American Trucking Associations v. City of Los Angeles , 660 F.3d 384 ( 2011 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMERICAN TRUCKING ASSOCIATIONS, 
INC.,
Plaintiff-Appellant,
v.
THE CITY OF LOS ANGELES; THE No. 10-56465
HARBOR DEPARTMENT OF THE
CITY OF LOS ANGELES; THE D.C. No.
BOARD OF HARBOR  2:08-cv-04920-
COMMISSIONERS OF THE CITY OF LOS CAS-CT
ANGELES, OPINION
Defendants-Appellees,
NATURAL RESOURCES DEFENSE
COUNCIL; SIERRA CLUB;
COALITION FOR CLEAN AIR, INC.,
Defendants-intervenors-Appellees.

Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted
June 10, 2011—Pasadena, California
Filed September 26, 2011
18193
18194 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
Before: Betty B. Fletcher and N. Randy Smith,
Circuit Judges, and Rudi M. Brewster,
District Court Judge.*
Opinion by Judge B. Fletcher;
Dissent by Judge N. R. Smith
*The Honorable Rudi M. Brewster, Senior District Court Judge for the
U.S. District Court for Southern California, San Diego, sitting by designa-
tion.
18198 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
COUNSEL
Robert Digges, Jr. (argued), Chief Counsel, American Truck-
ing Associations, Inc. Arlington, Virginia; Stephen S. Ander-
son, Jr., William Stephen Cannon, Seth David Greenstein,
Richard Levine, and Evan P. Schultz, Constantine, Cannon
LLP, Washington, D.C.; Christopher Chad McNatt, Jr., Sco-
pelitis, Garvin, Light, Hanson & Feary, LLP, Pasadena, Cali-
fornia, for the petitioner-appellant.
Steven S. Rosenthal (argued), Susanna Chu, David Cou-
sineau, and Alan Palmer, Kaye Scholer LLP, Washington,
D.C.; Joy Murakami Crose and Simon Michael Kann, LA
City Attorney’s Office, San Pedro, California; Thomas A.
Russell and Carmen A. Trutanich, City of Los Angeles, San
Pedro, California, for defendants-appellants the City of Los
Angeles and the Board of Harbor Commissioners.
Melissa Lin Perrella (argued) and David Richard Pettit, Natu-
ral Resources Defense Council, Inc., Santa Monica, Califor-
nia, for defendants-intervenors-appellees The National
Resources Defense Council, Sierra Club, and Coalition for
Clean Air, Inc.
Anthony T. Caso, Law Office of Anthony T. Caso, Orange,
California; John C. Eastman, The Claremont Institute Center
for Constitutional Jurisprudence, Orange, California, for
amicus-curiae The Center for Constitutional Jurisprudence
and Harbor Trucking Association.
Kamala Harris and Susan Lea Durbin, Office of the California
Attorney General, Sacramento, California, for amicus curiae
the State of California.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18199
John R. Bagileo, Law Office of John R. Bagileo, Glenwood,
Maryland; Mark Irving Labaton, Motley Rice LLP, Los
Angeles, California, for amicus curiae the Intermodal Associ-
ation of North America, Inc.
William L. Messenger, National Right to Work Legal Defense
Foundation, Springfield, Virginia, for amicus curiae Raymond
Porras, Pilar Orellana, and the National Right to Work Legal
Defense Foundation.
Paul D. Cullen, Jr., The Cullen Law Firm, PLLC, Washing-
ton, D.C., for amicus curiae The Owner-Operator Independent
Drivers Association, Inc.
OPINION
B. FLETCHER, Circuit Judge:
Beginning in 2008, the Port of Los Angeles (POLA, or the
Port) prohibited motor carriers from operating drayage trucks1
on Port property unless the motor carriers entered into “con-
cession agreements” with the Port. The concession agree-
ments set forth fourteen specific requirements covering,
among other things, truck driver employment, truck mainte-
nance, parking, and Port security. The agreements were
adopted as part of the Port’s “Clean Truck Program” (CTP),
which includes a progressive ban on older (and higher-
polluting) trucks on Port property, a multi-faceted incentive
program to support acquisition of clean trucks, and a system
of penalties on transport of cargo by older trucks. The Port
adopted the CTP in response to community opposition,
including litigation, that had successfully stymied Port growth
from the mid-1990s through 2007.
1
Drayage trucks move cargo from marine terminals at the Port (where
shipping companies unload containers) to customers, railroads, or other
trucks for long-distance transport.
18200 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
American Trucking Associations, Inc. (ATA, a national
association of motor carriers),2 challenges the concession
agreements, arguing that they are preempted by the Federal
Aviation Administration Authorization Act (FAAA Act), 49
U.S.C. § 14501 et seq. After obtaining a preliminary injunc-
tion against several provisions of the concession agreements,
ATA challenged five specific provisions at trial. The district
court held that none of the challenged provisions fell within
the scope of FAAA Act preemption, first because some did
not relate to motor carriers’ rates, routes, and services, and
second because the State adopted the entire agreement (and
the challenged provisions in particular) in its capacity as a
market participant, rather than a market regulator. See 49
U.S.C. § 14501(c)(1). The district court further held that the
FAAA Act’s exemption for regulation “genuinely responsive
to motor vehicle safety” saved from preemption the provision
requiring motor carriers to create and administer regular
maintenance plans. See 49 U.S.C. § 14501(c)(2)(A).
ATA appeals. We have jurisdiction under 28 U.S.C.
§ 1291. We affirm the district court in large part, but reverse
its decision that the employee-driver provision of the conces-
sion agreement falls within the market participant doctrine
and is not preempted.
I.
A.
The Port of Los Angeles is an independent division of the
City of Los Angeles, managed by the Board of Harbor Com-
missioners (BHC or the Board). It “occup[ies] land that was
granted by the State of California . . . via the California Tide-
lands Act, and the Port[ ] hold[s] the land in trust for the bene-
fit of the people of California.” Am. Trucking Ass’ns, Inc. v.
2
Approximately thirty of the six hundred motor carriers currently oper-
ating at the Port are members of ATA.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18201
City of L.A., 559 F.3d 1046, 1048-49 (9th Cir. 2009) (ATA-II).
The Port is not, however, taxpayer-supported; it depends
entirely on property leases and fees for its revenue, and man-
ages its funds independent of the City. The Port develops ter-
minal facilities and then leases those facilities to shipping
lines and stevedoring companies.3 It handles more shipping
container and cargo volume than any other port in the coun-
try, and competes with other ports for business.
Terminal operators unload cargo from ships docked at the
Port into marine terminals. From the marine terminals, dray-
age trucks transport cargo to customers (or to off-Port long-
distance trucks or railroads for further transport). “A supply
of drayage trucks and drivers is integral to cargo movement
at the Port.” Cargo owners, ocean carriers, railroads, and other
transportation providers arrange for drayage services through
Licensed Motor Carriers (LMCs or motor carriers). Prior to
2008, most LMCs serving the Port did not own or operate
drayage trucks; rather LMCs contracted with independent
owners and operators of trucks to actually provide the drayage
services. The Port does not directly contract for any drayage
services.
Around 1997, the Port developed plans to expand its cargo
terminal facilities in order to accommodate more (and larger)
ships. See Natural Res. Def. Council, Inc. v. City of L.A., 126
Cal. Rptr. 2d. 615, 618 (Cal. Ct. App. 2002). Those plans
have been stymied by legal opposition from community and
environmental groups, which claimed that the Port’s expan-
sion would increase air pollution, that such pollution would
adversely effect the health of people in the surrounding commu-
nities,4 and that the Port did not comply with environmental
laws in planning its expansion. Id. In 2002, a California
3
Stevedores manage the loading and unloading of ships. Black’s Law
Dictionary 1539 (9th ed. 2009).
4
The Port is located in California’s South Coast Air Basin, an EPA non-
attainment area for several air quality standards. In 2008, the Basin had the
worst air quality in the nation for a number of pollutants. The Port is
responsible for a significant portion of these pollutants. In 2008, the popu-
lation residing in the area around the Port suffered an average cancer risk
from air pollution more than 60% higher than the average in the South
Coast Air Basin.
18202 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
appellate court enjoined construction of a new terminal facil-
ity for the China Shipping Line Company, concluding that the
Port had failed to comply with the requirements of the Cali-
fornia Environmental Quality Act. Id. at 628. The Port settled
that suit in 2003 for more than $80 million. Similarly, in
2007, environmental and community groups threatened to
seek an injunction of the Port’s plan to expand its TraPac Ter-
minal. The Port entered into a settlement agreement in April
2008, requiring it to establish a five-year community mitiga-
tion plan to offset the environmental impact of the proposed
expansion.
In response to the opposition to Port expansion, the Boards
of Harbor Commissioners for Los Angeles and Long Beach
adopted a Clear Air Action Plan (CAAP) in November 2006.5
In the CAAP, the Port announced its intention to “grow
green” and achieve a 45% reduction in total emissions by
2012. The Ports stated that they “recognize that their ability
to accommodate the projected growth in trade will depend
upon their ability to address adverse environmental impacts
. . . that result from such trade.”
Recognizing that trucks are a major source of air pollution
at the Port, the CAAP introduced the Clean Truck Program,
which was “designed to reduce emissions from the heavy duty
trucks involved in port drayage to improve the health of peo-
ple living in the communities surrounding the [Port].” The
CAAP directed Port staff to “undertake a 5-year, focused
effort to replace or retrofit the entire fleet of over 16,000
trucks that regularly serve our Port . . . .” From November
2006 through February 2008, the Ports worked to develop the
5
The Ports of Los Angeles and Long Beach are contiguous and form a
single physical Port, although they are managed independently. Though
the Port of Long Beach was originally a party to this lawsuit, the Port of
Long Beach and Appellees settled in October 2009, and the district court
dismissed the Long Beach defendants with prejudice. The Long Beach
claims are not at issue in this case.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18203
Clean Truck program. The Ports held a number of public
meetings, consulted with stakeholders, and hired consultants
to evaluate ideas for implementation.
In October 2007, the Port adopted the first part of its Clean
Truck Program: a progressive ban on older, higher-polluting
trucks, with the goal that by 2012 all trucks visiting the Port
frequently or semi-frequently will meet the United States
Environmental Protection Agency’s 2007 emissions stan-
dards. The ban forbids terminal operators to allow non-
compliant trucks to enter Port property. In December 2007,
the Port also implemented a Clean Truck Fee, which functions
as a penalty to incentivize rapid replacement of older trucks.
