Oregon Coast Scenic Railroad, v. State of Oregon Department of, et al

Filing

FILED OPINION (SIDNEY R. THOMAS, RICHARD R. CLIFTON and JACQUELINE H. NGUYEN) REVERSED AND REMANDED. Judge: SRT Authoring, FILED AND ENTERED JUDGMENT. [10208210]

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 1 of 17

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

OREGON COAST SCENIC
RAILROAD, LLC, an Oregon
nonprofit corporation,
Plaintiff-Appellant,

No. 14-35414
D.C. No.
3:14-cv-00414-HZ

v.
OPINION
STATE OF OREGON DEPARTMENT
OF STATE LANDS; MARY M.
ABRAMS, Director of Department
of State Lands, in her official
capacity,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Oregon
Marco A. Hernandez, District Judge, Presiding
Argued and Submitted October 5, 2016
Portland, Oregon
Filed November 23, 2016
Before: Sidney R. Thomas, Chief Judge, and Richard R.
Clifton and Jacqueline H. Nguyen, Circuit Judges.
Opinion by Chief Judge Thomas

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 2 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

2

SUMMARY*

Surface Transportation Board
Reversing the district court’s judgment in favor of the
State of Oregon Department of State Lands, which sought to
enforce a state environmental law in connection with railroad
repair work, the panel held that the federal Surface
Transportation Board has exclusive jurisdiction over railroad
repair work done at the direction of a federally regulated rail
carrier but performed by a contractor rather than the carrier
itself.
The plaintiff, a non-profit operator of tourist trains, had
entered into an agreement with the Port of Tillamook Bay, a
federally regulated railroad, to repair a railroad track. The
plaintiff alleged that the Oregon law, known as a
“removal-fill” law, was preempted by the Interstate
Commerce Commission Termination Act, which governs
federal regulation of railroads.
The panel held that the repair work done by the plaintiff
under its agreement with the Port fell under the Board’s
jurisdiction because the work was done under the auspices of
a federally regulated rail carrier and was sufficiently related
to the provision of transportation over the interstate rail
network. The Oregon law therefore was preempted as
applied to this work. The panel reversed the district court’s
judgment and remanded for further proceedings with respect

*

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 3 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

3

to preliminary and permanent injunctive relief and
declaratory relief.

COUNSEL
Martin E. Hansen (argued) and Sarah E. Harlos, Francis
Hansen & Martin LLP, Bend, Oregon, for Plaintiff-Appellant.
Robert M. Wilsey (argued), Assistant Attorney General;
Anna M. Joyce, Solicitor General; Ellen F. Rosenblum,
Attorney General; Oregon Department of Justice, Salem,
Oregon; for Defendants-Appellees.

OPINION
THOMAS, Chief Judge:
This case presents the question whether the federal
Surface Transportation Board (“the Board”) has exclusive
jurisdiction over railroad repair work done at the direction of
a federally regulated rail carrier but performed by a contractor
rather than the carrier itself. We conclude that it does, and we
therefore reverse and remand.
I
The Oregon Coast Scenic Railroad (“Oregon Coast”) is a
non-profit corporation that operates tourist trains on a portion
of track in Oregon that is owned by the Port of Tillamook
Bay (“the Port”). The Port is a federally regulated railroad
authorized by the Board. The Port operates freight trains; it
formerly ran trains on the portion of the railroad used by

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 4 of 17

4

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

Oregon Coast, but in 2007 part of the track was damaged by
a winter storm and freight traffic ceased on that portion of the
track.
In 2012, Oregon Coast and the Port entered into a fiveyear agreement under which Oregon Coast would continue
leasing this portion of the track, but instead of paying the Port
for use of the track, Oregon Coast would instead use those
funds “for deferred maintenance and upgrading of [the Port’s]
rail line and right-of-way.” The agreement provided that
Oregon Coast would be “solely responsible” for rehabilitation
of the railway, track maintenance, and compliance with
federal and state safety and maintenance requirements. The
agreement contemplated that the repair work might reestablish the track’s “connection to a mainline carrier
providing service,” and freight traffic might resume at some
point. If and when that happened, the parties agreed to
negotiate a modification to the agreement that would allow
Oregon Coast to continue to run tourist trains alongside the
Port’s anticipated freight traffic.
Oregon Coast began repair work under this agreement in
early 2014. On March 11, 2014, after approximately five
weeks of work had been completed and two to four weeks of
work remained, the State of Oregon’s Department of State
Lands (“the State”) sent Oregon Coast a cease and desist
order. The order alleged that Oregon Coast’s repair work was
violating a state “removal-fill law,” which, among other
things, requires a state permit for the removal of any amount
of material from waters designated as Essential Salmonid
Habitat. The State alleged that Oregon Coast was engaging
in unpermitted “removal-fill activity” in or near an Essential
Salmonid Habitat section of the Salmonberry River, and it
contested Oregon Coast’s assertion that federal law

