[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Notices]
[Pages 56824-56827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22942]
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FEDERAL MARITIME COMMISSION
[Docket No. 08-05]
City of Los Angeles, CA, Harbor Department of the City of Los
Angeles, Board of Harbor Commissioners of the City of Los Angeles, City
of Long Beach, California, Harbor Department of the City of Long Beach,
and the Board of Harbor Commissioners of the City of Long Beach--
Possible Violations of Sections 10(B)(10), 10(D)(1) and 10(D)(4) of the
Shipping Act of 1984; Order of Investigation and Hearing
On November 20, 2006, the governing boards of the Ports of Los
Angeles and Long Beach voted to approve the San Pedro Bay Ports Clean
Air Action Plan (``CAAP''). The CAAP is a broad effort aimed at
significantly reducing the health risks posed by air pollution from
port-related ships, trains, drayage trucks, terminal equipment and
harbor craft by at least 45 percent in five years. To that end, each
port has adopted a Clean Truck Program (``CTP'') as a component of the
CAAP to address air pollution caused by the short haul truckers that
transport containers to and from the ports, i.e., the harbor truck
drayage system. Each port's CTP becomes effective on October 1, 2008.
The Federal Maritime Commission (``Commission'') is responsible for
enforcing the requirements of the Shipping Act of 1984, as amended by
the Ocean Shipping Reform Act of 1998 (``Shipping Act''). 46 U.S.C.
40101 et seq. As the ports of Los Angeles and Long Beach operate as
marine terminal operators (``MTOs'') under the Shipping Act, their
actions, to the extent they impact international transportation, are
subject to the Commission's jurisdiction and, in particular, to the
requirements of section 10 of the Shipping Act.\1\
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\1\ Section 10(d)(1) requires MTOs to establish, observe, and
enforce just and reasonable regulations and practices relating to or
connected with receiving, handling, storing, or delivering property.
46 U.S.C. 41102(c). Section 10(d)(4) provides that an MTO may not
give any undue or unreasonable preference or advantage or impose any
undue or unreasonable prejudice or disadvantage with respect to any
person. 46 U.S.C. 41106(2). An MTO may not unreasonably refuse to
deal or negotiate. 46 U.S.C. 41106(3).
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While the Commission appreciates the significant environmental and
public health benefits of the San Pedro Ports CAAP, it is concerned
that certain aspects of the ports' CTPs may violate the Shipping Act.
Accordingly, the Commission has determined to initiate an Investigation
and Hearing of the Ports' Clean Truck Programs under section 11 of the
Shipping Act with respect to possible violations under section 10 of
the Shipping Act.
San Pedro Bay Ports
The Port of Los Angeles (``POLA''), referred to as the Los Angeles
Harbor Department, is a self-supporting department of the City of Los
Angeles, California. POLA is under the control of a five-member Board
of Harbor Commissioners appointed by the mayor of Los Angeles and
approved by the City Council, and is administered by an executive
director.\2\ POLA is the largest container port in the United States.
POLA's annual loaded container volume for 2007 was 5.7 million twenty-
foot equivalent units (``TEUs'').
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\2\ For the purposes of this order, the 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 will be referred to as the
Port of Los Angeles or POLA.
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The Port of Long Beach (``POLB'') has an administrative structure
similar to
[[Page 56825]]
POLA. POLB is a public agency managed and operated by the City of Long
Beach Harbor Department. POLB is governed by the Long Beach Board of
Harbor Commissioners, whose five members are appointed by the mayor of
Long Beach and confirmed by the City Council. POLB is administered by
an executive director.\3\ POLB is the second largest port in the United
States. POLB's annual loaded container volume for 2007 was more than
4.9 million TEUs.
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\3\ For the purposes of this order, the City of Long Beach,
California, the Harbor Department of the City of Long Beach and the
Board of Harbor Commissioners of the City of Long Beach will be
referred to as the Port of Long Beach or POLB.
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POLA and POLB are located side-by-side in San Pedro Bay and
together are referred to as the San Pedro Bay Ports. Together they
would constitute the 5th largest container port in the world. While the
two ports compete for business, they cooperate on infrastructure
projects and environmental issues pursuant to agreements filed with the
Commission. It is reported that approximately 16,800 trucks, affiliated
with an estimated 600-1,200 licensed motor carriers (``LMCs''),
transport containers to and from the ports. At present, nearly all of
the trucks are operated by independent owner operators.
