The Surface Transportation Board is signaling that state and local restrictions on rail customers’ facilities may face greater scrutiny under federal law, issuing a sweeping policy statement that questions aspects of earlier agency decisions involving privately owned terminals and other rail-served projects.
The statement, which becomes final Nov. 9, also lays out arguments for treating government or private efforts to take exclusive possession of railroad rights-of-way as categorically preempted — potentially avoiding a detailed inquiry into how each taking would affect train operations.
The document essentially serves as a consolidation of existing law, and suggests potentially stronger federal protection for rail infrastructure and access to freight service, while stopping short of binding decisions or a blanket exemption from state and local oversight.
“The Board is not making any binding determinations in this policy statement,” the agency says. Individual disputes will still turn on their facts, circumstances and applicable law.
A closer look at restrictions aimed at rail customers
The statement addresses preemption, the principle under which federal law displaces conflicting state or local requirements. Under the ICC Termination Act of 1995, the STB has broad, exclusive jurisdiction over transportation by rail carriers and certain related infrastructure.
One central question is how far that protection reaches when a local government regulates not a railroad, but its customer.
The board acknowledges that its precedents “have not always been entirely consistent” on that issue. It offers a modified analytical framework for determining whether rules nominally directed at customers actually regulate the common-carrier rail service those customers receive.
The proposed inquiry asks two threshold questions: Is the facility developed or used to receive or tender common-carrier rail service, such as a transloading or off-loading facility? And does the government action restrict or dictate that service — including its volume, frequency, timing, configuration or commodity mix? If both answers are yes, the action may be subject to the board’s preemption analysis.
The board makes the point that directing a restriction at a customer does not necessarily make it different from directing the same restriction at the railroad. A cap on how much rail traffic a facility can receive can constrain the carrier’s service just as effectively as an order addressed to the carrier itself, the statement explains.
Earlier decisions come under scrutiny
The board illustrates its reasoning through two earlier cases: SEA-3, decided in 2015, and Valero Refining, decided in 2016.
In SEA-3, the agency had declined to preempt a city’s challenge to a zoning decision allowing an existing rail customer to expand its facility from three rail berths to eight. In Valero, the board held that it lacked jurisdiction over an existing customer’s construction of an off-loading facility intended to receive common-carrier unit-train service. State and local authorities denied a construction permit based at least partly on the effects of increased rail service and the commodity to be transported.
The new statement questions an approach focused on the stated target of regulation rather than its operational effect.
“SEA-3 and Valero read ‘transportation by rail carrier’ to ask what is the stated object of the regulation, whereas a better reading might ask what was regulated in effect,” the board writes.
Preventing the SEA-3 expansion, the statement reasons, would effectively dictate how many cars the railroad could deliver at a time and could require more trips, different scheduling and changes to yard storage. In Valero, denying permission for the project constrained both the type of train service and the commodities the carrier could deliver.
Those observations, the board says, do not decide a new case or categorically overturn the earlier outcomes. But they provide a potential basis for railroads and customers to challenge restrictions previously understood as outside the board’s jurisdiction.
Stronger arguments against taking railroad land
The statement also reexamines how to analyze attempts to take exclusive possession of railroad property through eminent domain, adverse possession or similar state-law claims.
Such disputes have sometimes been evaluated under an “as-applied” test, requiring a fact-specific assessment of whether the taking would unreasonably interfere with present or future rail operations. The board now identifies “strong policy arguments” for using categorical preemption when a taking would exclude rail use from a validly held right-of-way or other transportation property.
The board argues that it makes little sense to prohibit a locality from blocking a rail facility through zoning while potentially giving it greater latitude to take the property outright.
The agency does not adopt a definitive approach covering every case. It also distinguishes exclusive takings from routine, nonexclusive uses — such as road crossings or underground utility easements — that may remain appropriate for case-by-case review.
Why it matters for investment and local control
The board says greater clarity could reduce disputes and litigation costs and help remove inappropriate impediments to rail transportation serving manufacturing, agriculture and energy facilities.
The initiative followed a September 2025 request from six railroad and shipper organizations, including the Association of American Railroads, American Short Line and Regional Railroad Association, American Chemistry Council and National Grain and Feed Association.
For communities, the document reinforces an important limit on local leverage, that a requirement can be preempted even when the STB does not actively regulate the particular activity or offer an alternative remedy. The board points to ancillary tracks, which fall within its exclusive jurisdiction but generally do not require its construction authorization, as an example. Local environmental permitting cannot necessarily fill that gap.
The statement similarly explains that preemption can reach some common-law damages claims, not just ordinances and permits, when those claims effectively regulate rail operations. Not every lawsuit against a railroad is preempted, however; the relevant analysis still applies.
Not a blanket exemption
The board expressly rejects the idea that every rail-connected business gains federal protection from local law. Rail customers themselves are not directly under its jurisdiction, and much regulation of their facilities should remain outside it, the statement says. A manufacturing facility with an incidental rail component generally remains subject to local zoning, absent discriminatory treatment of rail transportation. Requirements governing portions of a project unrelated to receiving or tendering common-carrier service likewise may remain enforceable.
Nor does the statement treat federal environmental and safety laws as automatically displaced. The board says potentially overlapping federal statutes should be harmonized where possible, including the Federal Railroad Safety Act, Clean Air Act and Clean Water Act.
Finally, the agency warns that a strong federal legal position does not excuse poor relationships with communities.
“Railroads should not use ICCTA preemption as an excuse to be unresponsive to local public officials,” the board writes, urging communication, information sharing and cooperation even where local regulatory authority is limited.
“The Association of American Railroads (AAR) welcomes the Surface Transportation Board’s policy statement clarifying the federal framework governing rail transportation and the preemption of conflicting state and local regulation,” AAR President and Chief Executive Ian Jefferies said in a statement.
“On a bipartisan basis, Congress established a nationally uniform system for interstate rail transportation. By bringing decades of Board and court decisions together in one practical resource, the statement can help communities, shippers, railroads, and public officials better understand how that framework applies, reduce uncertainty and resolve disputes more efficiently in ways that benefit those states and localities and the domestic economy. Avoiding a patchwork of state and local laws and regulations supports a reliable national rail network that serves manufacturers, farmers, energy producers, and consumers across the country.”
Why it matters: The STB is signaling that cities and states may have less room to block or limit rail-served projects, even when their rules target the railroad’s customer rather than the railroad itself.
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Read more articles by Stuart Chirls here.
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