Nationwide Freight Systems, Inc. v. Illinois Commerce Commission

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.