State of Delaware v. STB, et al

Filing

OPINION [1678980] filed (Pages: 11) for the Court by Judge Rogers. [16-1121]

USCA Case #16-1121

Document #1678980

Filed: 06/09/2017

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 13, 2017

Decided June 9, 2017
No. 16-1121

STATE OF DELAWARE,
PETITIONER
v.
SURFACE TRANSPORTATION BOARD AND UNITED STATES OF
AMERICA,
RESPONDENTS
On Petition for Review of a Final Order
of the Surface Transportation Board
W. Eric Pilsk argued the cause for petitioner. With him on
the briefs were Allison I. Fultz and Steven L. Osit. Charles A.
Spitulnik entered an appearance.
Charles H.P. Vance, Attorney, Surface Transportation
Board, argued the cause for respondents. With him on the brief
were Robert B. Nicholson and Sean Sandoloski, Attorneys, U.S.
Department of Justice, Craig M. Keats, General Counsel,
Surface Transportation Board, and Theodore L. Hunt, Associate
General Counsel.
Kathryn D. Kirmayer was on the brief for amicus curiae
The Association of American Railroads in support of
respondents.

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Before: ROGERS and SRINIVASAN, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: The State of Delaware has
attempted to limit nighttime noise caused by idling railroad
locomotives in residential areas. Under Delaware Senate Bill
135 (“SB 135”) “[n]o person may permit the nonessential idling
of a locomotive under its control or on its property between 8
p.m. and 7 a.m.,” except in non-residential areas zoned for
industrial use. Del. Code tit. 21, § 8503(a), (c). Acknowledging
the need of locomotives to idle nonetheless, the statute exempts
idling caused by: (1) traffic conditions; (2) the direction of a
law-enforcement officer; (3) the operation of defrosting, heating,
or cooling equipment to ensure the health or safety of the driver
or passenger; (4) the operation of the primary propulsion engine
for essential work-related mechanical or electrical operations
other than propulsion; or (5) required maintenance, servicing,
repairing, diagnostics, or inspections. Id. at § 8503(b). A
violation is punishable by a civil fine between $5,000 and
$20,000 for each offense. Id. at § 8505.
Delaware now petitions for review of the Order of the
Surface Transportation Board based on its determination that SB
135 is categorically preempted under 49 U.S.C. § 10501(b) of
the Interstate Commerce Act, as broadened in the Interstate
Commerce Commission Termination Act of 1995 (“ICCTA”).
It emphasizes that SB 135 is a public health and safety
regulation that is narrowly tailored to avoid unduly burdening or
interfering with interstate rail transportation. The Board
concluded that SB 135 “has the effect of directly managing and
governing the operation of locomotives that are essential parts
of rail transportation.” Bd. Dec. 4 (Feb. 29, 2016). For the

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following reasons, we must deny the petition.
I.
Under the ICCTA, the remedies “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).
(The parties do not suggest any exception in Chapter 105 is
applicable. See id.) “Transportation” is defined under the
ICCTA as “a locomotive, car, vehicle, vessel, warehouse, wharf,
pier, dock, yard, property, facility, instrumentality, or equipment
of any kind related to the movement of passengers or property,
or both, by rail,” and “services related to that movement.” Id.
at § 10102(9)(A) & (B).
Notwithstanding the “expansive” definition of
transportation, all of the circuits have concluded that it “does not
encompass everything touching on railroads.” Emerson v. Kan.
City S. Ry. Co., 503 F.3d 1126, 1129 (10th Cir. 2007); see also
Fayus Enters. v. BNSF Ry. Co., 602 F.3d 444, 451 (D.C. Cir.
2010); Wedemeyer v. CSX Transp., Inc., 850 F.3d 889, 894–95
(7th Cir. 2017); City of Ozark, Ark. v. Union Pac. R.R. Co., 843
F.3d 1167, 1171 (8th Cir. 2016); Grosso v. Surface Transp. Bd.,
804 F.3d 110, 118 (1st Cir. 2015). That is, the ICCTA preempts
“all state laws that may reasonably be said to have the effect of
managing or governing rail transportation, while permitting the
continued application of laws having a more remote or
incidental effect on rail transportation.” N.Y. Susquehanna & W.
Ry. Corp. v. Jackson, 500 F.3d 238, 252 (3d Cir. 2007) (quoting
Fla. E. Coast Ry. Co. v. City of W. Palm Beach, 266 F.3d 1324,
1331 (11th Cir. 2001)); see also Adrian & Blissfield R. Co. v.
Vill. of Blissfield, 550 F.3d 533, 539 (6th Cir. 2008). As
summarized by the Second Circuit, states retain certain
traditional police powers over public health and safety concerns,
such as “[e]lectrical, plumbing and fire codes, direct

