FRIENDS OF the EEL RIVER, Plaintiff and Appellant, v. NORTH COAST RAILROAD AUTHORITY et al., Defendants and Respondents; Northwestern Pacific Railroad Company, Real Party in Interest and Respondent. Californians for Alternative to Toxics, Plaintiff and Appellant, v. North Coast Railroad Authority et al., Defendants and Respondents; Northwestern Pacific Railroad Company, Real Party in Interest and Respondent., 220 Cal. Rptr. 3d 812

Cantil-Sakauye, C.J. In this case we decide whether federal law, the ICC [Interstate Commerce Commission] Termination Act of 1995 ( Pub.L. No. 104-88 (Dec. 29, 1995) 109 Stat. 803) (ICCTA; see 49 U.S.C. § 10101 et seq. ), preempts application of the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq. ), to a railroad project that has been undertaken by a state public entity, defendant North Coast Railroad Authority (NCRA), along with lessee real party in interest, Northwestern Pacific Railroad Company (NWPCo), a private entity.

The Court of Appeal determined that "CEQA is preempted by federal law when the project to be approved involves railroad operations." We conclude that the ICCTA is not so broadly preemptive. True, the ICCTA contemplates a unified national system of railroad lines subject to federal, and not state, regulation. Indeed, it appears settled that the ICCTA would preempt state regulation in the form of the state's imposition of environmental preclearance requirements on a privately owned railroad that prevented the railroad from operating.

But in this case we must explore the application of the ICCTA preemption clause to the state's decisions with respect to its own subsidiary governmental entity in connection with a railroad project owned by the state. When the project is owned by the state, the question arises whether

an act of self-governance on the part of the state actually constitutes regulation at all within the terms of the ICCTA. Even though the ICCTA applies to state-owned rail lines, in the sense that states as owners cannot violate provisions of the ICCTA or invade the regulatory province of the federal regulatory agency, this is not the end of the question. In our view, the application of state law to govern the functioning of subdivisions of the state does not necessarily constitute regulation.

To determine the reach of the federal law preempting state regulation of a state-owned railroad we must consider a presumption that, in the absence of unmistakably clear language, Congress does not intend to deprive the state of sovereignty over its own subdivisions to the point of upsetting the usual constitutional balance of state and federal powers. There is another aspect of the state's status as the owner of the railroad that is significant.

The ICCTA, although it contemplates a rail system that is unified on a nationwide basis, also contemplates a rail industry that is subject to relatively limited regulation on the part of the federal government. Where the federal law has deregulated, the states are not free to fill regulatory voids. But the ICCTA's deregulatory feature also frees railroad owners to make market-based decisions and not suffer an undue level of regulation of any kind.

In the area of activity in which a private owner is free from regulation, the private owner nonetheless ordinarily would have internal corporate rules and bylaws to guide those market-based decisions. In other words, a private conglomerate that owns a subsidiary railroad company is not required to decide whether to go forward with a railroad project, for example, by tossing a coin. Rather, it can make the decision based on its own corporate guidelines, and require its rail company to do the same.

When we consider that the ICCTA has a deregulatory purpose that leaves railroad owners with a considerable sphere of action free from regulation, we see that the state, as owner, must have the same sphere of freedom of action as a private owner. But unlike other owners, to act in that deregulated sphere, the state ordinarily acts through its laws. In the circumstances here, those state laws are not regulation in the marketplace within the meaning of the ICCTA, but instead are the expression of the state's choice as owner within the deregulated sphere.

This is how the deregulatory purpose of the ICCTA necessarily functions when state-owned, as opposed to privately owned, railroad lines are involved. We acknowledge that, like the private owner, the state as owner cannot adopt measures of self-governance that conflict with the ICCTA or invade the regulatory province of the federal regulatory agency. But there is a sphere of regulatory freedom enjoyed by owners, and there are at least two specific areas of regulatory freedom that are present in this case.

Specifically, environmental decisions concerning track repair on an existing line and the level of freight service within certain boundaries to be offered on an existing line appear to be within the regulatory sphere left open to owners. We conclude that this freedom belongs to the state as owner, as well, and under these circumstance, the ICCTA does not preempt the application of CEQA to this project. I. Factual and Procedural Background An intrastate railroad line runs from Lombard, in Napa County, north to Arcata, in Humboldt County.

The northern, or so-called Eel River division of the line, is quite decayed and runs through the environmentally sensitive Eel River Canyon. The southern, or so-called Russian River division of the line, also formerly in poor condition, runs between a southern terminus in Lombard north to Willits, in Mendocino County. There is a connection to an interstate rail line at Lombard. The project under review involves resumption of freight service in the Russian River division. A. History of public ownership Public ownership of the line is relatively new.

Historically, private railroad companies owned the tracks and operated service on both the northern and southern divisions of the line. These companies eventually failed economically. The state Legislature was concerned that service on the line would be permanently abandoned. To avoid this outcome, particularly the loss of freight service-a result that was considered damaging to the economy of the counties through which the line ran-the Legislature decided that the investment of public monies would be necessary. ( Gov. Code, §§ 93001, 93003 ; see also Historical and Statutory Notes, 37A, pt. 3 West's Ann. Gov.

Code (2005 ed.) foll. former §§ 93030-93034, p. 296.) In late 1989, the Legislature created NCRA ( Gov. Code, § 93010 ), giving the agency the power to acquire necessary property and to operate a railroad on the line, and also to select a public or private entity to actually operate transportation services on the line. With state funds, NCRA acquired ownership or, on some sections, easement rights over the railroad line, including the Russian River and Eel River divisions, between 1990 and 1996. B.

Public funding for repairs and NCRA's repeated written commitments regarding CEQA compliance In 2000 the Legislature appropriated funds to the state Department of Transportation for allocation as directed by the California Transportation Commission, including $60 million to NCRA to "repair and upgrade track to meet Class II (freight) standards." ( Gov. Code, § 14556.40, subd. (a)(32).) Of this, approximately $4 million was allocated to environmental remediation. From 2001 to 2006 in various agreements and plans, NCRA committed to CEQA compliance.

In 2001 the state Department of Transportation entered into a funding master agreement with NCRA to run through 2010, naming a number of state funding sources, and binding NCRA as recipient to a number of terms, including, for example, compliance with state auditing rules; California Transportation Commission resolutions imposing environmental obligations; public contracting requirements; and nondiscrimination and disabled access requirements.

Significantly, as a condition of funding, one term of the master agreement stated that "[c]ompletion of the environmental process ('clearance') for project by recipient (and/or state if it affects a state facility within the meaning of the applicable statutes) is required prior to requesting project funds for right-of-way purchase or construction.

No state agency shall request funds nor shall any state agency, board or commission authorize expenditures of funds for any project effort, except for feasibility or planning studies, which may have a significant effect on the environment unless such a request is accompanied by an environmental impact report [as] mandated by [CEQA]." (Some capitalization omitted.) Funding was also conditioned on completion of strategic and capital assessment plans. These also acknowledged that NCRA was required to comply with CEQA before approving or carrying out the project.

In its 2006 application to the state Department of Transportation for $31 million to bring the line up to certain standards, NCRA asserted that "appropriate CEQA and NEPA documentation will be prepared" and various state, federal, and local agencies approached for permits. Environmental obligations under CEQA and the National Environmental Policy Act (NEPA; 42 U.S.C. § 4321 ; et seq.) were repeatedly acknowledged and fulfillment of those obligations was noted in funding requests.

A 2006 supplement to the master agreement between the state Department of Transportation and NCRA described the scope of the work to be financed to include various obligations under CEQA, including preliminary project and scoping activities, draft environmental impact reports (EIRs), and a final EIR. The NCRA administration and contracting policy manual also called for CEQA compliance: "As a public agency, [NCRA] is required to comply with the California Environmental Quality Act....

The Act requires public agencies to adopt a policy that serves to implement the CEQA for activities within the jurisdiction of the agency." Moreover, the manual represented, "[NCRA] adopts the Guidelines for the Implementation of the California Environmental Quality Act; California Code of Regulations, Title 14, Division 6,

Chapter 3, Sections 15000 - 15387 and Appendices A-K ('CEQA Guidelines') in its entirety...." C. Agreement with private operator NCRA contracted with private corporations that were to actually operate freight service on the entire line, ending up in 2006 with an arrangement with NWPCo, the real party in interest in this litigation. The text of this 2006 "agreement for the resurrection of operations upon the Northwestern Pacific railroad line and lease" (some capitalization omitted) designated NCRA as the owner of the line, which was under a statutory duty to provide freight rail service on the line.