The Clean Truck Programs
Central to each port's CTP is a system to control truck access to
the container terminals through the issuance of port concessions to
LMCs. Each CTP presently provides that after October 1, 2008, entry to
container terminals at the ports will be limited to licensed motor
carriers that have a concession agreement.\4\ Carriers serving both
ports must have a separate concession from each port. To obtain a
concession, an LMC must file an application (with a $2,500 fee for
POLA, and $250 for POLB, plus an annual fee of $100 per truck in both
ports) in which it presents an appropriate maintenance plan for trucks
used at the port; ensures that all trucks comply with safety,
regulatory and security requirements, and that drivers have obtained
their Transportation Worker Identification Credential; agrees to
searches; maintains prescribed insurance levels; equips trucks with
prescribed devices to allow for the electronic reading of certain data
concerning the truck; ensures compliance with parking ordinances;
agrees to hiring preferences for drivers with port experience; and
agrees to travel only on specified truck routes established by local
municipalities or the ports.
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\4\ The concession requirement has been challenged in federal
court. See American Trucking Associations v. City of Los Angeles, et
al., No. 08-04920, C.D. Calif. The district court has denied a
request for preliminary injunction, and this decision has been
appealed. The outcome of the legal action by the American Trucking
Associations does not affect the Commission's authority to institute
this investigation.
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There are certain differences between the CTPs of the two ports.
POLA requires that all approved concessionaires transition to providing
port service only with company-employee drivers. This requirement is
phased in over a 5-year period commencing January 1, 2009. By December
31, 2013, all concession drivers at POLA must be company employees.
Independent owner-operators will not be permitted entry to the
container terminals. POLB has no similar mandate and will permit
concessionaires to continue to provide service with either employee
drivers, independent owner-operators or a combination of both, as is
presently allowed. POLA also requires concession applicants to submit
for approval a plan that limits parking to off-street locations. No on-
street parking will be allowed for trucks not in service. POLB, on the
other hand, requires applicants to submit a parking plan that
demonstrates either the availability of off-street parking or legal on-
street parking. POLA also requires applicants to submit financial
statements and a statement of business experience at the port, in
drayage service, and with owner-operators or driver employees, together
with references to verify this information. POLB does not have a
similar requirement.
The applications of both ports provide that submission of an
application does not guarantee an award of a concession. There are no
published criteria or standards governing the granting or denial of
concessions. Both ports require the LMC to register its drayage
vehicles in a Drayage Truck Registry (DTR) identifying the vehicle and
all of its pertinent details, including the model year of the truck and
its engine. Only vehicles registered in the DTR will be permitted entry
to the container terminals.
Also as part of their CTPs, both ports have adopted a truck ban by
which trucks older than model year 1989 will be prohibited from
entering terminal premises on and after October 1, 2008. Thereafter,
the program progressively bans trucks that do not meet 2007 federal
Environmental Protection Agency (``EPA'') emission standards by January
1, 2012. Each port has adopted truck replacement programs to assist
truckers to purchase or upgrade to 2007-compliant trucks through grants
and lease-to-own plans. State and port funds, as well as funds derived
from a Clean Truck Fee, will be used to finance the truck replacement
programs through a Clean Truck Fund maintained by each port.
Commencing October 1, 2008, a fee of $35 per loaded TEU, or $70 per
FEU, will be collected from the beneficial cargo owner on every
container entering or exiting the terminals by truck. Containers
entering or leaving the ports by rail and those moving between
terminals at the ports are not subject to the fee. Both ports will
exempt collection of the fee where the truck hauling the container was
privately financed and is compliant with the 2007 federal EPA standards
and meets certain conditions. Each port maintains slight variations
with respect to eligibility for the exemption depending on whether the
truck's fuel is diesel or an alternative fuel such as LNG; when the
vehicle was purchased; whether an old truck was scrapped; and whether
it was purchased with program funds. Verification of eligibility and
enforcement of access to the terminals as well as collection of the
Clean Truck Fee are to be the responsibilities of the MTO tenants of
the ports. Provisions governing these requirements are published in the
respective tariffs of the ports.
