                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 93-1874

                    COMBINED MANAGEMENT, INC.,

                      Plaintiff, Appellant,

                                v.

                 SUPERINTENDENT OF THE BUREAU OF
                 INSURANCE OF THE STATE OF MAINE,

                       Defendant, Appellee.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                    FOR THE DISTRICT OF MAINE

           [Hon. D. Brock Hornby, U.S. District Judge]
                                                     

                                           

                              Before

                   Torruella, Aldrich and Cyr,

                         Circuit Judges.
                                       

                                           

     Richard  G. Moon with  whom Ralph A.  Dyer was  on brief for
                                               
appellant.
     James M. Bowie,  Assistant Attorney  General, Department  of
                   
the Attorney  General, with  whom Michael E.  Carpenter, Attorney
                                                       
General, Linda  M.  Pistner, Director,  Regulatory  Agency  Unit,
                           
Department  of  the  Attorney  General,  and  Thomas  D.  Warren,
                                                                
Director, Litigation  Unit, Department of  the Attorney  General,
were on brief for appellee.
     Robert Abrams, Attorney  General of the  State of New  York,
                  
Jerry  Boone,  Solicitor General,  Jane  Lauer  Barker, Assistant
                                                      
Attorney  General in  Charge  of Labor  Bureau,  and Jennifer  S.
                                                                 
Brand,  Assistant  Attorney General,  on brief  for State  of New
     
York, et al., amici curiae.
     John  M.  Rea,  Chief  Counsel, Vanessa  L.  Holton,  Senior
                                                        
Counsel, James D.  Fisher, Staff Counsel,  Gary J. O'Mara,  Staff
                                                         
Counsel, Department  of Industrial  Relations,  and Lloyd  Aubry,
                                                                 
Jr.,  Director,  Department  of  Industrial Relations,  State  of
   

California, on brief for State of California, amicus curiae.
     Marsha  S. Berzon, Michael Rubin, Indira Talwani, Altshuler,
                                                                 
Berzon,  Nussbaum, and Berzon &amp;  Rubin on brief  for the American
                                      
Federation of Labor and  Congress of Industrial Organizations and
the International Ladies' Garment Workers' Union,  AFL-CIO, amici
curiae.
     Thomas  S.  Williamson, Jr.,  Solicitor  of  Labor, Marc  I.
                                                                 
Machiz,  Associate  Solicitor, Plan  Benefits  Security Division,
      
Karen L.  Handorf, Counsel for Special  Litigation, Plan Benefits
                 
Security Division, and Elizabeth A. Goodman, Trial Attorney, Plan
                                           
Benefits Security  Division, U.S.  Department of Labor,  on brief
for the Secretary of Labor, amicus curiae.
     Allan M. Muir  and Pierce, Atwood, Scribner, Allen,  Smith &amp;
                                                                 
Lancaster on brief for Maine Employers' Mutual Insurance Company,
         
amicus curiae.
     Michael  M. Sykes,  General Counsel, Oklahoma  Department of
                      
Labor,  and  Kayla A.  Bower,  Attorney,  Oklahoma Department  of
                            
Labor,  on brief  for  State of  Oklahoma  ex rel.  Dave  Renfro,
Commissioner  of  Labor,  Oklahoma  Department  of Labor,  amicus
curiae.

                                           

                          April 22, 1994
                                           

                               -2-

          TORRUELLA,   Circuit   Judge.      Plaintiff-Appellant,
                                      

Combined Management,  Inc. ("CMI"),  brought an action  to enjoin

Brian   K.   Atchinson,  in   his   representative   capacity  as

Superintendent  of the Bureau of Insurance for the State of Maine

(the  "Superintendent"),  from  enforcing  certain  provisions of

Maine's workers' compensation statute.  39 M.R.S.A.   101 et seq.
                                                                

CMI  claimed that  because  CMI  provides  workers'  compensation

benefits  through a welfare benefit  plan that is  covered by the

Employee   Retirement   Income   Security  Act   ("ERISA"),   the

Superintendent's efforts to  apply the workers' compensation  law

to CMI  are preempted by  ERISA    514(a) of ERISA,  29 U.S.C.   

1144(a).   The district court dismissed  CMI's complaint, finding

that ERISA did not preempt Maine law.  We affirm.