The fee is charged to terminal operators, not to motor carriers,
and applies to every container transported during the transi-
tion period by a drayage truck not in compliance with 2012
emissions goals. Neither the progressive ban nor the Clean
Truck Fee are directly at issue in this appeal.
During its design of the Clean Truck Program, the Port
identified several dilemmas it believed it needed to address.
The Port believed that it would be very difficult for drayage
service providers to comply with the progressive ban, particu-
larly in light of research showing that drayage service provid-
ers had low capital and limited opportunities to obtain credit
to invest in the acquisition of new trucks. Accordingly, the
Port recognized that it would need to provide substantial
financial grants to support the Clean Truck Program. The Port
also wanted to “ensure that the Clean Trucks Program funding
system yields more than temporary benefits.” The Port was
especially concerned with ensuring that trucks purchased or
retrofitted using State funding were maintained to ensure
environmental compliance and safety. This concern stemmed
from the Port’s belief that independent owner-operators had
little capital to invest in maintaining cleaner trucks and that
current mechanisms were inadequate to ensure maintenance
on each individual truck.
18204 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
The Port was also concerned that the Clean Truck Program,
in combination with the Transportation Worker Identification
Credential (TWIC) program,6 would result in significant
losses of drayage truck drivers and disruption of Port services.
After engaging in extensive study of Port drayage, the Port
estimated that approximately 16,800 trucks would need to be
replaced or retrofitted, and that an additional 6,000 to 13,000
trucks would be necessary to maintain drayage services when
the Port expanded. The Port suspected that the Clean Truck
Program would be prohibitively expensive for independent
owner operators and could result in a significant disruption in
drayage services. It also believed that 10 to 20% of extant
drayage truck drivers would be unable to comply with TWIC
requirements and thus unable to continue with port drayage.
Left unaddressed, the Port concluded, these dilemmas could
result in a crisis.
To address its concerns, the Port decided to implement con-
cession agreements as part of the Clean Truck Program. It
hired consultants to examine whether proposed concession
agreements would further the Port’s economic, operational,
and safety goals. Some of the major issues the consultants
considered were: (1) whether to provide incentives only to
licensed motor carriers, or to all independent owner operators;
(2) whether to require operational criteria to provide oversight
of drayage truck operations; (3) and whether to require
licensed motor carriers to convert to an “employee-only”
model as opposed to using independent owner-operators.
Ultimately, the consultants reached similar conclusions.
Each report recognized that stringent operational criteria and
6
The Transportation Worker Identification Credential (TWIC) is a “se-
curity measure that will ensure individuals who pose a threat do not gain
unescorted access to secure areas of the nation’s maritime transportation
system” See Transportation Security Administration, TWIC Program
Information, available at http://www.tsa.gov/what_we_do/layers/twic/
program_info.shtm.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18205
the adoption of an employee-only model for motor carriers
would result in significant economic hardship for drayage
truck providers, likely putting many of the more
economically-marginalized companies out of business. Yet,
each recommended that converting to such a model would
have greater long-term benefits and provide the Port with the
“best guarantee” of long-term sustainability in port drayage.
In March 2008, the Port approved a multi-faceted incentive
program and a concession agreement system. The incentive
program was designed to “encourage Licensed Motor Carriers
to cooperate” with the progressive ban. These programs
included the Truck Funding Program, which offers grants
covering 80% of the cost of obtaining a new, compliant truck
or 100% of the costs of retrofitting older trucks, and a lease-
to-own program with financial institutions selected by the
Port and financial assistance towards the purchase of trucks at
the end of the lease term; a Scrap Truck Buyback program,
which provides a $5,000 bonus incentive for scrapping pre-
1989 drayage trucks; a Procurement Assistance Program to
help smaller motor carriers obtain better terms on new truck
purchases; and a Concession Business Outreach Program.
Though other incentives are available to any owner of quali-
fying trucks, the Truck Funding Program is available only to
licensed motor carriers who are “concessionaires” in good
standing with the Port, and funding priority is given to “con-
cessionaires with a history of port drayage and financing.”
The funding is not available to independent owner-operators.
In addition, concessionaires receiving funding must “commit
to a minimum Port drayage frequency for each new truck of
a minimum average of six trips per week for five years.” The
incentive programs are not directly at issue in this appeal.
Finally, the Board issued an order approving concession
agreements and providing that, effective October 1, 2008, “no
Terminal Operator shall permit access into any Terminal in
the Port of Los Angeles to any Drayage Truck unless such
Drayage Truck is registered under a Concession or a Day Pass
18206 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
from the Port of Los Angeles.” The concession plans created
a direct contractual agreement between the Port and motor
carriers providing drayage services.
Five provisions of the concession agreements are at issue
in this appeal:
1. Provision III(d) requires concessionaires to tran-
sition over five years to using 100% employee
drivers rather than using independent owner-
operators. (The employee-driver provision).
2. Provision III(f) requires concessionaires to sub-
mit for approval “an off-street parking plan that
includes off-street parking locations for all Per-
mitted Trucks” and requires concessionaires to
ensure that Permitted Trucks are “in compliance
with parking restrictions by local municipali-
ties.” (The off-street parking provision).
3. Provision III(g) makes concessionaires “respon-
sible for vehicle condition and safety” and
requires them to “ensure that the maintenance of
all Permitted Trucks . . . is conducted in accor-
dance with manufacturer’s instructions.” (The
maintenance provision).
4. Provision III(l) requires concessionaires to “post
placards on all Permitted Trucks” when the
trucks are “entering and leaving Port Property
and while on Port Property.” The placards shall
“refer[ ] members of the public to a phone num-
ber to report concerns regarding truck emissions,
safety, and compliance to the Concession
Administrator and/or authorities.” (The placard
provision).
5. Provision III(n) requires a concessionaire to
“demonstrate[ ] to the satisfaction of the Execu-
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18207
tive Director that it possesses the financial capa-
bility to perform its obligations under th[e]
Concession [agreement].” (The financial capa-
bility provision).
Each concessionaire also agreed to pay a one-time concession
fee of $2,500, and an annual fee of $100 for each permitted
truck. As of April 2010, approximately 600 motor carriers had
signed concession agreements with the Port.
B.
The procedural history of this case is extensive; we com-
mend the reader to the orders and opinions discussing ATA’s
quest for a preliminary injunction.7 Suffice it to say that ATA
was initially denied a preliminary injunction in full and this
court reversed. See generally Am. Trucking Ass’ns, Inc. v.
City of L.A., 577 F. Supp. 2d 1110 (C.D. Cal 2008) (ATA-I)
(holding that the market participant doctrine did not apply but
denying preliminary injunction on the grounds that the safety
exception applies); ATA-II, 559 F.3d 1046 (reversing the
safety exception decision and remanding). On remand, the
district court granted a preliminary injunction against the
employee driver provision, the parking provision, and the
financial capability provision, but not the maintenance and
placard provisions. See generally Am. Trucking Ass’ns, Inc. v.
City of L.A., No. CV 08-4920, 2009 WL 1160212 (C.D. Cal.
Apr. 28, 2009) (ATA-III). ATA again appealed. We reversed
only with respect to the placard provision. Am. Trucking
Ass’ns, Inc. v. City of L.A., 596 F.3d 602 (9th Cir. 2010)
7
See Am. Trucking Ass’ns, Inc. v. City of L.A., 577 F. Supp. 2d 1110(C.D. Cal 2008) (ATA-I)(denying preliminary injunction on the grounds
that the safety exception applies); Am. Trucking Ass’ns, Inc. v. City of
L.A., 559 F.3d 1046 (9th Cir 2009) (ATA-II) (reversing the safety excep-
tion decision and remanding); Am. Trucking Ass’ns, Inc. v. City L.A., No.
CV 08-4920, 2009 WL 1160212 (C.D. Cal. 2009 Apr. 28, 2009) (ATA-
III); Am. Trucking Ass’ns, Inc. v. City of L.A., 596 F.3d 602 (9th Cir.
2010) (ATA-IV).
18208 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
(ATA-IV). All told, the maintenance and placard provisions
have been operative since April 2009, but the employee
driver, parking, and financial capability provisions have not.
After a bench trial on the merits, the district court made 105
specific findings of fact, and concluded that none of the chal-
lenged provisions were preempted. ATA appeals.
II.
We review a district court’s decision regarding federal pre-
emption de novo. Tocher v. City of Santa Ana, 219 F.3d 1040,
1045 (9th Cir. 2000), abrograted on other grounds by City of
Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S.
424, 428 (2002), and Tillison v. City of San Diego, 406 F.3d
1126 (9th Cir. 2005); see also United States v. Hinkson, 585
F.3d 1247, 1259 (9th Cir. 2009) (en banc) (If a “‘question
requires us to consider legal concepts in the mix of fact and
law and to exercise judgment about the values that animate
legal principles, . . . the question should be classified as one
of law and reviewed de novo.’ ”) (quoting United States v.
McConney, 728 F.2d 1195, 1202 (9th Cir. 1987)).
The district court’s factual determinations are reviewed for
clear error, and may be reversed only if they are “illogical,
implausible, or without support in inferences that may be
drawn from the facts in the record,” leaving the court of
appeals with a “definite and firm conviction” that a mistake
has been committed. Hinkson, 585 F.3d at 1251, 1263.
III.
We first discuss the law relevant to this appeal, and address
ATA’s contentions that the district court misinterpreted the
applicable law. We do not, in this section, address ATA’s
contentions that the district court misapplied the law to the
facts. We will apply the law to the facts in section V of this
opinion.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18209
[1] Congress enacted the FAAA Act in 1994 to prevent
States from undermining federal deregulation of interstate
trucking. Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364,
368 (2008); Tocher, 219 F.3d at 1048. The FAAA Act pro-
vides as a “general rule” that “a State [or] political subdivi-
sion of a State . . . may not enact or enforce a law, regulation,
or other provision having the force and effect of law 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).
In determining whether § 14501(c)(1) of the FAAA Act
preempts State action, we ask three questions. First, we must
consider whether the provision “relate[s] to a price, route, or
service of a motor carrier.” Id.; see also Rowe, 552 U.S. at
368. If the answer is no, the provision does not fall within the
preemptive scope of § 14501(c)(1). If the answer is yes, we
must consider whether the provision “has the force and effect
of law”— that is, whether the provision was enacted pursuant
to the State’s regulation of the market, rather than the State’s
participation in the market in a proprietary capacity. 49
U.S.C. § 14501(c)(1); see also Tocher, 219 F.3d at 1049-50.