NWPCo was designated a franchisee, selected to operate freight service on the line. The agreement memorialized NWPCo's duty (under a certificate of convenience and necessity granted to it by the federal Surface Transportation Board) to provide safe, adequate, and efficient facilities and service. The agreement provided that NWPCo is the operator responsible for complying with federal and state safety regulations.

Under the agreement, NWPCo leased portions of the Russian River division owned by NCRA and gained an assignment of portions of the line that NCRA held under an easement, with an option involving the northern sections of the line. The agreement was subject to a number of conditions, including "NCRA having complied with the CaliforniaEnvironmental Quality Act ... as it may apply to this transaction ." (Italics added.) The agreement had a term of five years with options to renew.

NCRA was responsible for restoring all portions of the line to a certain level of "utility." NCRA committed that all available public funds designated for restoration and improvement would be invested and that "[i]t shall be solely NCRA's responsibility to use its best efforts to seek public funding to reopen, rehabilitate, restore, and continue the level of utility of the [line]." NWPCo had no obligation to provide service before this was accomplished. "If, however, [NWPCo] elects to operate ... over any portion of the [line] at a lesser Utility Level," then NWPCo was responsible for maintenance.

NWPCo was to be the sole provider of freight service on the line, would manage and control train operations after service resumed, and generally would be responsible for maintenance after service commenced. NWPCo had authority to seek the relevant federal agency's permission to suspend or discontinue service if service were to become "not economical in consideration of traffic volumes" for it to perform its maintenance obligation, although NWPCo agreed not to seek authority to suspend or discontinue service without NCRA approval.

"In the event that NCRA unsuccessfully opposes such suspension or discontinuance of service it may terminate this Agreement as to any

section or any portion of a

section of the ... line necessary in its sole discretion to restore service to [that] portion of the ... line...." D. Regulation of the rail line 1. Federal regulatory action and involvement of various state agencies As defendants and real party in interest stress, the project falls within the regulatory authority of the federal agency charged with administration of the ICCTA. Accordingly, in 1996, NCRA filed a notice of exemption with the newly established Surface Transportation Board (STB)-the successor to the prior federal regulatory agency, the ICC.

The 1996 notice of exemption produced an exemption from ordinary regulatory certification proceedings and permitted NCRA's acquisition of and operation on the line. (See 49 C.F.R. § 1150.41 (2016) [acquisition or operation by class III rail carrier].) In 2001, the first private operator selected by NCRA filed its own notice of exemption with the STB, thereby permitting a change of operators from NCRA to the private company without further procedures. (See 49 C.F.R. § 1150.31(a)(3) (2016) [exemption from certification procedure for change in operators].) This prior operator was succeeded by real party in interest, NWPCo.

In 2007 NWPCo filed its notice of exemption with the STB, permitting the change in operator along the Russian River division of the line without a certification procedure. (See 49 C.F.R. § 1150.31(a)(3) (2016).) In 2007, plaintiff Friends of the Eel River and others petitioned the STB to revoke the exemption. The challengers complained that increased train traffic on the line would, under STB regulations, necessitate federal environmental review of the planned operation.

In rejecting the petition, the STB explained that the level of frequency of freight service being planned was below the STB's regulatory threshold triggering the need for federal environmental review. It also noted that the ICCTA favors exemption from regulation whenever appropriate unless the STB has identified an abuse of market power. Several other state and federal agencies have taken actions respecting the line. Of note is safety regulation by the Federal Railroad Administration (FRA), an agency of the United States Department of Transportation charged with ensuring railroad safety.

In 1990, prior to state ownership, the FRA closed portions of the line because of safety concerns arising from inadequate maintenance. Safety problems continued as the line suffered from deferred maintenance and inadequate capital investment. The Federal Emergency Management Agency (FEMA) also became involved after flooding damage caused additional problems. The FRA worked with the state Public Utilities Commission, but both agencies, along with FEMA, found that defective track conditions had not been corrected, and in 1998 the FRA shut down service all along the line.

Repairs and operational improvements were made, and in May 2011, the FRA granted partial relief from its emergency order, permitting resumption of traffic on the southern portion of the line at issue in this litigation, but not on the northern section. In addition, various state entities, including the Department of Fish and Wildlife and Department of Toxic Substances Control, along with the North Coast Regional Water Quality Control Board, investigated poor environmental conditions on the line, documenting that in undertaking repairs, NCRA failed to comply with state environmental statutes and regulations.

They ultimately filed a complaint against NCRA for violation of the state Fish and Game Code, Health and Safety Code, and Water Code. In 1999 the parties entered into an elaborate consent decree binding NCRA to cease certain environmentally destructive practices and to undertake remediation. 2. Proceedings under CEQA Over a period of years, NCRA, acting as lead agency, undertook the following procedures under CEQA. In July 2007, NCRA submitted a notice of preparation of an EIR for the freight rail project that is the subject of this litigation.

The notice described the project as involving the resumption of freight rail service on the Russian River division of the line, saying more specifically that

(1) NCRA proposed a project to resume freight rail service on the Russian River division, and (2) that NWPCo, "NCRA's selected rail operator, proposes to resume the operations of freight service" on the line. The initial study for the "Russian River Division Freight Rail Project" also described the project as NCRA's proposal to resume freight rail service and again it pointed to NWPCo's involvement as the actual operator that would resume freight service.

The initial study also recounted NCRA's proposed "rehabilitation of its track, signals, embankments, and bridges," saying that some of these activities may cause a significant impact on the environment and would be analyzed in the EIR.

After public and agency consultation and scoping meetings, in March 2009 NCRA issued a draft EIR, again describing the project as NCRA's resumption of freight rail service on the Russian River division, with NWPCo designated as "NCRA's contract operator." The draft EIR noted that certain rehabilitation along the line had already been covered under a June 2007 notice of exemption, and that NCRA and NWPCo had been bound by an earlier consent decree as to that project.

The draft EIR also noted that NCRA and NWPCo were bound by the 1999 consent decree brought by the various state agencies (see ante , 220 Cal.Rptr.3d at pp. 824-825, 399 P.3d at p. 47), requiring them to prepare and implement waste clean-up plans, "conduct all rail operations in accordance with applicable environmental laws," and properly dispose of hazardous materials. The draft EIR stated that NWPCo proposed to resume freight operations, and that resumption of rail service would serve statewide air quality goals and reduce diesel truck traffic, among other things.

It acknowledged that "NCRA, acting as the CEQA lead agency, has a duty pursuant to CEQA guidelines to neither approve nor carry out a project as proposed unless the significant environmental effects have been mitigated to an acceptable level, where possible ." (Italics added.) The draft EIR provided a lengthy analysis of potential environmental impacts of resuming freight service, including consideration of rehabilitation of the line, cumulative impacts, and potential mitigation measures. After further hearings, a second draft EIR was filed in November 2009.

Comments were received in 2010 and the final EIR was released in March 2011. The final EIR again summarized the project as being to resume freight service on the Russian River division of the line, noting that "[r]epairs to the line to bring the rail line into conformance with FRA ... [s]tandards have been completed for most of the line, and it is now ready to resume service to Windsor." The project also was said to include four specific, rather limited repair and construction projects.

The final EIR rebutted comments claiming that the project actually included the northern or Eel River portion of the line-then consisting of unusable tracks. It also declared that rehabilitation activities covered by the 2007 notice of exemption were considered a separate project. Also appearing were rebuttal to concerns about the economic viability of the project, mitigation measures, and disposal of hazardous materials and waste. An addendum to the EIR responding to additional comments was attached in May 2011.

Joint regulatory authority was noted: "The NCRA plans and procedures as they relate to NWPCo. include, but are not limited to, rules and regulations of the Federal Railroad Administration, the Surface Transportation Board, federal, state and local laws, rules and regulations where applicable, the 2006 Lease by and between NCRA and NWPCo., the Operating Agreement with SMART, and Easement rights granted to and by NCRA. NWPCo. maintains certain obligations under each of these entities, and will continue to maintain such obligations while operating on the line.

If plans and procedures change over time, the revisions will be subject to the appropriate regulatory and environmental review. The agreement/contract between NCRA and NWPCo will reflect the revisions, as appropriate." In June 2011, NCRA's board of directors (Board) adopted a resolution certifying the final EIR and approving the project, again defined as the resumption of limited freight rail service on the so-called Russian River division of the line, along with the four specified rehabilitation, construction, and repair activities.

