stb brief

No. 14-2067 —————————————————————————————————

IN THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

——————— BROOK A. PADGETT; CRAIG DAUPHINAIS; JENNIFER

THOMAS; BRUCE W. SPINNEY, as they are members of the Board of Selectmen of the Town of Grafton,

Petitioners,

v.

SURFACE TRANSPORTATION BOARD; UNITED STATES,

Respondents,

GRAFTON & UPTON RAILROAD COMPANY,

Intervenor. ———————

ON PETITION FOR REVIEW OF A FINAL ORDER OF THE SURFACE TRANSPORTATION BOARD

————————————————————————————————— JOINT BRIEF OF RESPONDENTS

SURFACE TRANSPORTATION BOARD AND UNITED STATES

————————————————————————————————— WILLIAM J. BAER Assistant Attorney General ROBERT B. NICHOLSON SHANA M. WALLACE Attorneys Department of Justice Washington, D.C. 20530 March 20, 2015

CRAIG M. KEATS General Counsel EVELYN G. KITAY Deputy General Counsel CHARLES H.P. VANCE Attorney Surface Transportation Board 395 E Street, SW Washington, D.C. 20423 (202) 245-0275

Case: 14-2067 Document: 00116813268 Page: 1 Date Filed: 03/20/2015 Entry ID: 5894464

i

TABLE OF CONTENTS PAGE(S)

TABLE OF AUTHORITIES ................................................................................... iii GLOSSARY .............................................................................................................. xi ISSUES PRESENTED FOR REVIEW ..................................................................... 1 STATEMENT OF THE CASE .................................................................................. 1

A. Regulatory Framework .............................................................................. 2

B. Background ................................................................................................ 6

C. This Case .................................................................................................... 7

D. The Declaratory Order Proceeding ........................................................... 9

E. The Board’s Decision ............................................................................... 11

SUMMARY OF ARGUMENT ............................................................................... 13 ARGUMENT ........................................................................................................... 15 I. THE BOARD’S DETERMINATION IS ENTITLED TO DEFERENCE ................................................................................................ 15 II. THE BOARD REASONABLY CONCLUDED THAT THE

TRANSLOAD FACILITY IS WITHIN ITS JURISDICTION AND THAT THEREFORE STATE AND LOCAL PERMITTING AND PRECLEARANCE REQUIREMENTS ARE PREEMPTED ...................... 18

A. The Board’s Conclusion That G&U’s Current Plans Call For The

Facility To Be Part Of Its Operations As A Rail Carrier Is Supported By The Evidence. ................................................................... 18

B. The Town’s Arguments That The Board Applied The Wrong

Legal Standard For § 10501(b) Preemption Are Waived And, In Any Event, Are Unsound ........................................................................ 24


ii

1. The Town Waived Its Newly-Asserted Challenges Regarding

The Scope Of § 10501(b) Preemption .................................................. 24

2. In Any Event, The Argument For Narrow Preemption Is Unsound ................................................................................................ 25

III. THE TOWN’S NEPA-RELATED CLAIMS, TO THE EXTENT THEY

ARE NOT WAIVED, ARE WITHOUT MERIT ......................................... 30

A. The Town’s NEPA Challenges Lack Merit ............................................. 30

1. NEPA Does Not Apply Where No “Major Federal Action” Is Involved ................................................................................................ 30

2. NEPA Does Not Apply When An Agency Has No Discretion To

Consider Environmental Factors In Its Decision ................................. 36

3. Documentation Demonstrating Agency Consideration Of Environmental Factors Or Application Of A Specific Categorical Exclusion Was Not Required In This Case ...................... 39

B. The Town Waived Its Newly-Asserted NEPA Challenges ..................... 40

CONCLUSION ........................................................................................................ 41 CERTIFICATE OF COMPLIANCE ....................................................................... 42 CERTIFICATE OF SERVICE ............................................................................... 43


iii

TABLE OF AUTHORITIES* PAGE(S)

CASES

Adrian & Blissfield R.R. v. Village of Blissfield, 550 F.3d 533 (6th Cir. 2008) ........................................................................ 17, 28

Am. Airlines, Inc. v. DOT, 202 F.3d 788 (5th Cir. 2000) .............................................................................. 36

Andrus v. Sierra Club, 442 U.S. 347 (1979) ............................................................................................ 32

Ass’n of Am. R.Rs. v. S. Coast Air Quality Mgmt. Dist., 622 F.3d 1094 (9th Cir. 2010) .............................................................................. 5

*Bos. & Me. Corp. v. Town of Ayer, 330 F.3d 12 (1st Cir. 2003) ............................................................... 3, 4, 5, 18, 28

Bhd. Of Locomotive Eng’rs v. United States, 101 F.3d 718 (D.C. Cir. 1996) ............................................................................ 16

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) ............................................................................................ 16

City of Arlington v. FCC, __U.S.__, 133 S.Ct. 1863 (2013) ........................................................................ 16

*City of Auburn v. United States, 154 F.3d 1025 (9th Cir. 1998) ......................................... 3, 26, 27, 28, 29, 31, 38

Cross-Sound Ferry Servs., Inc. v. ICC, 934 F.2d 327 (D.C. Cir. 1991) ...................................................................... 33, 38

*DOT v. Pub. Citizen, 541 U.S. 752 (2004) ................................................................................ 35, 36, 37

* Authorities upon which we chiefly rely are marked with asterisks.


iv

Emerson v. Kan. City S. Ry., 503 F.3d 1126 (10th Cir. 2007) .................................................................... 17, 28

Fayard v. N.E. Vehicle Servs., LLC, 533 F.3d 42 (1st Cir. 2008) ....................................................................... 3, 26, 28

Fla. E. Coast Ry. v. City of W. Palm Beach, 266 F.3d 1324 (11th Cir. 2001) .................................................................. 4, 5, 28

Franks Inv. Co. v. Union Pac. R.R., 593 F.3d 404 (5th Cir. 2010) .............................................................................. 17

Goos v. ICC, 911 F.2d 1283 (8th Cir. 1990) ............................................................................ 36

Grafton & Upton R.R. Co. v. Town of Milford, 417 F. Supp. 2d 171 (D. Mass. 2006) ................................................................. 22

Granite State Concrete Co. v. STB, 417 F.3d 85 (1st Cir. 2005) ................................................................................. 16

*Green Mountain R.R. v. Vermont, 404 F.3d 638 (2d Cir. 2005) ........................................ 3, 4, 17, 19, 27, 28, 29, 38

Hayfield N. R.R. v. Chi. & N.W. Transp. Co., 467 U.S. 622 (1984) ............................................................................................ 17

Hi Tech Trans, LLC v. New Jersey, 382 F.3d 295 (3d Cir. 2004) ................................................................................. 4

Ill. Commerce Comm’n v. ICC, 879 F.2d 917 (D.C. Cir. 1989) ............................................................................ 29

Massachusetts v. Watt, 716 F.2d 946 (1st Cir. 1983) ............................................................................... 30

Mass. Dep’t of Pub. Welfare v. Sec’y of Agric., 984 F.2d 514 (1st Cir. 1993) ............................................................................... 25

Mayaguezanos por la Salud y el Ambiente v. United States, 198 F.3d 297 (1st Cir. 1999) ......................................................................... 32, 33


v

Mazariegos-Paiz v. Holder, 734 F.3d 57 (1st Cir. 2013) ................................................................................. 25

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) ............................................................................................ 27

Milo Cmty. Hosp. v. Weinberger, 525 F.2d 144 (1st Cir. 1975) ............................................................................... 36

N.H. Motor Transp. Ass’n v. Rowe, 448 F.3d 66 (1st Cir. 2006) ................................................................................. 26

N.Y. & Atl. Ry. v. STB, 635 F.3d 66 (2d Cir. 2011) ..................................................................... 17, 19, 27

N.Y. Susquehanna & W. Ry. v. Jackson, 500 F.3d 238 (3d Cir. 2007) ..................................................................... 3, 28, 29

Nicholson v. ICC, 711 F.2d 364 (D.C. Cir. 1983) ...................................................................... 27, 34

*Norfolk S. Ry. v. City of Alexandria, 608 F.3d 150 (4th Cir. 2010) ..................................................5, 19, 26, 27, 28, 29

Port City Props. v. Union Pac. R.R., 518 F.3d 1186 (10th Cir. 2008) ............................................................................ 4

Ralston Purina Co. v. Louisville & Nashville R.R., 426 U.S. 476 (1976) ............................................................................................ 16

Robertson v. Methow Valley Citizens Council, 490 U.S. 332 (1989) ............................................................................................ 37

Ross v. Fed. Highway Admin., 162 F.3d 1046 (10th Cir. 1998) .......................................................................... 33

Scientists’ Inst. for Pub. Info., Inc. v. Atomic Energy Comm’n, 481 F.2d 1079 (D.C. Cir. 1973) .......................................................................... 35

Sugarloaf Citizens Ass’n v. FERC, 959 F.2d 508 (4th Cir. 1992) .................................................................. 33, 35, 36


vi

*Tex. Cent. Bus. Lines Corp. v. City of Midlothian, 669 F.3d 525 (5th Cir. 2012) ............................................................ 26, 27, 28, 29

Tyrrell v. Norfolk S. Ry., 248 F.3d 517 (6th Cir. 2001) ................................................................................ 5

Unemp’t Comp. Comm’n v. Aragan, 329 U.S. 143 (1946) ............................................................................................ 25

Union Pac. R.R. v. Chi. Transit Auth., 647 F.3d 675 (7th Cir. 2011) .............................................................................. 28

United States v. Coalition for Buzzards Bay, 644 F.3d 26 (1st Cir. 2011) ................................................................................. 30

United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33 (1952) .............................................................................................. 25

United States v. Locke, 529 U.S. 89 (2000) .............................................................................................. 26

Upper Blackstone Water Pollution Abatement Dist. v. EPA, 690 F.3d 9 (1st Cir. 2012) ................................................................................... 25

Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 519 (1978) ...................................................................................... 25, 41

Wyeth v. Levine, 555 U.S. 555 (2009) ............................................................................................ 17

AGENCY DECISIONS**

Alaska R.R.—Constr. & Operation Exemption—A Rail Line to Port

MacKenzie, Alaska, 2011 WL 5857339 (STB served Nov. 21, 2011) ................................................................................................................... 31

Borough of Riverdale—Petition for Declaratory Order—N.Y. Susquehanna & W. Ry., 1999 WL 715272 (STB served Sept. 10, 1999) ............................................................................................................... 3, 31

** Agency decisions are available on Lexis and Westlaw, and Board decisions

after November 1, 1996, are also available at www.stb.dot.gov.


vii

Brazos River Bottom Alliance—Petition for Declaratory Order, 2014 WL 640879 (STB served Feb. 19, 2014) ............................................................ 34

Caddo Valley R.R.—Abandonment Exemption—In Pike & Clark Cntys., Ark., 2012 WL 486357 (STB served Feb. 14, 2012) .............................. 31

Cal. High-Speed Rail Auth.—Petition for Declaratory Order, 2014 WL 7149612 (STB served Dec. 12, 2014) ............................................... 4, 30, 32

Canadian Nat’l Ry.—Control—EJ&E W. Co., 2008 WL 8139694 (STB served Dec. 24, 2008)................................................................................ 31

City of Alexandria—Petition for Declaratory Order, 2009 WL 381800 (STB served Feb. 17, 2009) .......................................................................... 19, 20

CSX Transp., Inc.—Petition for Declaratory Order, 2005 WL 1024490 (STB served May 3, 2005) ..................................................................... 3

Denver & Rio Grande Ry. Historical Found.—Petition for Declaratory Order, 2012 WL 1498613 (STB served Apr. 30, 2012) ................................................................................................................... 21

DesertXpress Enters., LLC—Petition for Declaratory Order, 2007 WL 1833521 (STB served June 27, 2007) ................................................... 30, 31

Friends of the Aquifer, 2001 WL 928949 (STB served Aug. 15, 2001) ............. 4, 34

Grafton & Upton R.R.—Petition for Declaratory Order, 2014 WL 292443 (STB served Jan. 27, 2014) .................................................... 4, 17, 24, 34

Hi Tech Trans LLC—Petition for Declaratory Order—Newark, N.J., 2003 WL 21952136 (STB served Aug. 14, 2003) .............................................. 19

Joint Petition for Declaratory Order—Bos. & Me. Corp. & Town of Ayer, MA, 2001 WL 458685 (STB served May 1, 2001) ............................... 3, 33

M&G Polymers v. CSX Transp., Inc., 2012 WL 4469326 (STB served Sept. 27, 2013) ............................................... 39

New England Transrail, LLC—Construction, Acquisition & Operation Exemption—In Wilmington & Woburn, MA, 2007 WL 1989841 (STB served July 10, 2007) .............................................................. 21, 22, 34, 37


viii

Norfolk S. Ry.—Petition for Declaratory Order, 2010 WL 691256 (STB served Mar. 1, 2010) ................................................................................. 20

N. San Diego Cnty. Transit Dev. Bd.—Petition for Declaratory Order, 2002 WL 1924265 (STB served Aug. 21, 2002) ................................................ 21

