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Local Regulation of Railroads: Guidance forMunicipal Attorneys on Navigating theComplexities of Federal PreemptionStrategies for Exercising Local Control to Address Nuisance, Liability and Economic Issues

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, MARCH 8, 2016

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Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

Michael N. Conneran, Partner, Hanson Bridgett, San Francisco

Charles Spitulnik, Partner, Kaplan Kirsch Rockwell, Washington, D.C.

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Local Regulation of Railroads:Guidance for Municipal Attorneys onNavigating the Complexities of FederalPreemption

Strafford Live WebinarMarch 8, 2016Strafford Live WebinarMarch 8, 2016

Michael Conneran, Partner Charles Spitulnik, Partner

THE BASICS

• Surface Transportation Board

• Federal Railroad Administration

• Labor Issues

• The Courts - FELA

• Surface Transportation Board

• Federal Railroad Administration

• Labor Issues

• The Courts - FELA

6

Interstate Commerce Act of 1887

Imposed regulation of railroads:• Prohibited discrimination among shippers• Required publication of rates

7

Deregulation – 1976-1995

Combatting “the disappearing railroad blues,”Congress enacted new laws aimed at makingrailroads solvent:• 4R Act (1976) – Fewer controls on rates• Staggers Rail Act of 1980– More deregulation,

allows railroads to share tracks• Interstate Commerce Commission Termination

Act (ICCTA) of 1995

Combatting “the disappearing railroad blues,”Congress enacted new laws aimed at makingrailroads solvent:• 4R Act (1976) – Fewer controls on rates• Staggers Rail Act of 1980– More deregulation,

allows railroads to share tracks• Interstate Commerce Commission Termination

Act (ICCTA) of 1995

8

ICCTA of 1995

• Abolished Interstate Commerce Commission(ICC)

• Established Surface Transportation Board (STB)under the U.S. Department of Transportation• Now independent based on recent legislative

changes• More limited control of rail operations by federal

agency

• Abolished Interstate Commerce Commission(ICC)

• Established Surface Transportation Board (STB)under the U.S. Department of Transportation• Now independent based on recent legislative

changes• More limited control of rail operations by federal

agency

9

STB

10

The STB

• Jurisdiction: Interstate Commerce• Rail (all), Water (some), Motor Carrier (some)• … “exclusive and plenary”• Commerce – rates; sales, leases and use

agreements; abandonments

• Jurisdiction: Interstate Commerce• Rail (all), Water (some), Motor Carrier (some)• … “exclusive and plenary”• Commerce – rates; sales, leases and use

agreements; abandonments

11

Other Agencies

• Federal Railroad Administration (FRA) – SafetyAgency that regulates tracks, vehicles, speeds,and conducts safety inspections

• State Public Utilities Commission (PUC)

• Federal Railroad Administration (FRA) – SafetyAgency that regulates tracks, vehicles, speeds,and conducts safety inspections

• State Public Utilities Commission (PUC)

12

Basics for Federal Jurisdiction

• Commerce Clause – Art. I, §8, Cl. 3• Supremacy Clause – Art. VI, Cl. 2

13

• PREEMPTION –49 U.S.C. 1050249 U.S.C. 11321

14

Federal Pre-Emption• Remember the key words: “exclusive and

plenary”• Chicago and North Western Transportation

Company v. Kalo Brick and Tile Co. (1991) 450U.S. 311:

“The ICA is among the most pervasive and comprehensive offederal regulatory schemes . . . . Since the turn of the century,we have frequently invalidated attempts by the States toimpose on common carriers obligations that are plainlyinconsistent with the plenary authority of the[ICC] . . .”

• Remember the key words: “exclusive andplenary”

• Chicago and North Western TransportationCompany v. Kalo Brick and Tile Co. (1991) 450U.S. 311:

“The ICA is among the most pervasive and comprehensive offederal regulatory schemes . . . . Since the turn of the century,we have frequently invalidated attempts by the States toimpose on common carriers obligations that are plainlyinconsistent with the plenary authority of the[ICC] . . .”

15

Federal Pre-Emption


“[There] can be no divided authority over interstatecommerce, and . . . the acts of Congress on thatsubject are supreme and exclusive. [Citation.]Consequently, state efforts to regulate commercemust fall when they conflict with or interfere withfederal authority over the same activity.”(Id. at 318-9.)


“[There] can be no divided authority over interstatecommerce, and . . . the acts of Congress on thatsubject are supreme and exclusive. [Citation.]Consequently, state efforts to regulate commercemust fall when they conflict with or interfere withfederal authority over the same activity.”(Id. at 318-9.)