According to the resolution, the final EIR disclosed that the project posed significant or potentially significant adverse environmental impacts that may be mitigated; that with certain exceptions the significant adverse environmental impacts had been eliminated or reduced to insignificance; and as to certain impacts, that additional mitigation was infeasible. Having balanced the risks and benefits, the Board determined that the benefits outweighed the unavoidable adverse environmental effects.

The Board made a finding that environmental impacts of development on the Eel River division of the line properly had been omitted from consideration because the Board had no intention of resuming service in that division. It stated: "Given that there are no financial resources available to resume services in the [Eel River division], the Board does not intend to operate [there]." It appears that limited freight service has resumed on the southern or Russian River division of the line. E.

Litigation In July 2011, plaintiffs Friends of the Eel River and Californians for Alternatives to Toxics filed separate petitions for writ of mandate, naming NCRA as defendant and NWPCo as real party in interest.

Friends of the Eel River sought alternative and peremptory writs of mandate directing NCRA to set aside its findings and certification of the EIR and approval of the project and directing its compliance with CEQA, as well as a stay and preliminary and permanent injunctions preventing NCRA and its agents from "taking any action to implement, or further approve, or construct the Project, pending full compliance with the requirements of CEQA and the CEQA Guidelines," and restraining real party in interest from "taking any action to implement or construct the Project, pending full compliance with the requirements of CEQA and the CEQA Guidelines." Friends of the Eel River alleged two causes of action, both for violations of CEQA.

These challenged the adequacy of the EIR and of the mitigation measures and alternatives that had been considered and adopted, and the adoption of findings assertedly not supported by substantial evidence. The challenge was based in part on assertedly inadequate consideration of hazardous materials and impacts on water quality and threatened species, and in part on the absence of consideration of the northern or Eel River portion of the railroad.

Californians for Alternatives to Toxics petitioned for a writ of mandate ordering NCRA to set aside certain findings, the certification of the final EIR, and approval of the project and instead "to follow California regulations and statutes, including [CEQA], in any review of and new decision for the Russian River Division Freight Rail Project." It sought to enjoin NCRA and NWPCo "from engaging in any activity pursuant to the Russian River Division Freight Rail Project until the Project complies with all applicable California regulations and statutes, including requirements of [CEQA]." In all, Californians for Alternatives to Toxics alleged 10 causes of action for violations of CEQA.

It alleged various inadequacies in the information provided in the projects descriptions and EIRs; inadequate response to public comment; failure to evaluate the environmental impact of various levels of freight service and of track repair and rehabilitation on water, soil, air, and other resources; inadequate consideration of mitigation measures and alternatives; and improper findings of "overriding considerations" not supported by substantial evidence.

The petition also asserted that efforts to reopen the rail line in the Eel River division threatened serious environmental harm, especially harm to water in rivers and coastal areas. An 11th cause of action incorporated the prior allegations and alleged that irreparable injury to natural resources constituted a basis for injunctive relief. The petition sought an order that NCRA set aside its certification of the final EIR and its findings and approvals, that it follow CEQA, and that NCRA and NWPCo be enjoined from "engaging in any activity pursuant to the Russian River ...

Project until the Project complies with ... [CEQA]." At this point NCRA concluded that further challenges should be met with the argument that any application of CEQA to the project, i.e., the resumption of freight service and the specified rehabilitation work, was preempted by the ICCTA. The NCRA removed the matters to federal court, arguing the claims were preempted. The federal court found the dispute was not subject to so-called complete preemption, that is, plaintiffs were not attempting to litigate a federal cause of action in the guise of a state cause of action.

In addition, it determined that a case is not subject to removal solely on the basis of a federal defense, including the defense of preemption. Accordingly the federal court remanded the matters to state court. In April 2013, the NCRA Board issued a resolution rescinding its resolution of June 2011, "to clarify that the NCRA did not have before it a 'project' as that term is used in [CEQA] and did not approve a project when it certified the EIR that was the subject of the Resolution. More specifically, NCRA rescinds any word, phrase or

section of the Resolution to the extent that it purported to approve a project for the resumption of railroad operations...." The Board acknowledged that the EIR process had been a valuable source of information for it and for the public, but that the EIR was not legally required as a condition of operation of the line.

Rather, "[t]he ICCTA preempts CEQA's application over railroad operations on the line" and once the Board entered the lease with NWPCo in 2006, "no further discretionary actions or approvals were necessary by NCRA as a condition to NWPCo's right to operate the line"; that after the STB approved NWPCo's application for an exemption to operate the line in August 2007, "no further action or approval was required by the STB as a condition to NWPCo's right to operate the line"; that after the FRA partially lifted its emergency order in May 2011, "no further action or approval was required by the [FRA], or any other state or federal agency, as a condition to NWPCo's right to operate the line, and NWPCo had the legal right to immediately commence operations at that time." With respect to its representations in its 2006 application for state funds, resulting in appropriation to NCRA of $31 million for track repair and restoration (see ante , 220 Cal.Rptr.3d at pp. 821-822, 399 P.3d at pp. 44-45), the rescission resolution stated that the Board mistakenly had believed it must prepare an EIR, but that in any event, the appropriated money had been exhausted on the track repair project that was the subject of the categorical exemption.

It averred that "well before ... the [FRA's] partial lifting of [its emergency order], the TCRP [traffic congestion relief program]-funded repair work had been substantially completed and all TCRP funds allocated by the CTC [California Transportation Commission] to NCRA for the repair work had been used; ... [¶] [and] no TCRP funds were allocated to NCRA by the CTC for railroad operations on the line, nor were any TCRP funds used for actual railroad operations." As for NCRA's operating and lease agreement with NWPCo, the Board acknowledged that "the lease agreement contains a provision that NCRA will comply with CEQA 'as it may apply to this transaction' (meaning the NCRA's entry into the lease agreement), but the lease transaction was not challenged on CEQA grounds within the statutory time period, thus obviating NCRA's obligation to determine whether CEQA would have attached to the lease transaction." The Board noted that freight rail operations had resumed in July 2011.

Once the matters returned from federal to state court, NCRA and NWPCo demurred on the ground that the challenge under CEQA was preempted by the ICCTA and was time-barred. The trial court agreed with them that the application of CEQA was preempted, but overruled the demurrer because it found NCRA judicially estopped from pursuing that defense in light of positions it had taken in litigation ending in the consent decrees. NCRA and NWPCo thereafter filed a motion to dismiss for mootness in light of the Board's rescission of its earlier resolution.

The matter proceeded to a contested hearing before a different judicial officer. That officer reconsidered the estoppel point and rejected it, albeit agreeing with the first judicial officer that the preemption defense applied. The court entered orders denying the petitions for writ of mandate. The Court of Appeal affirmed. The court held initially that the controversy was not moot. It also concluded that the ICCTA was broadly preemptive of CEQA, and that the so-called market participant doctrine did not defeat preemption.

It rejected plaintiffs' view that principles of state sovereignty require that the ICCTA be interpreted to spare from preemption the state's control over NCRA, the state's own subdivision. The Court of Appeal also held that plaintiffs lacked standing to premise their challenges on the agreement between NCRA and NWPCo. Finally, it rejected their judicial estoppel argument. In its opinion, the Court of Appeal rejected the decision of another Court of Appeal, namely Town of Atherton v.

California High-Speed Rail Authority (2014) 228 Cal.App.4th 314, 175 Cal.Rptr.3d 145, which had addressed a route-selection element of California's high-speed rail project and, principally relying on a market participant theory, had concluded that there was no ICCTA preemption of CEQA in that case. Friends of the Eel River and Californians for Alternatives to Toxics petitioned for review, challenging the Court of Appeal's analysis and conclusion on the preemption issue. (The issues of mootness and judicial estoppel are not preserved for our review.) II. Discussion A.

Introduction The Court of Appeal found that the ICCTA preemption language is broad and concluded that "CEQA is preempted by federal law when the project to be approved involves railroad operations." Plaintiffs, by contrast, rely on presumptions governing the proper analysis of federal preemption language to contend that the ICCTA does not preempt application of CEQA in this case. We begin with general preemption principles, including certain presumptions.

Because the question before us is fundamentally one of statutory construction, we next turn to the text of the ICCTA preemption provision, the overall function of the ICCTA, and the unifying and deregulatory purpose disclosed by legislative history of the federal law. We observe that the ICCTA continues and strengthens a federal approach calling for a national as opposed to balkanized rail system. It also is apparent that the ICCTA completes a congressional trend in favor of relieving rail transportation of regulation and substituting the market as a dominant force.

