| Without getting bogged down in too many details, at the end of two years, the two ports are implementing different versions of a Clean Truck Program (CTP), which they initially began developing together. POLA is going forward with a plan requiring a transition to an all-employee system, which also has some targeted incentives to help accelerate the process of replacing dirty trucks with new ones. POLB is going forward with a plan lacking these features. Both plans provide for removing all older trucks within five years, getting rid of the oldest trucks first, and using a truck fee system on older trucks to help pay for part of the costs. They use a concession system (like taxis and limos at airports, for example) to regulate and enforce the rules. Combined with money from other government sources, the ports are providing substantial financial aid to pay for the cost of new trucks. However, the trucking industry is vehemently opposed. They want their money with no strings attached.
The American Trucking Association (ATA) sued the ports in Federal Court (9th Circuit) seeking an injunction to stop the plans from going into effect, charging that the concession systems were illegally re-regulating a deregulated industry. The only problem is, there are two legal doctrines-the market participation doctrine and the municipal ownership doctrine-that say there's a completely different set of allowable actions when a government entity is a participant in commerce vs. when it's a complete outsider trying to impose rules on commerce. While a number of different laws-environmental laws, interstate commerce laws, etc.-forbid state and local government from regulating various industries (at least without federal government waivers), these laws generally do not prevent government entities from adopting operating rules that are more analogous to corporate operating policies. The ATA has lost every step of the way so far in the 9th Circuit.
Now, however, the Federal Maritime Commission (FMC) is getting into the act. It's run by a 5-person board, which currently has two vacancies, and one Democratic holdover, former Maine Governor, Joseph Brennan, first appointed by Bill Clinton, and re-appointed by Bush. Every step of the way, Brennan has opposed his colleagues efforts to interfere with the ports' CTP, telling them, primarily, that they have no business trying to second-guess a complex local political process that has involved all sorts of expert analysis, stakeholder meetings, negotiations, public hearings, etc. Aside from which, the FMC has zero environmental expertise, and has not stuck its nose into a trucking industry issue for a very long time-the last such court case was during the Nixon Administration, and the basic shipping law that the FMC operates under was totally rewritten in 1984.
On September 12, for example, when the FMC requested additional information on the CTPs, Brennan voted against the request, and issued a statement saying, in part:
Commissioner Brennan believes that the FMC should show more deference in these circumstances to the public policy judgments of the elected officials of two major cities, without ignoring the agency's statutory responsibilities under the Shipping Act. In his view, the agreement filed with the Commission represents principally an environmental and labor/management matter, and the agency has neither the charge nor the necessary expertise to rule on those issues.
Just two days before the election, Obama wrote a letter to the mayors of California's three top port cities-LA, Long Beach and Oakland-praising the CTP and pledging support for it. (Oakland is developing its own CTP.) But just four days before that, the FMC announced its intention to sue to stop the CTP from going forward.
"[T]he Clean Trucks Program recognizes trade, labor and the environment are not separate, but linked issues," Obama wrote. "The program sets up tough standards to clean up truck diesel emissions and provides generous subsidies for vehicle purchase and retrofit. And it also recognizes that responsibility for investing in higher standards is best borne by firms rather than the individual truck drivers fighting to make a living with little leverage to negotiate for better pay."
The FMC claimed that the concession plan would not produce any added reduction in pollution beyond that already produced by replacing older trucks, and that it would produce enormous added costs. As a reporter covering port pollution issues since 2002, including two years of wrangling over the CTP and two studies evaluating CTP options, both of which found that POLA's employee mandate system was best, I was skeptical to say the least. One report, by Beacon Economics, was sponsored by the William & Flora Hewlett Foundation, the other by Boston Consulting Group (BCG), was conducted for POLA. They used somewhat different approaches, but came similar overall conclusions.
Interviewing Jon Havemen, principle author of the Beacon report, for my article on FMC's legal action, he argued that employee mandates alone were sufficient to maximize efficiency, putting control of scheduling into the hands of truck owners.
"If you're an employer and you're responsible for when and where your truck goes, would you rather make a dray that takes two hours or four hours for the same pay?" he asked.
Better matching of inbound and outbound loads-reducing pollution directly by using less fuel, and indirectly by reducing congestion-played a major role in BCG's analysis as well.
So with all that in mind, stoking my skepticism, I called up the FMC, and asked to see the study they were relying on.
