. at 1046. These comments preclude any possible claim by ATA that, because the
Ports’ concession programs address environmental and safety concerns, they are
outside the scope of the “efficient procurement” aspect of Engine Manufacturers.
We now turn to a related claim, alluded to earlier, that ATA may make —
namely, that the concession programs are outside the scope of that aspect of Engine
Manufacturers because they do not involve procurement at all. As the concept of
efficient procurement has been applied, any such contention would be wrong because
the Ports will be procuring, through the concession contract aspect of the CTP, the
trucking services necessary for the Ports’ operation in ways that further the objectives
of the CTP. The Ports will, after all, be entering into contracts with LMCs whereby
the LMCs will in effect be agreeing to provide services necessary for the Ports’
operations. The fact that the LMCs will also be entering into other contracts with (for
instance) MTOs relating to specific drayage jobs does not negate the existence of the
contracts between the LMCs and the Ports or the essential business purposes that the
Ports will be achieving through those contracts. In fact, the efficiencies achieved
through implementation of the concession contract program will directly benefit the
In these circumstances, and bearing in mind Engine Manufacturers’ directive
that the concept of “efficient procurement” should not be read “narrowly,” there can
be little doubt that, through the concession contract programs, the Ports will be
procuring services critical to their commercial success. Viewed through the lens of
the White decision, which similarly cautioned against a narrow reading of the
proprietary exception based on “privity of contract,” the result is identical: to
paraphrase the apposite language of White, all of the Port-related companies and
persons affected by the concession contract program — the LMCs, their employees,
and the MTOs — are “in a substantial if informal sense” working for the Ports.
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The District Court decision in Aeroground, Inc. v. City and County of San
Francisco, 170 F. Supp. 2d 950 (N.D. Cal. 2001), on which ATA may rely regarding
this issue, is distinguishable. And in any event, the decision is inconsistent with the
Supreme Court’s decision in Reeves.
Aeroground held that an airport’s imposition of pro-union policies on
employers at the airport did not fall within the market participant doctrine and was
preempted by the NLRA. But the policies in question were imposed through a “rule”
that was “adopted” by the airport commission, 170 F. Supp. 2d 952, not through a
concession or similar contract entered into by the airport and the employer plaintiff, a
cargo handler. Hence the airport’s action was regulatory on its face.
Although it was thus not necessary for the court’s decision, Aeroground
indicates that the court was influenced as to the proprietary issue by the fact that the
cargo handler’s services were purchased by entities other than the airport, so that the
airport’s action arguably did not involve “efficient procurement.” However, the
District Court clearly erred by holding that if the airport’s conduct did not involve
procurement, it was outside the market participant doctrine. Any such view, as we
have shown, is squarely contradicted by Reeves. Thus, Aeroground is without force
and does not in any way undermine the conclusion that the Ports’ concession contract
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programs in fact involve procurement.
c. Alternatively, the Concession Contract Programs Fall
Within the Second Part of the Engine Manufacturers
Decision
Even if the Ports’ concession programs somehow were viewed as being outside
the “efficient procurement” aspect of Lockyer and Engine Manufacturers, they
nonetheless would fall within the second part of the proprietary exception from
preemption as the exception is articulated in those decisions. That part of the market
participant doctrine states that governmental action “is proprietary if ‘the narrow
scope of the challenged action defeat[s] an inference that its primary goal was to
encourage a general policy rather than address a specific proprietary problem.’”
Engine Mfrs., 498 F.3d at 1041. Or, as Lockyer put this part of the standard, it
“protects narrow spending decisions that do not necessarily reflect a state’s interest in
efficient procurement . . . but that also lack the effect of broader social regulation.”
Lockyer, 463 F.3d at 1084.
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In the current situation, the Ports’ concession contracts are applicable only in
narrow circumstances, involving (a) drayage services only, and not any of the myriad
other services needed for the Ports’ operations, (b) on trust land granted by the State,
(c) for purposes directly related to the Ports’ commercial operations on that land.
There is no “general policy” expressed in the concession plan. There is no
requirement, for instance, that LMCs in California or in Los Angeles or Long Beach
who do not serve the Port must structure relationships with their drivers in any
particular fashion whatever. See Petrey v. City of Toledo, 246 F.3d 548, 559 (6th Cir.
2001) (holding city’s provisions regarding nonconsensual towing services to fall
within the market participant doctrine because those provisions “do not constitute
attempts on the part of the City to regulate the towing industry as a whole, or to
advance some general societal goal”). And the concession programs certainly don’t
even remotely resemble what Lockyer referred to as “broad social regulation.”
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The CTP’s concession contracts do not apply to on-dock rail transportation of
containers, or to the marina operators or other entities doing business at the Ports.
Thus, the concession contract programs constitute a targeted approach to “a specific
proprietary problem” — i.e., how to make the Ports more competitive in the future
while ensuring that environmental and safety/security concerns raised by drayage
trucks are effectively addressed so that the Ports’ neighbors do not impede efforts to
maximize the Ports’ commercial success. In these circumstances the Ports believe
that the concession program clearly falls within the “narrow scope” portion of the
Lockyer/Engine Manufacturers standard.9
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For similar reasons, ATA’s position is not aided by the Supreme Court’s
decision in Chamber of Commerce of the United States v. Brown, 128 S. Ct. 2408, 171
L. Ed. 264 (2008). In Brown, the Court addressed a California law prohibiting
employers receiving state grants of more than $10,000 from using the funds to assist
or promote union organizing. The Court held that the NLRA preempted that
prohibition. In analyzing the issue, the Court noted what is obvious about such a
9 This conclusion is supported by the decision in Hotel Employees & Restaurant
Employees Union v. Sage Hospitality Resources, LLC, 390 F.3d 206 (3d Cir. 2004) (city requirement that recipients of public funds for use in hotel projects sign collective bargaining agreements covering hotel hospitality staff was sufficiently narrow under a variant of the Lockyer standard because it was “limited to hotels and hospitality projects receiving [the] funds.”) 390 F.3d at 217-18. The District Court decision in Aeroground again may be thought to point in a contrary direction, but as we have pointed out, the airport “rule” involved there was facially regulatory. Nor did the District Court in that case cite any authority or even provide an explanation for its holding on the narrowness point, which merely turned on the court’s ipse dixit to the effect that the airport’s rule was not in its view “narrow.” Aeroground, 170 F. Supp. 2d at 958. Aeroground is distinguishable, moreover, because the Ports’ concession contract program is notably narrower than the rule at issue in Aeroground, which applied broadly to “all non-exempt employers at the airport.” Id. (emphasis added). As we have noted, the Ports’ concession program does not apply directly to the other employers who perform the great bulk of the work done at the Ports.
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prohibition:
It is beyond dispute that California enacted [the prohibition] as a
regulator rather than a market participant . . . . As the statute’s preamble
candidly acknowledges, the legislative purpose is not the efficient
procurement of goods and services, but the furtherance of a labor policy.
Id. at 2415. The Ports have no quarrel with the conclusion that, under the decisions
analyzed above, the union-related legislation involved in Brown clearly reflected
broad social policy of a regulatory nature. But as we have explained, the concession
programs are clearly proprietary in nature rather than regulatory.
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3. Other Ninth Circuit Precedent Supports the Conclusion that
the Concession Contract is not Preempted
The conclusion that the CTP’s concession contracts are not preempted is
buttressed by the Ninth Circuit’s earlier decision in Associated Gen. Contrs. of Am. v.
Metropolitan Water Dist., 159 F.3d 1178 (9th Cir. 1998). There the defendant Water
District, a public corporation, negotiated “project labor agreements” with a number of
unions in “an attempt to assure a good measure of labor harmony” in projects to be
handled by private contractors working for the Water District. Id. at 1180. The bid
specifications for the projects required all contractors to agree to the terms of the
agreements as a condition for securing the work. Certain contractors objected to this
agreement and argued that the agreements were preempted by the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 829, 29 U.S.C.
1001-1461 (“ERISA”). In rejecting this contention and holding that the agreements
fell within the market participant doctrine in the context of ERISA, the court stated as
follows:
[The Water District] has not enacted a law, or issued a decision, or
adopted a rule or regulation, or taken any other action which can be said
to have the effect of a law of the State. It has merely proposed the terms
of contracts, and then entered into those contracts.
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159 F.3d at 1184.
To be sure, not every aspect of that statement is applicable here. As we have
noted, the CTP is a part of ordinances approved by the Ports’ BHCs and the Los
Angeles City Council. However, we nonetheless believe that the essence of the
Metropolitan Water District decision supports the conclusion that the concession
plans are proprietary rather than regulatory. This is because in the concession part of
the CTP the Ports are merely “propos[ing] the terms of contracts,” id., that they are
willing to enter into with LMCs. At its core, this is a proprietary action, as
Metropolitan Water District squarely holds.
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4. The Recent District Court Decision Regarding the Port of
Miami Was Incorrectly Decided
We expect that the ATA will seek to rely on a recent District Court decision
from the Southern District of Florida — Florida Transportation Service, Inc. v.