                          I.  BACKGROUND

          CMI  is an  employee  leasing company  that leases  the

services of  its workers' to a  variety of businesses on  a long-

term   basis.     CMI   provides  employee   benefits,  including

occupational  injury  and  disability  benefits,  to  the  leased

employees through a subscription to the International Association

of  Entrepreneurs  of America  Welfare  Benefit  Plan (the  "IAEA

Plan").   The workers' compensation  portion of the  IAEA Plan is

not separately insured or administered.

          Maine state  law, 32  M.R.S.A.    14055(1)(B), mandates

that employee  leasing companies or their  client businesses must

arrange  for the  payment  of workers'  compensation benefits  in

accordance   with  the   requirements   of  the   Maine  Workers'

                               -3-

Compensation  Act,  39  M.R.S.A.    101  et  seq.   The  Workers'
                                                

Compensation  Act requires  that all  employers provide  workers'

compensation either through  an insurance  carrier authorized  by

the state or through a self-insurance plan that meets the state's

qualifications.     39-A  M.R.S.A.     403.21     Maine  requires

authorized  insurance  carriers   and  self-insurers  to  provide

                    

1  39-A M.R.S.A.   403 provides in part:

            An  employer  subject  to  [the  Workers'
            Compensation]     Act    shall     secure
            compensation  and  other benefits  to the
            employer's  employees in  one or  more of
            the ways described in this section. . . .

            1.  INSURING UNDER  WORKERS' COMPENSATION
            INSURANCE  POLICY.    The   employer  may
            comply with this section by  insuring and
            keeping  insured  the  payment   of  such
            compensation and other  benefits under  a
            workers' compensation insurance policy. .
            . . 

            2. PILOT  PROJECTS.   [The  employer  may
            participate   in   an  authorized   pilot
            project.] . . . 

            3.  PROOF  OF   SOLVENCY  AND   FINANCIAL
            ABILITY TO PAY; TRUST.  The  employer may
            comply  with  this section  by furnishing
            satisfactory proof  to the Superintendent
            of  Insurance  of solvency  and financial
            ability  to  pay  the   compensation  and
            benefits,     and     depositing    cash,
            satisfactory    securities,   irrevocable
            standby letters  of  credit issued  by  a
            qualified  financial   institution  or  a
            surety bond  with the board,  in such sum
            as the superintendent may determine . . .
            .

            4.   GROUP  SELF-INSURERS;   APPLICATION.
            Except  for  the  provision  relating  to
            individual public employer self-insurers,
            subsection 3 is equally applicable in all
            respects to group self-insurers.

                               -4-

evidence  of their  financial solvency  and meet  certain funding

requirements.  See, e.g., 24-A M.R.S.A.    221-A, 410, 4431-4452;
                        

39-A M.R.S.A.    403, 404.

          On January 29, 1993, the Maine Bureau of Insurance sent

a letter to CMI stating that  CMI's subscription to the IAEA Plan

did  not satisfy  its  obligation  under  state  law  to  provide

workers'  compensation   benefits  through  one  of  the  methods

authorized   by  39-A  M.R.S.A.     403.    The  letter  did  not

"constitute a formal  order or action of  the Superintendent" but

it  did warn  that failure of  CMI to  comply with  the law could

prompt some action in the future.

          One  month   later,  CMI  filed  suit   to  enjoin  the

Superintendent from  requiring CMI  to  obtain separate  workers'

compensation  insurance or  to establish  a qualified  program of

self-insurance  pursuant to 39-A M.R.S.A.   403.  CMI also sought

a  declaratory  judgment stating  that  any  enforcement of  39-A

M.R.S.A.   403 against CMI is preempted by ERISA.

          In   response  to  CMI's   request  for  a  preliminary

injunction, the magistrate judge  suggested that he first address

the   issue   of  whether   ERISA   preempted  Maine's   workers'

compensation laws.  Although CMI would have to establish that its

benefit plan, the IAEA  Plan, was an ERISA covered plan  under 29

U.S.C.     1002(3)  and 1002(37)(A)  before it  could invoke  the

protections of ERISA's preemption provision, the magistrate noted

that determining the status of the IAEA Plan would involve a fact

intensive inquiry requiring additional discovery.  Instead,  with

                               -5-

the  agreement of  the parties, the  magistrate ordered  that the

preemption issue be addressed first  on the understanding that if

he found ERISA did not  preempt Maine law, he would then  dismiss

the  case.  Thus, for  purposes of this  threshold question only,

the IAEA Plan is assumed to be a valid ERISA benefit plan.

