Supply Chain News / Risk & Compliance / Ocean / Ports

Port of LA Concessions Quashed

The U.S. Supreme Court supports the dominant commerce clause in ATA v. City of Los Angeles.

Port of LA

Preemption is an issue the U.S. Supreme Court has examined a number of times relative to transportation, and it has found once again in the case of American Trucking Associations, Inc. V. City of Los Angeles, California, et al. that the placard and parking requirements for drayage carriers set by the city of Los Angeles at the port are preempted by federal law. In a decision handed down on June 13, 2013, the Court said both parties agreed that the requirements affected the carriers’ price, route, or service and, therefore, the issue was whether the requirements “have the force of law.”

When the Court agreed to hear the case, it had said it would not consider the preemption issue, but it did agree to hear the case on the dominant commerce issue (see Down the Road Again).

Joel Anderson, president and ceo of the International Warehouse Logistics Association (IWLA) has already jumped on this element of the decision saying, “This also may help in the Minnesota warehouse tax case because it once again re-affirms the concept of interstate commerce and that when the feds preempt, they preempt exclusively.”

What Anderson is saying is that the long-established position that infers congress’ ability to regulate interstate commerce also prohibits states from passing legislation which improperly burdens or discriminates against interstate commerce. Clearly, Anderson is referring to an IWLA position that the Minnesota tax improperly burdens interstate commerce, and a decision by the Court in favor of the City of Los Angeles would have made their position more tenable in opposing the warehouse tax.

The Court pointed out, “Section 14501(c)(1) [of title 49 of the U.S. Code] draws a line between a government’s exercise of regulatory authority and its own contract-based participation in a market. The statute’s ‘force and effect of law’ language excludes from the clause’s scope contractual arrangements made by a State when it acts as a market participant, not as a regulator.”

What the Court has said is that one defense the City of Los Angeles had offered for its action was that it was acting as a market participant and that would preempt the federal law which doesn’t allow the City to regulate a motor carrier’s rate, route, or service. Saying the placard and parking requirements have the force of law means the market participant argument doesn’t stand up and won’t be debated.

The Court had no problem demonstrating the force of law in this instance: “It forced terminal operators – and through them, trucking companies – to alter their conduct by imple¬menting a criminal prohibition punishable by imprisonment. That counts as action ‘having the force and effect of law’ if anything does,” said the Court finding.

The Court’s decision is available at http://www.supremecourt.gov/opinions/12pdf/11-798_anbf.pdf

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