Miami-Dade County, 543 F. Supp. 2d 1315 (S.D. Fla. 2008) — but that case erred in
its analysis of the market participant doctrine. Florida Transp. Serv. considered
whether the county-owned Port of Miami had violated the dormant Commerce Clause
by licensing only a handful of stevedoring companies to work at the Port. Citing
South Central Timber Dev. Co. v. Wunnicke, 467 U.S. 82, 104 S. Ct. 2237, 89 L. Ed.
71 (1984), the District Court held the market participant doctrine to be inapplicable
because although the Port participated in the market for the provision of port services,
“[t]he market at issue . . . is not the market for port services, but the market for
stevedores.” Florida Transportation Service, 543 F. Supp. 2d at 1332.
This holding — that a governmental participant providing services in one
market does not fall within the market participant doctrine with respect to its actions
in procuring goods or services for use in its commercial activities — is inconsistent
with the various decisions cited with approval in Engine Manufacturers that form the
basis for the “efficient procurement” aspect of the doctrine. To be sure, there is a
seeming tension in this regard between White and Wunnicke, but the critical factor in
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resolving that tension is that White, like this case, involved procurement, whereas
Wunnicke addressed a situation in which a state enterprise was acting as a seller
attempting to restrict the downstream commercial activities of persons who purchased
from it.10
Wunnicke involved a decision by the State of Alaska that it would sell its timber
only to persons who agreed to initially process it in-state before shipping the
processed lumber out of state. The Supreme Court held this conduct to be outside the
market participant doctrine because it imposed restrictions downstream from the
market for the sale of raw timber. The Court stated that the market participant
doctrine “allows a State to impose burdens on commerce within the market in which it
is a participant, but allows it to go no further.” 467 U.S. at 97, 104 S. Ct. at 2245.
This conclusion was supported by (a) the general policy, embodied both in federal
antitrust law and in the common law, against vertical restraints on post-purchase
conduct by buyers of goods, and (b) the view that permitting such downstream
restrictions might extend too broadly the effects of state entities’ commercial policies.
Thus, the Court held that Alaska “may not avail itself of the market-participant
doctrine to immunize its downstream regulation of the timber-processing market in
which it is not a participant.” 467 U.S. at 99, 104 S. Ct. at 2246 (emphasis added).
The Court emphasized that the unacceptable effect of Alaska’s “regulation” takes
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10 The District Court also relied in Florida Transportation Service on the old
Fifth Circuit’s decision in J.L. Smith v. Department of Agric., 630 F.2d 1081 (5th Cir. 1980). But that decision, which pre-dates the development of most of the Supreme Court and Ninth Circuit jurisprudence concerning the market participant doctrine, is in any event inapposite with respect to commercial enterprises such as the Ports. It dealt, by contrast, only with a licensing scheme that allocated space at a farmer’s market held on state-owned property. Moreover, the Smith decision was not unanimous, and in Four T’s, Inc. v. Little Rock Mun. Airport Comm’n, 108 F.3d 909 (8th Cir. 1997), the Eighth Circuit specifically disagreed with the Fifth Circuit’s holding, concluding that the dissent in Smith was correct.
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place “after the completion of the parties’ direct commercial obligations, rather than
during the course of an ongoing commercial relationship . . . .” Id.
But the Ports’ concession contract programs have no such “downstream” effect.
To the contrary, they involve the procurement of services needed for their essential
commercial operations, and they apply not “after the completion” of the Ports’
commercial transactions but “during the course of [their] ongoing commercial
relationship” with the LMCs. Hence White and the other market participant decisions
involving procurement govern.
White specifically acknowledged that in a procurement context, a state may
within reasonable limits “impose restrictions that reach beyond the immediate parties
with which [it] transacts business.” 460 U.S. at 211, 103 S. Ct. at 1046 n.7. To
suggest that a state enterprise that processes and resells widgets is acting outside the
market participant doctrine when it buys unprocessed widgets — because the
purchases occur in a “different market” from the market for the sale of processed
widgets — makes no sense. This is because by definition a seller of goods and
services needs to procure as inputs upstream goods and services. Under the reasoning
of Florida Transportation Service, the South Dakota-owned cement plant in the
Reeves case would have been acting outside the scope of the market participant
doctrine whenever it purchased the raw materials that it used to make its cement.
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Such reasoning would eviscerate the entire line of decisions applying the
market participant doctrine to the procurement activities of state entities. Although it
used other terminology, White itself applied that participant doctrine despite the fact
that Boston’s procurement policy had effects in a upstream “market” other than the
“market” in which the city “participated.” This is precisely what the Supreme Court
meant when it stated that the city’s policies fell within the doctrine even though they
“impose[d] restrictions that reach[ed] beyond the immediate parties with which the
government transact[ed] business,” id. — even though, that is, they affected the
“market” in which persons contracting with the city purchased labor services rather
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than the “market” in which the city purchased the services of the contractors.
Like the state subdivisions that purchased vehicles in Engine Manufacturers, or
the municipality that acquired tow truck services in Cardinal Towing, the Ports’
concession contract programs merely assure them of the trucking services that are
essential to their operations. Certainly it would be perverse to conclude that the Ports’
participation as a commercial enterprise in the market for port services gives them less
right to market participant status than governmental entities that procure goods or
services in order to engage in noncommercial activities such as the construction of
public works as in White or vehicle towing for police purposes as in Cardinal Towing.
By failing to go through this analysis, and by holding instead that the Port of Miami’s
participation in the port services market somehow rendered its procurement of
stevedoring services outside the market participant doctrine, the District Court in
Florida Transportation Service erred in a way that is inconsistent with, and that in fact
subverts, the essential purpose of that doctrine.11
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Finally, Florida Transportation Service is inconsistent with the Eighth Circuit’s
decision in Four T’s, Inc. v. Little Rock Municipal Airport Commission, supra, n.10.
There, the court considered a situation directly analogous to the one involved here,
where a Commerce Clause challenge was brought by a car rental company
challenging an airport’s method of contracting with it. Although the defendant airport
was of course principally involved in providing airport services — just as the Ports
here participate principally in the market for the provision of port services — the court
held that the defendant was also “participating in the rental car market” because it
“provided facilities” to providers of car rental services. 108 F.3d at 913. The Ports
11 The port in Florida Transportation Service never asserted a sovereign
tidelands defense. In any event, the claim in that case arose directly under the Commerce Clause and not under a federal statute. Therefore, the clear statement doctrine would not have been implicated.
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certainly are no less participants in the market for drayage truck services, in that they
are directly involved, as we have explained, in securing such services. See also
owned Port was within the market participant doctrine in arranging for tugboat
services).
In short, in setting up the concession aspect of the CTP the Ports are acting as
the proprietors of extremely significant commercial businesses. Just as the private
operator of such a business may well want (a) to act so as to advance its commercial
objectives, (b) to act responsibly regarding environmental issues, (c) to minimize the
possibility of safety risks (including security risks), and (d) to reduce annoyance that
its activities may cause to residents of nearby areas, thereby reducing the likelihood of
potentially disruptive litigation, so too the Ports have legitimate proprietary and
commercial justifications for doing all of those things here. Accordingly, the Ports are
not precluded by section 14501 from achieving those objectives through the
concession programs.
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C. The CTP’s Concession Contract Programs are Not Preempted Under
Section 14501 Because They Fall Under the “Safety” Exception to
Preemption Under the FAAAA
1. The Concession Contract Programs Further the Safety and
Security of the Ports and Hence are Not Preempted
For purposes of discussing the next reason why ATA is unlikely to succeed on
the merits, the Ports will assume — contrary to their well-supported position — that
the Ports’ concession contract requirements are regulatory rather than proprietary in
nature. ATA’s preemption argument fails even under that assumption, because the
concession contract programs fall within the statutory exception that preserves state
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and local regulatory authority in the area of safety.12
Although section 14501 generally preempts state and municipal economic
regulation of motor carriers, Congress specifically preserved from preemption under
that provision the authority of states and their subdivisions to regulate motor carriers
on matters generally related to safety, providing that this subject is “not covered” by
section 14501: “Matters not covered . . . [The preemption provisions of the Act] shall
not restrict the safety regulatory authority of a State with respect to motor
vehicles . . . .” 49 U.S.C. § 14501(c)(2)(A); see also City of Columbus v. Ours
Garage and Wrecker Serv. Inc., 536 U.S. 424, 122 S. Ct. 2226, 153, L. Ed. 2d 430
(2002) (“Ours Garage”) (construing section 14501(c)(2)(A) to preserve regulations
enacted by municipalities as well as states).
In interpreting section 14501(c)(2)(A), Ours Garage clearly suggests that the
exception should be broadly construed in light of the “assumption that the historic
police powers of the States were not to be superseded . . . unless that was the clear and
manifest purpose of Congress.” Ours Garage, 536 U.S. at 438, 122 C. St. at 2235.
Accordingly, the Ninth Circuit has concluded that Ours Garage “broadly interpret[s]
the safety exception to [the] FAAAA” set forth in section 14501(c)(2)(A). Tillison v.
Gregoire, 424 F.3d 1093, 1103 (9th Cir. 2005). Thus, laws and regulations “may fall
within the safety exception . . . so long as they are ‘genuinely responsive to safety
concerns.’” Id. at 1101 (quoting Ours Garage, 536 U.S. at 442, 122 S. Ct. at 2237).13
(continued...)
