Opinion ID: 4190211
Heading Depth: 4
Heading Rank: 1

Heading: Principles derived from deregulation

Text: We have seen from the summary of the ICCTA (see ante, pt. II.C), that the law provides for limited federal regulation in defined spheres. We have also seen that the ICCTA was intended to complete a deregulatory trend. Statutorily defined policy minimizes regulatory control and barriers (49 U.S.C. § 10101(2), (7)), and imposes a duty on the STB to afford regulatory exemptions ―to the maximum extent consistent with [the ICCTA].‖ (Id., § 10502(a); see also 49 C.F.R. § 1150.31.) Deregulation means that once general ICCTA compliance obligations are met, the railroad owner has a protected domain that is subject neither to federal nor to state regulation, a freedom to plan, develop, and restore rail service on market principles but within the framework of modest federal regulation. The text and history of the enactment indicate that, in the domain that has been deregulated, the owner may carry out its activities according to its own corporate goals and in response to market forces. This freedom, of course, is subject to the proviso that the owner‘s actions cannot conflict with federal regulations. But within the zone of the owner‘s control, the owner has considerable freedom. Freedom does not imply anarchy — the private owner ordinarily will have internal corporate rules, policies and bylaws to guide its market-based decisions. In other words, we may presume that a private conglomerate that owns a subsidiary that is a railroad company is not required to decide when it is prudent to go 46 forward with the development of a railroad project by, for example, tossing a coin. Rather, it can make its decisions based on its own internal guidelines, so long as there is no conflict with federal law. But how is the freedom accorded to the private owner by the ICCTA to be given effect when the state is the owner of a rail line? The ICCTA‘s deregulatory sweep must protect the zone of autonomy belonging to the state when it is the owner, such that within the deregulated zone, the state as owner may make its decisions based on its own guidelines rather than some anarchic absence of rules of decision. And we have already established that CEQA is an internal guideline governing the processes by which state agencies may develop or approve projects that may affect the environment. (See ante, pt. II.D.1.) If a private owner has the freedom to adopt guidelines to make decisions in a deregulated field, we see no indication the ICCTA preemption clause was intended to deny the same freedom to the state as owner. The ICCTA does not appear to us to be intended to effect a blanket preemption of state law governing how a state‘s own subdivision — its subsidiary — will enter and engage in the railroad business, so long as there is no inconsistency with regulation provided for by the ICCTA. In fact, even putting aside broader owner decisions concerning entry into a railroad market, it appears that the specific project under consideration in the present case was within an owner‘s sphere of control. We can discern that the track repair element of the project in the present case was within the owner‘s sphere under the ICCTA because the STB has chosen not to regulate track repair and renovation on existing lines. (See Lee‟s Summit, MO v. Surface Transp. Bd. (D.C. Cir. 2000) 231 F.3d 39, 42-43, fn. 3 (Lee‟s Summit); Detroit/Wayne County Port Authority v. I.C.C. (D.C. Cir. 1995) 59 F.3d 1314, 1317 [same, under ICC]; Flynn v. Burlington Northern Santa Fe Corp. (E.D.Wn. 2000) 98 F.Supp.2d 1186, 1190 [although the STB has jurisdiction over rail construction, it appears it does not in fact regulate refurbishing of existing lines].) And we can discern 47 that decisions about resuming a certain level of service, and particularly about undertaking environmental review of the impact of resumption of freight service along the line are within the owner‘s sphere of independent action, because the STB determined that the level of service along the line in the present case did not cross a threshold that would require federal environmental review. (See ante, at pp. 9-10; see also Lee‟s Summit, supra, 231 F.3d 39 [approving STB determination that no environmental assessment is required under the ICCTA for restored level of service, under a certain threshold, over existing but unused railroad]; Boston & Maine, supra, 2001 WL 458685, p.  4 [railroads do not need STB approval to upgrade or increase traffic on an existing line]; see also 3 West‘s Fed. Administrative Prac., supra, § 5390, fns. 1 & 13.) In the present case, the STB accepted NCRA‘s and NWPCo‘s petitions for exemption from STB certification requirements, but the STB‘s recognition of each entity‘s status as a rail carrier did not instruct them how soon they had to complete track repairs on the shuttered line, what the best method of repair might be, or when, specifically, they must resume service. Nothing in the exemptions tells NCRA or NWPCo how to evaluate choices about services or how to decide what methods to employ for track rehabilitation. These were owner decisions in a deregulated sphere.