"No can do," they told me [all quotes in this paragraph are paraphrases]. It was "work product," and not for public view. I was, to say the least, incredulous. "If you go to court, it's going to have to come out. It will be subject to discovery," I argued, "So why hold back now?" The FMC counsel-who asked that his name not be used-told me that I was mistaken. As work product, it would not be subject to discovery. "This isn't a national security case," I shot back. I can't see what grounds you'd have to keep it secret." At that point, he informed me that they would be relying on expert testimony from staff, and that would be their foundation. Needless to say, I was not impressed. As a general rule of thumb, people who hide things usually have something to hide.
When the court case was filed-FMC seeking a preliminary injunction-boy did I find out I was right. The more I examined the declaration by FMC's chief economist, Roy Pearson, the more astonished I became, particularly as I compared it with the response from two economists who gave declarations supporting POLA's CTP. Only some of the contradictions and confusions in Pearson's declaration surfaced in the hearing that was held on December 5, but I think that it's really important to understand just how inadequate and incoherent his reasoning is, for at least two reasons. First of all, it's virtually impossible that such a shoddy piece of work could have come out of a public process. Second of all, its intellectual shoddiness and ideological blindness are all of a piece with many other products of the Bush Administration.
While Obama joined a broad local consensus that the port trucking system is badly broken, the Maritime Commission's chief economist, Roy Pearson, saw "a perfectly competitive market," in his declaration supporting FMC's legal action. He claimed that "key aspects" of the ports' plans "will likely transform the drayage market from a perfectly competitive market to a severely constrained market."
This was a perfect ideological claim, utterly divorced from reality. POLA has over 700 firms signed up for concessions-far too many to allow for a constrained market according to any standard economic analysis, as Harvard economist Joseph P. Kalt patiently explained in his declaration supporting POLA.
But there was another embarrassing fact that Kalt pointed out, which was more in the way of a fundamental contradiction in the FMC's case-the first of three I identified. The FMC is charging that the two ports are colluding to restrict competition, but Pearson's argument does not involve the market they are in-providing port services.
"Reduced competition and increased prices in port trucking (drayage) services would reduce demand for what POLA and POLB sell. This is not in their economic interests," Kalt stated. "POLA's and POLB's interests lie in more, not less, competition in the port trucking (drayage) services market."
This leads into a second basic contradiction. Pearson argued that POLA and POLB had colluded together, despite significant differences in their plans (above all, the employee mandate required by POLA, and incentives for buying new trucks sooner, rather than later), which would normally indicate a lack of coordination. However, his argument that the "plan" introduced anti-competitive costs relied on comparison to a baseline plan in which both ports used POLB's plan.
As a result, BCG economist Simon Goodall, principal author of their study referred to above, noted in his declaration supporting POLA, "the 'net cost' he [Pearson] measures is actually the cost not of an 'agreement,' but of the absence of an agreement, whereby the two Ports are acting differently."
The third contradiction actually involves two flawed arguments, and how they undercut one another. The argument that the truck drayage market would be anti-competitive, because it will be too concentrated, with too few companies directly contradicted his argument that truck utilization efficiencies cited by Beacon and BCG could not be realized because the market was too fragmented, with too many companies.
In the hearing, Rosenthal, concentrated on the first argument, saying, "As a matter of textbook economics, it is impossible to have anti-competitive effects in a marketplace with literally hundreds, if not thousands of competitors, no concentration and no barriers to entry." But the second, contradictory argument appears equally questionable..
"[T]he very high rate of matching, on which the BCG high-end estimate depends, is an unwarranted assumption," Pearson argued in his declaration. "Moreover, absent considerable consolidation of the drayage industry, even the low estimate of 25.8 percent matching is not achievable."
Haveman pointedly disagreed, saying, "It's precisely the concentrations that will result, especially from the Port of LA plan, that will drive them all to seek out inefficiencies to lower costs,"
I had originally intended to include a whole other section on the hearing itself, but I'm already well over 2,000, and I think that basic point is well enough made: this is but one more example of the utter intellectual shabbiness and ideological blindness that has permeated the Bush Administration at every level, carelessly spreading death and destruction wherever it goes. The cost of this particular foolishness can be measured in the lungs and the lives of the children-overwhelming children of color-in the communities surrounding the two ports and freeways leading away from them. |
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