We next consider the preemptive impact of the ICCTA, especially as to state environmental regulation. We briefly outline the CEQA scheme that the Court of Appeal, along with NCRA and NWPCo, contend is preempted here. As the Court of Appeal correctly pointed out, the national system of railroads is of peculiarly federal, not state, concern. The ICCTA is both unifying and deregulatory; it would undermine both values if states could compel the rail industry to comply with regulation of railroads that conflicted with federal law, or even to comply with supplementary regulation of railroads on a state-by-state basis.

We acknowledge that, at least as to privately owned railroads, state environmental permitting or preclearance regulation that would have the effect of preventing a private railroad from operating pending CEQA compliance would be categorically preempted. As we will explain, federal courts-even those that take a relatively narrow view of the preemption language of the ICCTA-as well as the STB agree in this respect. In the ordinary regulatory setting in which a state seeks to govern private economic conduct, applying CEQA to condition state permission to go forward with railroad operations would be preempted.

This conclusion, however, does not resolve the application of CEQA to NCRA. The ICCTA preempts solely regulation of rail transportation, and we will discuss whether it actually constitutes regulation when the state is the owner of the rail line and, by state law, prescribes the process by which its own subsidiary agency will make decisions concerning the resumption of rail service along a rail line.

We will consider whether, when the state establishes the general law according to which the state's own subsidiaries are to use the funds and powers allocated by the state-including for railroad projects-this constitutes not regulation but instead self-governance on the part of the state. We will conclude that CEQA may be considered a matter of self-governance in this setting-the control exercised by the state over its own subdivision.

We acknowledge that, although a CEQA process as applied to a private railroad might also be considered to reflect self-governance-in the sense that the state is governing how its subsidiary governmental entity makes development decisions concerning developments actually carried out by other, private owners-such an application of CEQA to a private line nonetheless would be preempted. Yet we believe that the analysis is different when the state is the owner of the railroad.

We will discuss United States Supreme Court authority in support of this view, primarily the presumption that in the absence of unmistakably clear language, courts assume that congressional preemption provisions are not intended to upset the usual constitutional balance of state and federal powers. We also will discuss, by analogy, the so-called market participant doctrine, relying on it for its presumption that, in connection with state market activities that are not regulatory, the state ordinarily has the same freedom of action as a private entity.

And we will address the apparent freedom of action accorded to owners over environmental considerations presented by track repair and increased levels of service on existing railroad lines. Because the present project appears to fall within that area of freedom of action, applying CEQA to NCRA's decisions on the project appears not to be regulation by the state but instead self-governance by the owner.

As we will explain, because we see no indication in the language of the ICCTA that Congress intended to preempt such self-governance in that field, we will conclude that application of CEQA to NCRA in the present case is not preempted. Finally, we will discuss the application of principles developed in this opinion to NWPCo, the private lessee that operates the freight service on the railroad. B. Federal preemption 1.

General principles "The Supremacy Clause provides that 'the Laws of the United States' (as well as treaties and the Constitution itself) 'shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.' Art. VI, cl. 2. Congress may consequently pre-empt, i.e. , invalidate, a state law through federal legislation. It may do so through express language in a statute. But even where ... a statute does not refer expressly to pre-emption, Congress may implicitly pre-empt a state law, rule, or other state action." ( Oneok, Inc. v.

Learjet, Inc. (2015) 575 U.S. ---- [135 S.Ct. 1591, 1594-1595] 191 L.Ed.2d 511 ( Oneok ); see Quesada v. Herb Thyme Farms, Inc. (2015) 62 Cal.4th 298, 307-308, 195 Cal.Rptr.3d 505, 361 P.3d 868 ( Quesada ).) When express preemption is claimed, the court's "task is to 'identify the domain expressly pre-empted.' [Citation.] To do so, we focus first on the statutory language, 'which necessarily contains the best evidence of Congress' pre-emptive intent.' [Citation.]" ( Dan's City Used Cars, Inc. v.

Pelkey (2013) 569 U.S. 251 [133 S.Ct. 1769, 1778] 185 L.Ed.2d 909.) Indeed, in all preemption cases, whether express or implied preemption is claimed, the fundamental question regarding the scope of preemption is one of congressional intent. ( Quesada , supra , 62 Cal.4th at p. 308, 195 Cal.Rptr.3d 505, 361 P.3d 868 ; Brown v. Mortensen (2011) 51 Cal.4th 1052, 1059-1060, 126 Cal.Rptr.3d 428, 253 P.3d 522 ; see Wyeth v. Levine (2009) 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 ; Lorillard Tobacco Co. v.

Reilly (2001) 533 U.S. 525, 541-542, 121 S.Ct. 2404, 150 L.Ed.2d 532.) Implied preemption exists under defined circumstances. First, there may be " 'field' preemption" when "Congress ... intended 'to foreclose any state regulation in the area,' irrespective of whether state law is consistent or inconsistent with 'federal standards.' [Citation.] In such situations, Congress has forbidden the State to take action in the field that the federal statute pre-empts." ( Oneok , supra , 575 U.S. ---- [135 S.Ct. at p. 1595], italics omitted.) Alternatively, there may be "conflict" or "obstacle" preemption.

These are present when " 'compliance with both state and federal law is impossible,' or where 'the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." ' [Citation.] In either situation, federal law must prevail." ( Ibid . ; see Quesada , supra , 62 Cal.4th at p. 308, 195 Cal.Rptr.3d 505, 361 P.3d 868.) Implied preemption may exist even in company with an express preemption clause. ( Sprietsma v. Mercury Marine (2002) 537 U.S. 51, 65, 123 S.Ct. 518, 154 L.Ed.2d 466 [in context of conflict preemption].) 2.

Presumptions There is a presumption that protects against undue federal incursions into the internal, sovereign concerns of the states. The United States Supreme Court expressed the rule in Gregory v. Ashcroft (1991) 501 U.S. 452, 111 S.Ct. 2395, 115 L.Ed.2d 410 ( Gregory ) and Nixon v. MissouriMunicipal League (2004) 541 U.S. 125, 124 S.Ct. 1555, 158 L.Ed.2d 291 ( Nixon ).

That case law posits a presumption that Congress would not alter the balance between state and federal powers without doing so in unmistakably clear language. ( Nixon , supra , 541 U.S. at pp. 140-141, 124 S.Ct. 1555 ; Gregory , supra , 501 U.S. at pp. 459-461, 111 S.Ct. 2395 ; Sheriff v. Gillie (2016) 578 U.S. ---- [136 S.Ct. 1594, 1602] 194 L.Ed.2d 625 ( Gillie ); City of Los Angeles v.

County of Kern (2014) 59 Cal.4th 618, 631, 174 Cal.Rptr.3d 67, 328 P.3d 56 ["Principles of federalism dictate a distinct approach to the construction of statutes impinging on state sovereignty, one designed to ensure courts do not assume an incursion where none was intended"].) A related presumption arises in the context of the so-called market participant doctrine. Federal law ordinarily preempts only state regulation of a defined field. Not all state law constitutes regulation.

There may be no regulation and hence no preemption in circumstances when the state is acting in the marketplace in a proprietary rather than regulatory mode. This doctrine "is not a wholly freestanding doctrine, but rather a presumption about congressional intent." ( Engine Manufacturers Ass'n v. South Coast Air Quality Management Dist. (9th Cir. 2007) 498 F.3d 1031, 1042 ( Engine Manufacturers ).) Courts presume Congress does not intend to reach and preempt a state's proprietary arrangements in the marketplace in the absence of evidence of such an expansive congressional intent. ( Building & Constr.

Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc. (1993) 507 U.S. 218, 227, 231, 233, 113 S.Ct. 1190, 122 L.Ed.2d 565 ( Boston Harbor ); see American Trucking Ass'ns, Inc. v.City of Los Angeles (2013) 569 U.S. 641 [133 S.Ct. 2096, 2102-2103] 186 L.Ed.2d 177 ( American Trucking ); Engine Manufacturers , supra , 498 F.3d at p. 1042.) C. The ICCTA We must apply these preemption principles to the ICCTA. But first we must understand that enactment. 1. The federal law.

The ICCTA contains an express preemption provision, which provides: "The jurisdiction of the STB over-[¶] (1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers; and [¶] (2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State, [¶] is exclusive.

