The opinion of the court was delivered by: Christina A. Snyder
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This case was tried to the Court on April 20, 21, 22, 23, 27, 28, and 29, 2010. The parties filed their post-trial briefs on May 14, 2010. Robert Digges, Jr. of the ATA Litigation Center, and Christopher McNatt, Jr. of Scopelitis, Garvin, Light, Hanson & Feary, LLP, appeared on behalf of plaintiff American Trucking Associations, Inc. ("ATA"). Steven Rosenthal, Alan Palmer, and Susanna Chu of Kaye Scholer LLP, and Thomas Russell and Simon Kann of the Los Angeles City Attorney's Office, appeared as counsel on behalf of defendants City of Los Angeles, the Harbor Department of the City of Los Angeles, and the Board of Harbor Commissioners of the City of Los Angeles. David Pettit and Melissa Perrella of the Natural Resources Defense Council ("NRDC"), appeared as counsel on behalf of intervenor defendants NRDC, Sierra Club, and #:10004 Coalition for Clean Air, Inc.
On March 20, 2008, defendant Los Angeles Harbor Board of Commissioners adopted an order which provides that "beginning October 1, 2008, at 8:00 am, no Terminal Operator shall permit access into any Terminal in the Port of Los Angeles to any Drayage Truck unless such Drayage Truck is registered under a Concession from the Port of Los Angeles . . ." The Los Angeles Concession Agreement requires that motor carriers accessing the Port of Los Angeles ("POLA" or "the Port") comply with a number of requirements in order to maintain this access.*fn1
On July 28, 2008, ATA filed the complaint in this action against defendants City of Los Angeles, Harbor Department of the City of Los Angeles, and Board of Harbor Commissioners of the City of Los Angeles (collectively "POLA"), and City of Long Beach, Harbor Department of the City of Long Beach, and Board of Harbor Commissioners of the City of Long Beach.*fn2 The first and second claims allege that the Los Angeles Concession Agreement is preempted by the Supremacy Clause of the United States Constitution and the motor carrier provision of the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. § 14501(c) ("the FAAA Act"). The third claim alleges that the Concession Agreement is preempted because it places an undue burden on and discriminates against the right of motor carriers to engage in interstate commerce.
On July 30, 2008, ATA moved for a preliminary injunction pursuant to the first and second claims for relief restraining implementation of the Ports' mandatory Concession Agreements. On September 9, 2008, this Court denied ATA's motion for a preliminary injunction. See Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 577 F. Supp. 2d 1110 (C.D. Cal. 2008). The Court found that ATA would likely demonstrate that the Concession Agreements "related to a price, route, or service" of motor carriers, which would generally render them preempted under the FAAA Act. Id. at 1118; see 49 U.S.C. § 14501(c)(1). The Court further determined that ATA would have a significant likelihood of success in showing that "the fact that the Ports sit on sovereign tidelands does not exempt [the Concession Agreements] from preemption under the FAAA," and that "the market participant exception to preemption does not apply in this case." Id. at 1118-1123; see Engine Mfrs. Ass'n v. South Coast Air Quality Management Dist., 498
F.3d 1031, 1040 (9th Cir. 2007) (holding that in cases of statutory preemption, "the market participant doctrine is based on the proposition that pre-emption doctrines apply only to state regulation.") (emphasis added). However, the Court held that ATA was nevertheless unlikely to succeed on the merits, because the Concession Agreements likely fell under the FAAA Act's statutory "safety exception." Id. at 1125; see 49 U.S.C. § 14501(c)(2)(A) (preemption provision "shall not restrict the safety regulatory authority of a State with respect to motor vehicles . . ."). Moreover, the Court concluded that the Supreme Court's holding in Castle v. Hayes Freight Lines, Inc., 349 U.S. 61 (1954), did not preclude application of the "safety exception" to the Concession Agreements. Id. at 1125 (citing 349 U.S. at 63-64 (holding that under the Federal Motor Carrier Act, a state could not punish a motor carrier for repeated violations of safety standards by suspending the motor carrier's right to engage in interstate commerce over the state's roads)). The Court also found that ATA had not shown a likelihood of irreparable harm, and that the balance of the hardships and the public interest weighed in favor of denying the injunction. Id. at 1126-1128. On March 20, 2009, in Am. Trucking Ass'ns Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009) (hereinafter "Am. Trucking I") the United States Court of Appeals for the Ninth Circuit reversed the Court's September 9, 2008 order, finding instead that the "safety exception" to the FAAA Act likely did not apply to at least some of the provisions of the Concession Agreements. 559 F.3d at 1055-1057. The Ninth Circuit remanded the case to this Court for further proceedings. Id.
