If the NC General Assembly abolishes the Ports Railway Commission and lets the State Ports Authority lease port switching operations directly to private operators, would the State Ports Authority become subject to the federal Railway Labor Act?

Plain-English summary

The NC State Ports Authority (SPA) operates the Wilmington and Morehead City ports. For decades, switching operations at the ports (moving rail cars between the ports and connecting carriers) had been performed by the Ports Railway Commission (PRC), a separate state entity that functioned as a buffer for labor law purposes. The arrangement insulated SPA from claims that it was a railway "carrier" subject to the federal Railway Labor Act (RLA).

A legislative proposal was floating to abolish the PRC and let the SPA lease the switching operations directly to private operators. Executive Director Erik Stromberg asked the AG to revisit a 1994 opinion that had warned about legal exposure.

Senior Deputy AG Reginald L. Watkins and Special Deputy AG Victoria L. Voight updated the answer. The legal landscape had changed materially in 1999 to favor abolition.

Why the 1994 opinion was cautious. The longstanding International Longshoreman's Association v. North Carolina Ports Authority litigation (filed in 1969) had been pending at the National Mediation Board for years on the question of whether the SPA and PRC were "under common control" for RLA purposes. The federal district court (1971 and 1974) and Fourth Circuit (1972 and 1975) had previously held that the SPA was subject to the RLA, relying largely on Parden v. Terminal Railway (1964), which had held that states could be subjected to private causes of action under the FELA on a constructive-waiver theory.

If the PRC were abolished and the SPA took over switching directly, the AG worried in 1994 that ILA would press the RLA claim with renewed force, since there would no longer be any structural separation to preserve the buffer.

Two 1999 developments changed the picture.

First, on June 7, 1999, the NMB ruled in In re NC State Ports Authority v. ILA that the PRC was no longer a "carrier" within the meaning of the RLA. The common-control question became moot. The ILA stated it did not intend to appeal. That ended the long-running litigation and removed the most immediate threat.

Second, on June 23, 1999, the U.S. Supreme Court decided College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board. The Court overruled Parden v. Terminal Railway on the constructive-waiver theory that had been the linchpin of the 1970s Fourth Circuit decisions against the SPA. The Court held that states cannot be subjected to private federal-court damages actions on a constructive-waiver theory under federal statutes regulating commerce; sovereign immunity is intact.

The combined effect. With the NMB removing the immediate dispute and College Savings Bank removing the doctrinal foundation, the AG's updated reading is that the SPA would not become subject to the RLA if it leased switching operations directly to private operators. The state's RLA exposure is much weaker than it was in 1994.

Caveat about legislative wisdom. The AG carefully noted, citing D&W, Inc. v. Charlotte (1966), that the wisdom of legislation is for the General Assembly. The AG's analysis is not a recommendation to abolish PRC or transfer assets to SPA; it is only a legal opinion that doing so would not likely trigger RLA application.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The state sovereign immunity doctrine in College Savings Bank has been developed further by the U.S. Supreme Court in subsequent cases including Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) (a directly relevant case for port authorities and federal administrative proceedings). NC's Ports Authority structure has evolved since 1999. Anyone reviewing this question today should consult current federal sovereign immunity doctrine, current Railway Labor Act caselaw, and current NC Ports Authority enabling legislation.

Background and statutory framework

The Railway Labor Act regulates labor relations between railway and airline carriers and their employees. The Act has elaborate dispute-resolution machinery (collective bargaining, mediation, arbitration, presidential emergency boards) designed to prevent strikes that would disrupt interstate commerce. Whether a particular entity is a "carrier" subject to the RLA is a determination made by the National Mediation Board, subject to judicial review.

State-owned railroads and port operations sit awkwardly in the RLA framework. Federal labor law generally applies to private-sector employers. States invoke sovereign immunity to argue they cannot be sued in federal court under federal statutes that regulate commerce. The doctrinal balance has shifted multiple times over the past 60 years.

Parden v. Terminal Railway (1964) was the high-water mark for federal labor law applying to states. The Court held that Alabama's operation of a terminal railroad was a waiver of sovereign immunity for FELA claims. The reasoning was that by operating a commercial railroad in interstate commerce, the state had constructively consented to federal regulation.

College Savings Bank (1999) repudiated Parden on the constructive-waiver theory. The Court held that constructive waiver cannot strip a state of its sovereign immunity. Only express waiver or congressional abrogation under § 5 of the 14th Amendment can do that. The decision rebalanced the doctrine toward state sovereign immunity.

Federal Maritime Commission v. South Carolina State Ports Authority (2002) extended College Savings Bank to federal administrative proceedings, ruling that states cannot be subjected to private actions in administrative tribunals like the FMC. That decision came after this AG opinion but reinforced its trajectory.

The PRC structure was a creative legal workaround. By housing the switching operations in a separate state entity that was arguably the "carrier," NC insulated the SPA itself from carrier classification. The buffer worked through decades of NMB and federal court litigation. The 1999 NMB ruling that PRC was no longer a carrier suggests the buffer concept may also be outdated; the operating realities have changed such that the PRC no longer met the carrier definition.

The opinion is a good illustration of how AG offices track federal law developments that affect state operations. The combination of the NMB ruling and College Savings Bank materially changed the legal risk profile for SPA, and the AG promptly updated his 1994 advice to reflect that.

Common questions

What does the College Savings Bank sovereign immunity doctrine mean for state agencies generally?