If the provision does not fall within the market participant
doctrine and relates to rates, routes, or services, we turn to the
third inquiry and consider whether any of the FAAA Act’s
express exemptions save the regulation from preemption. As
relevant here, the FAAA Act does not “restrict the safety reg-
ulatory authority of a State with respect to motor vehicles.” 49
U.S.C. § 14501(c)(2)(A); see also City of Columbus, 536 U.S.
at 428.
ATA argues that the district court misidentified and misap-
plied the law at every step. We first consider each of ATA’s
general challenges to the district court’s analysis. We reject
ATA’s arguments that (1) the concession agreements per se
affect rates, routes, and services; (2) the market participant
doctrine does not apply because the Port does not “procure”
drayage services; and (3) that the Supreme Court’s decision
18210 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
in Castle v. Hayes Freight Lines, Inc., 348 U.S. 61 (1954)
precludes the application of the safety exception to this case.
A. Related to Rates, Routes, or Services
“[S]tate enforcement actions having a connection with, or
reference to [motor] carrier rates, routes, and services are pre-
empted.” Rowe, 552 U.S. at 370-371 (internal quotation
marks and emphasis omitted) (quoting Morales v. Trans
World Airlines, Inc., 504 U.S 374, 384, 386-84, 390 (1992)
(interpreting the nearly identical preemption provision of the
Airline Deregulation Act of 1978, 49 U.S.C. app.
§ 1305(a)(1)). The terms “rates, routes, and services” were
“used by Congress in the public utility sense; that is, service
refers to such things as the frequency and scheduling of trans-
portation, and to the selection of markets to or from which
transportation is provided. . . . . Rates indicates price; routes
refers to courses of travel.”8 Air Transport Ass’n of Am. v.
City & Cnty. of San Francisco, 266 F.3d 1064, 1071 (9th Cir.
2001) (internal quotation marks, citations, and alterations
omitted); see also Rowe, 552 U.S. at 372-73 (describing a
motor carrier’s services as its system for picking up, sorting,
and carrying goods).
In determining whether a provision has a connection to
rates, routes, or services, we must examine the actual or likely
effect of a State’s action. Cf. Cal. Div. of Labor Standards
Enforcement v. Dillingham Constr. NA, Inc., 519 U.S. 316,
325 (1997); Californians for Safe & Competitive Dump Truck
Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir. 1998).
If the State, for example, mandates that motor carriers provide
8
The Airline Deregulation Act preempts any provision that relates to
“rates, routes and services.” 49 U.S.C. app. § 1305(a)(1) (emphasis
added). The FAAA Act preempts any provision that relates to “prices,
routes, and services.” 49 U.S.C. § 14501(c)(1). We use the terms “prices”
and “rates” interchangeably. See Rowe, 552 U.S. at 375 (discussing
whether a state provision relates to rates and is preempted under the
FAAA Act).
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18211
a particular service to customers, or forbids them to serve cer-
tain potential customers, the effect is clear, and the provision
is preempted if it has the force and effect of law. See Rowe,
552 U.S. at 372-73; Morales, 504 U.S. at 388-89 (noting that
advertising guidelines expressly referenced rates and had a
forbidden significant effect on the fares charged). The waters
are murkier, though, when a State does not directly regulate
(or even specifically reference) rates, routes, or services. We
recognize that FAAA Act “pre-emption may occur even if a
[S]tate law’s effect on rates, routes, and services ‘is only indi-
rect.’ ” Rowe, 552 U.S. at 370 (quoting Morales, 504 U.S. at
386). At the same time, we require that the effect on rates,
routes or services be more than “tenuous” or “remote.” Id. at
371 (quoting Morales, 504 U.S. at 390).
In such a “borderline” case, the proper inquiry is whether
the provision, directly or indirectly, “binds the . . . carrier to
a particular price, route or service and thereby interferes with
competitive market forces within the . . . industry.” Air Trans-
port, 266 F.3d at 1072; cf. Am. Airlines, Inc. v. Wolens, 513
U.S. 219, 232-33 (1995) (holding that the Airline Deregula-
tion Act’s preemption clause “stops States from imposing
their own substantive standards with respect to rates, routes,
or services” but does not prevent States from enforcing dis-
pute resolution provisions in contracts signed by airlines);
Mendonca, 152 F.3d at 1189 (holding that a State minimum
wage statute did not affect rates, routes or services). ATA
argues that the district court erred in examining the effect of
each individual provision of the concession agreements, con-
tending that “the requirement of a concession agreement per
se affects routes and services” because it provides “POLA
[the] ability to prohibit non-concessionaire LMCs from enter-
ing its property.”
Our decision in Air Transport forecloses ATA’s argument.
266 F.3d at 1071-72. Air Transport considered whether a city
ordinance requiring that registered domestic partners be
afforded treatment equal to spouses had an effect on the
18212 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
routes of airlines.9 Id. at 1069. The Airlines contended that the
ordinance would require them to raise their rates or cease
operating at San Francisco Airport due to increased costs. Id.
at 1072, 1074. We held that because “[t]he Airlines [con-
ceded] that they will use airport property in San Francisco
regardless of the Ordinance . . . , the Ordinance cannot be said
to compel or bind the Airlines to a particular route or service
and there is no preemption under the connection-with test.”
Id. at 1074. The Airlines claimed that the ordinance presented
a “Hobson’s choice—either leave the Airport or do not dis-
criminate.” Id. We noted that air carriers were allowed “to
make their own decisions about where to fly and how many
resources to devote to each route and service.” Id. Though the
Airlines’ decision to operate in San Francisco “may mean the
Airlines will have to agree to abide by the Ordinance’s non-
discrimination requirements as a ‘cost’ of maintaining their
leases at [San Francisco Airport],” that did not, in itself, mean
the Ordinance was preempted. Id. “Hypothetically, there
might be some contract term the City could demand whose
costs would be so high that it would compel the Airlines to
change their prices, routes, or services,” but the San Francisco
Ordinance “d[id] not approach that level.” Id. at 1075 (citing
N.Y. State Conference of Blue Cross & Blue Shield Plans v.
Travelers Ins. Co., 514 U.S. 645, 655 (1995) for the proposi-
tion that “there may be a point at which costs from a [S]tate
9
ATA argues that the concession agreements differ from the ordinance
at issue in Air Transport because the latter did “not give the city discretion
to decide which airlines could not serve the airport.” ATA misreads Air
Transport. The ordinance there said “[n]o contracting agency of the City
. . . shall execute or amend any contract . . . with any contractor that dis-
criminates in the provision of [benefits] . . . between employees with
domestic partners and employees with spouses . . . .” 266 F.3d at 1069.
The ordinance required the airport to establish that the airlines did not dis-
criminate, and prohibited the airport from contracting with airlines that
did, or executing pre-existing contracts. There is no meaningful distinction
between the ordinance in Air Transport and the concession agreements,
which also require the Port to ensure that concessionaires comply with
certain requirements before entering Port property.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18213
law are so exorbitant that it could rise to the level of a sub-
stantive mandate.”).
[2] Air Transport establishes that a State may condition
access to State property so long as the conditions do not
impose costs that compel the carrier to change rates, routes,
or services (for example by forcing the carrier to cease doing
business with the State). Accordingly, the concession agree-
ments do not necessarily affect rates, routes, or services sim-
ply because they impose conditions on entering Port property.
The correct question is whether each condition binds motor
carriers, directly or indirectly, to a particular rate, route, or
service. We apply this law to specific provisions of POLA’s
concession agreements in part V of this opinion.
B. The Market Participant Doctrine
[3] The FAAA Act “preempt[s] only [S]tate regulation,
and not actions a [S]tate takes as a market participant.” John-
son v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011,
1022 (9th Cir. 2010); Tocher, 219 F.3d at 1049. In applying
the market participant doctrine, we undertake “a single
inquiry: whether the challenged program constitute[s] direct
[S]tate participation in the market.” Reeves Inc. v. Stake, 447
U.S. 429, 435 n.7 (1980) (internal quotation marks omitted);
see also Bldg. & Constr. Trades Council of the Metro. Dist.
v. Associated Builders & Contractors of Mass./R.I., Inc.
(hereinafter Boston Harbor), 507 U.S. 218, 227-32 (1993)
(considering whether the State was pursuing “proprietary
interests”).
ATA contends that the Port does not participate in the mar-
ket because the concession agreements do not fall neatly
within the two-prong test adopted by our circuit as a guide for
determining whether the market participant doctrine applies.
Johnson, 623 F.3d at 1023-24. The test was first developed in
Cardinal Towing & Auto Repair, Inc. v. City of Bedford, 180
F.3d 686, 693 (5th Cir. 1999), and asks:
18214 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
First, does the challenged action essentially reflect
the entity’s own interest in its efficient procurement
of needed goods and services, as measured by com-
parison with the typical behavior of private parties in
similar circumstances? Second, does the narrow
scope of the challenged action defeat an inference
that its primary goal was to encourage a general pol-
icy rather than address a specific proprietary prob-
lem?
Id.; see also Chamber of Commerce v. Lockyer, 463 F.3d
1076, 1084 (9th Cir. 2006) (en banc), rev’d on other grounds
sub nom. Chamber of Commerce v. Brown, 554 U.S. 60 (9th
Cir. 2008)(en banc) and vacated by 543 F.3d 1117 (2008).
The first question “looks to the nature of the expenditure and
protects comprehensive [S]tate policies with wide application
from preemption, so long as the type of [S]tate action is
essentially proprietary.” Johnson, 623 F.3d at 1024 (internal
quotation marks omitted) (quoting Lockyer, 463 F.3d at
1084). “The second question looks to the scope of the expen-
diture and protects narrow spending decisions that do not nec-
essarily reflect a [S]tate’s interest in the efficient procurement
of goods or services, but that also lack the effect of broader
social regulation.” Id. (internal quotation marks omitted)
(quoting Lockyer, 463 F.3d at 1084). If the answer to either
question is yes, the market participant exception applies. Id.The second prong of the Cardinal Towing test is not at
issue here. The concession agreements are not “narrow spend-
ing decisions” that “lack the effect of broader social regula-
tion.” Johnson, 623 F.3d at 1024 (quoting Lockyer, 463 F.3d
at 1084)(internal quotation marks omitted). “Narrow spending
decisions” tend to be expressly limited in time and scope—for
example, they apply to one city contract or to a number of
contracts of a particular size and funded by a particular finite
source. See Id. at 1028-29 (agreement limited to construction
projects costing over $200,000, in a three-year period, and
funded by specific initiative); Sprint Spectrum LP v. Mills,
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18215
283 F.3d 404, 421-21 (2d Cir. 2002) (contract applied only to
one cellular phone tower located on particular property); Car-
dinal Towing, 180 F.3d at 694 (restrictions applied to single
contract for police tows). Here, the concession agreements are
not limited to contracts of a particular size or subsidized by
State funds, and are not limited to drayage operations for a
particular time. These factors indicate that the concession
agreements do not fall within the narrow scope prong.