Providence & Worcester R.R.—Petition for Declaratory Order—Gardner Branch, 2011 WL 2076463 (STB served May 26, 2011) ................... 22

Sea-3, Inc.—Petition for Declaratory Order, 2015 WL 1215490 (STB served Mar. 17, 2015) ........................................................................................... 5

Soo Line R.R.—Petition for Declaratory Order, 2014 WL 7330097 (STB served Dec. 23, 2014).............................................................................. 3, 5

Springfield Terminal Ry.—Petition for Declaratory Order—Reasonableness of Demurrage Charges, 2010 WL 2405021 (STB served June 16, 2010) ......................................................................................... 21

Town of Babylon & Pinelawn Cemetery—Petition for Declaratory Order, 2008 WL 275697 (STB served Feb. 1, 2008) ......................................... 19

Town of Babylon & Pinelawn Cemetery—Petition for Declaratory Order, 2009 WL 3329242 (STB served Oct. 16, 2009) ..................................... 27

Town of Milford, MA—Petition for Declaratory Order, 2004 WL 1802301 (STB served Aug. 12, 2004) ................................................................ 22

TTX Co.—Application for Approval of Pooling of Car Service with Respect to Flatcars, 2014 WL 4922384 (STB served Oct. 1, 2014) ................. 39

Union Pac. R.R.—Petition for Declaratory Order—Rehab. of Mo.-Kan.-Tex. R.R. Between Jude & Ogden Junction, Tex., 1998 WL 525587 (STB served Aug. 21, 1998) .................................................................. 34

United Transp. Union v. Bessemer & Lake Erie R.R., 342 I.C.C. 849 (1974) ......................................................................................... 38

Viking Starship, Inc., Common Carrier Application (Montauk, NY), 6 I.C.C.2d 228 (Nov. 27, 1989) ............................................................................. 38


ix

STATUTES

5 U.S.C. § 554(e) ....................................................................................................... 2

42 U.S.C. § 4332(C)............................................................................................. 5, 30

49 U.S.C. § 721 .......................................................................................................... 2

49 U.S.C. § 722(c) ................................................................................................... 23

49 U.S.C. § 10101 .............................................................................................. 27, 28

49 U.S.C. § 10102 ................................................................................................ 3, 37

49 U.S.C. § 10501(a) ........................................................................................passim

49 U.S.C. § 10501(b) ........................................................................................passim

49 U.S.C. § 10707 .................................................................................................... 39

49 U.S.C. § 10901 ........................................................................................ 31, 33, 34

49 U.S.C. § 10903 .................................................................................................... 31

49 U.S.C. § 10906 .................................................................................. 15, 27, 33, 34

49 U.S.C. § 11321 .................................................................................................... 31

49 U.S.C. § 11322 .................................................................................................... 39

REGULATIONS

40 C.F.R. § 1500.1 ..................................................................................................... 5

40 C.F.R. § 1501.4 ................................................................................................... 39

40 C.F.R. § 1508.4 ................................................................................................... 39

40 C.F.R. § 1508.18 ............................................................................................. 6, 32

49 C.F.R. § 1105.6 ................................................................................................... 40

49 C.F.R. § 1114.21 ................................................................................................. 21


x

OTHER AUTHORITIES

Administrative Procedure Act .................................................................................. 16

Clean Air Act ............................................................................................................. 5

Clean Railroads Act of 2008 .................................................................................... 27

Clean Water Act ......................................................................................................... 5

Federal Railroad Safety Act ....................................................................................... 5

Final Guidance for Federal Departments & Agencies on Establishing, Applying, and Revising Categorical Exclusions Under the National Environmental Policy Act, 75 Fed. Reg. 75,628 ................................................ 40

H.R. Rep. No. 104-311 ........................................................................................ 4, 30

Interstate Commerce Act ................................................................... 2, 17, 25, 28, 29

ICC Termination Act of 1995 .............................................................................. 2, 29

National Environmental Policy Act ..................................................................passim

Safe Drinking Water Act............................................................................................ 5


xi

GLOSSARY Board: Surface Transportation Board CEQ: Council of Environmental Quality CSXT: CSX Transportation, Inc. FMCSA: Federal Motor Carrier Safety Administration G&U: Grafton & Upton Railroad Co. ICA: Interstate Commerce Act ICC: Interstate Commerce Commission ICCTA: ICC Termination Act of 1995 NEPA: National Environmental Policy Act NGL: NGL Supply Terminals, Inc. Propane: liquefied petroleum gas R.A.: record appendix Spicer: Spicer Plus, Inc. STB: Surface Transportation Board


1

ISSUES PRESENTED FOR REVIEW

1. Whether the Surface Transportation Board (Board or STB) properly declared

that a planned new operation conducted by a rail carrier on its own property

transloading shipments between railcars and trucks would fall within the Board’s

jurisdiction under 49 U.S.C. § 10501(a) and therefore would be covered by the

statutory rail carrier preemption provision at 49 U.S.C. § 10501(b).

2. Whether the Board was required to conduct a review of potential impacts to

the human environment under the National Environmental Policy Act (NEPA)

before it could declare that certain described rail activities, over which the agency

would have no licensing authority, would be subject to the statutory rail carrier

preemption provision.

STATEMENT OF THE CASE

This case involves application of the statutory rail carrier preemption

provision (49 U.S.C. § 10501(b)) to the construction and operation of a facility that

will be used to transload (i.e., transfer) liquefied petroleum gas (propane) from

railcars to trucks. The facility is in North Grafton, Massachusetts (part of the

Town of Grafton), on property owned by Grafton & Upton Railroad Company

(G&U), a licensed rail carrier.

In the proceeding below, Petitioners (the Town) claimed that because G&U

will not construct, operate, finance, or control operations at the facility, the facility


2

does not involve transportation by rail carrier and therefore is subject to all of the

state and local laws that would apply to any non-rail business. In the declaratory

order decision1 under review, Grafton & Upton R.R.—Petition for Declaratory

Order, 2014 WL 4658736 (STB served Sept. 19, 2014) (Preemption Decision),2

the Board reviewed the evidence of record and found that G&U had shown that it

intended to construct and operate the facility itself. Accordingly, the Board

concluded that the project as proposed would come within its jurisdiction under 49

U.S.C. § 10501(a) and therefore qualify under 49 U.S.C. § 10501(b) for federal

preemption from most state and local laws, including the zoning, environmental,

and land use regulations that the Town wants to impose.

A. Regulatory Framework

The Interstate Commerce Act (ICA), 49 U.S.C. § 10501(a), gives the Board

jurisdiction over “transportation by rail carrier.” Section 10501(b), as broadened

by the ICC Termination Act of 1995 (ICCTA),3 expressly provides that where the

Board has jurisdiction over “transportation by rail carriers,” which includes the

1 Under 5 U.S.C. § 554(e) and 49 U.S.C. § 721, the Board may issue a declaratory order to terminate a controversy or remove uncertainty.

2 Subsequent citations to the Preemption Decision will be to the Record Appendix (R.A.).

3 Pub. L. No. 104-88, 109 Stat. 803 (1995). In ICCTA, Congress abolished the Interstate Commerce Commission (ICC), transferred its rail regulatory functions and proceedings to the STB, and provided that ICC precedent would remain applicable.


3

carriers’ rail facilities,4 that jurisdiction is “exclusive,” and state and local laws are

generally preempted.

The Board and the courts have consistently held that, for activities over

which the Board has jurisdiction, § 10501(b) categorically preempts state or local

permitting or preclearance requirements—including zoning ordinances and

environmental and land use requirements—that, by their nature, could be used to

deny a rail carrier’s ability to conduct rail operations.5 Other state or local

regulations may be preempted “as applied;” that is, only if they would have the

effect of unreasonably burdening or interfering with rail transportation, which is a

fact-specific determination based on the individual circumstances of each case.6

4 The term “transportation” is broadly defined at 49 U.S.C. § 10102(9) to

include, in relevant part, “a yard, property, [or] facility…related to the movement of…property…by rail…regardless of ownership or an agreement concerning use.”

5 See, e.g., Fayard v. N.E. Vehicle Servs., LLC, 533 F.3d 42, 47-48 (1st Cir. 2008); Bos. & Me. Corp. v. Town of Ayer, 330 F.3d 12, 16-17 (1st Cir. 2003) (Town of Ayer II); Green Mountain R.R. v. Vermont, 404 F.3d 638, 642-43 (2d Cir. 2005); City of Auburn v. United States, 154 F.3d 1025, 1030-31 (9th Cir. 1998); Soo Line R.R.—Petition for Declaratory Order, 2014 WL 7330097, at *4-5 (STB served Dec. 23, 2014). Categorically preempted regulations are preempted “regardless of the context or rationale for the action.” CSX Transp., Inc.—Petition for Declaratory Order, 2005 WL 1024490, at *2 (STB served May 3, 2005) (citing Green Mountain, 404 F.3d at 642-45, and City of Auburn, 154 F.3d at 1030-31).

6 See N.Y. Susquehanna & W. Ry. v. Jackson, 500 F.3d 238, 252 (3d Cir. 2007) (Jackson); Joint Petition for Declaratory Order—Bos. & Me. Corp. & Town of Ayer, MA, 2001 WL 458685, at *6 (STB served May 1, 2001) (Town of Ayer I); Borough of Riverdale—Petition for Declaratory Order—N.Y. Susquehanna & W. Ry., 1999 WL 715272, at *6 (STB served Sept. 10, 1999).


4

Moreover, preemption applies even where the Board does not license and/or

actively regulate the activity involved.7

The purpose of the § 10501(b) rail carrier preemption provision is to prevent

a patchwork of local and state regulation from unreasonably interfering with

interstate commerce. See H.R. Rep. No. 104-311, at 95-96 (1995), reprinted in

1995 U.S.C.C.A.N. 793, 808. Thus, both the courts and the Board have

emphasized the importance of national uniformity in laws governing rail

transportation when interpreting § 10501(b),8 and the key question in many

preemption cases, as here, is whether a particular activity is in fact performed by a

rail carrier.9

7 See, e.g., Town of Ayer II, 330 F.3d at 16; Port City Props. v. Union Pac.

R.R., 518 F.3d 1186, 1188-89 (10th Cir. 2008); Green Mountain, 404 F.3d at 642; Grafton & Upton R.R.—Petition for Declaratory Order, 2014 WL 292443, at *4 (STB served Jan. 27, 2014) (Grafton & Upton Rail Yard); Friends of the Aquifer, 2001 WL 928949, at *4 (STB served Aug. 15, 2001).

8 Compare, e.g., Fla. E. Coast Ry. v. City of W. Palm Beach, 266 F.3d 1324, 1339 (11th Cir. 2001) (Fla. E. Coast) (local regulation of non-carrier’s aggregate distribution business conducted on property leased from rail carrier allowed because it would not result in “patchwork of regulation” of the rail industry) with Cal. High-Speed Rail Auth.—Petition for Declaratory Order, 2014 WL 7149612, at *5 (STB served Dec. 12, 2014) (state environmental regulation of rail construction project preempted because it would subvert § 10501(b)’s purpose of preventing “patchwork of local regulation from unreasonably interfering with interstate commerce”).

9 Where an activity, even though it is on rail property, cannot be considered transportation by rail carrier under § 10501(a), there is no preemption. See, e.g., Hi Tech Trans, LLC v. New Jersey, 382 F.3d 295, 309 (3d Cir. 2004); Fla. E.


5

Although § 10501(b) preemption is broad, localities retain their police

powers to protect public health and safety—e.g., electrical, plumbing, and fire

codes—provided that they do not discriminate against rail carriers or unreasonably

burden interstate commerce.10 Section 10501(b) also does not interfere with the

role of state and local agencies in implementing federal environmental statutes

such as the Clean Air Act (42 U.S.C. § 7401 et seq.), the Clean Water Act (33

U.S.C. § 1311 et seq.), and the Safe Drinking Water Act (42 U.S.C. § 300f et seq.),

unless such implementation unreasonably interferes with interstate commerce.11

Finally, NEPA (42 U.S.C. § 4321 et seq.) directs federal agencies to

consider the environmental consequences of “major Federal actions significantly

affecting the quality of the human environment.” Id. § 4332(2)(C).12 Under the

Council of Environmental Quality (CEQ) regulations implementing NEPA, “major

Coast, 266 F.3d at 1336-37; Sea-3, Inc.—Petition for Declaratory Order, 2015 WL 1215490, at *4 (STB served Mar. 17, 2015).

10 See Norfolk S. Ry. v. City of Alexandria, 608 F.3d 150, 158-60 (4th Cir. 2010) (City of Alexandria II); Town of Ayer II, 330 F.3d at 16-17; Soo Line, 2014 WL 7330097, at *4-5.

11 See Town of Ayer II, 330 F.3d at 16-17; Ass’n of Am. R.Rs. v. S. Coast Air Quality Mgmt. Dist., 622 F.3d 1094, 1098 (9th Cir. 2010). Section 10501(b) likewise does not preempt Federal Railroad Administration safety regulation under the Federal Railroad Safety Act (49 U.S.C. § 20101 et seq.). See Tyrrell v. Norfolk S. Ry., 248 F.3d 517, 522-23 (6th Cir. 2001).

