FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERICAN TRUCKING ASSOCIATIONS, 

INC.,

Plaintiff-Appellant,

v.

No. 10-56465 THE CITY OF LOS ANGELES; THE

HARBOR D.C. No. DEPARTMENT OF THE

C 2:08-cv-04920- ITY OF LOS ANGELES; THE

BOARD OF HARBOR  CAS-CT

COMMISSIONERS OF THE CITY OF LOS ORDER AND

ANGELES, AMENDED

Defendants-Appellees, OPINION

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

Amended October 31, 2011

19669
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 designation. 

19670 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
COUNSEL

Robert Digges, Jr. (argued), Chief Counsel, American Trucking Associations, Inc. Arlington, Virginia; Stephen S. Anderson, Jr., William Stephen Cannon, Seth David Greenstein,

Richard Levine, and Evan P. Schultz, Constantine, Cannon

LLP, Washington, D.C.; Christopher Chad McNatt, Jr., Scopelitis, Garvin, Light, Hanson & Feary, LLP, Pasadena, California, for the petitioner-appellant.

Steven S. Rosenthal (argued), Susanna Chu, David Cousineau, 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, Natural Resources Defense Council, Inc., Santa Monica, California, 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.

19674 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 Association 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, Washington, D.C., for amicus curiae The Owner-Operator Independent

Drivers Association, Inc.

ORDER

The majority opinion filed September 26, 2011, slip op.

18193, is hereby amended as follows:

1. Lines 20-25 at slip op. 18208 are deleted and the

following are substituted in their stead: “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.” Hinkson,

585 F.3d at 1251.”

OPINION

B. FLETCHER, Circuit Judge:

Beginning in 2008, the Port of Los Angeles (POLA, or the

Port) prohibited motor carriers from operating drayage trucks1

1Drayage trucks move cargo from marine terminals at the Port (where

shipping companies unload containers) to customers, railroads, or other

trucks for long-distance transport.

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19675
on Port property unless the motor carriers entered into “concession agreements” with the Port. The concession agreements set forth fourteen specific requirements covering,

among other things, truck driver employment, truck maintenance, 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 higherpolluting) 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.

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 injunction 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

2Approximately thirty of the six hundred motor carriers currently operating at the Port are members of ATA.

19676 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
its decision that the employee-driver provision of the concession 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 Commissioners (BHC or the Board). It “occup[ies] land that was

granted by the State of California . . . via the California Tidelands Act, and the Port[ ] hold[s] the land in trust for the benefit of the people of California.” Am. Trucking Ass’ns, Inc. v.

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 manages its funds independent of the City. The Port develops terminal 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 country, and competes with other ports for business. 

Terminal operators unload cargo from ships docked at the

Port into marine terminals. From the marine terminals, drayage trucks transport cargo to customers (or to off-Port longdistance 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

3Stevedores manage the loading and unloading of ships. Black’s Law

Dictionary 1539 (9th ed. 2009). 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19677
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 expansion would increase air pollution, that such pollution would

adversely effect the health of people in the surrounding communities,4

 and that the Port did not comply with environmental

laws in planning its expansion. Id. In 2002, a California

appellate court enjoined construction of a new terminal facility for the China Shipping Line Company, concluding that the

Port had failed to comply with the requirements of the California 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 Terminal. The Port entered into a settlement agreement in April

2008, requiring it to establish a five-year community mitigation 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

4The Port is located in California’s South Coast Air Basin, an EPA nonattainment 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 population 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.

5The 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. 

19678 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 people 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

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 standards. The ban forbids terminal operators to allow noncompliant 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 transition 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

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19679
service providers to comply with the progressive ban, particularly in light of research showing that drayage service providers 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.

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.

6The Transportation Worker Identification Credential (TWIC) is a “security 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. 

19680 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
To address its concerns, the Port decided to implement concession 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

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 leaseto-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 pre1989 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 qualifying trucks, the Truck Funding Program is available only to

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19681
licensed motor carriers who are “concessionaires” in good

standing with the Port, and funding priority is given to “concessionaires 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

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 transition over five years to using 100% employee

drivers rather than using independent owneroperators. (The employee-driver provision).

2. Provision III(f) requires concessionaires to submit for approval “an off-street parking plan that

includes off-street parking locations for all Permitted Trucks” and requires concessionaires to

ensure that Permitted Trucks are “in compliance

with parking restrictions by local municipalities.” (The off-street parking provision).

