Federal Maritime Commission to Seek Ports Injunction

The Federal Maritime Commission is seeking an injunction against the Ports of Los Angeles and Long Beach saying portions of the Clean Truck Programs could reduce competition and produce an unreasonable increase in transport costs.

“The Federal Maritime Commission (FMC) determined by 2-1 vote [on October 29, 2008] that implementation of certain portions of the Clean Truck Programs ("CTP") by the Ports of Los Angeles and Long Beach under FMC Agreement No. 201170, are likely, by a reduction in competition, to produce an unreasonable increase in transportation cost or unreasonable reduction in service. The Commission, therefore, authorized staff to file a complaint with the US District Court for the District of Columbia pursuant to section 6(h) of the Shipping Act of 1984, to enjoin aspects of Agreement No. 201170, including concession requirements that mandate exclusive use of employee-drivers,” said a statement by the FMC. Commissioner Joseph E. Brennan dissented from this determination.

The FMC acknowledged the potential environmental and public health goals of the Ports' CTP, and said it recognizes that some transportation cost increases may be necessary to generate clean air and public health benefits. “However, the Commission concluded that the reduction in competition resulting from certain agreement-related activities will result in substantial transportation cost increases, beyond what is necessary to generate the public benefits asserted by the Ports.” The FMC statement related to its complaint said “surgical removal” of substantially anti-competitive elements of the Agreement, such as the employee mandate, would allow the ports to stay on scheduled in implementing elements of the CTP that produce clean air and improve public health.

As expected, the FMC cited the Shipping Act of 1984, saying the Act directs the FMC to evaluate potential anti-competitive impacts of all agreements. “The Ports of Los Angeles and Long Beach are marine terminal operators under the Shipping Act, and are permitted to collectively develop and implement their CTP pursuant to an agreement on file with the FMC. Subject to the Commission's jurisdiction and ongoing oversight,” said FMC. “Parties to agreements receive immunity from the US anti-trust laws. This oversight ensures that activities of the Agreement parties do not result in unreasonable increases in transportation cost or reductions in service, or otherwise give rise to unreasonable practices under the Shipping Act.”

FMC said its staff worked with Agreement filing parties to collect and analyze information to understand how the CTP would work and to minimize FMC intervention. The Commission requested additional information both informally and formally from the Agreement parties to assist the Commission in making its determination. Commissioners Harold J. Creel Jr. and Rebecca F. Dye commented that the FMC must ensure that “our foreign trades operate free from substantially anticompetitive activities.” The shipping public should be afforded the full benefit of the protections of the Shipping Act of 1984, they said.

Commissioner Joseph E. Brennan dissented saying he considers it “a colossal mistake for the Commission to try to block a program of environmental protection and economic expansion that has been endorsed as reasonable and necessary by, among others, Los Angeles Mayor Antonio Villaraigosa, the Los Angeles Board of Harbor Commissioners, US Senators Dianne Feinstein and Barbara Boxer, Speaker of the House Nancy Pelosi, US Representatives Laura Richardson and Loretta Sanchez, and some 30 other members of the California delegation of the US House of Representatives.”

The FMC should give more deference to the policy judgments made in this matter by elected officials, said Brennan. “Following years of extensive study in a public process with input from all concerned, Los Angeles has adopted a Clean Trucks Program that fairly falls within the broad definition of "reasonable" under the Shipping Act,” Brennan continued. “Under these circumstances, the Commission majority has no basis for forcing the Port of Los Angeles to adopt an alternative port-management model that individual commissioners happen to think is reasonable.”

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