Following the decision in Am. Trucking I, in April 3, 2009, ATA filed a motion for entry of preliminary injunction on counts I and II of the complaint. On April 28, 2009, this Court issued an order granting in part and denying in part ATA's motion, which enjoined POLA from implementing and enforcing various provisions of the Concession Agreement.*fn3 Am. Trucking Ass'ns, Inc. v. City of Los Angeles, No. 08-4920 CAS (CTx), 2009 WL 1160212, at * 7 (C.D. Cal. Apr. 28, 2009). This Court again found that the holding in Castle, 349 U.S. at 61, was inapplicable to the instant case.*fn4 Id. On February 24, 2010, the United States Court of Appeals for the Ninth Circuit affirmed the Court's April 28, 2009 order with one limited exception, in Am. Trucking Ass'ns Inc. v. City of Los Angeles, 596 F.3d 602 (9th Cir. 2010) (hereinafter "Am. Trucking II"). Specifically, the Ninth Circuit affirmed this Court's holding that certain provisions of the Port's Concession Agreement are preempted by the FAAA Act, and that the preempted provisions of the Concession Agreement are severable. Id. at 605-07. The Ninth Circuit in Am. Trucking II vacated this Court's finding that the requirement that drayage trucks display identifying placards with a telephone number fell within the motor vehicle safety exception to the FAAA Act, and remanded in order for this Court to consider whether 49 U.S.C. § 14506(a) preempts the requirement. Id. at 606. On February 25, 2010, this Court denied both ATA's and POLA's cross-motions for summary judgment.
Because the parties have now provided the Court with a complete evidentiary record, the Court will revisit each of the issues upon which it previously ruled.
II. THE CONCESSION AGREEMENT PROVISIONS AT ISSUE
In the instant proceeding, ATA challenges five provisions of the Los Angeles Concession Agreement. Apr. 20 Tr. at 16:15-21 (ATA Opening). Motor carriers must comply with these requirements, among others, in order to maintain access to the Port. The five challenged provisions are as follows:
1. The Employee Driver Provision. This provision provides in relevant part: Driver Hiring. . . . Concessionaire shall be granted a transition period, as set forth in the schedule below, by which to transition its Concession drivers to 100% Employee Concession drivers by no later than December 31, 2013 ("Transition Period"). . ..
Ex. 181 ¶ III(d), "POLA Concession Agreement."
2. The Off-Street Parking Provision. This provision provides in relevant part: Compliance with Truck Routes and Parking Restrictions. Concessionaire shall submit for approval by the Concession Administrator, an off-street parking plan that includes off-street parking location(s) for all Permitted Trucks. Concessionaire shall ensure that all Permitted Trucks are in compliance with on-street parking restrictions by local municipalities. Permitted Trucks not in service shall be staged off public streets and away from residential districts. . . .
Ex. 181 ¶ III(f), "POLA Concession Agreement."
3. The Maintenance Provision. This provision provides: Truck Maintenance. Concessionaire shall prepare an appropriate maintenance plan for all Permitted Trucks. Concessionaire shall be responsible for vehicle condition and safety and shall ensure that the maintenance of all Permitted Trucks, including retrofit equipment, is conducted in accordance with manufacturer specifications. Maintenance records for all Permitted Trucks shall be available for inspection by the Concession Administrator during business hours. Ex. 181 ¶ III(g), "POLA Concession Agreement."
4. The Placard Provision. This provision provides: Placards. When entering and leaving Port Property and while on Port Property, Concessionaire shall post placards on all Permitted Trucks referring members of the public to a phone number to report concerns regarding emissions, safety and security compliance to the Concession Administrator and/or authorities.
Ex. 181 ¶ III(l), "POLA Concession Agreement."
5. The Financial Capability Provision.This provision provides: Financial Capability. Concessionaire shall demonstrate to the satisfaction of the Executive Director that it possesses the financial capability to perform its obligations under this Concession over the term of the Agreement.
Ex. 181 ¶ III(n), "POLA Concession Agreement."
1. The City of Los Angeles (the "City") is a municipal corporation established under Article XI of the Constitution of the State of California and is a political subdivision of that state. Defendant Harbor Department of the City of Los Angeles is a department of the City of Los Angeles. Defendant Board of Harbor Commissioners ("Board" or "BHC") controls the assets and facilities of the Harbor Department. Pretrial Conf. Order ¶ 5.