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12 Although the Ports do not specifically address herein the question of whether their concession contract programs are “related to a price, route, or service of [a] motor carrier” in the language of section 14501, they specifically reserve for the merits stage their position that the programs do not relate to prices, routes, or service. Given page constraints and the other clear grounds for concluding that ATA is unlikely to succeed on the merits, we need not analyze that issue in this preliminary injunctive context.
13 Other courts have deemed approaches at least somewhat similar to the concession contract arrangements to be legitimately safety-related. For example,
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Moreover, whether the concession requirements are “genuinely responsive to
safety concerns” is primarily a question turning on the Ports’ intent. Gregoire, 424
F.3d at 1101; Tillison v. City of San Diego, 406 F.3d 1126, 1129 (9th Cir. 2005) (“The
focus . . . must be on the legislative intent and whether the legislature was acting out
safety concerns”). Accordingly, the principal issue here relates to the intent of the
Board of Harbor Commissioners.
On this point, the two BHCs have specifically stated that the concession
contract portion of the CTP is intended in some substantial measure to achieve
enhanced Port safety and to address gaps in Port security. Knatz Decl. ¶¶ 33, 36-38.
This is a strong indication that the concession contract arrangement is “genuinely
responsive” to safety concerns. Port staff’s recommendations to the Boards also
identified that the CTP as being needed to address security issues such as the use of
Although the concession contract plans relate in some measure to “traditional”
safety concerns — e.g., concerns that older trucks may pose road hazards that newer
trucks do not pose — an additional safety concern addressed by the arrangement
relates to port security. That fact in no way, however, suggests that the plan somehow
falls outside the safety exception.
Through its security-related requirements, the Ports are attempting to ensure the
safety of drayage truck drivers and, indeed, of all persons working or otherwise
located at or near the Ports. A single violent or destructive incident, whether caused
courts have upheld against preemption attack regimes that require tow-truck motor carriers to obtain licenses and to provide proof of insurance, to post bonds, and to pass criminal background checks before doing so. See Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d 765, 776-77 (2d Cir. 1999); Hott v. City of San Jose, 92 F. Supp. 2d 996, 999 (N.D. Cal. 2000).
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by terrorists or otherwise, could have disastrous consequences for everyone located at
or near the Port. Although section 14501 is part of a statute enacted prior to
September 11, 2001, there is no basis for reading the term “safety” in that section in
what today surely would be an artificially narrow fashion by excluding security
concerns from its ambit. If ATA contends otherwise, it should put to its members the
question of whether those members regard the concession plan’s security-related
provisions as helping to ensure their safety.
Indeed, existing decisions confirm that the safety exception to section 14501
should be expansively applied in a fashion that surely covers security-related
concerns. In Gregoire, for example, the Ninth Circuit addressed whether Washington
State’s statutory provision governing tow-truck services fell within the safety
exception. That legislation required, for instance, written authorization in some
instances before a vehicle could be towed, and it required that in similar circumstances
a public official or the owner of the property on which the vehicle was located had to
be present for the tow. Gregoire held that the legislation was not preempted under
section 14501 because it was indeed within the safety exception. And in explaining
the basis for that conclusion, the court stated, among other things, that the legislation
(a) “reduces confrontations” of the sort that can occur regarding involuntary towing,
and (b) “protects the vehicle owner from being stranded at a dangerous time and
location . . . .” Gregoire, 424 F.3d at 1104. Thus, the court held that concerns well
beyond a narrow reading of “safety” (as being limited, for instance, to unsafe vehicles
or vehicle operation) are included within the safety exception. Other courts have
uniformly agreed. See Cole v. City of Dallas, 314 F.3d 730, 735 (5th Cir. 2002);
Galactic Towing, Inc. v. City of Miami Beach, 274 F. Supp. 2d 1315, 1323 (S.D. Fla.
2002); People ex rel. Renne v. Servantes, 86 Cal. App. 4th 1081, 1084 (2001). If
concerns about “confrontations” and about motorists “being stranded” fall within the
safety exception, the Court can be comfortably assured that here, the Ports’ security-
related concerns in an age of terrorism certainly do as well.
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To be sure, the concession contract feature of the CTP is about more than safety
and security. It is also intended in substantial measure to address environmental
concerns about air pollution. This point does not detract, however, from the fact that
the concession arrangements are genuinely responsive to security and other safety
concerns. ATA cites no authority whatever for the proposition that safety-related
regulations may not also serve other purposes. And governing precedent contradicts
any such contention. For example, Gregoire noted that the Washington tow-truck
legislation at issue there also served various purposes unrelated to safety, such as
“help[ing to] expedite vehicle recovery.” 424 F.3d at 1104.
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Indeed, any concern that multi-purpose provisions like the concession contract
programs might somehow improperly escape preemption under section 14501 is
unfounded in light of a companion statute, 49 U.S.C. § 31141. As the Supreme Court
emphasized in Ours Garage, that provision
affords the Secretary of Transportation a means to prevent the safety
exception from overwhelming the lawmakers’ [economic] deregulatory
purpose. That provision authorizes the Secretary to void any “State law
or regulation on commercial vehicle safety” that, in the Secretary’s
judgment, “has no safety benefit . . . [or] would cause an unreasonable
burden on interstate commerce.” . . . Under this authority, the Secretary
can invalidate local safety regulations upon finding that their content or
multiplicity threatens to clog the avenues of commerce.
Ours Garage, 536 U.S. at 441, 122 S. Ct. at 2237.
Given this authority on the part of the Secretary of Transportation, this Court
can be doubly assured that the concession contract arrangement will not somehow
undermine the economic deregulatory purpose underlying section 14501. If the
Secretary of Transportation should conclude that the connection with safety is
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insufficient here to warrant whatever effect on commerce he or she may find to exist,
then the concession contract arrangements will be rendered void.14
In short, where there is a legitimate safety-related basis for regulation, as there
is here, the regulation should be held to fall within the safety exception explicitly
provided by Congress. Given that exception, section 14501 does not reflect a “clear
and manifest purpose of Congress” to supersede “the historic police powers” of
California and its subdivisions regarding safety and security.15
(continued...)
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14 The security at the largest United States seaports, including POLA and POLB, is the subject of extensive recent federal legislation, which among other things imposes federal security mandates on seaport operations. See, e.g., Security and Accountability for Every Port Act of 2006, Pub. L. No. 109-347, Title I, 120 Stat. 1884, 1887-1901. This and other federal port security legislation may also give rise to an implied exception to Section 14501 with respect to port programs that seek to improve Port defenses against security threats.
15 The Ports also note that certain portions of the concession contracts fall within another specific exception to section 14501. Section 14501(c) authorizes states “to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.” Within Schedule 3 to the POLA’s concession contract, for example, various provisions relating to liability insurance fall specifically within that language. To be sure, ATA argues that despite the severability provisions in the CTP, the Court should decline to sever any part of the concession contracts that it may find to be preempted while sustaining against preemption challenge the remaining portions of those programs. ATA Mem. in Supp. of Prelim. Inj. 18 (“ATA Br.”). But although ATA cites decisions in which courts have in some circumstances declined to honor severability provisions, those decisions address and explicate exceptions to the rule. The general rule, of course, is that severability language will be given its intended effect. Adair v. Stockton Unified School Dist.,162 Cal. App. 4th 1436, 1450 (2008) (“It is settled that where a contract has both void and valid provisions, a court may sever the void provision and enforce the remainder of the contract. California cases take a very liberal view of severability, enforcing valid parts of an apparently indivisible contract where the interests of justice or the policy of the law would be furthered”) (citations omitted); Schweitzer v. Westminster Invs., 157 Cal. App. 4th 1195, 1212 (2007) (enforcing severability provision of Home Equity Sales Contracts Act and finding that, although a provision of the Act was not enforceable, the
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2. ATA’s Contention that the Ports are Precluded by California
Law from Addressing Safety Issues is Incorrect
ATA’s sole reference to the safety exception to section 14501 is its assertion
that the exception “cannot apply, because under state law neither the Ports nor the
cities of Los Angeles and Long Beach have any authority to impose motor carrier
safety regulations.” According to ATA, this is because “Section 34623(a) of the
California Vehicle Code provides that ‘[t]he Department of the California Highway
Patrol has exclusive jurisdiction for the regulation of safety of operation of motor
carriers of property.’” ATA Br. 18 (emphasis deleted). This contention is incorrect as
a matter of law and in addition is inconsistent with the basis of ATA’s own complaint.
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To begin with, the Ports have independent authority to address safety and
security issues. The Los Angeles City Charter gives POLA the power to “[m]ake and
enforce all necessary rules and regulations governing the . . . operation and use of the
Harbor District.” L.A. City Charter § 652(a). Similarly, the Long Beach City Charter
grants POLB the power “to make and enforce in the Harbor District general rules and
regulations, to the extent that may be necessary for port purposes.” L.B. City Charter
§ 1203. Hence the Ports have the clear authority to regulate safety issues as part of the
cities’ general police powers.
