By John M. Scheib, an attorney at Gentry Locke Attorneys and is the former Chief Legal Officer of a Class I railroad.

One may have missed the Executive Order issued February 19, 2025, entitled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulator Initiative” (“Executive Order”).  It orders agency heads to identify regulations to target for deregulatory action.  Although that may be a substantial opportunity for certain heavily regulated industries, those same industries and their regulators should be careful that the unintended consequence is not more regulation at the state and local level.  The railroad industry is such an industry; the Federal Railroad Administration (“FRA”) is such a regulator.

The Executive Order

The administration previously had announced that an agency may only adopt a new regulation if it repeals ten existing regulations.  The Executive Order upped the emphasis on deregulation.  Specifically, the Executive Order gave agencies 60 days from the date of the order to identify seven classes of regulations.  Those classes included: (i) regulations that impose significant costs upon private parties that are not outweighed by public benefits; (ii) regulations that harm the national interest by significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives; and (iii)  regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship. 1  Thereafter agency heads and the Office of Information and Regulatory Affairs have 60 days to develop an agenda that seeks to rescind or to modify these regulations.

There are undoubtedly legacy regulations promulgated by the FRA or the Department of Homeland Security (“DHS”) that meet the criteria listed in the Executive Order.  The rail industry has long targeted these regulations and may see the Executive Order as the next good opportunity to have the FRA or DHS repeal some of their regulations.  But, there is risk that repeal could result in State regulation if done carelessly.

The Federal Rail Safety Act

FRSA contains an express preemption provision that governs the relationship between federal regulation by the two agencies and state regulation of railroad safety. 2  This preemption provision establishes the balance between national uniformity of laws and regulations and state-level regulation in railroad safety matters.  FRSA preemption is valuable to the rail industry, which has invoked it successfully to stop state regulation.  Based on a variety of existing federal regulations, courts have held that it preempts State attempts to regulate train speeds,3 warning devices at railroad-highway crossings, 4 and blocked crossings,5 among others.

Section 20106 of Title 49 provides that laws, regulations, and orders related to railroad safety or to railroad security shall be nationally uniform to the extent practicable. 6  At the same time, it provides that a “State may adopt or continue in force a law, regulation, or order related to railroad safety or security until the Secretary of Transportation (with respect to railroad safety matters), or the Secretary of Homeland Security (with respect to railroad security matters), prescribes a regulation or issues an order covering the subject matter of the State requirement.” 7  Additionally, a “State may adopt or continue in force an additional or more stringent law, regulation, or order related to railroad safety or security when the law, regulation, or order— (A) is necessary to eliminate or reduce an essentially local safety or security hazard; (B) is not incompatible with a law, regulation, or order of the United States Government; and (C) does not unreasonably burden interstate commerce.”  49 U.S.C. § 20106(a)(2).

If a federal law contains an express preemption clause, it does not immediately end the inquiry because the question of the substance and scope of Congress’ displacement of state law still remains. 8  Congressional intent is determined by the language of the statute itself, and through the structure and purpose of the federal law.  Interpreting the language of the FRSA preemption provision, the Supreme Court has observed that the provision does not employ the broad term “relate to” but rather limits preemptive effect to those regulations “covering” the same subject matter as the state law in question. 9  It held that “‘covering’ is a more restrictive term which indicates that the preemption applies only if the federal regulations substantially subsume the subject matter of the relevant state law.”

Does FRSA Preemption Still Apply After a Deregulatory Action?

As the railroad industry considers whether to petition either agency to repeal legacy regulations, a fundamental and unresolved question is whether FRSA preemption will still preempt States from regulating the area that the repealed regulation covered.  There are no examples that define the contours of preemption after repeal of a rail safety regulation.