[4] Thus, we must consider whether the nature of the con-
cession agreements is essentially proprietary. Johnson, 623
F.3d at 1024. ATA contends if the State’s actions do not qual-
ify as “efficient procurement,” they cannot be considered propri-
etary.10 We disagree.
The Supreme Court has applied the market participant doc-
trine to a case not involving “procurement” of goods. In
Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 796-97
(1976), the Supreme Court upheld a Maryland policy penaliz-
ing in-state wreckers who kept abandoned vehicles on their
property, and offering bounties to processors who scrapped
vehicles formerly titled in Maryland. The Court held that
Maryland’s “payment of [S]tate funds—in the form of
10
Contrary to ATA’s assertion, neither the district court’s decision at the
preliminary injunction phase nor this court’s affirmance of that decision
are binding as law of the case. The district court concluded that
“[a]lthough case law provides some conflicting indications, the Court
finds that, on balance, plaintiff has a significant likelihood of showing that
defendants are not participants in the relevant market.” ATA-I, 577 F.
Supp. 2d at 1120. We commended the district court’s “cogent explana-
tion” but offered no further analysis. ATA-II, 559 F.3d at 1053.
As a “general rule, our decisions at the preliminary injunction phase do
not constitute the law of the case.” Ranchers Cattlemen Action Legal Fund
United Stockgrowers of Am. v. USDA, 499 F.3d 1108, 1114 (9th Cir.
2007) (internal quotation marks and citation omitted). “Any of our conclu-
sions on pure issues of law, however, are binding.” Id. Neither ATA-I nor
ATA-II decided a “pure issue of law” with respect to the market participant
doctrine, and their equivocal holdings on the likelihood that plaintiffs
would prevail are not binding on this panel.
18216 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
bounties—to encourage the removal of automobile hulks”
was proprietary and did not violate the dormant commerce
clause. Id. at 809. It stated that vehicles “remain within Mary-
land in response to market forces, including that exerted by
money from the State.” Id. at 810. Under Alexandria Scrap,
procurement for governmental use is not the only way a State
can participate in the market.
The first prong of Cardinal Towing is useful in cases where
the government is buying goods or seeking services,11 but it
is not the be-all-and-end-all of proprietary action. Cardinal
Towing acknowledged as much, noting that its questions
“seek to isolate” those cases to which the market participant
doctrine applies and help courts to “distinguish[ ] between
proprietary action that is immune from preemption and imper-
missible attempts to regulate through the spending power.”
180 F.3d at 693. If the State is not engaged in “efficient pro-
curement” but nonetheless directly participates in the market
in a proprietary manner, we see no reason why Cardinal Tow-
ing should preclude the application of the market participant
doctrine. Cf. Tri-M Group, LLC v. Sharp, 638 F.3d 406, 422
(3d Cir. 2011) (identifying “several questions a court should
ask when conducting the ‘single inquiry’ to determine
‘whether the challenged program constitute[s] direct state par-
ticipation in the market’ ” and emphasizing that the questions
must be considered in the “specific context” presented) (quot-
ing White v. Mass. Council of Constr. Emp’rs Inc., 460 U.S.
204, 208 (1983)).
[5] Here, the Port directly participates in the market as a
manager of Port facilities. In essence, the concession agree-
ments are contracts under which the Port exchanges access to
its property for a drayage carrier’s compliance with certain
11
See, e.g., Engine Mfrs. Ass’n v. S. Coast Air Quality Maint. Dist., 498
F.3d 1031, 1040 (9th Cir. 2007) (the State was acting as a market partici-
pant when it required transportation vehicles purchased with State funds
to meet environmental standards); Tocher, 219 F. 3d at 1049-50.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18217
conditions. ATA contends that the Port’s participation in the
“port market” cannot extend to imposing restrictions on the
“drayage market.”12 To be sure, the State does not act as a
market participant every time it manages any of its property.
See Olympic Pipe Line Co. v. City of Seattle, 437 F.3d 872,
881-82 (9th Cir. 2006). In Olympic Pipe Line, for example,
the City of Seattle was not acting as a market participant
when it refused to renew a franchise agreement giving a right
of way under city streets to a natural gas pipeline because the
pipeline did not conduct tests at the behest of the city. Id. at
875-76, 882. We noted that, despite the city’s claim that it
was acting as a landlord, the city’s “interest is not that of a
private market participant that owns a pipeline or competes in
the pipeline market or a related market.” Id. at 881 (emphasis
added). Rather, we stated that “Seattle in its sovereign capac-
12
ATA argues that, in S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S.
82, 97-98 (1984) (plurality), the Supreme Court limited the market partici-
pant doctrine to State actions taken in a “narrow” market defined by con-
tractual privity. Wunnicke is not controlling precedent on this question. Its
discussion of the market participant doctrine did not garner a majority of
justices. See id. at 93-98 (majority op.); id. at 101 (Powell, J., in a concur-
rence in part and concurrence in the judgment joined by Burger, C.J.)
(stating that they would remand to allow the Court of Appeals to apply the
market participant doctrine in the first instance); id. at 101-103 (Rehn-
quist, J., in a dissent joined by O’Connor, J.) (arguing that the market par-
ticipant doctrine applied). Indeed, Wunnicke is a perfect example of the
Supreme Court’s fractured views on the market participant doctrine. See
Shell Oil Co. v. City of Santa Monica, 830 F.2d 1052, 1056 (9th Cir.
1987).
Subsequent cases either distinguish Wunnicke as an outlier involving
special considerations of natural resources, foreign commerce, and restric-
tions on resale, or cite Wunnicke for general positions of law not unique
to its analysis. See, e.g., Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328,
348 n.17 (2008) (responding to the dissent and distinguishing Wunnicke
as a case involving three unique circumstances); United Haulers Ass’n,
Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 340 n.4
(2007) (citing Wunnicke as an example of local-processing requirements
invalidated by the Court); Shell Oil, 830 F.2d at 1057-58 (citing Wunnicke
for the proposition that “contractual privity does not insulate a state or
local body from commerce clause scrutiny”).
18218 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
ity owns the streets and land under which the Seattle Lateral
[pipeline] runs, for the purpose of maintaining a transporta-
tion system” and the city sought to exercise its power to pro-
tect public health and safety. Id. at 882; see also Shell Oil Co.
v. City of Santa Monica, 830 F.2d 1052, 1057-58 (9th Cir.
1987) (holding that a city “is not a market participant . . . in
deciding whether, or on what terms to grant a franchise for the
use of city streets”).
[6] In this case, we are not faced with a situation where the
Port is managing property “in its sovereign capacity,” or
imposing restrictions unrelated to its business interests as a
property manager. As the district court recognized, the Port of
Los Angeles is a business entity, operating wholly separately
from the city government. It is entirely self-sustaining and
does not depend on city funds. Furthermore, the Port has a
business interest in the drayage market. The Port’s business
is to provide a point of entry for ships to unload goods. The
Port necessarily requires the interrelated service of drayage
trucking in order to transport those goods to customers or
points of forwarding. The district court found that (1) the
“Port has a direct financial interest in the unhindered and effi-
cient flow of cargo through its terminals and in increasing
container traffic through the Port”; (2) the Port “needs to con-
tinually improve the efficiency of cargo operations at the Port
to maintain its competitive position with respect to other ports
and capture additional business”; and (3) a supply of drayage
trucks and drivers is integral to cargo movement at the Port.
ATA does not challenge those factual findings as clearly erro-
neous. Accordingly, we must conclude that even though the
Port does not purchase drayage services, such services are an
integral part of Port business. The drayage and port markets
are so closely related that the Port’s interest in managing its
facilities can extend to imposing conditions on drayage carri-
ers that operate on Port property.13
13
Both parties discuss as persuasive authority cases from other circuits
and district courts addressing the market participant doctrine in the general
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18219
[7] We hold that when an independent State entity man-
ages access to its facilities, and imposes conditions similar to
those that would be imposed by a private landlord in the
State’s position, the State may claim the market participant
doctrine. Here, the Port leases its facilities to terminal opera-
tors, and permits drayage trucks to access its facilities, for the
purpose of moving cargo through the Port and increasing Port
revenues. The Port has a financial interest in ensuring that
drayage services are provided in a manner that is safe, reli-
able, and consistent with the Port’s overall goals for facilities
management. A private port owner could (and probably
would) enter into concession-type agreements with licensed
motor carriers in order to further its goals. See Boston Harbor,
507 U.S. at 231-32. We therefore conclude that the Port acted
in its proprietary capacity as a market participant when it
decided to enter into concession agreements.
context of State facilities. See Sprint Spectrum L.P., 283 F.3d at 420-21(upholding under the market participant doctrine a school district’s restric-
tions on cellular phone towers placed on school property); Four T’s, Inc.
v. Little Rock Mun. Airport Comm’n, 108 F.3d 909, 912-13 (8th Cir. 1997)
(holding that State restrictions on rental car operators that leased airport
terminal counter space fell within the market participant doctrine); Smith
v. Dep’t of Agric., 630 F.2d 1081, 1083 (5th Cir. 1980) (holding that pref-
erential placement for local farmers at a State-run farmers market did not
fall within the market participant doctrine); Aeroground, Inc. v. City &
Cnty. of San Francisco, 170 F. Supp. 2d 950, 958-59 (N.D. Cal. 2001)
(holding for the purposes of a preliminary injunction that an airport was
not acting as a market participant when it adopted a rule requiring employ-
ers operating at the airport to permit certain union actions); Transp. Lim-
ousine of Long Island, Inc. v. Port Auth. of N.Y. & N.J., 571 F. Supp. 576,
581 (E.D.N.Y. 1983).
