Angiulo: Railroad in Grafton Subject to Federal Law

Monday, October 19, 2015

Leonardo Angiulo, GoLocalWorcester Legal Contributor

Most people have no idea about the layers of regulation many industries face. Of course, most of these rules have specific purposes and serve legitimate concerns. Every so often both the federal and state governments will have a stake in a situation and have rules, regulations or statutes that are relevant. Just such an event occurred in Worcester County recently and a recent opinion from the Federal First Circuit Court of Appeals looks at how such a conflict will be resolved.

In the matter titled Padgett v. Surface Transportation Board the court had to resolve whether, or not, state and local regulations applied to a commercial project developed by the Grafton & Upton Railroad Company (“G&U”). The dispute arose because G&U embarked on a plan to create a liquid propane gas facility, which included transmission from rail car to truck for distribution, at a site adjacent to some of its railways. Completion of the project required, among other things, the installation of 80,000 gallon storage tanks for these petroleum products in a water supply protection area for the town of Grafton. For those that are unaware, petroleum products that escape their storage can introduce highly toxic chemicals into the ground and water table. This caused concern for the local population who would then have to consume the potentially tainted drinking water.

The objection to this project was premised on state law and local zoning regulations dealing with the storage of such large amounts of toxic or hazardous materials. In particular, these rules require additional permits that state and local authority have oversight in issuing. There is, however, a seperate federal board created to regulate railroad activity known as the Surface Transportation Board. Federal law on the topic gives this board exclusive jurisdiction over this industry.

Procedurally, this issue was first presented to the board itself and an administrative hearing took place. The parties on either side of that administrative hearing were the town, claiming regulatory authority over the project, and the G&U railroad contending federal law preempts the state and local laws. During that hearing the town focused on claims that the railroad company was merely a part of the project that included a seperate propane company who was managing the site and financing. In response, the railroad presented evidence that the business plan for the project gave G&U the sole authority for operating the facility on property that was part of its railways. With that evidence, the board ruled the proposed liquid propane gas facility was, in fact, an integral part of G&U's operation as a rail carrier and so federal law controlled.

With this as background, the court was asked to determine whether the board's ruling was valid. In doing so, the question was only whether facts found by the board rationally supported their finding. When the court looked back they considered that preemption is a two step analysis requiring evidence that a broadly defined concept of transportation was involved and that the transportation was conducted by a rail carrier. When it found that this test was met, and supported the boards finding, the court was also ruling that this project would be subject to federal rather than local rule.

For those concerned about energy policy, one moral may be that simply relying on state legislators and town by laws may not be enough. This case stands as a reminder that even the smallest towns in Massachusetts are part of a larger international economy that our Federal Government is designed to regulate. It follows, therefore, that to impact policies that effect energy sources, transportation, and drinking water for yourself and your neighbors you must be an active participant in electoral politics at all levels.

Leonardo Angiulo is an Attorney with the firm of Glickman, Sugarman, Kneeland & Gribouski in Worcester handling legal matters across the Commonwealth. He can be reached by email at [email protected].