Under Cal. Gov. Code § 37359, moreover, a city “may at any time withdraw
[its] property from the personal access and use of members of the public, or limit the
access or use in . . . any . . . reasonable manner deemed necessary.” See Irwin v. City
of Manhattan Beach, 65 Cal. 2d 13, 415 P. 2d 769 (1966) (denying injunction against
use of city funds to construct a pedestrian bridge not intended to be open to the public
at large). As we have already noted, in fact, this authority is at the core of the state’s
sovereignty over the tidelands property on which the Ports are located.
remainder of the statutory scheme remained valid).
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Accordingly, the concession contract programs are valid, inasmuch as they
merely condition entry onto Port property on the willingness of LMCs to sign
concession agreements. The CHP’s “exclusive” authority as a general matter over
truck safety cannot reasonably be construed to prohibit a landowner, whether private
or public, from adopting safety-related rules for vehicles seeking entry onto their
property — particularly when that property is the site of special safety concerns (as is
the Ports’ property). See Great W. Shows v. Los Angeles County, 27 Cal. 4th 853,
870, 44 P. 3d 120 (2002) (“[T]he County is not compelled to grant access to its
property to all comers [for gun shows] . . . . [I]t may impose more stringent
restrictions on the sale of firearms than state law prescribes”); Oakland v. Burns, 46
Cal. 2d 401, 407, 296 P. 2d 333 (1956) (“When a governmental entity is authorized to
exercise a power purely proprietary, the law leans to the theory that it has full power
to perform it in the same manner as a private person would”). This conclusion is
doubly supported with respect to the security-related aspects of the concession
programs, since the CHP’s exclusive authority to regulate the “safety of operation of
motor carriers” in no way implicates anti-terrorist or other security-related issues of
the sort that the Ports must deal with, as opposed to more traditional truck safety
concerns.
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V. AN ANALYSIS OF HARM AND A BALANCING OF THE EQUITIES
CLEARLY WEIGHS AGAINST ISSUANCE OF AN INJUNCTION
ATA’s recitation of the changes that some of its members say they must make
to their business models when the concession contracts go into effect asserts at most
economic harm. By contrast, both the Ports and the public interest will be irreparably
harmed in significant and non-economic ways if an injunction is issued.
A. ATA’s Alleged Injuries Are Merely Financial
ATA’s LMC declarants identify the potential costs they may incur to purchase
or to retrofit trucks and to transition to employee drivers under POLA’s concession
contract as the major injuries they face if the CTP’s concession contracts are not
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enjoined. See Declaration of Gregory L. Owen ¶¶ 10, 16 (“Owen Decl.”); Declaration
of Billy Joe Patterson ¶¶ 10, 16 (“Patterson Decl.”); Declaration of Reid Wicker
¶¶ 10, 17 (“Wicker Decl.”). The employee requirement of the CTP, however, is
phased into effect over time, and therefore the asserted costs need not be incurred until
the last quarter of 2009. Holmes Decl. ¶ 11, Ex. 4. Moreover, while ATA’s
declarants assert that these requirements will eventually have some impact, they do
not distinguish between the impacts that will ensue as a result of the truck ban and the
impacts that will result from the concession contracts.
With respect to the latter, ATA does not claim that the concession contract
programs will drive any LMC out of business. Nor does it claim any other intangible,
non-economic, or otherwise truly irreparable harm from the concession contracts. The
injury that ATA claims is, according to its own declarants, purely economic in
character. That injury includes (1) the cost of administrative efforts to prepare
concession applications, ATA Br. 28; (2) the cost of finding private parking for trucks,
Owen Decl. ¶ 29; and (3) the cost of paying human resources consultants to prepare to
hire employee drivers. Id. A major claimed injury consists of the money LMCs will
have to pay to assemble paperwork. See Patterson Decl. ¶ 26.
While it is thus true that some LMCs will incur modest costs immediately as a
result of the concession contracts, the Ports have presented contrary testimony of
LMCs that say applying for concessions and complying with their terms will not be
onerous and will not significantly affect the LMCs’ operations. Declaration of
Michael K. Fox ¶¶ 10, 12-13 (“Fox Decl.”); Declaration of Ramses A. Villavicencio
¶¶ 10-14 (“Villavicencio Decl.”). Additionally, as these same declarations indicate,
some LMCs think the CTP’s concession contract programs offer a significant
opportunity to increase the size and quality of their truck fleets and to grow their
businesses. See Fox Decl. ¶ 12; Villavicencio Decl. ¶ 11. All in all, therefore, the
most that can be said about the concession programs’ likely effect on LMCs is that
there will be both costs and benefits. And even if the net effect were negative — and
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ATA has made no such showing — there has been no demonstration that any net costs
could not be recovered. Economic losses are not ordinarily considered irreparable
injury for purposes of a preliminary injunction calculus. See Rent-A-Center, Inc. v.
(“economic injury alone does not support a finding of irreparable harm”).
Finally, even if the concession programs’ net effect on the LMCs were both
injurious and irreparable, that injury nonetheless would easily be outweighed by the
injuries the Ports and nearby residents would suffer if an injunction were to issue.
Potential injuries that are financial in nature — like those identified by ATA — have
been deemed by the Ninth Circuit to be relatively insubstantial when compared with
the types of harm that will be suffered by the Ports and by residents of nearby
communities if an injunction is issued. Golden Gate Restaurant Ass’n v. San
Francisco, 512 F.3d 1112 (9th Cir. 2008); Lands Council v. McNair, 494 F.3d 771
(9th Cir. 2007). We will detail those injuries in the next section, but the Ports’ legal
point here is embodied in the Ninth Circuit’s recent decision in Golden Gate.
Golden Gate involved a preemption challenge (based on ERISA) to a city
ordinance requiring certain employers to provide health care funding for their
employees. The court was asked by the city to stay an injunction (under standards
essentially identical to those that govern here) that would have prevented the
ordinance from taking effect. The plaintiffs were in the same position ATA is in —
i.e., they claimed that an allegedly preempted state law would cause them financial
injury. But the Ninth Circuit ruled against them, and both the court’s holding and its
language show the weakness of ATA’s position.
The court stayed the injunction, and thus declined to postpone the effective date
of the ordinance, ruling that the “balance of hardships tips sharply in favor of the City
and the [employee-representative] Intervenors.” Golden Gate, 512 F.3d at 1127.
Without the employer-required funding, the court observed, many employees would
lack health coverage, would forego needed medical treatment, and would face “human
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suffering, illness and possibly death.” Id. at 1124. By contrast, the employer
plaintiffs — notwithstanding their allegation that the ordinance was preempted under
ERISA and the Supremacy Clause — had demonstrated only injury (in the form of
mandated employee health care expenditures) that was “entirely economic.” Far from
endorsing ATA’s contention that the “constitutional injury” in question was ipso facto
irreparable, the court ruled that an injunction against the ordinance was
inappropriate.16 Faced with “a conflict between financial concerns and preventable
human suffering,” the court had “little difficulty” in finding that the balance of
hardships favored the city. Id. at 1126.
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B. The Harm that an Injunction Would Cause to the Ports and to the
Public Interest Weighs Strongly Against Issuance of an Injunction
1. The Ports Will Suffer Irreparable Injury if the CTP’s
Concession Contract Programs are Delayed
The Ports are an important link in the international chain of commerce that
drives the nation’s economy. Holmes Decl. ¶ 35. As such, they are an important part
of the country’s critical infrastructure and are thought to be prime targets for foreign
terrorist groups. Id. The Ports have been actively working to improve Port security,
but the relatively unfettered access that drayage trucks currently have to the Ports’
16 The ATA cites a 1989 case from this Court for the proposition that any
constitutional violation gives rise to a presumption of irreparable harm. Citicorp Services, Inc. v. Gillespie, 712 F.Supp. 749, 753-54 (C.D. Cal. 1989). Whether that was ever a correct statement of the law, virtually all of the Circuits have limited the doctrine today to First Amendment liberties. See Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 299-304 (D.C. Cir. 2006), which contains an extensive analysis of the current state of the law on this issue. Even with a presumption of irreparable injury in a First Amendment case, moreover, the moving party must show “a substantial likelihood of success on the merits, that the injunction would not substantially injure other interested parties, and that the public interest would be furthered by the injunction” in order to succeed. Id. at 304.
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terminals presents an as-yet unaddressed security risk. Id. ¶ 31. The CTP, and
specifically its concession contracts, will constitute a substantial step toward
minimizing this risk. Id. ¶¶ 38,41. Any delay in implementation of the concession
contract programs and their enhanced security measures therefore will irreparably
harm the Ports. Id. ¶¶ 44-45.
After September 11, 2001, POLA hired two consultants to independently assess
Port security. Id. ¶ 32. Both consultants identified the drayage trucks being driven in
and out of the Port by unknown and unidentified drivers as a key security weakness.
Id. Today a drayage truck driver can gain access to the Ports’ terminals with no more
than a cargo manifest and a temporary license. Id. ¶ 41. The Ports are thus exposed to
the danger that any local or long-haul trucker may be willing to bring unauthorized,
dangerous, or restricted materials, including even weapons of mass destruction, into
the terminals. Id.