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environmental regulations . . . and other generally applicable,
non-discriminatory regulations and permit requirements,”
provided “the regulations protect public health and safety, are
settled and defined, can be obeyed with reasonable certainty,
entail no extended or open-ended delays, and can be approved
(or rejected) without the exercise of discretion on subjective
questions.” Green Mountain R.R. Corp. v. Vermont, 404 F.3d
638, 643 (2d Cir. 2005); see Island Park, LLC v. CSX Transp.,
559 F.3d 96, 105–06 (2d Cir. 2009). This power to impose
“rules of general applicability,” Ass’n of Am. R.Rs. v. S. Coast
Air Quality Mgmt. Dist., 622 F.3d 1094, 1098 (9th Cir. 2010),
includes authority to issue and enforce regulations whose effect
on railroads is “incidental,” Franks Inv. Co. v. Union Pac. R.R.
Co., 593 F.3d 404, 410–11 (5th Cir. 2010), and which “address
state concerns generally, without targeting the railroad
industry,” N.Y. Susquehanna, 500 F.3d at 254; see also Fla. E.
Coast Ry. Co., 266 F.3d at 1331; Norfolk S. Ry. Co. v. City of
Alexandria, 608 F.3d 150, 157–58 (4th Cir. 2010).
But state or local statutes or regulations are preempted
categorically if they “have the effect of ‘managing’ or
‘governing’ rail transportation.” Fla. E. Coast Ry. Co., 266 F.3d
at 1331 (alterations omitted); see Norfolk S. Ry. Co., 608 F.3d at
157; Franks Inv. Co., 593 F.3d at 410; Green Mountain R.R.
Corp., 404 F.3d at 642. Categorical preemption under the
ICCTA precludes such regulation regardless of its practical
effect because “the focus is the act of regulation itself, not the
effect of the state regulation in a specific factual situation.”
Green Mountain R.R. Corp., 404 F.3d at 644 (internal quotation
omitted); see also New Orleans & Gulf Coast Ry. Co. v. Barrois,
533 F.3d 321, 332 (5th Cir. 2008); Adrian & Blissfield R. Co.,
550 F.3d at 540. State statutes or regulations that are not
categorically preempted may still be impermissible if, as
applied, they would have the effect of unreasonably burdening
or interfering with rail transportation. Franks Inv. Co., 593 F.3d

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at 414; Adrian & Blissfield R. Co., 550 F.3d at 541.
In response to Delaware’s enactment of SB 135, the Norfolk
Southern Railroad Company filed a petition with the Surface
Transportation Board in 2015 for a declaratory order that the
statute was preempted under the ICCTA. It argued that SB 135
was categorically preempted because its restrictions
“specifically prohibit rail transportation” and that “sort of direct
regulation, specifically targeting railroads[,] has never survived
a preemption challenge.” Pet. of Norfolk S. Ry. Co. for
Expedited Declaratory Order 7 (Aug. 3, 2015) (emphasis in
original). Alternatively, in the Railroad’s view, SB 135 was
preempted as applied because it “necessarily interfere[s] with
rail transportation.” Id. at 9.
The Railroad submitted the verified statement of Baron K.
Emery, its superintendent for operations in Delaware. He
explained that, “[i]n order to promote its transportation
objective, [the Railroad] idles locomotives for a variety of
reasons,” Emery Statement 2 (July 30, 2015), and gave three
examples. The Railroad must idle trains: (1) to maintain the air
line, a process necessary to the braking system, because if the air
line is not maintained for more than four hours, a multi-hour air
test is required by federal law, id. at 2–3; (2) “due to unforeseen
conditions, such as train crew shortages or scarce rail capacity,”
because shutting down and then re-starting trains in those
circumstances “consumes a significant amount of time,” while
idling “avoids network congestion and delays that would result
from fully shutting down and restarting the train,” id. at 3; and
(3) when the temperature falls below 35 degrees Fahrenheit “to
prevent freezing or automatic dumping of the locomotive
cooling system, which could result in damage to the train and
thus impair rail service and network operations.” Id. Delaware
filed a Notice of Intent to Participate in the proceedings, and it
replied that the State “fully acknowledges that broad regulation