12 NEPA’s purpose is to ensure that “high quality” environmental information “is available to public officials and citizens before decisions are made and before actions are taken.” 40 C.F.R. § 1500.1(b).


6

Federal actions” include regulatory approval of projects proposed by private

parties. 40 C.F.R. § 1508.18. Thus, the Board conducts an environmental review

under NEPA prior to exercising its regulatory authority—e.g., when it authorizes

proposals to construct, abandon, acquire, or consolidate rail lines by carriers that

operate as part of the interstate rail network. See 49 U.S.C. §§ 10901-07 & 11323-

25.

B. Background

G&U owns and operates a rail line in Massachusetts extending 16.5 miles

between its connection with a CSX Transportation, Inc. (CSXT) line in North

Grafton and another CSXT line in Milford. R.A. 59. In January 2012, G&U

bought a parcel of land in North Grafton immediately adjacent to its line and

existing rail yard. G&U said it intended to construct a transload facility on the

parcel and use it to transload propane received by tank car in North Grafton to

storage tanks and then to trucks for delivery to propane dealers across New

England. G&U retained LPG Ventures, Inc. (a firm specializing in propane

transload facilities) to design and build the transloading facility. G&U said it

planned to invest $1.8 million of its own funds and to raise capital for the

remaining $3.2 million in costs. R.A. 8-9.

In December 2012, G&U notified the Town that four 80,000 gallon propane

storage tanks were about to be delivered to its rail yard. The Town, citing its


7

municipal zoning and permitting ordinances, issued a cease and desist order

requiring G&U to halt construction on the project. It also filed a complaint in the

Superior Court for Worcester County (Superior Court), arguing that construction of

the transload facility would violate the Town’s permitting requirements and zoning

and water supply protection by-laws. G&U removed the case to the federal district

court (District Court), which sent it back to the Superior Court without addressing

preemption. On June 12, 2013, the Superior Court enjoined the delivery of the

storage tanks and directed G&U to comply with the Town’s cease and desist order.

It also stayed proceedings pending a determination by the Board on preemption

and directed G&U to file a petition for declaratory order. R.A. 12-14.

C. This Case

G&U asked the Board for a declaratory order regarding preemption on July

24, 2013. R.A. 3. It told the agency that it had originally planned to develop the

transload operation in conjunction with several non-railroad businesses (generally

referred to as the “Propane Companies”), but that after the Superior Court’s ruling,

it decided to build and operate the transload facility by itself. Thus, it had

contracted with the Propane Companies to eliminate their involvement in the

project, and G&U alone would finance construction of the facility.13 G&U said it

13 To finance construction, G&U stated that it would rely on a combination

of financing sources that would not involve the Propane Companies, including (1)


8

would hire the necessary qualified operating personnel, continue to use its

interchange partner CSXT to invoice and collect customer payments, and continue

to retain the services of experts on applicable safety regulations.14 R.A. 9-10 & 14-

15.

The Town replied on August 19, 2013, that G&U’s new plan to finance,

construct, and operate the facility on its own was neither credible nor feasible. The

Town questioned whether G&U would actually own and operate the transload

facility, arguing that G&U’s executives had testified to the District Court that

involvement by the Propane Companies in the construction and operation of the

facility was important. And the Town generally disputed G&U’s ability to finance

and operate the facility. R.A. 99-113.15

current cash flow from other G&U operations, and (2) financing from other business entities controlled by Jon Delli Priscoli (G&U’s owner, president, and chief executive officer). R.A. 68. G&U submitted various documents, including verified statements from Priscoli and Eric Moffett (G&U’s vice president of business development), to support its contention that the Propane Companies no longer had any role in the financing, construction, and operation of the facility. R.A. 59-72 & 84-90.

14 G&U also submitted a verified statement from Thomas Godfrey, a consultant hired by G&U to prepare a fire safety analysis and assist in the review of and compliance with applicable safety regulations. R.A. 92-95.

15 The American Short Line and Regional Railroad Association filed a reply in support of G&U’s petition. R.A. 96. The Commonwealth of Massachusetts asked the Board to clarify that the transload facility would be subject to relevant provisions of the state fire safety and aboveground storage tank construction codes even if federal preemption applied. R.A. 232-44. It also told the Board it had


9

G&U supplemented its petition for declaratory order on September 9, 2013.

The supplement documented that G&U had now fully terminated the Propane

Companies’ involvement in the financing, construction, and operation of the

transload facility. R.A. 279-359.

On September 17, 2013, the Town replied that none of the documents

submitted with G&U’s supplement demonstrated G&U’s ability to finance the deal

on its own and to comply with federal hazardous materials regulations, and did not

show the complete withdrawal from the project by NGL Supply Terminals Co.

(NGL), one of the Propane Companies. R.A. 373-78.

D. The Declaratory Order Proceeding

The Board instituted a declaratory order proceeding on January 27, 2014.

R.A. 379-80. G&U then submitted verified statements from Priscoli and Lawrence

Chesler, president of Spicer Plus, Inc. (Spicer), another of the Propane Companies,

which attested to the termination of the previous agreements between G&U and the

Propane Companies. R.A. 385-414.16 Priscoli’s statement also provided further

settled with G&U regarding claims involving the Massachusetts Wetlands Protection Act. R.A. 267-68.

16 G&U explained that the Equipment Note (R.A. 338-39) issued to GRT Financing, another of the Propane Companies, “is akin to reimbursement of GRT for expenditures it made to acquire the tanks and other equipment and to pay for the construction work that has been completed thus far.” R.A. 390 n.2 (citing Priscoli’s statement (R.A. 401)). G&U further explained that the note “does not afford GRT any ability to have any role or input in, much less to control, the


10

explanation of G&U’s plan to finance the construction. R.A. 400-04. G&U

testified that increases in rail traffic and revenues had enhanced its ability to

complete construction of the transloading facility without any financing assistance

or guarantees of propane traffic from the Propane Companies. It detailed the

additional financing available from other companies owned by Priscoli. G&U also

pointed out that the sale of propane in New England is expected to be profitable, as

the already significant demand for propane is increasing. Finally, G&U elaborated

on its plans to identify and hire qualified employees to perform transloading

operations safely. R.A. 392-96 & 401-05.

The Town replied that, “other than various verified statements,” R.A. 417,

G&U had not submitted credible evidence of financial resources to construct the

facility on its own or with assistance from Priscoli-owned companies. It said that

publicly-available information showed that Priscoli’s assets were heavily

leveraged, and thus that G&U’s financial condition had not really improved. It

also argued that the operation would not be financially viable absent volume

commitments from the Propane Companies, and that G&U had not adequately

demonstrated the knowledge and experience needed to handle hazardous materials

properly. Finally, the Town took the position that, notwithstanding the agreements construction or operation of the facility; rather, it is a passive interest that will allow GRT to be reimbursed for expenditures that inure solely to the benefit of G&U.” R.A. 391 n.2.


11

that G&U had provided terminating the Propane Companies’ involvement, G&U

had still not supported its claim that NGL’s involvement with the facility had

ended. R.A. 417-23.

On April 1, 2014, G&U filed an unopposed reply to the Town’s reply,

offering additional information about Priscoli’s assets, the facility’s financial

viability, NGL’s status, other G&U revenues, and G&U’s ability to operate the

transload facility safely. R.A. 589-97.

E. The Board’s Decision

The Board held that the construction and operation of the transload facility,

as described in G&U’s filings, would be part of G&U’s rail operations, and that

therefore Grafton’s permitting and preclearance requirements, including zoning

ordinances, would be categorically preempted. Preemption Decision, R.A. 607 &

613. After reviewing the record, the Board was satisfied that G&U had

“provide[d] evidence that [the original] arrangements [between G&U and the

Propane Companies] have been terminated and that G&U now plans to construct

and control the facility and the activities to be conducted there.” Id., R.A. 611.

The Board observed that the Town had not disputed the legality of G&U’s

new contracts and the agreements terminating G&U’s original proposal. The

Board noted the Town’s argument that, because G&U had originally structured the

operation to include important help from the Propane Companies, there must be


12

some “undisclosed vehicle that subverts the proffered agreements and maintains

control of the facility in the hands of the Propane Companies.” Id. But, as the

Board said, businesses routinely change their plans to address potential legal

concerns, and so G&U was entitled to revise its initial plans by terminating all

Propane Company involvement in the project. Id.

The Board found no merit in the Town’s argument that NGL, one of the

Propane Companies with an indirect role in the initial plan, might still be involved

in activities related to the facility because it never signed a termination agreement.

As the Board explained, the Town simply presented no “evidence to suggest that

NGL may still be involved with the project.” Id., R.A. 612.17

Addressing the Town’s claims regarding financing, the Board credited

Priscoli’s showing that he has sufficient assets to finance the project as it is

currently planned, that the sale of propane in New England is expected to be

profitable, and that the demand for propane is both significant and increasing. As

for the Town’s assertion that Priscoli and his businesses are already overleveraged,

the Board credited G&U’s explanation that one of the “overleveraged” mortgages

is in fact held by a company that Priscoli owns, that another property has been

17 G&U had explained that NGL’s only role in the initial plan had been to guarantee performance by Patriot Gas Supply (another of the Propane Companies) of its minimum annual volume commitment. Therefore, termination of G&U’s agreement with Patriot left nothing for NGL to guarantee, and so formal termination of NGL’s involvement was unnecessary. R.A. 592-93.


13

appraised much higher than the Town’s suggested valuation, and that the other

properties have substantial equity and cash flow. Id., R.A. 612 & n.17.

While the Board did not dispute the Town’s evidence that G&U had no

experience in handling propane, it found no reason to disbelieve G&U’s promise to

hire the personnel needed for safe operation of the facility. Id., R.A. 613. The

Board therefore was satisfied that “the evidence of record now before the Board

demonstrates that G&U’s current plans call for the transloading facility to be an

integral part of its operations as a rail carrier,” and that construction and operation

of the facility therefore would come within the Board’s jurisdiction and qualify for

federal preemption under § 10501(b). Id.

Finally, the Board told Massachusetts that—with the exception of the

aboveground storage tank construction permit requirement—the state’s fire and

storage tank safety codes would apply to the facility, so long as they are enforced

in a non-discriminatory manner. Id., R.A. 613-14.

SUMMARY OF ARGUMENT

The Board’s jurisdiction under § 10501(a) extends to transportation

activities performed by a rail carrier—activities that are shielded from the

application of most state and local laws by § 10501(b). Here, after reviewing all of

the evidence, the Board reasonably concluded that under its revised plan, G&U

intended to construct and operate the propane transload facility by itself; that the


14

facility would therefore constitute transportation “by” a rail carrier under §

10501(a); and that the Town’s zoning, environmental, and land use regulations

would thus be preempted under § 10501(b).

The Town argues that these findings were incorrect because G&U did not

prove by “factually unrebuttable” evidence (Pet. Brief 38) that it actually would

construct and operate the facility on its own. But the record contained powerful

evidence that G&U had terminated its prior arrangements, evidence that included

the original agreements, the subsequent termination agreements, and the

replacement contracts executed by G&U and the Propane Companies. G&U also

provided verified statements from its executives and Propane Company executives

attesting to the fact that the Propane Companies no longer factored into G&U’s

plans to construct and operate the transload facility. In contrast, there was no

evidence to support the Town’s claim that the Propane Companies were still

involved.

The Town’s argument that preemption should be construed narrowly so as to

allow the Town to regulate the transload facility was never raised in the proceeding

below and therefore has been waived. The argument is unsound in any event,

flying in the face of virtually all precedent addressing the question, which holds

that state and local permitting and preclearance requirements—such as the zoning,

environmental, and land use regulations at issue in this case—are categorically


15

preempted regardless of their purpose because by their nature they can be used to

deny a rail carrier’s ability to conduct rail operations and thereby unreasonably

interfere with interstate commerce.

Finally, the Town also never raised a NEPA argument before the Board in

the instant proceeding, and thus it has waived that issue as well. The Town’s

NEPA argument is unsound, in any case. The Board’s declaratory order involved

no exercise of the Board’s regulatory authority since the project falls within the

licensing exception for ancillary facilities under 49 U.S.C. § 10906. Because

construction and operation of the facility do not require Board approval, the

Board’s declaratory order is not a “major Federal action” to which NEPA

obligations attach. NEPA also does not apply because the Board has no discretion

to consider environmental factors when rendering jurisdictional and preemption

determinations in cases like this one, and thus have no power to change the

agency’s decision.

ARGUMENT I. THE BOARD’S DETERMINATION IS ENTITLED TO

DEFERENCE.

