Vt. Ry., Inc. v. Town of Shelburne
Opinion of the Court
*84This is an appeal from a judgment entered on January 2, 2018, in the United States District Court for the District of Vermont (Sessions, J. ), granting a permanent injunction barring the Town of Shelburne, Vermont ("the Town") from enforcing against Vermont Railway, Inc. ("the Railway") the Town's "Ordinance Regulating the Storage, Handling and Distribution of Hazardous Substances" ("the Ordinance") and §§ 1950.1 and 1950.2(A) of the Performance Standards section of the Town's zoning bylaws. The litigation arises out of the Railway's development of property for use as a road salt transloading facility in the Town. When the Town enacted the Ordinance and then attempted to enforce it against the Railway, the Railway sought injunctive relief in the District Court. Determining that these regulations, as applied to the Railway, are preempted by the Interstate Commerce Commission Termination Act ("ICCTA"),
The issue on appeal is whether the Ordinance falls within an exception to ICCTA preemption that allows the continued application of state and local regulations affecting rail transportation if the regulations constitute a valid exercise of the local body's police powers. The District Court ruled that the Ordinance is not a valid exercise of the Town's police powers because it discriminates against the Railway and unreasonably burdens rail transportation by placing significant restrictions on the movement of rail cars and rail commodities, which restrictions do not meaningfully protect public health and safety. We identify no error in either the District Court's legal analysis of the Town's police powers or its factual findings underlying that analysis, and we thus affirm the judgment of the District Court.
I.
In late 2015, the Railway purchased a parcel of land along its main line in the Town. The Railway intended "to develop a state-of-the-art, rail-to-truck transloading facility ... intended for the handling of bulk commodities, primarily road salt, shipped to Vermont by rail and used for deicing winter roads" ("Facility"). Appellee Br. 1-2. The Railway intended to stockpile sodium chloride (road salt) at the Facility over the summer months for distribution as needed during the winter.
When the Town attempted to enforce a pre-construction permit requirement against the Railway, the Railway sought declaratory and injunctive relief in the District Court, arguing that the ICCTA preempts the Town's local zoning regulations as applied to the Railway. Following a six-day evidentiary hearing, on June 29, 2016, the District Court entered a declaratory order that the ICCTA preempts the Town's pre-construction permit requirement, and enjoined the Town from "enforcing any regulation that prevents the Railway from constructing its proposed facility." J. App. 316. That June 2016 declaratory order determined, as part of the District Court's preemption ruling, that the construction and operations of the Railway's planned salt transloading facility constitute "transportation by rail carrier" as that term is used in the ICCTA. J. App. 332-34. The District Court "reserve[d] judgment on the question of whether the ICCTA preempts other zoning regulations derived from the Town's police powers that relate to the operation of the Railway's proposed facility" and directed the Town to "indicate[ ] precisely which zoning *85regulations it intends to enforce." J. App. 317. The District Court explained that its future consideration of identified regulations would not require it to revisit the "transportation by rail carrier" ruling; rather, the court would merely evaluate whether each such regulation met the police powers exception to ICCTA preemption. J. App. 317, 343-44. The Town moved for reconsideration of the June 2016 order, and the District Court denied that motion in June 2017.
On August 21, 2017, having received input from both parties, the court entered partial final judgment on its June 2016 ruling that the Railway's activities constitute transportation by rail carrier and the ICCTA "preempts the Town['s] ... pre-construction permit requirement and related zoning regulations as to the [Facility]." Sp. App. 7-8. The Town did not appeal from that partial final judgment. Indeed, the Town had specifically indicated it did "not oppose the entry" of partial final judgment, while offering suggested language that modified the Railway's proposed partial final judgment order by more closely mirroring the District Court's June 29 declaratory order. Dkt. No. 193, 2:16-cv-16.
A few weeks earlier, on August 8, 2017, the Town had enacted the Ordinance at issue in this appeal, which the Town identified "as falling under the post-construction police powers it intend[ed] to enforce against the Railway, as requested by the Court's June 29, 2016 Order."
