Nationwide Freight Systems, In v. Illinois Commerce Commission , 784 F.3d 367 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-3316
NATIONWIDE FREIGHT
SYSTEMS, INC., et al.,
Plaintiffs-Appellants,
v.
ILLINOIS COMMERCE
COMMISSION, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12 C 2486— James F. Holderman, Judge.
ARGUED DECEMBER 12, 2014 — DECIDED APRIL 23, 2015
Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.
ROVNER, Circuit Judge. The appellants in this case are three
motor carriers that were cited for engaging in intrastate
operations in Illinois without a license from the Illinois
Commerce Commission (the “ICC” or “Commission”). When
the ICC conducted a follow-up investigation of the carriers and
2 No. 13-3316
requested documents relating to their operations in Illinois, the
carriers refused to comply, reasoning that because the docu-
ments sought by the ICC would reveal their rates, routes, and
services, the requests were “related to” those rates, routes, and
services and therefore were preempted by the Federal Aviation
Administration Authorization Act of 1994 (the “FAAAA”),
49 U.S.C. § 14501(c). The ICC rejected the carriers’ argument
and fined them for their failure to comply with the document
requests, prompting the carriers to file suit seeking a judgment
declaring the ICC’s enforcement efforts preempted. The district
court granted summary judgment to the ICC, concluding that
the document requests, although they might reveal the
carriers’ rates, routes, and services, had no significant economic
impact on them. Alternatively, the court found that the ICC’s
efforts to enforce its licensing requirement, which serves as a
means of verifying a carrier’s insurance coverage, is exempted
from federal preemption. Nationwide Freight Sys., Inc. v.
Baudino, No. 12 C 2486, 2013 WL 5346450 (N.D. Ill. Sep. 23,
2013). We agree on both points and affirm.
I.
Since 1953, Illinois has prohibited motor carriers of prop-
erty from conducting intrastate operations without first
procuring a license from the ICC. See 1953 Ill. Laws 933, 937-38;
625 ILCS 5/18c-4104(1)(a). Section 4104 of the Illinois Commer-
cial Transportation Law currently deems it unlawful to
“[o]perate as an intrastate motor carrier of property without a
license from the Commission; or as an interstate motor carrier
of property without a registration from the Commission.”
625 ILCS 5/18c-4104(1)(a). Obtaining a license for intrastate
operations in turn requires a carrier to carry appropriate
No. 13-3316 3
insurance or surety coverage. 625 ILCS 5/18c-4901 & 4402(2)(b).
Procedurally, a carrier complies with the licensing requirement
by completing an application and submitting proof of its
insurance or bond coverage along with an administrative fee.
See id.; 92 Ill. Admin. Code § 1301.30(a). A carrier is then issued
a public carrier certificate which states, inter alia, that “[t]he
holder of this license certifies to the Commission that it will
perform transportation activities only with the lawful amount
of liability insurance in accordance with 92 Ill. Admin.
Code 1425.” R. 49 at 11. See also Ill. Admin. Code § 1425.10 (“A
license or registration issued by the [ICC] to a motor carrier of
property has force and effect only while the carrier is in
compliance with requirements for the filing of proof of
insurance or bond coverage.”). Drivers must have a copy of the
carrier’s license with them at all times. See 625 ILCS 5/18c-
4104(c). It is a Class C misdemeanor offense, punishable by
imprisonment for up to 30 days and a fine of up to $1,500, for
an operator not to produce proof of registration upon request
(id.; 625 ILCS 5/18c-1704(1); 730 ILCS 5/5-4.5-65); and the ICC
also has the authority to impose a civil penalty of between $100
and $1,000 per offense (625 ILCS 5/18c-1704(2)). Each day of
continuous operation in violation of the licensing requirement
constitutes a separate offense. 625 ILCS 5/18-1701.
Each of the three appellants is a motor carrier engaged in
the intrastate transportation of property in Illinois that was
cited by the ICC police force for conducting such activity
without a license. Nationwide Freight Systems, Inc. and Stott
Contracting, Inc. were cited in May of 2010 and were each
fined $750. Leader U.S. Messenger, Inc., which previously had
obtained a license but had allowed it to lapse, was cited in
4 No. 13-3316
March of 2011 and was subjected to a civil penalty of $200.1
After those penalties were paid, the ICC opened investigations
into each carrier in order to determine the extent to which the
operator may have committed additional violations by
conducting unlicensed, intrastate operations for hire prior to
the occasion on which the operator was cited. Toward that end,
each carrier was asked to produce, for a period of five or six
months preceding the violation, documents (including, but not
limited to, bills of lading,2 driver logs, and invoices from any
owner/operators leased to the carrier) that would show the
dates of transport, a description of the cargo carried, the origin
and destination of that cargo, and the revenues generated from
the transportation provided. The authorization for these
requests is supplied by section 1703 of the Illinois Commercial
Transportation Law: “Authorized employees of the Commis-
sion shall have the power at any and all times to examine,
audit, or demand production of all accounts, books, memo-
randa, and other papers in the possession or control of a license
or registration holder, its employees, or agents.” 625 ILCS
5/18c-1703(2)(b).3 All three carriers refused to comply with the
1
Of the three appellants, only Nationwide thereafter corrected the
deficiency for which it was cited by obtaining a license.