The Town disputes the Board’s finding that the transload facility as

contemplated by G&U would be a rail carrier operation that would fall under the

Board’s § 10501(a) jurisdiction. To the extent this finding implicates the Board’s


16

interpretation of the scope of its own jurisdiction under the statute it is charged

with administering, it is entitled to Chevron deference.18

To the extent this finding involves factual determinations, a court may not

set aside a decision of the Board (including a declaratory order) under the

Administrative Procedure Act unless it is arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.19 The STB’s decision is not

arbitrary or capricious if a rational basis for the decision exists in the facts on the

record, and a court may not substitute its judgment for that of the agency.20 It is

the agency’s exclusive province to draw legitimate inferences from the evidence

presented and to determine the weight that evidence should be given.21

The Town also argues that the Board’s interpretation of preemption is

incorrect. Because the Town did not challenge the scope of § 10501(b) preemption

before the Board—and in fact specifically conceded its proper scope in a similar

18 Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). See City of Arlington v. FCC, __U.S.__, 133 S.Ct. 1863 (2013); Bhd. Of Locomotive Eng’rs v. United States, 101 F.3d 718, 726 (D.C. Cir. 1996) (ICC determination regarding the scope of its own jurisdiction entitled to Chevron deference).

19 Granite State Concrete Co. v. STB, 417 F.3d 85, 91 (1st Cir. 2005). 20 Id. at 91-92. 21 Ralston Purina Co. v. Louisville & Nashville R.R., 426 U.S. 476, 477-78

(1976) (per curiam). Of course, this case is different from the typical adjudication because if the facts change in the future—e.g., if it turns out that the facility is in fact run by an independent third-party operator—then preemption might not apply and the Town might be able to regulate the facility. See infra at n.33.


17

context in a recent proceeding involving these parties, Grafton & Upton Rail Yard,

2014 WL 292443, at *2—the Town’s claim that preemption is in fact very narrow

is not properly at issue before this Court. But to the extent the Court does consider

the Town’s arguments in this regard, the Board’s conclusions regarding the scope

of § 10501(b) preemption, though not binding, are accorded deference provided

they reflect a reasonable and well laid-out interpretation of the relevant

considerations.22 Thus, the Town’s assertion that review is de novo (Pet. Brief 22)

is simply wrong. The courts have consistently found that, as the agency authorized

by Congress to administer the ICA, the “Board is uniquely qualified to determine

whether state law…should be preempted by [§ 10501(b)].”23 Deference is

particularly appropriate because the Board’s application of § 10501(b)

preemption—which, this Court has recognized, is a “finely crafted” analytical

22 Wyeth v. Levine, 555 U.S. 555, 576-77 (2009) (explaining that the weight

accorded to agency’s explanation of state law’s impact on the federal scheme “depends on its thoroughness, consistency, and persuasiveness”); accord Franks Inv. Co. v. Union Pac. R.R., 593 F.3d 404, 413-14 (5th Cir. 2010) (en banc) (adopting Board’s preemption test after finding it a reasonable and persuasive interpretation of relevant considerations). See also Hayfield N. R.R. v. Chi. & N.W. Transp. Co., 467 U.S. 622, 634 (1984) (ICC preemption decision entitled to deference); N.Y. & Atl. Ry. v. STB, 635 F.3d 66, 70 (2d Cir. 2011) (N.Y. & Atl. Ry.) (STB preemption decision entitled to deference).

23 Green Mountain, 404 F.3d at 642 (internal quotation marks omitted). See also Adrian & Blissfield R.R. v. Village of Blissfield, 550 F.3d 533, 539 (6th Cir. 2008) (Village of Blissfield) (quoting Green Mountain); Emerson v. Kan. City S. Ry., 503 F.3d 1126, 1130 (10th Cir. 2007) (same).


18

framework24—has been consistent since the preemption provision was broadened

by Congress in 1995.

II. THE BOARD REASONABLY CONCLUDED THAT THE TRANSLOAD FACILITY IS WITHIN ITS JURISDICTION AND THAT THEREFORE STATE AND LOCAL PERMITTING AND PRECLEARANCE REQUIREMENTS ARE PREEMPTED.

A. The Board’s Conclusion That G&U’s Current Plans Call For The

Facility To Be Part Of Its Operations As A Rail Carrier Is Supported By The Evidence.

As noted, the only issue in dispute before the Board was whether

construction and operation of the proposed transload facility would constitute

“transportation by rail carrier” under § 10501(a) and be entitled to preemption

under § 10501(b).25

24 Town of Ayer II, 330 F.3d at 16. 25 While the Town asserts before this Court that § 10501(b) preemption

should be narrowly construed, it made no such claim to the Board in the declaratory order proceeding, but instead simply argued that construction and operation of the transload facility would not be part of G&U’s rail transportation operations and thus would fall outside the Board’s exclusive jurisdiction under § 10501(a). See Preemption Decision, R.A. 609 (“The parties do not dispute that the actions of the Town constitute local permitting and preclearance actions that are generally preempted with regard to facilities under the Board’s jurisdiction….[but simply] disagree as to whether the proposed transload facility would be part of G&U’s transportation by rail carrier…or rather a third-party transload operation run by non-railroads…”).


19

To come within the Board’s jurisdiction under § 10501(a), a transload

facility must be part of rail transportation and under the control of a rail carrier.26

Here, there is no dispute that construction and operation of a transload facility

constitutes “transportation” and that G&U is a licensed rail carrier. To determine

whether the activities in question would be part of transportation “by” rail carrier,

the Board undertook a factual analysis of whether G&U’s revised plan called for

the facility to be an integral part of its operations as a rail carrier.27 After carefully

reviewing all of the evidence, the Board found that it would be.

The Town contends that the Board improperly shifted the burden of proof

from G&U to itself. Pet. Brief 38-40. This is incorrect. Rather, the Board

reasonably found that various documents submitted by G&U—including its

termination agreements with the Propane Companies; new contracts into which it

26 See, e.g., City of Alexandria II, 608 F.3d at 157-58; City of Alexandria—

Petition for Declaratory Order, 2009 WL 381800, at *1 (STB served Feb. 17, 2009) (City of Alexandria I).

27 See Preemption Decision, R.A. 610-11 & n.15 (comparing, e.g., Green Mountain, 404 F.3d at 642 (transloading conducted by rail carrier found to be part of rail transportation) and City of Alexandria I, 2009 WL 381800, at *2 (transloading conducted by third party was integral part of railroad’s operations and therefore qualified for federal preemption) with Town of Babylon & Pinelawn Cemetery—Petition for Declaratory Order, 2008 WL 275697, at *4 (STB served Feb. 1, 2008) (Board lacked jurisdiction over activities of a noncarrier transloader offering its own services directly to customers), aff’d, N.Y. & Atl. Ry., 635 F.3d 66, and Hi Tech Trans LLC—Petition for Declaratory Order—Newark, N.J., 2003 WL 21952136, at *4-5 (STB served Aug. 14, 2003) (no STB jurisdiction over truck-to-truck transloading prior to commodities being delivered by rail)).


20

had entered; and verified statements from Priscoli, another G&U executive

(Moffett), and the president of one of the Propane Companies (Chesler)28—showed

that the Propane Companies were no longer involved and that G&U planned to

finance, construct, and operate the facility by itself. Preemption Decision, R.A.

610-13. This powerful evidence amply carried G&U’s burden of proof.

The Board recognized that G&U’s original plan called for substantial and

important involvement by the Propane Companies, but concluded that the Town

had not submitted evidence sufficient to call into question G&U’s claim that the

Propane Companies were no longer involved. Preemption Decision, R.A. 611-12.

G&U’s motivation for its change of plans was irrelevant, explained the Board,

because rail carriers (like other businesses) may restructure their relationships to

fall inside or outside the ambit of a particular law. See id. at 611.29

The Town also claims that G&U did not show that Priscoli and G&U can

finance and construct the facility without the significant involvement of third

parties. Pet. Brief 42. But the Board’s findings on this issue—that Priscoli has

substantial assets, that one of G&U’s creditors is Priscoli-owned, and that the

28 The Board has relied on verified statements such as those provided here

as evidence in many other cases involving federal preemption. See, e.g., Norfolk S. Ry.—Petition for Declaratory Order, 2010 WL 691256, at *5 (STB served Mar. 1, 2010).

29 See also City of Alexandria I, 2009 WL 381800, at *4.


21

demand for propane is increasing and sales are expected to be profitable,

Preemption Decision, R.A. 612 & n.17—are reasonable and credible. While the

Town provided some evidence on some of these points, the Board concluded that

G&U had adequately rebutted the Town’s claims. Id. at 612.

The Town complains that it could not make its case on these issues because

the Board ignored its “repeated requests” for access to financial documents. Pet.

Brief 40. But the Town neither sought discovery from G&U nor filed with the

Board a motion to compel the production of documents the Town now claims it

needed in order to support its claims.30

The Town also asserts that the Board should have held an oral argument to

further explore the issues, as it did in New England Transrail, LLC—Construction,

Acquisition & Operation Exemption—In Wilmington & Woburn, MA, 2007 WL

1989841 (STB served July 10, 2007) (NET). Pet. Brief 41. The Board’s practice,

30 The Board’s regulations permit a party to obtain discovery for any matter,

not privileged, that is relevant to the subject matter involved in a proceeding. 49 C.F.R. § 1114.21(a)(1). All discovery procedures may be used by parties without filing a petition and obtaining prior Board approval. Id. § 1114.21(b). While the Board does not typically order discovery in declaratory order proceedings, it has done so when the party seeking discovery has shown it to be warranted. See, e.g., Denver & Rio Grande Ry. Historical Found.—Petition for Declaratory Order, 2012 WL 1498613, at *2 (STB served Apr. 30, 2012); Springfield Terminal Ry.—Petition for Declaratory Order—Reasonableness of Demurrage Charges, 2010 WL 2405021, at *3 (STB served June 16, 2010); N. San Diego Cnty. Transit Dev. Bd.—Petition for Declaratory Order, 2002 WL 1924265, at *2 (STB served Aug. 21, 2002).


22

however, is to decide almost all of its proceedings on the basis of a written record.

See, e.g., Providence & Worcester R.R.—Petition for Declaratory Order—Gardner

Branch, 2011 WL 2076463, at *4 (STB served May 26, 2011). Here, with no

reason to depart from its usual practice, the Board properly followed its standard

approach by applying well-settled standards for resolving the limited factual

question before it—whether the transportation activities at issue would be

performed “by” G&U and therefore would fall within the Board’s exclusive

jurisdiction under § 10501(a). In short, this case is nothing like NET.31

Finally, the Town says, the Board’s decision was inadequate because it was

based on a record of only two pages of text and seven paragraphs of Priscoli’s

affidavit included in G&U’s July 2013 petition for a declaratory order. Pet. Brief

39.32 In fact, G&U provided far more than that to demonstrate its sole control over

31 NET—a case that, unlike this one, elicited commentary from numerous

parties representing various interests—involved novel jurisdictional questions revolving around whether the petitioner’s planned activities would constitute transportation and the petitioner’s status as a rail carrier. NET, 2007 WL 1989841, at *3-5 & 7. In contrast, there is no dispute in this case about G&U’s status as a rail carrier and no dispute about the fact that construction and operation of the transload facility constitutes transportation.

32 The Town relies on unrelated Board and court proceedings, Town of Milford, MA—Petition for Declaratory Order, 2004 WL 1802301 (STB served Aug. 12, 2004), and Grafton & Upton R.R. Co. v. Town of Milford, 417 F. Supp. 2d 171 (D. Mass. 2006), to attack G&U’s credibility. Pet. Brief 44-46. But those proceedings involved different facts and a different facility. The fact that the Board concluded in that case that G&U had failed to support its claim that the


23

the transload facility in its July 2013 petition, its September 2013 supplement, and

its filing in response to the Board’s January 2014 decision instituting a proceeding.

That evidence included relevant contracts, termination agreements, a verified

statement from G&U’s fire safety consultant (Godfrey), and verified statements

from Priscoli and G&U’s vice president of business development (Moffett). R.A.

3-95, 279-371, 385-414. And G&U’s April 2014 reply offered additional

information regarding Priscoli’s assets, the facility’s financial viability, NGL’s

status vis-à-vis the project, other G&U revenues, and G&U’s ability to operate the

transload facility safely and in compliance with federal hazardous materials

regulations. R.A. 589-604. While the Town disagrees with the Board’s

conclusions, it fails to show that the Board’s decision lacked a rational basis and

therefore was arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.33

transloading operations in question there qualified as transportation by rail carrier does not mean that G&U did not make its case as to the facility at issue here.

33 If the facts or circumstances concerning the future construction and operation of the facility change, the Board’s decision may no longer be applicable. In that event, the parties may seek to reopen this matter under 49 U.S.C. § 722(c) or file a new petition for declaratory order to allow the Board to determine whether preemption would still apply.


24

B. The Town’s Arguments That The Board Applied The Wrong Legal Standard For § 10501(b) Preemption Are Waived And, In Any Event, Are Unsound.

1. The Town Waived Its Newly-Asserted Challenges

Regarding The Scope Of § 10501(b) Preemption.

Consistent with its acknowledgment about the scope of § 10501(b)

preemption in a 2014 proceeding involving the same parties, Grafton & Upton Rail

Yard, 2014 WL 292443, at *2,34 the Town made no claim before the Board in this

case that § 10501(b) preemption should be construed narrowly. See Preemption

Decision, R.A. 609 (“The parties do not dispute that the actions of the Town

constitute local permitting and preclearance actions that are generally preempted

with regard to facilities under the Board’s jurisdiction….[but simply] disagree as to

whether the proposed transload facility would be part of G&U’s transportation by

rail carrier…or rather a third-party transload operation run by non-railroads…”).

