Monday, October 31, 2011

Ninth Circuit on Federal Aviation Administration Authorization Act Preemption

A divided three-judge panel of the Ninth Circuit on Monday ruled on the preemptive effects of the Federal Aviation Administration Authorization Act in American Trucking Associations, Inc. v. City of Los Angeles.  The case involves five provisions of concession agreements that the Port of Los Angeles required of all drayage truck operators as part of the Port's Clean Truck Program.  (Drayage trucks tranport cargo from the Port to customers, railroads, or other trucks.)  Those provisions are:

  • The "employee-driver provision," which requires drayage truck operators to transition over five years to using 100% employee drivers rather than independent owner-operators.
  • The "off-street parking provision," which requires drayage truck operators to submit an off-street parking plan for its trucks to maintain compliance with parking restrictions of local municipalities.
  • The "maintenance provision," which makes drayage truck operators responsible for vehicle maintenance and safety.
  • The "placard provision," which requires drayage truck operators to post a placard on all its trucks covered by a concession agreement; the placard must display a phone number to report concerns about truck emissions, safety, and compliance.
  • The "financial capability provision," which requires a drayage truck operator to demonstrate that it possesses the financial capability to perform these and other obligations under the concession agreement.

The FAAA Act says as a "general rule" that "a State [or] political subdivision of a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property."  49 U.S.C. Sec. 14501(c)(1).  The relevant saving clause says that the FAAA Act does not "restrict the safety regulatory authority of a State with respect to motor vehicles."  49 U.S.C. Sec. 14501(c)(2)(A).

Thus the court wrote that it must first determine whether each concession agreement provision "relate[s] to a price, route, or service of a motor carrier."  If so, then the court must next determine "whether the provision 'has the force and effect of law'--that is, whether the provision was enacted pursuant to the State's regulation of the market, rather than the State's participation in the market in a proprietary capacity."  If the provision meets the market participant exception, it is not preempted.  But if the provision has the force of law, then the court must determine whether it fits within the saving clause.

Here's what the court said about whether the FAAA Act preempted each provision:

  • The employee driver provision isn't saved from preemption by the market participant exception: it has the force of law (it doesn't meet the market participant exception) because it seeks to impact third-party (driver) wages--a subject of negotiation between the drayage operators and the drivers alone, and not the Port.
  • The off-street parking provision is not preempted, because it meets the market participant exception.
  • The maintenace provision is not preempted, because it is a safety regulation and fits within the saving clause.
  • The placard provision is not preempted, because it is a safety regulation and fits within the saving clause.
  • The financial capability provision is not preempted, because it does not relate to prices, routes, or services.

Judge Smith dissented, arguing that the market participant exception didn't apply (because "drayage services (not port services) form the relevant market, and the [Port] acts a as a regulator of drayage services; even if the Port qualifies under the exception, the off-street parking provision is preempted, because it affects "parties unrelated to contractual obligations to the Port"; and the placard provision is preempted under another provision of the FAAA Act.

The ruling affirms the lower court ruling that the provisions on off-street parking, maintenance, placard, and financial capability are not preempted.  But it reverses the lower court ruling that the employee driver provision was saved by the market participant exception.

SDS

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