The Port of Los Angeles Incentive Program
On August 21, 2008, POLA adopted two additional incentives to
encourage companies operating 2007 or newer compliant trucks to become
concessionaires and commit to a stated minimum of service at POLA. One
incentive offers a cash payment of $20,000 for each 2007 EPA-compliant
truck that is privately funded and committed to service in the port
drayage market at a minimum frequency of 6 trips per week for 5 years.
Carriers interested in participating were required to submit a letter
of interest by September 19, 2008, stating the number of eligible
trucks operated, the number to be initially committed to port service,
and the number to be added monthly. The other incentive provides for a
cash payment of $10 per dray by a 2007 EPA-compliant truck, if the
truck achieves a minimum target of 600 qualified drays per year in and
out of POLA and POLB, and 300 of those drays are for POLA cargo. There
is a per truck limit on this incentive of $10,000 for the year
commencing October 1, 2008. Incentive payments for both programs will
be made from the Clean Truck Fund and other port funds. Successful
applicants
[[Page 56826]]
for the payment will be selected at the sole discretion of the port
staff.
Commission Authority
A marine terminal operator is defined as ``a person engaged in the
United States in the business of furnishing wharfage, dock, warehouse
or other terminal facilities in connection with a common carrier, or in
connection with a common carrier and a water carrier subject to sub-
chapter 11 of chapter 135 of title 49, United States Code.'' 46 U.S.C.
40102(14). Section 10(d)(1) of the Shipping Act states that a
``[c]ommon carrier, ocean transportation intermediary, or marine
terminal operator may not fail to establish, observe, and enforce just
and reasonable regulations and practices relating to or connected with
receiving, handling, storing, or delivering property.'' 46 U.S.C.
41102(c). Under section 10(d)(4), ``[a] marine terminal operator may
not give any undue or unreasonable preference or advantage or impose
any undue or unreasonable preference or advantage or impose any undue
or unreasonable prejudice or disadvantage with respect to any person;''
46 U.S.C. 41106(2). Section 10(b)(10) of the Shipping Act prohibits a
marine terminal operator from unreasonably refusing to deal or
negotiate. 46 U.S.C. 41106(3).
The Commission is responsible for ensuring that the practices and
regulations of marine terminal operators are just and reasonable. Under
Section 10(d), a regulation or practice must be tailored to meet its
intended purpose. It may have a valid purpose and yet be unreasonable
because it goes beyond what is necessary to achieve that purpose.
Distribution Services, Ltd. v. TransPacific Freight Confer. of Japan,
24 SRR 714, 722 (FMC, 1988). The test of reasonableness as applied to
MTOs requires that actions and practices ``be otherwise lawful, not
excessive and reasonably related, fit and appropriate to the ends in
view.'' Exclusive Tug Arrangements in Port Canaveral, 29 SRR 487, 489
(FMC, 2002) and West Coast Maritime Association v. Port of Houston, 18
SRR 783, 790 (1978), 610 F2d 100 (D.C. Cir. 1979), cert. denied, 449
U.S. 822 (1980).
Now therefore, it is ordered, That pursuant to section 11(c) of the
Shipping Act of 1984, 46 U.S.C. 41303(c), an investigation is
instituted to determine:
1. Whether Respondent Port of Los Angeles has failed to establish,
observe, and enforce just and reasonable regulations and practices in
violation of section 10(d)(1) of the Shipping Act by mandating, on a
phased-in basis, that LMCs providing drayage service to the Port
utilize only employee drivers;
2. Whether Respondent Port of Los Angeles provides an undue or
unreasonable preference or advantage or imposes any undue or
unreasonable prejudice or disadvantage with respect to any person in
violation of section 10(d)(4) of the Shipping Act by implementing, on a
phased-in basis, a ban on independent owner operators providing drayage
service at the Port;
3. Whether Respondent Port of Los Angeles has failed to establish,
observe and enforce just and reasonable regulations and practices in
violation of section 10(d)(1) of the Shipping Act or provides an undue
or unreasonable preference or advantage or imposes any undue or
unreasonable prejudice or disadvantage with respect to any person in
violation of section 10(d)(4) of the Shipping Act, by making payments
to certain selected motor carriers as incentive to provide drayage
service at the port, but not to others;
4. Whether Respondent Port of Los Angeles has failed to establish,
observe and enforce just and reasonable regulations and practices in
violation of section 10(d)(1) of the Shipping Act or provides an undue
or unreasonable preference or advantage or imposes any undue or
