In a surprising decision, Surface Transportation Board Decision, Docket No. FD35861, December 12, 2014 (“Docket”), the Federal Surface Transportation Board (“Board”) ruled that the application of the California Environmental Quality Act (“CEQA”), Cal. Pub. Res. Code § 21000, et seq., to the 114 mile high-speed passenger rail line between Fresno and Bakersfield, California is preempted in its entirety by federal law.  The Board’s decision is not only surprising in the context of prevailing legal authority, but also potentially important in the context of other modes of transportation.  

The decision is surprising because it went far beyond the scope of the petition filed by the responsible State agency, the California High-Speed Rail Authority (“Authority”).  The Authority asked only that the Board find that injunctive relief as a remedy under CEQA is foreclosed as preempted by the Interstate Commerce Commission Termination Act (“ICCTA”), Pub.L. 104–88, 104th Congress, and is, thus, barred under 49 U.S.C. § 10501(b) which gives the Board jurisdiction over “the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State,” 49 U.S.C. § 10501(b)(2).  The Authority further argued that, as it had completed CEQA review in May 2014, the Board need not address whether CEQA is generally preempted, but need only address whether injunctive relief resulting in a work stoppage is available as a remedy in the lawsuits filed against the Authority.
 
Despite the Authority’s limited petition, the Board expanded its ruling to include a finding that § 10501(b) prevents the states and localities from intruding into matters that are “directly regulated by the Board (e.g., rail carrier rates, services, construction, and abandonment),” Docket, p. 8, and from “imposing requirements that, by their nature, could be used to deny a rail carrier’s ability to conduct rail operations.”  Id.  The Board employs the rationale that “Section 10501(b) [ ] is intended to prevent a patchwork of local regulation from unreasonably interfering with interstate commerce.”  Id.  
 
The Board recognizes, however, that “[n]ot all state and local regulations that affect rail carriers are preempted by § 10501(b).”  Id. at p. 9.  It acknowledges further that “State and local regulation is appropriate where it does not interfere with rail operations,” Id., and that “[l]ocalities retain their reserved police powers to protect the public health and safety so long as their actions do not unreasonably burden interstate commerce.”  Id.  
 
On that basis, and ignoring that “states and towns may exercise their traditional police powers . . . to the extent that the regulations ‘protect public health and safety, are settled and defined, can be obeyed with reasonable certainty, entail no extended or open-ended delays, and can be approved (or rejected) without the exercise of discretion on subjective questions,’” Id. citing Green Mountain v. Vermont, 404 F.3d 638, 643 (2nd Cir. 2005), the Board concluded that CEQA was categorically preempted as 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,” Docket, p. 10, citing DesertXpress Enters., LLC-Pet. For Declaratory Order, slip op. at 5.  The Board further found that CEQA lawsuits “can regulate rail transportation just as effectively as a state statute or regulation.”  Id. at 14, citing, inter alia, Maynard v. CSX Transp., Inc., 360 F. Supp. 2d 836, 840 (E.D. Ky. 2004) [explaining that common law suits constitute regulations].  
 
The Board decision, however, appears to be based on two fundamental misconceptions. 
 


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Following in the footsteps of his colleagues, on January 6, 2012, Assemblyman Mike Feuer introduced legislation that would give rail projects the same type of relief from California Environmental Quality Act (“CEQA”) requirements that were received in the last session by the proposed NFL stadium in Los Angeles, and some renewable energy projects. Notably, the CEQA amendments enacted for the NFL stadium include a very short time frame of 175 days for resolution of CEQA issues. While current CEQA litigation may extend to two years or more, depending on the complexity of the project and workload of the court, it stands to reason that issues surrounding local projects such as the stadium, with local traffic, noise and air quality impacts, may potentially be resolved within the 175 day timeframe. Rail projects are of far different scope, geographic extent, and are subject to a different set of laws.


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Proponents of California’s proposed high-speed rail project envision a high-speed rail network connecting Sacramento, San Francisco, Central Valley, Los Angeles, Orange County, the Inland Empire and San Diego. However, there are many obstacles, real or imagined, that could delay or derail the project. First, the House Subcommittee on Transportation voted to fund only $1.4 billion for high-speed rail in FY 2011, compared to the $4 billion they approved last year. The project appears to be plagued by unreliable cost, ridership and revenue projections, uncertainty about private investment and, given the State of California’s finances, the possibility that taxpayers may have to subsidize the project if revenue projections are not met. A high-speed rail system would reduce revenues for Metrolink and Amtrak. A number of cities and communities along the proposed routes oppose the project. Finally, the proposed project will require environmental review. Environmental review will include at least two alternatives (in addition to the mandatory “no-action” alternative) – a “shared track” alternative and a “dedicated track” alternative. Both present problems.


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