          On June  15, 1993, the magistrate  recommended a denial

of the requested  preliminary injunction and  a dismissal of  the

case on the grounds  that ERISA did not preempt  Maine's workers'

compensation  law.    The  magistrate  found  that  the  workers'

compensation law did not "relate to" the IAEA Plan offered by CMI

because  the law is a matter of general application affecting all

private employers, whether or not they have adopted  ERISA plans,

and   because   the   law   does  not   affect   the   structure,

administration, or type of benefits  provided by any ERISA  plan.

On  August 2, 1993, the  district court affirmed  and adopted the

magistrate's  recommended   decision.    CMI  now   appeals  this

decision.

                      II.  ERISA PREEMPTION

          ERISA  preempts state  laws that  "relate to"  an ERISA

covered  welfare  benefit  plan.    ERISA     514(a),  29  U.S.C.

  1144(a).2  A  state law "relates to" an ERISA covered plan "'if

                    

2  Section 514(a) provides that the provisions of ERISA:

            shall  supersede any  and all  State laws
            insofar  as  they  may now  or  hereafter
            relate  to  any  employee   benefit  plan
            described  in  section  1003(a)  of  this
            title  and  not   exempt  under   section
            1003(b) of this title.

                               -6-

it has a connection with or reference to such a plan.'"  District
                                                                 

of  Columbia v. Greater Washington Bd. of  Trade, 113 S. Ct. 580,
                                                

583 (1992) (quoting Shaw v.  Delta Air Lines, Inc., 463 U.S.  85,
                                                  

96-97 (1983)); see also Ingersoll-Rand Co. v. McClendon, 498 U.S.
                                                       

133, 139  (1990).  A  state law  may "relate to"  a benefit  plan

"even  if the  law is  not specifically  designed to  affect such

plans, or the effect  is only indirect."  Greater  Washington Bd.
                                                                 

of Trade, 113 S. Ct. at  583 (quoting Ingersoll-Rand, 498 U.S. at
                                                    

139).  However, preemption will not occur where the state law has

only a  "tenuous, remote, or peripheral"  connection with covered

plans,  "as is the case with many laws of general applicability."

Id. at  583 n.1  (citing Shaw,  463 U.S. at  100 n.21);  see also
                                                                 

Mackey v. Lanier Collection  Agency &amp; Serv., Inc., 486  U.S. 825,
                                                 

830-38 (1988).

          State  laws that  do not  "relate to" an  ERISA covered

plan but instead "relate to" a benefit plan established solely to

comply with state workers' compensation laws are not preempted by

ERISA.     Section  514(a);   ERISA      4(b)(3),  29   U.S.C.   

1003(b)(3).3   As Maine's workers' compensation  law falls within

                    

29 U.S.C.   1144(a).

3  Section  4(b)(3) provides that  ERISA shall  not apply to  any
employee benefit plan if:

            such  plan is  maintained solely  for the
            purpose  of   complying  with  applicable
            workmen's     compensation    laws     or
            unemployment  compensation  or disability
            insurance laws.

29 U.S.C.   1003(b)(3).

                               -7-

this   special  exemption,   we  affirm   the  district   court's

determination  that ERISA  does not  preempt any  efforts by  the

Superintendent to require  CMI to  provide workers'  compensation

benefits  through an authorized  insurance provider  or qualified

self-insurance.  See Employee Staffing Servs., Inc. v. Aubry, No.
                                                            

93-15482,  1994   WL  109731   (9th  Cir.  1994)   (holding  that

California's workers' compensation law, which is quite similar to

Maine's, is not preempted by ERISA).

          A.  The Workers' Compensation Exemption
                                                 

          Congress    explicitly    exempted    state    workers'

compensation schemes from ERISA's purview,  see H.R. Rep. No. 93-
                                               

1280, 93d Cong., 2d Sess. 383 (1974), reprinted in 1974 U.S. Code
                                                  

Cong. &amp;  Admin.  News  5038, 5162,  leaving  intact  the  states'

traditional regulation and oversight  of this specialized  system

of insurance.  See  also 28 U.S.C.   1445(c)  (forbidding removal
                        

of workers' compensation benefits  claims to federal court).   In

the statute,    4(b)(3) excludes benefit plans  created solely to

comply  with state workers'  compensation statutes  from coverage

under  ERISA, and    514(a) excludes  from preemption  state laws

that  relate to those  plans described in    4(b).   29 U.S.C.   

