In a decision that could have significant implications for California’s high-speed rail project, the California Supreme Court recently held in Friends of the Eel River v. North Coast Railroad Authority that the federal Interstate Commerce Commission Termination Act does not preempt the application of the California Environmental Quality Act to a state-owned and funded rail line project.
The project under consideration was an intrastate rail line running from Napa to Humboldt County. The North Coast Railroad Authority, a public agency established by state law, contracted with Northwestern Pacific Railroad Company to allow it to conduct freight rail services on NCRA’s line. Despite having prepared an Environmental Impact Report for projects on the line, in April 2013, the NCRA Board issued a resolution stating that the ICCTA preempted CEQA’s application over railroad operations.
The Supremacy Clause of the United States Constitution generally stands for the principle that the laws of the United States, as well as treaties and the Constitution itself, are the supreme law of the land. Pursuant to this doctrine, Congress may preempt a state’s ability to legislate in certain areas by enacting federal legislation. As the ICCTA establishes a regulatory environment through which the federal Surface Transportation Board is granted broad authority over rail operations, the NCRA argued that CEQA did not apply to the NCRA’s rail operations.
While the Supreme Court recognized the broad scope of the ICCTA and that railroads are of “peculiar[] federal concern,” it struck a sharp contrast between private and publicly owned rail lines. The ICCTA, the Court noted, “contemplates a national rail system operating with minimal regulation, not an industry subject to a patchwork of state regulation.” Authorizing a “state to regulate private railroad operations even where STB regulation is absent or has been satisfied... [is therefore] inconsistent with the broad deregulatory purposes of the ICCTA.”
However, the Court found that the situation is quite different where the state is the owner of the rail line. In that case, the ICCTA’s deregulatory provisions must “protect the zone of autonomy belonging to the state when it is the owner,” such that the state may make decisions based on its own guidelines and regulations. CEQA, the Court continued, “is an internal guideline governing the processes by which state agencies may develop or approve projects that may affect the environment.” Accordingly, because Congress did not expressly revoke the self-governance provisions extending to its own subdivisions, such as the State, the Court concluded the ICCTA did not preempt the application of CEQA to state-owned and funded rail line projects.
Given that the high-speed rail project is both state-owned and funded, the Supreme Court’s decision appears to close the door on questions as to whether compliance with CEQA is required for that project.
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