16

• IT’S ALL ABOUT SAFETY

• 49 U.S.C. §20106: National Uniformity of Regulation Preemption of State Law

• IT’S ALL ABOUT SAFETY

• 49 U.S.C. §20106: National Uniformity of Regulation Preemption of State Law

17

• 49 CFR Part 209, Appendix AJoint Use of Rail Lines“Connection” of “electric interurban rail

system” to interstate rail system

• 49 CFR Part 209, Appendix AJoint Use of Rail Lines“Connection” of “electric interurban rail

system” to interstate rail system

18

What is an Interstate Carrier?

• Active• Discontinued• Abandoned (not the same as easement

abandonment)• Rails to Trails (“Railbanking”)– Grantwood

Village v. Missouri Pacific Railroad Company• Railroads that look wholly Intrastate• Tourist railroads, plant railroads not included (not

point-to-point)

• Active• Discontinued• Abandoned (not the same as easement

abandonment)• Rails to Trails (“Railbanking”)– Grantwood

Village v. Missouri Pacific Railroad Company• Railroads that look wholly Intrastate• Tourist railroads, plant railroads not included (not

point-to-point)

19

Railway Labor: Also a World Unto Itself

• Railway Labor Act, National Mediation Board• Railroad Retirement/Railroad Unemployment

Insurance• LABOR PROTECTION

• STB• Collective Bargaining• Transit Industry

• FELA

• Railway Labor Act, National Mediation Board• Railroad Retirement/Railroad Unemployment

Insurance• LABOR PROTECTION

• STB• Collective Bargaining• Transit Industry

• FELA

20

City of Auburn v Surface TransportationBoard, 154 F.3d 1025 (9th Cir. 1998)

Auburn:Cities file legal challenges to the re-opening ofStampede Pass line• 229 miles through the Cascades• Auburn at Western terminus – near Seattle N/S line

Auburn:Cities file legal challenges to the re-opening ofStampede Pass line• 229 miles through the Cascades• Auburn at Western terminus – near Seattle N/S line

21


BNSF sought STB approval to reacquire line it hadsold to short line operator and segment it usedonly for local traffic• STB prepared Environmental Assessment (EA)

under National Environmental Policy Act (NEPA)

BNSF sought STB approval to reacquire line it hadsold to short line operator and segment it usedonly for local traffic• STB prepared Environmental Assessment (EA)

under National Environmental Policy Act (NEPA)

22


City challenged STB decision that found that:i. Local environment permitting laws were

preempted by ICCTAii. STB’s use of Environmental Assessment

(i.e. finding that no Environmental ImpactStatement (EIS) needed to be prepared)

City challenged STB decision that found that:i. Local environment permitting laws were

preempted by ICCTAii. STB’s use of Environmental Assessment

(i.e. finding that no Environmental ImpactStatement (EIS) needed to be prepared)

23


City of Auburn contentions on appeal to 9th Circuit:• City claims no express preemption of local

regulation:– Says Congress meant to preempt economic

regulation, not “essential local police powerrequired to protect the health or safety ofcitizens.”

City of Auburn contentions on appeal to 9th Circuit:• City claims no express preemption of local

regulation:– Says Congress meant to preempt economic

regulation, not “essential local police powerrequired to protect the health or safety ofcitizens.”

24


Court rejects City’s position--opinion notes longhistory of judicial recognition that rail operationsneed to be regulated at the federal, not local, level

25


Auburn court cited Chicago and North WesternTransportation Company v. Kalo Brick and TileCompany:• Interstate Commerce Act (ICA) is “among the

most persuasive and comprehensive federalregulatory schemes” (450 U.S. 311,318)

Auburn court cited Chicago and North WesternTransportation Company v. Kalo Brick and TileCompany:• Interstate Commerce Act (ICA) is “among the

most persuasive and comprehensive federalregulatory schemes” (450 U.S. 311,318)

26


Does legislative history of ICCTA help city? No!1. 49 U.S.C. §10501(b)(2): STB will have

exclusive jurisdiction over “the construction,acquisition, operation, abandonment, ordiscontinuance of spur, industrial, team,switching, or side tracks, or facilities . . . .”

2. Remedies are exclusive and preempt local law

Does legislative history of ICCTA help city? No!1. 49 U.S.C. §10501(b)(2): STB will have

exclusive jurisdiction over “the construction,acquisition, operation, abandonment, ordiscontinuance of spur, industrial, team,switching, or side tracks, or facilities . . . .”

2. Remedies are exclusive and preempt local law

27


Auburn court noted that STB also has exclusiveauthority over rail line mergers and acquisitionsand stated:• “[A] rail carrier participating in that approved or

exempted transaction is exempt from . . . allother law, including state and municipal law…”

Auburn court noted that STB also has exclusiveauthority over rail line mergers and acquisitionsand stated:• “[A] rail carrier participating in that approved or

exempted transaction is exempt from . . . allother law, including state and municipal law…”

28


Also rejected City’s NEPA challenge, finding theEnvironmental Assessment was adequate and thepreparation of an Environmental Impact Statementwas not required.