It means states cannot be sued in federal court for damages under federal statutes that regulate commerce, absent express waiver or proper congressional abrogation. State agencies retain sovereign immunity. This is a powerful protection that limits private federal litigation against states. It has been the foundation for subsequent decisions in Alden v. Maine (1999), Federal Maritime Commission v. South Carolina State Ports Authority (2002), and others.

What about the National Mediation Board's authority over the SPA?

The NMB's 1999 ruling that PRC was no longer a carrier moots the SPA-RLA question for now. But future operating arrangements could change. If the SPA itself became a carrier in fact (operating its own railway services in interstate commerce), the carrier question could come back. The opinion specifically addresses leasing switching operations to private operators, which would not make the SPA a carrier.

Could the ILA still organize the switching workers under state labor law?

Probably yes. If the workers are state employees, they would be subject to NC's public-employee labor framework (which is restrictive but not absent). If they are private-operator employees under a lease arrangement, they would be subject to the National Labor Relations Act through the private operator, not through the SPA. Either way, the path forward does not run through the RLA.

Did NC abolish the PRC?

The opinion does not say. The legislative proposal was pending as of 1999. Anyone curious about whether and when the PRC was abolished should check the General Assembly's records of subsequent sessions.

Source

• Landing page: https://ncdoj.gov/opinions/applicability-of-railway-labor-act-to-state-ports-authority/

Citations

• Railway Labor Act, 45 U.S.C. § 155
• In re North Carolina State Ports Authority v. International Longshoreman's Association, AFL-CIO, 26 NMB No. 60, File No. CJ-6209
• College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 119 S.Ct. 2219 (1999)
• Parden v. Terminal Ry. of Alabama State Docks Department, 337 U.S. 184 (1964)
• International Longshoreman's Association v. North Carolina Ports Authority, 332 F. Supp. 95 (E.D.N.C. 1971), vacated and remanded, 462 F.2d 1 (4th Cir. 1972)
• International Longshoreman's Association v. North Carolina Ports Authority, 370 F. Supp. (E.D.N.C. 1974), affirmed 511 F.2d 1007 (4th Cir. 1975)
• D&W, Inc. v. Charlotte, 268 N.C. 577 (1966)

Original opinion text

REPLY TO:
Victoria L. Voight
Labor Section
919/716-6680

October 11, 1999

Erik Stromberg
Executive Director
North Carolina State Ports Authority
P.O. Box 9002
Wilmington, N.C. 28402

Re: Advisory Opinion re Applicability of Railway Labor Act to State Ports Authority

Dear Mr. Stromberg:

This letter responds to your recent request that our office revisit its June 13, 1994 Advisory Opinion concerning "any negative legal consequences" associated with a then pending legislative proposal to abolish the Ports Railway Commission (PRC) and provide a current opinion as to "whether the State Ports Authority (SPA) would be subject to the Railway Labor Act if it leased the port switching operations directly to private operators without the 'buffer' of the Ports Railway Commission." Considering the well established principle that the wisdom of legislation is a matter for the General Assembly, D&W, Inc. v. Charlotte, 268 NC 577, 591 (1966), comments expressed herein should not be interpreted as a recommendation either to abolish the PRC or to transfer its assets to the SPA.

The June 13, 1994 Advisory Opinion stated that "[t]he most likely 'negative consequence' of abolishing PRC and transferring its assets to SPA would be in connection with the litigation involving SPA, PRC, and the ILA which is pending before the National Mediation Board." The litigation referred to was In re North Carolina State Ports Authority v. International Longshoreman's Association, AFL-CIO, 26 NMB No. 60, File No. CJ-6209. The action was brought by the International Longshoreman's Association (ILA) against the State Ports Authority (SPA) under the Railway Labor Act (RLA), 45 U.S.C. § 155. At the time the 1994 opinion was issued, the case had been pending in one form or another since 1969, had been to the federal circuit court twice, and was then was currently before the National Mediation Board (NMB) for a determination as to whether the SPA and the PRC were "under common control." On June 7, 1999, the NMB ruled that the PRC was no longer a "carrier" within the meaning of the RLA and thus the question of "whether the SPA and PRC are under common control is moot." The ILA has stated that it does not intend to appeal the NMB decision.

Given the holding of the NMB, it is our opinion that it is highly unlikely that either the NMB or the federal courts would find the SPA to be a "carrier" for purposes of the RLA if it leased the port switching operations directly to private operators "without the buffer of the PRC". Further, a recent decision of the United State Supreme Court has provided new support for our office's original position that RLA does not apply to State-owned railroads. In College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 119 S.Ct. 2219 (June 23, 1999), the United States Supreme Court specifically overruled its earlier holding in Parden v. Terminal Ry. Of Alabama State Docks Department, 337 U.S. 184 (1964) that a state could be subjected to a private cause of action in federal court for damages under the Federal Employers' Liability Act (FELA) under the theory of "constructive waiver." The Parden decision was one of two decisions relied upon by the federal district and circuit courts in their determinations that the SPA, a State agency, was subject to the requirements of the RLA. International Longshoreman's Association v. North Carolina Ports Authority, 332 F. Supp. 95 (EDNC 1971), vacated and remanded, 462 F.2d 1 (4th Cir. 1972); International Longshoreman's Association v. North Carolina Ports Authority, 370 F. Supp. (EDNC 1974), affirmed 511 F. 2d 1007 (4th Cir. 1975). In light of the recent NMB and United States Supreme Court decisions, it is our opinion that the SPA would likely not become subject to the RLA if it leased the port switching operations directly to private operators.

Sincerely,

Reginald L. Watkins
Senior Deputy Attorney General

Victoria L. Voight
Special Deputy Attorney General