2
Bills of lading typically both acknowledge the receipt of goods by the
carrier for shipment and recite the terms of the parties’ agreement. See Ill.
Match Co. v. Chicago, R.I. & P. Ry. Co., 95 N.E. 492, 493-94 (Ill. 1911); Marx
Transp., Inc. v. Air Exp. Int’l Corp., 882 N.E.2d 1281, 1286-87 (Ill. App. Ct.
2008); BLACK’S LAW DICTIONARY 198-99 (10th ed. 2014).
3
There is no dispute here that the Commission’s power extends to motor
(continued...)
No. 13-3316 5
ICC’s demand for such documents and were issued adminis-
trative citations for their refusals. See 625 ILCS 5/18c-4401(k).
The carriers filed motions to dismiss these citations with the
ICC. They argued that the document requests were preempted
by the FAAAA because they sought records that would reveal
the rates, routes, or service of each carrier. “To the extent that
the commerce commission’s minions are asking for informa-
tion about such things as bills of lading, owner-operator
contracts, and any other documents concerning the origins or
destinations of cargo, they are running afoul of clearly-stated
federal law,” they argued. “Their conduct should be barred
and sanctioned.” See R. 1-1 at 6-7 (Stott); R. 44-4 at 5-6 (Nation-
wide).
The enactment of the FAAAA extended the 1978 preemp-
tion of state regulation of air carriers to motor carriers. Pursu-
ant to the FAAAA’s preemption provision, neither a state nor
its political subdivision may enact or enforce laws “related to a
price, route, or service of any motor carrier … with respect to
the transportation of property. 49 U.S.C. § 14501(c)(1) (empha-
sis ours). The provision also contains a number of exceptions.
As relevant here, the act specifies that the preemption provi-
sion does not displace “the authority of a State to regulate
motor carriers with regard to minimum amounts of financial
3
(...continued)
carriers of property that should be, but are not, licensed to conduct
operations in Illinois. We note that the Commission also has the power
under section 1703 to subpoena information from persons other than license
holders in furtherance of its inquiry into potential violations. See § 18c-
1703(2)(b).
6 No. 13-3316
responsibility relating to insurance requirements or self-
insurance authorization.” § 14501(c)(2)(A).
The ICC’s chief administrative law judge (“ALJ”), Latrice
Kirkland-Montague, denied the carriers’ motions to dismiss,
found each in violation of its obligation to comply with the
Commission’s document requests, and ordered each of them
to pay fines of $500 for the failure to comply. The carriers filed
a consolidated petition for rehearing with the ICC, and Judge
Kirkland-Montague issued a memorandum to the ICC’s
commissioners explaining why, in her view, the petition
should be denied. First, the carriers had made no showing that
the document requests might have anything more than an
indirect, remote, or tenuous effect on their rates, routes, or
services. The Commission had only asked the carriers to
produce records already in their possession. Second, the statute
exempts from preemption the state’s power to regulate carriers
with respect to minimum insurance requirements. Without the
ability to demand the types of records that the ICC had sought
from the carriers, Kirkland-Montague asserted, the state would
be unable to ascertain whether a carrier was or is operating
without a license or without the insurance coverage necessary
to obtain a license. R. 44-3 at 45-46. The Commission denied the
carriers’ petition for rehearing.
The carriers turned to federal court, where they filed suit
against the ICC and three of its officers and agents in their
official capacities. (The ICC was dismissed from the suit on
Eleventh Amendment grounds, and that decision is not
challenged here.) The carriers sought a declaratory judgment
deeming the ICC’s document requests and its investigations
preempted by the FAAAA to the extent they implicated the
No. 13-3316 7
carriers’ rates, routes, or services. “The fact is,” the carriers
alleged, “that the Interstate Commerce Commission is attempt-
ing to regulate—by investigating—a motor carrier’s rates,
routes, or services for purposes which are preempted by
49 U.S.C. § 14501. That it cannot do.” R. 1 at 7 ¶ 27. They also
sought an injunction barring the ICC from assessing penalties
for their refusal to comply with the document requests and
from making any further inquiry into any aspect of their
operations other than their compliance with the ICC’s insur-
ance requirements or demonstrated safety issues.
The parties filed cross-motions for summary judgment. In
connection with those motions, acting ICC police chief Craig
Baner submitted a declaration in which he represented that the
ICC typically opens an investigation when a commercial motor
carrier is discovered to be operating without a public carrier
certificate. The purpose of that investigation is to determine
how long the carrier has been conducting operations without
such a certificate in the time period preceding that violation,
and also to determine whether the carrier had the requisite
insurance coverage (and had proof of such coverage on file
with the ICC) during that same time period. In seeking a
carrier’s business records, Baner averred, the ICC has no
interest in regulating a carrier’s prices, routes, or services. Its
sole purpose in seeking the types of documents demanded of
the carriers in this case is to enforce the certification and
insurance requirements imposed on the carriers by Illinois law,
and to determine the nature of any additional penalties the ICC
may impose on the carrier for violations of those requirements.
