Reply Brief — North Coast Railroad Authority, Petitioner v. Friends of the Eel River, et al.

No. 17-915

In the Supreme Court of the United States

NORTH COAST RAILROAD AUTHORITY,

Petitioner,

v.

FRIENDS OF THE EEL RIVER, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to

the Supreme Court of California

REPLY BRIEF FOR PETITIONER

CHAD M. CLAMAGE

Mayer Brown LLP

71 South Wacker

Chicago, IL 60606

(312) 782-0600

ANDREW TAUBER

Counsel of Record

DAN HIMMELFARB

PETER W. DENTON

Mayer Brown LLP

1999 K Street, NW

CHRISTOPHER J. NEARY

Washington, DC 20006

Neary & O’Brien

110 South Main Street, (202) 263-3000

atauber@mayerbrown.com

Suite C

Willits, CA 95490

(707) 459-5551

Counsel for Petitioner

i

TABLE OF CONTENTS

Page

I.

THIS COURT HAS JURISDICTION ..............2

II.

THE DECISION BELOW CONFLICTS

WITH RULINGS OF THE SURFACE

TRANSPORTATION BOARD AND

ANOTHER STATE COURT OF LAST

RESORT............................................................4

III. THE DECISION BELOW IS

ERRONEOUS ...................................................6

IV.

THE QUESTION PRESENTED IS

ONE OF EXCEPTIONAL PUBLIC

IMPORTANCE ............................................... 10

CONCLUSION .......................................................... 12

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Adrian & Blissfield R.R. v. Vill. of

Blissfield,

550 F.3d 533 (6th Cir. 2008)..................................3

Belknap, Inc. v. Hale,

463 U.S. 491 (1983)................................................2

California v. Taylor,

353 U.S. 553 (1957)..........................................8, 10

City of Auburn v. U.S. Gov’t,

154 F.3d 1025 (9th Cir. 1998)............................3, 7

Cox Broad. Corp. v. Cohn,

420 U.S. 469 (1975)............................................2, 3

G. & T. Terminal Packaging Co. v.

Consol. Rail Corp.,

830 F.2d 1230 (3d Cir. 1987) ...............................10

Green Mountain R.R. v. Vermont,

404 F.3d 638 (2d Cir. 2005) ...................................7

Gregory v. Ashcroft,

501 U.S. 452 (1991)................................................8

Hilton v. S. Car. Pub. Rys. Comm’n,

502 U.S. 197 (1991)................................................3

Nixon v. Missouri Municipal League,

541 U.S. 125 (2004)................................................8

iii

TABLE OF AUTHORITIES—continued

Page(s)

Southland Corp. v. Keating,

465 U.S. 1 (1984)....................................................2

United States v. California,

297 U.S. 175 (1936)................................................8

Statutes

5 U.S.C. § 554(e) ..........................................................4

28 U.S.C. § 1257(a)......................................................2

49 U.S.C. § 721(a)........................................................4

49 U.S.C. § 1321(a)......................................................4

49 U.S.C. § 10501(b).......................................... passim

49 U.S.C. § 10501(c) ................................................7, 9

49 U.S.C. § 10502(a)..................................................10

49 U.S.C. § 11101(a)....................................................9

Other Authorities

Cal. High-Speed Rail Auth.—Pet. for

Declaratory Order,

2014 WL 7149612 (S.T.B. served

Dec. 12, 2014) .................................................4, 5, 6

iv

TABLE OF AUTHORITIES—continued

Page(s)

Cities of Auburn & Kent, Wa.-Pet. for

Declaratory Order-Burlington N.

R.R. Stampede Pass Line,

2 S.T.B. 330, 1997 WL 362017 (1997) ...............3, 9

DesertXpress Enters. LLC—Pet. for

Declaratory Order,

2007 WL 1833521 (S.T.B. served

June 27, 2007) ........................................................5

H.R. Rep. 104-311 (1995) ......................................4, 12

Maura Dolan et al., California’s Bullet

Train Is Likely To Face More

Environmental Hurdles After A High

Court Ruling, L.A. TIMES, July 31,

2017 ......................................................................11

N. San Diego Cty. Trans. Dev. Bd.—Pet.

for Declaratory Order, 2002 WL

1924265 (S.T.B. served Aug. 21,

2002) .......................................................................5

Nw. Pac. R.R.—Pet. for Declaratory

Order, 2016 WL 1639525 (S.T.B.

served Apr. 25, 2016) ............................................5

S.B. 1029, § 2(c), 2018 Leg., Reg. Sess.