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of a railroad’s activities by state or local authorities is preempted
by federal law,” and that SB 135 is permissible because it “is
narrowly and precisely tailored to avoid such wholesale
regulation.” Reply of the State of Del. 2 (Oct. 23, 2015).
The Board granted the Railroad’s petition for declaratory
relief, concluding that SB 135 is categorically preempted by the
ICCTA “because it has the effect of directly managing and
governing the operation of locomotives that are essential parts
of rail transportation.” Bd. Dec. 4; see also 49 U.S.C.
§ 10501(a) & (b). The Board credited Emery’s examples of how
SB 135 might interfere with the Railroad’s operations and
rejected Delaware’s defense that the statute was permissible
because it was narrowly tailored. Critically, the Board observed,
“Delaware has purported to determine for the railroad which rail
operations are essential and which are not,” thereby
“substituting its judgment for that of the railroads directly
managing rail operations.” Bd. Dec. 4. Alternatively, the Board
viewed SB 135 to be preempted as applied because it “has the
effect of unreasonably burdening and interfering with rail
transportation” by “leav[ing] it to the discretion of local police
officers to determine whether an idling locomotive is in
violation of the law.” Id. at 5.
II.
The State of Delaware challenges the Board’s Order
granting declaratory relief principally on the ground its decision
fails to acknowledge that although “preemption under the
ICCTA is broad, it ‘does not categorically sweep up all state
regulation that touches upon railroads’ and does not displace
states’ ability to act under their traditional police powers to
protect its citizens from harm.” Pet’r’s Br. 16 (quoting Island
Park, LLC, 559 F.3d at 104). States may, it contends, impose
limitations on railroad-related activities in order to protect the

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public from harm so long as they do not unreasonably burden
rail transportation. But the latter relates to as-applied
preemption, see, e.g., Adrian & Blissfield R. Co., 550 F.3d at
540–41, while the Board determined SB 135 is categorically
preempted as well.
There is some legal uncertainty in this circuit about the
appropriate level of deference a court owes to an agency’s
determination of its own preemption. In Wyeth v. Levine, 555
U.S. 555 (2009), the Supreme Court observed, with regard to the
impact of tort law on federal objectives, that even in technical
matters and where the history is complex and extensive, that
we have not deferred to an agency’s conclusion that
state law is preempted[, but] attended to an agency’s
explanation of how state law affects the regulatory
scheme. While agencies have no special authority to
pronounce on pre-emption absent delegation by
Congress, they do have a unique understanding of the
statutes they administer and an attendant ability to
make informed determinations about how state
requirements may pose an obstacle to the
accomplishment and execution of the full purposes and
objectives of Congress.
Id. at 576–77 (internal citation omitted). The Court applied the
standard of Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944);
see United States v. Mead Corp., 533 U.S. 218, 234–35 (2001).
Wyeth, 555 U.S. at 577.
Since Wyeth, this court concluded that it is “an open
question in this circuit” whether “an agency decision against
preemption of a state or local law receives Chevron [U.S.A., Inc.
v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)] deference,”
noting that Wyeth “obviously puts the Chevron deference claim

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in further doubt.” Fayus Enters., 602 F.3d at 446–47. Delaware
urges that the Skidmore standard should be applied, pointing out
that other circuits have interpreted Wyeth to accord deference to
agency preemption determinations based on that standard,
deferring to the agency’s reasoning only where it is persuasive.
See Grosso, 804 F.3d at 116–17; Steel Inst. of N.Y. v. City of
N.Y., 716 F.3d 31, 39–40 (2d Cir. 2013); Franks Inv. Co., 593
F.3d at 413–14. The Board, on the other hand, maintains
Chevron deference is appropriate because Section 10501(b)
contains an express preemption provision, and as two of our
sister circuits have concluded, the Board “is uniquely qualified
to determine whether state law is preempted by Section
10105(b).” Resp’t’s Br. 14 (quoting N.Y & Atl. Ry. Co. v.
Surface Transp. Bd., 635 F.3d 66, 70 (2d Cir. 2011)); see also
Emerson, 503 F.3d at 1130.
The court need not decide the precise level of deference
owed to the Board’s preemption determination because it
survives under either standard of review. The Board looked to
the plain text of SB 135 in light of the Railroad’s undisputed
need to carry out its transportation objective. See Friberg v.
Kan. City S. Ry. Co., 267 F.3d 439, 443 (5th Cir. 2001). The
ICCTA preempts state or local statutes that regulate rail
transportation, which is defined broadly to include locomotives
and equipment “related to the movement of passengers or
property.” 49 U.S.C. § 10102(9)(A); Norfolk S. Ry. Co., 608
F.3d at 157. SB 135 directly regulates rail transportation by
prohibiting locomotives from idling in certain places at certain
times, in essence requiring that at night, in residential
neighborhoods, they either shut down or keep moving (unless
one of the exceptions in Chapter 85 of Delaware Code Title 21
applies). This is a regulation of rail transportation under the
ICCTA, and Delaware’s challenges to the Board’s determination
that SB 135 is categorically preempted by the ICCTA are
unpersuasive.