R 44-9 at 3 ¶¶ 3-5. For their part, the plaintiff carriers were
somewhat vague as to how the document requests might affect
8 No. 13-3316
their rates, routes, or services. They suggested that the practical
result of the ICC’s investigation might be to require a carrier
and its customers to prepare particular forms responsive to the
ICC’s demands for information and thereby incur additional
costs or, alternatively, face additional penalties if they did not.
R. 42 at 5.
The district court granted summary judgment in the ICC’s
favor. To the extent that the document requests could be
construed “[a]t a broad level” to relate to a carrier’s rates,
routes, or services in the sense of having some connection with
them, 2013 WL 5346450, at *6, this alone was insufficient to
trigger preemption, the court reasoned. Rather, the challenged
conduct must “have ‘a significant impact on carrier rates,
routes, or services’” to be preempted. Id., at * 7 (quoting
Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 375,
128 S. Ct. 989, 997 (2008) (emphasis in Rowe)). The court had
been presented with no evidence that the document requests
affected the plaintiffs’ rates, routes, or services in any way, and
the plaintiffs did not claim that they did. Id. The carriers could
do no more than speculate that the ICC’s document requests
might force them to create new forms in order to supply the
sort of information that the ICC demanded; but that specula-
tion was not supported by the record. Id. Consequently, the
carriers had no basis for claiming that the ICC’s effort to obtain
the challenged documents from the plaintiffs was preempted.
Alternatively, the ICC’s pursuit of documents was covered
by the statutory exemption for activities aimed at enforcing
carrier financial responsibility. Id., at *8. Baner’s declaration
indicated that the ICC sought the documents in order to
No. 13-3316 9
determine how long each carrier had been operating without
the requisite certificate, whether the carrier had the requisite
insurance coverage during that time, and, if so, whether the
carrier had proof of its coverage on file with the ICC during
that time. There was no indication that Baner’s explanation for
the document requests was false. Id. The carriers’ argument
that the document requests were not, in fact, focused on
insurance or safety issues was unpersuasive in light of the
information actually sought by the request—including the
origin, nature, and destination of cargo transported, the dates
of transportation, and so forth—and Baner’s explanation that
this information was sought in order to ascertain how long the
carriers may have been operating without a license and, in
turn, the requisite insurance. “As a matter of common sense,
this type of information is relevant to ascertaining whether a
motor carrier is properly licensed and insured.” Id.
II.
We are presented on appeal with essentially the same two
issues presented to the district court. First, we must consider
whether the ICC’s investigation “relate[s] to” the plaintiff
carriers’ rates, routes, and services, and is therefore preempted
by the FAAAA, because the Commission has demanded
documents which will disclose those rates, routes, and services,
absent any additional indication that the Commission’s
investigation will have a significant economic impact on the
carriers’ rates, routes, and services. Second, we must consider
whether the Commission’s document requests fall within the
FAAAA’s exception for state insurance requirements, given
that the requests are not confined to documents reflecting
whether and when the carriers were insured and had proof of
10 No. 13-3316
their insurance on file with the ICC. We review the district
court’s resolution of these issues on summary judgment
de novo. E.g., Hotel 71 Mezz Lender LLC v. Nat’l Retirement Fund,
778 F.3d 593, 601 (7th Cir. 2015); see also Mass. Delivery Ass’n v.
Coakley, 769 F.3d 11, 17 (1st Cir. 2014) (“Since federal preemp-
tion is a question of statutory construction, we review these
issues de novo.”).
A. Connection Between the ICC’s Document Requests and
the Carriers’ Rates, Routes, and Services
The plaintiff carriers contend that the FAAAA bars an
investigation into the operations of a motor carrier whenever
that investigation, however incidentally, touches upon a
carrier’s rates, routes, or services with respect to the transpor-
tation of property. In the exercise of its audit authority, the ICC
has sought documents which will disclose a carrier’s rates,
routes, and services with respect to the transportation of
property; and to that extent, the ICC’s investigation arguably
“relates to” those rates, routes, and services, as the district
court acknowledged. 2013 WL 5346450, at *6. This, in the
carriers’ view, is enough to demonstrate that the Commission’s
investigation (including, in particular, the document requests)
is preempted, notwithstanding the ICC’s unchallenged
representation that it seeks these documents solely for pur-
poses of determining how long each carrier may have been
operating without the requisite license (and potentially without
the insurance coverage needed to obtain such a license) and
determining appropriate penalties, and not with any intent to
regulate a carrier’s rates, routes, or services. They argue:
No. 13-3316 11
When coupled with the Illinois Commerce Commis-
sion’s demands for transportation-related docu-
ments, the admission by the commission that it was
seeking information about how long the motor
carriers were operating (that is, providing services)
without licenses is as clear an indication as any that
the commission was investigating the rates, routes
and services of motor carriers.
