Federal Maritime Claim of Harm in LA Port Program Denied

April 23, 2009
The Federal Maritime Commission has failed to establish irreparable harm will result from the California ports' Clean Truck Program, says US District Court judge.

Richard J. Leon, US District Court judge for the District of Columbia denied a motion by the US Federal Maritime Commission (FMC) seeking an injunction against portions of the clean truck program instituted by the Port of Los Angeles and the Port of Long Beach. The FMC claimed authority under the Shipping Act of 1984 to seek an injunction alleging the Clean Trucks Programs (CTP) would cause irreparable harm in the form of less competition, lower service and higher costs.

The FMC, in its suit, alleged the “employee mandate” and disparate Clean Truck Fee exemptions and subsidies were likely to cause “an unreasonable increase in transportation costs and an unreasonable decrease in transportation services.”

The employee mandate refers to a requirement that drivers engaged in performing dray services at the Port Los Angeles be employees of companies which are granted concession status to operate at the port.

The FMC had said that, as structured, the CTPs would transform the drayage market from a competitive market to a severely constrained market in which the surviving licensed motor carriers would be able to increase prices above competitive levels while offering inferior service.

Judge Leon noted this is the first time since the enactment of the Shipping Act provisions in question that FMC has sought action. He further noted that in the absence of “plain language” or “legislative history” indicating Congress intended to set aside its traditional four-part preliminary injunction test. The FMC motion does not meet that full test.

On likelihood of success on the merits of the action, the Court said FMC failed to prove that the agreement it was seeking to enjoin, “is likely to cause a reduction in competition.” That reduction in competition is likely to cause an increase in transportation cost or decrease in service. And that the likely reduction in service or increase in cost is unreasonable.

On the issue of irreparable harm, the Court said FMC had failed to make a sufficient showing on irreparable harm. The Judge's ruling stated that the Circuit had established a high standard for irreparable harm and would not grant injunctive relief against “something merely feared as liable to occur at some indefinite time.”

On balance of equities and public interest, the Judge found that “the balance of equities and the public interest weigh in favor of denying the FMC's motion for a preliminary injunction.” The Court acknowledged that both parties were acting in the public interest. On the FMC side, it was fulfilling a statutory responsibility to protect against anticompetitive agreements that are likely to raise rates and decrease service unreasonably. The ports were seeking to improve air quality along with safety and security. In this instance, the long, deliberative process the ports undertook relative to the air quality and safety/security requirements favored denying the FMC motion.

To view Judge Leon's opinion: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2008cv1895-56

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