(Cal. 2018) ...........................................................12

California is not the plaintiff in this case. Indeed,

although they purport to champion the principle of

“state self-governance,” Plaintiffs are private

organizations suing a California agency to prevent it

from repairing and operating a state-owned rail line.

Plaintiffs admit that “ICCTA extends to stateowned railroads” like NCRA. Opp. 16 n.3. They

admit that their CEQA lawsuits “challeng[e]”

NCRA’s project for “the resumption of freight

service,” including “repairs necessary to reopen the

line,” and that they seek an injunction “suspending

project activity.” Opp. 8, 13, 17. They admit that the

California Supreme Court held that their suits

“would be preempted” if filed against “a private

railroad’s transportation” and therefore “cannot be

the basis for an injunctive order directed specifically

at” privately owned Northwestern Pacific to “halt

[its] freight operations.” Opp. 15, 18. And Plaintiffs

admit that the decision below held that ICCTA “does

not preempt” Plaintiffs’ suits against NCRA precisely

because NCRA is publicly owned. Opp. 1.

As Plaintiffs’ brief indicates, NCRA’s petition

presents a pure question of federal law: Does ICCTA

categorically preempt Plaintiffs’ citizen suits that

seek to impose CEQA’s preclearance requirements

against a state-owned railroad by enjoining its

needed repairs and operations? A divided California

Supreme Court answered “no.” The STB, Justice

Corrigan, the California Court of Appeal, and both

trial judges answered “yes.”

The question presented satisfies every criterion

for Supreme Court review and cries out for

immediate resolution. None of Plaintiffs’ arguments

to the contrary pass muster.

2

I.

THIS COURT HAS JURISDICTION.

Plaintiffs argue that the California Supreme

Court’s decision is not “final” within the meaning of

28 U.S.C. § 1257(a). Opp. 16–20. They are wrong.

A decision is “final” under Section 1257 when

“the federal issue has been finally decided in the

state courts with further proceedings pending in

which the party seeking review here might prevail

on the merits on nonfederal grounds, thus rendering

unnecessary review of the federal issue by this

Court,” and “reversal of the state court on the federal

issue would be preclusive of any further litigation on

the relevant cause of action.” Cox Broad. Corp. v.

Cohn, 420 U.S. 469, 482–483 (1975). “In these

circumstances, if a refusal immediately to review the

state court decision might seriously erode federal

policy, the Court has entertained and decided the

federal issue.” Id. at 483; e.g., Southland Corp. v.

Keating, 465 U.S. 1, 6–8 (1984); Belknap, Inc. v.

Hale, 463 U.S. 491, 497 n.5 (1983).

Those conditions are satisfied here.

The “federal issue” of categorical preemption has

been “finally decided.” Cox, 420 U.S. at 482. “The

California Supreme Court held” that ICCTA does not

categorically “preempt” Plaintiffs’ suits against

NCRA. Opp. 1.1

There are “further proceedings pending” in which

NCRA “might prevail on the merits on nonfederal

grounds.” Cox, 420 U.S. at 482. For example, “the

There is neither need nor good cause to wait years to

determine whether Plaintiffs’ suits are preempted “as-applied.”

Opp. 18 n.4. Plaintiffs’ suits are preempted categorically and

should be dismissed now. See Pet. 21–28; infra 6–10.

1

3

state court could find that the EIR was adequate and

issue final judgment in NCRA’s favor.” Opp. 17. Such

a judgment would “render[] unnecessary review of

the federal issue by this Court.” Cox, 420 U.S. at 482.

“[R]eversal of the state court on the federal issue

would be preclusive of any further litigation on the

relevant cause of action.” Id. at 482–483. Reversing

on categorical preemption would require “denying

[Plaintiffs’ CEQA] petitions” and entering judgment

for NCRA, as the trial court and Court of Appeal

held. Opp. 15.