A successful attack on the Ports with a weapon of mass destruction or even
conventional explosives would have severe consequences for the economy of southern
California and a significant impact on the nation’s economy as well. Id. With
approximately 41 percent of the United States’ foreign trade passing through the
Ports, id., a disruption of that commerce could lead to the loss of hundreds of
thousands of jobs, destruction of cargo worth billions of dollars, and wreckage of
facilities that could take years to replace. Id.
Once the concession contract programs are implemented, however, the Ports
will be contractually able (1) to collect identifying information for the driver, the
truck, the cargo, and the responsible company for each truck entering their terminals;
(2) to correlate each piece of information with other information for a given truck
visit; and (3) to make one entity — the LMC, which will be coordinating its truck
movements — wholly responsible for providing the information and verifying its
accuracy. Id. ¶ 38. The concession contracts will make it easier for the Ports to
protect the terminals and locate drivers in the event of emergencies, and it will provide
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valuable intelligence and forensic information that can be analyzed to better
understand an event after the fact. Id. ¶ 39.
The security measures that are integrated into the concession contracts cannot
be implemented independently of the concession program. Id. ¶ 44. The potential
harm caused by a delay in implementation of the concession contract programs thus
cannot be measured in dollars and would truly be irreparable.
2. The Public Interest Will Be Served by Implementation of the
CTP and Its Concession Contract Programs
Under Ninth Circuit precedent, the court must consider “where the public
interest lies” as a separate factor, independent of the irreparable injury or balance of
hardship inquiries, because the outcome of this case affects the public at large. NRDC
v. Winter, 502 F.3d 859, 863 (9th Cir. 2007). There can be no doubt that the public
interest lies in cleaning up the air in the communities surrounding the Ports and the
South Coast Basin as a whole and in improving Port security. With respect to
security, we refer the court to the discussion above, which relates not just to the
interests of the Ports but to the public interest as well.
As to air pollution and health issues, according to 2005 statistics, the activities
at the Port released 2628 tons of diesel particulates into the air — which means Port-
related operations produced roughly 7 percent of the total particulate matter in the
region. Chang Decl. ¶ 8. The impact of this DPM pollution is not trivial. For every
17 tons of diesel particulates released into the air, one person dies prematurely and
many more suffer significant illnesses. Id. ¶ 11. Even more importantly, the
SCAQMD has determined that 84 percent of the toxic air risk in the South Coast Air
Basin is from DPM and that the highest risks from air toxics are in the communities
surrounding the Ports. Id. ¶ 9. Port operations also produce more smog-forming and
particulate-forming nitrogen oxides than the six million cars in the region. Id. ¶ 8.
The EPA recognizes diesel particulates as likely human carcinogens, Chang
Decl. ¶ 9. The California Air Resources Board estimates that diesel emissions from
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drayage trucks will result in up to 580 premature deaths, 350 hospital admissions, and
100,000 lost work days during the period 2010-2014, most of which are attributed to
drayage truck emissions associated with the Ports. Id. Residents living in the area
around the Ports suffer an average cancer risk from air pollution that is more than 60
percent higher than the average in the South Coast Air Basin, and population-
weighted toxic exposure in the Ports area has increased by 15 percent since 1998. Id.
¶ 10.
These environmental and health impacts caused by operations at the Ports are
avoidable, but only if the CTP’s concession contracts are implemented by the Ports.
The requirement under the CTP’s concession contracts that all drayage trucks entering
the Ports be registered in the DTR, and that all trucks must be equipped with a RFID,
is absolutely critical to enforcement of the truck ban. Kanter Decl. ¶ 16. It is the DTR
and the RFIDs that give the MTOs the ability to prevent drayage trucks that do not
comply with the truck ban from entering the Ports. Id. ¶ 18. Without the DTR and the
RFIDs, the Ports’ ability to enforce the truck ban is extremely limited. Id. Indeed,
without effective enforcement of the truck ban all of the anticipated environmental
and health benefits of the CTP would evaporate. As a result, implementation of the
CTP’s concession contract programs are critical to the public interest.
Moreover, the environmental and health benefits of the CTP are significant.
The SCAQMD estimates that, for the period 2008 to 2025, the CTP will prevent 840
premature deaths and nearly 150,000 lost work days, as well as numerous other
negative health effects. Chang Decl. ¶ 17. SCAQMD has calculated the economic
value of these benefits at approximately $5.9 billion. Id.
Thus, the sooner the CTP and the concession contract programs are
implemented, the better for the communities near the Ports and for the people living in
the South Coast Air Basin. As the Ninth Circuit has noted, there should be “little
difficulty” balancing the harms when the conflict is “between financial concerns” on
the one hand and “preventable human suffering” on the other. Golden Gate, 512 F.3d
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF ELAINE CHANG, DR.PH IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
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I, Elaine Chang, DrPH, pursuant to 28 U.S.C. § 1746, do state and declare as
follows:
1. I am the Deputy Executive Officer for Planning, Rule Development and
Area Sources at the South Coast Air Quality Management District (“SCAQMD”). I
am submitting this declaration in support of the Defendants the City of Los Angeles,
the Los Angeles Harbor Department, the Los Angeles Board of Harbor
Commissioners, the City of Long Beach, the Long Beach Harbor Department and the
Long Beach Board of Harbor Commissioners’ (collectively the “Ports”) Opposition to
Plaintiff American Trucking Association’s (“ATA”) Motion for Preliminary
Injunction. I offer this declaration to describe (1) the environmental regulatory
framework in which the Ports operate, (2) the contribution from activities at the Port
to the poor air quality in the southern California region and the attendant health
impacts, and (3) the regulatory response the Ports will face in the event that the Clean
Truck Program (“CTP”) is not implemented. I make this Declaration based on my
personal knowledge and, if called upon, could and would testify to the facts stated
herein.
A. Regulatory Framework
2. SCAQMD is a political subdivision of the State of California and is an
air quality management district organized and existing pursuant to Sections 40400 et
seq. of the California Health and Safety Code. SCAQMD includes the South Coast
Air Basin, which includes non-desert portions of Los Angeles, Riverside and San
Bernardino Counties, and all of Orange County. Cal. Health & Safety Code § 40410;
Cal. Code Regs. Tit. 17, § 60104. The Ports are in the South Coast Air Basin and thus
fall under the jurisdiction of SCAQMD.
3. The South Coast Air Basin (“Basin”) has been designated by the United
States Environmental Protection Agency (“U.S. EPA”) as non-attainment for the
National Ambient Air Quality Standards (“NAAQS”) for the 8-hour ozone standard
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and for the annual fine particulate matter (“PM2.5”) standard. The Basin has the worst
air quality in the nation for both of these pollutants.
4. SCAQMD is the agency primarily responsible under state law for
attaining the national ambient air quality standards (Cal. Health & Safety Code §
40001) and is the “sole and exclusive local agency within the South Coast Air Basin
with responsibility for comprehensive air pollution control, and it shall have the duty
to represent the citizens of the basin in influencing the decisions of other public and
private agencies whose actions might have an adverse impact on air quality in the
basin.” Cal. Health & Safety Code § 40412.
5. SCAQMD’s responsibility under state law includes developing and
implementing the state implementation plan (“SIP”) for the areas under its jurisdiction
(Cal. Health & Safety Code § 40460) as required under the Clean Air Act § 110. 42
U.S.C. §7410.
6. SCAQMD is vitally interested in the CTP adopted by the Ports because
SCAQMD has calculated that it cannot achieve the NAAQS for ozone and particulate
matter by the dates required by federal law without significant reductions of diesel
particulate matter (“DPM”) and the particulate matter precursor pollutants nitrogen-
oxides (“NOx”) and sulfur-oxides (“SOx”) from Port operations. NOx is also a
precursor to ozone. Because diesel emissions from heavy duty trucks, like those that
provide drayage services to the Ports, are major emitters of NOx and DPM, dramatic
reductions in diesel truck emissions are critical to the SCAQMD’s ability to show
attainment with the federal standards.
B. Environmental Impacts of Operations at the Ports
7. Emissions inventory data for 2002 indicate that activities at the Ports are
responsible for 24 percent of the total diesel particulate matter, 11 percent of the
nitrogen-oxides pollutants, and 45 percent of the sulfur-oxides pollutants emitted in
the South Coast Air Basin. Moreover, projections prepared by the SCAQMD indicate
that the contribution to the region’s air quality problems from activities at the Port will
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grow substantially over the next decade. By 2020, the activities at the ports are
projected to contribute almost a third of diesel particulate matter, a quarter of the NOx
and over three-fifths of the SOx emissions for the region.
8. Specifically, in the most recent year for which data is available, (2005)
the activities at the Ports released 2,628 tons of diesel particulates into the air. At
these levels, these activities produce roughly 7% of the total particulate matter in the
region. In addition, the Ports account for more smog-forming and particulate-forming
nitrogen oxides than the 6 million cars in the region.
9. Diesel particulates are recognized as likely human carcinogens by the
U.S. EPA and SCAQMD has determined that 84% of the air toxic risk in the South
Cost Air Basin is from DPM. (Multiple Air Toxics Exposure Study “MATES” III,
July 2008.) More critically, SCAQMD’s modeling shows the highest risks from air
toxics are in the areas surrounding the Ports.