3. Provision III(g) makes concessionaires “responsible for vehicle condition and safety” and

requires them to “ensure that the maintenance of

all Permitted Trucks . . . is conducted in accor19682 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 number 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 Executive Director that it possesses the financial capability to perform its obligations under th[e]

Concession [agreement].” (The financial capability 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 commend the reader to the orders and opinions discussing ATA’s

quest for a preliminary injunction.7 Suffice it to say that ATA

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 exception 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) (ATAIII); Am. Trucking Ass’ns, Inc. v. City of L.A., 596 F.3d 602 (9th Cir.

2010) (ATA-IV). 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19683
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)

(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 challenged provisions were preempted. ATA appeals.

II.

We review a district court’s decision regarding federal preemption 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,

19684 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
implausible, or without support in inferences that may be

drawn from the facts in the record.” Hinkson, 585 F.3d at

1251.

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.

[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 provides as a “general rule” that “a State [or] political subdivision 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

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19685
express exemptions save the regulation from preemption. As

relevant here, the FAAA Act does not “restrict the safety regulatory 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 misapplied 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

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 preempted.” 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 transportation, 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.

8The 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). 

19686 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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

a particular service to customers, or forbids them to serve certain 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 indirect.’ ” 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 Transport, 266 F.3d at 1072; cf. Am. Airlines, Inc. v. Wolens, 513

U.S. 219, 232-33 (1995) (holding that the Airline Deregulation 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 dispute resolution provisions in contracts signed by airlines);

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19687
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, contending 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 entering 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

routes of airlines.9Id. 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 [conceded] 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 discriminate.” Id. We noted that air carriers were allowed “to

make their own decisions about where to fly and how many

9ATA 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 discriminates 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 discriminate, 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. 

19688 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 nondiscrimination 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 proposition that “there may be a point at which costs from a [S]tate

law are so exorbitant that it could rise to the level of a substantive 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 agreements do not necessarily affect rates, routes, or services simply 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.” Johnson 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);

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19689
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 market 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: 

First, does the challenged action essentially reflect

the entity’s own interest in its efficient procurement

of needed goods and services, as measured by comparison 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 policy rather than address a specific proprietary problem?

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 expenditure and protects narrow spending decisions that do not necessarily 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)

19690 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
(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 spending decisions” that “lack the effect of broader social regulation.” 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,

283 F.3d 404, 421-21 (2d Cir. 2002) (contract applied only to

one cellular phone tower located on particular property); Cardinal 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 concession agreements is essentially proprietary. Johnson, 623

F.3d at 1024. ATA contends if the State’s actions do not qualify as “efficient procurement,” they cannot be considered proprietary.10 We disagree. 

10Contrary 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 explanation” 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

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19691
The Supreme Court has applied the market participant doctrine 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 penalizing 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

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 Maryland 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 impermissible attempts to regulate through the spending power.”

180 F.3d at 693. If the State is not engaged in “efficient procurement” but nonetheless directly participates in the market

in a proprietary manner, we see no reason why Cardinal Towing should preclude the application of the market participant

United Stockgrowers of Am. v. USDA, 499 F.3d 1108, 1114 (9th Cir.

2007) (internal quotation marks and citation omitted). “Any of our conclusions 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.

11See, 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 participant when it required transportation vehicles purchased with State funds

to meet environmental standards); Tocher, 219 F. 3d at 1049-50. 

19692 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 participation in the market’ ” and emphasizing that the questions

must be considered in the “specific context” presented) (quoting 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 agreements are contracts under which the Port exchanges access to

its property for a drayage carrier’s compliance with certain

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

12ATA argues that, in S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S.

82, 97-98 (1984) (plurality), the Supreme Court limited the market participant doctrine to State actions taken in a “narrow” market defined by contractual 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 concurrence 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 (Rehnquist, J., in a dissent joined by O’Connor, J.) (arguing that the market participant 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 restrictions 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”). 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19693
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 capacity owns the streets and land under which the Seattle Lateral

[pipeline] runs, for the purpose of maintaining a transportation system” and the city sought to exercise its power to protect 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 efficient flow of cargo through its terminals and in increasing

container traffic through the Port”; (2) the Port “needs to continually improve the efficiency of cargo operations at the Port

to maintain its competitive position with respect to other ports

19694 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 erroneous. 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 carriers that operate on Port property.13

[7] We hold that when an independent State entity manages 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 operators, and permits drayage trucks to access its facilities, for the

13Both parties discuss as persuasive authority cases from other circuits

and district courts addressing the market participant doctrine in the general

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 restrictions 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 preferential 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 employers operating at the airport to permit certain union actions); Transp. Limousine 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 holdings would be strained. Cf. Tri-M, 638 F.3d at 422 (the court must consider the government’s actions in the specific context presented). These

cases are useful only to illustrate that other courts examine whether a particular 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. 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19695
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, reliable, 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.