Except as otherwise provided in this part, the remedies provided under this part 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).) To understand this preemption provision, we must gain a general understanding of the ICCTA and must understand some of its key terms. The term " 'rail carrier' means a person providing common carrier rail transportation...." ( 49 U.S.C. § 10102(5).) The term " 'transportation' includes [¶] (

A) 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, regardless of ownership or an agreement concerning use; and [¶] (

B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property...." ( Id ., § 10102(9).) As for the general outlines of the ICCTA, it requires carriers to establish reasonable rates, rules, and practices related to transportation or services ( 49 U.S.C. § 10702 ); prohibits discriminatory pricing (id ., § 10741); and establishes common carrier obligations requiring provision of transportation or services on reasonable request. (Id ., § 11101; see Decatur County Commissioners v.

Surface Transp.

Bd. (7th Cir. 2002) 308 F.3d 710, 715 ( Decatur ) ["A railroad may not refuse to provide services merely because to do so would be inconvenient or unprofitable. [Citation.] The common carrier obligation, however, is not absolute"].) The act prohibits rail carriers from improper obstruction of through traffic or freight ( 49 U.S.C. § 10744 ), and prohibits state or local tax discrimination against rail property. (Id ., § 11501.) The ICCTA assigns administrative and regulatory duties to the STB. ( 49 U.S.C. §§ 1301 - 1302.) The STB "has jurisdiction over transportation by rail carrier." (Id ., § 10501(a)(1).) The STB's jurisdiction applies even to intrastate transportation so long as it is "part of the interstate rail network." (Id ., § 10501(a)(2)(A).) A number of transactions require approval from the STB.

The ICCTA provides for STB licensing of railroad construction and operations (id ., § 10901), as well as for STB authorization to abandon a rail line or discontinue service. (Id ., § 10903; but see GS Roofing Products Co., Inc. v. Surface Transp.

Bd. (8th Cir. 2001) 262 F.3d 767, 773 [carriers unilaterally may temporarily discontinue service by announcing embargo]; see also Decatur, supra , 308 F.3d 710 [20-month embargo held reasonable].) The STB has authority to prescribe routes and certain rates ( 49 U.S.C. § 10705 ) and to adjudicate claims of unreasonable rates arising from market dominance. (Id ., § 10707.) The act provides for STB approval of railroad mergers and consolidation (id ., §§ 11323-11324), including leases or contracts to operate property of another rail carrier, acquisition of control of a rail carrier or nonrail carrier, and acquisition by a rail carrier of trackage rights over a line owned or operated by another. (Ibid .) As relevant to the present case, a certificate from the STB is required for rail carriers to construct or operate on new or extended lines, and noncarriers require a certificate authorizing acquisition or operation of a line. ( 49 U.S.C. § 10901(a).) At the same time, the STB must grant such certificates unless the request is "inconsistent with the public convenience and necessity." ( Id ., § 10901(c).) STB regulations also govern the application of federal environmental protection law to railroad projects. ( 49 C.F.R §§ 1105.1 - 1105.12 (2016) ; see especially id ., § 1105.6 [environmental impact statements normally are required for rail construction projects, with specified exceptions; STB environmental assessments are required for abandonment, discontinuance of passenger or freight services (with exceptions) and for acquisitions, leases, or mergers resulting in changes exceeding certain thresholds; the STB has authority to modify requirements for certain proceedings]; see also Alaska Survival v.

Surface Transp. Bd. (9th Cir. 2013) 705 F.3d 1073, 1078 ( Alaska Survival ) [when determining whether to authorize construction of a new extension of a railroad line, the STB considers the environmental record]; 3 West's Fed. Administrative Prac.

(2016) Transportation, ch. 53, Surface Transportation Board, § 5390.) Other federal agencies, including the FRA, also participate along with the STB in environmental regulation of the rail industry, especially with regard to construction of new railroad lines. ( Alaska Survival , supra , 705 F.3d at p. 1078 ; see also California High-Speed Rail Authority, Exemption (STB, June 13, 2013, No. FD 35724), 2013 WL 3053064, p. *22.) 2. Purpose and history of the ICCTA The ICCTA both unifies the rail industry into a national system subject to unitary federal regulation, and also deregulates the industry.

The deregulatory and unifying purpose of the ICCTA appears in its history. Preemption of state regulation of rail transportation has a long history that is part of a federal effort to establish uniform regulation of the rail industry across state lines. More recent enactments (including the Staggers Rail Act of 1980 (Staggers Act) and the current enactment, the ICCTA), achieve broad deregulation at the federal level as well, while maintaining preemption of state remedies. The ICCTA arose in the following context.

In the 19th century, railroad owners achieved monopolies that were oppressive to other businesses and distorted the market for freight rates and services. (See H.R.Rep. No. 104-311, 1st Sess., p. 90 (1995); Sen.Rep. No. 104-176, 1st Sess., p. 2 (1995); Eldredge, Who's Driving the Train? Railroad Regulation and Local Control (2004) 75 U.Colo. L.Rev. 549, 557-558 (hereafter Eldredge).) In response, Congress adopted the Interstate Commerce Act of 1887 to regulate rates and services in the rail industry (as well as the motor carrier industry) and resolve some of these distortions on a national basis. (See H.R.Rep.

No. 104-311, supra , p. 90; Sen.Rep. No. 104-176, supra , p. 2; Eldredge, supra , at p. 558.) Even without an express preemption clause in that law, the high court concluded that state court remedies for matters regulated by this earlier federal act were preempted. ( Chicago & N.W. Tr. Co. v. Kalo Brick & Tile Co. (1981) 450 U.S. 311, 318, 101 S.Ct. 1124, 67 L.Ed.2d 258 ( Chicago & N. W. ) [" '[I]t would be inconsistent with [federal] policy' ... 'if local authorities retained the power to decide' whether the carriers could do what the Act authorized them to do"]; Texas & Pac. Ry. v.

Abilene Cotton Oil Co. (1907) 204 U.S. 426, 440-441, 27 S.Ct. 350, 51 L.Ed. 553 ( Texas & Pac. ) [inconsistency between jurisdictions would destroy the uniformity and equality in rates that the enactment was intended to achieve].) Although the earlier act was intended to achieve nationwide uniformity, it came to be seen as also having imposed an onerous regulatory burden on the industry that Congress believed should be lifted. ( H.R.Rep.

No. 104-311, supra , pp. 90-91.) In an effort to improve the railroads' ability to compete economically, Congress began to relieve the industry of what it termed a "Kafkaesque regulatory regime." (Id ., at p. 91.) Congress accordingly adopted the Staggers Act, the precursor to the ICCTA. ( Pub.L. No. 96-448, supra , 94 Stat. 1895; see H.R.Rep. No. 104-311, supra , p. 91; Eldredge, supra , 75 U.Colo. L.Rev. at p. 558.) The Staggers Act "deregulated most railroad rates, legalized railroad shipping contracts, simplified abandonments, and stimulated an explosion of service and marketing alternatives...." ( H.R.Rep.

No. 104-311, supra , p. 91.) An important deregulatory feature was a provision giving the regulatory agency, the ICC, the administrative power to accomplish additional deregulation through its exemption power. (Ibid .; G. & T. Terminal Packaging Co., Inc. v. Consolidated Rail Corp. (3d Cir. 1987) 830 F.2d 1230, 1234 ( G. & T. Packaging ) [calling the exemption authority a "principal component" of the enactment].) This administrative power to afford exemption from regulation was "employed aggressively," producing what was viewed as a "renaissance in the railroad industry." ( H.R.Rep.

No. 104-311, supra , p. 91.) With the Staggers Act, Congress not only deregulated, but also made its earlier implied preemptive purpose express. In language that basically parallels that appearing in 49 United States Code

section 10501 today, the Staggers Act provided that "[t]he jurisdiction of the [ICC] ... over transportation by rail carriers, and the remedies provided in this title with respect to the rates, classifications, rules, and practice of such carriers, is exclusive." (49 U.S.C. former § 10501(d), added by Pub.L. No. 96-448 (Oct. 14, 1980) 94 Stat. 1895, 1915.) This language was intended to "assure uniform administration of the regulatory standards of the Staggers Act." (H.R.Rep.

No. 104-422, 1st Sess., p. 167 (1995).) It was held to go beyond the question of jurisdiction, and to indicate that with respect to rail regulation, the Staggers Act remedies themselves were exclusive, displacing state remedies. ( G. & T. Packaging , supra , 830 F.2d at p. 1234 ; see also H.R.Rep. No. 96-1430, 2d Sess., p. 106 (1980), reprinted in 1980 U.S. Code Cong. & Admin.

