904 F.3d 755
9th Cir.2018Background
- California enacted SB 84 requiring railroads to collect a per-loaded-railcar fee from shippers of certain hazardous materials ($45/car plus up to 5% administrative charge) and remit proceeds to a state fund for regional railroad accident preparedness and related emergency-response equipment and training.
- Fees are charged when a car is loaded in California or upon entry if loaded out of state; the same fee applies regardless of in-state distance traveled; failure to collect/remit carries civil and criminal penalties.
- Fund expenditures may reimburse start-up costs, purchase/maintain specialized response equipment, support regional training/teams, and that equipment may also be used for truck-accident responses (with local agency reimbursement to the Fund).
- BNSF and Union Pacific sued to enjoin SB 84, arguing it is preempted by the ICCTA, HMTA, and the 4‑R Act, and violates the dormant Commerce Clause; the district court granted a preliminary injunction, finding likelihood of success on the merits.
- The Ninth Circuit affirmed the preliminary injunction, holding SB 84 is preempted by the ICCTA because the statute imposes a fee that functions as a rail "rate," and that HMTA's fee‑authorization does not save SB 84 because the statute’s fee scheme is not "fair" (it singles out rail versus truck).
Issues
| Issue | Plaintiff's Argument (Railroads) | Defendant's Argument (California) | Held |
|---|---|---|---|
| Whether SB 84 is preempted by the ICCTA as regulation of rail "rates" | SB 84 requires railroads to collect a per-car charge that operates as a shipping rate and thus is preempted by ICCTA/STB exclusive jurisdiction | SB 84 is a state fee for hazardous-material transport, not a rail rate, and therefore not preempted | Held preempted: fee functions as a "rate" under §10501(b) and thus falls within ICCTA preemption |
| Whether HMTA §5125(f)(1) authorizes state fees for hazardous-material transport that can avoid ICCTA preemption | HMTA does not independently authorize state charges that would conflict with ICCTA/STB jurisdiction; any fee-authority is a limitation, not affirmative authorization | HMTA affirmatively permits states to impose fees related to hazardous-material transport so long as fees are "fair," which can protect such fees from ICCTA preemption | Court: HMTA does affirmatively protect state fees generally, but protection only applies if fees are "fair"; HMTA and ICCTA harmonized where possible |
| Whether SB 84's fee is "fair" under HMTA §5125(f)(1) | SB 84 is unfair because it burdens rail shipments while exempting truck shipments, thereby skewing modal competition | California contends fee funds hazardous-material response and is reasonably related to that purpose; inclusion of rail-only assessment is justified by accident risk profile and policy choices | Held not fair: scheme discriminates against rail (rail and truck move comparable hazardous ton-miles; catastrophic rail accidents justify parity or broader coverage), so HMTA protection fails |
| Whether preliminary injunction factors supported relief (irreparable harm, equities, public interest) | Railroads would suffer irreparable harm from diversion of shipments to trucks and economic injury; balance favors railroads; public interest not served by enforcing a preempted law | California argued public safety benefits from funded preparedness; but benefits speculative during litigation | Held: district court did not abuse discretion—irreparable harm, equities, and public interest supported injunction |
Key Cases Cited
- DISH Network Corp. v. F.C.C., 653 F.3d 771 (9th Cir.) (standard of review for preliminary injunction)
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (U.S.) (preliminary injunction four-factor test)
- DHX, Inc. v. Surface Transportation Bd., 501 F.3d 1080 (9th Cir.) (ICCTA background and STB jurisdiction)
- Ass'n of Am. Railroads v. S. Coast Air Quality Mgmt. Dist., 622 F.3d 1094 (9th Cir.) (ICCTA preemption scope; laws with incidental effect may survive)
- City of Auburn v. United States, 154 F.3d 1025 (9th Cir.) (breadth of ICCTA preemption)
- Adrian & Blissfield R. Co. v. Village of Blissfield, 550 F.3d 533 (6th Cir.) (targeting rail industry relevant to preemption analysis)
- Township of Tinicum v. U.S. Dep't of Transp., 582 F.3d 482 (3d Cir.) (interpretation of similar federal "may"/"only if" language)
- Sanchez v. Aerovias De Mexico, S.A., 590 F.3d 1027 (9th Cir.) (economic incidence—tax collected by carrier is part of price)
- Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (U.S.) (specific statute not controlled by a general one)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (U.S.) (presumption against implied repeal; harmonize statutes when possible)