Thus, the Town makes this argument for the first time on appeal. But

reviewing courts should not overturn administrative decisions unless a party has

34 In that case, the Board determined that G&U’s construction and operation

of a new rail yard and storage tracks (as opposed to the transload facility that is the subject of this case) on the same parcel was entitled to § 10501(b) preemption. Grafton & Upton Rail Yard, 2014 WL 292443, at *6. The Town acknowledged in that proceeding—which was not appealed—that “‘it has no right to assert any preclearance requirements against G&U where the railroad is undertaking an activity that constitutes transportation.’” Id. at *2 (quoting the Town’s reply to G&U’s petition).


25

presented its objections at the appropriate time under the agency’s practice.35 The

waiver rule “accords respect to the agency decisionmaking process by providing

the agency with the opportunity to address a party’s objections [and] apply its

expertise.”36 “Were the court free to delve into the merits of issues not presented

to the agency, it would effectively usurp the agency’s function.”37 As a result, the

Town’s belated arguments with respect to the scope of § 10501(b) preemption are

not properly before this Court.

2. In Any Event, The Argument For Narrow Preemption Is Unsound.

The Town (and amicus Congressman McGovern)38 argue for the first time

that the Board failed to recognize the “presumption against preemption” (Pet. Brief

22-25); that under a “proper view” of preemption, even zoning is nothing more

than a permissible exercise of police power (id. at 25-30); that, because the ICA

was passed to protect shippers from abuses by railroads, and because states had

35 Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S.

519, 553-54 (1978); United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952); Upper Blackstone Water Pollution Abatement Dist. v. EPA, 690 F.3d 9, 30 (1st Cir. 2012) (Upper Blackstone); Mass. Dep’t of Pub. Welfare v. Sec’y of Agric., 984 F.2d 514, 523-24 (1st Cir. 1993).

36 Upper Blackstone, 690 F.3d at 30 (internal quotation marks omitted). 37 Mazariegos-Paiz v. Holder, 734 F.3d 57, 62-63 (1st Cir. 2013) (citing

Unemp’t Comp. Comm’n v. Aragan, 329 U.S. 143, 155 (1946)). 38 Congressman McGovern did not participate before the agency in this

matter.


26

some complementary regulatory role in the past, § 10501(b) preemption should be

construed narrowly (id. at 30-35); and that, because the statute expressly preempts

only remedies under federal or state law, local governments can burden rail carriers

in ways that states cannot (id. at 35-38). These arguments are unsound.

First, the presumption against preemption does not apply to § 10501(b)

preemption here. In United States v. Locke, 529 U.S. 89, 108 (2000) (internal

quotation marks omitted), the Supreme Court held that “an assumption of nonpre-

emption [sic] is not triggered when the State regulates in an area where there has

been a history of significant federal presence.” As this Circuit has explained,

“[h]istorically, federal regulation of railroads has been extensive.” Fayard, 533

F.3d at 46.39 Given the long history of federal regulation of railroad operations and

the effect that application of the Town’s land use and zoning regulations would

have on G&U’s operations, the presumption against preemption does not apply to

the circumstances of this case. See City of Alexandria II, 608 F.3d at 160 n.12.

And even in situations where it might otherwise apply, “the presumption

[against preemption] can be overcome where the congressional purpose is

sufficiently clear.” N.H. Motor Transp. Ass’n v. Rowe, 448 F.3d 66, 74 n.10 (1st

39 See also Tex. Cent. Bus. Lines Corp. v. City of Midlothian, 669 F.3d 525,

532 (5th Cir. 2012) (noting history of significant federal presence in regulation of railroads); City of Auburn, 154 F.3d at 1029-31 (summarizing history of federal railroad regulation).


27

Cir. 2006) (internal citations omitted). With regard to § 10501(b) in particular,

“[i]t is difficult to imagine a broader statement of Congress’s intent to preempt

state regulatory authority over railroad operations.” City of Auburn, 154 F.3d at

1030 (internal quotation marks omitted). Indeed, several courts have found that

Congressional intent to preempt state and local environmental permitting and

zoning laws with respect to activities falling within the Board’s jurisdiction—even

though not actually regulated by the Board40—is explicit in the plain language of §

10501(b) and the statutory framework surrounding it. See Green Mountain, 404

F.3d at 645; City of Auburn, 154 F.3d at 1031 (citing Medtronic, Inc. v. Lohr, 518

U.S. 470, 486 (1996)); see also City of Midlothian, 669 F.3d at 530-32; City of

Alexandria II, 608 F.3d at 159-60.41

40 A Board license is not required for a transload facility. See infra at 33;

Nicholson v. ICC, 711 F.2d 364, 368-70 (D.C. Cir. 1983) (ancillary track and facility exception to licensing). Congress is aware that there is a regulatory “gap” for operations and facilities that fall within the 49 U.S.C. § 10906 licensing exception, and has taken steps to address this gap in situations where it has deemed that more regulation would be appropriate. See Clean Railroads Act of 2008 (codified at 49 U.S.C. §§ 10501(c)(2) & 10908-10) (taking solid waste transload facilities owned or controlled by rail carriers out of the usual “ancillary facilities” category and subjecting them to certain federal and state and local regulation); Town of Babylon & Pinelawn Cemetery—Petition for Declaratory Order, 2009 WL 3329242, at *5 (STB served Oct. 16, 2009), aff’d, N.Y. & Atl. Ry., 635 F.3d 66.

41 Despite this, Congressman McGovern cites the “rail transportation policy” provision at 49 U.S.C. § 10101(8) and argues that § 10501(b) preemption should be construed narrowly in order to ensure that rail carriers are regulated “without detriment to the public health and safety.” Amicus Brief 3-4. But §


28

Thus, every court of appeals to have addressed local permitting and

preclearance requirements that could be used to prevent a rail carrier from

conducting Board-jurisdictional transportation operations has held that such

requirements are categorically preempted by § 10501(b)—i.e., never permissible,

regardless of their purpose or the goals they seek to further. See City of

Midlothian, 669 F.3d at 530-32 & 536 (Fifth Circuit); City of Alexandria II, 608

F.3d at 157-60 (Fourth Circuit); Green Mountain, 404 F.3d at 641-44 (Second

Circuit); City of Auburn, 154 F.3d at 1029-31 (Ninth Circuit). See also Fayard,

533 F.3d at 47 (First Circuit); Town of Ayer II, 330 F.3d at 16-17 (First Circuit);

Union Pac. R.R. v. Chi. Transit Auth., 647 F.3d 675, 679 (7th Cir. 2011); Village of

Blissfield, 550 F.3d at 539-40 (Sixth Circuit); Emerson, 503 F.3d at 1130 (Tenth

Circuit); Jackson, 500 F.3d at 252-53 (Third Circuit).42

10101(8) is simply one of fifteen policy goals that the STB is to follow when regulating rail carriers under the ICA. See id. § 10101 (“In regulating the railroad industry, it is the policy of the United States Government…”). These policy goals have no application in cases like this one that involve no exercise of the Board’s regulatory authority.

42 The Eleventh Circuit’s decision in Florida East Coast Railway, 266 F.3d 1324, is not to the contrary, as it simply stands for the unremarkable proposition that state and local regulation is allowed where the activities in question do not constitute “transportation by rail carrier” and therefore fall outside the scope of the Board’s exclusive jurisdiction under § 10501(a).


29

The Town correctly notes that the ICA was originally passed to combat

railroad abuse of shippers, and that states historically had some regulatory role.43

But the courts have invariably found that Congress broadened express federal

preemption in ICCTA and made the Board’s jurisdiction “exclusive” for all rail

transportation and facilities (like the one here) that are part of the national rail

network.44

Finally, the suggestion that localities can burden railroads with regulation

while states cannot simply makes no sense. The argument conflicts with clear

Congressional intent to establish in § 10501(b) complete exclusivity of federal

jurisdiction, undermines the uniformity of federal standards needed to govern the

interstate rail network, and finds no support in any Board or court precedent.45

43 Before 1995, some states regulated certain rail carrier activities at yards

or spur tracks that were excepted from ICC licensing. See, e.g., Ill. Commerce Comm’n v. ICC, 879 F.2d 917, 922-24 (D.C. Cir. 1989). Section 10501(b) preemption explicitly puts an end to this practice. See 49 U.S.C. § 10501(b)(2).

44 See City of Auburn, 154 F.3d at 1030-31. Congressman McGovern’s argument that § 10501(b) was intended to preempt only “economic regulation” of railroads (Amicus Brief 6) is incorrect. See Jackson, 500 F.3d at 252 (“What matters is the degree to which the challenged regulation burdens rail transportation, not whether it is styled as ‘economic’ or ‘environmental.’”); accord Green Mountain, 404 F.3d at 644; City of Auburn, 154 F.3d at 1031.

45 Cf. City of Midlothian, 669 F.3d at 530-32; City of Alexandria II, 608 F.3d at 159-60; Green Mountain, 404 F.3d at 645; City of Auburn, 154 F.3d at 1031. The basic purpose of § 10501(b) preemption is to prevent a patchwork of local and state regulation from unreasonably interfering with interstate commerce.


30

III. THE TOWN’S NEPA-RELATED CLAIMS, TO THE EXTENT THEY ARE NOT WAIVED, ARE WITHOUT MERIT.

A. The Town’s NEPA Challenges Lack Merit.

1. NEPA Does Not Apply Where No “Major Federal Action” Is Involved.

The Board’s determination that construction and operation of the propane

transload facility is within its jurisdiction and therefore is entitled to § 10501(b)

preemption is not a “major Federal action” for NEPA purposes. Thus, contrary to

the Town’s claims, the Board’s declaratory order was not “a decision to which

NEPA obligations attach.”46

NEPA’s environmental review requirements apply to “major Federal actions

significantly affecting the quality of the human environment.” 42 U.S.C. §

4332(C). The STB has concluded that § 10501(b) does not nullify its obligation to

undertake NEPA review in all contexts in which NEPA is otherwise applicable.47

Accordingly, NEPA is applied where the Board is exercising its regulatory

See H.R. Rep. No. 104-311, at 95-96 (1995), reprinted in 1995 U.S.C.C.A.N. 793, 808.

46 United States v. Coalition for Buzzards Bay, 644 F.3d 26, 31 (1st Cir. 2011) (quoting Massachusetts v. Watt, 716 F.2d 946, 952 (1st Cir. 1983) (internal quotation marks omitted)).

47 See Cal. High-Speed Rail Auth.—Petition for Declaratory Order, 2014 WL 7149612, at *3 (STB served Dec. 12, 2014); DesertXpress Enters., LLC—Petition for Declaratory Order, 2007 WL 1833521, at *3 (STB served June 27, 2007).


31

authority, such as when it decides whether to authorize construction of a rail line

under § 10901; the abandonment of a rail line under § 10903; or the acquisition,

sale, or consolidation of rail lines under §§ 10901 & 11321 et seq.48 The Town,

however, does not—and cannot—contend that the instant case involved an exercise

of the Board’s regulatory authority.49

Rather, it is beyond dispute that the Preemption Decision is a declaratory

order issued “to provide guidance to the parties” about the scope of federal

preemption for a planned transload facility. R.A. 610. Unlike a licensing

situation, where Board action is required in order for a project to move forward or

48 See, e.g., Alaska R.R.—Constr. & Operation Exemption—A Rail Line to

Port MacKenzie, Alaska, 2011 WL 5857339 (STB served Nov. 21, 2011) (rail construction authorization); Caddo Valley R.R.—Abandonment Exemption—In Pike & Clark Cntys., Ark., 2012 WL 486357 (STB served Feb. 14, 2012) (rail abandonment authorization); Canadian Nat’l Ry.—Control—EJ&E W. Co., 2008 WL 8139694 (STB served Dec. 24, 2008) (rail acquisition of control authorization).

49 The Town suggests (without support) that environmental factors are often considered in the course of declaratory order proceedings. Pet. Brief 49 n.34. This is incorrect. Environmental considerations are only relevant in instances where NEPA review has been or will be conducted in conjunction with a related proceeding involving an exercise of the Board’s regulatory authority. Compare DesertXpress (initial preemption decision followed by subsequent NEPA review in connection with application for authority to construct 200-mile passenger rail line), City of Auburn (NEPA review of proposed acquisition, with separate declaratory order addressing scope of preemption), and NET (NEPA review of entry licensing proceeding but not declaratory order) with Borough of Riverdale (preemption decision indicating no future NEPA review where project was within STB jurisdiction but not subject to regulatory approval).