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 5 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

5

preempted application of this state law to railroad repair
work.
Oregon Coast filed a complaint in federal district court
the following day, seeking declaratory and injunctive relief.
Oregon Coast argued that the removal-fill law is preempted
by the Interstate Commerce Commission Termination Act
(“ICCTA”), 49 U.S.C. §§ 10101 et seq., which governs
federal regulation of railroads. Oregon Coast sought a
permanent injunction and a determination that application of
the state law is federally preempted; that enforcement of the
removal-fill law constituted an impermissible burden on
interstate commerce in violation of the Commerce Clause;
and that enforcement of the law violated Oregon Coast’s
federal rights under 42 U.S.C. § 1983. Oregon Coast also
immediately moved for a preliminary injunction against the
law’s enforcement.
The district court held a hearing on the preliminary
injunction in April 2014. At the State’s request, the district
court consolidated the preliminary injunction hearing with a
hearing on the merits; it then issued a single order on all of
Oregon Coast’s requested relief. The court concluded that the
removal-fill law was not preempted because Oregon Coast’s
tourist train activities were not sufficiently related to
interstate commerce to bring Oregon Coast within the
exclusive federal jurisdiction provision of the ICCTA. The
court also concluded that Oregon Coast’s agreement with the
Port was insufficient to establish federal preemption as to
Oregon Coast on the basis of the Port’s status as a federally
licensed carrier. Having concluded that Oregon Coast’s
claims failed on the merits, the district court denied Oregon
Coast’s requests for preliminary and permanent injunctions
and for declaratory relief, and it dismissed the case.

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 6 of 17

6

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

Oregon Coast appeals, challenging (1) the district court’s
conclusion that federal preemption does not apply to the
repair work done by Oregon Coast; (2) its conclusion that
Oregon Coast was not acting as an agent of the Port; and
(3) its denial of Oregon Coast’s requests for preliminary and
permanent injunctions and declaratory relief. Oregon Coast
presents a federal question by alleging that enforcement of
the state removal-fill law is preempted by the federal ICCTA;
thus the district court had subject matter jurisdiction under
28 U.S.C. § 1331. See Indep. Training & Apprenticeship
Program v. Cal. Dep’t of Indus. Relations, 730 F.3d 1024,
1031 (9th Cir. 2013) (citing Shaw v. Delta Air Lines, Inc.,
463 U.S. 85, 96 n.14 (1983)). We have jurisdiction over the
appeal under 28 U.S.C. § 1291.
We review de novo a district court’s decision granting or
denying declaratory relief. Wagner v. Prof’l Eng’rs in Cal.
Gov’t, 354 F.3d 1036, 1040 (9th Cir. 2004). We review a
district court’s denial of a preliminary or permanent
injunction for abuse of discretion. All. for the Wild Rockies
v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011); Cummings
v. Connell, 316 F.3d 886, 897 (9th Cir. 2003). In this context,
“[a]n abuse of discretion will be found if the district court
based its decision ‘on an erroneous legal standard or clearly
erroneous finding of fact.’” Cottrell, 632 F.3d at 1131
(quoting Lands Council v. McNair, 537 F.3d 981, 986 (9th
Cir. 2008) (en banc)).
Because it is a question of law, we review de novo a
district court’s conclusion about the extent of federal
preemption. In re Korean Air Lines Co., Ltd., 642 F.3d 685,
691 n.3 (9th Cir. 2011). Here, because the district court’s
decisions on the preliminary injunction, permanent
injunction, and declaratory relief all relied on the same

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 7 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

