Del Grosso v. Surface Transportation Board
804 F.3d 110
1st Cir.2015Background
- Grafton & Upton Railroad (G&U), a licensed shortline carrier, built a wood-pellet transloading facility in Upton, MA to receive bulk pellets by hopper car, remove dust, store in silos, bag into 40-lb bags, palletize, and load onto trucks.
- G&U contracted GU Railcare (part of Dana Companies) to operate the transloading services; GU Railcare was not owned by G&U.
- Local residents petitioned the Surface Transportation Board (STB) for a declaratory order that the facility’s vacuuming, screening, bagging, and palletizing were not "transportation by rail carrier" under the ICCTA and thus not preempted by federal law.
- The STB concluded the activities were "transportation" because they facilitated rail carriage (allowing use of hopper cars) and found GU Railcare acted on behalf of G&U, preempting state and local regulation.
- The First Circuit affirmed that a rail carrier operated the facility but vacated and remanded because the STB used an improper efficiency-based test rather than focusing on whether the activities facilitated the physical movement or transfer of property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether vacuuming, screening, bagging, palletizing are "transportation" under ICCTA | These activities are manufacturing/processing, not part of movement; thus not preempted | Activities are part of transportation because they facilitate rail carriage (efficiency; permit hopper cars) | Court: STB was right to treat transloading broadly but erred by relying on efficiency; remand to determine if activities "facilitate the physical movement/transfer" from rail to truck |
| Whether GU Railcare was a "rail carrier" (i.e., activities performed by rail carrier) | GU Railcare is an independent operator; not a rail carrier performing the activities on behalf of G&U | G&U exercised sufficient control and agreements show GU Railcare acted for the carrier | Held: substantial evidence supports STB finding that G&U (through GU Railcare) operated the facility; no error in denying discovery |
| Proper deference to STB's preemption determination | STB argued for Chevron deference | Petitioners urged no Chevron; SKIDMORE or de novo review for legal preemption question | Held: Chevron does not apply to agency preemption rulings; Skidmore deference applies to STB's interpretation and factual findings are reviewed for substantial evidence |
| Whether STB should have allowed discovery into relationships among G&U, GU Railcare, Dana Cos. | Petitioners sought discovery to show sham/avoidance of regulation | STB argued submitted agreements sufficed and discovery was discretionary | Held: STB permissibly denied discovery; petitioners failed to show manifest injustice or material need for additional documents |
Key Cases Cited
- Wyeth v. Levine, 555 U.S. 555 (2009) (agencies lack special authority to pronounce on preemption; agency preemption conclusions not entitled to Chevron)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (framework for judicial deference to agency statutory interpretations)
- Skidmore v. Swift & Co., 323 U.S. 134 (1944) (weight accorded agency interpretations depends on persuasiveness)
- Tex. Cent. Bus. Lines Corp. v. City of Midlothian, 669 F.3d 525 (5th Cir. 2012) (transloading and services related to rail movement can be preempted)
- N.Y. Susquehanna & W. Ry. Corp. v. Jackson, 500 F.3d 238 (3d Cir. 2007) (transloading activities generally preempted)
- Green Mountain R.R. Corp. v. Vermont, 404 F.3d 638 (2d Cir. 2005) (unloading bulk shipments and temporary storage at rail facilities implicates preemption)
- Emerson v. Kansas City S. Ry. Co., 503 F.3d 1126 (10th Cir. 2007) (statutory "transportation" does not cover all activities touching railroads; focus on movement of passengers or property)
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (discussion of circumstances where agency pronouncements on preemption may receive deference)