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

CEQA Alert: CEQA Does Not Apply to Approval of Proposed Railroad Operations – Express Preemption by ICCTA
more+less-10/7/2014byNicole Martin, Donald Sobelman | Barg Coffin Lewis & Trapp, LLP Contact more+
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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


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Well, yes.  If you are a law wonk that likes trains, you weren't  a bit surprised by this outcome.  What is interesting is the back story.  I am under the impression, but have no solid information on it, that NCRA got into the CEQA EIR quagmire early on when it dove into preparing an EIR in order to qualify for some funding grant that they'd sought.  EIRs are often conditions of certain government grant applications.  Along with the Eel River Eco-Freaks and the Novato City Council, which was "railroaded" by a small contingent of vocal Eco Freaks, and their own desire to qualify for the money grant, NCRA got all wrapped up in an EIR compliance tar baby. As know, there is an entire industry that has grown out of EIR compliance and a large body of law, since the more you sue, the less that gets built.  Anyway, it wasn't until NCRA had settled with Novato (which it had to do, and pay Novato money, because it had to get the suit out of the way to qualify for the repair funds it initially needed) that it finally figured out what most knew: Federal railroad law preempts California environmental law.  (Bad fumble, NCRA, if, in fact, that's the way it happened.)  Bottom line, it looks like NCRA spent a lot of time and money fighting a fight that they'd won before it started.  I never could figure that one out.  I've always wondered exactly why in the first place they didn't just tell Friends of the Eel River and the City of Novato, "Kiss our sweet bippie! Nothing stops the railroad!" 

Bob     You are an attorney.  I know little about legal issues.  I have always wondered how Novato (or any other town) could have sued NCRA to stop rail activity. The railroad had been operating for near 100 years and was not abandoned, but rather on "hold" until repairs were made.  It was not a new railroad or new route giving ground to opponents.  However, litigation took place and NCRA entered into (whatever) a consent decree.  That decree called for several items, to which NCRA agreed.  My question since is :  Will the NCRA be required to use the lowest emission locomotives forever, or does that obligation fade away at some point in time?  Most of the other conditions were going to happen ultimately with SMART building (welded rail replaced with ribbon rail) quiet zones etc.  I know an inclusion was made that allowed NCRA/NWP to substitute non low emission locomotive while low emission was down for service.  Also included was the use during construction.  Bottom line, NWP will never be able to build fleet of Tier 4 units.  And there are so many other good units coming available that it would be a shame they can't get started with those.  Your pro thoughts????

I really don't know the finer details of the consent decree (settlement) between NCRA and Novato.  Carole Dillon Knutsen, at the time a Novato city counselperson, told me that Novato "only filed the lawsuit for leverage so we'd have a say in how the train affected the city." and that they wanted to extract concessions regarding CWR and "Quite Zones."  I also heard that NCRA settled because it would have cost them more in lost grant money if delays caused them not to use the money to repair the line and get it up and running.  Nobody seems to have admitted they screwed up, although NCRA took the position that they "mistakenly believed initially that they were required to do the EIR as a condition of their rehab money grants" and then took the position that EIR or not, they weren't bound to comply with CEQA.  The irony now is that Novato and San Rafael, I believe, are wringing their hands because they've figured out that if they opt for "Quiet Zones," although the FRA didn't elect to impose absolute tort liability as a condition of "Quiet Zones," they nonetheless left the question to be resolved by local law.  So, as a practical matter, if someone gets hit by a train in a "Quiet Zone" in California, the railroad will always be able to defend any claim by asserting that had they been able to sound their horn as otherwise required by Federal law, the plaintiff would have had enough warning to get out of the way and, since they couldn't because of the city ordinance prohibiting that (i.e. the "Quiet Zone,") liability falls to the municipality that elected to impose the "Quiet Zone" restrictions.  That would make the cities' taking the liability hit in most every instance.

As for the Tier Four engines, I have a vague recollection I heard that the limitation on that expires at some point when the consent decree expires.  I don't know the details, though.

BTW, here's the Consent Decree, if anybody wants to wade through it.  Since it's all grounded on CEQA, it may or may not be negated by the recent appellate confirmation that Federal law preempts CEQA.  That's going to probably occasion more litigation.  The question is whether NCRA is bound by a consent decree in a suit that was later determined to be without any support in the law.  If unfettered interstate transportation is "in the public interest" and a matter of "public policy," perhaps NCRA/NWP Co. are bound by Federal law and not by the consent decree.  On the other hand, they did agree to it and "a deal is a deal," so there will probably be more wrangling about it.

Bob   Thank you for taking the time to put forth your observations.  I agree with the "quiet Zone" issue as regards cities in Marin as I have read it somewhere.    Presumably, that could require an agreed amendment to the consent decree and if that were true, maybe a bargaining chip for NCRA to reduce the effect of some other condition.  I don't know, just saying.  As regards consent decree, I hope you are right and there is some expiration date, but I cannot find it in the context provided. I also read the amended decree from say last two years, but there is no mention there about locomotives nor expiration dates.  Maybe the nature of a consent decree itself leads to expiration when conditions are met.  However, one condition was the low emission locomotives so we are right back where we started .   Thanks again......

Yea, this isn't a legal opinion that I'd charge anybody money for and free advice is worth just what you pay for it, but my quick take on it without studying it in any depth is that they probably sold their soul on the Tier Four engines.  Eventually, there will be enough Tier Four engines around that it won't really matter, I guess.  For the time being, I'm guessing their Tier Four engine will be down for repairs quite a bit!  Actually, though, I really don't think anybody cares at this point.  I'd expect that there aren't many in Novato that have ever had to stop for a grade crossing signal since the NWP has been up and running.  I work in town every day and I sure haven't and I can count on one hand the times I've seen a train actually running through town, although obviously they do.  The problem with Marin is that there is a small, but vocal minority (where did I hear that before?) that go nuts over environmental issues (often with no science to back it up) "just because."  The politicians seem to be terrified of the political pressure, so we live with crazy things like outlawing plastic supermarket bags to "protect the environment."  You can fill your paper carry-out bag, which now also costs you a dime "to save the earth," with plastic bags full of wrapped meat and vegetables, but it's against the law to put all the plastic bags full of meat and vegetables in another plastic bag.  It's getting pretty insane.


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