Factually, those cases are distinguishable, so any analogy to the hold-
ings would be strained. Cf. Tri-M, 638 F.3d at 422 (the court must con-
sider the government’s actions in the specific context presented). These
cases are useful only to illustrate that other courts examine whether a par-
ticular provision is actually related to the State’s proprietary interest in
managing its facilities, or whether it reflects the State’s regulatory interest
in unrelated industries.
18220 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
We stop short, though, of holding that every provision of
the concession agreements is saved from preemption. The
Supreme Court has placed limitations on what a State, acting
as a market participant, may do. “[W]here the [S]tate seeks to
affect private parties’ conduct unrelated to the performance of
contractual obligations to the [S]tate,” the State’s actions are
“tantamount to regulation.” Johnson, 623 F.3d at 1025-26(quoting Wis. Dep’t of Indus., Labor & Human Relations v.
Gould Inc.,475 U.S. 282, 289 (1986); see also Chamber of
Commerce v. Brown, 554 U.S. 60, 70 (2008). Accordingly,
we must examine whether the provisions at issue further the
State’s interests as a facilities manager, or whether the provi-
sions seek to affect conduct unrelated to those interests. The
State’s avowed purposes may be relevant, but we need not
inquire into the State’s undisclosed intentions. See Gould, 475
U.S. at 288 (examining the State’s admitted motives); John-
son, 623 F.3d at 1026 (refusing to examine the State’s “ulte-
rior motives”). We do not examine each individual provision
of the concession agreements at this point, saving that discus-
sion for part V of this opinion.
C. Safety Exception
Finally, we consider whether the district court identified the
correct legal principles in applying the safety exception to
FAAA Act preemption. ATA argues that, notwithstanding the
express safety exception of 49 U.S.C. § 14501(c)(2)(A), the
Port has no authority to “revoke a motor carriers’ ability to
engage in interstate commerce.” It argues that in Castle, 348
U.S. 61, the Supreme Court held that if interstate motor carri-
ers violate the safety laws of the State, it is up to the federal
government to “protect the State’s interest” through federal
enforcement proceedings. Thus, according to ATA, at the
time the FAAA Act was passed, the State’s regulatory author-
ity did not permit it to revoke the ability of motor carriers to
engage in interstate commerce. ATA argues that the safety
provision incorporates the then-existing regulatory authority
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18221
of a State, and simply does not grant the States “independent
power to make safety-related revocations.”
Castle does not, however, stand for the proposition that the
States have no power to limit motor carrier access to particu-
lar land in order to further safety. In Castle, Illinois punished
freight carriers that repeatedly violated State limits on the
weight of commercial trucks by totally suspending the carri-
ers’ right to use Illinois state highways for up to one year. 348
U.S. at 63. At the time, the Interstate Commerce Commission
had the exclusive right to issue and revoke certificates permit-
ting motor carriers to operate interstate. Id. at 63-64. The
Court held that Illinois’s action was “the equivalent of a par-
tial suspension of [a motor carrier’s] federally granted certifi-
cate,” because Illinois highways were used “to transport
interstate goods to and from [Illinois and] are also used as
connecting links to points in other states.” Id. at 64. Accord-
ingly, Illinois’s action was prohibited. Id. at 65. The Court
stated, though, that Illinois remained free to impose “conven-
tional forms of punishment” on over-weighted or improperly
loaded motor trucks. Id. at 64. The Court also made clear that
it “know[s] of no reason why the Commission may not protect
the [S]tate’s interest, either on the Commission’s own initia-
tive or on complaint of the [S]tate.” Id. at 65. It did not, as
ATA asserts, hold that only the federal government may
impose punishment for a motor carrier’s violation of State
safety regulations.
[8] Even if the FAAA Act incorporated (rather than modi-
fied) Castle’s limitations on the State’s authority,14 Castle
does not preclude the Port from permitting access only to
motor carriers that comply with its safety restrictions. Unlike
a ban on using all of a State’s freeways, a limitation on access
to a single Port does not prohibit motor carriers from partici-
pating in “transport [of] interstate goods to and from that
State” or eliminate “connecting links to points in other states.”
14
We express no opinion on this point.
18222 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
Id. at 64. While a denial of access to the Port may have more
effect on motor carriers than a traditional fine, it does not rise
to the level of the comprehensive ban at issue in Castle.
[9] The district court did not err in applying the safety
exception to this case. In addition, it correctly concluded that
the safety exception is available only when a regulation is
“genuinely responsive to safety concerns.” City of Columbus,
536 U.S. at 442; ATA-II, 559 F.3d at 1053-54. The district
court rightly examined the avowed intent of the government,
and considered whether any “ ‘purported safety justifications’
will withstand scrutiny.” ATA-II, 559 F.3d 1055 (quoting Auto
Club of N.Y., Inc., v. Dykstra, 520 F.3d 210, 215 (2d Cir.
2008) (per curiam)). In sum, we determine that the district
court correctly identified the applicable law.
IV.
With these principles in mind, we analyze whether, and on
what grounds, each challenged provision is subject to preemp-
tion by the FAAA Act. We agree with the district court that
the financial capability provision has only a tenuous and
remote connection to rates, routes, or services, so is not pre-
empted by § 14501(c) of the FAAA Act. We also agree with
the district court that the maintenance provision is intended to
be and is genuinely responsive to safety, so is not preempted.
We conclude that the off-street parking and placard provisions
were adopted to address specific proprietary concerns faced
by the Port as a facilities manager and do not seek to affect
unrelated conduct by third parties, so fall under the market
participant doctrine. We hold, however, that the employee-
driver provision is pre-empted because it is tantamount to reg-
ulation.
A. Financial Capability Provision
The financial capability provision requires a concessionaire
to “demonstrate[ ] to the satisfaction of the Executive Director
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18223
that it possesses the financial capability to perform its obliga-
tions under th[e] Concession.” As with the maintenance pro-
vision, the district court held that the provision did not relate
to rates, routes, and services in more than a tenuous way. It
concluded, however, that the provision was not genuinely
responsive to safety. We agree with the district court that the
financial capability provision does not relate to rates, routes,
and services in a more than tenuous fashion, and is not pre-
empted; we therefore do not apply the market participant doc-
trine or safety exception.
[10] The financial capability provision does not directly
impact the drayage services provided to customers (for exam-
ple, picking up and transporting cargo). Nor does it directly
regulate the routes served or the prices charged. Cf. Indep.
Towers of Wash. v. Wash., 350 F.3d 925, 931-32 (9th Cir.
2003) (a State’s regulation of payment method does not relate
to the tow truck operator’s route or service and is not pre-
empted by § 14501(c)). Thus, we must consider whether the
financial capability provision indirectly binds drayage carriers
to particular rates, routes, or services. Air Transport, 513 U.S.
at 1075. ATA argues only that the provision “gives POLA
discretion to deny LMCs the right to provide drayage services
on routes involving the Port”—apparently, that the financial
capability provision could be used by the Port to deny access
to otherwise qualified drayage carriers and thus affect routes.
The district court disagreed, and its conclusion is well sup-
ported by the record. The Port has never refused to sign a con-
cession agreement on the basis of the financial capability
provision, and the motor carriers who testified indicated that
the financial capability provision would not change their oper-
ations. While this does not preclude the possibility that the
financial capability provision will effect rates, routes or ser-
vices, it makes that possibility “tenuous or remote.” Rowe,
552 U.S. at 371. Accordingly, we hold that the financial capa-
bility provision is not preempted by § 14501(c) of the FAAA
Act.
18224 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
B. The Maintenance Provision
[11] The maintenance provision makes concessionaires
“responsible for vehicle condition and safety” and requires
them to “ensure that the maintenance of all Permitted Trucks
. . . is conducted in accordance with manufacturer’s instruc-
tions.” The district court held that the maintenance provision
was not preempted by the FAAA Act because it does not have
more than an indirect, remote, or tenuous effect on rates,
routes, or services. Alternatively, the district court concluded
that, even if subject to preemption, the maintenance provision
was genuinely responsive to safety concerns. Even assuming
that the maintenance provision relates to rates, routes, and ser-
vices,15 we agree with the district court that the provision was
intended to be and is genuinely responsive to safety and is
thus exempt from preemption by the FAAA Act.
We conclude that the maintenance provision was intended
to respond to safety concerns. The Port cited concerns about
vehicle safety (including vehicle maintenance, repair and
replacement, and driver safety) as motivations for adopting
the concession agreements. The Port also “found that serious
safety and security problems existed in connection with dray-
age trucks at the Port” and cited statistics indicating that
heavy duty vehicles accounted for a disproportionate share of
15
Though we do not rest our holding on this ground, we agree with the
district court that the maintenance provision has only a tenuous and
remote connection to rates, routes, and services. Requiring regular mainte-
nance of trucks does not directly affect drayage pickups or deliveries, nor
does it bind motor carriers to particular routes or types of services. Though
one would suspect that maintenance could have a connection to costs and
thus rates, the evidence introduced at trial established that the maintenance
provision has not given rise to any significant additional costs and that
concessionaires have not increased their rates as a result of complying
with the provisions. ATA does not challenge as clearly erroneous the dis-
trict court’s factual finding that the maintenance provision has not changed
the rates charged by motor carriers, further supporting our view that the
maintenance provision is not related to rates and not preempted by the
FAAA Act.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18225
traffic violations, accidents, and citations for improper main-
tenance.
[12] ATA correctly notes that the maintenance provision
was also motivated by environmental concerns. In particular,
the Port wanted to ensure that all drayage trucks, including
those purchased or retrofitted with State funds, continued to
meet emissions standards over time. The presence of such
mixed motives, though, does not preclude the application of
the safety exception, provided that the State’s safety motives
are not pre-textual. Cf. Loyal Tire & Auto Ctr., Inc. v. Town
of Woodbury, 445 F.3d 136, 145-47 (2d Cir. 2006). For exam-
ple, in Loyal Tire, the city passed a towing ordinance with a
broad general statement that towing regulations as a whole
were in the public interest. Id. at 146. At the same time, there
was significant evidence in the legislative history that the stat-
ute had been passed in order to discriminate against a particu-
lar out-of-town towing company. Id. at 146-47. Though the
State alleged that it was actually responding to safety, it didn’t
document any safety issues until after litigation commenced.
