**Testimony of W. Douglas Buttrey**

**Chairman of the Surface Transportation Board**

**House Committee on Transportation and Infrastructure**

**Subcommittee on Railroads**

**Hearing on Impacts of Railroad-Owned Waste Facilities**

**10 a.m. May 23, 2006**

Good morning Mr. Chairman. My name is Douglas Buttrey, and I am the
Chairman of the Surface Transportation Board. I appreciate the
opportunity to testify before you today about federal preemption for
rail-related facilities. I would first like to provide the Subcommittee
with an overview of the Board's role, and the role of state and local
authorities with regard to such facilities. Next, I will discuss the
state of the law on this complex issue which is still being fleshed out
by the Board and the courts in individual cases that arise. Finally,
because there has been a lot of concern lately about the potential for
misuse of federal preemption in cases involving facilities on rail
lines, I will outline how interested parties can raise concerns before
the Board and in the courts regarding individual proposals that arise. I
will not focus today on the individual cases that have addressed federal
preemption for rail-related facilities, but I have included as part of
my written testimony a summary of the relevant case law.

1.  [The Scope of the Federal Preemption]{.underline}

As all of you are aware, the Surface Transportation Board was created in
the ICC Termination Act of 1995 (ICCTA). The express federal preemption
contained in the Board's governing statute at 49 U.S.C. 10501(b) gives
the Board exclusive jurisdiction over "transportation by rail carriers."
Congress has defined the term "transportation" broadly, at 49 U.S.C.
10102(9), to include all of the related facilities and activities that
are part of rail transportation. The purpose of preemption is to prevent
a patchwork of otherwise well intentioned local regulation from
interfering with the operation of the rail network to serve interstate
commerce.

Both the Board and the courts have made clear, however, that, although
the scope of the section 10501(b) preemption is broad, there are limits.
While a literal reading of section 10501(b) would suggest that it
preempts all other law, neither the Board nor the courts have
interpreted the statute in that manner. Rather, where there are
overlapping federal statutes, they are to be harmonized, with each
statute given effect to the extent possible. This is true even for
federal statutory schemes that are implemented in part by the states,
such as the Clean Air Act, the Clean Water Act, and the Solid Waste
Disposal Act.

When states or localities are acting on their own, certain types of
actions are categorically preempted, regardless of the context or basis
of the action. This includes any form of permitting or preclearance
requirementsuch as building, zoning, and environmental and land use
permittingwhich could be used to deny or defeat a railroad's ability
to conduct its rail operations or to proceed with activities that the
Board has authorized. Also, states or localities cannot regulate matters
directly regulated by the Board, such as railroad rates or service or
the construction, operation, and abandonment of rail lines.

Otherwise, whether the preemption applies depends on whether the
particular action would have the effect of preventing or unreasonably
interfering with rail transportation. Types of state and local measures
that have been found to be permissible, even in cases that qualify for
the federal preemption, include requirements that railroads share their
plans with the community when they are undertaking an activity for which
a non-railroad entity would require a permit, or that railroads comply
with local electrical, fire, and plumbing codes.

In cases involving facilities that require a license from the Board and
an environmental review under the National Environmental Policy Act
(NEPA), the Board addresses both the transportation-related issues and
any environmental issues that are raised. The environmental review is
managed by the Board's Section of Environmental Analysis.

Even where no license is needed from the Board, there are several
avenues of recourse for interested parties, communities, or state and
local authorities concerned that the section 10501(b) preemption is
being wrongly claimed to shield activities that do not rightly qualify
for the federal preemption. Any interested party can ask the Board to
issue a declaratory order addressing whether particular operations
constitute "rail transportation" conducted by a "rail carrier."
Alternatively, parties are free to go directly to court to have that
issue resolved. Some courts have chosen to refer that issue to the
Board; others have decided the matter themselves. It is worth noting,
however, that the Board and court cases on the boundaries of the section
10501(b) preemption have been remarkably consistent, and that the Board
and the courts have never reached a different conclusion regarding the
availability of the preemption for particular activities and operations.