Appellants’ Br. 16. This is an exceedingly broad view of
preemption principles that finds no support in case law.
The Supremacy Clause of the Constitution establishes a rule
of decision precluding courts from “giv[ing] effect to state laws
that conflict with federal laws.” Armstrong v. Exceptional Child
Ctr., Inc., 2015 WL 1419423, at *3 (U.S. Mar. 31, 2015); see U.S.
Const. Art. VI, cl. 2. Of the three recognized types of preemp-
tion, see, e.g., Wigod v. Wells Fargo Bank, N.A, 673 F.3d 547, 576
(7th Cir. 2012), it is express preemption that is at issue in this
case, as the FAAAA states explicitly what states may and may
not do with respect to motor carriers of property. Our inquiry
into whether the FAAAA preempts the ICC’s investigation and
document requests consequently begins with the language of
the statute, “which necessarily contains the best evidence of
Congress’ pre-emptive intent.” Dan’s City Used Cars, Inc. v.
Pelkey, 133 S. Ct. 1769, 1778 (2013) (quoting CSX Transp., Inc. v.
Easterwood, 507 U.S. 658, 664, 113 S. Ct. 1732, 1737 (1993)).
Congress enacted the FAAAA’s preemption provision in
1994 with the aim of eliminating the patchwork of state
regulation of motor carriers that persisted fourteen years after
it had first attempted to deregulate the trucking industry. See
12 No. 13-3316
Dan’s City, 133 S. Ct. at 1775 (citing City of Columbus v. Ours
Garage & Wrecker Serv., Inc., 536 U.S. 424, 440, 122 S. Ct. 2226,
2236 (2002)); S.C. Johnson & Son, Inc. v. Transp. Corp. of Am., Inc.,
697 F.3d 544, 548-49 (7th Cir. 2012). Borrowing language from
the 1978 legislation deregulating the airline industry, see Dan’s
City, 133 S. Ct. at 1775, Congress precluded any state or its
political subdivision from “enact[ing] or enforc[ing] a law,
regulation, or other provision having the force and effect of
law related to a price, route, or service of any private motor
carrier … with respect to the transportation of property.”
42 U.S.C. § 14501(c)(1).
Thus, as is typical in preemption cases, this appeal focuses
on whether the Commission’s attempt to enforce the Illinois
licensing requirement reasonably can be said to “relate[ ] to”
the plaintiff motor carriers’ rates, routes, or services. See, e.g.,
Dan’s City, 133 S. Ct. at 1778; S.C. Johnson, 697 F.3d at 549. “The
ordinary meaning of these words is a broad one—‘to stand in
some relation; to have bearing or concern; to pertain; refer; to
bring into association with or connection with,’—and the
words thus express a broad pre-emptive purpose.” Morales v.
Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S. Ct. 2031, 2037
(1992) (citation omitted); see also Dan’s City, 133 S. Ct. at 1778;
Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 370,
128 S. Ct. 989, 994-95 (2008). The universe of state regulatory
efforts preempted by the FAAAA thus includes laws or actions
having some type of connection with or reference to a carrier’s
rates, routes, or services, whether direct or indirect. Dan’s City,
133 S. Ct. at 1778 (citing Rowe, 552 U.S. at 370, 128 S. Ct. at 995);
see also Morales, 504 U.S. at 384, 112 S. Ct. at 2037). But “the sky
is [not] the limit.” Dan’s City, 133 S. Ct. at 1778. A state’s
No. 13-3316 13
regulatory action is not preempted where its relationship with
carrier rates, routes, or services is “tenuous, remote, or
peripheral.” Id. (citing Rowe, 552 U.S. at 371, 128 S. Ct. at 995);
see also Morales, 504 U.S. at 390, 112 S. Ct. at 2040). Rather, state
action must have a substantial economic effect on carrier rates,
routes, or services in order to be subject to preemption. Travel
All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423,
1431 (7th Cir. 1996); see also Rowe, 552 U.S. at 375, 128 S. Ct. at
997 (“we have written that the state laws whose ‘effect’ is
‘forbidden’ under federal law are those with a ‘significant
impact’ on carrier rates, routes, or services”) (quoting Morales,
504 U.S. at 388, 390, 112 S. Ct. at 2039, 2040) (emphasis in Rowe).
We have thus articulated two requirements for preemption.
First, a state must have enacted or attempted to enforce a law.
Second, that law must relate to carrier rates, routes, or services
“either by expressly referring to them, or by having a signifi-
cant economic effect on them.” Travel All Over the World, 73
F.3d at 1432 (citing American Airlines, Inc. v. Wolens, 513 U.S.
219, 228-29, 115 S. Ct. 817, 823-24 (1995)); S.C. Johnson, 697 F.3d
at 553; see Morales, 504 U.S. at 388, 112 S. Ct. at 2039; see also,
e.g., Mass. Delivery Ass’n, 769 F.3d at 17-18; Parise v. Delta
Airlines, Inc., 141 F.3d 1463, 1465-66 (11th Cir. 1998).
