Supreme Court Overturns the Port of Los Angeles’s Placard Requirement

From the Supreme Court’s syllabus in American Trucking Associations, Inc.  v. City of Los Angeles, California:

The Port of Los Angeles, a division of the City of Los Angeles, is run by a Board of Harbor Commissioners pursuant to a municipal ordinance known as a tariff.  The Port leases marine terminal facilities to operators that load cargo onto and unload it from docking ships.  Federally licensed short-haul trucks, called “drayage trucks,” assist in those operations by moving cargo into and out of the Port.  In 2007, in response to community concerns over the impact of a proposed port expansion on traffic, the environment, and safety, the Board implemented a Clean Truck Program.  As part of that program, the Board devised a standard-form “concession agreement” to govern the relationship between the Port and drayage companies.  The agreement requires a company to affix a placard on each truck with a phone number for reporting concerns, and to submit a plan listing off-street parking locations for each truck.  Other requirements relate to a company’s financial capacity, its maintenance of trucks, and its employment of drivers.  The concession agreement sets out penalties for violations, including possible suspension or revocation of the right to provide drayage services.  The Board also amended the Port’s tariff to ensure that every drayage company would enter into the agreement.  The amended tariff makes it a misdemeanor, punishable by fine or imprisonment, for a terminal operator to grant access to an unregistered drayage truck.

Petitioner American Trucking Associations, Inc. (ATA), whose members include many of the drayage companies at the Port, sued the Port and City, seeking an injunction against the concession agreement’s requirements.  ATA principally contended that the requirements are expressly preempted by the Federal Aviation Administration Authorization Act of 1994 (FAAAA), see 49 U.S.C. § 14501(c)(1).  ATA also argued that even if the requirements are valid, Castle v. Hayes Freight Lines, Inc., 348 U.S. 61, 75 S.Ct. 191, 99 L.Ed. 68, prevents the Port from enforcing the requirements by withdrawing a defaulting company’s right to operate at the Port.  The District Court held that neither § 14501(c)(1) nor Castle prevented the Port from proceeding with its program.  The Ninth Circuit mainly affirmed, finding only the driver-employment provision preempted and rejecting petitioner’s Castle claim.

Held :

1.  The FAAAA expressly preempts the concession agreement’s placard and parking requirements. Section 14501(c)(1) preempts a state “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. § 14501(c)(1).  Because the parties agree that the Port’s placard and parking requirements relate to a motor carrier’s price, route, or service with respect to transporting property, the only disputed question is whether those requirements “hav[e] the force and effect of law.”  Section 14501(c)(1) 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.  See, e.g., American Airlines, Inc. v. Wolens, 513 U.S. 219, 229, 115 S.Ct. 817, 130 L.Ed.2d 715.  But here, the Port exercised classic regulatory authority in imposing the placard and parking requirements. It forced terminal operators—and through them, trucking companies—to alter their conduct by implementing a criminal prohibition punishable by imprisonment.  That counts as action “having the force and effect of law” if anything does.

The Port’s primary argument to the contrary focuses on motives rather than means.  But the Port’s proprietary intentions do not control.  When the government employs a coercive mechanism, available to no private party, it acts with the force and effect of law, whether or not it does so to turn a profit.  Only if it forgoes the (distinctively governmental) exercise of legal authority may it escape § 14501(c)(1)’s preemptive scope.  That the criminal sanctions fall on terminal operators, not directly on the trucking companies, also makes no difference.  See, e.g., Rowe v. New Hampshire Motor Transp. Assn., 552 U.S. 364, 371–373, 128 S.Ct. 989, 169 L.Ed.2d 933.

2.  This Court declines to decide in the case’s present, pre-enforcement posture whether Castle limits the way the Port can enforce the financial-capacity and truck-maintenance requirements upheld by the Ninth Circuit.  Castle rebuffed a State’s attempt to bar a federally licensed motor carrier from its highways for past infringements of state safety regulations.  But Castle does not prevent a State from taking off the road a vehicle that is contemporaneously out of compliance with such regulations.  And at this juncture, there is no basis for finding that the Port will actually use the concession agreement’s penalty provision as Castle proscribes.