Id. at 146. In addition, there was no logical relationship
between at least one of the city’s purported safety justification
and the measure at issue. Id. at 147- 48. In light of this record,
the court held that the city’s purported safety justification did
not withstand scrutiny. Id. at 148. Unlike Loyal Tire, nothing
in the record here demonstrates that the Port’s safety motives
are illusory or pretextual—the Port’s safety motivation is gen-
uine, albeit operating in tandem with its other concerns. Cf.
Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d
765, 774 (2d Cir. 1999) (stating that because “it is difficult to
treat these programs as a guise for economic regulation” the
programs were “sufficiently safety-oriented to survive pre-
emption under § 14501(c)).
We also agree with the district court that the maintenance
provision is genuinely responsive to safety, because “requir-
ing routine truck maintenance will no doubt help to ensure
that drayage trucks are operating properly and safely, which
18226 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
will in turn likely prevent motor vehicle accidents.” Again
unlike in Loyal Tire, there is a logical connection here
between the maintenance provision and motor vehicle safety.
ATA argues that the maintenance provision is not genuinely
responsive to safety because the Port has not demonstrated
that requiring motor carriers to “comply with manufacturers’
instructions” creates safety benefits in addition to those
already created by federal law. In other words, according to
ATA, because regular maintenance is already required by fed-
eral law, the Port must demonstrate that the non-duplicative
portion of the maintenance provision—the requirement to
comply with manufacturer’s instructions—has an independent
safety benefit.
[13] We hold that State provisions duplicating federal law
may still be genuinely responsive to safety. At the preliminary
injunction phase of this case, we “reject[ed] ATA’s conten-
tions that the provisions are not safety-related simply because
they duplicate already-existing federal laws.” ATA-IV, 596
F.3d at 606. Our conclusion comports with the Supreme
Court’s decision in City of Columbus. One of the arguments
raised in City of Columbus was that the safety exception
should not extend to municipalities because each one could
adopt different regulations, which would be needlessly dupli-
cative and burdensome. 536 U.S. at 441-42. The Court
declined to adopt such a broad rule; instead, it noted that 49
U.S.C. § 31141 authorizes the Secretary of Transportation to
void any State law that “has no safety benefit” and thus per-
mitted the federal government to invalidate local safety regu-
lations “upon finding that their content or multiplicity
threatens to clog the avenues of commerce.” 536 U.S. at 442.
[14] Duplicity is not the death knell of a safety-related reg-
ulation. Because provisions that duplicate federal law may
still have a safety benefit, we hold that the Port need not dem-
onstrate that the requirement to comply with manufacturer’s
instructions creates safety benefits over and above those cre-
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18227
ated by federal law. The maintenance provision falls within
the safety exception and is not preempted.
C. Off-Street Parking Provision
[15] The off-street parking provision requires concession-
aires to submit for approval a “plan that includes off-street
parking locations for all Permitted Trucks” and requires con-
cessionaires to ensure that Permitted Trucks are “in compli-
ance with parking restrictions by local municipalities.” The
district court held that the provision would probably affect
motor carriers’ rates, because the carriers would incur high
costs in obtaining off-street parking and be forced to pass
those costs on to consumers. It also concluded that the off-
street parking provision was not genuinely responsive to
safety because the Port adopted the provision to mollify com-
munity opposition, rather than to address existing safety con-
cerns. The Port does not challenge either of these holdings on
appeal, so the off-street parking provision must rise or fall on
the applicability of the market participant exception. The dis-
trict court was correct that the concession agreements, as a
whole, were adopted by the Port in its proprietary capacity as
a facilities provider. The real issue is whether the off-street
parking provision was adopted to further specific proprietary
goals, or whether it is thinly-veiled regulation.
The Supreme Court confronted a case of thinly veiled regu-
lation in Gould. 475 U.S. at 287-89. There, Wisconsin forbade
its procurement agents to purchase any product manufactured
or sold by any firm on a State-maintained list of repeat viola-
tors of the National Labor Relations Act (NLRA). Id. at
283-83. “[O]n its face the debarment statute serve[d] plainly
as a means of enforcing the NLRA” and the State conceded
that its point was “to deter labor law violations and to reward
‘fidelity to the law.’ ” Id. at 287. The Court held that Wiscon-
sin “simply is not functioning as a private purchaser of ser-
vices,” but instead attempting to impose a supplemental
sanction for violations of the NLRA that “conflicts with the
18228 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
[federal government’s] comprehensive regulation of industrial
relations.” Id. at 288. The Court did not believe that Congress
would permit a State to interfere with that scheme “as long as
[the States] did so through exercises of the spending power.”
Id. at 290. The Court explained that “ ‘[i]t is the conduct
being regulated . . . that is the proper focus of concern.’ ” Id.
at 289 (quoting Amalgamated Ass’n of St. Elec. Ry. & Motor
Coach Emps. of Am. v. Lockridge, 403 U.S. 274, 292 (1971)).
[16] Unlike the provision in Gould, nothing on the face of
the off-street parking provision indicates it was designed to
circumvent the restrictions of the FAAA Act by disguising
impermissible regulation as proprietary. Rather, the off-street
parking provision and the documents adopting it indicate that
it was designed to address specific proprietary problems. Prior
to the enactment of concession agreements, community mem-
bers complained that drayage trucks regularly parked in sur-
rounding neighborhoods, posing safety and health risks. The
Port believed that off-street parking would mitigate drayage
trucks’ negative impacts and increase the community good-
will necessary to facilitate Port expansion. Enhancing good-
will in the community surrounding the Port is an important
and, indeed, objectively reasonable business interest, particu-
larly since the community has already proved its ability to
stymy Port growth and operations by pursuing litigation over
health hazards and environmental impacts.
Further, maintaining Port security is an important business
interest of the Port. The district court found that the Depart-
ment of Homeland Security considers the Port part of one of
seven “ ‘Group I’ port areas at the highest risk of terrorist
attacks.” Jeffrey Brown, an expert in port security, testified
that the off-street parking provision was “safety related”
because, for example, parking vehicles carrying hazardous
cargo on the street creates safety risks. The off-street parking
provision therefore serves the Port’s business interest in pro-
moting Port security. Nor does the off-street parking provi-
sion reach beyond the Port’s participation in the market as a
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18229
facilities provider and seek to impact the private behavior of
third parties. The provision binds only those motor carriers
operating on Port property, and applies to only those trucks
permitted to operate at the Port. It is tailored to a specific pro-
prietary problem facing the Port.
[17] ATA argues that there were alternative ways for the
Port to placate community concerns about truck parking; for
example, by lobbying the city to change parking regulations,
or by deploying Port police as agents of the city to enforce
existing regulations. The fact that the State could have
achieved its goals through regulation does not bear on the
question of whether the Port’s chosen means were regulatory
or proprietary. Because the Port imposed the off-street park-
ing provision only on those drayage trucks operating on Port
property, and did so in response to perceived business neces-
sity, we hold that the off-street parking provision falls within
the market participant doctrine.
D. Employee-Driver Provision
The employee-driver provision requires all concessionaires
to gradually cease using independent owner-operators for Port
drayage. At the end of a five year period, each Port drayage
driver must be an employee of a licensed motor carrier. The
district court held that the provision was preempted by the
FAAA Act as related to rates, routes and services, and
rejected the Port’s argument that the provision was safety
related. The Port does not challenge those holdings on appeal,
so the employee-driver provision survives preemption only if
it falls within the market participant doctrine.
The Port adopted the employee-driver provision for a num-
ber of reasons. The record is replete with evidence that the
provision was designed to “ensure sufficient supply of dray-
age drivers by improvement of wages, benefits, and working
conditions.”16 Essentially, the Port wanted to ensure that
16
In assessing the Port’s motivations, we focus exclusively on the orders
and published documents issued by the Port, and on statements made at
18230 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
motor carriers would provide higher wages to drivers, thus
enabling them to attract drivers to replace those lost through
the TWIC program. In addition, the Port believed that the
employee-driver provision would “protect the Port’s invest-
ment in clean trucks” because it created an employer-
employee relationship between truck drivers and subsidized
concessionaires, ensuring that the trucks were owned and
operated by persons with the means to maintain them. The
Port also indicated that the employee-driver provision would
be “easier to administer” because it would shift from the Port
to employers the burden of maintaining records on each
driver. ATA II, 559 F.3d at 1056.
[18] We conclude that, under Gould, the employee driver
provision seeks to impact third party behavior unrelated to the
performance of the concessionaire’s obligations to the Port.
One of the Port’s primary motives in adopting the employee
driver provision was to increase stability in Port drayage by
ensuring that drivers were paid higher wages. As a facilities
provider, the Port has an interest in continued provision of
drayage services, but it may not obtain that stability by unilat-
erally inserting itself into the contractual relationship between
motor carriers and drivers. The Port, unlike the governmental
entities in Boston Harbor or Johnson, does not pay driver sal-
aries or subsidize benefits, so has no connection with drayage
drivers justifying interference with the drivers’ employment
relationships. Cf. Boston Harbor, 507 U.S. at 231-32 (empha-
sizing that the State could require project labor agreements as
a purchaser of construction services); White, 460 U.S. at 214(holding that the city was entitled to the market participant
trial by high-ranking Port officials. Both ATA and its amicus imply that
statements of consultants hired by the Port reflect the Port’s motivations.
This argument is without merit, even though both reports were commis-
sioned by the Port, and the Port ultimately adopted the course recom-
mended by both reports. The consultants are not agents of the Port, and
it is too much to conclude that every statement in each report was adopted
by the Port or accurately reflects the Port’s motivations.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18231
doctrine because it expended its own funds in contracting for
construction of public projects); Johnson, 623 F.3d at 1029-30(noting that the State could require parties to maximize oppor-
tunities for minority and women-owned businesses as consid-
eration for the benefits received from the State). While the
Port may impose conditions on licensed motor carriers seek-
ing to operate on Port property, it cannot extend those condi-
tions to the contractual relationships between motor carriers
and third parties.
The Port argues that it subsidized approximately 35% of
the drayage trucks operating at the Port, and believes that
employee-drivers will better protect that investment. But the
concession agreements bind all licensed motor carriers operat-
ing at the Port, not merely those who drive Port-subsidized
trucks. Accordingly, even assuming that the Port’s investment
in drayage trucks entitles it to control the employment status
of the drivers of subsidized trucks, the employee-driver provi-
sion still seeks to impact behavior beyond the scope of the
obligations imposed by the subsidies. Cf. Wyo. v. Okla., 502
U.S. 437, 456 (1992) (holding that a State which owned and
operated an electricity plant did not act as a market participant
in requiring all plants to use at least 10% Oklahoma coal).