Without doubt, the state’s regulatory efforts satisfy the first
of these two criteria. The licensing requirement imposed by
section 4104 of the Illinois Commercial Transportation Law,
which the ICC was attempting to enforce by way of the
document request promulgated pursuant to section 1703 of the
statute, applies to motor carriers of property. But does the
Commission’s enforcement effort meaningfully “relate to”
14 No. 13-3316
carrier rates, routes, or services? We agree with the district
court that it does not, as the economic impact of the document
requests on rates, routes, or services is, if anything, insignifi-
cant.
The Illinois statute does not expressly refer to rates, routes,
or services, nor does it betray an effort to regulate their
operations in any way. It simply imposes a licensing require-
ment on all motor carriers transporting property within the
state and subjects a carrier to penalties for failure to comply
with that requirement.
Nor, for that matter, do the challenged document requests
expressly refer to rates, routes, or services. It is undisputed that
the aim of those requests was to obtain documents that would
establish how many times the plaintiff carriers had conducted
unlicensed–and potentially uninsured–operations during the
time period preceding their citations for operating without the
required certificate. The only sense in which the requests
implicate rates, routes, or services is that the business records
sought (for example, invoices) will necessarily disclose infor-
mation about the transportation services that a carrier has
provided to its customer and the prices charged for those
services. It is by no means unusual for one type of record to
disclose a variety of information; for that matter, one piece of
data can be informative and relevant in any number of ways.
Documents which illuminate how many times a carrier
engaged in unlicensed operations, how many miles of Illinois
roads it used in those operations, and so forth will necessarily
touch upon and overlap with the carrier’s rates, routes, and
services, yes, but the Commission was not interested in the
plaintiffs’ rates, routes, and services as such.
No. 13-3316 15
The district court accepted the notion that the document
requests could be said to relate to the carriers’ rates, routes,
and services in the limited sense that they call for production
of records that will disclose their prices, routes, and services.
But in the absence of evidence that the ICC’s investigation
would have any meaningful impact on the carriers’ rates,
routes, or services, the court concluded that Travel All Over the
World’s second criterion—that the enforcement effort have a
significant economic effect on rates, routes, or services—had
not been met.
Indeed, the carriers have never been able to demonstrate
how the ICC’s document requests might meaningfully affect
their rates, routes, or services. As below, they can only specu-
late that the need to document their compliance with the ICC’s
registration and insurance requirements might compel the
carriers and their customers to generate extra paperwork and
thereby increase costs by some indefinite amount. But the ICC
has not demanded that the carriers create any particular type
of form; the Commission has asked the carriers to produce the
types of documents that one would expect to be found among
any motor carriers’ existing business records. The notion that
compliance with the document requests would require the
carriers to modify and expand their record-keeping is pure
speculation, and is certainly insufficient to demonstrate a
significant economic impact on the carriers’ operations.4
4
At points in their briefs and arguments to this court, the carriers have
suggested that the test for preemption is whether the challenged state action
relates to or has a significant impact on carrier rates, routes and services. See
(continued...)
16 No. 13-3316
The carriers are thus left with the contention that any nexus
between the challenged state action and their rates, routes, and
services–including investigatory actions which would result in
the disclosure of their rates, routes, and services– is sufficient
to trigger preemption, however minimal the connection might
be, and that our own decision in Travel All Over the World erred
in requiring a showing of a significant economic impact. But the
Supreme Court has never indicated that a de minimis impact on
rates, routes, or services suffices for purposes of preemption,
and we believe Travel All Over the World is in fact consistent
with the high Court’s cases on this point.
The Supreme Court’s preemption precedents are clear that
not any relationship between state law and carrier rates, routes,
and services, no matter how insignificant, will necessarily
result in preemption. The cases do acknowledge that a state
statute or effort to enforce that statute need not expressly cite
4
(...continued)
Reply Br. at 4; Oral Argument at 4:29 (“There’s two prongs to this statute:
to relate to, or to have an effect on.”). Actually, “related to” is the single,
broad statutory standard, which this court (among others) has deemed to
preclude a state from enacting or enforcing a law that: (1) expressly
references rates, routes, and services, or (2) has a significant economic
impact on rates, routes, and services. See Travel All Over the World, 73 F.3d
at 1432; see also Morales, 504 U.S. at 388, 112 S. Ct. at 2039; Mass. Delivery
Ass’n, 769 F.3d at 17-18. The carriers seem to be attempting to create a third
category of preempted state laws or enforcement actions which implicitly
reference, without significantly affecting, rates, routes, or services. Our
cases do not recognize such a third category. Moreover, as we explain
below, neither the Supreme Court’s jurisprudence nor our own support the
notion that an implicit reference to or connection with carrier rates, routes,
or services is alone sufficient to trigger preemption.
