Despite Otto von Bismarck’s famous quote about not watching sausage or law being made, it is interesting to watch the interaction between the legislative and the judicial branches of the U.S. government when it comes to transportation.

Specifically, the American Trucking Associations and the City of Los Angeles will be arguing before the High Court, and looking for support for their positions. There is a particular reason for the transportation industry — and others — to pay attention to this case. That is the fact that the court agreed to hear arguments on the dormant commerce clause.

In very a loose layman’s definition, it infers congress’ ability to regulate interstate commerce also prohibits states from passing legislation which improperly burdens or discriminates against interstate commerce. Here, it would seem the ATA has a strong argument that the Concession Plans put in place at the Ports of Los Angeles and Long Beach create such a burden. The question is whether the current court will accept this inference which is not spelled out in legislation.

This is where the transportation industry’s history with the court muddies the waters. Post-deregulation, the court ruled in Maislin v. Primary Steel that the Interstate Commerce Commission (ICC) had erred in interpreting the intent of congress was to eliminate tariff filing requirements. That issue had to be addressed in the ICC Termination Act which corrected or addressed the omission in the Motor Carrier Act of 1980.

In another case, popularly known as the Armstrong Carpet case, the federal courts supported the view that the ICC was correct in ruling that Armstrong’s movement of product from Georgia to a distribution center in Texas and then onward to a final destination inside Texas was, by intent, an interstate move. With court precedent but without the ICC, the issue that intrastate regulation of transportation services, rates or routes could not preempt federal law was included in the Federal Aviation Administration Authorization Act.

Even with legislation supporting intrastate deregulation, the issue returned to the courts and the Supreme Court in Rowe v. New Hampshire Motor Transport Association — where the court reinforced the position that states did not have the right to regulate rates, routes or services.

Preemption was argued in the lower courts on the current ATA v. City of Los Angeles case and the Supreme Court said the lower courts erred in supporting preemption and declined to consider that argument when the current case comes before the court. The good news in this is that the legislative responses to Maislin and intrastate deregulation have made explicit what had been inferred or assumed.

The issue for today’s complex, extended supply chains is that the dormant commerce clause is about to be interpreted again. If the Supreme Court accepts the long-standing position that the dormant commerce clause is as good as law, will it compel legislators to turn it into actual law? There are precedents for two exceptions that could allow Los Angeles to carry its position. One is market participation — which the court will consider. The other is congressional exception. In this instance, it would be good to have congressional support to help keep our supply chains flowing smoothly and efficiently.

– Perry A. Trunick, Editor-in-Chief
trunickp@worldtradeWT100.com