Padgett v. Surface Transportation Board
804 F.3d 103
1st Cir.2015Background
- G&U (Grafton & Upton Railroad) bought land adjacent to its rail line in North Grafton, MA, and proposed a propane (liquid petroleum gas) transloading facility to transfer propane from rail tank cars to storage and trucks.
- Grafton (the Town) issued a cease-and-desist and sued in state court, asserting that state zoning and permitting laws (including a state tank-permit statute and local zoning prohibitions/special-permit requirements) barred construction.
- The state court enjoined delivery of storage tanks and directed G&U to seek a declaratory preemption determination from the Surface Transportation Board (Board); G&U petitioned the Board.
- The Board found § 10501(b) of the ICCTA preempted the state/local permitting and zoning requirements because the facility constituted "transportation by rail carrier," and concluded safety and construction codes could still apply if nondiscriminatory.
- The Town sought judicial review in federal court challenging (1) scope of ICCTA preemption (local vs. state; health & safety carve-out), (2) whether G&U would actually operate the facility, and (3) whether the Board violated NEPA by failing to prepare environmental analysis.
Issues
| Issue | Plaintiff's Argument (Town) | Defendant's Argument (G&U/Board) | Held |
|---|---|---|---|
| Whether ICCTA preempts local zoning/permit laws regulating the facility | ICCTA preempts only state law, not local ordinances | "State law" in ICCTA includes local laws; Congress intended broad preemption of state/local regulation of rail transportation | Preemption covers local as well as state law; Town's local ordinances are preempted if they regulate rail transportation |
| Whether the facility is "transportation by rail carrier" under §10501(b) (i.e., whether G&U will operate it) | The facility will be built/operated by third-party Propane Companies, not G&U, so it is not rail-carrier transportation | G&U terminated those contracts, presented contracts and verified statements showing it will finance/operate the facility; Board's factual finding entitled to deference | Board's factual finding that G&U will operate the facility is supported by the record and upheld |
| Whether health and safety regulations (traditional police power) are not preempted | Health/safety rules should survive preemption; presumption against preemption applies | Town failed to raise that argument before the Board; agency waiver bars new arguments on review | Argument waived for failing to present it to the Board; court declines to address it on first review |
| Whether the Board violated NEPA by issuing a declaratory order without environmental assessment | Board's preemption determination is a "major Federal action" and the Board issued a FONSI without EA/EIS | Declaratory order was not a major Federal action; Board provided no funds or licensing and declaratory orders are categorically exempt absent extraordinary circumstances | NEPA inapplicable; no NEPA violation; boilerplate FONSI language criticized but harmless |
Key Cases Cited
- Fayard v. Ne. Vehicle Servs., LLC, 533 F.3d 42 (1st Cir.) (Board has jurisdiction over transportation by rail carrier)
- Granite State Concrete Co. v. Surface Transp. Bd., 417 F.3d 85 (1st Cir.) (agency decisions not arbitrary if supported by rational basis in record)
- Tex. Cent. Bus. Lines Corp. v. City of Midlothian, 669 F.3d 525 (5th Cir.) (ICCTA preempts state and local laws within Board's jurisdiction)
- Norfolk S. Ry. Co. v. City of Alexandria, 608 F.3d 150 (4th Cir.) (city ordinances preempted by ICCTA)
- Mountain R.R. Corp. v. Vermont, 404 F.3d 638 (2d Cir.) (transloading and storage facilities fall within Board authority)
- Sierra Club v. Wagner, 555 F.3d 21 (1st Cir.) (NEPA requires agencies to evaluate significant environmental impacts; EIS/EA/FONSI framework)
- Mayaguezanos por la Salud y el Ambiente v. United States, 198 F.3d 297 (1st Cir.) (test for "major Federal action" under NEPA: federal approval a prerequisite and agency control)
- Skidmore v. Swift & Co., 323 U.S. 134 (1944) (deference to agency interpretations based on persuasiveness)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (framework for agency deference; court clarified limited application here)