News 4110, 4138 ["The remedies available against rail carriers with respect to rail rates, classifications, rules and practices are exclusively those provided by the Interstate Commerce Act ... and any other federal statutes which are not inconsistent with the ... Act. No state law or federal or state common law remedies are available"].) State common law remedies with respect to matters such as reasonable rates could not be substituted to fill a gap when the ICC had decided in favor of deregulation. ( G. &T.

Packaging , supra , 830 F.2d at p. 1235.) The statute did provide a limited exception to the exclusive remedy provision, however, that permitted states to obtain ICC certification to enforce the federal act as to purely intrastate transportation. ( H.R.Rep. No. 104-311, supra , p. 83.) There was also a disclaimer explaining that ordinary state police powers were not preempted. The Staggers Act relieved the industry of heavy federal regulation, but Congress evidently believed further deregulation was called for.

Congress "recogni[zed] that the surface transportation industry is competitive and that few economic regulatory activities are required to maintain a balanced transportation network ." ( H.R.Rep. No. 104-311, supra , p. 82, italics added.) Accordingly in 1995, Congress adopted the current regulatory scheme-the ICCTA. ( 49 U.S.C. § 10101 et seq. ) According to a congressional report on the bill, the ICCTA "builds on the deregulatory policies that have promoted growth and stability in the surface transportation sector.

For the rail industry, only regulations are retained that are necessary to maintain a 'safety net' or 'backstop' of remedies to address problems of rates, access to facilities, and industry restructuring ...." ( H.R.Rep.

No. 104-311, supra , p. 93, italics added.) The express, statutorily defined policy of the ICCTA is "to minimize the need for Federal regulatory control over the rail transportation system" ( 49 U.S.C. § 10101(2) ), "to reduce regulatory barriers to entry into and exit from the industry" ( id ., § 10101(7) ), to promote a "sound rail transportation system with effective competition" ( id ., § 10101(4) ), and to permit the market to establish reasonable rates. ( Id ., § 10101(1) ; see Fayus Enterprises v. BNSF Railway (D.C.

Cir. 2010) 602 F.3d 444, 450 ( Fayus ) [commenting that alterations in the ICCTA were "entirely in a deregulatory direction"].) The power vested in the governing agency to afford additional exemptions from regulation on an administrative basis was enhanced; now the agency has a statutory duty to afford exemptions "to the maximum extent consistent with [the ICCTA]." ( 49 U.S.C. § 10502(a) ; see H.R.Rep.

No. 104-311, supra , p. 96 [also noting the elimination of some former restrictions on the granting of exemptions that were viewed as unnecessary in light of the functioning of the market].) This provision is seen as streamlining the regulatory process. ( Alaska Survival , supra , 705 F.3d at p. 1078.) Regulations provide for routine exemption from acquisition and operations certificate requirements (see 49 C.F.R. § 1150.31 (2016))-which is what occurred in the present case both for NCRA and NWPCo.

Still, the ICCTA does provide for federal regulation, including "Federal regulatory oversight of line constructions, line abandonments, line sales, leases, and trackage rights, mergers and other consolidations ..., antitrust immunity for certain collective activities ..., competitive access, financial assistance, feeder line development, emergency service orders, and recordation of equipment liens." (Sen.Rep.

No. 104-176, supra , p. 7.) As for the preemption provision itself, as noted, former language stating the exclusive jurisdiction of the federal agency to provide remedies was largely retained, but the preemptive force of the statute was enhanced.

Additional preemptive language was added in the ICCTA, specifically this sentence: "Except as otherwise provided in this part, the remedies provided under this part 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).) With this language, the limited regulatory role of the states that had been retained by the Staggers Act was eliminated.

Congressional reports announced that "[t]he bill is intended to standardize all economic regulation (and deregulation ) of rail transportation under Federal law, without the optional delegation of administrative authority to State agencies to enforce Federal standards, as provided in the relevant provisions of the Staggers Rail Act." ( H.R.Rep. No. 104-311, supra , p. 95, italics added.) The unifying intent of the statute remains vital. (Sen.Rep. No. 104-176, supra , p. 6 ["The railroad system in the United States is a nationwide network.

The hundreds of rail carriers that comprise the railroad industry rely on a nationally uniform system of economic regulation. Subjecting rail carriers to regulatory requirements that vary among the States would greatly undermine the industry's ability to provide the 'seamless' service that is essential to its shippers and would w[e]aken the industry's efficiency and competitive viability"].) Yet it was acknowledged that outside the regulated field, states "retain the police powers reserved by the Constitution." ( H.R.Rep. No. 104-311, supra , p. 96.) D.

Preemptive impact of the ICCTA on state regulation To review, we have seen that under 49 U.S.C.

section 10501, the STB has exclusive jurisdiction over transportation by rail carrier, including the movement of goods and all services related to that movement. Its remedies are exclusive and expressly preempt state remedies "with respect to regulation of rail transportation." ( Id ., § 10501(b).) There is no dispute that NCRA and NWPCo are rail carriers within the meaning of the ICCTA and have received exemptions from certificate requirements, permitting eventual operation of services.

Nor is there any dispute that their operation of freight service on the rail line in this case is "rail transportation" and is within the jurisdiction of the STB. 1. CEQA To understand whether application of CEQA to the rail carriers in this case would constitute regulation of rail transportation within the terms of the ICCTA, we must review some essential features of CEQA. CEQA embodies a central state policy to require state and local governmental entities to perform their duties "so that major consideration is given to preventing environmental damage." ( Pub.

Resources Code, § 21000, subd. (g) ; see Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 390, 253 Cal.Rptr. 426, 764 P.2d 278 ( Laurel Heights ).) CEQA prescribes how governmental decisions will be made when public entities, including the state itself, are charged with approving, funding-or themselves undertaking -a project with significant effects on the environment. ( Pub.

Resources Code, § 21065, subd. (a) [defining a "project" to include "activit[ies] directly undertaken by any public agency"]; see also id ., §§ 21100 [state agency procedures], 21102 [state agency generally cannot request state funds for a project which may have a significant effect on the environment without an EIR], 21104 [responsibilities of state lead agencies], 21105 [state agency EIRs], 21151 [local agencies]; Sunset Sky Ranch Pilots Assn. v. County of Sacramento (2009) 47 Cal.4th 902, 907, 102 Cal.Rptr.3d 894, 220 P.3d 905 ; Mountain Lion Foundation v.

Fish & Game Com. (1997) 16 Cal.4th 105, 119, 65 Cal.Rptr.2d 580, 939 P.2d 1280 ( Mountain Lion Foundation ); Laurel Heights , supra , 47 Cal.3d at pp. 390-391, 253 Cal.Rptr. 426, 764 P.2d 278.) The Legislature, in enacting CEQA, imposed certain principles of self-government on public entities. In other words, CEQA is a legislatively imposed directive governing how state and local agencies will go about exercising the governmental discretion that is vested in them over land use decisions. (See California Building Industry Assn. v.

Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369, 383, 196 Cal.Rptr.3d 94, 362 P.3d 792 [emphasizing CEQA's function in self-government]; Citizens of Goleta Valley v.

Board of Supervisors (1990) 52 Cal.3d 553, 564, 276 Cal.Rptr. 410, 801 P.2d 1161 ( Citizens of Goleta Valley ) [same]; Laurel Heights , supra , 47 Cal.3d at p. 392, 253 Cal.Rptr. 426, 764 P.2d 278 [same]; see also Mountain Lion Foundation , supra , 16 Cal.4th at p. 112, 65 Cal.Rptr.2d 580, 939 P.2d 1280 [CEQA applies to projects calling for the lead agency to "use its judgment in deciding whether and how to carry out the project"]; Western States Petroleum Assn. v.

Superior Court (1995) 9 Cal.4th 559, 566-567, 38 Cal.Rptr.2d 139, 888 P.2d 1268 [CEQA prescribes rules under which state and local agencies are to exercise quasi-judicial as well as quasi-legislative discretion].) CEQA review is undertaken by a lead agency, defined as "the public agency which has the principal responsibility for carrying out or approving a project which may have a significant effect upon the environment." ( Pub.

Resources Code, § 21067, italics added.) The lead agency's function in the environmental review process is so important that it cannot be delegated to another body. ( Planning & Conservation League v.