A Ninth Circuit case, in which the FRA and the industry attempted to assert that FRSA preemption applied when the FRA considered regulating but declined to adopt a rule, may be instructive of the risk.  When considering and withdrawing a proposal to regulate the size of a train crew, FRA’s Order noted that then “nine states have laws in place regulating crew size” and stated that the Order’s intent is “to preempt all state laws attempting to regulate train crew staffing in any manner.”10  FRA explicitly intended its “notice of withdrawal to cover the same subject matter as the state laws regulating crew size and therefore expects it will have preemptive effect.” 11

The Ninth Circuit rejected FRA’s attempt to negatively or implicitly preempt state regulation when withdrawing the proposed regulation. 12  The court held that “Congress limited the preemptive effect of an FRA order by providing in § 20106(a)(2) that states may ‘continue in force an additional or more stringent law’ that is ‘necessary to eliminate or reduce an essentially local safety or security hazard’ and ‘is not incompatible with a [federal] law, regulation, or order.’”  The state regulation “is preempted only when incompatible with the FRA’s decision.” Id. at 1180.  “The Order, although declaring it ‘negatively preempt[s] any state laws’ concerning crew staffing, does not address why state regulations addressing local hazards cannot coexist with the Order’s ruling on crew size.”  Id.

If a proposed and not adopted rule does not preempt state regulation, how will courts view an instance in which any agency withdraws its regulatory design over a safety issue by repealing an existing regulation?  Does a withdrawn regulation still “cover the subject matter”?  The risk is that the industry would lose the express preemption of § 20106 when the agency repeals a regulation, and the industry would be left arguing a theory of implied preemption.  Such a theory would likely be weaker given the FRSA preemption provision and the legal presumption against preemption.

Thinking Ahead

The industry and the agencies should proceed deliberately and consider steps to reduce the risk of state regulation as an unintended consequence of seeking deregulation at the federal level.  First, the rail industry should be sure the targeted legacy regulation is significant enough to justify the legal fight to follow if States step into the area.  Second, the industry should propose revisions to regulations that make them less restrictive rather than propose outright repeals.  Third, the agency should heed the lessons of the Ninth Circuit case.

Notes

  1. Of the four other classes two may be potentially relevant here (i) regulations that are based on anything other than the best reading of the underlying statutory authority or prohibition and (ii) regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority.
  2. The Interstate Commerce Commission Termination Act (“ICCTA”) also includes a preemption provision that the railroad industry argues may also apply to certain safety regulations.  49 U.S.C. § 10501(b).  There may be preemption under ICCTA but it would require a more complex analysis in the safety realm.
  3. See e.g., CSX Transportation v. Easterwood, 507 U.S. 658, 664 (1993) (“Easterwood”); Seyler v. Burlington Northern Santa Fe Corp., 102 F. Supp.2d 1226 (D. Kan. 2000).
  4. See e.g., Armijo v. Atchison, Topeka & Santa Fe Ry., Co., 754 F. Supp. 1526 (D.N.M. 1990).
  5. For a good overview of Section 20106, see People v. Burlington Northern Santa Fe R.R., 209 Cal. App.4th 1513 (2012); Village of Mundelein v. Wisconsin Cent. R.R., 882 N.E2d 544 (Ill. 2008).
  6. See Frank J. Mastro, Preemption Is Not Dead: The Continued Vitality of Preemption Under the Federal Railroad Safety Act Following the 2007 Amendment to 49 U.S.C. § 20106, 37 Transp. L. J. 1 (2010).
  7. Infermo v. N.J. Transit Rail Operations, Inc., 2012 U.S. Dist. LEXIS 8151 (D. Ct. NJ 2012).
  8. Altria Group v. Good, 555 U.S. 70, 76 (2008).
  9. Easterwood, 507 U.S. at 664.
  10. 84 Fed. Reg. 24,735 at 24,741.
  11. Id. at 24,741.  It may be worth considering what would have happened if the FRA has adopted a regulation that said a minimum on one trained crew is required.  State regulation would have been preempted.
  12. Transp. Div. of the Int’l Ass’n of Sheet Metal, Air, & Transp. Workers v. FRA, 988 F.3d 1170 (9th Cir. 2021).