10. The area around the Ports suffers an average cancer risk from air
pollution that is more than 60% higher than the average in the South Coast Air Basin
(1415 in a million for the Port area; 853 in a million for the Basin). Moreover,
population weighted exposure to cancer risks from toxic air pollution has been
reduced in the air basin (excluding the Ports) by 11% since the SCAQMD’s previous
air toxics study in 1998. In contrast, population weighted toxic exposure in the Ports
area has increased by 15%. This increase is largely due to growth in Port activities.
The Ports anticipate significant growth in the future. Unless the CTP and other
emission-reduction programs are implemented, future growth will only exacerbate the
already unacceptable health risks in Port areas.
11. The impact on the health and lives of those living in the region is not
trivial. For every 17 tons of diesel particulates released into the air, one person dies
prematurely and many more suffer significant illnesses. California Air Resources
Board Technical Support Document: Proposed Regulation to Control Emissions from
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In-Use On-Road Diesel-Fueled Heavy Duty Drayage Trucks (pp 90-91) (October
2007). There is no recognized safe level for diesel particulates.
12. Indeed, California’s Air Resources Board (“CARB”) estimates that
excess diesel emissions from drayage trucks in port service will result in as many as
580 premature deaths, 350 hospital admissions, and 100,000 lost work days in the
period 2010-2014. The vast majority of these pollution impacts are attributable to
drayage truck emissions in the SCAQMD and are associated with the drayage trucks
serving the Ports of Los Angeles and Long Beach. CARB Technical Support
Document: Proposed Regulation to Control Emissions from In-Use On-Road Diesel-
Fueled Heavy Duty Drayage Trucks (pp 90-91) (October 2007).
C. Importance of CTP Emission Reductions
13. Is imperative that the DPM, NOx and SOx emitted by Port sources are
immediately and dramatically reduced if the South Coast Air Basin is to meet the
NAAQS. If the South Coast Air Basin fails to comply with ambient air quality
standards by federal Clean Air Act deadlines, and EPA determines the failure is due to
non-implementation of the SIP, the Port and other regional entities may be unable to
obtain federal funding for future growth. If the South Coast Air Basin remains out of
compliance beyond these deadlines, billions of dollars of federal funding for regional
infrastructure improvements could be lost under federal conformity policies.
14. It is equally imperative that the CTP’s anticipated reduction in DPM,
NOx and SOx pollutants be a sustainable reduction in order to improve the air quality
in the region over time. Thus, both the SCAQMD and the CARB have identified
pollution sources associated with “goods movement” as a subject for specific
emissions control regulation and if an injunction of elements of the CTP jeopardizes
the anticipated reduction, the SCAQMD will take steps to require the Ports to reduce
emissions commensurate with the original CAAP emissions levels through the
SCAQMD’s Port Backstop Rule.
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15. California’s Health & Safety Code requires SCAQMD to adopt an “Air
Quality Management Plan” to achieve and maintain all state and federal air quality
standards. Cal. Health & Safety Code §40460. The SCAQMD’s 2007 Air Quality
Management Plan includes as a “control strategy” measures for the retrofit or
replacement of existing “drayage trucks” that provide services to the San Pedro Ports.
This measure is designated as the “Port Truck Modernization” measure. CARB has
included this strategy into its proposed SIP that has been submitted to the U.S. EPA
for approval under Section 110 of the Clean Air Act. Upon EPA approval, this SIP
will have “the force and effect of federal law,” and is enforceable by the United States
and by private citizens. Safe Air for Everyone v. EPA, 488 F.3d 1088 (9th Cir. 2007).
While the SIP measure refers to a CARB rule, it is important to note that the CTP
obtains emission reductions from trucks at an earlier time than the CARB rule, thus
providing greater health benefits. Moreover, the CTP provides important reductions
not only of directly-emitted PM but also of NOx, which forms PM & ozone in the
atmosphere.
16. The SCAQMD’s 2007 “Control Strategy” also includes a further
“backstop measure” directed at “indirect sources of emissions from ports and port
related facilities.” MOB-03 AMQP Control Strategy, Ch 4 at 4-24. This measure is
intended to “address emissions from all new and existing stationary and mobile
sources at ports and port-related facilities,” in order to “ensure the adequacy of and
effective implementation of port measures and strategies proposed or developed by
ports and or CARB.” At its staff’s recommendation, the CARB ultimately excluded
this element from the State’s SIP submittal to EPA, so any “backstop measures” that
the SCAQMD might ultimately decide to adopt would not be enforceable as a matter
of federal law under the Clean Air Act. Nevertheless, the omission of these “backstop
measures” does not affect SCAQMD’s authority under the Health & Safety Code to
adopt additional “backstop controls” to implement this measure under California law.
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF MICHAEL K. FOX IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
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Rockard J. Delgadillo, (SBN 125465)City Attorney
Thomas A. Russell, (SBN 108607)General Counsel
Joy M. Crose, (SBN 116011)Asst. General Counsel
Simon M. Kann, (SBN 197907)Deputy City Attorney
LA CITY ATTORNEY’S OFFICE425 South Palos Verdes StreetSan Pedro, California 90731Phone: (310) 732-3750Email: [email protected]
Steven S. Rosenthal (SBN 109739)Alan K. Palmer (pro hac vice)Douglas A. Tucker (pro hac vice)Tiffany R. Moseley (SBN 204800)KAYE SCHOLER LLP901 Fifteenth Street, NWWashington, DC 20005Phone: (202) 682-3500Email: [email protected]
Bryant Delgadillo (SBN 208361)KAYE SCHOLER LLP1999 Avenue of the Stars, Suite 1700Los Angeles, California 90067Phone: (310) 788-1000Email: [email protected] for the City of Los Angeles Defendants
IN THE UNITED STATES DISTRICT COURTFOR THE CENTRAL DISTRICT OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS,
Plaintiff,
v.
CITY OF LOS ANGELES, et al,
Defendants.
Case No. CV 08-04920 CAS (CTx)
DECLARATION OF JOHN M. HOLMES IN SUPPORT OFDEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
C. Jonathan Benner (pro hac vice)Mark E. Nagle (pro hac vice)TROUTMAN SANDERS, LLP401 Ninth Street, NWWashington, D.C. 20004Phone: (202) 274-2950Email: [email protected]@troutmansanders.com
Paul L Gale (SBN 65873)ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected]
Counsel for City of Long Beach Defendants
2 DECL. OF JOHN M. HOLMES
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I, John M. Holmes, pursuant to 28 U.S.C. § 1746, declare as follows:
1. I am Deputy Executive Director for Operations for the Port of Los
Angeles (“Port” or “POLA”). I submit this declaration in opposition to the effort by
the American Trucking Associations to enjoin POLA and the Port of Long Beach
(“POLB”) (collectively “Ports”) from implementing the concession features of the
Clean Trucks Program (“Program”). I make this declaration based upon my personal
knowledge and, if called upon, could and would testify to the facts stated herein.
2. I have been Deputy Executive Director of Operations at the Port since
December 2006. I oversee the activities of POLA’s Operations Group, which includes
the Division of Homeland Security, the Port Police, the Pilot Service, the Office of the
Wharfinger, and the Construction and Maintenance Division. I have overall
responsibility for all safety-related matters, POLA’s security policies and practices,
ship berthing, pilot services, cargo data collection, reporting and analysis, contract and
Tariff compliance, billing, facility maintenance, and operational coordination between
the Port and its customers.
3. My familiarity with the safety and security issues at POLA and POLB
dates back to my tenure as the United States Coast Guard’s Captain of the Port
between 2001 and 2003. As Captain of the Port, I was involved in all aspects of the
federal government’s activities related to maritime safety and security, and I was
directly responsible for performance of the Coast Guard’s functions at both Ports. My
Coast Guard career also included service as the Deputy Chief of the Office of
Legislative Affairs in Washington, D.C.; the United States Government’s Delegate to
the International Maritime Organization, where I served as Chairman of its Survey
and Certification and Port State Control working groups; and Chief of Compliance for
the Coast Guard’s Vessel Inspection Program. In all of these jobs, I was called upon
to analyze maritime safety and security matters. After over 27 years in the Coast
Guard, I retired in 2003.
3 DECL. OF JOHN M. HOLMES
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4. I then became vice-president and director of business development for
Science Applications International Corporation (“SAIC”), where I advised on
homeland security matters and developed security programs for SAIC’s governmental
and corporate clients.
5. I left SAIC in 2005 to form the Marsec Group, a consulting firm focused
on supply chain security, and I left the Marsec Group when I accepted the position
that I now have with POLA. Currently, in addition to my duties at POLA, I teach the
maritime portion of the Executive Course on Terrorism at the CREATE Center of the
University of Southern California, and since 2006, the Department of Defense,
Defense Threat Reduction Agency’s course “Combating Weapons of Mass
Destruction in the Maritime Environment.” I was one of the developers of the latter
course, which is offered by the United States Government to officials of other
governments around the world, most recently in June 2008 in Bulgaria.