unreasonable prejudice or disadvantage with respect to any person in
violation of section 10(d)(4) of the Shipping Act, by denying access to
terminal facilities to drayage carriers absent port-approved
arrangements to park their vehicles on off-street premises;
5. Whether Respondents Port of Long Beach and Port of Los Angeles
have failed to establish, observe and enforce just and reasonable
regulations and practices in violation of section 10(d)(1) of the
Shipping Act, or give an undue or unreasonable preference or advantage
or impose any undue or unreasonable prejudice or disadvantage with
respect to any person in violation of section 10(d)(4) of the Shipping
Act, by exempting from the $35/TEU Clean Truck Fee those beneficial
cargo owners whose cargo is moved by privately financed, 2007 compliant
trucks, while imposing fees on those beneficial cargo owners whose
cargo is moved by publicly financed 2007 compliant trucks and trucks
manufactured between 1989 and 2006;
6. Whether Respondents Port of Long Beach and Port of Los Angeles
have failed to establish, observe and enforce just and reasonable
regulations and practices in violation of section 10(d)(1) of the
Shipping Act by requiring motor carriers providing container drayage
service at the ports to submit an application for a concession, but not
publishing standards or criteria by which such application will be
granted or denied;
7. Whether Respondent Port of Los Angeles violated section
10(b)(10) of the Shipping Act by refusing to deal or negotiate with
motor carriers otherwise authorized to provide drayage service at the
port who conduct their port operations using independent owner-
operators;
8. Whether, in the event one or more violations of section 10 of
the Shipping Act are found, civil penalties should be assessed and, if
so, the identity of the entities against whom the penalties should be
assessed and the amount of the penalties to be assessed;
9. Whether, in the event violations are found, appropriate cease
and desist orders should be issued.
It is further ordered, That a public hearing be held in this
proceeding and that this matter be assigned for hearing before an
Administrative Law Judge of the Commission's Office of Administrative
Law Judges at a date and place to be hereafter determined by the
Administrative Law Judge in compliance with Rule 61 of the Commission's
Rules of Practice and Procedure, 46 CFR 502.61. The hearing shall
include oral testimony and cross-examination in the discretion of the
presiding Administrative Law Judge only after consideration has been
given by the parties and the presiding Administrative Law Judge to the
use of alternative forms of dispute resolution, and upon a proper
showing that there are genuine issues of material fact that cannot be
resolved on the basis of sworn statements, affidavits, depositions, or
other documents or that the nature of the matters in issue is such that
an oral hearing and cross-examination are necessary for the development
of an adequate record;
It is further ordered, That the following entities be designated as
Respondents in this proceeding:
City of Los Angeles, California; Harbor Department of the City of
Los Angeles; Board of Harbor Commissioners of the City of Los Angeles;
City of Long Beach, California; Harbor Department of the City of Long
Beach; Board of Harbor Commissioners of the City of Long Beach;
It is further ordered, That the Commission's Bureau of Enforcement
be designated a party to this proceeding;
It is further ordered, That notice of this Order be published in
the Federal Register, and a copy be served on all parties of record;
It is further ordered, That other persons having an interest in
[[Page 56827]]
participating in this proceeding may file petitions for leave to
intervene in accordance with Rule 72 of the Commission's Rules of
Practice and Procedure, 46 CFR 502.72;
It is further ordered, That all further notices, orders, or
decisions issued by or on behalf of the Commission in this proceeding,
including notice of the time and place of hearing or prehearing
conference, shall be served on all parties of record;
It is further ordered, That all documents submitted by any party of
record in this proceeding shall be directed to the Secretary, Federal
Maritime Commission, Washington, DC 20573,in accordance with Rule 118
of the Commission's Rules of Practice and Procedure, 46 CFR 502.118,
and shall be served on parties of record; and
It is further ordered, That in accordance with Rule 61 of the
Commission's Rules of Practice and Procedure, the initial decision of
the Administrative Law Judge shall be issued by September 24, 2009 and
the final decision of the Commission shall be issued by January 22,
2010.
Karen V. Gregory,
Secretary.
[FR Doc. E8-22942 Filed 9-29-08; 8:45 am]
BILLING CODE 6730-01-P