1003(b) and 1144(a).  Some state workers' compensation laws might

"relate to"  ERISA  covered  benefit plans,  instead  of,  or  in

addition  to, plans exempt under    4(b)(3), and  thus fall under

the broad sweep of ERISA's preemption clause.  Greater Washington
                                                                 

Bd.  of Trade, 113 S. Ct.  at 584-85.  Laws  which relate only to
                                                              

welfare benefit plans exempt  from ERISA's coverage, however, fit

                               -8-

safely under the umbrella of   4(b)'s exemption.  Id.
                                                    

          In Shaw v. Delta  Air Lines, Inc., 463 U.S.  85, 106-09
                                           

(1983), the  Supreme  Court held  in  part that  a New  York  law

mandating  the  provision  of  certain  disability   benefits  to

employees  was exempt from  preemption under ERISA  pursuant to  

4(b)(3),   even  though  employers  could  provide  the  required

benefits through  their ERISA covered plans.   Because disability

benefit laws  are  exempted from  ERISA's  coverage by  the  same

provision  exempting workers'  compensation laws,    4(b)(3),  29

U.S.C.    1003(b)(3), the Shaw decision applies  directly to this
                              

case.  The Supreme Court found in Shaw that:
                                      

            A  State  may   require  an  employer  to
            maintain a disability plan complying with
            state  law  as a  separate administrative
            unit.  Such a  plan would be exempt under
              4(b)(3). .  . .  [W]hile the State  may
            not  require an  employer  to  alter  its
            ERISA plan, it may  force the employer to
            choose   between   providing   disability
            benefits  in  a  separately  administered
            plan  and  including  the  state-mandated
            benefits in its ERISA plan.  If the State
            is  not satisfied  that  the  ERISA  plan
            comports  with  the  requirements of  its
            disability insurance law,  it may  compel
            the  employer to maintain a separate plan
            that does comply.

Id. at 108.  See also Greater Washington Bd. of Trade, 113 S. Ct.
                                                     

at 584-85 (reaffirming the holding in Shaw).
                                          

          The  Supreme   Court  also  noted   that  although  the

exemption in    4(b)(3)  applies only to  separately administered

disability plans maintained solely to  comply with state law, and

does  not include  ERISA  covered benefit  plans  that provide  a

combination of exempt and non-exempt benefits, employers are not:

                               -9-

            completely   free   to   circumvent   the
            Disability Benefits Law by adopting plans
            that combine disability benefits inferior
            to those  required by that law with other
            types of benefits.   Congress surely  did
            not intend, at the same time it preserved
            the role  of  state disability  laws,  to
            make    enforcement    of   those    laws
            impossible.

Shaw, 463 U.S. at 108.
    

          Maine's workers' compensation law falls squarely within

the  dictates of  Shaw.    29-A  M.S.R.A.     403  mandates  that
                      

employers  provide workers'  compensation by  purchasing approved

insurance or  by  establishing an  approved self-insurance  plan.

This is  precisely what the  Supreme Court  contemplated when  it

found  that  states "may  require an  employer  to maintain  a [ 

4(b)(3)  exempt] plan as  a separate administrative  unit."  Id.;
                                                               

accord Greater Washington Bd. of Trade, 113 S. Ct. at 584-85.  In
                                      

the present  case, the  Superintendent expressed an  opinion that

CMI's  subscription  to  the  IAEA  Plan  does  not  satisfy  the

requirements of  Maine's law.   Further  efforts to  ensure CMI's

compliance  with the  law  would  clearly  constitute an  act  to

"compel  the  employer to  maintain  a  separate plan  that  does

comply"  with the  workers'  compensation law,  an  act which  is

explicitly approved of by Shaw.  Shaw, 463 U.S. at 108.
                                     

          Even though CMI provides workers' compensation benefits

through the IAEA Plan, which we assumed is an ERISA covered plan,

Maine's law does  not require,  and the  Superintendent does  not

request, that  CMI alter the IAEA  Plan in any way  or provide or

                               -10-

not provide certain benefits through the IAEA Plan.  In fact, the

Maine law  imposes no limitations or  requirements, regulatory or

otherwise,  on  the  IAEA Plan  or  on  any  ERISA covered  plan.