Finally, “refusal immediately to review the state

court decision might seriously erode federal policy.”

Cox, 420 U.S. at 483. “[T]he entire federal scheme of

railroad regulation applies to state-owned railroads.”

Hilton v. S. Car. Pub. Rys. Comm’n, 502 U.S. 197,

203 (1991). And ICCTA expressly “preempt[s]”

“State” “regulation of rail transportation.” 49 U.S.C.

§ 10501(b). Subjecting NCRA to years of CEQA

litigation when ICCTA “categorically preempts” state

environmental permitting requirements that “could

be used to deny a railroad the ability to conduct some

part of its operations” (Adrian & Blissfield R.R. v.

Vill. of Blissfield, 550 F.3d 533, 540 (6th Cir. 2008))

“would both interfere with the federal licensing

program and unreasonably burden interstate

commerce.” Cities of Auburn & Kent, Wa.-Pet. for

Declaratory Order-Burlington N. R.R. Stampede Pass

Line, 2 S.T.B. 330, 1997 WL 362017, at *5 (1997),

aff’d, 154 F.3d 1025 (9th Cir. 1998). Thus, the

California Supreme Court’s decision “undermine[s]

the uniformity of Federal standards and risk[s] the

balkanization and subversion of the Federal scheme

of minimal regulation for this intrinsically interstate

4

form of transportation.” H.R. Rep. 104-311, at 96

(1995).

The parties have already spent seven years

litigating federal preemption. Without this Court’s

immediate intervention, it will be years before NCRA

could again seek this Court’s review of the California

Supreme Court’s misreading of federal law. In the

meantime, private parties will be free to file CEQA

actions to enjoin federally authorized rail operations.

Federal policy demands putting an end to Plaintiffs’

suits now.

II. THE DECISION BELOW CONFLICTS WITH

RULINGS OF THE SURFACE TRANSPORTATION BOARD AND ANOTHER STATE

COURT OF LAST RESORT.

A. Plaintiffs do not deny the irreconcilable

conflict between the California Supreme Court’s

decision and STB orders. Plaintiffs in fact admit that

the STB has expressed “its sweeping ‘view’ that

CEQA” is “‘categorically preempted’ under the

ICCTA.” Opp. 24 (citing Cal. High-Speed Rail

Auth.—Pet. for Declaratory Order, 2014 WL 7149612

(S.T.B. served Dec. 12, 2014) (CHSRA)).

Plaintiffs try to minimize that conflict by calling

that STB order an “advisory opinion.” Opp. 24. But

Congress empowered the STB to “carry out” ICCTA

(49 U.S.C. § 1321(a) (previously codified at 49 U.S.C.

§ 721(a))) and gave it “discretion” to “issue a

declaratory order” to “remove uncertainty.” 5 U.S.C.

§ 554(e). The STB invoked both statutory provisions

when it ruled that ICCTA categorically preempts

CEQA citizen suits against state-owned railroads.

CHSRA, 2014 WL 7149612, at *3. Plaintiffs do not

and cannot suggest that this order was ultra vires.

5

And while Plaintiffs cite (Opp. 24) the STB’s and

Department of Justice’s brief stating that the Ninth

Circuit lacked appellate jurisdiction to review that

order, they ignore the government’s declaration that

the STB had statutory jurisdiction to issue the order

(and correctly determined that ICCTA categorically

preempts CEQA claims against state-owned

railroads). Joint Br. of Resps. at 17–20, 24–41, Kings

Cty. v. STB, No. 15-71780 (9th Cir. Mar. 23, 2016).

Plaintiffs say that the STB’s order “does not

reflect the STB’s decisions in prior or subsequent

rulings.” Opp. 25. That is incorrect. The STB has

consistently held that ICCTA categorically preempts

CEQA suits that would impose preclearance or

permitting requirements on private and public

railroads. E.g., CHSRA, 2014 WL 7149612, at *7;

DesertXpress Enters. LLC—Pet. for Declaratory

Order, 2007 WL 1833521, at *3 (S.T.B. served June

27, 2007); N. San Diego Cty. Trans. Dev. Bd.—Pet.

for Declaratory Order, 2002 WL 1924265, at *3–6

(S.T.B. served Aug. 21, 2002).

