Surface Transportation Board rules that federal law preempts application of CEQA to a portion of the high-speed rail line.

The Surface Transportation Board (STB) issued a ruling on December 12, 2014, concluding that 49 U.S.C. § 10501(b) preempts application of CEQA to the Fresno to Bakersfield segment of the state high-speed rail project. Under this statute, STB’s jurisdiction over transportation by rail carriers is exclusive, even if the tracks are located entirely in one state. Furthermore, the remedies provided with respect to regulation of rail transportation “are exclusive and preempt the remedies provided under Federal or State law.”

The issue before STB was whether a state court can, under CEQA, enjoin construction of a rail line that the Board has authorized. In 2013, STB found it had jurisdiction over the High Speed Train system. It subsequently granted petitions for exemption that permitted construction of the first segment of the rail line, between Merced and Fresno. After STB’s assertion of jurisdiction, the High Speed Rail Authority noted in its environmental documentation that it was not waiving the right to assert federal preemption in response to any potential legal challenge to its CEQA compliance.

STB stated that due to the conflicting appellate court opinions regarding CEQA preemption presented in the recent Town of Atherton and Friends of Eel River state appellate court decisions, the Board was uniquely qualified to resolve the preemption question. STB first determined that state permitting or preclearance requirements, such as CEQA, were categorically preempted as to any rail lines and facilities that are an integral part of rail transportation. STB found it difficult, as a practical matter, to separate CEQA’s injunctive remedies—the focus of opponents’ lawsuits—from a state court’s ability to enforce compliance with CEQA itself. Thus, the issue became whether CEQA as a whole is preempted with regard to the line. Applying “well-established preemption principles,” the Board concluded that it was.

STB noted that the line would be constructed and operated as part of the interstate rail network. Any implied agreement to comply with CEQA that potentially could have the effect of prohibiting the construction of a rail line authorized by the Board, therefore, would unreasonably interfere with interstate commerce by conflicting with the Board’s exclusive jurisdiction and preventing the Authority from exercising its power.

The Board noted that to the extent its preemption analysis conflicted with the court’s decision in Atherton, it respectfully disagreed with that opinion. STB did not believe that the market participant doctrine creates an exception to federal preemption in the context of a CEQA enforcement suit for a railroad project under the Board’s jurisdiction. The Board agreed with Eel River’s reasoning that even if a state agency’s action can be viewed as proprietary and the initial decision to prepare the EIR a component of that proprietary action, a writ proceeding by a private citizen’s group challenging the adequacy of the CEQA review is not part of that proprietary action. This is because the aspect of CEQA that allows a citizen’s group to challenge the adequacy of an EIR when CEQA compliance is required is regulatory in nature; a lawsuit against a government entity cannot be viewed as part of its proprietary action, even if the lawsuit challenges that proprietary action. This holding, the Board stated, does not infringe upon state sovereignty because the CEQA enforcement actions are not being brought by the state. It also held that whether Proposition 1A requires the Authority to comply with CEQA as a condition of its funding is a question of state law for a state court to decide. One commissioner dissented, arguing that the majority had gone further with its preemption holding than the Authority had requested.

The Supreme Court has granted review of Friends of Eel River. Briefing is currently set for the end of February 2015.