Title: In re Vermont Railway

State: vermont

Issuer: Vermont Supreme Court

Document:

In re Vermont Railway (99-350); 171 Vt. 496; 769 A.2d 648 

[Filed 08-Dec-2000]
[Motion for Reargument and Stay Denied 5-Jan-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 99-350

In re Appeal of Vermont Railway	                 Supreme Court

                                                 On Appeal from
                                                 Environmental Court

                                                 June Term, 2000
Merideth Wright, J.

Eric R. Benson, Burlington, for Appellant.

Joseph E. McNeil, City Attorney & Corporation Counsel, and Kimberlee J. 
  Sturtevant, Assistant City Attorney, of McNeil, Leddy & Sheahan, Burlington, 
  for Appellee.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       MORSE, J.  Vermont Railway appeals the environmental court's ruling on
  summary  judgment in favor of the City of Burlington.  The court determined
  that the majority of permitting  conditions imposed on a facility located
  at 207 Flynn Avenue in Burlington and owned by Vermont  Railway are not
  preempted by federal legislation.  Vermont Railway raises numerous issues
  on  appeal, but essentially argues that the application of the City of
  Burlington's zoning ordinances to its  facility at 207 Flynn Avenue is
  preempted entirely by the Interstate Commerce Commission  Termination Act
  (ICCTA), 49 U.S.C. §§ 10101-16106.  We disagree and affirm the decision of
  the  environmental court.

       The undisputed material facts are as follows: Vermont Railway is a
  railroad engaged in the 

 

  interstate transportation of both passengers and freight by rail.  It is
  the surviving corporation of the  merger between itself and Cliffside
  Leasing Company.  Vermont Railway succeeded to Cliffside  Leasing's
  ownership interest in the property located at 207 Flynn Avenue in
  Burlington by virtue of  the merger.

       Located at the property are antique shops, a roofing company, metal
  works, storage facilities,  a salt shed and semi-tractor storage.  Vermont
  Railway uses the property for the storage and transfer  of freight as well. 
  It also stores equipment at the facility and undertakes repairs there. 
  Before its  merger with Vermont Railway, Cliffside Leasing had received a
  series of permits from the City of  Burlington in connection with the
  various uses of the property.  These permits contained numerous  conditions
  governing the property, many of which were specifically addressed to the
  expansion and  use of the salt shed on the premises.

       Cliffside Leasing was in the process of challenging several of these
  conditions at the time of  its merger with Vermont Railway.  Vermont
  Railway also received permit approval subject to  conditions with respect
  to operation of the salt shed facility and appealed to the environmental
  court.  The court consolidated the appeals, and the case proceeded in the
  name of Vermont Railway.  At  issue were the cumulative conditions imposed
  by the City on the operations of the salt shed facility  by Vermont
  Railway.

       Vermont Railway argued that all zoning regulation of the salt shed
  operation by the City was  preempted by federal legislation governing
  railway safety and economic activity associated with  railway operations. 
  The City argued that Vermont Railway was foreclosed from challenging the 
  conditions by its and Cliffside Leasing's failure to appeal their
  imposition in prior permits and by the  lack of changed circumstances which
  would otherwise allow Vermont Railway to revisit the 

 

  conditions.  The City also argued that regulation of the salt shed facility
  via its municipal ordinances  was not preempted by federal legislation.

       Finding that the acquisition of the facility by a railway company in
  conjunction with the  passage of the ICCTA constituted changed
  circumstances sufficient to allow review of the permitting  conditions, the
  court determined that portions of four conditions were preempted by the
  ICCTA and  therefore needed to be amended.  The court concluded that the
  remaining conditions, however, were  neither preempted as regulation of
  railway safety, nor preempted as regulation of economic activity 
  associated with railway operations.  Vermont Railway now appeals.

       In 1995, Congress enacted the ICCTA, which abolished the Interstate
  Commerce  Commission, established the Surface Transportation Board (STB)
  and granted the STB jurisdiction  over certain aspects of interstate rail
  activity.  ICC Termination Act of 1995, Pub. L. No. 104-88, 109  Stat. 803
  (1995), codified at 49 U.S.C. §§  10101-16106.  Its purpose was to
  deregulate the economic  activity of surface transportation industries. 
  H.R. Rep. No. 104-311, at 82 (1995), reprinted in 1995  U.S.C.C.A.N. 793,
  793 (indicating bill passed in lieu of original Senate bill reformed
  economic  regulation of transportation and substantially deregulated the
  rail and motor carrier industries); see  also S. Rep. No.104-176, at 2, 5
  (1995) (indicating that bill as originally proposed in the Senate was 
  intended to "significantly" reduce regulation and continue the
  "deregulation theme" with regard to  surface transportation industries). 
  Nevertheless, it retained the traditional police powers reserved to  the
  states by the Constitution.  H.R. Rep. No. 104-311, at 95-96, reprinted in
  1995 U.S.C.C.A.N. at  807-08 (noting with respect to jurisdictional
  provision of bill that explicit disclaimer regarding states  retaining
  their residual police powers was unnecessary; although Congress intended to
  preempt all  state regulation of economic activity, including state
  securities regulation, the states nevertheless 

 

  "retain the police powers reserved by the Constitution" under the bill). 
  Within the ICCTA is found  this explicit preemption provision which states:

     (b)  The jurisdiction of the [STB] 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 
          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.

  49 U.S.C. § 10501(b) (emphasis added); see also 49 U.S.C. § 10102(9)(A)
  (defining "transportation"  as "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").

       "Consideration of issues arising under the Supremacy Clause 'start[s]
  with the assumption  that the historic police powers of the States [are]
  not to be superseded by . . . Federal Act unless that  [is] the clear and
  manifest purpose of Congress.'" Cipollone v. Liggett Group, Inc.,