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As Delaware sees it, SB 135 “applies, literally, only to the
non-movement of passengers and property,” and “does not
therefore constitute the regulation of rail transportation.” Pet’r’s
Br. 31 (internal quotation omitted). Delaware did not make this
argument to the Board, and it is forfeit. The “hard and fast rule
of administrative law, rooted in simple fairness, [is] that issues
not raised before an agency are waived and will not be
considered by a court on review.” Nuclear Energy Inst., Inc. v.
EPA, 373 F.3d 1251, 1297 (D.C. Cir. 2004). Even so, the
ICCTA’s definition of “transportation” belies any requirement
of movement at the time of regulation; it preempts regulation of
immovable objects including “warehouse[s], whar[ves], pier[s],
dock[s and] yard[s].” 49 U.S.C. § 10102(9)(A). The precedents
on which Delaware relies in attempting to distinguish SB 135
are unhelpful to it. Grosso, 804 F.3d at 117–19, vacated the
Board’s decision that regulating property before it was loaded
on trains was categorically preempted because the Board had not
focused sufficiently on whether the activity “facilitated the
physical movement of passengers or property.” Id. at 119.
Emerson, 503 F.3d at 1129–30, involved tort claims arising from
the railroad’s disposal of railway ties in ditches that were not
preempted because the disposal was not “transportation” under
the ICCTA. In other words, regulation of activities that occur
before or after “transportation” and are incidental to such
transportation may not be preempted. By contrast, SB 135
limits how and when locomotives operate and thereby directly
affects the movement of trains. To the extent SB 135 includes
exceptions, Delaware has decided for the Railroad how it shall
operate.
Similarly unavailing is Delaware’s view that SB 135 is not
preempted because it is “narrowly tailored” and “seeks only to
limit non-essential idling that has a deleterious public health
effect,” and is thus analogous to cases where courts found no
preemption. Pet’r’s Br. 33, 36. The precedents on which it

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relies are inapposite. In Island Park LLC, 559 F.3d at 98, 103–
04, a state regulation closing a private, unpaved road across train
tracks was not preempted because it would have no effect on the
railroad except by “removing a potential hazard” of vehicles on
the tracks at the crossing; in other words, it facilitated or
enhanced railroad movement. Id. at 103–04. In Franks
Investment Company, 593 F.3d at 411, a railroad crossing
dispute “governed by [state] property laws and rules of civil
procedure that have nothing to do with railroad crossings” was
not preempted, in contrast to “a tort suit that attempts to
mandate when trains can use tracks and stop on them,” thereby
“attempting to manage or govern rail transportation.” Id. SB
135 directly and exclusively applies to railroad operations by
deciding, as the Board observed, operational issues for the
railroads and thereby, as illustrated by the Emery Statement,
posing potential obstacles to rail “transportation.”
Delaware fails to meaningfully distinguish precedent that
supports the Board’s decision that SB 135 is categorically
preempted. In Friberg, 267 F.3d at 443–44, a state statute
limiting when trains could block streets was held categorically
preempted. Delaware points out that in Friberg the statute
“directly and indiscriminately target[ed] aspects of rail
transportation related to the movement of passengers or
property.” Pet’r’s Br. 25. That SB 135 is more narrowly drawn
does not mean that it does not impermissibly target rail
transportation and railroad operations. In Association of
American Railroads, 622 F.3d, state rules that “apply
exclusively and directly to railroad activity” and “requir[e]
railroads to reduce emissions” were “plainly” preempted
because they “have the effect of managing or governing rail
transportation,” id. at 1098 (quoting N.Y. Susquehanna, 500 F.3d
at 252). Delaware points out that the regulation in Association
of American Railroads imposed reporting requirements that SB
135 does not, id. at 1096, 1098. That is not dispositive,

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however. Even so, by limiting times and places for idling, and
providing exceptions, SB 135 directly regulates the rail
transportation of passengers or property by limiting permissible
idling time, subject to exceptions whose applicability can turn
on the discretion of local law enforcement. See Del. Code tit.
21, § 8504(a).
Still, Delaware insists that the Board’s determination is
owed no deference because the exceptions in SB 135 “narrowly
restrict[] only unnecessary locomotive idling,” Pet’r’s Br. 36,
and would allow the necessary idling identified in the Emery
Statement. See id. at 38–39. The Emery Statement offers
examples, not an exhaustive list of necessary idling, and the
Board focuses principally on the fact that Delaware, not the
Railroad, was making operational decisions about when, where,
and how long locomotives could idle. Categorical preemption
does not depend on whether the practical application of the
statute or regulation is narrowly tailored. Adrian & Blissfield
R.R. Co., 550 F.3d at 540; New Orleans & Gulf Coast Ry. Co.,
533 F.3d at 332; Green Mountain R.R. Corp., 404 F.3d at 644.
Even under Skidmore’s limited deference standard, the question
for the court is not whether SB 135 would prohibit any specific
instances of “essential” idling, Pet’r’s Br. 37; rather the question
is whether an operation or service is “transportation” at all. See,
e.g., N.Y. Susquehanna, 500 F.3d at 247. The Board
persuasively concluded that SB 135 regulates rail transportation.
Accordingly, we deny the petition for review.

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