In fact, when Northwestern Pacific petitioned for

a declaratory order about this case, the STB

responded that it “has already ruled on preemption

in the context of this precise matter,” citing the

“[California High-Speed Rail Authority] Declaratory

Order” holding “that CEQA is categorically

preempted by § 10501(b) in connection with rail lines

regulated by the [STB], including state-operated or

owned rail lines.” Nw. Pac. R.R.—Pet. for Declaratory

Order, 2016 WL 1639525, at *2 (S.T.B. served Apr.

25, 2016). Although it was discussed in the petition

(at 18), Plaintiffs ignore the STB order addressing

this very case.

6

Plaintiffs’ remaining arguments boil down to

their belief that the STB misinterpreted ICCTA.

Opp. 25–28. They are wrong. See Pet. 21–28; infra 6–

10. But even if they were right, it would not erase

the square conflict between the views of the

California Supreme Court and the federal agency

entrusted with “exclusive” “jurisdiction” over

interstate rail transportation. 49 U.S.C. § 10501(b).

This Court should grant review to resolve those

conflicting interpretations of federal law.

B. Plaintiffs do not explain away the conflict with

the Grupp decisions. See Pet. 20–21. Plaintiffs argue

that those decisions, including one by New York’s

highest court, addressed a “different” statute. Opp.

29 n.8. But as the STB and the California Court of

Appeal both recognized, “this case is analogous to the

* * * Grupp cases,” which rejected the reasoning

advanced by Plaintiffs and adopted by the California

Supreme Court. CHSRA, 2014 WL 7149612, at *12

n.23; accord Pet. App. 133a. That another California

court had previously followed the Grupp cases (see

Opp. 29–30 n.8) highlights the California Supreme

Court’s error in this case. The conflict between the

Grupp cases and the California Supreme Court’s

ruling warrants review.

III. THE DECISION BELOW IS ERRONEOUS.

Plaintiffs advance several theories to prop up the

California Supreme Court’s erroneous holding that

their suits against NCRA “d[o] not constitute

preempted ‘regulation of rail transportation.’” Opp.

31. None has merit.

Plaintiffs argue that CEQA “does not regulate

* * * rail transportation” because it “is a law of

general applicability.” Opp. 7. This argument has

7

been universally rejected. Although it distinguished

claims asserted against a publicly owned railroad,

the majority below held, notwithstanding CEQA’s

general applicability, that Plaintiffs’ CEQA claims

against Northwestern Pacific are “a classic example

of state regulation” preempted by ICCTA because

they impose “state environmental preclearance

rules” that “cannot be used to halt railroad

operations.” Pet. App. 82a–83a. All other California

courts held that Plaintiffs’ CEQA suits were

preempted in full. Pet. 10–13. The STB agreed. Pet.

18. And federal courts of appeals have consistently

held that state permitting and preclearance

requirements, although generally applicable, are

preempted “regulation of rail transportation” when

they prohibit or frustrate rail transportation. E.g.,

Green Mountain R.R. v. Vermont, 404 F.3d 638, 642–

643 (2d Cir. 2005); City of Auburn v. U.S. Gov’t, 154

F.3d 1025, 1030 (9th Cir. 1998).

Disregarding Congress’s explicit intent to

preempt state regulation of rail transportation (Pet.

24–25) and a century of precedent holding that

federal law preempts state law as applied to stateowned railroads to the same extent it preempts state

law as applied to private railroads (id. 22–23),

Plaintiffs invoke ICCTA’s “plain text” to defend the

California Supreme Court’s conclusion that their

suits for injunctive relief against NCRA do not

constitute “regulation of rail transportation.” Opp.

31. Yet Plaintiffs have remarkably little to say about

ICCTA’s text or structure. They ignore the fact that

ICCTA’s express-preemption provision, Section

10501(b), does not distinguish between private and

public railroads while the statute’s very next

provision, Section 10501(c), makes that distinction in

a way that undermines Plaintiffs’ arguments. See

8

Pet. 23–24. Plaintiffs’ failure to confront ICCTA’s

text and structure is telling.

Plaintiffs draw no support from Gregory v.

