CEQA Alert: CEQA Does Not Apply to Approval of Proposed Railroad Operations – Express Preemption by ICCTA

California’s First Appellate District has held that federal law preempts CEQA’s application to the approval of proposed railroad operations. Although this was an issue of first impression for a California appellate court, the decision adopts the reasoning of a uniform line of decisions by federal courts and the Surface Transportation Board (STB) holding that the Interstate Commerce Commission Termination Act (ICCTA) broadly preempts state statutes requiring environmental review as a condition of railroad operations.

 

The decision in Friends of Eel River v. North Coast Railroad Authority et al. (September 29, 2014; 1st DCA Case No. A139222) arose from two separate actions challenging the reopening of rail service from Willits, in Mendocino County, to Lombard, in Napa County. The government agency charged with maintaining rail service on that line, the North Coast Railroad Authority (NCRA), initially prepared and certified an EIR, but later – following a legal challenge – passed a resolution rescinding certification of the EIR. NCRA explained that it had “mistakenly, but in good faith, believe[d] that it needed to complete” an EIR for resumed rail operations, but had since determined that the ICCTA expressly preempted application of CEQA to the project.
 

The Court of Appeal focused on the “expansive language” of ICCTA’s “broadly worded express preemption provision,” which gives the STB exclusive jurisdiction over transportation by rail carriers and the construction, acquisition, and operation of railroad tracks and facilities, even if located entirely in one state. The court found “persuasive and fully applicable to the case before us” a uniform line of federal court and STB cases concluding that state statutes requiring environmental review as a condition to railroad operations are preempted by the ICCTA.   
 

Although petitioners pursued several lines of attack to defeat the preemption argument, the court rejected all of them. Most importantly, the court ruled that the market participation doctrine – which precludes preemption where the state acts in a “proprietary” role as a market participant, rather than as a regulator – did not apply. According to the court, “[t]he aspect of CEQA that allows a citizen’s group to challenge the adequacy of an EIR when CEQA compliance is required is clearly regulatory in nature, as a lawsuit against a governmental entity cannot be viewed as part of its proprietary action, even if the lawsuit challenges that proprietary action.” The court acknowledged that the Third Appellate District reached a contrary conclusion concerning the market participation doctrine in another recent CEQA decision, but disagreed with that court’s analysis of the issue.
 

The court also rejected petitioners’ other arguments, holding that: 

1. An agreement between NCRA and Caltrans that governed the process for obtaining state funding and included an environmental review provision did not obligate NCRA to complete an EIR.  Moreover, as non-parties to that agreement, petitioners had no standing to assert such a claim. 
2. NCRA’s agreement to comply with CEQA with respect to certain work – which was contained in a consent decree reached in separate litigation – did not confer a contractual obligation on NCRA to prepare an EIR for the reopening of the rail line. And even if it did, petitioners, as nonparties to that consent decree, lacked standing to sue.
3. Petitioners’ Tenth Amendment, judicial estoppel, and collateral estoppel arguments were without merit.

The decision is available here.

 

UPDATE: On December 10, 2014, the California Supreme Court granted the petition for review filed by plaintiffs and appellants Friends of Eel River and Californians for Alternatives to Toxics. 

--Don Sobelman and Nicole Martin

For more information, contact Don Sobelman at des@bcltlaw.com, (415) 228-5456, or Nicole Martin at nmm@bcltlaw.com, (415) 228-5435.