2. Plaintiff ATA is the non-profit national trade association for the trucking industry established under the laws of the Commonwealth of Virginia as a federation of affiliated state trucking associations, conferences, and organizations representing every type and class of motor carrier in the country. The Intermodal Motor Carriers Conference ("IMCC") is an affiliated conference of ATA and is open to all ATA member companies engaged in the intermodal transportation of property. The IMCC provides services to the intermodal (land-sea) motor carrier members of ATA and represents the interests of these members in a broad range of federal, state, local, and industry policy forums. Pretrial Conf. Order ¶ 5.
3. ATA and the IMCC's membership include motor carriers that provide drayage services at the Port. The Executive Committee of ATA and the IMCC Board authorized and directed that a legal challenge to POLA and the Port of Long Beach Concession Agreements be brought on behalf of ATA members. ATA and the IMCC authorized this litigation to protect an interest germane to the interests of those organizations. The vindication of its members' rights is central to ATA's mission, as is set forth in the Bylaws of the American Trucking Associations, Art. II.1, which provides, "[t]he membership of ATA shall be composed of companies, including independent owner-operators . . .", and the IMCC Bylaws, Art. III(a), which provides, "[t]o promote and protect the interests of intermodal motor carriers on legislative and regulatory issues at all levels of government," and the ATA Mission Statement, which provides that it is, "to serve and represent the interests of the trucking industry . . . ." Pretrial Conf. Order ¶ 5.
4. Intervenor NRDC is a not-for-profit membership organization incorporated under the laws of the State of New York. The NRDC maintains an office in Santa Monica, California. Intervenor Sierra Club is incorporated in the State of California as a Nonprofit Public Benefit Corporation and maintains an office in Los Angeles, California. Intervenor Coalition for Clean Air, Inc. is a nonprofit organization based in California and maintains an office in Los Angeles, California. Pretrial Conf. Order ¶ 5.
B. The Port of Los Angeles
5. The Port is formally organized as the Los Angeles Harbor Department. Pursuant to the City Charter, the Port is an independent, self-funding department of the City of Los Angeles. Pursuant to Article VI of the City Charter, a five-member Board of Harbor Commissioners has the authority to manage Port assets and Port-related activity and to make and enforce all necessary rules and regulations relating to Port operations within the geographic boundaries of the Harbor District. Pretrial Conf. Order ¶ 5.
6. The Port is located along 43 miles of the coast of San Pedro Bay, approximately 20 miles south of downtown Los Angeles adjacent to the Port of Long Beach (collectively with POLA, the "Ports"). Several residential areas adjoin the Port, including the neighborhoods of San Pedro and Wilmington. Over two million people reside in the communities surrounding the Ports. Pretrial Conf. Order ¶ 5.
7. The Port is the leading container port in the United States in terms of shipping container volume and cargo volume, and in 2008 handled more than $240 billion in cargo. Pretrial Conf. Order ¶ 5.
8. The total value of cargo handled at the Port was $240.4 billion in 2007. POLA's top trading partners in that year in terms of cargo value were: China ($115.2 billion); Japan ($39.2 billion); Taiwan ($14.6 billion); South Korea ($9.7 billion); and Thailand ($6.9 billion). Based on its 2007 cargo volume, POLA ranked as the busiest container port in the United States, the thirteenth busiest in the world, and the fifth busiest in the world when combined with the cargo volume of the adjacent the Port of Long Beach. Pretrial Conf. Order ¶ 5.
9. In the years 2007-2009, POLA handled more containers than any other port in the United States. Pretrial Conf. Order ¶ 5.
10. The cargo handled at the Port is usually transported in shipping containers of a standard size (sometimes referred to as twenty-foot equivalent units or "TEUs"). This form of cargo can be offloaded directly from ships onto railcars or truck tractor-trailers for transfer inland. Ex. 187, "POLA Website FAQs."
11. In addition to containerized cargo, POLA also handles passengers, automobiles, liquids, dry bulk, and breakbulk cargo with facilities specific to each type of cargo. Ex. 187, "POLA Website FAQs."
12. As the leading seaport in North America in terms of shipping container volume and cargo value, the Port generates over 900,000 regional jobs and more than $39 billion in annual wages and tax revenues. Ex. 183, "Husing Report"; Ex. 187, "POLA Website FAQs."
13. The Port is self-sustaining solely from revenues it receives from property leases and fees for dockage, wharfage, storage, royalties, and other port services. Thus, the Port operates without taxpayer support and is designated in the City Charter as a "Proprietary Department," controlling its own funds separately from the rest of the City. Ex. 187, "POLA Website FAQs"; Apr. 27 Tr. at 45-46 (Freeman).