[19] We recognize that a facilities provider in the Port’s
position has a proprietary interest in streamlined administra-
tion. We also recognize that the employee-driver provision
furthers this interest, because it permits the Port to hold
accountable a smaller number of licensed motor carriers,
rather than having to monitor a large number of independent
owner-operators. Nevertheless, under the circumstances, this
is insufficient to outweigh the Port’s avowed desire to impact
wages not subsidized by the State. The employee-driver pro-
vision is “tantamount to regulation” and thus does not fall
under the market participant exception. Gould, 475 U.S. at
289.
18232 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
E. Placard Provision
Lastly, the placard provision requires concessionaires to
“post placards on all Permitted Trucks” when the trucks are
“entering and leaving Port property and while on Port proper-
ty.” The placards shall “refer[ ] members of the public to a
phone number to report concerns regarding truck emissions,
safety, and compliance to the Concession Administrator
and/or authorities.” Since April, 2009, the Port has provided
sticker placards to motor carriers, although Permitted Trucks
are allowed to use other placards.
[20] The placard provision may be preempted by
§ 14501(c) of the FAAA Act, prohibiting regulations related
to motor carriers’ rates, routes, and services. We agree with
the district court that the placard provision is genuinely
responsive to motor vehicle safety, so not preempted by
§ 14501(c).17 The placards help the Port to gather information
about the safety of drayage truck operations, both on and off
Port property. This information can be communicated to
motor carriers and informs the Port’s operations. The fact that
many drayage trucks continue to display the placards off Port
property (although nothing in the provision requires them to
do so), and that community members have reported off-Port
safety violations, does not diminish the placards’ safety bene-
fit.
[21] Though it survives preemption by § 14501(c) because
of the safety exception, the placard provision may be pre-
empted by 49 U.S.C. § 14506(a), which prevents States from
enacting or enforcing any “provision having the force and
17
As discussed in section IV.C supra, application of the FAAA’s safety
exception is not precluded by Castle v. Hayes, 348 U.S. 61 (1954). The
placard provision is a reasonable measure aimed at promoting Port safety,
which applies only while trucks are operating on the Port’s private prop-
erty. It is not comparable to Illinois’ attempt to bar certain federally
licensed motor carriers from its state highways, which was at issue in Cas-
tle.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18233
effect of law that requires a motor carrier . . . to display any
form of identification on or in a commercial motor vehicle . . .
other than forms of identification required by the Secretary of
Transportation.” The district court erroneously concluded that
the placards are not a “form of identification” because they
merely list a phone number. The phone number, though, iden-
tifies the truck as one serving the Port, and falls within the
broad scope of § 14506(a).
[22] There is no safety exception to § 14506(a), ATA-IV,
596 F.3d at 606, but because it applies only to provisions hav-
ing the force and effect of law, § 14506(a) does not apply to
State proprietary action. Cf. Cardinal Towing, 180 F.3d at
695. The placard provision is proprietary in nature, and, under
the market participant doctrine, is not preempted by
§ 14506(a). The Port adopted the placard provision in
response to community concerns about drayage truck opera-
tion. The provision invites community participation and
increases goodwill, thus facilitating Port expansion. As a
facilities provider, the Port has a proprietary interest in receiv-
ing complaints about drayage trucks entering, leaving, and
operating on its property. A private facilities provider would
do the same. Cf. Boston Harbor, 507 U.S. at 231-32. The
placard provision does not seek to impact third party behavior
unrelated to the performance of contractual obligations to the
State, but is concerned only with drayage truck operations
immediately connected to the Port. Thus, it is not preempted.
V.
The district court meticulously identified and applied the
governing law. We affirm the district court’s holdings that the
financial capability, maintenance, off-street parking, and plac-
ard provisions are not preempted. We reverse the district
court’s conclusion that the employee-driver provision is saved
from preemption by the market participant doctrine, and
remand for further proceedings consistent with this opinion.
18234 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
AFFIRMED IN PART AND REVERSED IN PART
N.R. SMITH, Circuit Judge, dissenting in parts III.B., III.C.,
IV.B., IV.C., and IV.E. of the majority opinion:
I must dissent from the majority opinion because: (1) the
market participant exception to preemption does not apply.
Drayage services (not port services) form the relevant market,
and the Port of Los Angeles (the “Port”) acts as a regulator
of drayage services. (2) Even assuming the Port qualifies as
a proprietor, the off-street parking provisions are preempted,
because they affect parties unrelated to contractual obligations
to the Port. (3) The placard provision is preempted and not
saved by the market participant doctrine or the safety excep-
tion, because California cannot revoke access to channels of
interstate commerce and identification requirements on motor
carriers are expressly preempted under 49 U.S.C. § 14506(a).
I. Market Participant Exception
The Port acts as a regulator (rather than a market propri-
etor) of drayage services. It is therefore ineligible for the
“market participant” defense to federal preemption. We apply
a two-prong test for distinguishing proprietary from regula-
tory actions:
First, does the challenged action essentially reflect
the entity’s own interest in its efficient procurement
of needed goods and services, as measured by com-
parison with the typical behavior of private parties in
similar circumstances? Second, does the narrow
scope of the challenged action defeat an inference
that its primary goal was to encourage a general pol-
icy rather than address a specific proprietary prob-
lem?
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18235
Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011,
1023-24 (9th Cir. 2010) (citation omitted). If the answer to
either question is yes, the market participant exception
applies. Id. at 1024.
The Port’s regulation of drayage services does not qualify
as “efficient procurement” of needed services. The Ninth Cir-
cuit has no controlling precedent on this point. However, the
Fifth Circuit, in Smith v. Department of Agriculture of the
State of Georgia, concluded that mere ownership of a facility
does not make the government a participant in the markets
operating in that facility. 630 F.2d 1081 (5th Cir. 1980); cf.
Shell Oil Co. v. City of Santa Monica, 830 F.2d 1052,
1057-58 (9th Cir. 1987) (holding that a city “control[ling]
easements in the area beneath city streets, a commodity with
value . . . . [with which] the city competes with other enti-
ties[,] . . . is not a market participant in the setting of franchise
fees for easements under public streets”). In Smith, the Fifth
Circuit held that Georgia acted as a market regulator when it
leased booths to farmers at a state-owned-and-operated far-
mer’s market that gave preferential treatment to Georgia
farmers. Georgia acted as a regulator, rather than a proprietor,
because it (1) did not “produce the goods to be sold at the
market,” (2) did not “engage in the actual buying or selling of
those goods,” and (3) had “simply provided a suitable market-
place for the buying and selling of privately owned goods.”
Id. at 1083. As the district court in this case suggested in an
earlier order, Am. Trucking Ass’ns., Inc. v. City of L.A., 577
F. Supp. 2d 1110, 1120 (C.D. Cal. 2008), and a concurring
judge in Smith emphasized, the outcome of this test depends
on the definition of the market: “[i]f the market is . . . one in
sale booths for produce, then Georgia [is a proprietor] of
booths. . . . But [because] the relevant market [is] one in vege-
tables, . . . [and] Georgia is not their producer or seller,”
Georgia is not a proprietor. Smith, 630 F.3d at 1086 (Gee, J.,
concurring).1
1
Also not controlling but persuasive is the case of Fla. Transp. Serv.,
Inc. v. Miami-Dade Cnty., 757 F.Supp.2d 1260 (S.D. Fla. 2010). In Flor-
18236 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
The majority states that the “efficient procurement” prong
“is useful in cases where the government is buying goods or
seeking services, but it is not the be-all-and-end-all of propri-
etary action.” Maj. Op. at 18216 (footnote omitted). Instead,
the real inquiry is distinguishing between propriety and regu-
latory action. See id. In determining whether actions are “as
a market participant or regulator, a court must examine
whether the . . . government has imposed restrictions that
‘reach beyond the immediate parties with which the govern-
ment transacts business.’ ” Big Country Foods, Inc. v. Bd. of
Educ. of Anchorage Sch. Dist., 952 F.2d 1173, 1178 (9th Cir.
1992) (citing White v. Mass. Council of Constr. Emp’rs, 460
U.S. 204, 211 n.7 (1983) and S.-Cent. Timber Dev. v. Wunn-
icke, 467 U.S. 82, 95 (1984)).2 “In White, . . . Boston did not
reach beyond the immediate parties by requiring contractors
to hire local workers because everyone affected by the order
was, ‘in a substantial if informal sense, working for the
city.’ ” Id. (citing White, 460 U.S. at 211 n.7). “In contrast,
the Court in Wunnicke found that the Alaska timber process-
ing requirement constituted a ‘downstream’ regulation prohib-
ited by the commerce clause.” Id. (citing Wunnicke, 467 U.S.
at 95).
Here, the Port reaches beyond the immediate parties with
whom it transacts, because it does not transact business with
drayage service providers. Unlike the rules requiring contrac-
tors to hire local workers in White, the Port does not require
the shipping lines and stevedoring companies (that rent termi-
nals) to regulate the drayage service providers. Further, the
ida Transportation the plaintiffs challenged the Port of Miami’s limitation
on the number of stevedores. Id. Regarding the market participant doc-
trine, the court found the county operating the Port of Miami not to be in
the market of stevedoring just because it participates in the market for port
services. Id. at 1282 (“[T]he county simply provides a suitable market
place that it owns—the Port—for stevedores to offer their services.”).
2
Although Wunnicke, 467 U.S. 82 (1984), is a plurality opinion, we
cited its holding with approval in Big Country Foods, 952 F.2d at 1178.
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18237
drayage service providers do not, even in an informal sense,
work for the Port. See White, 460 U.S. at 211 n.7. Therefore,
the Port reaches the limits of the market participation exemp-
tion. Id. (privity of contract is not the boundary of the market
participation exemption, but “there are some limits on a . . .
government’s ability to impose restrictions that reach beyond
the immediate parties with which the government transacts
business.”).
The provision of maritime ports does not form the relevant
market here; rather, the market is the provision of drayage
services. The Port cannot be a proprietor in this market,
because it neither purchases nor provides drayage services.3
Indeed, the Port does not involve itself in any market activity
with the independent contractors and companies providing
drayage services. See Amicus Brief of the Center of Constitu-
tional Jurisprudence 11-12. Therefore, the Port regulates
third-party drayage providers in its capacity as a regulator,
eliminating the Port’s eligibility for the market participant
defense.