Consequently, it does  not "relate  to" an ERISA  plan such  that

preemption is triggered.  In such a situation, CMI cannot don the

mantle   of  ERISA   preemption  simply  by   including  workers'

compensation  benefits in  its welfare  benefit plan  and thereby

escape the  requirements of Maine's law.   See Shaw, 463  U.S. at
                                                   

108;  Foust v.  City Ins. Co.,  704 F.  Supp. 752,  754 (W.D.Tex.
                             

1989).

          CMI  misinterprets Shaw  to hold  that states  can only
                                 

require  employers to  provide  a specified  level or  package of

workers'  compensation  benefits and  cannot  otherwise interfere

with plan administration through  provisions like the funding and

solvency requirements  established in 39-A  M.S.R.A.   403.   CMI

would  thus limit  the ERISA  exemption under    4(b)(3)  to laws

mandating benefit outputs  instead of laws establishing  separate

benefit plans.  As a  corollary to this claim, CMI  contends that

Shaw  requires states to give employers a choice of providing the
    

specified benefits  in its own ERISA plan  or in a state mandated

benefits  plan.  CMI maintains that  because ERISA allows welfare

benefit plans to provide workers' compensation benefits, refusing

to give CMI  the option  of providing such  benefits through  the

IAEA plan would effectively  bar what ERISA permits.   See Alessi
                                                                 

v. Raybestos-Manhattan,  Inc., 451 U.S. 504,  524 (1981) (finding
                             

state  law  that  barred   one  method  of  calculating  benefits

                               -11-

permitted by ERISA to be preempted).

          CMI cites several cases for the proposition that states

may  not  force  employers  to   separate  workers'  compensation
                                         

benefits from their fully integrated ERISA plans.  Id. at 521-26;
                                                     

PPG  Industries Pension Plan A  v. Crews, 902  F.2d 1148, 1150-51
                                        

(4th  Cir. 1990).   CMI  extends this  proposition to  argue that

states  are  also prohibited  from  forcing employers  to  set up
                                                                 

separate workers' compensation plans.

          Although  ERISA preempts  state laws  that prohibit  an

ERISA  covered  plan  from  providing certain  benefits  or  from

calculating benefits in a certain  way (including laws that would

force a plan to separate out a portion of its existing coverage),
                        

we find  no  support  in  Shaw,  or any  other  case,  for  CMI's
                              

proposition that  ERISA preempts state laws  that force employers

to adopt a separately administered workers' compensation benefits
        

plan.    On the  contrary,    4(b)(3)  and Shaw  itself expressly
                                               

permit states to do just that.  Shaw, 463 U.S. at 108.  Shaw does
                                                            

not require states to give employers the option of complying with

state law  by providing  workers' compensation benefits  in their

ERISA  covered  plans.   Instead,  Shaw  merely states  that  the
                                       

existence  of such  an  option does  not automatically  result in

preemption,  id.  at 108;  it  certainly  does  not  suggest  the
               

converse  proposition,  that  an  option is  required  for  the  

4(b)(3)  exemption to  apply.   See Barker  v. Pick  N  Pull Auto
                                                                 

Dismantlers,  Inc.,  819 F.  Supp.  889,  891-96 (E.D.Cal.  1993)
                  

(rejecting the  identical argument  that Shaw requires  states to
                                             

                               -12-

offer  employers the  option of  providing workers'  compensation

through their ERISA plans).4

          Likewise,  Shaw  does  not  limit the  exemption  under
                         

  4(b) (3) to state laws mandating a specific level or package of

benefits  as  opposed  to  laws mandating  solvency  and  funding

requirements.   There  is  no basis  for  this distinction  in   

4(b)(3)  or in  Shaw.   Additionally, the  language of  those two
                    

authorities  indicates that  the case  for exemption  of solvency

requirements  is even  stronger than  the case  for exemption  of

benefit  requirements.  See   4(b)   (3), 29  U.S.C.   1003(b)(3)
                           

(stating  that the  provisions of  ERISA shall  not apply  to any

employee  benefit plan if "such plan is maintained solely for the
                                    

purpose of complying with applicable workmen's compensation laws)
                                                                

(emphasis  added); Shaw, 463 U.S. at 108 (stating that states can
                       

require employers to comply with the "requirements" of its law by

setting up  "a separate  administrative unit"); see  also Barker,
                                                                

819  F. Supp.  at  895  (finding  that  "Shaw  does  not  address
                                             

'benefits' but speaks only of 'requirements,'" and that a state's

concern about the solvency of a workers' compensation plan is "of

equal stature  as any concern as to the level of benefits.").  If

anything, state  laws mandating  specific benefits from  an ERISA

covered plan are more likely to "relate  to" that ERISA plan than

                    

4   We note that  this case differs  from our recent  decision in
Simas v. Quaker  Fabric Corp., 6 F.3d 849 (1st  Cir. 1993), where
                             
we  held that states cannot mandate the establishment of an ERISA
covered plan.  Id.  That holding does not apply to state workers'
                 
compensation laws such as Maine's which mandate the establishment
of exempt, non-ERISA covered plans.