14. The California State Tidelands Act of 1911 and subsequent legislative acts granted the tidelands and waterfront in San Pedro Bay to the Cities of Los Angeles and Long Beach as trustees for the benefit of the people of California. Ex. 245, "Ordinance No. 179981." Subsequent litigation between the United States and the State of California in an original proceeding before the U.S. Supreme Court confirmed that California had sovereign title to the tidelands in San Pedro Bay granted to Los Angeles and Long Beach. United States v. California, 382 U.S. 448-53 (1966).
15. All or virtually all of the marine terminals at the Port are located on sovereign tidelands, which the City of Los Angeles holds as trustee subject to the tidelands trust. Ex. 245, "Ordinance No. 179981."
16. The Port operates as a landlord port in that it develops terminal facilities and then leases those facilities to shipping lines and stevedoring companies, sometimes referred to as marine terminal operators ("MTOs"). Ex. 267, "CAAP Technical Report"; Ex. 356, "Steinke Decl."
17. The MTOs load and unload ships, moving cargo between the vessel and the terminal. They receive and dispatch cargo into and out of their facilities via rail and truck. This movement of cargo between a marine terminal and a local destination by truck is commonly referred to as "drayage." Ex. 183, "Husing Report."
18. Motor carriers draying cargo to and from the Port act under contract to ocean carriers, cargo owners, freight forwarders, and brokers, and other transportation intermediaries and carriers. Ex. 183, "Husing Report."
19. Motor carriers dray containers under bills of lading for each container that designate the points of origination and destination, under the direction of the cargo owner or its agent. Ex. 183, "Husing Report."
20. In many cases motor carriers dray containers under "store-door" tariffs of ocean carriers in which the ocean carrier is compensated for the transit between a shipper location in the United States and a foreign port. In some cases, the bill of lading specifies through transportation by rail to or from the Port, and the drayage carrier serves as a contractor to dray the container between a marine terminal at the Port and an "off-dock" railhead outside the Port. Ex. 183, "Husing Report."
21. The majority of drayage trips take place within the State of California. The Port estimates that drayage trucks transport less than 5% of the cargo that they pick up at POLA to points outside of California, and ATA does not appear to dispute this.
22. A supply of drayage trucks and drivers is integral to cargo movement at the Port. Ex. 183, "Husing Report."
23. The Port has a direct financial interest in the unhindered and efficient flow of cargo through its terminals and in increasing container traffic through the Port terminals. The Port's revenue is directly tied to the volume of containers moved through the terminals. The greater the volume of containers handled at the Port, the greater are the Ports' revenues. Apr. 27 Tr. at 45-46 (Freeman); Ex. 191, "BCG Report."
24. In light of increasing global trade and larger ships, POLA expects cargo volumes at the Port to increase at a pace sufficient to at least double the demand for cargo-handling capacity over the next decade. Ex. 272, "Sahagun Article"; Ex. 281,
"POLA Stakeholder Presentation"; Ex. 353, "California Air Resources Board Report."
25. POLA faces competition from other U.S. ports along the Pacific coast, the Atlantic coast, the Gulf of Mexico and foreign ports emerging in Mexico and Canada. POLA also faces additional competition because of the scheduled 2014 completion of the Panama Canal expansion. Ex. 245, "Ordinance No. 179981."
26. The Port needs to continually upgrade and renovate existing terminals and facilities to maintain its competitive position with respect to other ports and capture additional business through improved cargo capacity. Ex. 191, "BCG Report"; Apr. 27 Tr. at 45-46 (Freeman).
27. POLA also needs to continually improve the efficiency of cargo operations at the Port to maintain its competitive position with respect to other ports and capture additional business. Id.
28. POLA markets itself to potential customers, among other things, on the basis of the efficiency of its terminal operations, its experienced labor force, the quality of its infrastructure, and the "clean" nature of the drayage trucks serving the Port. See Exs. 291-96, "POLA Advertisements."
C. Environmental Impacts Associated with Operations at the Port
29. The Port is located in California's South Coast Air Basin (the "Basin"), which has been designated by the United States Environmental Protection Agency as a non-attainment area for the National Ambient Air Quality ("NAAQ") standards, for the 8-hour ozone standard, and for the annual fine particulate matter standard. At least in 2008, the Basin had the worst air quality in the nation for these pollutants. Ex. 245, "Ordinance No. 179981."
