American Shipper

Judge denies FMC bid to enjoin clean truck plans

Judge denies FMC bid to enjoin clean truck plans

   A district court judge in Washington, D.C. on Wednesday denied a Federal Maritime Commission request for a preliminary injunction against portions of the clean truck programs of the ports of Los Angeles and Long Beach.

   “The public interest, at this point, favors denying the FMC’s motion for a preliminary injunction,” said Judge Richard J. Leon.

   In October, a divided FMC determined by 2-1 vote that implementation of certain portions of the Los Angeles-Long Beach clean truck programs (CTPs) would likely reduce competition and produce an unreasonable increase in transportation cost or unreasonable reduction in service, thereby violating the Shipping Act of 1984 that it is responsible for enforcing.

   They authorized their staff to seek an injunction under section 6(h) of the Shipping Act. Commissioners Harold J. Creel Jr. and Rebecca F. Dye supported seeking the injunction while Commissioner Joseph E. Brennan called it a “colossal mistake ' to try to block a program of environmental protection and economic expansion.”

   Leon agreed the plans at the nation’s two largest ports may cause some trucking companies to change their business practices, raise rates, exit the market, and force some drivers to cease operating as independent owner operators because of mandate in Los Angeles that concession holders use employees.

   But he said, “The FMC has not established the drayage market will suffer a reduction in competition.” He citied testimony from an FMC economist that as of mid-October 2008 almost 800 licensed motor carriers had signed up for Port of Los Angeles concession agreements. And the economist agreed barriers to market entry were low so that other draymen could enter the business if the trucking business became concentrated and truckers raised prices while reducing services.

   The judge also noted that there were differences in the plans between the two ports, which he said was an indication that the two ports were competing with each other.

   He refused to grant the preliminary injunction, saying potential economic harms and changes to the drayage market “must be weighed against the harm to the ports and the greater San Pedro Bay region” if the portions of the clean truck plans that the FMC was challenging were enjoined preliminarily “pending a decision on the merits.”

   Leon noted that this was the first time ever that the FMC has sought a preliminary injunction pursuant to Sections 6(g) and 6(h) of the Shipping Act. The FMC had argued that the judge need only assess whether it had a substantial likelihood of success on the merits of its case, citing parallel case law used by the Securities and Exchange Commission and Commodities Future Trading Commission.

   But Leon opted for a more traditional test of when a preliminary injunction could be imposed, and said the FMC had “failed to demonstrate the necessary likelihood of success on the merits and irreparable harm.”

   His decision contrasts with a decision handed down a month ago by the Ninth Circuit Court of Appeals in California that found the concession agreements of both the ports are “likely to result in at least some irreparable harm to the motor carriers.”

   It found a district court had “abused its discretion when it denied a preliminary injunction as to significant parts of the agreements” that was requested by the American Trucking Associations.

   The appeals court sent the ATA’s request for an injunctionagainst the Los Angeles and Long Beach concession plans back to U.S. District Judge Christina Snyder, and said the plans “will likely be found to be preempted in whole or in part.”

   That hearing is now scheduled for April 27.

   The Coalition for Clean and Safe Ports said Leon’s decision was “a victory for the movement to clean the air and create good green jobs at our nation's ports.” ' Chris Dupin