About three weeks later, on September 1, 2017, the Railway moved for a preliminary injunction seeking to restrain enforcement of the Ordinance, following which the District Court held yet another evidentiary hearing. In an Opinion and Order issued on December 7, 2017, the District Court ruled that the Ordinance was also preempted by the ICCTA, and permanently enjoined the Town from enforcing it against the Railway.
II.
As a preliminary matter, we do not have jurisdiction to revisit the District Court's earlier ruling that the Railway's activities in the Town constitute "transportation by rail carrier" under the ICCTA. That is because no appeal was taken from the August 21, 2017 final judgment reflecting that ruling. The Town appealed solely from the District Court's December 7, 2017 order and the January 2, 2018 final judgment on that order. The Town's Notice of Appeal does not identify or reference any other decision or order of the District Court. See Fed. R. App. P. 3(c)(1)(B) (requiring Notice of Appeal to "designate the judgment, order, or part thereof being appealed"); see also New Phone Co. v. City of New York ,
The December 7, 2017 order does not revisit the transportation by rail carrier holdings from June 29, 2016 and June 28, 2017, discussing those rulings only to provide the procedural background of the case and explain that they were now law of the case and no longer at issue: "Because the Court has already determined that the activities conducted at the facility constitute transportation by a rail carrier and are thus subject to the ICCTA's preemption clause, the Court now needs only to determine whether the [ ] Ordinance falls with the scope of ICCTA preemption." Sp. App. 15; see Musacchio v. United States , --- U.S. ----,
Even if we were to assume that the earlier orders were somehow incorporated in the Town's Notice of Appeal of both the December 7, 2017 order and January 2, 2018 judgment, the Town would be barred from attempting to relitigate a question that was already definitively determined through the entry of the August 21, 2017 partial final judgment that it failed timely *87to appeal. See Bowles v. Russell ,
The sole question before this Court on appeal, therefore, is whether the Ordinance meets the police powers exception to preemption by the ICCTA. We have jurisdiction under
III.
We review the application of preemption principles de novo . Marentette v. Abbott Laboratories, Inc. ,
IV.
The only argument advanced by the Town is that "the Ordinance constitutes a valid exercise of the Town's traditional municipal police powers and, therefore, is not preempted by the ICCTA." Appellant Br. 13. The District Court correctly determined the Ordinance is not a valid exercise of the Town's police powers, and we therefore affirm the District Court's grant of a permanent injunction barring the Town from enforcing the Ordinance against the Railway.
The Supremacy Clause of the United States Constitution provides that federal law "shall be the supreme Law of the Land[,] ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. Art. VI, cl. 2. Federal preemption may "occur where compliance with both federal and state regulations is a physical impossibility, or where state law impedes the execution of the full purposes and objectives of Congress." Entergy Nuclear Vt. Yankee, LLC v. Shumlin ,
The ICCTA contains such an express preemption clause. It vests the Surface Transportation Board with exclusive jurisdiction over "(1) transportation by rail carriers," and "(2) the construction, acquisition, operation, abandonment, or discontinuance of ... tracks, or facilities," and states that "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."
We have recognized, however, that:
not all state and local regulations are preempted by the [ICCTA]; local bodies retain certain police powers which protect public health and safety. ... [S]tates and towns may exercise traditional police powers over the development of railroad property, at least to the extent that the regulations protect public health and safety, are settled and defined, can be obeyed with reasonable certainty, entail no extended or open-ended delays, and can be approved (or rejected) without the exercise of discretion on subjective questions.
Green Mountain R.R. Corp. v. Vermont ,
Under Green Mountain , the threshold question in our inquiry into whether a given local regulation is a permissible exercise of the governing body's police power, such that it is not subject to preemption under the ICCTA, is whether that regulation "protect[s] public health and safety." Id . The District Court's finding that the Ordinance does not "achieve[ ] any meaningful health or safety goals" is amply supported by the record. Sp. App. 25; see Sp. App. 22-24. That is, the Town's experts knew of no other legislation that classified road salt as a hazardous material; the Town's own salt storage shed did not have the environmental monitoring mechanisms that were in place at the Facility; the Ordinance outlaws spillage of road salt as may happen at the Facility, but permits the spreading of road salt for the purpose of de-icing motorways, driveways, and sidewalks; and the Town itself spreads road salt throughout the winter months. Indeed, the Town's own expert admitted that the mere storage of road salt causes no environmental impact. Given this evidence, we conclude that the District Court was not clearly erroneous in finding that the Ordinance failed to promote public health and safety. Applying this factual finding in our own de novo review, we conclude that the Town's assertion of a police powers exception to preemption fails as a matter of law.