                               -13-

laws which merely  require the creation  of an ERISA-exempt  plan

and  which  make no  demands on  the  ERISA covered  plan itself.

Thus,  the instant case presents an even clearer application of  

4(b)(3)'s exemption than does Shaw.
                                  

          Maine's law  does  not bar  what  ERISA permits.    CMI

remains  free  to  provide  the  existing  workers'  compensation

benefits to its employees and to integrate such benefits with the

rest of  its ERISA plan benefits.   We are not  presented in this

case with a state workers'  compensation law that prohibits ERISA

covered plans from calculating pension benefits in a certain way,

see  Alessi, 451 U.S. at 521-26 (finding that ERISA preempted New
           

Jersey law  that prohibited  ERISA plans from  offsetting pension

benefits by  amounts  awarded  for  workers'  compensation);  PPG
                                                                 

Industries,  902  F.2d at  1150-51  (finding  preemption of  West
          

Virginia  law  that prohibited  an  employer  from deducting  the

amount  of pension benefits previously paid to a retiree from the

retiree's subsequent workers' compensation  award), or a law that

specifically refers  to ERISA covered  benefit plans in  order to

determine  workers' compensation benefits, see Greater Washington
                                                                 

Bd. of Trade, 113 S. Ct. at 583-85 (holding that  ERISA preempted
            

District  of Columbia  law requiring  that employers  who provide

health insurance coverage for their employees under an ERISA plan

must  provide equivalent  health insurance  coverage for  injured

employees eligible for workers' compensation).  These cases cited

by CMI in support  of its misguided interpretation of  Shaw found
                                                           

preemption  for reasons  that  do not  apply  to this  case.   We

                               -14-

therefore  find that  a  state  law  that requires  employers  to

operate  a separately administered  workers' compensation benefit

plan is not preempted by ERISA.

     B.  Does Maine's Law Nevertheless "Relate To" the IAEA Plan?
                                                                 

          CMI  further argues that  Maine's workers' compensation

law relates to an ERISA plan, and thus is  preempted, because the

law  affects  the  cost  of  providing   ERISA  benefits  to  its

employees.  Specifically,  CMI alleges  that if it  is forced  to

adopt  a  separate workers'  compensation  plan,  the burdens  of

duplicate administration and the higher cost of separate workers'

compensation benefits  provided  outside of  the integrated  IAEA

Plan  will have a significant  economic impact on  CMI and render

CMI unable to afford  the existing level of benefits  now offered

through the  IAEA  Plan.   According  to CMI,  a state  law  that

creates a significant economic  impact on an ERISA plan,  without

more,  sufficiently  "relates  to"  the  plan  and  is  therefore

preempted.   E-Systems, Inc. v.  Pogue, 929 F.2d  1100, 1103 (5th
                                      

Cir.), cert. denied, 112 S. Ct. 585 (1991); Travelers Ins. Co. v.
                                                              

Cuomo, 813 F. Supp. 996, 1002-06 (S.D.N.Y. 1993).5
     

          To  begin  with,  we   decline  to  address  whether  a

                    

5  As CMI points out, Travelers cites FMC Corp.  v. Holliday, 498
                                                            
U.S. 52, 58-60 (1990),  for the proposition that state  laws that
increase  plan costs are preempted.   Travelers, 813  F. Supp. at
                                               
1006.  FMC Corp. v. Holliday makes no mention of  state laws that
                            
merely impose additional costs.  Instead, the Supreme Court found
that state laws  interfering with an ERISA  plan's calculation of
benefits, in that case  through a state antisubrogation  law, was
preempted.  FMC  Corp., 498 U.S. at 58-60.   Although we need not
                      
decide  the issue in this case, the question of whether increased
costs alone can trigger preemption is far from settled.

