Cal. Supreme Court Rules CEQA Applies in North Coast Railroad Case

On July 27, 2017, the California Supreme Court issued an Opinion holding that the North Coast Rail Authority must comply with environmental review requirements under the California Environmental Quality Act (CEQA) with respect to the reopening of tracks that run from Novato into Humboldt County.  At issue was whether federal laws that govern railroads preempt California’s bedrock environmental statute, CEQA.

“California’s environmental laws must apply to public projects, plain and simple,” noted Amy Bricker, an attorney at the Firm who represented Friends of the Eel River in the case. “Convoluted arguments about federal preemption don’t change the facts: public agencies have an obligation to disclose environmental impacts and minimize them to the extent feasible.”

As the Supreme Court’s opinion states, there is no clear language in federal law “that would direct us to the surprising conclusion that a state must operate without its usual tools and guidelines when it becomes an owner-participant in the railroad industry.”

The North Coast Rail Authority (NCRA) is a state agency that partnered with a private enterprise, Northwestern Pacific Railroad Co., to make repairs to and begin re-operating the defunct freight rail line, which has been dormant since 1998. NCRA applied for and received millions of dollars from the California Transportation Commission, which requires CEQA review for its funding. Under CEQA, project proponents must analyze likely environmental impacts and identify opportunities to reduce them. As noted in the Court’s decision, “NCRA is not an independent corporation or a private company, but an arm of the state, created and funded by the state to carry out goals established by the Legislature.  What rule of decision … other than whim would guide NCRA’s decisions, if not state law?”

NCRA initially prepared an Environmental Impact Report under CEQA. But after Friends of the Eel River and Californians for Alternatives to Toxics sued to remedy the grossly inadequate report, NCRA argued that CEQA was preempted by federal law. The lower courts agreed with NCRA, but the California Supreme Court reversed, agreeing with the environmental groups.

“In deciding whether to reopen its rail line, NCRA must account for the significant harm it will cause to the Eel River and its native species,” added Scott Greacen, Executive Director of Friends of the Eel River. “There’s no way for us to know how rail line operations will affect fish and water quality without a legally adequate environmental review. This rail line is a public asset, and NCRA has an obligation to minimize harm on California’s natural resources.”

Historically, the rail line in question was designed to carry freight from the Port of Eureka to the San Francisco Bay, but over time the line became so dilapidated that it has not been usable. It passes through the environmentally sensitive and geologically unstable Eel River Canyon. Prior to its closure, rail operators routinely dumped large amounts of rock and debris that fell from canyon walls into the Eel River, harming water quality and blocking fish passage for the river’s native salmon and steelhead populations.

NCRA argued that the Interstate Commerce Commission Termination Act preempted CEQA because a federal agency has some authority over rail licensing and operations. But since NCRA’s line is state-owned and state-funded, the California Supreme Court agreed that federal law cannot interfere with core state business unless it explicitly states that the federal regulation at hand trumps state requirements. In this situation, state law governs.

The California Supreme Court reversed the Appellate Court and remanded the case for further proceedings.

Read the decision here.