29

Applying Auburn (and ICCTA) tospecific issues:• Construction and Operation• Environmental Review• Nuisances• Condemnation• Franchises• Crossings

• Construction and Operation• Environmental Review• Nuisances• Condemnation• Franchises• Crossings

30

Construction and Operation

Courts find state law controls are preempted:• Boston and Maine and Town of Ayer (Joint Petition for

Declaratory Order to STB) (Auto unloading facility)• Amer. Assn. of RR v. South Coast AQMD (diesel idling)Some exceptions:• Enforcement of public health and safety regulations where it

does not interfere with rail operations (Stampede Pass,Riverdale)

• Voluntary Agreements (Township of Woodbridge)• Enforcement of Clean Water Act (Humboldt Baykeeper)

Courts find state law controls are preempted:• Boston and Maine and Town of Ayer (Joint Petition for

Declaratory Order to STB) (Auto unloading facility)• Amer. Assn. of RR v. South Coast AQMD (diesel idling)Some exceptions:• Enforcement of public health and safety regulations where it

does not interfere with rail operations (Stampede Pass,Riverdale)

• Voluntary Agreements (Township of Woodbridge)• Enforcement of Clean Water Act (Humboldt Baykeeper)

31

Environmental Review

Courts find state law requiring reviews are preempted:• City of Encinitas (construction of side track for commute rail)

(North San Diego County Transit Development Board –Petition for Declaratory Order to STB)

• Friends of the Eel River v. North Coast Rail Authority (Cal.Supreme Court Case No S222472).

• City of Atherton v. California High Speed Rail Authority ((2014)228 Cal.App.4th) (Challenge to CA High Speed Rail Project)

• Green Mountain Railroad Corp. v State of Vermont (D.C.Vermont 2003) 1003 U.S. Dist. LEXIS 23774

Courts find state law requiring reviews are preempted:• City of Encinitas (construction of side track for commute rail)

(North San Diego County Transit Development Board –Petition for Declaratory Order to STB)

• Friends of the Eel River v. North Coast Rail Authority (Cal.Supreme Court Case No S222472).

• City of Atherton v. California High Speed Rail Authority ((2014)228 Cal.App.4th) (Challenge to CA High Speed Rail Project)

• Green Mountain Railroad Corp. v State of Vermont (D.C.Vermont 2003) 1003 U.S. Dist. LEXIS 23774

32

Nuisances

• Gluckenberg v. Wisc. Central Ltd.• Friberg• Village of Ridgefield Park

Courts, STB reject local attempts to regulate noise, etc. from railopertions• Recent STB Decision:

Norfolk Southern Railway received confirmation that Delawarestatute restricting locomotive idling is preempted

• Gluckenberg v. Wisc. Central Ltd.• Friberg• Village of Ridgefield Park

Courts, STB reject local attempts to regulate noise, etc. from railopertions• Recent STB Decision:

Norfolk Southern Railway received confirmation that Delawarestatute restricting locomotive idling is preempted

33

Condemnation

State court condemnation actions barred:• Commonwealth v. Bartlett (1st Cir. 1967) 384 F.2d 819• Wisconsin Central Ltd. V. City of Marshfield (W.D. Wisc. 2000)

160 F. Supp. 2d 1009• In re Metropolitan Transportation Authority (2006) 823

N.Y.S.2d 88Options:

-Condemnation of non-rail properties permitted-Potential to have track removed from federal jurisdiction

by means of “adverse abandonment”

State court condemnation actions barred:• Commonwealth v. Bartlett (1st Cir. 1967) 384 F.2d 819• Wisconsin Central Ltd. V. City of Marshfield (W.D. Wisc. 2000)

160 F. Supp. 2d 1009• In re Metropolitan Transportation Authority (2006) 823

N.Y.S.2d 88Options:

-Condemnation of non-rail properties permitted-Potential to have track removed from federal jurisdiction

by means of “adverse abandonment”

34

Franchises

• Union Pacific Railroad Company - Petition for DeclaratoryOrder, STB Finance Docket No. 34090 (Decided: November7, 2001):

“[E]ven assuming that the City's interpretation of theFranchise Agreement is correct, its enforcement of theFranchise Agreement is no less an attempt to regulatethe abandonment of an interstate line of railroad than ifthe City promulgated laws for the same purpose.”

• New Orleans Terminal, 366 F.2d at 163-64,• Des Moines v. Chicago & N.W. R. Co., 264 F.2d 454, 457-60

(8th Cir. 1959),

• Union Pacific Railroad Company - Petition for DeclaratoryOrder, STB Finance Docket No. 34090 (Decided: November7, 2001):

“[E]ven assuming that the City's interpretation of theFranchise Agreement is correct, its enforcement of theFranchise Agreement is no less an attempt to regulatethe abandonment of an interstate line of railroad than ifthe City promulgated laws for the same purpose.”

