Canadian Pacific Railway is going ahead with controversial plans to expand its switching yard southeast of downtown St. Paul over the city’s objections, after St. Paul backed down from seeking an environmental review and permits normally required for such a project.

The city had little choice but to concede after the railroad took its case to the U.S. Surface Transportation Board, which is known for shielding railroads from compliance with local and state laws in the name of protecting interstate commerce.

“They don’t want to follow the rules — surprise,” said a frustrated Kathy Lantry, president of the St. Paul City Council, whose East Side district includes the neighborhood and parks surrounding the yard.

The city’s attorneys had consulted experts across the country on the legal doctrine of “pre-emption,” which gives railroads the authority to bypass local and state laws in favor of federal regulations covering everything from land use and pollution to controlling noise.

“It seemed unlikely the city would prevail,” Lantry said. “It’s like they’re a sovereign nation.”

Canadian Pacific now can proceed with its plans to lengthen six tracks — one of which was built without permission — to accommodate trains nearly 2 miles long without having to address a list of environmental, noise and other concerns raised by the city and those living nearby.

Those concerns include the installation of an 880-foot-long steel wall along the Mississippi River that will rise to nearly 11 feet high, upending of the city’s riverfront development master plan and the filling-in of a 6.3-acre wetland near Pig’s Eye Lake, which the city and neighbors say would impact the nearby heron and egret refuge, one of the largest of its kind in the Upper Midwest.

Andy Cummings, a spokesman for Canadian Pacific, said the project will minimize any potential effects on the environment. The expansion will result in switching and blocking (sorting out and reassembling freight train loads) operations at the yard that are safer and more efficient, he said, and will keep the main lines open for those operations.

Known as the Dunn Yard, the switching area between Hwy. 61 and the river was built in the 1950s and is not designed for today’s longer trains. The yard’s arrival tracks are now 7,000 feet long, and will be lengthened to 10,000 feet.

“Our St. Paul yard is critical to that transportation corridor,” Cummings said.

The Dunn Yard long has been a source of frustration over noise — train horns, banging rail cars and squealing brakes — and the railroad has been largely unresponsive, said Tom Dimond, a former St. Paul City Council member, who worries about the impact on parkland to the west and a residential area to the east.

“They are doing this because they want to increase revenue — which makes sense,” Dimond said. “But they are doing so at the expense of parkland, wetlands and neighbors who live nearby.”

The aim of the St. Paul expansion, company documents show, is to take pressure off Canadian Pacific’s switching operations in Chicago and Canada.

Cummings said the railroad plans to start construction as soon as it explains to the U.S. Army Corps of Engineers how it plans to mitigate the loss of wetlands around Pig’s Eye Lake, which is fed by an inlet from the Mississippi, and gets the necessary permits.

The railroad had considered several alternatives to avoid filling the wetlands, but documents show it could find no “practicable alternative.”

Federal law requires wetland replacement at a 2-to-1 ratio, and the railroad plans to do that by buying credits in the State Wetland Bank.

Dispute continues

The railroad and the city still remain locked in an associated dispute before the Surface Transportation Board, a three-member federal panel that oversees railroad regulation.

The city in July told the railroad it needed to submit a state environmental impact statement. The project also would have normally required a slew of other city and state permits, including rezoning because the expansion results in a nonconforming use of the land.

At that point, Canadian Pacific filed its petition with the federal board, seeking a declaration that it not be required to comply with local approval requirements on the basis of pre-emption.

In its response, the city acknowledged that the board almost certainly would rule in favor of the railroad and so it argued the petition was a moot point and no action was needed.

However, St. Paul holds that it still has the right to intervene if Canadian Pacific’s yard expansion poses a threat to health or safety. The city argues that the pre-emption rule doesn’t remove its oversight powers.

In hopes of getting a sweeping declaration of its authority, Canadian Pacific is still pressing the board for a decision. “Clearly, the city cannot use its health, safety and police powers to accomplish what it could not through its preclearance requirements,” it said.

The case is not the first time that St. Paul and Canadian Pacific have been in a legal tangle over pre-emption.

In 2010, after a seven-year battle in federal court, the city lost its case to acquire by eminent domain a 2-mile stretch of vacant railroad land along Ayd Mill Road for use as a bike trail. Federal rules trumped the state’s condemnation law.

The pre-emption doctrine is rooted in the U.S. Constitution’s “supremacy clause,” said Alexandra Klass, a University of Minnesota law professor who has written and taught extensively on the subject.

“When there’s a conflict between state law and federal law, federal law always wins,” she said. That ensures uniformity of laws across all 50 states in areas where Congress deems it necessary, she said.

The historical importance of railroads to the nation’s development and interstate commerce have put them under federal regulation. Pre-emption applies not just to railroads, Klass said, but to an array of issues such as the environment and medical devices.

Dimond said that federal law’s pre-emption of state and local law is “troublesome.” Lantry agreed.

“The problem is, we have no carrot and no stick,” she said, adding she has been involved with the rail yard project for four years.

“My approach has always been, do the right thing because it’s the right thing to do, to work things out like neighbors chatting over the fence. It’s supremely frustrating.”