Federal law does not necessarily preclude all state regulation of operations and conditions at sites where solid waste is loaded onto rail cars, according to a ruling by a Philadelphia federal appeals court.

The decision overturned a federal district court order enjoining the state of New Jersey from enforcing the state's health, safety and environmental regulations for so-called “transloading” facilities.

The three-judge appellate panel remanded the case to the lower court where, unless the parties can reach agreement on key factual matters, the district judge must conduct a full-blown hearing, considering each regulation individually and developing a complete record to determine whether it is “nondiscriminatory and not unreasonably burdensome.”

Responding to public health and safety concerns, the state enacted rules for the handling and transfer of solid waste along railroad rights-of-way. The New York, Susquehanna and Western Railway (NYS&W), which operates five transloading sites in New Jersey, considers these facilities to be exempt from state and local regulation and, for the most part, it disregarded the rules.

When the state, alleging multiple violations, issued a compliance order and assessed a steep penalty against NYS&W, the railroad filed suit and won an order blocking the state from enforcing its railroad-related regulations. [See “Choo-Choo Strain,” Waste Age, April 2007, p. 26]

Significantly, the appeals court affirmed the lower court's finding that NYS&W's transloading activities are “transportation” under the Interstate Commerce Commission Termination Act (ICCTA), which created the Surface Transportation Board (STB) and gave it exclusive control over “transportation by rail carriers.”

No matter whether NYS&W also sorts and processes wastes at its sites, the state regulations “broadly regulate storage and transloading … [which] fall within the definition of ‘transportation’ …,” the opinion stated.

The appellate panel also rejected the state's contentions that NYS&W is not a “rail carrier” when it ships waste because it does not operate the transloading facilities itself and because it deals with limited numbers of shippers. It is enough, the appeals court said, that NYS&W “contracts with shippers to load their waste,” even if it “pays a loading agent to do so on its behalf,” and that it provides “to the public … waste transport services in the manner common in the industry.”

Nevertheless, the court noted that the STB and at least one other federal appeals court accept the notion that “states and towns may exercise traditional police powers over … railroad property [where] the regulations protect public health and safety, are settled and defined, can be obeyed with reasonable certainty, entail no extended or open-ended delays” and where the activity can be “approved (or rejected) without the exercise of discretion on subjective questions.”

Such regulations, however, may give state and local officials some discretion so long as they are not “unreasonably enforced or used as a pretext to carry out a policy of delay or interference.”

[New York, Susquehanna and Western Railway Corp. v. Jackson, No. 07-1675, 3d Cir., Sept. 4, 2007.]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: shanoff@knopf-brown.com.

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.