Ashcroft, 501 U.S. 452 (1991), or Nixon v. Missouri

Municipal League, 541 U.S. 125 (2004). Unlike those

cases, Plaintiffs’ suits do not implicate “core state

sovereign functions.” Opp. 32. This Court long ago

rejected Plaintiffs’ Tenth Amendment arguments

when raised by California. See California v. Taylor,

353 U.S. 553, 568 (1957); United States v. California,

297 U.S. 175, 185 (1936). The Court explained that

“federal statutes regulating interstate railroads”

have “consistently been held to apply to publicly

owned or operated railroads,” and “California, by

engaging in interstate commerce by rail, subjects

itself to the commerce power so that Congress can

make it conform to federal” law. Taylor, 353 U.S. at

562, 568. Decades after those decisions, California

created NCRA to acquire an existing interstate rail

line. There is no unfairness or violation of state

sovereignty in subjecting NCRA to the same

standards as private railroads and affording NCRA

the same protections.

Moreover, even if Gregory’s plain-statement rule

applied, ICCTA would overcome it. Under Gregory,

ICCTA need not “mention” public railroads

“explicitly”; it simply must make “clear” that it

governs them. Gregory, 501 U.S. at 467. ICCTA

makes that clear. Using broad language that makes

no distinction between public and private railroads,

ICCTA’s preemption provision declares that federal

“remedies” regarding the “regulation of rail

transportation are exclusive and preempt the

remedies provided” under “State law.” 49 U.S.C.

§ 10501(b). The very next subsection then explicitly

9

exempts some “local government authorit[ies],” but

not NCRA, from ICCTA’s provisions. Id. § 10501(c).

Thus, the text and structure of the statute

unambiguously demonstrate that ICCTA governs

NCRA.

Congress enacted ICCTA after a century of

federal regulation of public railroads without the

slightest indication that it intended to overturn that

settled practice. Plaintiffs’ contention that ICCTA’s

express preemption provision treats public railroads

differently from private railroads is “unsupported by

precedent.” Pet. App. 89a–90a (Corrigan, J.).

Plaintiffs’ suggestion that they are advancing

“ICCTA’s deregulatory purpose” is nonsense. Opp.

33. They are “third party plaintiffs” seeking “to

thwart or delay public railroad projects” by imposing

state “regulation” on NCRA. Pet. App. 91a (Corrigan,

J.). There is nothing “deregulatory” about their suits.

Finally, the fact that “the STB has no jurisdiction

over NCRA’s decision to rehabilitate and reopen” the

Line and that NCRA’s track repair is in a

“deregulated space” does not help Plaintiffs. Opp. 21,

34. ICCTA gives railroads the “right to maintain and

improve” their lines “to keep [them] in operable

condition,” and “state and local authorities may not

regulate those activities.” Cities of Auburn & Kent,

1997 WL 362017, at *5, *7. Moreover, ICCTA

imposes a common-carrier duty on carriers to provide

“transportation or service on reasonable request.” 49

U.S.C. § 11101(a); see Pet. 8, 9 n.1, 24. Plaintiffs’

suits interfere with NCRA’s right to maintain the

10

Line and duty to ensure that the Line’s customers

are served. ICCTA preempts these suits.2

In short, the California Supreme Court’s decision

is wrong as a matter of federal law. It should be

reviewed and reversed.3

IV. THE QUESTION PRESENTED IS ONE OF

EXCEPTIONAL PUBLIC IMPORTANCE.

Plaintiffs cannot minimize the importance of this

case. They do not deny that, across California, state

and local agencies own and operate ICCTA-regulated

railroads that serve a vital role in the nation’s

interstate rail network. See Pet. 28–30. These

railroads’ “continued operation is important to the

national flow of commerce.” Taylor, 353 U.S. at 566.

Plaintiffs’ suggestion that the petition does not

“point to a single California public railroad that

would be affected by the decision [below]” is absurd.

2 Plaintiffs complain about the STB’s exemptions and the lack

of “federal environmental review of the NCRA repair project.”

Opp. 9, 23 n.6. But exemptions are a critical part of ICCTA’s

deregulatory objectives. See 49 U.S.C. § 10502(a) (STB “shall

exempt” services “to the maximum extent consistent” with

ICCTA). NCRA is exempt from federal environmental review

because operations on the Line fall below regulatory thresholds.