6. I am offering this declaration primarily to describe (1) the various
features of the Program (I attach the documents that set forth the Program in detail),
(2) the aspects of the drayage concessions that will enhance the safety and security of
the Ports, and (3) the impact that a delay in implementation of the concessions would
have on POLA’s safety and security.
A. The Clean Trucks Program and Its Concession Contract Component
7. I have been involved with the Program since I joined POLA and became
more heavily involved with aspects of the concession contracts in mid-2007. Given
my responsibilities at POLA, my work on the concession contracts has focused mainly
on operational considerations and program implementation.
8. POLA’s most visible and widely publicized goal for the Program has
always been to reduce air pollution coming from the drayage trucks at the Ports. The
Ports face a unique environmental problem because of the large number of trucks
operating almost around-the-clock in a relatively small geographic area. This problem
4 DECL. OF JOHN M. HOLMES
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is aggravated by the geography of the region, and is projected to grow steadily worse
as container traffic is projected to more than double by 2020. The Program is
designed to help solve this problem.
9. The Program is also designed to address other problems that result from
the truck activities at the Ports — safety and security problems — that my group is
tasked with addressing.
10. The Program itself is set forth in a series of formal actions taken by
POLA’s Board of Harbor Commissioners (“BHC”) at public meetings on November
1, 2007, December 20, 2007, March 20, 2008, and May 15, 2008, pursuant to its
authority under the City Charter. POLA has also, pursuant to authority granted by the
BHC, provided instructions and additional details of the Program to the public to
facilitate its implementation.
11. In preparation for such BHC actions, POLA staff generally prepares
memorandum recommendations for review by the board members. Members of
POLA’s executive staff, including Executive Director Geraldine Knatz; Deputy
Executive Director of Finance & Administration Molly Campbell; Director of
Environmental Management Ralph Appy; and me, review these various
recommendations. I have attached to my declaration copies of the four memorandum
recommendations, together with the corresponding proposed orders and resolutions, as
Exhibits 1, 2, 3 and 4. (I understand that a copy of POLA’s Concession Agreement,
and the Order and Resolution for the meeting held on March 20, 2008, have already
been submitted to the Court by ATA, so I have not submitted these items.)
12. The essential details of the Program are set forth in these attached
exhibits (as well as in the exhibits that the ATA already submitted).
13. The first part of the Program, approved in November 2007, took the form
of an amendment to Tariff No. 4 (“Tariff”). Tariff No. 4 sets forth the basic terms
upon which POLA does business as a port. The amendment set limits on the model
5 DECL. OF JOHN M. HOLMES
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years of the trucks that are allowed on POLA property (the “Truck Ban”). Exh. 1.
14. The Truck Ban requires POLA’s Marine Terminal Operators (“MTOs”),
the entities who directly operate terminals under leases from POLA and who directly
handle the cargo that passes through the Port, to comply with the Truck Ban. The
BHC also established that MTOs must collect a $35.00 fee per loaded, twenty-foot
container and $70.00 for each forty-foot or larger container hauled through a terminal
gate by an older truck (“Clean Truck Fee”) as an additional piece of this first part of
the Program, although the action establishing the Clean Truck Fee was taken at the
BHC’s December 20, 2007 meeting. Exh. 2.
15. The second part of the Program, approved by the BHC in March 2008,
represents POLA’s effort to encourage Licensed Motor Carriers (“LMCs”) to
cooperate with the MTOs. It set forth POLA’s intention to require concessions in
principle, and authorized a series of programs to encourage POLA’s LMCs to replace
and/or retrofit older, dirtier trucks. This second action by the BHC established (1) a
truck funding program (grants to replace old with new or retrofit older trucks with
emissions control devices); (2) a procurement assistance program (providing standard
purchasing terms from Original Equipment Manufacturers, which should allow
smaller LMCs to obtain better terms); (3) a scrap truck buyback program (which will
pay owners of eligible, pre-1989, drayage trucks $5,000 per scrapped truck); (4) a
system of exemptions from the Clean Truck Fee that is intended to provide incentives
for quicker replacement of older trucks and adoption of the cleanest engine
technology; and (5) a business outreach program intended to assist LMCs with the
transition to green drayage. Exh. 3.
16. Both the Truck Ban and the Clean Truck Fee, which are directed at
MTOs, and the various pieces in the second part of the Program, which are directed at
LMCs, were developed by the Ports’ staff based on the principle that air quality
improvements would flow from reductions in total emissions and that these reductions
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would be the result of the replacement of older, dirty trucks with newer, clean trucks.
This truck fleet-replacement principle was in place when I became involved with the
Program (although I was involved in working out many of the details).
17. The challenge that I was given was to help design a system that allowed
the Ports to implement, enforce, and sustain over the long term the replacement of the
truck fleet. This mission lead to our recommendation that the BHC adopt the
concession contract model — the third part of the Program. The concession contract
is a “form” agreement intended to serve as a master contract specifying terms of
performance that LMCs must meet in order to provide drayage services at the Ports. It
was approved by the BHC on May 15, 2008. Exh. 4.
B. POLA Needs Concession Contracts To Ensure A Smooth Transition
To Clean, Safe, Secure, and Sustainable Drayage
18. The first two parts of the Program should lead to the rapid replacement of
old drayage trucks with new, clean trucks. New and retro-fitted trucks are both
cleaner and safer than older trucks. However, POLA needed to (1) ensure a smooth
transition from conditions that currently prevail among drayage LMCs to avoid
disrupting port operations, (2) sustain the conditions encouraging the use of cleaner,
safer trucks once the new fleet was in service, and (3) encourage efficiencies that will
reduce the overall number of truck moves required (thereby further reducing
emissions).
19. These goals presented a serious challenge because the Ports would be
asking well over 17,000 owner-operators (“IOOs”)/LMCs with whom POLA has had
no previous direct business relationship to participate in our Program.
20. By the time I became involved, the Ports had sponsored multiple studies
and surveys that had been completed prior to the adoption of the Clean Air Action
Plan in 2006, and further analytical work was being performed that has now been
completed.
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21. Through these efforts, the Ports tracked the patterns of truck visits to the
terminals and developed a clear picture of the economics of drayage. Based on this
information, both Ports concluded that simply mandating the use of newer trucks
would be ineffective and, potentially, counterproductive.
22. Were the Ports to simply ban certain trucks comprising a significant
portion of the truck fleet serving the Ports, they risked causing major disruptions in
service. Because the individuals and companies that owned the trucks in the existing
fleet operated on extremely low margins, even taking into account Proposition 1B
money they might receive, it appeared that many of the LMCs and IOOs who owned
the older trucks that would need to be replaced would not have the financial capacity
to purchase new, clean trucks.
23. The truck grant, financing and fee elements of the Program were
therefore developed partly in recognition of this reality — because the Ports could not
risk causing a severe shortage of equipment by imposing the Truck Ban by itself.
24. At the same time, the Ports expected to face a shortage of truck drivers.
The shortage was anticipated due to the requirements of the Transportation Worker
Identification Credential Program (“TWIC”). TWIC will require those seeking
regular access to most Port facilities to obtain a credential issued according to
federally-specified criteria. The Ports’ analyses indicated that TWIC would lead to a
significant reduction in the pool of drivers eligible to drive trucks at the Ports because
many drivers appeared to be unable to meet the TWIC criteria.
25. So the challenge that the Ports faced had multiple dimensions: the need
to transition without disrupting port operations, the need to sustain the cleaner, safer
truck fleet once in place, and the need to address likely shortages of drivers as TWIC
was implemented. The Ports’ solution was to adopt the concession contracts to apply
specifically to LMCs performing drayage (each Port took slightly different approaches
- hereafter, I focus on POLA’s concession agreement).
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26. POLA elected to address these issues in a number of ways, to a large
extent based on the analysis that the Boston Consulting Group (“BCG”) performed at
POLA’s request. BCG’s analysis indicated that the enhanced control over trucks and
drivers afforded by the use of employees in place of IOOs would allow the same
drayage services to be performed more securely and with fewer trucks. This was
important because the mandate to use newer and necessarily more expensive trucks to
reduce emissions meant that additional labor costs associated with employee drivers
could be offset by reduced capital costs resulting from more efficient use of trucks.
Essentially, one truck could be used more intensively and generate more revenue if the
truck were driven by two employee drivers working in shifts in comparison to the
same truck driven by one IOO.
27. The analysis also suggested that in this scenario, the increased revenues
would lead to increases in driver compensation, and that this increase in driver
compensation would help to attract additional drivers to drayage, helping to offset the
loss of drivers due to TWIC.
28. POLA’s concession contract provides for sustainability of the truck fleet
by incorporating provisions requiring standard maintenance, safety training, minimum
financial responsibility of the LMC-owners, and enforcement/inspection rights. These
provisions were designed to be consistent with prevailing practices among prudent
LMCs, and with state and federal laws, so that they would not increase costs or alter
existing practices of LMCs who were operating prudently and in compliance with the
applicable laws. Simply stated, POLA wants to ensure that LMCs are obeying
existing laws and following reasonable, prudent practices while they are operating
trucks on POLA property.