Department of Water Resources (2000) 83 Cal.App.4th 892, 907, 100 Cal.Rptr.2d 173.) CEQA provides for extensive review on the part of the lead public agency. ( Laurel Heights , supra , 47 Cal.3d at p. 390, 253 Cal.Rptr. 426, 764 P.2d 278.) "The EIR has been aptly described as the 'heart of CEQA.' [Citations.] Its purpose is to inform the public and its responsible officials of the environmental consequences of their decision before they are made." ( Citizens of Goleta Valley , supra , 52 Cal.3d at p. 564, 276 Cal.Rptr. 410, 801 P.2d 1161, fn. & italics omitted.) Agencies are directed to mitigate or avoid significant environmental impacts in projects they carry out (or approve) if it is feasible to do so ( Pub.

Resources Code, § 21002.1, subd. (c) ), retaining discretion to carry out the project notwithstanding impacts when mitigation is infeasible and certain findings have been made. ( Id ., §§ 21002.1, subd. (c), 21081.) The EIR must set forth not only environmental impacts and mitigation measures to be reviewed and considered by state and local agencies, but also project alternatives (id ., §§ 21001, subd. (g) [local lead agencies], 21002.1, subd. (a), 21100, subd. (b)(4) [state lead agencies]; Citizens of Goleta Valley , supra , 52 Cal.3d at pp. 564-565, 276 Cal.Rptr. 410, 801 P.2d 1161 )-including a "no project" alternative . ( Cal.

Code Regs., tit. 14, § 15126.6.) As we have said, "the mitigation and alternatives discussion forms the core of the EIR." ( In re Bay-Delta etc. (2008) 43 Cal.4th 1143, 1162, 77 Cal.Rptr.3d 578, 184 P.3d 709.) When economic, legal, or other considerations make mitigation or avoidance infeasible, the agency must make a finding of overriding benefits that outweigh environmental effects. ( Pub. Resources Code, § 21081, subds. (a)(3), (b).) Typically CEQA requirements must be complied with as a condition of the approval of projects or the undertaking of a project by the public agency itself.

An agency must not carry out a project when an EIR is certified identifying significant environmental impacts, without first making specific findings regarding mitigation and overriding benefits. ( Pub. Resources Code, § 21081 ; City of Marina v. Board of Trustees of California State University (2006) 39 Cal.4th 341, 350, 46 Cal.Rptr.3d 355, 138 P.3d 692.) CEQA is enforced with powerful remedies to ensure that the review process is completed appropriately and the various findings are made before projects go forward.

Litigants, including members of the public, may apply to courts to order agencies to void, either in whole or in part "any determination, finding, or decision ... made without compliance" with CEQA. ( Pub. Resources Code, § 21168.9, subd. (a) ; see also Code Civ. Proc., § 1086 [standing for persons beneficially interested]; Save the Plastic Bag Coalition v.

City of Manhattan Beach (2011) 52 Cal.4th 155, 166, 170, 127 Cal.Rptr.3d 710, 254 P.3d 1005 [summarizing principles of standing under CEQA].) CEQA affords enforcement mechanisms that may have the effect of preventing or impeding progress on a public or private project pending compliance with CEQA requirements. ( Pub.

Resources Code, § 21168.9, subd. (a)(2) [mandate to public agency and real party in interest to suspend any or all specific project activities until agency "has taken any actions that may be necessary to bring the determination, finding, or decision into compliance with [CEQA]"].) But orders may be limited and include "only those mandates which are necessary to achieve compliance" and "only those specific project activities in noncompliance" with CEQA. ( Id ., § 21168.9, subd. (b) [severability findings].) Using the mechanisms we have just described, plaintiffs challenged the evidentiary basis of NCRA's findings and EIR certification, seeking an order that NCRA set aside its findings, certification, and project approval pending CEQA compliance.

In addition, plaintiffs relied on CEQA to seek an injunctive remedy to halt the project as to both NCRA and NWPCo pending NCRA's further reporting, mitigation measures, and consideration of alternatives as provided by CEQA. In other words, plaintiffs sought to require NCRA, as the lead agency, to comply more fully with CEQA. They would impose state law requirements on that agency as a condition of its decision to proceed with a project defined as the resumption of freight rail service along an existing line (together with some limited track repairs). 2.

CEQA would be preempted as applied to halting operations by a private rail line As the Court of Appeal recognized in its opinion in this case, there is little doubt that application of CEQA to halt resumption of service by a private rail carrier pending CEQA review by a state or local agency would have the effect of regulating rail transportation and would be categorically preempted regulation. As the Court of Appeal pointed out, regulation of the national system of railroads is of peculiarly federal concern, rather than one involving historic state police powers. (See Scheiding v.

General Motors Corp. (2000) 22 Cal.4th 471, 481, 93 Cal.Rptr.2d 342, 993 P.2d 996.) We have noted that even when the early federal law governing railroads was adopted without an express preemption clause, the high court concluded that the need for a unified federal system meant that state remedies must be superseded. (See Texas & Pac. , supra , 204 U.S. at pp. 440-441, 27 S.Ct. 350 ; see also Chicago & N.

W. , supra , 450 U.S. at p. 318, 101 S.Ct. 1124.) The ICCTA is unifying and deregulatory; it would undermine these values if states could compel the railroad industry to halt service pending compliance with regulations that conflict with federal law or invade the regulatory field of the STB. Requiring a private rail carrier to undergo a state agency's CEQA review as a condition of operations would impose an extensive state law regulatory burden on the rail carrier as a condition of providing service.

CEQA remedies could halt service on a line pending environmental compliance even though the rail carriers were licensed by the STB to undertake operations, and even though the STB may have determined that no environmental review was required. Although CEQA does not on its face specifically regulate rail transportation, its enforcement mechanisms requiring environmental compliance as a condition of project approval involving a private rail carrier would have the effect of regulating rail transportation, a result inconsistent with 49 U.S.C.

section 10501. Permitting a state to regulate private railroad operations even where STB regulation is absent or has been satisfied is also inconsistent with the broad deregulatory purpose of the ICCTA. State regulation would be in tension with the fact that the ICCTA, like its predecessors, contemplates a national rail system operating with minimal regulation, not an industry subject to a patchwork of state regulation.

It would undermine the purpose of the ICCTA if states could compel the rail industry to comply with supplementary regulation on a state-by-state basis even when the STB has left a regulatory hole, or, to put it more positively, a sphere of freedom of action for the owner. As a number of courts have indicated, given the deregulatory purpose of the ICCTA, what is deregulated under the ICCTA cannot be reregulated by the states. (See Fayus , supra , 602 F.3d at p. 450 [the ICCTA contains no "invitation to states to fill the regulatory void created by federal deregulation"]; Florida East Coast Ry. v.

City of West Palm Beach (11th Cir. 2001) 266 F.3d 1324, 1338 ( Florida East Coast Ry. ); Port City Properties v. Union Pacific Ry. Co. (10th Cir. 2008) 518 F.3d 1186, 1188-1189 [the ICCTA permits entities to construct certain tracks without STB approval, but this "void" does not permit state regulation of such tracks]; CSX Transp., Inc. v. Georgia Public Serv. Com'n (N.D.Ga. 1996) 944 F.Supp. 1573, 1581 [rejecting claim that Georgia could regulate the closure of ticketing agencies in the absence of federal regulation or remedies on that subject]; Sen.Rep.

No. 104-176, supra , p. 6 [nothing in the ICCTA "should be construed to authorize States to regulate railroads in areas where Federal regulation has been repealed"]; see also Boston & Maine Corp. and Town of Ayer, MA, Petition (STB, Apr. 30, 2001, No. FD 33971), 2001 WL 458685, p. *4 ( Boston & Maine ), affd. sub nom . Boston & Maine Corp. v. Town of Ayer (D.Mass. 2002) 191 F.Supp.2d 257 [town's preconstruction permit requirement preempted although STB approval not required]; Thomas Tubbs, Petition (STB, Oct. 29, 2014, No.

FD 35792), 2014 WL 5508153, p. *6 ; Cities of Auburn & Kent, WA, Petition (STB, July 1, 1997, No. FD 33200), 1997 WL 362017, p. *7 ( Auburn & Kent ), affd. sub nom. City of Auburn v. U.S. Government (9th Cir. 1998) 154 F.3d 1025 ; North San Diego County Transit Development Board, Petition (STB, Aug. 19, 2002, No. FD 34111), 2002 WL 1924265, p. *5 ( North San Diego ).) For the foregoing reasons, we acknowledge that state environmental permitting or preclearance regulation that would have the effect of halting a private railroad project pending environmental compliance would be categorically preempted.