                               -15-

significant  economic  impact on  an  ERISA covered  plan  may be

sufficient by itself to trigger preemption because CMI's argument

fails regardless of  how that  issue is resolved.   The  argument

fails  for two reasons.  First, CMI's  claim is at odds with Shaw
                                                                 

and Greater Washington Bd.  of Trade, in which the  Supreme Court
                                    

explicitly  contemplated   state  laws  requiring   the  separate

administration of workers'  compensation plans without  "relating

to" existing ERISA plans.   Greater Washington Bd. of  Trade, 113
                                                            

S. Ct. at 584-85; Shaw, 463 U.S. at 108.
                      

          Second, Maine's law, while having an economic impact on

CMI, does not  have an economic impact  on the IAEA Plan  itself.

Clearly,  any  law  that  increases  a  company's  cost of  doing

business can be said to affect that business's ability to provide

benefits under its welfare benefit  plan.  This is not the  same,

however, as  imposing burdens on the welfare benefit plan itself.

The increased cost or administrative burdens imposed by the state

law  must have some connection  to the covered  ERISA plan before

the preemption analysis  can come  into play.   See United  Wire,
                                                                 

Metal  and  Machine Health  &amp;  Welfare Fund,  v.  Morristown Mem.
                                                                 

Hosp., 995 F.2d  1181, 1193 (3d  Cir. 1993) ("Where  there is  no
     

direct nexus between a  state statute and ERISA plans,  no effect

on the manner of such plans' conducting business or their ability

to  operate  in interstate  commerce,  statues  have been  upheld

despite  the fact that they may have the indirect ultimate effect

of increasing plan costs.").

          In  requiring  CMI  to  provide  separate  coverage for

                               -16-

workers' compensation,  Maine does  not increase  the operational

expenses or  input costs of the  IAEA Plan,6  nor  does it impose

any additional  administrative burdens, benefit  requirements, or

other obligations on  the IAEA  Plan.  Maine's  law may  increase

CMI's cost  of doing business,  but it  does not affect  the IAEA

Plan's  cost of  providing benefits  or costs  of administration.

Should CMI choose  voluntarily to change  its coverage under  the

IAEA Plan in response to Maine's law, we consider such a decision

to  constitute, at  most,  an  effect  of the  law  that  is  too

"tenuous"  and  "remote" to  warrant  preemption.   See  Employee
                                                                 

Staffing  Servs., Inc.  v. Aubry,  No. C-92-4096,  1993 WL  83310
                                

(N.D.Cal. Mar.  17, 1993), aff'd,  No. 93-15482,  1994 WL  109731
                                

(9th  Cir. 1994); cf. Mackey v. Lanier Collection Agency &amp; Serv.,
                                                                 

Inc., 486  U.S. 825, 831-32 (1988)  (finding generally applicable
    

state  garnishment law  did not  "relate to" ERISA  covered plans

even  though  the law  might  burden the  administration  of such

plans);  Aetna Life Ins. Co. v.  Borges, 869 F.2d 142, 145-46 (2d
                                       

Cir.), cert. denied,  493 U.S. 811 (1989)  (finding state escheat
                   

law did  not "relate to" ERISA  plans and noting that  ERISA does

not preempt many  laws that  have a minimal,  indirect impact  on

                    

6  In contrast,  two cases that defendant relies  upon, E-Systems
                                                                 
and  Travelers, involve  laws  that increase  the  costs of  plan
              
operation.  See E-Systems, 929 F.2d at 1103 (finding that because
                         
the state  tax in that case  was collected from  an ERISA covered
plan, the "cost of the plan must therefore increase"); Travelers,
                                                                
813 F. Supp. at  1003 (finding "little doubt that  the Surcharges
at  issue  will  have  a  significant effect  on  the  commercial
insurers  and HMOs which do  or could provide  coverage for ERISA
plans  and thus lead, at least indirectly, to an increase in plan
costs") (footnote omitted).

                               -17-

plan   administration);  Martori  Bros.  Distributors  v.  James-
                                                                 

Massengale, 781 F.2d 1349, 1358-59  (9th Cir.), cert. denied, 479
                                                            

U.S. 1018  (1986) (finding  state unfair labor  practices statute

that  required employers to pay  damages based in  part on fringe

benefits employees would have received if employers had bargained

in  good faith  did not  "relate  to" an  ERISA plan).   We  find

therefore  that Maine's law does not "relate to" an ERISA covered

plan and is not thereby preempted.

          Accordingly,  the  order  of   the  district  court  is
                                                                 

affirmed.
        

                               -18-