7

analysis of the preemption question, a legal error in that
analysis would affect the court’s decision on all three forms
of requested relief. We therefore focus our analysis on the
district court’s conclusion as to the federal preemption
question.
II
The ICCTA was passed in 1995, in part with the purpose
of expanding federal jurisdiction and preemption of railroad
regulation. See H.R. Rep. No. 104-311 at 95 (1995)
(“[C]hanges are made to reflect the direct and complete preemption of State economic regulation of railroads.”). In order
for federal preemption to apply under the ICCTA, the activity
in question must first fall within the statutory grant of
jurisdiction to the Surface Transportation Board, one of
several federal agencies charged with railroad regulation.
49 U.S.C. § 10501(a). As modified by the ICCTA, 49 U.S.C.
§ 10501(a) provides in relevant part:
(1) Subject to this chapter, the Board has
jurisdiction over transportation by rail carrier
that is–
(A) only by railroad; or
(B) by railroad and water [under specified
circumstances].
(2) Jurisdiction under paragraph (1) applies
only to transportation in the United States
between a place in–

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 8 of 17

8

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

(A) a State and a place in the same or
another State as part of the interstate rail
network . . . .
If the Board has jurisdiction under 49 U.S.C. § 10501(a), the
question whether jurisdiction is exclusive — i.e., whether
state regulation is preempted — is a separate question
governed by 49 U.S.C. § 10501(b), which provides that “[t]he
jurisdiction of the Board over . . . (1) transportation by rail
carriers . . . and (2) the construction, acquisition, operation,
abandonment, or discontinuance of spur, industrial, team,
switching, or side tracks, or facilities, even if the tracks are
located, or intended to be located, entirely in one State, is
exclusive.”
In short, under the factual scenario presented by this case,
Board jurisdiction under § 10501(a) is a threshold question
requiring that the disputed activity meet three statutory
prongs: it must be (1) “transportation” (2) “by rail carrier”
(3) “as part of the interstate rail network.” Id. The parties do
not dispute that the repair work done by Oregon Coast
qualifies as “transportation,” which the ICCTA defines as
including any “property, facility, instrumentality, or
equipment of any kind related to the movement of passengers
or property, or both, by rail” as well as “services related to
that movement.” 49 U.S.C. § 10102(9). The parties’ central
dispute focuses on the other two prongs of the jurisdiction
analysis — that is, on whether the repair work can be
considered work done “by rail carrier” through Oregon
Coast’s relationship with the Port, and whether maintenance
work done on an intrastate section of track can be considered
“part of the interstate rail network.” For the reasons
described below, we answer both questions in the affirmative.

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 9 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS

9

A
The ICCTA defines “rail carrier” as “a person providing
common carrier railroad transportation for compensation.”
49 U.S.C. § 10102(5). But the statute does not address
whether, in the jurisdiction provision, the term “transportation
by rail carrier” may include work actually performed by
another party under the auspices of the rail carrier. Here, it
is undisputed that the Port is a federally licensed and
regulated rail carrier, authorized by the Board under the
procedures set out in 49 U.S.C. § 10901. The State has
conceded that the track repair work in this case would fall
under the Board’s jurisdiction if the Port were undertaking
the repairs itself.1 Instead, the Port has essentially hired
Oregon Coast to do this maintenance work on its behalf
during the five-year agreement; the Port is paying Oregon
Coast in the form of free track use for the duration of the
agreement. This leaves us with the question whether the Port
somehow divested the Board of jurisdiction over the repairs
by hiring Oregon Coast to perform the work on its behalf.
We conclude that it did not.
The Board itself has considered this question in similar
contexts, and its decisions are instructive here.2 See Ass’n of
1

In fact, the Port undertook very similar maintenance and repair work
on almost the same segment of track in the mid-1990s. The Port hired a
contractor to perform this work, and that contractor has testified that he
completed the work under the auspices of the Port, without going through
state permitting processes.
2

Although the parties focus on whether an agency relationship was
created under Oregon law, the question whether a federal statute grants
jurisdiction over a particular activity is a question of federal law that does
not depend on the contours of a particular state’s agency law. See, e.g.,

