In the last several months, the Surface Transportation Board (STB or Board) has issued a number of decisions further defining the scope of federal preemption. As the primary agency tasked with the economic regulation of the railroads, the Board is often asked to settle questions about the application of the governing preemption statute – 49 U.S.C. § 10501 – in response to Petitions for Declaratory Orders filed by various parties. Three especially notable petitions have been recently reviewed by the Board, providing further clarification on the law of preemption.
1.Preemption and the Interplay between State and Federal Regulations / The Environmental Protection Agency Petition
In United States Environmental Protection Agency—Petition for Declaratory Order, FD 35803 (STB served Dec. 29, 2014), the Environmental Protection Agency (EPA) filed a Petition for Declaratory Order asking the STB to address whether locomotive idling rules issued by the South Coast Air Quality Management District (SCAQMD), one of 35 regional air quality management districts created by the California legislature, would be preempted.
The rules proposed by SCAQMD for adoption into California's State Implementation Plan (SIP) of the Clean Air Act (CAA), governed locomotives operating in Southern California. The rules called for railroads to record locomotive idling events that last thirty minutes or more, and in certain circumstances limited the time that the locomotives may be left idling to thirty minutes when the locomotive is unattended. The railroads challenged SCAQMD's proposed rules in federal court in California when they were originally enacted in 2006, arguing that SCAQMD's enforcement of the rules were preempted under the law implemented by the STB. The District Court agreed and issued an injunction preventing the enforcement of the rules. On appeal, the Ninth Circuit affirmed. The EPA then turned to the STB for guidance on the interplay between the state air quality rules, EPA's approval of SIPs and the jurisdiction of the STB.
Numerous parties weighed in on the EPA's petition, including railroads, federal and state legislators, environmental organizations, the Federal Railroad Administration and the Department of Transportation. The STB ultimately declined to issue a declaratory order, determining that the issue was not ripe until the EPA approved SCAQMD's rules as a part of California's SIP. However, in its decision, the STB offered guidance on "the nature and extent of 10501(b) preemption and how it might apply to the incorporation of the Rules into the California SIP." The Board explained that "if EPA were to approve the Rules as a part of California's SIP1, it appears, based on the current record, that the Rules likely would be preempted by § 10501(b)" due to the "the potential patchwork of regulations that could result" if other states and local districts adopt their own locomotive idling rules.2 The STB explained that: "[a]llowing potentially 100 different localities to adopt their own idling rules also would likely disrupt uniformity in rail operations by opening the door to varying regulatory operational and/or equipment requirements for locomotives across the country." 3
2. Preemption and the California Environmental Quality Act / The California High-Speed Rail Line Construction Case
In another high-profile case, the STB found that 49 U.S.C.§ 10501(b) preempts the application of the California Environmental Quality Act (CEQA) to the construction of California's High Speed Rail line between Fresno and Bakersfield, California. California High-Speed Rail Authority-Petition for Declaratory Order, FD 35861 (STB served Dec. 12, 2014). In that case, the California High-Speed Rail Authority (Authority) petitioned the Board for a Declaratory Order to settle an issue that was raised in seven lawsuits filed in California challenging the Authority's compliance with CEQA. At the time that the Authority filed the Petition, state courts in California were split on the issue of whether CEQA was preempted.
Several interested parties submitted comments to the Board on each side of the issue. The Board ultimately held that CEQA is categorically preempted by § 10501(b) in connection with the high-speed rail line. Citing its own precedent, the Board explained that "CEQA is a state preclearance requirement that, by its very nature, could be used to deny or significantly delay an entity's right to construct a line that the Board has specifically authorized, thus impinging upon the Board's exclusive jurisdiction over rail transportation." The Board went on: "a CEQA enforcement suit in this context attempts to regulate a project that is directly regulated by the Board. Section 10501(b) expressly preempts any state law attempts to regulate rail construction projects, as they are under the Board's exclusive jurisdiction." 4
3. Preemption and Transload Facilities / The STB's Jurisdiction Over Transportation By Rail Carrier
In SEA-3, Inc.—Petition for Declaratory Order, FD 35853 (STB served March 16, 2015), the Board denied a Petition for a Declaratory Order filed by SEA-3, the operator of a propane storage and distribution terminal in Newington, New Hampshire. SEA-3 sought to reconfigure and expand the rail berths at its facility in order to increase the amount of propane received by rail. The nearby City of Portsmouth appealed the local zoning Board's decision approving SEA-3's expansion and also filed with the New Hampshire Supreme Court a petition to overturn that decision. SEA-3 came to the STB seeking a Declaratory Order arguing that the City of Portsmouth sought to block additional traffic from moving through the city and was thereby attempting to direct rail traffic or impose preclearance requirements, which are federally preempted under 49 U.S.C. § 10501.
The Board denied SEA-3's petition, concluding based on the specific facts of the case, that in operating the transload facility, "SEA-3 is not a carrier or performing transportation-related activities on behalf of any other rail carrier."5 However, in denying SEA-3's petition, the Board made it very clear that, under another set of facts, preemption would lie if state and local regulation were to unreasonably interfere with commerce, and in particular the operations of the railroad involved here.6 The Board thus reaffirmed its prior precedent that any state or local regulation which interferes with or unreasonably burdens rail transportation is preempted.
These three cases provide valuable insight into the application of the law on preemption to specific factual situations. As passenger and freight rail continues to grow throughout the country, look to more decisions from the Board affirming the breadth of federal preemption and further clarifying its scope.