No. 13-3316 17
a carrier’s rates, routes, or services, and that state regulatory
action may be preempted as long as it affects a carrier’s rates,
routes, and services, even if the effect is indirect. E.g., Dan’s
City, 133 S. Ct. at 1778; Rowe, 552 U.S. at 370-71, 128 S. Ct. at
995; Morales, 504 U.S. at 386, 112 S. Ct. at 2038. Even so, Dan’s
City observes that, notwithstanding the broad preemptive
reach of the FAAAA’s “related to” clause, “the sky is [not] the
limit,” and a “tenuous, remote, or peripheral” impact will not
trigger preemption. 133 S. Ct. at 1778. The plain import of this
qualifying language is that the challenged statute or regulatory
action must have a meaningful impact in order to be pre-
empted. To be fair, the Supreme Court has not yet had occa-
sion to identify precisely what types of effects will be too
insignificant to trigger preemption, because the cases that the
Court has decided under the airline and motor carrier preemp-
tion statutes have not been close to the line, wherever that line
may be. See S.C. Johnson, 697 F.3d at 552 (citing Rowe, 552 U.S.
at 371, 128 S. Ct. at 995). But whatever room this may leave for
the plaintiff carriers to argue that the mere disclosure of their
rates, routes, and services is enough of an effect to trigger
preemption of the ICC’s document requests, Travel All Over the
World all but closes the door on such a contention. Travel All
Over the World draws the line to exclude from preemption
actions which may have some nominal, incidental connection
with carrier rates, routes, or services but do not have a mean-
ingful economic impact on them. 73 F.3d at 1432. We can find
nothing in the Supreme Court’s cases that is inconsistent with
our holding on that point. Indeed, we cannot help but wonder
why the Court would continue to caution that a “tenuous,
remote, or peripheral” relationship between state regulation
18 No. 13-3316
and a carrier’s rates, routes, or services does not trigger
preemption if it did not mean to imply exactly what our
decision in Travel All Over the World recognizes: that the
challenged state action must have a discernible and substantial
impact on a carrier’s rates, routes, or services in order to be
deemed preempted. Rowe itself states that “the state laws
whose ‘effect’ is ‘forbidden’ are those with a ‘significant impact’
on carrier rates, routes, or services.” 552 U.S. at 375, 128 S. Ct.
at 997 (quoting Morales, 504 U.S. at 388, 390, 112 S. Ct. at 2039,
2040) (emphasis in Rowe); see also, e.g., Mass. Delivery Ass’n,
769 F.3d at 18 (“[C]ountless state laws have some relation to the
operations of [motor carriers] and thus some potential effect on
the prices charged or services provided. State laws whose
effect is only tenuous, remote, or peripheral are not pre-
empted.”) (internal quotation marks and citations omitted)
(emphasis in original). And we are confident that wherever the
Supreme Court may ultimately draw the line between pre-
empted and non-preempted effects, this case falls on the non-
preempted side of the line.
All that the carriers have shown, in the end, is that the
Commission’s document requests will require them, inciden-
tally, to disclose information regarding their rates, routes, and
services, not that the aim or the result of the investigation will
be to affect those aspects of their operations. The carriers’
speculation concerning extra paperwork at best suggests a de
minimis (potential) economic effect on their operations in the
form of unspecified paperwork. And despite the carriers’
insinuation that if the ICC is requesting documents that will
reveal their rates, routes, and services, the Commission must
have an agenda to influence those aspects of their operations,
No. 13-3316 19
there is no indication that the Commission is interested in their
rates, routes, or services as such, let alone that it intends to (or
necessarily will) regulate or otherwise affect them.
We confronted a similar line of argument when S.C.
Johnson & Son sued motor carriers that had allegedly bribed
the company’s transportation director to contract with them to
provide transportation services to the company. S.C. Johnson
had alleged, among other things, that the bribery had injured
it by increasing the company’s transportation costs—i.e., the
price it had paid to the carriers for their services. The carriers
cited this allegation as “the smoking gun that proves that S.C.
Johnson’s claims are ‘really’ just about rates and services.”
697 F.3d at 559. We rejected the argument as to S.C. Johnson’s
bribery and racketeering claims, reasoning that although the
injury that S.C. Johnson experienced as a result of the defen-
dants’ alleged criminal acts might have some relation to the
carriers’ rates or services, the relationship was too tangential to
warrant preemption. Id. at 560. Our decision in that case makes
clear that simply because a carrier can show some link between
the state action it challenges and its rates, routes, or services
does not invariably mean that the challenged action is pre-
empted as one “related to” those rates, routes, or services. The
nexus must be significant, and in this case the carriers have no
evidence to show that it is.
Finally, it should be noted that the records the ICC has
asked the carriers to produce are of a type that might be sought
in any number of civil and criminal settings. A customer suing
a motor carrier for theft, for example, might ask for these same
records, perhaps to establish a pattern of wrongdoing (and
other potential victims), to identify the errant driver responsi-
20 No. 13-3316
ble for the theft(s), or to trace the path the victim’s property
took after it was stolen. The state itself might seek to subpoena
such records, and for similar purposes, in the course of
investigating potential criminal charges of theft, bribery,
racketeering, or tax evasion in connection with a carrier’s
operations. To say that the ICC’s requests are preempted
simply because the documents they seek will disclose the
carriers’ rates, routes, and services would call into question any
number of legitimate requests for a motor carrier’s business
records, even when those records are being sought for pur-
poses entirely unrelated to the deregulatory purposes of the
FAAAA. Motor carriers, as members of the public, see
S.C. Johnson, 697 F.3d at 558 (citing Rowe, 552 U.S. at 375,
128 S. Ct. at 997), remain subject to the civil and criminal
constraints that “set basic rules for a civil society,” id. at 558.
