Federal Rail Rulings Stack Up Against State Regulators in Fort Bragg Mill Site Dispute
California Coastal Commission voluntarily withdraws appeal
A pair of federal decisions issued over the past year have steadily eroded the legal foundation on which California state and local regulators had hoped to assert authority over Mendocino Railway’s operations at the former Georgia-Pacific mill site in Fort Bragg, culminating last week in the California Coastal Commission’s decision to drop its appeal before the Ninth Circuit Court of Appeals.
The most recent and consequential blow came Feb. 19, when the U.S. Surface Transportation Board issued a ruling in a separate proceeding involving the Great Redwood Trail Agency. The decision addressed a question at the center of the Coastal Commission’s federal appeal.
The Question That Unraveled the Appeal
When the Coastal Commission filed its petition for review in the Ninth Circuit, its primary argument was straightforward: the STB had failed to consider whether Mendocino Railway actually provides transportation “as part of the interstate rail network.” That question mattered as a legal threshold.
Under federal law, railroads that are part of the interstate rail network fall under the exclusive jurisdiction of the STB and are broadly exempt from conflicting state and local regulations. If Mendocino Railway could be shown to operate only as a local, intrastate carrier disconnected from the national rail system, state and local regulators might have had a stronger argument for asserting permitting authority over the mill site.
The Coastal Commission was betting the STB had never adequately addressed that question — and that the Ninth Circuit might agree.
The February GRTA decision closed that opening.
In that ruling, the STB directly analyzed Mendocino Railway’s connection to the broader rail network and found that the railway’s line is connected to the interstate rail network through its link to the embargoed GRTA line, according to court filings by the Coastal Commission’s own attorneys describing the decision.
“The Coastal Commission is evaluating whether the STB’s analysis sufficiently addresses its contentions on appeal,” Deputy Attorney General Patrick Tuck wrote in a March 5 court filing. Two weeks later, the Commission filed a stipulated voluntary dismissal of its appeal, signed by all parties.
What the Rulings Establish — and What Remains Unsettled
Taken together, the STB’s declaratory order — which confirmed Mendocino Railway’s status as a Class III common carrier under federal jurisdiction — and the February GRTA decision have now established two critical legal facts.
First, Mendocino Railway is a federally regulated common carrier railroad. The STB found the railway acquired that status when it took over the California Western Railroad in 2004, and that a railroad does not forfeit its federal status simply because it is not actively hauling freight.
Second, the railway is connected to the interstate rail network —absent formal abandonment. This is the finding that directly undercut the Coastal Commission’s appellate argument.
Together, those findings mean that state and local regulations that conflict with federal laws governing rail operations or track construction do not apply to the railway’s federally jurisdictional activities at the site.
What the rulings do not resolve — and what remains the central battleground — is precisely where the line falls between railroad activities that are federally preempted and non-railroad activities on the 400-plus-acre property that remain subject to city and state oversight.
That boundary question is the core issue in ongoing litigation, which began when the City of Fort Bragg sued Mendocino Railway in 2021. The Coastal Commission joined that case, and a settlement conference is scheduled for April 15.
The Preemption Problem for Local Regulators
Federal preemption of state and local rail regulation flows from the Interstate Commerce Commission Termination Act, which gives the STB broad authority over rail transportation and generally bars states from regulating matters the STB oversees.
With the STB having now confirmed both Mendocino Railway’s carrier status and its interstate connectivity, the railway can point to a robust body of federal authority when resisting permitting requirements from the Coastal Commission or the City of Fort Bragg for activities it characterizes as railroad operations.
Railway President Robert Jason Pinoli has not been subtle about the implications.
“This order reaffirms our long-held position,” Pinoli said following the STB’s declaratory order. “We’re committed to working with the City and the CCC on the MDA and CatEx. We’re also committed to having this litigation carry on — it’s really that simple.”
Negotiated Framework Remains the Path Forward
Despite the railway’s strengthened legal position, the dispute is not simply a matter of federal preemption sweeping away all local authority. The proposed Master Developer Agreement — which the parties have been negotiating for months — is designed to map out which activities on the site are railroad-related and thus federally preempted, and which fall under local or state jurisdiction.
That agreement, if finalized, would give the city and the Coastal Commission a defined role in overseeing non-railroad development on the property, including environmental cleanup and broader redevelopment.
Mendocino Railway is also separately pursuing a Categorical Exclusion Zone application with the Coastal Commission for rail-related portions of the site — a process that requires a two-thirds Commission vote and is expected to take approximately a year. That process, notably, involves the Commission exercising a role the railway has accepted rather than contested.
The April 15 settlement conference will test whether the parties can reach agreement on those frameworks without going to trial. If no settlement is reached, the case is expected to proceed to trial in June 2026.
Read MendoLocal.News’ coverage of Mendocino Railway and the mill site dispute:
Federal Railroad Board Blocks Great Redwood Trail Abandonment Motion
Skunk Train Chief Details Freight Operations, Federal Oversight Amid Eminent Domain Dispute
California Appeals Court Says Public Utilities Need Not Serve Active Customers
Should the Skunk Train be Part of the Regional Transporation Plan?
California AG Bonta Challenges Mendocino Railway’s Federal Carrier Status
Mendocino Railway Rejects Fort Bragg’s Bid for Yearlong Pause in Litigation
Fort Bragg Plans Public Study Session, Website to Boost Transparency on Mill Site Development
Skunk Train, Fort Bragg Jointly Agree to Set Aside Default in Mill Site Suit
U.S. Supreme Court denies Skunk Train appeal
Federal Railway Agency Affirms Mendocino Railway’s Carrier Status
Default Notice Issued as Stormwater Contamination Battle with Fort Bragg Escalates