II. Safety Exception
The majority applies the safety exception in this case by
distinguishing Castle v. Hayes Frieght Lines, 348 U.S. 61(1954), and finding that it does not preclude the Port from
banning access of motor carriers. Maj. Op. at 18220-22.
3
In virtually every Ninth Circuit case finding that a government entity
acted as a market proprietor, the government was actually participating in
the marketplace by purchasing goods or services. See, e.g., Engine Mfrs.
Ass’n v. S. Coast Air Quality, 498 F.2d 1031 (9th Cir. 2007) (holding that
a state subdivision acted as a market participant in establishing air quality
rules governing state and local governments’ procurement of new fleet
vehicles); Tocher v. City of Santa Ana, 219 F.3d 1040, 1049 (9th Cir.
2000) (holding the City of Santa Ana acted as a market participant in “es-
tablishing rules and regulations to guide the formation of contracts for
towing services provided exclusively to the City” (emphasis added)).
18238 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
In Castle, the Supreme Court held that Illinois could not
revoke an interstate motor carrier’s access to state highways
for repeatedly violating the state highway regulations, because
the federal government has assumed exclusive authority over
the licensing of interstate motor carriers. 348 U.S. at 63-64.
The Court explained that it would be “odd if a state could take
action amounting to a suspension or revocation of an inter-
state carrier’s [federal government]-granted right to operate.”
Id. at 64. The Court further elaborated that
[i]t cannot be doubted that suspension of this com-
mon carrier’s right to use Illinois highways is the
equivalent of a partial suspension of its federally
granted certificate. The highways of Illinois are not
only used by Hayes [Freight Lines] to transport
interstate goods to and from that State but are also
used as connecting links to points in other states
which the Commission has authorized Hayes to
serve. Consequently if the ninety-day or the one-year
suspension should become effective, the carriage of
interstate goods into Illinois and other states would
be seriously disrupted.
Id. Although the state could not revoke access to its highways
for operators who repeatedly violated the state’s size and
weight restrictions, the state could still (1) resort to “conven-
tional forms of punishment” and (2) rely on federal authori-
ties to protect the state’s interest by mandating compliance
with state regulations.4 Id. at 64-65.
4
California recognized this enduring limit on its authority to regulate
interstate motor carriers when it enacted the Motor Carrier Safety
Improvement Act of 1996. The Act provides, in part, that if the California
Highway Patrol determines a commercial carrier has engaged in “consis-
tent failure” to comply with safety requirements “so as to justify a suspen-
sion or revocation of the motor carrier’s motor carrier permit . . . for
interstate operators, the [Highway Patrol] shall recommend to the Federal
Motor Carrier Safety Administration that appropriate administrative
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18239
The Port does not dispute that the federal government con-
tinues to issue interstate transportation “registrations” or “per-
mits” enabling trucking companies to transport cargo across
state lines so long as they comply with federal safety and
insurance regulations. See, e.g., Motor Carrier Safety Act,
Pub. L. No. 98-554, 98 Stat. 2829 (codified, in part, at 49
U.S.C. § 31144); Trucking Industry Regulatory Reform Act
of 1994, Pub. L. No. 103-311, § 201, 108 Stat. 1683.5 Thus,
the preemption analysis in Castle still applies, even if the
form of comprehensive federal regulation has changed over
the years.6 Additionally, contrary to the district court’s hold-
ing, drayage operations between the Port of Los Angeles and
other points (even within California) constitute interstate
commerce. They are part of the continuous flow of goods
between locations outside California and customers within
California. Klitzke v. Steiner Corp., 110 F.3d 1465, 1469 (9th
Cir. 1997) (“Whether any particular shipment is interstate is
actions be taken against the carrier . . . .” Cal. Veh. Code § 34505.6(a)
(emphasis added). This enforcement scheme is consistent with Castle in
that California relies on federal authorities to revoke an interstate offend-
er’s permit where the state would otherwise revoke an intrastate offend-
er’s transportation permit for the same conduct.
5
The district court concluded, without analysis, that Castle does not
apply, because the FAAA Act was enacted 40 years after Castle. How-
ever, the FAAA Act did not expand states’ authority to regulate interstate
motor vehicles, even on safety grounds. In addressing this very question,
Congress explained that “nothing in these new subsections contains a new
grant of Federal authority to a State to regulate commerce and nothing in
these sections amends other Federal statutes that govern the ability of
States to impose safety requirements . . . .” H.R. Rep. No. 103-677 at 84
(1994), reprinted in 1994 U.S.C.C.A.N. 1715, 1757.
6
The United States, writing as amicus curiae in this case, also argued
that Castle and its progeny are still in full effect, explaining “the Supreme
Court has recognized that ‘comprehensive federal regulation precludes
state or local entities from ‘exercising any veto power over’ interstate
commerce service providers.’ ” See Motion Granting in Part and Denying
in Part Plaintiff’s Motion on Remand for Entry of Preliminary Injunction,
Case No. 2:08-cv-04920-CAS-CT, Dkt. No. 155, at 6 (citing Castle, 348
U.S. at 64).
18240 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
determined . . . by the essential character of the commerce,
manifested by shipper’s fixed and persisting transportation
intent at the time of shipment, and is ascertained from all of
the facts and circumstances surrounding the transportation.”
(internal quotation marks and citation omitted) (emphasis in
original)).
Therefore, interstate drayage operations are the regulatory
province of the federal government. California agencies may
promulgate safety regulations for drayage operators and may
utilize “conventional forms of punishment” for violating these
regulations (e.g., fines). However, revoking access, under
Castle, is an enforcement mechanism beyond the reach of
California and its political sub-parts, including the Port.
The opinion attempts to distinguish Castle, because a limi-
tation on access to a single Port does not prohibit the motor
carriers from participating in transport of interstate goods to
and from the state or rise to the level of the comprehensive
statewide ban at issue in Castle. Maj. Op. at 18221-22. How-
ever, the ban in Castle did not “prohibit” offending motor car-
riers from participating in interstate commerce or “eliminate”
connecting links to other states. Instead, as the Supreme Court
characterized it, the ban (1) “partially suspended” the motor
carrier’s federally granted permit to travel interstate, and (2)
“seriously disrupted” (rather than “eliminated”) the motor car-
riers’ carriage of goods into Illinois and other states. There
were obviously alternatives available to carriers in Castle,
whose state licenses were suspended, but the state enforce-
ment scheme placed impermissible burdens on a federally-
regulated interstate commercial activity. The same problem
arises in this case. Barring access to the Port of Los Angeles
—the largest port in the United States and one of only a hand-
ful of large commercial deep-water ports on the West Coast—
would no doubt “seriously disrupt” drayage carriers’ ability to
transport goods from ships to other destinations in and outside
California. Indeed, barring access is a “partial suspension” of
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18241
drayage carriers’ federal permits to transport goods in the
stream of interstate commerce.
Thus, although the Port can avail itself of the traditional
remedies discussed in Castle, it cannot step into the shoes of
the federal government and partially revoke drayage carriers’
access to the channels of interstate commerce. Therefore, the
Port cannot justify any of the challenged regulations on the
basis of safety. California’s safety regulations cannot disrupt
Federal authority over interstate travel of motor carriers.
III. Off-street Parking Provisions
Even if the Port qualified as a proprietor, the off-street
parking provisions do not qualify as “efficient procurement”
of services. The Port “seeks to affect private parties’ conduct
unrelated to the performance of contractual obligations to the
[Port].” Johnson, 623 F.3d at 1026. The off-street parking
provisions attempt to address political concerns the Port
alleges local community members have raised regarding dray-
age truck parking practices, which are not related to any con-
tracts between drayage providers and the Port.
The off-street parking provisions cannot survive preemp-
tion, either because (1) the Port is not acting as a market par-
ticipant in the “efficient procurement” of services simply by
virtue of its ownership of Port facilities, or (2) the agree-
ment’s far-reaching provisions affect conduct beyond any
direct obligations of drayage providers to the Port.
IV. Placard Provision
A. Preemption under 49 U.S.C. § 14501(c)
The placard provision (requiring concessionaires to post
placards on all drayage trucks when the trucks are “entering
and leaving Port property and while on Port property”) may
be preempted under 29 U.S.C. § 14501(c), if it relates to
18242 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
motor carriers’ prices, routes, and services. The majority does
not determine whether the placard provision relates to prices,
routes or services because of its reliance on the safety excep-
tion to overcome preemption. Maj. Op. at 18232. However,
this provision is not saved by the safety exception (as the
majority concludes), because the state cannot impede Federal
authority to allow motor carriers access to interstate travel, as
noted above. Nevertheless, finding preemption under
§ 14501(c) is not required, because § 14506(a) clearly pre-
empts the placard provision.
B. Preemption under 49 U.S.C. § 14506(a)
The Port-mandated placard is a “form of identification”
under 49 U.S.C. § 14506(a), because it identifies a truck as
one serving the Port and provides a phone number to report
unsafe activity. Section 14506(a) provides:
No State [or] political subdivision of a State . . . may
enact or enforce any law, rule, regulation, standard,
or any other provision having the force and effect of
law that requires a motor carrier . . . to display any
form of identification on or in a commercial motor
vehicle . . . other than forms of identification
required by the Secretary of Transportation.
Because the placard provision requires drayage operators to
display “any form of identification on or in a commercial
motor vehicle,” the provision is plainly preempted. Further, as
explained above, this requirement cannot be saved from pre-
emption as a “proprietary” action lacking the “force and effect
of law,” because the Port is acting as a regulator (rather than
proprietor) of drayage services.
V. Miscellaneous
The district court correctly held that the maintenance provi-
sion would have only a tenuous effect on prices, routes, and
AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 18243
services. See Maj. Op. at 18224. The record indicates that the
time and cost of such compliance is minimal. The plaintiffs
had the burden to show more than a tenuous effect, and they
did not. Therefore, even though the majority did not rely on
this reasoning, I concur with the conclusion of the majority
that the maintenance provision is not preempted. However, I
do not agree with the majority that the safety exception would
save the maintenance provision for the reasons set out previ-
ously.
I agree with the majority that the concession agreements
fail the narrow scope prong of the market participant test. Fur-
ther, I concur that the employee-driver and financial capabil-
ity provisions are preempted by federal law.