In the ordinary regulatory setting in which a state seeks to govern private economic conduct, requiring CEQA compliance as a condition of state permission to go forward with railroad operations would be preempted. Federal courts-even those that do not regard the ICCTA's preemption clause as broad and sweeping-as well as the STB agree with the foregoing conclusion. Some decisions refer to the preemption provision as "sweeping," "pervasive" and "comprehensive." ( Auburn , supra , 154 F.3d at p. 1029 ( Auburn ); see also Union Pacific Ry. Co v.

Chicago Transit Auth. (7th Cir. 2011) 647 F.3d 675, 678 ( Union Pacific ).) Many federal decisions, on the other hand, characterize the preemption clause of the ICCTA as relatively narrow. ( Florida East Coast Ry. , supra , 266 F.3d at p. 1331 [the ICCTA preempts " 'regulation of rail transportation,' " not all laws " 'with respect to rail transportation' "]; see Franks Investment Co. LLC v. Union Pacific Ry. Co. (5th Cir. 2010) 593 F.3d 404, 410 ( Franks ); PCS Phosphate Co., Inc. v. Norfolk Southern Corp. (4th Cir. 2009) 559 F.3d 212, 218 ( PCS Phosphate ); New York Susquehanna v.

Jackson (3d Cir. 2007) 500 F.3d 238, 252 ( Susquehanna ).) But it is unnecessary to address disputes among federal courts concerning whether to designate the preemption provision as broad or narrow, because in fact, even those with a narrow view of preemption accept the same formulation concerning state environmental laws. In this view, the "preemption analysis distinguishes between two types of preempted state actions or regulations.

First, there are those state actions that are 'categorically preempted' by the ICCTA because such actions 'would directly conflict with exclusive federal regulation of railroads.' [Citation.] Regulations falling within this first category are 'facially preempted' or 'categorically preempted' and come in two types: [¶] 'The first is any form of state or local permitting or preclearance that, by its nature, could be used to deny a railroad the ability to conduct some part of its operations or to proceed with activities that the [STB] has authorized.... [¶] Second, there can be no state or local regulation of matters directly regulated by the [STB]-such as the construction, operation , and abandonment of rail lines [citation]; railroad mergers, line acquisitions, and other forms of consolidation [citation]; and railroad rates and service [citation].' [¶] [Citation.] State actions such as these constitute 'per se unreasonable interference with interstate commerce.' [Citation.] As such, the preemption analysis for state regulations in this first category is addressed to 'the act of regulation itself' and 'not to the reasonableness of the particular state or local action.' [Citation.] [¶] The second category of preempted state actions and regulations are those that are preempted as applied.

Section 10501(b) [of 49 U.S.C.] may preempt state regulations, actions, or remedies as applied, based on the degree of interference the particular state action has on railroad operations. 'For state or local actions that are not facially preempted, the

section 10501(

b) preemption analysis requires a factual assessment of whether that action would have the effect of preventing or unreasonably interfering with railroad transportation.' [Citation.].... [T]he STB stated that 'it is well settled that states cannot take an action that would have the effect of foreclosing or unduly restricting a railroad's ability to conduct any part of its operations or otherwise unreasonably burdening interstate commerce.' " ( New Orleans & Gulf Coast Ry. Co. v.

Barrois (5th Cir. 2008) 533 F.3d 321, 332, italics added & omitted ( New Orleans & Gulf Coast ); see also Union Pacific , supra , 647 F.3d at p. 679 ; Franks , supra , 593 F.3d at pp. 410, 413 ; Adrian & Blissfield Ry. Co. v. Village of Blissfield (6th Cir. 2008) 550 F.3d 533, 539-540 ( Adrian & Blissfield ); Emerson v. Kansas Southern Ry. Co. (10th Cir. 2007) 503 F.3d 1126, 1130, 1132-1133 ( Emerson ); see also People v.

Burlington Northern Santa Fe Railroad (2012) 209 Cal.App.4th 1513, 1528, 148 Cal.Rptr.3d 243 ( Burlington ).) More specifically, the rule seems well accepted in federal courts that the ICCTA preempts state and local environmental regulation requiring private railroad companies to acquire permits or preclearance as a condition to operating the railroad , as well as remedies that would prohibit the conduct of railroad business pending compliance with state or local environmental requirements.

For example, in Auburn , supra , 154 F.3d 1025, a private rail carrier was before the STB seeking approval to reacquire a portion of a rail line through the Stampede Pass in Washington State, and to reopen service on the route. The rail carrier's plans included repairs and improvements on the line. STB environmental staff, following environmental assessments under the federal environmental law, concluded the project would not have a significant environmental effect if certain mitigation efforts were undertaken.

The STB approved the project, but the City of Auburn challenged the agency's decision, arguing that the agency erroneously had found state and local environmental review of the project and the related permitting process to be preempted by the ICCTA. The city sought to compel the private rail carrier's compliance with state and local environmental rules as a precondition to rail operations, but the court determined that such application of state and local law was preempted.

The City of Auburn argued, as do plaintiffs and amici curiae supporting them in the present case, that the ICCTA preempts solely economic regulation of railroads, but not a state's exercise of traditional police power to protect the environment.

The Ninth Circuit responded that, on the contrary, rail regulation has long been viewed as a subject of federal concern from which states are excluded, and that prior law, as continued in effect by the ICCTA, was "recognized as 'among the most pervasive and comprehensive of federal regulatory schemes.' " ( Auburn , supra , 154 F.3d at p. 1029.) The court referred to both 49 U.S.C.

section 10501(b)'s statement of exclusive jurisdiction and its explicit preemption clause displacing state remedies " 'with respect to regulation of rail transportation' " ( 154 F.3d at p. 1030 ), as well as other language, commented on the absence of language in the act expressly sparing state environmental regulation from preemption ( Auburn , supra , p. 1031 ["there is no evidence that Congress intended any such state role under the ICCTA to regulate the railroads"] ), and drew parallels with the preemptive scope of assertedly similar federal laws. ( Ibid . ) In conclusion, the Auburn court observed, "the distinction between 'economic' and 'environmental' regulation begins to blur.

For if local authorities have the ability to impose 'environmental' permitting regulations on the railroad, such power will in fact amount to 'economic regulation' if the carrier is prevented from constructing, acquiring, operating, abandoning, or discontinuing a line. [¶] We believe the congressional intent to preempt this kind of state and local regulation of rail lines is explicit in the plain language of the ICCTA and the statutory framework surrounding it. [Citation.] Because congressional intent is clear, and the preemption of rail activity is a valid exercise of congressional power under the Commerce Clause, we affirm the STB's finding of federal preemption." ( Auburn , supra , 154 F.3d at p. 1031, fn. omitted; see also Susquehanna , supra , 500 F.3d at p. 252 [rejecting the view that the ICCTA preempts solely economic regulation]; Florida East Coast Ry. , supra , 266 F.3d at p. 1331 [same].) In another decision-also involving state attempts to exert control over a private rail carrier-the court in Green Mountain Railroad Corp. v.

Vermont (2d Cir. 2005) 404 F.3d 638 ( Green Mountain ) held that the ICCTA preempted Vermont's efforts to obtain a declaratory judgment requiring the railroad carrier to go through a state environmental law process imposing mitigation conditions before the carrier could obtain a permit to construct a transloading facility on its land.

The Second Circuit relied on the ICCTA's language expressly preempting "remedies ... with respect to regulation of rail transportation" ( 49 U.S.C. § 10501(b) ), vesting in the STB exclusive jurisdiction over transportation by rail carriers (ibid .), and defining the term "transportation" broadly to include facilities related to movement of passengers or freight under section 10102(9). ( Green Mountain , at p. 642.) The state preconstruction permit requirement in that case was preempted because it " 'unduly interfere[s] with interstate commerce by giving the local body the ability to deny the carrier the right to construct facilities or conduct operations,' [citation]; and ... it can be time-consuming, allowing a local body to delay construction of railroad facilities almost indefinitely." ( Id . at p. 643.) The court also relied on Auburn , federal district court opinions, and STB decisions for the proposition that " 'state and local permitting or preclearance requirements (including environmental requirements) are preempted because by their nature they unduly interfere with interstate commerce.' " ( Ibid . ) The Green Mountain court acknowledged, as numerous other cases have, that state and local governments retain some "traditional police powers over the development of railroad property," suggesting that such police powers should be recognized solely "to the extent that the regulations protect public health and safety" and are defined, settled, and can be obeyed with certainty and without delay or exercise of discretion. ( Green Mountain , supra , 404 F.3d at p. 643.) "Electrical, plumbing and fire codes, direct environmental regulations enacted for the protection of the public health and safety, and

[…]