32

an activity to take place, the issuance of declaratory orders does not involve the

Board’s exercise of regulatory authority to approve or disapprove a project. When

it comes to preemption, a declaratory order gives the Board an opportunity to

“provide [its] views on the preemption issue” at hand, to inform interested parties,

and to assist in the resolution of conflicts.50

The Town’s attempt to turn a declaratory order that provided guidance to the

parties into some sort of “major Federal action” should be rejected. As discussed

above, G&U sought no STB license, and none was provided in the declaratory

order. Nor does the project involve actions by non-federal actors “with effects that

may be major and which are potentially subject to Federal control and

responsibility.”51 40 C.F.R. § 1508.18. The CEQ regulations define “actions” to

include “projects and programs entirely or partly financed, assisted, conducted,

regulated, or approved by federal agencies.” Id. § 1508.18(a). This Circuit has

explained that, in cases where there is no claim that it is being federally funded, a

non-federal project is considered a “major Federal action” only if federal approval

is a “prerequisite to the action taken by the private actors and…the federal agency

possesses…authority over the outcome.” Mayaguezanos por la Salud y el

50 See, e.g., Cal. High-Speed Rail, 2014 WL 7149612, at *3. 51 CEQ’s interpretation of NEPA is entitled to substantial deference.

Andrus v. Sierra Club, 442 U.S. 347, 358 (1979).


33

Ambiente v. United States, 198 F.3d 297, 302 (1st Cir. 1999). Conversely, where

an agency only makes a legal determination that does not authorize action by a

private party, that determination is not a “major Federal action” requiring analysis

under NEPA.52

Here, G&U sought a legal determination from the Board as to whether the

Town’s municipal zoning and land use permitting ordinances would be preempted

with regard to its planned transload facility. R.A. 3. G&U sought neither federal

funding for the project nor the Board’s approval to build the transload facility, and

there was no need for it to do so. It is well settled that, in light of the 49 U.S.C. §

10906 licensing exception, “[r]ailroads are not required to obtain Board approval

under section 10901 to build or expand facilities that are ancillary to a railroad’s

operations unless the activity is part of a larger project…(such as construction of a

new rail line)” that is itself subject to the Board’s regulatory authority. Town of

Ayer I, 2001 WL 458685, at *4 (proposed construction and operation of

automobile transloading facility did not require license from the Board); see also

52 See, e.g., Ross v. Fed. Highway Admin., 162 F.3d 1046, 1051 (10th Cir. 1998) (federal action when “the federal government has actual power to control the project” (internal quotation marks and citation omitted)); Sugarloaf Citizens Ass’n v. FERC, 959 F.2d 508, 513-14 (4th Cir. 1992) (Sugarloaf) (non-federal project “considered a ‘federal action’ if it cannot begin or continue without prior approval by a federal agency and the agency possesses authority to exercise discretion over the outcome” (internal quotation marks and citations omitted)); Cross-Sound Ferry Servs., Inc. v. ICC, 934 F.2d 327, 334 (D.C. Cir. 1991) (agency finding of no jurisdiction not considered a major federal action for NEPA purposes).


34

Grafton & Upton Rail Yard, 2014 WL 292443, at *4 (G&U rail yard and storage

tracks did not require Board license).53 It is also well settled that, while safety and

environmental concerns related to such ancillary facilities may be important, “their

existence does not transform a rail operation that does not require authority from

the Board…into one that does.”54

Here, G&U’s initial declaratory order petition noted that the planned

propane transload facility, which would be ancillary to G&U’s other railroad

operations, did not require a § 10901 license from the Board, R.A. 23, and the

Town has never taken a contrary position. With no licensing, approval, permitting,

or federal funding at play, it strains credulity to suggest that the preemption

53 See also Nicholson, 711 F.2d at 368-70 (agency has no regulatory authority over track and facilities that assist the railroad in providing its existing operations but do not give the carrier the ability to physically penetrate or invade new markets); Friends of the Aquifer, 2001 WL 928949, at *4 (same).

54 Brazos River Bottom Alliance—Petition for Declaratory Order, 2014 WL 640879, at *4 (STB served Feb. 19, 2014). See also Friends of the Aquifer, 2001 WL 928949, at *5 (“It is clear that the potential significance of an environmental issue, by itself, does not confer regulatory authority on the Board.”); Union Pac. R.R.—Petition for Declaratory Order—Rehab. of Mo.-Kan.-Tex. R.R. Between Jude & Ogden Junction, Tex., 1998 WL 525587, at *5 (STB served Aug. 21, 1998) (“The extent of, or intensity of debate over, a project’s environmental and safety issues…does not, by itself, confer [§ 10901] jurisdiction on the Board.”).

The Town argues that the Board should have followed the approach it took in NET, in which the Board indicated its intent to conduct an environmental review. Because the property involved in NET was the facility operator’s only rail property, however, it was not subject to the § 10906 licensing exception. Accordingly, NET’s facility required a Board license, thereby triggering NEPA review.


35

guidance provided by the Board in its declaratory order is a “major Federal action”

to which NEPA obligations attach.

Despite its complete silence about NEPA’s purported applicability before

the Board, the Town now argues that “[n]onfederal activity that has been ‘enabled’

by federal action is routinely regarded as federal action” and that the Board’s

decision somehow “allow[ed] the G&U to proceed with construction and

operation” of the facility. Pet. Brief 48 n.3 & 51. But, as even the case cited by

the Town makes clear, this principle only applies when an agency “makes a

decision that permits action by other parties.” Scientists’ Inst. for Pub. Info., Inc. v.

Atomic Energy Comm’n, 481 F.2d 1079, 1088-89 (D.C. Cir. 1973) (emphasis

added); accord DOT v. Pub. Citizen, 541 U.S. 752, 767 (2004) (Pub. Citizen)

(mere “‘but for’ causal relationship insufficient to make an agency responsible for

a particular effect under NEPA”); Sugarloaf, 959 F.2d at 514 (rejecting “but for”

causation theory under NEPA).55 Here, the Board’s decision addressed only the

agency’s jurisdiction and whether § 10501(b) preemption applied to the project;

neither federal funding nor Board licensing was involved, and the Board has not

authorized construction or operation of the facility in any way.

55 The Town provides no authority for the proposition that a federal agency

is required to perform an environmental effects analysis each time it takes a position on a statute’s meaning. The impracticality of such analysis is inconsistent with the “rule of reason” inherent in NEPA. See Pub. Citizen, 541 U.S. at 767.


36

2. NEPA Does Not Apply When An Agency Has No Discretion To Consider Environmental Factors In Its Decision.

The Town’s NEPA arguments also fail because Congress granted the Board

no discretion to consider environmental factors when determining its jurisdiction

and addressing the scope of federal preemption in cases like this one. As this

Circuit has explained, NEPA does not apply in situations where environmental

factors “are irrelevant to [the agency’s] determination” under the statutory

scheme.56 In such situations, preparation of environmental documentation is

unnecessary because consideration of environmental factors has no power to

“change[] the [agency’s] decision.”57

Indeed, as the Supreme Court has explained, no NEPA review is required in

situations where environmental review would have no impact on the

decisionmaking process. See Pub. Citizen, 541 U.S. at 767-68 (inherent in NEPA

and its implementing regulations is a “rule of reason” under which environmental

review is not required where consideration of environmental impacts can “have no

effect on [the agency’s] decisionmaking”).58 NEPA analysis makes detailed

information available to the agency concerning the environmental consequences of

56 Milo Cmty. Hosp. v. Weinberger, 525 F.2d 144, 148 (1st Cir. 1975). 57 Id. at 147. 58 Accord Am. Airlines, Inc. v. DOT, 202 F.3d 788, 803-04 (5th Cir. 2000);

Sugarloaf, 959 F.2d at 513; Goos v. ICC, 911 F.2d 1283, 1296 (8th Cir. 1990).


37

its proposed action, and it also makes the information available “to the larger

audience that may also play a role in both the decisionmaking process and the

implementation of the decision.” Id. at 768 (quoting Robertson v. Methow Valley

Citizens Council, 490 U.S. 332, 349 (1989)). As the Supreme Court held in Public

Citizen, neither of those purposes would have been served by requiring the Federal

Motor Carrier Safety Administration (FMCSA) to prepare an environmental

impact statement concerning the crossborder operations of Mexican motor carriers,

both because the agency “has no authority to categorically prevent the cross-border

operations,” and because FMCSA would not be able to act on any additional

information the “larger audience” might provide. Id. at 768-69.

The same is true of the Preemption Decision. Declaratory orders like this

one involve two issues: whether a particular activity constitutes “transportation by

rail carrier” and, if so, whether a particular state or local law is preempted. When

making a jurisdictional determination under § 10501(a), the Board has no

discretion to consider environmental factors, which are irrelevant to the question of

whether a proposed activity falls within the statutory definitions of “transportation”

and “rail carrier” set forth in § 10102.59 Likewise, the determination of whether

59 See NET, 2007 WL 1989841, at *1 (what the Board’s “statute does not

permit, in this or any other case, is to have different legal standards for what is part of rail transportation based on the particular commodity involved” even where the commodity in question has “the potential to create health and safety concerns”);


38

state and local permitting and preclearance laws are preempted under § 10501(b) in

no way turns on what environmental impact a particular activity is likely to have.

Rather, as set forth in the Preemption Decision, R.A. 610-11 & 613-14, both the

courts and the Board have consistently held that—while some local police powers

to protect public health and safety are preserved—state and local permitting or

preclearance requirements (including the zoning, environmental, and land use

regulations the Town seeks to impose here) are categorically preempted for

facilities that are part of transportation by rail carrier because, by their nature, these

requirements would unduly interfere with interstate commerce.60 Because state

and local permitting and preclearance requirements are necessarily preempted by §

10501(b) for transportation by rail carrier, environmental factors are not part of,

and do not influence, the Board’s determinations regarding the scope of

preemption in cases such as this one, and the Board would not have been able to

act on any environmental information gathered through the NEPA process in

Viking Starship, Inc., Common Carrier Application (Montauk, NY), 6 I.C.C.2d 228, 247 (Nov. 27, 1989) (environmental issues have no bearing on whether particular operations are activities subject to the agency’s jurisdiction and “provide no basis on which the Commission can ‘exercise its discretion’ in determining the nature of [the] operations” in question), aff’d, Cross-Sound Ferry Servs., 934 F.2d 327; United Transp. Union v. Bessemer & Lake Erie R.R., 342 I.C.C. 849, 858 (1974) (NEPA does not apply to agency’s jurisdictional determination).

60 See, e.g., Green Mountain, 404 F.3d at 640 & 644; City of Auburn, 154 F.3d at 1027-31.


39

rendering the Preemption Decision. Thus, NEPA simply does not apply to the

Preemption Decision.

3. Documentation Demonstrating Agency Consideration Of Environmental Factors Or Application Of A Specific Categorical Exclusion Was Not Required In This Case.

The Town argues that inclusion of the Board’s standard environmental

disclaimer61 in the Preemption Decision is arbitrary and capricious in the absence

of documentation demonstrating Board consideration of environmental factors or a

specific finding that its action falls within a categorical exclusion.62 However, as

discussed above, NEPA does not apply to the Preemption Decision because no

“major Federal action” was involved and the Board had no discretion to consider

environmental factors. Thus, there was no requirement for any environmental

61 The Board’s decision concludes with the standard environmental

disclaimer that “[t]his action will not significantly affect either the quality of the human environment or the conservation of energy resources.” Similar disclaimers are found in virtually all STB decisions, including decisions in which an environmental review is not conducted. See, e.g., TTX Co.—Application for Approval of Pooling of Car Service with Respect to Flatcars, 2014 WL 4922384, at *5 (STB served Oct. 1, 2014) (approval of pooling agreement under 49 U.S.C. § 11322); M&G Polymers v. CSX Transp., Inc., 2012 WL 4469326, at *14 (STB served Sept. 27, 2013) (market dominance findings under 49 U.S.C. § 10707).

62 The CEQ regulations provide for categorical exclusions from NEPA review for actions “which do not individually or cumulatively have a significant effect on the human environment and have been found to have no such effect in procedures adopted by a federal agency in implementation of these regulations.” 40 C.F.R. §§ 1501.4(a)(2) & 1508.4.


40

disclaimer in the Board’s declaratory order decision and any confusion caused by

inclusion of the standard environmental disclaimer is, at most, harmless error.

Even assuming arguendo that NEPA could somehow apply here, declaratory

orders are categorically excluded from the preparation of environmental

documentation under the Board’s NEPA regulations, as the Town itself recognizes.

Pet. Brief 49. The Board’s environmental rules at 49 C.F.R. § 1105.6(c)(2)(iii)

specify that “[n]o environmental documentation will normally be prepared” for

declaratory orders. Such orders are categorically excluded because they are not

used to authorize, license, or fund any projects, and therefore are not likely to have

significant environmental impacts.63 Thus, the Town has failed to demonstrate any

NEPA violation here.

B. The Town Waived Its Newly-Asserted NEPA Challenges.

In any event, the Town’s NEPA challenges are waived. Just as it failed to

present any arguments regarding the scope of § 10501(b) preemption before the

Board, the Town failed to assert or even suggest during the agency proceeding that

NEPA was somehow applicable to the Board’s preemption determination. As

63 It is unnecessary for an agency’s decision to specifically invoke a categorical exclusion. See Final Guidance for Federal Departments & Agencies on Establishing, Applying, and Revising Categorical Exclusions Under the National Environmental Policy Act, 75 Fed. Reg. 75,628, 75,636 (Dec. 6, 2010). Furthermore, the Board was not required to explore the possibility that “extraordinary circumstances” sufficient to justify NEPA review were present, because NEPA simply is not applicable to decisions such as this one.