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 10 of 17

10 OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS
Am. R.R.s v. S. Coast Air Quality Mgmt. Dist., 622 F.3d 1094,
1097 (9th Cir. 2010) (drawing “guidance on the scope of
ICCTA preemption from the decisions of the Surface
Transportation Board . . . , to which we owe Chevron
deference” (citing DHX, Inc. v. Surface Transp. Bd., 501 F.3d
1080, 1086 (9th Cir. 2007))). The Board’s decisions show
that work done by a non-carrier can be considered activity
“by a rail carrier” if there is a sufficient degree of integration
between the work done by the non-carrier and the authorized
rail carrier’s own operations. See, e.g., City of Alexandria,
No. 35157, 2009 WL 381800, at *2 (S.T.B. Feb. 17, 2009);
Town of Babylon, No. 35057, 2008 WL 275697, at *3 (S.T.B.
Feb. 1, 2008); Hi Tech Trans, LLC, No. 34192, 2003 WL
21952136, at *4 (S.T.B. Aug. 14, 2003).
The Board’s decisions emphasize that this question is a
“case-by-case, fact-specific determination.”
City of
Alexandria, 2009 WL 381800, at *2. Factors considered by
the Board include the degree of control exercised by the
carrier over the non-carrier’s operations, the involvement of
the carrier in day-to-day operations, the structure of payments
and cost agreements, and other terms of the agreement
between the carrier and the non-carrier. Id. The Board
weighs these factors to determine whether the non-carrier’s
activities are “an integral part of [the rail carrier’s] provision
of transportation by rail carrier.” Hi Tech, 2003 WL
21952136, at *4.

Ass’n of Am. R.R.s v. S. Coast Air Quality Mgmt. Dist., 622 F.3d 1094,
1096–98 (9th Cir. 2010) (analyzing the issue of Board jurisdiction and
preemption under federal law); City of Auburn v. United States, 154 F.3d
1025, 1029–31 (9th Cir. 1998) (same).

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 11 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS 11

Applying this framework to the current case, the repairs
are properly considered done by the Port. The agreement
between Oregon Coast and the Port gives Oregon Coast
responsibility for the specified repair and maintenance
operations; yet Oregon Coast must adhere to the agreed-upon
maintenance plan, which gives the Port a degree of control by
specifying particular tasks and timelines that Oregon Coast
must meet. Moreover, track maintenance and repair are
essential to providing transportation over a railway. Thus by
helping the Port maintain its track and re-establish its
connection to the interstate rail network, the repair work
performed by Oregon Coast is “an integral part of [the Port’s]
provision of transportation by rail carrier.” See id.
Finally, we note the absurd result that would occur if the
Port were able to divest the Board of jurisdiction simply by
hiring a contractor to perform repair or maintenance work on
its behalf. The ICCTA and its predecessor, the Interstate
Commerce Act, ch. 104, 24 Stat. 379 (1887), have “been
recognized as ‘among the most pervasive and comprehensive
of federal regulatory schemes,’” City of Auburn v. United
States, 154 F.3d 1025, 1027 (9th Cir. 1998) (quoting Chicago
& N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311,
318 (1981)). Allowing a rail carrier to avoid federal
jurisdiction by hiring a contractor would defeat Congress’s
purpose in creating such a far-reaching regulatory scheme.
Because “statutory interpretations which would produce
absurd results are to be avoided,” Ma v. Ashcroft, 361 F.3d
553, 558 (9th Cir. 2004) (citing United States v. Wilson,
503 U.S. 329, 334 (1992)), we cannot conclude that Congress
intended to exclude from federal jurisdiction any party
carrying out a rail carrier’s essential transportation-related
functions on its behalf.

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 12 of 17

12 OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS
Accordingly, the repair work done by Oregon Coast is
properly considered “transportation by rail carrier” within the
meaning of 49 U.S.C. § 10501(a)(1). The district court erred
in concluding otherwise.
B
Once the other prongs of the jurisdictional inquiry are
met, the ICCTA gives the Board jurisdiction over domestic
rail transportation “between a place in . . . a State and a place
in the same or another State as part of the interstate rail
network.” 49 U.S.C. § 10501(a)(2)(A). Because Oregon
Coast’s repair work takes place entirely within the state of
Oregon, it satisfies this prong if it is done “as part of the
interstate rail network.” Id. We conclude that it is.
The phrase “as part of the interstate rail network” is not
defined by statute, but the Board has interpreted it “broadly
to include (but not be limited to) facilities that are part of the
general system of rail transportation and are related to the
movement of passengers or freight[]in interstate commerce.”
DesertXpress Enters., LLC, No. 34914, 2010 WL 1822102,
at *9 (S.T.B. May 7, 2010). The Board has also emphasized
that the ICCTA actually expanded the Board’s jurisdiction to
ensure that “transportation between places in the same state
would be within the Board’s jurisdiction as long as that
transportation was related to interstate commerce.” Id. at *6.
We confirmed this interpretation in City of Auburn, where
we held that the Board had exclusive jurisdiction over an
intrastate railroad repair project that aimed to prepare a
section of track — at the time used only for local traffic — to
join a reestablished main line for through traffic. 154 F.3d at
1031. In that case, we “not[ed] that Congress and the courts