Finally, in some cases, environmental and safety concerns have been
successfully resolved through consensual means, by the railroad and the
community working together to address their respective interests.

2.  [Relevant Precedent on Facilities]{.underline}

Given the strength and breadth of the section 10501(b) preemption, the
potential for misuse is a definite concern. Thus, both the Board and the
courts have made clear that an entity is not entitled to federal
preemption to the extent it is engaged in activities other than rail
transportation. In some cases, solid waste and other businesses have
located close to a railroad and claimed to be a rail facility exempted
from state and local laws that would otherwise apply, but have been
found by the Board or a court not to be entitled to the federal
preemption because the operation did not actually constitute "rail
transportation" by a "rail carrier." In other cases, activities and
operations at facilities have been found to qualify for the federal
preemption, as part of the transportation conducted by a rail carrier.

Cases involving solid waste transfer, storage and /or processing
facilities proposed to be located along rail lines are especially
controversial and often raise concerns that the operations could cause
environmental harm. In every case, however, interested parties,
communities, and state and local authorities concerned about a proposal
have recourse to the Board or the courts.

Rail carriers need approval to construct a new rail line under 49 U.S.C.
10901. During the Board's licensing proceedings, parties concerned that
all or part of the project is not entitled to preemption have the
opportunity to present their views to the Board for consideration in the
proceeding. In rail construction cases, the Board also routinely
conducts a detailed NEPA review, allowing all interested parties the
opportunity to raise any environmental concerns. The Board then takes
the entire environmental record into account in deciding whether to
grant the license. The Board can, and often does, impose appropriate
environmental conditions to address the environmental concerns that are
raised. Thus, the Board's existing process has proven to be sufficient
to allow the agency to address any issues related to proposed solid
waste or other facilities along the line.

If the project involves the acquisition and operation of an existing
rail line, or the acquisition of a rail carrier by another carrier or
carrier-affiliate, authority from the Board also is required, and NEPA
is applicable. Normally, however, a proposal to change the owner or the
operator of a line will not have any significant effects on the
environment. Therefore, the Board does not always conduct a
case-specific environmental analysis. But where there is a potential for
significant impacts, and that is brought to the Board's attention, the
Board may decide to undertake a full environmental review.

Finally, some activities at facilities on or along rail lines may
qualify for the preemption in section 10501(b) but not require Board
approval and review, so that there is no occasion for the Board to
conduct an environmental review. For example, under the statute,
carriers may make improvements and add new facilities (including a solid
waste facility) to an existing line without seeking Board approval. Even
in these types of cases, however, parties concerned that section
10501(b) is being used to shield activities that do not qualify for the
federal preemption under section 10501(b) can ask the Board to issue a
declaratory order, or a stay, or go directly to court to address the
status of the facility.

The inquiry into whether and to what extent the preemption applies in a
particular situation is naturally a fact-bound question. There have been
only a few cases that have come before the Board involving solid waste
facilities. The Board and the courts will continue to explore where the
boundary may lie between traditional solid waste activities and what is
properly considered to be part of "rail transportation," and what kinds
of state and local actions are federally preempted, in the individual
cases that arise.

**CONCLUSION**

In conclusion, it is important to reiterate that, although both the
Board and the courts have interpreted section 10501(b) preemption
broadly, there are limits on the preemption, which is harmonized with
other federal laws. The question of what constitutes "transportation by
rail," according to the statute and precedent addressing the rights of
railroads and of state and local authorities under section 10501(b), is
still being fleshed out by the Board and the courts in the individual
cases that arise. However, it is clear that not all activities are
entitled to preemption simply because the activities take place at a
facility located on rail-owned property. Of course, cases involving
preemption for railroad facilities are likely to remain controversial.
But even in cases that do not require review and approval by the Board,
parties concerned that the section 10501(b) preemption is being misused
in a case involving a facility have ways to raise their concerns at the
Board or in the courts.

I appreciate the opportunity to discuss these issues with you today, and
would be happy to answer any questions you may have.