41

noted above, courts should not overturn administrative decisions unless a party has

presented its objections at the appropriate time under the agency’s practice.64

Accordingly, the NEPA issue is waived and the Court should not address its

merits.

CONCLUSION

For the foregoing reasons, the Town’s petition for review of the Board’s

decision should be denied.

Respectfully submitted,

WILLIAM J. BAER CRAIG M. KEATS Assistant Attorney General General Counsel ROBERT B. NICHOLSON EVELYN G. KITAY SHANA M. WALLACE Deputy General Counsel Department of Justice Washington, D.C. 20530 /s/ Charles H.P. Vance

CHARLES H.P. VANCE Attorney

Surface Transportation Board 395 E Street, SW Washington, D.C. 20423 (202) 245-0275 [email protected] March 20, 2015

64 See Vt. Yankee, 435 U.S. at 553-54. See generally supra at 24-25 and

cases cited therein.


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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Fed. R. App. P.

32(a)(7)(B) because the brief contains 10,655 words, excluding the parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because the

brief has been prepared in a proportionally spaced typeface using Microsoft Office

Word 2010 in 14-point Times New Roman font.

/s/ Charles H.P. Vance Charles H.P. Vance Attorney Office of the General Counsel Surface Transportation Board March 20, 2015


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CERTIFICATE OF SERVICE

I, Charles H.P. Vance, hereby certify that on March 20, 2015, I

electronically filed a copy of the foregoing document with the Clerk for the U.S.

Court of Appeals for the First Circuit using the CM/ECF system. I certify that the

following counsel of record are registered as CM/ECF filers and that they will be

served via the CM/ECF system:

David F. Hassett, Esq. James E. Howard, Esq. Ginny S. Kremer, Esq. John A. Mavricos, Esq. Linda J. Morgan, Esq. Jonah M. Temple, Esq. /s/ Charles H.P. Vance Charles H.P. Vance Attorney Surface Transportation Board


ADDENDUM


1

TABLE OF CONTENTS 42 U.S.C. § 4332…………………………………………………………………2 49 U.S.C. § 722…………………………………………………………………..4 49 U.S.C. § 10101………………………………………………………………..5 49 U.S.C. § 10102………………………………………………………………..6 49 U.S.C. § 10501………………………………………………………………..8 49 U.S.C. § 10901………………………………………………………............10 49 U.S.C. § 10906………………………………………………………............12 40 C.F.R. § 1500.1………………………………………………………………13 40 C.F.R. § 1501.4………………………………………………………............14 40 C.F.R. § 1508.4………………………………………………………………16 40 C.F.R. § 1508.18……………………………………………………………..17 49 C.F.R. § 1105.6………………………………………………………………18 49 C.F.R. § 1114.21……………………………………………………………..21


2

42 U.S.C. § 4332 Cooperation of agencies; reports; availability of information; recommendations; international and national coordination of efforts

The Congress authorizes and directs that, to the fullest extent possible:

(1) the policies, regulations, and public laws of the United States shall be

interpreted and administered in accordance with the policies set forth in this chapter, and

(2) all agencies of the Federal Government shall— (A) utilize a systematic, interdisciplinary approach which will insure the

integrated use of the natural and social sciences and the environmental design arts in planning and in decisionmaking which may have an impact on man’s environment;

(B) identify and develop methods and procedures, in consultation with the Council on Environmental Quality established by subchapter II of this chapter, which will insure that presently unquantified environmental amenities and values may be given appropriate consideration in decisionmaking along with economic and technical considerations;

(C) include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on—

(i) the environmental impact of the proposed action, (ii) any adverse environmental effects which cannot be avoided should the

proposal be implemented, (iii) alternatives to the proposed action, (iv) the relationship between local short-term uses of man’s environment and

the maintenance and enhancement of long-term productivity, and (v) any irreversible and irretrievable commitments of resources which would

be involved in the proposed action should it be implemented.

Prior to making any detailed statement, the responsible Federal official shall consult with and obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved. Copies of such statement and the comments and views of the appropriate Federal, State, and local agencies, which are authorized to develop and enforce environmental standards, shall be made available to the President, the Council on


3

Environmental Quality and to the public as provided by section 552 of title 5, and shall accompany the proposal through the existing agency review processes;

(D) Any detailed statement required under subparagraph (C) after January 1, 1970, for any major Federal action funded under a program of grants to States shall not be deemed to be legally insufficient solely by reason of having been prepared by a State agency or official, if:

(i) the State agency or official has statewide jurisdiction and has the

responsibility for such action, (ii) the responsible Federal official furnishes guidance and participates in

such preparation, (iii) the responsible Federal official independently evaluates such statement

prior to its approval and adoption, and (iv) after January 1, 1976, the responsible Federal official provides early

notification to, and solicits the views of, any other State or any Federal land management entity of any action or any alternative thereto which may have significant impacts upon such State or affected Federal land management entity and, if there is any disagreement on such impacts, prepares a written assessment of such impacts and views for incorporation into such detailed statement.

The procedures in this subparagraph shall not relieve the Federal official of his

responsibilities for the scope, objectivity, and content of the entire statement or of any other responsibility under this chapter; and further, this subparagraph does not affect the legal sufficiency of statements prepared by State agencies with less than statewide jurisdiction.

(E) study, develop, and describe appropriate alternatives to recommended courses of action in any proposal which involves unresolved conflicts concerning alternative uses of available resources;

(F) recognize the worldwide and long-range character of environmental problems and, where consistent with the foreign policy of the United States, lend appropriate support to initiatives, resolutions, and programs designed to maximize international cooperation in anticipating and preventing a decline in the quality of mankind’s world environment;

(G) make available to States, counties, municipalities, institutions, and individuals, advice and information useful in restoring, maintaining, and enhancing the quality of the environment;

(H) initiate and utilize ecological information in the planning and development of resource-oriented projects; and

(I) assist the Council on Environmental Quality established by subchapter II of this chapter.


4

49 U.S.C. § 722 Board action (a) Effective Date of Actions.—Unless otherwise provided in subtitle IV, the Board may determine, within a reasonable time, when its actions, other than an action ordering the payment of money, take effect. (b) Terminating and Changing Actions.—An action of the Board remains in effect under its own terms or until superseded. The Board may change, suspend, or set aside any such action on notice. Notice may be given in a manner determined by the Board. A court of competent jurisdiction may suspend or set aside any such action. (c) Reconsidering Actions.—The Board may, at any time on its own initiative because of material error, new evidence, or substantially changed circumstances—

(1) reopen a proceeding; (2) grant rehearing, reargument, or reconsideration of an action of the Board; or (3) change an action of the Board.

An interested party may petition to reopen and reconsider an action of the Board under this subsection under regulations of the Board. (d) Finality of Actions.—Notwithstanding subtitle IV, an action of the Board under this section is final on the date on which it is served, and a civil action to enforce, enjoin, suspend, or set aside the action may be filed after that date.


5

49 U.S.C. § 10101 Rail transportation policy

In regulating the railroad industry, it is the policy of the United States Government—

(1) to allow, to the maximum extent possible, competition and the demand for

services to establish reasonable rates for transportation by rail; (2) to minimize the need for Federal regulatory control over the rail

transportation system and to require fair and expeditious regulatory decisions when regulation is required;

(3) to promote a safe and efficient rail transportation system by allowing rail carriers to earn adequate revenues, as determined by the Board;

(4) to ensure the development and continuation of a sound rail transportation system with effective competition among rail carriers and with other modes, to meet the needs of the public and the national defense;

(5) to foster sound economic conditions in transportation and to ensure effective competition and coordination between rail carriers and other modes;

(6) to maintain reasonable rates where there is an absence of effective competition and where rail rates provide revenues which exceed the amount necessary to maintain the rail system and to attract capital;

(7) to reduce regulatory barriers to entry into and exit from the industry; (8) to operate transportation facilities and equipment without detriment to the

public health and safety; (9) to encourage honest and efficient management of railroads; (10) to require rail carriers, to the maximum extent practicable, to rely on

individual rate increases, and to limit the use of increases of general applicability; (11) to encourage fair wages and safe and suitable working conditions in the

railroad industry; (12) to prohibit predatory pricing and practices, to avoid undue concentrations of

market power, and to prohibit unlawful discrimination; (13) to ensure the availability of accurate cost information in regulatory

proceedings, while minimizing the burden on rail carriers of developing and maintaining the capability of providing such information;

(14) to encourage and promote energy conservation; and (15) to provide for the expeditious handling and resolution of all proceedings

required or permitted to be brought under this part.


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49 U.S.C. § 10102 Definitions

In this part— (1) “Board” means the Surface Transportation Board; (2) “car service” includes (A) the use, control, supply, movement, distribution,

exchange, interchange, and return of locomotives, cars, other vehicles, and special types of equipment used in the transportation of property by a rail carrier, and (B) the supply of trains by a rail carrier;

(3) “control”, when referring to a relationship between persons, includes actual control, legal control, and the power to exercise control, through or by (A) common directors, officers, stockholders, a voting trust, or a holding or investment company, or (B) any other means;

(4) “person”, in addition to its meaning under section 1 of title 1, includes a trustee, receiver, assignee, or personal representative of a person;

(5) “rail carrier” means a person providing common carrier railroad transportation for compensation, but does not include street, suburban, or interurban electric railways not operated as part of the general system of rail transportation;

(6) “railroad” includes— (A) a bridge, car float, lighter, ferry, and intermodal equipment used by or in

connection with a railroad; (B) the road used by a rail carrier and owned by it or operated under an

agreement; and (C) a switch, spur, track, terminal, terminal facility, and a freight depot, yard,

and ground, used or necessary for transportation; (7) “rate” means a rate or charge for transportation; (8) “State” means a State of the United States and the District of Columbia; (9) “transportation” includes—

(A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard,

property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail, regardless of ownership or an agreement concerning use; and

(B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property; and


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(10) “United States” means the States of the United States and the District of Columbia.


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49 U.S.C. § 10501 General jurisdiction

(a)(1) Subject to this chapter, the Board has jurisdiction over transportation by rail carrier that is—

(A) only by railroad; or (B) by railroad and water, when the transportation is under common control,

management, or arrangement for a continuous carriage or shipment.

(2) Jurisdiction under paragraph (1) applies only to transportation in the United States between a place in—

(A) a State and a place in the same or another State as part of the interstate rail

network; (B) a State and a place in a territory or possession of the United States; (C) a territory or possession of the United States and a place in another such

territory or possession; (D) a territory or possession of the United States and another place in the same

territory or possession; (E) the United States and another place in the United States through a foreign

country; or (F) the United States and a place in a foreign country.

(b) The jurisdiction of the Board over—

(1) transportation by rail carriers, and the remedies provided in this part with

respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers; and

(2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State, is exclusive. Except as otherwise provided in this part, 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.

(c)(1) In this subsection—

(A) the term “local governmental authority”—


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(i) has the same meaning given that term by section 5302(a) of this title; and (ii) includes a person or entity that contracts with the local governmental

authority to provide transportation services; and

(B) the term “mass transportation” means transportation services described in section 5302(a) of this title that are provided by rail.

(2) Except as provided in paragraph (3), the Board does not have jurisdiction under this part over—

(A) mass transportation provided by a local government authority; or (B) a solid waste rail transfer facility as defined in section 10908 of this title,

except as provided under sections 10908 and 10909 of this title.

(3)(A) Notwithstanding paragraph (2) of this subsection, a local governmental authority, described in paragraph (2), is subject to applicable laws of the United States related to—

(i) safety; (ii) the representation of employees for collective bargaining; and (iii) employment, retirement, annuity, and unemployment systems or other

provisions related to dealings between employees and employers.

(B) The Board has jurisdiction under sections 11102 and 11103 of this title over transportation provided by a local governmental authority only if the Board finds that such governmental authority meets all of the standards and requirements for being a rail carrier providing transportation subject to the jurisdiction of the Interstate Commerce Commission that were in effect immediately before January 1, 1996. The enactment of the ICC Termination Act of 1995 shall neither expand nor contract coverage of employees and employers by the Railway Labor Act, the Railroad Retirement Act of 1974, the Railroad Retirement Tax Act, and the Railroad Unemployment Insurance Act.


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49 U.S.C. § 10901 Authorizing construction and operation of railroad lines

(a) A person may—

(1) construct an extension to any of its railroad lines; (2) construct an additional railroad line; (3) provide transportation over, or by means of, an extended or additional

railroad line; or (4) in the case of a person other than a rail carrier, acquire a railroad line or

acquire or operate an extended or additional railroad line, only if the Board issues a certificate authorizing such activity under subsection (c).