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 13 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS 13

long have recognized a need to regulate railroad operations at
the federal level.” Id. at 1029. We also highlighted the fact
that § 10501 itself expressly refers to the Board’s jurisdiction
over “the construction . . . of spur, industrial, team,
switching, or side tracks, or facilities, even if the tracks are
located, or intended to be located, entirely in one State.” Id.
at 1030 (emphasis added) (quoting 49 U.S.C. § 10501(b)(2)).3
The facts of the current case closely mirror City of
Auburn. Oregon Coast contracted with the Port to perform
repair work on a section of track that was previously
connected to the interstate rail network and that would, once
fully repaired, reconnect the track to the interstate rail
network. The agreement between Oregon Coast and the Port
expressly contemplates that the track may be reconnected to
the interstate network within the five-year span of the
agreement, allowing the parties to negotiate a modification to
the agreement — but leaving the agreement in place — if the
“rail connection to a mainline carrier providing service [is]
re-established and freight traffic resume[s].” Similarly, the
lease agreement gives Oregon Coast the “option . . . to
reinstall the rail line and recover” eighteen train cars that are
currently stranded on the severed portion of track. These
provisions suggest that Oregon Coast’s repair work is aimed
at reconnecting the disconnected track to the interstate rail

3

Although this language appears in the preemption provision,
49 U.S.C. § 10501(b), rather than in the jurisdictional grant, 49 U.S.C.
§ 10501(a), it nevertheless informs our interpretation of the jurisdictional
provision, because the general jurisdictional grant of § 10501(a) must be
at least as broad as the exclusive jurisdiction provision of § 10501(b). See
Medtronic, Inc. v. Lohr, 518 U.S. 470, 485–86 (1996) (explaining that a
court may properly look to the statutory framework and surrounding
provisions for guidance in interpreting the scope of preemption).

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 14 of 17

14 OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS
network. Thus, as in Auburn, this repair work is done “as
part of the interstate rail network.”
Moreover, even if Oregon Coast’s work did not result in
full reconnection of the track, the repairs would still be
considered “part of the interstate rail network” because they
involve track that is still federally authorized as part of the
interstate rail system. In a similar case that is instructive
here, the Board concluded that it had jurisdiction over a
project to rehabilitate a depot serving a rail line that had not
been in service for years but was still federally authorized.
City of Creede, No. 34376, 2005 WL 1024483, at *8 (S.T.B.
May 3, 2005). Here, similarly, the repair work is being done
on track that is owned by the Port and is still federally
authorized under the Port’s Certificate of Public Convenience
and Necessity, despite the physical disconnection caused by
storm damage. The fact these repairs are integral to the
functioning of a federally authorized track segment
establishes that the repairs are done “as part of the interstate
rail network” within the meaning of § 10501(a)(2)(A).
Although the State cites several cases purportedly
demonstrating that the Board does not have jurisdiction over
wholly intrastate segments of track, those cases do not affect
our analysis. We note that Magner-O’Hara Scenic Railway
v. Interstate Commerce Commission, a Sixth Circuit case
considering a similar question, was decided before the
ICCTA expanded Board jurisdiction over intrastate
transportation. 692 F.2d 441, 442–43 (6th Cir. 1982). And
we are unpersuaded by the logic of more recent cases citing
Magner without acknowledging the significant expansion of
jurisdiction under the ICCTA. See RLTD Ry. Corp. v.
Surface Transp. Bd., 166 F.3d 808, 813 (6th Cir. 1999); Fun

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 15 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS 15