Indeed, respondent Friends unsuccessfully challenged those

exemptions. See Pet. 8–9. Plaintiffs’ CEQA suits remain

preempted by ICCTA despite any exemptions. See, e.g., G. & T.

Terminal Packaging Co. v. Consol. Rail Corp., 830 F.2d 1230,

1234–1235 (3d Cir. 1987).

Plaintiffs imply that NCRA breached its funding contracts

that required CEQA compliance. Opp. 9–11. They lost that

argument in the trial court and in the Court of Appeal and did

not raise it in the California Supreme Court. Pet. App. 22a,

121a–127a, 167a–168a, 178a–179a. Their argument is thus not

only meritless, but waived.

3

11

Opp. 29. The petition (at 29) cited the California

High-Speed Rail Authority’s brief explaining that the

STB’s preemption order affected its operations. The

California Supreme Court’s ruling in this case

threatens to overturn the protections that the STB’s

order afforded to CHSRA. See Maura Dolan et al.,

California’s Bullet Train Is Likely To Face More

Environmental Hurdles After A High Court Ruling,

L.A. TIMES, July 31, 2017 (the California Supreme

Court’s decision “has broad significance” for CHSRA

and “clears the way for opponents of the $64-billion

bullet train to file more lawsuits,” which are now

“expected”). That CHSRA prevailed on state-law

grounds in one suit is no answer. Cf. Opp. 23. The

suit never should have gotten that far because it is

preempted by ICCTA.

Plaintiffs’ argument (Opp. 21–22) that the

California Supreme Court’s interpretation of ICCTA

cannot affect the Alameda Corridor Transportation

Authority and other California public entities that

own or operate ICCTA-regulated lines is likewise

incorrect. The California Supreme Court’s decision

opens the floodgates for CEQA suits against future

repair or reconstruction activities that these public

entities may undertake with respect to their existing

rail lines, just like NCRA’s project here. The decision

below threatens to ensnare any California public

entity that owns or proposes to construct ICCTAregulated rail lines with years of CEQA litigation

brought by private parties.

Plaintiffs’ argument that the California Supreme

Court’s decision “has no bearing” outside California

is equally meritless. Opp. 29. Plaintiffs do not deny

that many states own ICCTA-regulated railroads.

See Pet. 30. The California Supreme Court’s decision

12

sets dangerous precedent that private plaintiffs in

other states can use to impose state-law restrictions

on public entities that own or operate ICCTAregulated rail lines. The result would be the

“balkanization and subversion” of federal rail law

that ICCTA prohibits. H.R. Rep. 104-311, at 96

(1995).

Finally, Plaintiffs’ suggestion that NCRA may be

“abolish[ed]” is pure speculation. Opp. 18.

Furthermore, even if the bill currently pending in a

California Senate committee passed, it would merely

“[t]ransfer” NCRA’s rights “to an unspecified

successor agency” that would “continu[e] to run

freight along the active rail line.” S.B. 1029, § 2(c),

2018 Leg., Reg. Sess. (Cal. 2018). Thus, even if

NCRA were “requir[ed]” to “transfer its rights” and

“responsibilities to a successor entity” (Opp. 18), that

successor entity would owe a common-carrier duty

under ICCTA to serve the Line’s customers and have

the right and obligation to maintain the Line.

Regardless of that bill, the controversy in this case

will remain live, important, and in need of this

Court’s resolution.

CONCLUSION

The petition for a writ of certiorari should be

granted.

13

Respectfully submitted.

CHAD M. CLAMAGE

Mayer Brown LLP

71 South Wacker

Chicago, IL 60606

(312) 782-0600

ANDREW TAUBER

Counsel of Record

DAN HIMMELFARB

PETER W. DENTON

Mayer Brown LLP

1999 K Street, NW

CHRISTOPHER J. NEARY

Washington, DC 20006

Neary & O’Brien

110 South Main Street, (202) 263-3000

atauber@mayerbrown.com

Suite C

Willits, CA 95490

(707) 459-5551

Counsel for Petitioner

APRIL 2018