V.
For the foregoing reasons, the judgment of the District Court is AFFIRMED.
The Ordinance prohibits the storage of substances above certain quantities within 250 meters of a school or waterway: 550 tons of sodium chloride, calcium chloride, magnesium chloride, or potassium chloride; 2,000 gallons on hydraulic oil, diesel fuel, unleaded fuel, heating oil, propane, motor oil, natural gas, or petroleum crude oil; and 34,500 gallons of ammonia, chlorine, or hydrogen fluoride. The Facility is within 250 meters of the LaPlatte River. The Facility holds 80,000 tons of road salt. The only other road salt storage in the Town is the Town's, which holds 550 tons.
Under the Ordinance, storage facilities may be inspected by designated Town officials, and "Health Orders" may be issued to require compliance. Sp. App. 10. A fine of $ 800 a day would be imposed for violations, and in the event an enforcement action were brought by the Town, the fines would go up to $ 10,000 a day. The violator could also be responsible for any costs incurred by the Town in monitoring the site.
The Railway was required to obtain state permits before beginning construction. Pursuant to the Multi-Sector General Permit ("MSGP"), the Railway prepared a Storm Water Pollution Prevention Plan ("SWPP") and applied to the Vermont Department of Environmental Conservation for an authorization to discharge, which was granted and from which the Town did not appeal. The Facility is subject to ongoing monitoring of discharge by the State. This involves upstream and downstream monitoring of the LaPlatte River. When an increase in sodium chloride was detected in the river, it was determined the increase was due to spillage during the transloading process and improvements were made to the Facility to prevent such spillage.
The District Court also held that §§ 1950.1 and 1950.2(A) of the Town's zoning bylaws were preempted because they were duplicative of the Ordinance. The Town does not address the District Court's ruling as to the zoning bylaws in its principal brief on appeal, and any challenge to that ruling is therefore waived.
Even if the Town could surmount this jurisdictional obstacle, however, we would reject any challenge to the ICCTA's application to the Railway's facility for the reasons ably stated by the District Court.
The Town does not argue that the District Court's permanent injunction analysis was erroneous, and, having determined that the District Court's preemption analysis is sound, we do not separately analyze the District Court's imposition of a permanent injunction.
Concurring in Part
*89I agree with my colleagues that the Town's ordinance does not fall within the police powers exception to the ICCTA, and so I concur in Parts I, III, and IV of the majority opinion. I dissent merely with respect to its holding in Part II that we lack jurisdiction to review the district court's conclusion that the Railway's activities constitute "transportation by [a] rail carrier[ ]."
I. BACKGROUND
The procedural quirks of this case bear noting. On January 26, 2016, the Railway filed a complaint, seeking both a declaration that the Town's pre-construction permitting ordinance was preempted by the ICCTA and injunctive relief barring enforcement of the ordinance. On June 29, 2016, the district court entered an order finding that (1) "the construction and operation of the Railway's planned intermodal facility constitute[d] 'transportation by a rail carrier,' " and (2) the ICCTA preempted the Town's pre-construction permitting regime. Accordingly, the district court "enjoin[ed] the Town from enforcing any regulation that prevents the Railway from constructing its proposed facility." Although the Railway completed construction of its facility in June 2017, the district court did not enter partial final judgment on the June 29, 2016 order until August 21, 2017.