But, as a practical matter, those rules would be unenforceable
against motor carriers if such carriers were deemed exempt
even from routine investigatory efforts that would result in
incidental disclosures of their rates, routes, or services, not-
withstanding the absence of any purpose to interfere with the
competitive forces of the free market. This is the unmistakable
import of the carriers’ reply brief, which flatly argues that any
effort to document and fine a carrier based on the number of
days it has conducted unlicensed operations is preempted by
the FAAAA. Reply Br. at 6.
B. Safety and Insurance Exception
Even if it could be said that the ICC’s investigation mean-
ingfully relates to the carriers’ rates, routes and services, the
district court correctly determined that the Commission’s
enforcement actions fall within the exception to preemption set
No. 13-3316 21
forth in the insurance provision of the FAAAA. The statute
provides that the general rule of preemption set forth in section
14501(c)(1) “shall not restrict the safety regulatory authority of
a State with respect to motor vehicles … or the authority of a
State to regulate motor carriers with regard to minimum
amounts of financial responsibility relating to insurance
requirements and self-insurance authorization.”
§ 14501(c)(2)(A). As the district court recognized, “[t]his
exception preserves ‘the preexisting and traditional state police
power over safety,’ and state laws that are ‘genuinely respon-
sive to safety [or insurance] concerns’ are included within the
exception.” 2013 WL 5346450, at *8 (quoting Ours Garage,
536 U.S. at 439, 442, 122 S. Ct. S. Ct. at 2236, 2237). Because it is
fair to say that the ICC’s investigation was aimed at enforcing
Illinois’ requirement that carriers maintain specified insurance
coverage, the Commission’s investigation is covered by this
exception.5
It is undisputed that the one substantive requirement that
a motor carrier must satisfy in order to obtain the requisite
5
The carriers devote significant attention in their briefs to contesting the
notion that the ICC’s investigation was motivated by safety concerns.
Among other things, they point out that the ICC’s former responsibilities
for conducting safety inspections of the vehicles used by motor carriers
have been transferred to the Illinois Department of Transportation. See 20
ILCS 2705/2705-125. But setting safety concerns aside, there nonetheless
remains the express exemption for regulation of “motor carriers with regard
to minimum amounts of financial responsibility relating to insurance
requirements.” § 14501(c)(2)(A); see Cal. Tow Truck Ass’n v. City & Cnty. of
San Francisco, 693 F.3d 847, 857-58 (9th Cir. 2012) (identifying these as
separate exceptions). It is this statutory exception on which the ICC relies,
and on which we shall focus our attention.
22 No. 13-3316
license from the ICC is to show that it has appropriate insur-
ance or bond coverage; beyond that, it is simply a matter of
completing paperwork and submitting a fee.6 Requiring a
license is thus a means of confirming that motor carriers are
properly insured. Indeed, as we noted earlier, the public carrier
certificate issued to an intrastate motor carrier memorializes
the license holder’s certification “that it will perform transpor-
tation activities only with the lawful amount of liability
insurance in accordance with 92 Ill. Admin. Code 1425.” R. 49
at 11. And penalizing a carrier for conducting unlicensed
operations (and conducting an investigation to determine the
extent of such operations for purposes of determining the
appropriate penalty) likewise furthers the insurance require-
ment. Thus, the ICC’s investigation fits comfortably within
section 14501(2)(A)’s exception for imposing and enforcing
insurance requirements vis-à-vis commercial motor carriers of
property. Cf. Ace Auto Body & Towing, Ltd. v. City of New York,
171 F.3d 765, 776 (2d Cir. 1999) (remarking, with respect to
municipal regulations as to “licensing, display of information,
reporting, record-keeping, criminal history, insurance, posting
of bond, and maintenance of storage and repair facilities” of
tow-truck operators: “Most of these requirements are so
directly related to safety or financial responsibility and impose
so peripheral and incidental an economic burden that no
detailed analysis is necessary to conclude that they fall within
the § 14501(c)(2)(A) exemptions.”).
6
The minimum amounts and types of insurance coverage are specified by
the Illinois Administrative Code. See 92 Ill. Admin. Code §§ 1425.30-
1425.50; see also id. § 1425.120 (specifying minimum net worth requirements
for carrier to qualify for self-insurance).