Trains, Inc., No. 33472, 1998 WL 92052, at *2 (S.T.B. Mar.
5, 1998).
We conclude, therefore, that the repair work performed by
Oregon Coast under the agreement with the Port is properly
considered done “as part of the interstate rail network.”
49 U.S.C. § 10501(a)(2)(A). Because the repair work also
qualifies as “transportation by rail carrier,” as discussed
above, we conclude that it falls within the Board’s
jurisdiction under 49 U.S.C. § 10501(a).
III
Once jurisdiction is established under 49 U.S.C.
§ 10501(a), the broad preemption provision of 49 U.S.C.
§ 10501(b) makes the Board’s jurisdiction exclusive over
“(1) transportation by rail carriers” and “(2) the construction,
acquisition, operation, abandonment, or discontinuance of
spur, industrial, team, switching, or side tracks, or facilities,
even if the tracks are located, or intended to be located,
entirely in one State.” This subsection also expressly
provides that “the remedies provided under this part with
respect to regulation of rail transportation are exclusive and
preempt the remedies provided under Federal or State law.”
49 U.S.C. § 10501(b). Because the repair work here falls
squarely within this preemption provision, we conclude that
state regulation is preempted.
Our decision on this question is controlled by City of
Auburn, in which we held that 49 U.S.C. § 10501(b)
preempted not just economic but also environmental
regulation, “[f]or if local authorities have the ability to
impose ‘environmental’ permitting regulations on the
railroad, such power will in fact amount to ‘economic

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 16 of 17

16 OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS
regulation’ if the carrier is prevented from constructing,
acquiring, operating, abandoning, or discontinuing a line.”
154 F.3d at 1031. Looking to the language of 49 U.S.C.
§ 10501(b), we emphasized in City of Auburn that “[i]t is
difficult to imagine a broader statement of Congress’s intent
to preempt state regulatory authority over railroad
operations.” Id. at 1030 (quoting CSX Transp., Inc. v. Ga.
Pub. Serv. Comm’n, 944 F. Supp. 1573, 1581 (N.D. Ga.
1996)). As a result, we held that 49 U.S.C. § 10501(b)
“explicitly grant[ed] the [Board] exclusive authority over
railway projects like” the intrastate rail repair project at issue
in City of Auburn, which closely resembles the project in this
case. City of Auburn, 154 F.3d at 1030.
Our subsequent decision in Association of American
Railroads v. South Coast Air Quality Management District
clarified that the ICCTA “does not preempt state or local laws
if they are laws of general applicability that do not
unreasonably interfere with interstate commerce,” but it
“preempts all ‘state laws that may reasonably be said to have
the effect of managing or governing rail transportation.’”
622 F.3d 1094, 1097 (9th Cir. 2010) (first citing Bos. & Me.
Corp. & Town of Ayer, No. 33971, 2001 WL 458685, at *4–6
(S.T.B. May 1, 2001); then quoting N.Y. Susquehanna & W.
Ry. Corp. v. Jackson, 500 F.3d 238, 252 (3d Cir. 2007)). In
determining whether a law of general applicability is
permissible, we explained that “[w]hat matters is the degree
to which the challenged regulation burdens rail
transportation.” Id. at 1097–98 (quoting N.Y. Susquehanna,
500 F.3d at 252).
Here, the State’s removal-fill law requires that Oregon
Coast apply for and be granted a permit before removing “any
amount of material within waters designated Essential

Case: 14-35414, 11/23/2016, ID: 10208210, DktEntry: 35-1, Page 17 of 17

OR. COAST SCENIC R.R. V. OR. DEP’T OF STATE LANDS 17

Salmonid Habitat.”
Because “the ability to impose
‘environmental’ permitting regulations on the railroad” can
in fact give local authorities the power to “prevent[ a carrier]
from constructing, acquiring, operating, abandoning, or
discontinuing a line,” City of Auburn, 154 F.3d at 1031, such
a permitting scheme would “have the effect of managing or
governing rail transportation,” Ass’n of Am. R.R.s, 622 F.3d
at 1097 (quoting N.Y. Susquehanna, 500 F.3d at 252). Thus
even under the more subjective approach used in Association
of American Railroads, we conclude that the State’s removalfill law is preempted by the ICCTA as applied to the repair
work in this case.
IV
In sum, the repair work done by Oregon Coast under its
agreement with the Port falls under the Board’s jurisdiction
because the work is done under the auspices of a federally
regulated rail carrier and is sufficiently related to the
provision of transportation over the interstate rail network.
The State’s removal-fill law is preempted as applied to this
work, and the district court erred in concluding otherwise.
Because the district court’s rulings on the preliminary
injunction, permanent injunction, and declaratory relief were
all premised on this incorrect legal determination, we reverse
and remand for further proceedings with respect to each form
of relief.
REVERSED and REMANDED.