On May 3–4, 2017, the California Supreme Court heard oral arguments in three cases with significant implications for California land use law. Below we summarize the main issue(s) argued in each matter and possible outcomes. Because many of these cases have been pending for years, the Court that originally voted to grant review has since been dramatically transformed by Governor Brown’s newest appointments, including Justices Cuéllar and Kruger. Consequently, predicting the likely outcome in any of these cases is particularly difficult.
Friends of Eel River v. North Coast Railroad AuthorityOn May 3, 2017, the Court heard oral arguments in Friends of Eel River v. North Coast Railroad Authority (2014) 230 Cal.App.4th 85 (appellate decision), which concerns the application of the federal preemption doctrine to State environmental review requirements. The principal question before the Court is whether the federal Interstate Commerce Commission Termination Act (“ICCTA”) preempts the application of CEQA to a state agency’s proprietary actions related to a state-owned and funded rail-line.
The underlying project involves a public-private partnership between the North Coast Railroad Authority (“NCRA”), a public entity established under the California Government Code, and the Northwestern Pacific Railroad Company (“NWPRC”). By contract, the parties agreed to allow NWPRC to use NCRA’s rail-tracks for freight rail service. Petitioners filed writ of mandate petitions challenging the project’s EIR. The First District Court of Appeal decided the matter in favor of the defendants, holding that petitioners’ CEQA claims fell within the ICCTA’s express preemption clause, and that an exception to federal preemption—the “market participant” doctrine—did not apply. This appellate decision came on the heels of a 2014 CEQA opinion published by the Third District (Town of Atherton v. California High-Speed Rail Authority), which found that the market participant doctrine operated as an exception to preemption under the circumstances of that case. With this split of authority, the California Supreme Court granted review.
At argument, the Supreme Court intensely questioned counsel for Real Party in Interest NWPRC, probing the propriety of CEQA’s preemption. The Court’s inquiries highlighted four main areas of concerns: (1) whether CEQA actually poses a preclearance hurdle in violation of the ICCTA, (2) the scope of federal preemption as it relates to a State’s right to self-govern, (3) the impact of the State’s role as a partial market participant, and (4) the remedies available in the event that CEQA is not preempted. A probing question by Chief Justice Cantil-Sakauye captures the essence of the Court’s apprehension concerning adoption of NWPRC’s position: if the federal Surface Transportation Board determines that a project is exempt from federal environmental review—which it is authorized to do under the ICCTA—and the Court adopts Defendant’s position that the ICCTA preempts CEQA, wouldn’t a project with potentially serious environmental impacts evade all environmental review? NWPRC’s counsel demonstrated otherwise, providing several examples of other potentially applicable environmental regulations and pointing out that the legal precedent strongly supports preemption. Though this response did not appear to overcome the Court’s concerns, the weight of...