No. 13-3316 23
The carriers suggest that if the Commission were truly
interested in insurance, it would simply ask the carriers about
their coverage and leave it at that. But when a carrier has been
cited for operating without a license, as each of these carriers
was—presenting the possibility that the carrier was also
operating without appropriate insurance coverage—the
Commission is not required to take the carrier at its word for
how long it may have been out of compliance with the ICC’s
requirements. It may legitimately seek to establish, independ-
ently, to what extent the carrier has engaged in unlicensed
operations–i.e., how many operations it has conducted over
Illinois roads without a license. This is the obvious point of the
ICC’s document requests, and we are given no reason to
believe that its requests were a subterfuge for something else,
including in particular an effort to affect the carrier’s rates,
routes or services.
On this point, it bears emphasizing that the carriers have
consistently refused to acknowledge the stated purpose for
which the ICC has sought the requested documents, which is
to document the extent of the carriers’ intrastate operations in
violation of Illinois’ licensing and insurance requirements. The
carriers seem to assume that the Commission has no need to
know anything beyond the fact that a particular carrier was or
was not licensed and insured. But, as the ICC has argued
without contradiction, the extent of a carrier’s unlicensed and
potentially uninsured operations factors into the magnitude of
the penalty that the Commission will impose for such opera-
tions. Recall that each day of continuous operation in violation
of the licensing requirement constitutes a separate violation of
the Illinois Commercial Transportation Law. 625 ILCS 5/18c-
24 No. 13-3316
1701. And the Commission’s regulations state expressly that
the extent of a carrier’s violative conduct affecting the public
interest is a factor bearing on the civil penalties that the
Commission may impose. See 92 Ill. Admin. Code § 1440.10(d).
The records sought by the ICC thus have an obvious relevance
to what additional penalties ought to be imposed on the
carriers for their unlicensed operations.7 To assert, as the
carriers do implicitly, that the Commission does not need to
know how many trips a carrier has made or how much cargo
it has transported while it was unlicensed and/or without
appropriate insurance coverage is to suggest that all delin-
quent carriers should be treated alike; that a carrier which has
conducted only five unauthorized trips in a particular time
period should be assessed the same penalty as a carrier which
has conducted hundreds of such unauthorized trips, for
example. This defies common sense, and is inconsistent with
the state statutory scheme.
The carriers go so far as to suggest that any inquiry at-
tempting to ascertain the total number of unlicensed opera-
tions they conducted in Illinois represents the very “kind of
economic regulation that Congress intended to bar when it
passed the FAAAA” and that treating each day of unlicensed
operation as a separate violation of Illinois law “is nothing
more than economic regulation.” Reply Br. at 5-6. Why they
7
Cf. Nussbaum Trucking, Inc. v. Ill. Commerce Com’n, 425 N.E.2d 1229, 1233-
34 (Ill. App. Ct. 1981) (in ICC proceeding on petition to approve purchase
of motor carrier of property, abstracts of representative shipments were
competent and admissible to establish that carrier’s operations had not been
abandoned, suspended, discontinued, or left dormant).
No. 13-3316 25
believe this is so is not clear. We are aware of no case holding
that a state may not require a motor carrier of property doing
business within its borders to be licensed by that state, particu-
larly when licensing is the state’s means of ensuring that the
carrier is appropriately insured. Nor are we convinced that a
system of penalties proportionate to the extent of a motor
carrier’s unauthorized operations could have anything more
than a tangential effect on the carrier’s rates, routes, or services.
The services a carrier has provided while unlicensed will
inform whatever penalty the ICC later chooses to impose, but
that penalty logically would not restrain, influence, or other-
wise affect the carrier’s choice of rates, routes, or services
thereafter. Once the penalty is paid and a license is secured, the
carrier is free to provide whatever services it wishes, at the
rates it believes appropriate and over the routes of its
choosing.8 A proportionate penalty surely will discourage the
carrier from ignoring the licensing requirement in the future,
but if the licensing requirement itself is permissible, as we are
certain it is, then so too is this salutary effect.
8
A hefty fine certainly could put a dent in a carrier’s finances, and perhaps
the carrier might seek to charge its customers more (the market permitting),
or otherwise modify its rates, routes, or services in an effort to repair the
damage to its balance sheet. We very much doubt that this could be
characterized as anything more than a tangential effect on the carrier’s rates,
routes, and services for purposes of the preemption analysis. Cf.
S.C. Johnson, 697 F.3d at 559-60 (alleged bribery conspiracy’s effect on rates
customer was charged for carrier’s services insufficient to show customer’s
bribery and racketeering claims were preempted). In any event, the carriers
do not make this particular argument.
26 No. 13-3316
Promoting financial responsibility by requiring that motor
carriers operating within a state’s borders maintain appropri-
ate insurance is an area that Congress has expressly reserved
to the states; and a licensing regime akin to the one Illinois has
established is an obvious and logical way to enforce its
insurance requirements. The type of document requests that
the ICC has issued to the carriers is also precisely the sort of
discovery in which one would expect an agency to engage in
order to assess the extent and gravity of a carrier’s non-
compliance with the licensing requirement and to assess a
proportionate penalty. We are satisfied that the challenged
requests fall within the scope of the exception that Congress
has established.
III.
For the foregoing reasons, we AFFIRM the grant of sum-
mary judgment in favor of the defendants-appellees.