American Trucking Assns., Inc. v. Los Angeles

Supreme Court of the United States
569 U.S. 641, 2013 U.S. LEXIS 4539, 186 L. Ed. 2d 177 (2013)

ELI5:

Rule of Law:

A state or local government provision has the "force and effect of law" and is subject to federal preemption under the Federal Aviation Administration Authorization Act of 1994 (FAAAA) when compliance is compelled through the government's coercive power, such as the threat of criminal sanctions, regardless of the government's proprietary or commercial motive.

Facts:

The Port of Los Angeles, a division of the City of Los Angeles, sought to expand its facilities in the late 1990s.
Local neighborhood and environmental groups opposed the expansion, citing concerns about congestion, pollution, and safety, which delayed the project for nearly a decade.
To address these concerns, the Port's Board of Harbor Commissioners implemented a 'Clean Truck Program,' which required all drayage trucking companies to sign a standard 'concession agreement' to operate at the Port.
This agreement contained several requirements, including that companies affix a placard on each truck with a phone number for reporting concerns and submit a plan listing off-street parking locations for each truck.
To compel trucking companies to sign the agreement, the Board amended the Port's tariff, a municipal ordinance, to prohibit terminal operators from granting access to any truck not registered under a concession agreement.
A violation of this tariff by a terminal operator was classified as a misdemeanor, punishable by a fine of up to $500 or a prison sentence of up to six months.

Procedural Posture:

American Trucking Associations, Inc. (ATA) sued the City of Los Angeles in the United States District Court, seeking an injunction against several provisions of the concession agreement.
ATA argued that the provisions were expressly preempted by the Federal Aviation Administration Authorization Act of 1994 (FAAAA).
Following a bench trial, the District Court found for the City, holding that the agreement was not preempted.
ATA, as appellant, appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
The Ninth Circuit, as the intermediate appellate court, largely affirmed the District Court's decision, holding that the placard and parking requirements did not have the 'force and effect of law' because the Port was acting to advance its proprietary business interests.
The Supreme Court of the United States granted ATA's petition for a writ of certiorari to review the Ninth Circuit's decision on the preemption and enforcement issues.

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Issue:

Does the Federal Aviation Administration Authorization Act of 1994 (FAAAA), which preempts local provisions 'having the force and effect of law,' preempt municipal port regulations that require trucking companies to display specific placards and submit off-street parking plans when compliance is compelled through a contract mandated by a criminal ordinance?

Opinions:

Majority - Justice Kagan

Yes. The Federal Aviation Administration Authorization Act of 1994 (FAAAA) preempts the placard and parking provisions because they have the 'force and effect of law.' Although the FAAAA distinguishes between a government's regulatory authority and its proprietary participation in a market, the Port acted in a regulatory capacity. The Port used its unique sovereign power—the threat of criminal sanctions—to force trucking companies, via the terminal operators, to enter into the concession agreements. The Port's motive, whether to address business needs like community goodwill or to act as a regulator, is irrelevant; what matters are the means employed. By using the 'hammer of the criminal law,' a tool unavailable to private parties, the Port was not merely acting as a market participant but was performing a 'prototypical regulatory role,' thus bringing its provisions within the preemptive scope of the FAAAA.

Concurring - Justice Thomas

Yes. While agreeing with the majority's reasoning that the Port's actions have the 'force and effect of law,' this opinion expresses doubt about the constitutionality of the FAAAA itself. The Commerce Clause grants Congress power to regulate commerce 'among the several States,' not purely intrastate commerce. By preempting local regulations that may govern wholly intrastate activities, such as off-site truck parking, Congress may have exceeded its enumerated powers. However, because the respondents did not raise a constitutional challenge to the FAAAA, joining the Court's opinion is appropriate.

Analysis:

This decision significantly clarifies the distinction between a government entity acting as a 'regulator' versus a 'market participant' for the purposes of federal preemption. The Court established that the focus of the inquiry is on the means of enforcement, not the government's motive. By holding that the use of coercive sovereign power, like criminal penalties, transforms a seemingly contractual requirement into a provision 'having the force and effect of law,' the Court limits the ability of state and local governments to evade federal preemption by structuring their regulations as proprietary agreements. This precedent will make it more difficult for local governments to impose regulations on industries subject to federal preemption schemes by using non-voluntary contracts backed by governmental power.

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