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 provisions 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); Johnson, 623 F.3d at 1026 (refusing to examine the State’s “ulterior motives”). We do not examine each individual provision

of the concession agreements at this point, saving that discussion 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

19696 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 carriers 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 authority 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

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 particular 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 carriers’ 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 permitting motor carriers to operate interstate. Id. at 63-64. The

Court held that Illinois’s action was “the equivalent of a partial suspension of [a motor carrier’s] federally granted certificate,” 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. Accordingly, Illinois’s action was prohibited. Id. at 65. The Court

stated, though, that Illinois remained free to impose “conventional 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 initiative 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. 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19697
[8] Even if the FAAA Act incorporated (rather than modified) 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 participating in “transport [of] interstate goods to and from that

State” or eliminate “connecting links to points in other states.”

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 preemption 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 preempted 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

14We express no opinion on this point. 

19698 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 employeedriver provision is pre-empted because it is tantamount to regulation.

A. Financial Capability Provision

The financial capability provision requires a concessionaire

to “demonstrate[ ] to the satisfaction of the Executive Director

that it possesses the financial capability to perform its obligations under th[e] Concession.” As with the maintenance provision, 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 preempted; we therefore do not apply the market participant doctrine or safety exception.

[10] The financial capability provision does not directly

impact the drayage services provided to customers (for example, 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 preempted 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 supported by the record. The Port has never refused to sign a conAMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19699
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 operations. While this does not preclude the possibility that the

financial capability provision will effect rates, routes or services, it makes that possibility “tenuous or remote.” Rowe,

552 U.S. at 371. Accordingly, we hold that the financial capability provision is not preempted by § 14501(c) of the FAAA

Act. 

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 instructions.” 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 services,15 we agree with the district court that the provision was

15Though 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 maintenance 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 district 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. 

19700 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 drayage trucks at the Port” and cited statistics indicating that

heavy duty vehicles accounted for a disproportionate share of

traffic violations, accidents, and citations for improper maintenance.

[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 example, 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 statute had been passed in order to discriminate against a particular 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 genAMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19701
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 preemption under § 14501(c)). 

We also agree with the district court that the maintenance

provision is genuinely responsive to safety, because “requiring routine truck maintenance will no doubt help to ensure

that drayage trucks are operating properly and safely, which

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 federal 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 contentions 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 duplicative 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

19702 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
void any State law that “has no safety benefit” and thus permitted the federal government to invalidate local safety regulations “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 regulation. Because provisions that duplicate federal law may

still have a safety benefit, we hold that the Port need not demonstrate that the requirement to comply with manufacturer’s

instructions creates safety benefits over and above those created 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 concessionaires to submit for approval a “plan that includes off-street

parking locations for all Permitted Trucks” and requires concessionaires to ensure that Permitted Trucks are “in compliance 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 offstreet parking provision was not genuinely responsive to

safety because the Port adopted the provision to mollify community opposition, rather than to address existing safety concerns. 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 district 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 regulation in Gould. 475 U.S. at 287-89. There, Wisconsin forbade

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19703
its procurement agents to purchase any product manufactured

or sold by any firm on a State-maintained list of repeat violators 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 Wisconsin “simply is not functioning as a private purchaser of services,” but instead attempting to impose a supplemental

sanction for violations of the NLRA that “conflicts with the

[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 members complained that drayage trucks regularly parked in surrounding neighborhoods, posing safety and health risks. The

Port believed that off-street parking would mitigate drayage

trucks’ negative impacts and increase the community goodwill necessary to facilitate Port expansion. Enhancing goodwill in the community surrounding the Port is an important

and, indeed, objectively reasonable business interest, particularly 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 Depart19704 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 promoting Port security. Nor does the off-street parking provision reach beyond the Port’s participation in the market as a

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 proprietary 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 parking provision only on those drayage trucks operating on Port

property, and did so in response to perceived business necessity, 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,

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19705
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 number of reasons. The record is replete with evidence that the

provision was designed to “ensure sufficient supply of drayage drivers by improvement of wages, benefits, and working

conditions.”

16 Essentially, the Port wanted to ensure that

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 investment in clean trucks” because it created an employeremployee 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 unilat16In assessing the Port’s motivations, we focus exclusively on the orders

and published documents issued by the Port, and on statements made at

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 commissioned by the Port, and the Port ultimately adopted the course recommended 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. 

