If state and local governments were allowed to regulate the system without restraint, the volume of rules would make interstate operations difficult.
A thriving freight-rail system is critical to our nation’s economic health. Railroads ship massive amounts of goods and commodities over 140,000 miles in a cost-efficient, safe, and environmentally friendly way. If state and local governments were allowed to regulate the system without restraint, the volume of rules would make interstate operations difficult, if not impossible. To prevent such a regulatory nightmare, Congress sought to create a comprehensive regulatory framework for our freight-rail system — although the courts have largely abandoned the meaning of the legislation.
Recently, freight railroads and shippers have been so concerned about state and local governments encroaching upon the Surface Transportation Board’s (STB) congressionally mandated jurisdiction over freight-rail transportation that they asked the STB to provide definitive guidance on its regulatory authority. A draft policy statement is expected in the near future.
This request was driven by an error in statutory interpretation that has plagued the freight-rail system for 30 years. The preemption language found in Section 10501(b) of the Interstate Commerce Commission Termination Act of 1995 (ICCTA) expressly provides the STB with exclusive jurisdiction over the economic regulation of freight-rail transportation — including, but not limited to, (1) rates, (2) routes, (3) the construction, acquisition, and operation of the system, (4) the facilities and equipment used to carry out such transportation, and (5) the remedies associated with such regulation. But in the past three decades, the courts have misinterpreted that section to limit federal authority.
Both state and federal courts have misused the legislative history of the ICCTA to dramatically reduce the scope of the federal government’s supposed jurisdiction in this area. In the words of the Supreme Court of Ohio, “The ICCTA’s legislative history indicates that Congress did not intend to preempt any and all state laws that might touch upon or indirectly affect railway property.”
Instead of recognizing the STB’s exclusive jurisdiction as provided for in the statute, the courts have become judicial activists in this area of the law. In particular, judges use what is known as “applied” preemption analysis to transfer STB jurisdiction to state and local governments. This means that the STB retains jurisdiction only if the court concludes that state or local rules would have the effect of preventing or unreasonably interfering with railroad transportation.
By adopting this approach, a court would allow a state or local government to usurp the STB’s exclusive jurisdiction if it can show that the action taken is (1) within a state’s traditional police powers to protect the health, welfare, safety, and property of its citizens, and (2) based on the facts presented, does not unreasonably interfere with rail transportation. For example, a court may find that a state’s condemnation of a vacant parcel of railroad property does not come under the STB’s jurisdiction. This would allow the state to go ahead with its condemnation procedure, and thereby deny the railroad the opportunity to decide how best to utilize the property in the future. This is authority that the state does not have under the express language of the statute.
No matter how reasonable the “applied” preemption approach may seem, it opens the door for the unlawful narrowing of the STB’s jurisdiction far beyond anything that Congress had approved. It allows for extensive interference by state and local governments in an area of regulation where the statute unambiguously provides exclusive authority to the STB.
If the Supreme Court were to review the legality of “applied” preemption, it likely would not accept such creations of judicial activism as lawful. SCOTUS would almost certainly focus on the text of a statute, not its legislative history. A majority of justices would likely adhere to the “supremacy-of-the-text principle,” an interpretative approach centered on the meaning of the text rather than its purpose, intent, or legislative background. As SCOTUS said in Puerto Rico v. Franklin Cal. Tax-Free Trust (2016): “And because the statute ‘contains an express preemption clause,’ we do not invoke any presumption against preemption but instead ‘focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ preemptive intent.’”
Therefore, it is time for the STB to reestablish its congressionally mandated exclusive jurisdiction over the regulation of our freight-rail system. To the degree consistent with the properly understood preemption language of the ICCTA, the STB must be proactively ensuring its exclusive jurisdiction is regarded as a non-negotiable boundary that states and local governments cannot cross.
To achieve this, the STB must include in its upcoming policy statement a repudiation of the “applied” preemption analysis currently employed by the courts. This will be the first step in reestablishing what Congress unambiguously expressed in the ICCTA — a uniform framework of freight-rail regulation. Much litigation may follow, but ultimately, the law as written will finally be respected.