29. POLA has no intention of hindering LMCs from going about the drayage
business. To the contrary, to the extent POLA raises the cost of moving cargo without
offsetting benefits in efficiency or otherwise, POLA harms its own interests. So when
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LMCs raised concerns related to the difficulty LMCs could encounter obtaining off-
street parking for trucks (the original concession contract would have required each
LMC to plan for an off-street parking space for each truck), POLA suspended the
enforcement of the requirement until at least March 31, 2009. Therefore, there is no
restriction in the concession contracts against legal, on-street, parking through next
March.
C. The Concession Contracts Allow POLA To Address Security Issues
30. POLA understood that the decision to implement minimum standards for
drayage companies would increase the pressure on drayage companies who were not
operating in accordance with federal and state safety standards to come into
compliance. And POLA also understood that the formalities of LMCs’ dealings with
the drivers that they send through terminal gates at POLA would change simply
because the number of IOOs in drayage today is greater than the number of drayage
drivers who are employees. However, as POLA decided to move ahead with these
steps, it became clear that there was also an opportunity to address another concern —
the threat to security — that POLA had regarding drayage.
31. In particular, the relatively unfettered access that drayage trucks have to
its terminals presents a serious threat to POLA’s security.
32. After the attacks of September 11, POLA contracted for assessments of
its security situation by consultants from Science Applications International Corp. and
Sandia National Laboratories. POLA asked SAIC and Sandia to independently assess
Port security, submit findings, and make recommendations concerning how best to
enhance security. In those studies, the heavy trucks being driven in and out of the Port
by unknown and unidentified drivers were identified as a key security vulnerability.
33. Any security vulnerability is serious because a successful attack on one
or both Ports has the potential to do substantial harm to the commerce of the United
States. Approximately 41 percent of the Nation’s foreign trade passes through the
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Ports, and a substantial disruption of that commerce could cause the loss of hundreds
of thousands of jobs, destruction of cargo worth billions of dollars, and the loss of
facilities that could take years to replace.
34. Moreover, the shipping delay that could result would lead to ripple
effects on the nation’s economy that could result in an economic impact measured in
the trillions of dollars.
35. As a key component of the Nation’s transportation system, POLA is high
on the list of the nation’s critical infrastructure and can be considered as a target for
foreign terrorist groups, including those deemed to present the greatest threat to the
United States.
36. An attack on the Port using either conventional explosives or a Weapon
of Mass Destruction (“WMD”) could have severe consequences for the economy of
Los Angeles and a significant impact on the well-being of the nation. In addition, a
busy seaport is a route by which to smuggle nuclear materials, a nuclear device, or
another type of extremely dangerous weapon into the United States.
37. Although such large-scale attacks are improbable, smaller-scale security
incidents, typically involving smuggling of people and controlled substances, have
taken place, can be expected to continue to occur, and present security problems
which are similar to, and as difficult to solve, as the security problems we confront
when attempting to prevent a WMD-style attack.
38. As I explain below, the drayage concession contracts provide the Port
with the tools to better secure itself from threats involving the use of heavy-duty
trucks as a means to transport illicit or dangerous materials into or out of the Port.
The concession contracts enhance Port security by contractually allowing POLA to:
(1) collect identifying information for the driver, the truck, the cargo, and the
responsible company for each truck entering POLA’s terminals; (2) correlate each
piece of information with the other pieces for a given truck visit; and (3) make one
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entity, the LMC, which is the entity coordinating drayage truck movements, wholly
responsible for providing the information and verifying its accuracy. At present,
POLA has no system in place to collect such information, no way to correlate the
information, and no practical mechanism to hold anyone accountable for the accuracy
of the information or a breach of Port rules.
39. The concession contract’s establishment of a system that connects the
identity of the driver to the cargo will make it easier for POLA to locate drivers in the
event of emergencies, and it will provide valuable intelligence/forensic information
that can be analyzed to prevent events and conduct an investigation after an event
occurs.
40. I believe that the latter ability — the generation of forensic information
that will be accessible to allow us to better understand a security breach or terror
attack if one does take place — is especially critical. POLA has no such system
today, and the concession contracts will help to fill this gap in our capabilities.
41. The bottom line is that today, a truck driver can gain access to a terminal
at POLA with no more than a cargo manifest and a temporary license. This leaves
POLA exposed to any local or long-haul trucker willing to attempt bringing
unauthorized, dangerous, or restricted materials into the terminals, including a WMD
for a terrorist attack. With no capability to reliably and quickly connect a driver to a
specific truck, LMC, or manifest, POLA could do little to stop such a trucker even
were we to have the trucker’s name. The Program’s concession contracts are a key
step along the way of giving POLA the capability to find the trucker with such limited
information.
42. POLA also seeks to encourage the LMCs using trucks at the Port to take
responsibility for security. Indeed, it would be difficult for POLA to enforce any
truck security program without having the ability to assert substantial control over the
entities involved in drayage. The concession contracts give POLA a basis to assert
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such control.
43. The security enhancements from the concession contracts are not the only
way that POLA is enhancing security. It is also doubling the number of officers who
are assigned to patrol the Port, and we have begun to install security cameras at the
terminals to feed live video to police monitoring stations. However, these other steps
will not yield the same level of security that POLA will be able to achieve with the
concession contracts in place. Access control and accountability are the cornerstones
of any effective physical security program, so direct relationships with LMCs, the
entities directly coordinating drivers, trucks, and cargo, are essential if POLA is to
assure itself of the safe and secure operation of drayage. There is no other way that I
am aware of for POLA to obtain the same level of control, collect reliable
information, correlate the various relevant pieces of information, and apply the
information in a timely way to address the drayage security issues that POLA faces.
D. A Delay In Implementing Concessions Will Increase The Risk Of A
Security Breach Or Other Incident
44. Any delay of the concession contract component of the Program beyond
October 1, 2008, will result in further delay in the Port’s ability to implement security
measures protecting the Port and will make it impossible to rapidly and effectively
mitigate a known security vulnerability. First, it would be extremely difficult to
implement the security measures that are integrated into the concession contract
independently of a concession program in some form. Second, an alternative method
of implementing similarly effective measures that would address drayage security
does not exist now and would require a substantial amount of time to develop. I
cannot predict how much time would be required to develop other strategies, how
effective such alternative measures would be, or whether such alternative measures
could be implemented as a practical matter.
45. So while the Clean Trucks Program will have other benefits as well,
EXHIBITS
1. Los Angeles Board of Harbor Commissioners, Order 6935
2. Memorandum from Executive Director, Port of Los Angeles, “Permanent Order
Amending Port of Los Angeles Tariff No. 4 by Establishing a Clean Truck Fee
and a Clean Truck Fund” (December 20, 2007)
3. Los Angeles Board of Harbor Commissioners, Resolution 6522
4. Los Angeles Board of Harbor Commissioners, Agenda Item 3
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF ROBERT G. KANTER IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF DR. GERALDINE KNATZ IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF KATHRYN MCDERMOTT IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
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Rockard J. Delgadillo, (SBN 125465) Robert E. Shannon, (SBN 43691)
City Attorney Dominic Holzhaus, (SBN 130625) Principal Deputy CITY OF LONG BEACH 333 West Ocean Boulevard Eleventh Floor Long Beach, California 90802 Phone: (562) 570-2200 Email: [email protected]
[email protected] C. Jonathan Benner (pro hac vice) Mark E. Nagle (pro hac vice) TROUTMAN SANDERS, LLP 401 Ninth Street, NW Washington, D.C. 20004 Phone: (202) 274-2950 Email:
Paul L Gale (SBN 65873) ROSS DIXON AND BELL, LLP 5 Park Plaza Suite 1200 Irvine, CA 92614-8592 Phone: (949) 622-2700 Email: [email protected] Counsel for City of Long Beach Defendants
City Attorney Thomas A. Russell, (SBN 108607) General Counsel Joy M. Crose, (SBN 116011) Asst. General Counsel Simon M. Kann, (SBN 197907) Deputy City Attorney LA CITY ATTORNEY’S OFFICE 425 South Palos Verdes Street San Pedro, California 90731 Phone: (310) 732-3750 Email: [email protected]
IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA
AMERICAN TRUCKING ASSOCIATIONS, INC, Plaintiff,
v. CITY OF LOS ANGELES, et al. Defendants.
CASE NO. CV 08-04920 CAS (CTx) DECLARATION OF RICHARD D. STEINKE IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Date: September 8, 2008 Time: 10:00 am Place: Courtroom 5 Hon. Christina A. Snyder
EXHIBITS
1. Memorandum from Robert Kanter, Managing Director of Environmental Affairs
and Planning, Port of Long Beach, “Clean Truck Program Tariff Adoption”
(October 31, 2007)
2. Memorandum from Robert Kanter, Managing Director of Environmental Affairs
and Planning, Port of Long Beach, “Clean Truck Fee Tariff Adoption” (December
10, 2007)
3. Memorandum from Steve Rubin, Managing Director of Finance and Support
Services, Port of Long Beach, “Clean Truck Funding Program” (February 13,
2008)
4. Memorandum from Robert Kanter, Managing Director of Environmental Affairs
and Planning, Port of Long Beach, “Drayage Truck Concession Requirements”