30. As of 2008, California's South Coast Air Quality Management District ("SCAQMD") calculated that it could not achieve the NAAQ standards for ozone and particulate matter by the dates specified in the federal Clean Air Act without significant reductions of diesel particulate matter ("DPM") and of particulate matter precursor pollutants nitrogen-oxides ("NOx") and sulfur-oxides ("SOx") from Port operations. Ex. 267, "CAAP Technical Report"; Ex. 337, "SCAQMD 2007 Air Quality Management Plan."
31. Emissions inventory data for 2002 indicated that activities at the Ports are responsible for 24 percent of the total DPM, 11 percent of NOx, and 45 percent of SOx emitted in the South Coast Air Basin. By 2020, activities at the Ports were projected to contribute almost a third of the South Coast Air Basin's DPM, a quarter of its NOx, and over three-fifths of its SOx. Ex. 336, "SCAQMD MATES III Study."
32. SCAQMD found that, as of 2008, the area around the Port suffered an average cancer risk from air pollution that was more than 60 percent higher than the average in the South Coast Air Basin (1415 in a million for the Port area; 853 in a million for the basin). Apr. 23 Tr. at 15 (Chang); Ex. 336, "SCAQMD MATES III Study."
33. Prior to the implementation of the Port's Clean Truck Program, SCAQMD considered dramatic reductions in diesel truck emissions to be critical to the attainment of the federal air quality standards, because drayage trucks are major emitters of NOx and DPM. Apr. 23 Tr. at 12-20 (Chang); Ex. 336, "SCAQMD MATES III Study."
34. Prior to the implementation of the Clean Truck Program, trucks used in drayage operations at the Port (the "drayage truck fleet" or "drayage trucks") tended to be older than those used by national long-haul truck fleets. Drayage trucks typically started out as long-haul trucks that were then sold to smaller, lower-cost carriers who used them to the end of their useful long-haul lives before selling the trucks to drayage carriers for Port use. Apr. 27 Tr. (Freeman).
35. Prior to implementation of the Clean Truck Program, drayage trucks accounted for between 10 and 24 percent of the total emissions of DPM and NOx from Port sources. Ex. 268, "CAAP Overview."
D. Environmental and Community Group Opposition to Port Expansion
36. As a result of the health risks and environmental impacts caused by Port-related sources, environmental and community groups mobilized to oppose Port expansion projects. Such opposition blocked a series of expansion projects at the Port from 2001-2008. Apr. 27 Tr. (Freeman) at 45-48; see also Ex. 270, "Malnic Article"; Ex. 272-273, "Sahagun Articles."
37. In May 2001, the Port entered into an agreement with China Shipping Line Company ("China Shipping") by which the Port would construct and China Shipping would lease a new container terminal facility at POLA. See Ex. 270, "Malnic Article"; Ex. 271, "Schoch Article."
38. The Natural Resources Defense Council, the Coalition for Clean Air, and certain community groups (collectively, "NRDC") subsequently filed a lawsuit seeking a writ of mandate in the Los Angeles County Superior Court alleging that the Port had failed to comply with the requirements of the California Environmental Quality Act ("CEQA") with respect to the China Shipping terminal. See Ex. 270, "Malnic Article."
39. On October 30, 2002, the Second District Court of Appeal found that the Port had not complied with CEQA's requirements before entering into the agreement with China Shipping. The Second District Court of Appeal also enjoined further construction at the terminal. NRDC v. City of Los Angeles, 103 Cal. App. 4th 268 (Cal. Dist. Ct. App. 2002).
40. The Port and NRDC reached a settlement in March 2003, which enabled the Port to proceed with the China Shipping expansion project subject to a number of mitigation measures. Ex. 271, "Schoch Article"; Ex. 351, "Staff Recommendation, Resolution No. 09-6743."
41. Under the China Shipping settlement, the Port was required to establish a special fund for mitigation of air quality and aesthetic impacts in the community due to the new terminal. POLA also committed to extensive equipment modifications in the terminal as well as requiring ships to turn off ship engines and switch to shore-side electrical power when docked, a process called "cold ironing." The settlement ultimately cost the Port more than $80 million. Funds for the settlement of the China Shipping litigation came entirely from Port revenue, without contributions from either the City of Los Angeles or China Shipping. Ex. 271, "Schoch Article"; Ex. 351, "Staff Recommendation, Resolution No. 09-6743."
42. Following the China Shipping settlement, POLA resolved to address air quality and environmental issues related to goods movement at the Port and adopted a "green growth" strategy. Apr. 27 Tr. (Freeman) at 45-48; Ex. 273, "Sahagun Article."
43. Subsequent to the China Shipping settlement, the Port continued to face pressure from the surrounding community and environmental groups such as NRDC in connection with proposed development projects that could result in higher levels of pollution. ...