• New Orleans Terminal, 366 F.2d at 163-64,• Des Moines v. Chicago & N.W. R. Co., 264 F.2d 454, 457-60

(8th Cir. 1959),

35

Crossings

• People v. Burlington Northern Santa Fe Railroad(2012) 209 Cal.App.4th

State rule regulating blockage of grade crossingsfound to be preempted

• Not a preemption issue exclusively but a seriousconcern that merits some discussion

• People v. Burlington Northern Santa Fe Railroad(2012) 209 Cal.App.4th

State rule regulating blockage of grade crossingsfound to be preempted

• Not a preemption issue exclusively but a seriousconcern that merits some discussion

36

Stop that train?

• Not gonna happen

• At 55 mph, a train can take one mile to stop

• Safety focus must be on controlling cars andtrucks

• Not gonna happen

• At 55 mph, a train can take one mile to stop

• Safety focus must be on controlling cars andtrucks

37

Crossing Signals—Not Always Enough!

• 50% of collisions occur atsignalized intersections– Source: Operation Lifesaver

• 50% of collisions occur atsignalized intersections– Source: Operation Lifesaver

38

Sound the horn!

• Locomotive engineers rely on horns for safety

• Horns are noisy but the best safety deviceavailable

• Locomotive engineers rely on horns for safety

• Horns are noisy but the best safety deviceavailable

39

Federal Law Controls Local Attemptsto Limit Noisy Horns

• Federal law is supreme regarding regulation ofinterstate commerce

• Federal law is plenary with regard to railroadoperations

• “What part of ‘plenary’ don’t you understand?”

• Federal law is supreme regarding regulation ofinterstate commerce

• Federal law is plenary with regard to railroadoperations

• “What part of ‘plenary’ don’t you understand?”

40

Congress Acts: PL 103-44049 USC §20153• 1994 statute requires DOT to issue regulations

requiring that train horns be sounded at publiccrossings

• Allows FRA to grant exemptions via rulemakingprocess

• Regulations will pre-empt non-compliant localbans

• 1994 statute requires DOT to issue regulationsrequiring that train horns be sounded at publiccrossings

• Allows FRA to grant exemptions via rulemakingprocess

• Regulations will pre-empt non-compliant localbans

41

Who can establish quiet zones?

• “Public Authorities” = agencies “responsible fortraffic control or law enforcement” (i.e. cities,counties etc.)

• Not railroads, nor the state PUC

• “Public Authorities” = agencies “responsible fortraffic control or law enforcement” (i.e. cities,counties etc.)

• Not railroads, nor the state PUC

42

What can be done?

• Localities can now declare quiet zones underthe conditions specified in the FRA rule

43

Alternate Safety Measures

• Require prior FRA approval• Allows use of measures that don’t qualify as SSM’s• OK to use “corridor approach” to average risks within

quiet zone• Education/enforcement program (including photo

enforcement)

• Require prior FRA approval• Allows use of measures that don’t qualify as SSM’s• OK to use “corridor approach” to average risks within

quiet zone• Education/enforcement program (including photo

enforcement)

44

Issues for Cities and Counties• Who pays for intersection improvements?

– Federal rule is silent on this point– If you want a quiet zone, must you pay for it? (Answer:

probably!)

• Potential sources of funding:– Assessment Districts– Developer mitigations– Grants– Bond Proceeds– Sales Tax

• Who pays for intersection improvements?– Federal rule is silent on this point– If you want a quiet zone, must you pay for it? (Answer:

probably!)

• Potential sources of funding:– Assessment Districts– Developer mitigations– Grants– Bond Proceeds– Sales Tax

45

Railroad Concerns

• Railroads focused of freight movement• Railroads have other capital priorities for their

$$$• Liability issues are of concern

• Railroads focused of freight movement• Railroads have other capital priorities for their

$$$• Liability issues are of concern

46

Addressing Liability

• Text of rule is silent on liability• Federal law preempts certain state law actions,

such as:– Actions based on creation of quiet zones– Actions for failure to sound horn

• FRA declined to require localities to indemnifyRR’s

• RR’s may demand indemnity in exchange formaking improvements (no prohibition in rule)

• Text of rule is silent on liability• Federal law preempts certain state law actions,

such as:– Actions based on creation of quiet zones– Actions for failure to sound horn

• FRA declined to require localities to indemnifyRR’s

• RR’s may demand indemnity in exchange formaking improvements (no prohibition in rule)

47

More information:

[email protected]; (415) 995-5042

[email protected]; (202) 955-5600

48

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