19706 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 salaries 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 (emphasizing 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

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 opportunities for minority and women-owned businesses as consideration for the benefits received from the State). While the

Port may impose conditions on licensed motor carriers seeking to operate on Port property, it cannot extend those conditions 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 operating 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 provision 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 administration. 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,

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19707
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 provision is “tantamount to regulation” and thus does not fall

under the market participant exception. Gould, 475 U.S. at

289.

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 property.” 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

17As 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 property. It is not comparable to Illinois’ attempt to bar certain federally

licensed motor carriers from its state highways, which was at issue in Castle. 

19708 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
do so), and that community members have reported off-Port

safety violations, does not diminish the placards’ safety benefit.

[21] Though it survives preemption by § 14501(c) because

of the safety exception, the placard provision may be preempted by 49 U.S.C. § 14506(a), which prevents States from

enacting or enforcing any “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.” 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, identifies 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 having 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 operation. The provision invites community participation and

increases goodwill, thus facilitating Port expansion. As a

facilities provider, the Port has a proprietary interest in receiving 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

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19709
financial capability, maintenance, off-street parking, and placard 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.

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 exception, 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 proprietor) 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 regulatory 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 comparison with the typical behavior of private parties in

19710 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
similar circumstances? Second, does the narrow

scope of the challenged action defeat an inference

that its primary goal was to encourage a general policy rather than address a specific proprietary problem?

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 Circuit 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 entities[,] . . . 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 farmer’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 marketplace 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

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19711
booths. . . . But [because] the relevant market [is] one in vegetables, . . . [and] Georgia is not their producer or seller,”

Georgia is not a proprietor. Smith, 630 F.3d at 1086 (Gee, J.,

concurring).1

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 proprietary action.” Maj. Op. at 19692 (footnote omitted). Instead,

the real inquiry is distinguishing between propriety and regulatory 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 government 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. Wunnicke, 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 processing requirement constituted a ‘downstream’ regulation prohibited by the commerce clause.” Id. (citing Wunnicke, 467 U.S.

at 95). 

1Also 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 Florida Transportation the plaintiffs challenged the Port of Miami’s limitation

on the number of stevedores. Id. Regarding the market participant doctrine, 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.”). 

2Although 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.

19712 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 contractors to hire local workers in White, the Port does not require

the shipping lines and stevedoring companies (that rent terminals) to regulate the drayage service providers. Further, the

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 exemption. 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 Constitutional 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.

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 “establishing rules and regulations to guide the formation of contracts for

towing services provided exclusively to the City” (emphasis added)). 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19713
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 19696-98. 

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 interstate 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 common 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 “conventional forms of punishment” and (2) rely on federal authorities to protect the state’s interest by mandating compliance

with state regulations.4Id. at 64-65. 

4California recognized this enduring limit on its authority to regulate

interstate motor carriers when it enacted the Motor Carrier Safety

19714 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
The Port does not dispute that the federal government continues to issue interstate transportation “registrations” or “permits” 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 holdImprovement Act of 1996. The Act provides, in part, that if the California

Highway Patrol determines a commercial carrier has engaged in “consistent failure” to comply with safety requirements “so as to justify a suspension 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

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 offender’s permit where the state would otherwise revoke an intrastate offender’s transportation permit for the same conduct. 

5The district court concluded, without analysis, that Castle does not

apply, because the FAAA Act was enacted 40 years after Castle. However, 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. 

6The 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). 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19715
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

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 limitation 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 19697-98. However, the ban in Castle did not “prohibit” offending motor carriers 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 carriers’ 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 enforcement scheme placed impermissible burdens on a federallyregulated interstate commercial activity. The same problem

arises in this case. Barring access to the Port of Los Angeles

19716 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
—the largest port in the United States and one of only a handful 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

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 drayage truck parking practices, which are not related to any contracts between drayage providers and the Port. 

The off-street parking provisions cannot survive preemption, either because (1) the Port is not acting as a market participant in the “efficient procurement” of services simply by

virtue of its ownership of Port facilities, or (2) the agreement’s far-reaching provisions affect conduct beyond any

direct obligations of drayage providers to the Port. 

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19717
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

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 exception to overcome preemption. Maj. Op. at 19708-09. 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

preempts 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 pre19718 AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES
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 provision would have only a tenuous effect on prices, routes, and

services. See Maj. Op. at 19700-01. 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 previously. 

I agree with the majority that the concession agreements

fail the narrow scope prong of the market participant test. Further, I concur that the employee-driver and financial capability provisions are preempted by federal law.

AMERICAN TRUCKING ASSOCIATIONS v. LOS ANGELES 19719