Market Data 
The Supremacy Clause of the U.S. Constitution states, in part: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land.” Most people learn about this clause of the Constitution in civics class and think little of it again. Yet, the Supremacy Clause is integral to the nation’s economic growth and competitiveness in the world. Why? Because the Supremacy Clause is the root from which the doctrine of federal preemption has grown.
Advocates of vigorous government oversight look upon the concept of federal preemption as a tool of deregulation. That notion is not accurate. Those who support preemption see the value of being regulated at the federal instead of the state level. Businesses crave certainty more than anything else and navigating disparate state regulatory regimes is not only inefficient but costly. Without federal preemption, entire industries face the prospect of regulatory compliance with federal law and possibly 50 other, different standards. Federal laws that regulate products as diverse as pharmaceuticals and medical devices, food, securities, and tobacco include express preemption provisions.
One industry whose very existence relies on federal preemption is the railroad industry. Railroads span the entire continent, connecting the East Coast, West Coast, Gulf, and Great Lakes, with over 140,000 miles of rail moving all kinds of commodities. By providing one uniform set of national standards, federal preemption gives railroads the ability to seamlessly operate across the nation in a cost-effective manner, in compliance with a single uniform set of rules and regulations.
Unique among the transportation modes, “[r]ailroads have been subject to comprehensive federal regulation for [more than] a century,” since the passage of the Interstate Commerce Act (ICA) in 1887. United Transp. Union v. Long Island R. Co., 455 U.S. 678,687(1982). Indeed, railroads were the first industry to be federally regulated. That regulatory authority is now vested in the Surface Transportation Board (STB). In creating the current statutory scheme, Congress made clear that the STB’s jurisdiction over rail transportation and the remedies provided under the law is exclusive, expressly preempting other remedies under federal or state law. 49 U.S.C. § 10501(b). It is well-settled that STB’s preemption provision (often called “ICCTA preemption” after the act of Congress that created the STB as a successor agency to the Interstate Commerce Commission) is one of the most comprehensive preemption statutes that Congress has ever adopted. This broad preemption reflects the importance of, and compelling need for uniformity in, operation of the interstate rail system.
Without broad ICCTA preemption, states could step in and regulate transportation by rail—a purposefully broad phrase—in 50 different and inconsistent ways. For example, imagine one state mandating the use of a certain type of locomotive, while another state mandates a different type. Instead of seamlessly operating over state lines to move goods and people as efficiently as possible, the railroad would have to stop at the state line and switch locomotives to comply with each state’s differing law. If this were even possible (which as a practical matter it is not), the ensuing delays to rail traffic would be devastating to the industry, consumers, and the nation’s supply chain. This is not an outlandish hypothetical. In 2023, a California regulatory agency proposed to ban on locomotives more than 23 years old and require that all new locomotives be operated with zero emissions. After it became clear that federal regulators would not grant a waiver necessary for the proposal, the California regulator withdrew its proposal.
ICCTA preemption goes beyond just state laws, however, in that it can also preempt other federal laws—often referred to as preclusion (“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 (emphasis added)). Generally, the agency and the courts will try to harmonize the two federal laws, but if there is a “positive repugnancy” or “irreconcilable conflict” between them, ICCTA must prevail.
This issue arises most commonly when states exercise their authorities under other federal authorities (e.g., Clean Air Act, Clean Water Act) to issue regulations, and thereby arguably federalize what would otherwise be state regulation. The agency and courts recognize that ICCTA may nonetheless preempt such laws where the laws directly regulate rail operations, where they are applied in a discriminatory manner against railroads, or where enforcement of such laws is likely to lead to a patchwork of different regulation that would render compliance virtually impossible. Otherwise, allowing states to use their federal authorities to regulate transportation by rail would simply end-run ICCTA, and conflict directly with the express intention of Congress to ensure uniform national regulation of rail transportation.
In preempting other laws, Congress eliminated all obstacles to the execution of ICCTA, and it did so for good reason. Railroads need uniformity to operate as smoothly and efficiently as possible to move the goods that move the economy. As Congress explained, it “intended to standardize all economic regulation (and deregulation) of rail transportation under Federal law.” (H. Rpt. 104-311, p. 95).
Over the next several years, States may be tempted to point to the deregulatory atmosphere in Washington and “fill the void” with additional or different regulations of the railroad industry. State legislators should bear in mind the breadth of ICCTA preemption and remember the prominent role a national regulatory framework plays in the smooth railroad operations that provide state residents with needed goods and the economy with high paying jobs. Federal agencies like STB should actively support federal preemption when States tread on their regulatory turf. And if businesses are forced to challenge state overreach in federal court, judges should interpret and apply federal laws in the preemptive manner Congress intended.