(b) A proceeding to grant authority under subsection (a) of this section begins when an application is filed. On receiving the application, the Board shall give reasonable public notice, including notice to the Governor of any affected State, of the beginning of such proceeding. (c) The Board shall issue a certificate authorizing activities for which such authority is requested in an application filed under subsection (b) unless the Board finds that such activities are inconsistent with the public convenience and necessity. Such certificate may approve the application as filed, or with modifications, and may require compliance with conditions (other than labor protection conditions) the Board finds necessary in the public interest. (d)(1) When a certificate has been issued by the Board under this section authorizing the construction or extension of a railroad line, no other rail carrier may block any construction or extension authorized by such certificate by refusing to permit the carrier to cross its property if—

(A) the construction does not unreasonably interfere with the operation of the crossed line;

(B) the operation does not materially interfere with the operation of the crossed line; and

(C) the owner of the crossing line compensates the owner of the crossed line.

(2) If the parties are unable to agree on the terms of operation or the amount of payment for purposes of paragraph (1) of this subsection, either party may submit the matters in dispute to the Board for determination. The Board shall make a


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determination under this paragraph within 120 days after the dispute is submitted for determination.


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49 U.S.C. § 10906 Exception

Notwithstanding section 10901 and subchapter II of chapter 113 of this title, and without the approval of the Board, a rail carrier providing transportation subject to the jurisdiction of the Board under this part may enter into arrangements for the joint ownership or joint use of spur, industrial, team, switching, or side tracks. The Board does not have authority under this chapter over construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks.


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40 C.F.R. § 1500.1 Purpose

(a) The National Environmental Policy Act (NEPA) is our basic national charter for protection of the environment. It establishes policy, sets goals (section 101), and provides means (section 102) for carrying out the policy. Section 102(2) contains “action-forcing” provisions to make sure that federal agencies act according to the letter and spirit of the Act. The regulations that follow implement section 102(2). Their purpose is to tell federal agencies what they must do to comply with the procedures and achieve the goals of the Act. The President, the federal agencies, and the courts share responsibility for enforcing the Act so as to achieve the substantive requirements of section 101. (b) NEPA procedures must insure that environmental information is available to public officials and citizens before decisions are made and before actions are taken. The information must be of high quality. Accurate scientific analysis, expert agency comments, and public scrutiny are essential to implementing NEPA. Most important, NEPA documents must concentrate on the issues that are truly significant to the action in question, rather than amassing needless detail. (c) Ultimately, of course, it is not better documents but better decisions that count. NEPA's purpose is not to generate paperwork—even excellent paperwork—but to foster excellent action. The NEPA process is intended to help public officials make decisions that are based on understanding of environmental consequences, and take actions that protect, restore, and enhance the environment. These regulations provide the direction to achieve this purpose.


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40 C.F.R. § 1501.4 Whether to prepare an environmental impact statement

In determining whether to prepare an environmental impact statement the Federal agency shall:

(a) Determine under its procedures supplementing these regulations (described in § 1507.3) whether the proposal is one which:

(1) Normally requires an environmental impact statement, or (2) Normally does not require either an environmental impact statement or an

environmental assessment (categorical exclusion).

(b) If the proposed action is not covered by paragraph (a) of this section, prepare an environmental assessment (§ 1508.9). The agency shall involve environmental agencies, applicants, and the public, to the extent practicable, in preparing assessments required by § 1508.9(a)(1).

(c) Based on the environmental assessment make its determination whether to

prepare an environmental impact statement. (d) Commence the scoping process (§ 1501.7), if the agency will prepare an

environmental impact statement. (e) Prepare a finding of no significant impact (§ 1508.13), if the agency

determines on the basis of the environmental assessment not to prepare a statement.

(1) The agency shall make the finding of no significant impact available to the affected public as specified in § 1506.6.

(2) In certain limited circumstances, which the agency may cover in its procedures under § 1507.3, the agency shall make the finding of no significant impact available for public review (including State and areawide clearinghouses) for 30 days before the agency makes its final determination whether to prepare an environmental impact statement and before the action may begin. The circumstances are:

(i) The proposed action is, or is closely similar to, one which normally requires the preparation of an environmental impact statement under the procedures adopted by the agency pursuant to § 1507.3, or


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(ii) The nature of the proposed action is one without precedent.


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40 C.F.R. § 1508.4 Categorical exclusion Categorical exclusion means a category of actions which do not individually or cumulatively have a significant effect on the human environment and which have been found to have no such effect in procedures adopted by a Federal agency in implementation of these regulations (§ 1507.3) and for which, therefore, neither an environmental assessment nor an environmental impact statement is required. An agency may decide in its procedures or otherwise, to prepare environmental assessments for the reasons stated in § 1508.9 even though it is not required to do so. Any procedures under this section shall provide for extraordinary circumstances in which a normally excluded action may have a significant environmental effect.


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40 C.F.R. § 1508.18 Major Federal action Major Federal action includes actions with effects that may be major and which are potentially subject to Federal control and responsibility. Major reinforces but does not have a meaning independent of significantly (§ 1508.27). Actions include the circumstance where the responsible officials fail to act and that failure to act is reviewable by courts or administrative tribunals under the Administrative Procedure Act or other applicable law as agency action.

(a) Actions include new and continuing activities, including projects and programs entirely or partly financed, assisted, conducted, regulated, or approved by federal agencies; new or revised agency rules, regulations, plans, policies, or procedures; and legislative proposals (§§1506.8, 1508.17). Actions do not include funding assistance solely in the form of general revenue sharing funds, distributed under the State and Local Fiscal Assistance Act of 1972, 31 U.S.C. 1221 et seq., with no Federal agency control over the subsequent use of such funds. Actions do not include bringing judicial or administrative civil or criminal enforcement actions.

(b) Federal actions tend to fall within one of the following categories:

(1) Adoption of official policy, such as rules, regulations, and interpretations

adopted pursuant to the Administrative Procedure Act, 5 U.S.C. 551 et seq.; treaties and international conventions or agreements; formal documents establishing an agency's policies which will result in or substantially alter agency programs.

(2) Adoption of formal plans, such as official documents prepared or approved by federal agencies which guide or prescribe alternative uses of Federal resources, upon which future agency actions will be based.

(3) Adoption of programs, such as a group of concerted actions to implement a specific policy or plan; systematic and connected agency decisions allocating agency resources to implement a specific statutory program or executive directive.

(4) Approval of specific projects, such as construction or management activities located in a defined geographic area. Projects include actions approved by permit or other regulatory decision as well as federal and federally assisted activities.


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49 C.F.R. § 1105.6 Classification of actions (a) Environmental Impact Statements will normally be prepared for rail construction proposals other than those described in paragraph (b)(1) of this section. (b) Environmental Assessments will normally be prepared for the following proposed actions:

(1) Construction of connecting track within existing rail rights-of-way, or on land owned by the connecting railroads;

(2) Abandonment of a rail line (unless proposed under the Northeast Rail Services Act or the Bankruptcy Act);

(3) Discontinuance of passenger train service or freight service (except for discontinuances of freight service under modified certificates issued under 49 CFR 1150.21 and discontinuances of trackage rights where the affected line will continue to be operated);

(4) An acquisition, lease or operation under 49 U.S.C. 10901 or 10910, or consolidation, merger or acquisition of control under 49 U.S.C. 11343, if it will result in either

(i) Operational changes that would exceed any of the thresholds established in § 1105.7(e)(4) or (5); or

(ii) An action that would normally require environmental documentation (such as a construction or abandonment);

(5) A rulemaking, policy statement, or legislative proposal that has the potential for significant environmental impacts;

(6) Water carrier licensing under 49 U.S.C. 10922 that:

(i) Involves a new operation (i.e., one that adds a significant number of barges to the inland waterway system requiring the addition of towing capacity, or otherwise significantly alters an existing operation, or introduces service to a new waterway that has had no previous traffic, or involves the commencement of a new service that is not statutorily exempt); or

(ii) Involves the transportation of hazardous materials; and

(7) Any other proceeding not listed in paragraphs (a) or (c) of this section.


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(c) No environmental documentation will normally be prepared (although a Historic Report may be required under section 1105.8) for the following actions:

(1) Motor carrier, broker, or freight forwarder licensing and water carrier licensing not included in section 1105.6(b)(6);

(2) Any action that does not result in significant changes in carrier operations (i.e., changes that do not exceed the thresholds established in section 1105.7(e) (4) or (5)), including (but not limited to) all of the following actions that meet this criterion:

(i) An acquisition, lease, or operation under 49 U.S.C. 10901 or 10910, or consolidation, merger, or acquisition of control under 49 U.S.C. 11343 that does not come within subsection (b)(4) of this section.

(ii) Transactions involving corporate changes (such as a change in the ownership or the operator, or the issuance of securities or reorganization) including grants of authority to hold position as an officer or director;

(iii) Declaratory orders, interpretation or clarification of operating authority, substitution of an applicant, name changes, and waiver of lease and interchange regulations;

(iv) Pooling authorizations, approval of rate bureau agreements, and approval of shipper antitrust immunity;

(v) Approval of motor vehicle rental contracts, and self insurance; (vi) Determinations of the fact of competition;

(3) Rate, fare, and tariff actions; (4) Common use of rail terminals and trackage rights; (5) Discontinuance of rail freight service under a modified certificate issued

pursuant to 49 CFR 1150.21; (6) Discontinuance of trackage rights where the affected line will continue to be

operated; and (7) A rulemaking, policy statement, or legislative proposal that has no potential

for significant environmental impacts. (d) The Board may reclassify or modify these requirements for individual proceedings. For actions that generally require no environmental documentation, the Board may decide that a particular action has the potential for significant environmental impacts and that, therefore, the applicant should provide an environmental report and either an EA or an EIS will be prepared. For actions generally requiring an EA, the Board may prepare a full EIS where the probability of significant impacts from the particular proposal is high enough to warrant an


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EIS. Alternatively, in a rail construction, an applicant can seek to demonstrate (with supporting information addressing the pertinent aspects of § 1105.7(e)) that an EA, rather than an EIS, will be sufficient because the particular proposal is not likely to have a significant environmental impact. Any request for reclassification must be in writing and, in a rail construction, should be presented with the prefiling notice required by § 1105.10(a)(1) (or a request to waive that prefiling notice period). (e) The classifications in this section apply without regard to whether the action is proposed by application, petition, notice of exemption, or any other means that initiates a formal Board proceeding.


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49 C.F.R. § 1114.21 Applicability; general provisions (a) When discovery is available.

(1) Parties may obtain discovery under this subpart regarding any matter, not privileged, which is relevant to the subject matter involved in a proceeding other than an informal proceeding. For the purpose of this subchapter, informal proceedings are those not required to be determined on the record after hearing and include informal complaints and all proceedings assigned for initial disposition to employee boards under § 1011.6.

(2) It is not grounds for objection that the information sought will be inadmissible as evidence if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

(3) In cases using the simplified standards Three-Benchmark method, the number of discovery requests that either party can submit is limited as set forth in §§ 1114.22, 1114.26, and 1114.30, absent advance authorization from the Board. (b) How discovery is obtained. All discovery procedures may be used by parties without filing a petition and obtaining prior Board approval. (c) Protective conditions. Upon motion by any party, by the person from whom discovery is sought, or by any person with a reasonable interest in the data, information, or material sought to be discovered and for good cause shown, any order which justice requires may be entered to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, or to prevent the raising of issues untimely or inappropriate to the proceeding. Relief through a protective order may include one or more of the following:

(1) That the discovery not be had; (2) That the discovery may be had only on specified terms and conditions,

including a designation of the time and place; (3) That the discovery may be had only upon such terms and conditions as the

Board may impose to insure financial responsibility indemnifying the party or person against whom discovery is sought to cover the reasonable expenses incurred;

(4) That the discovery may be had only by a method other than that selected by the party seeking discovery;

(5) That certain matters not be inquired into or that the scope of discovery be limited to certain matters;


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(6) That discovery be conducted with no one present except persons designated in the protective order;

(7) That a deposition after being sealed be opened only by order of the Board; (8) That a trade secret or other confidential research development or commercial

information not be disclosed or be disclosed only in a designated way; and (9) That the parties simultaneously file specified documents or information

enclosed in sealed envelopes to be opened only upon direction or order of the Board. If the motion for a protective order is denied in whole or in part, the Board may, on such terms and conditions as it deems just, enter an order requiring any party or person to provide or permit discovery. A protective order under this paragraph may only be sought after, or in conjunction with, an effort by any party to obtain relief under § 1114.24(a), §1114.26(a), or §1114.31. (d) Sequence and timing of discovery. Unless the Board upon motion, for the convenience of parties and witnesses and in the interest of justice, orders otherwise, methods of discovery may be used in any sequence and the fact that a party is conducting discovery, whether by deposition or otherwise, should not operate to delay any party's discovery. (e) Stipulations regarding discovery. Unless otherwise ordered, a written stipulation entered into by all the parties and filed with the Board may:

(1) Provide that depositions be taken before any person, at any time or place, upon sufficient notice, and in any manner and when so taken may be used like other depositions; and

(2) Modify the procedures provided by these rules for other methods of discovery. (f) Service of discovery materials. Unless otherwise ordered by the Board, depositions, interrogatories, requests for documents, requests for admissions, and answers and responses thereto, shall be served on other counsel and parties, but shall not be filed with the Board. Any such materials, or portions thereof, should be appended to the appropriate pleading when used to support or to reply to a motion, or when used as an evidentiary submission.


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