Meanwhile, on August 8, 2017, the Town enacted a new ordinance that prohibited the storage of certain quantities of sodium and other chemicals within 250 meters of a school or waterway (the "Storage Ordinance"). On September 1, 2017, the Railway moved for a preliminary injunction, seeking to bar the Storage Ordinance's enforcement. The district court held a preliminary injunction hearing on September 25, 2017, but did not rule on the motion at that time. In the interim, the Court issued a TRO enjoining enforcement of the Storage Ordinance pending the preliminary injunction ruling. After resuming the hearing on November 1 and 2, 2017, the district court issued its December 7, 2017 order, which effectively granted (1) a preliminary injunction to the Railway, (2) judgment for the Railway, and (3) a permanent injunction as the remedy for the judgment.
II. DISCUSSION
A.
The majority first asserts that we lack jurisdiction to review whether the Railway's activities constitute transportation by a rail carrier because the Town's notice of appeal only refers to the December 7, 2017 order. According to the majority, that order discussed the district court's prior transportation-by-rail-carrier ruling "only to provide the procedural background of the case." This misreads both the relevant legal inquiry and the district court's order.
A party seeking a preliminary injunction must establish, among other things, that it "is likely to succeed on the merits," Citigroup Glob. Markets, Inc. v. VCG Special Opportunities Master Fund Ltd. ,
In granting judgment and a permanent injunction on the basis of ICCTA preemption, the district court's December 7, 2017 order necessarily had to find that the Railway's activities constituted "transportation by [a] rail carrier[ ]." Thus, the district court's statement that it had "already determined [in its June 29, 2016 order] that the activities conducted at the facility constitute transportation by a rail carrier" merely reflects that the district court was incorporating by reference its previous legal conclusion into its December 7, 2017 order. In that regard, this case is very different from Shrader v. CSX Transp., Inc. ,
B.
Equally unpersuasive is the majority's alternative conclusion that, even if the December 7, 2017 order adequately ruled on the transportation-by-rail-carrier question, the Town was nonetheless "barred from attempting to relitigate [this] question" at all because it "failed timely to appeal" the August 21, 2017 partial final judgment.
The August 21, 2017 partial final judgment relied on by the majority "finalized" an injunction that barred the Town from enforcing a different, pre-construction ordinance. That ordinance required the Railway to submit its construction plans to the Town for approval before commencing construction on its contemplated storage facility. But by the time the partial final order was issued on August 21, 2017, the storage facility was already constructed . Therefore, an appeal of the partial final judgment would have been pointless, since even vacatur of the injunction would not have enabled the Town to enforce its pre-construction ordinance against a facility that was already built. Put differently, by the time the storage facility was completed in *91June 2017, there was no justiciable controversy between the Town and the Railway that could be remedied by appellate review, as "it is axiomatic that there must be a continuing controversy capable of redress by this Court." Haley v. Pataki ,
C.
What the majority conclusorily acknowledges in footnote four - that it would affirm the district court's transportation-by-rail-carrier ruling anyway - is correct, and the ground on which I would affirm the district court's finding.
The Railway's facility is a transloading center designed "for unloading bulk salt arriving by rail for local distribution by truck and for temporary storage in sheds pending distribution." In other words, as the majority puts it, the facility "stockpile[s] sodium chloride ... over the summer months for distribution as needed during the winter." The ICCTA defines "transportation" to include "a locomotive, car, vehicle, vessel, warehouse ... yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail."
Nor can there be any dispute that the Railway qualifies as a "rail carrier" under the statute. The ICCTA defines "rail carrier" to mean "a person providing common carrier railroad transportation for compensation ...."
III. CONCLUSION
Although I disagree with the majority's waiver finding in Part II, this is ultimately an intramural dispute since we all agree that the Storage Ordinance does not fall within the police powers exception to ICCTA preemption. Accordingly, I would affirm the judgment of the district court in all respects, including that the Railway's activities constitute transportation by a rail carrier.
Reference
- Full Case Name
- VERMONT RAILWAY, INC., Plaintiff-Counter-Defendant - Appellee, v. TOWN OF SHELBURNE, Defendant-Counter-Claimant - Appellant, Joe Colangelo, in His Capacity as Town Manager and Zoning Enforcement Officer, Defendant.
- Cited By
- 4 cases
- Status
- Published