Opinion ID: 621920
Heading Depth: 2
Heading Rank: 2

Heading: Preemption Under the ICCTA

Text: “Whether a particular activity constitutes transportation by rail carrier under section 10501(b) is a case-by-case, fact-specific determination.” Town of Babylon and Pinelawn Cemetery–Petition for Declaratory Order, STB Finance Docket No. 35057, 2008 WL 275697,  (Feb. 1, 2008) (emphasis added), aff’d. N.Y. & Atl. Ry. Co v. Surface Transp. Bd., 635 F.3d 66 (2d Cir. 2011). Although it need not bind us, “we are free to adopt the STB’s preemption test to the extent that we find it to be reasonable and a persuasive interpretation of the relevant considerations.” Franks, 593 F.3d at 414. The parties direct us to a pair of recent Board opinions considered by the district court. See Babylon, 2008 WL 275697 (finding the operations were not transportation by a rail carrier); City of Alexandria, VA–Petition for Declaratory Order, STB Finance Docket No. 35157, 2009 WL 381800 (Feb. 17, 2009) (finding there was transportation by a rail carrier). These authorities helpfully identify factors for determining whether the rail carrier is sufficiently involved in the operations. We will explain why the facts of this case make it more analogous to Alexandria, and accordingly that these operations were by a rail carrier. 4 There is no dispute that TCB is a rail carrier, defined by the ICCTA as an entity “providing common carrier railroad transportation for compensation.” 49 U.S.C. § 10102(5). 6 Case: 10-11041 Document: 00511744889 Page: 7 Date Filed: 02/01/2012 No. 10-11041 These two Board opinions consider a series of pertinent factors. They include: (1) “whether the rail carrier holds out transloading” as part of its business, (2) the “degree of control retained by the [rail] carrier,” (3) property rights and maintenance obligations, (4) contractual liability, and (5) financing. Alexandria, 2009 WL 381800, at ; see Babylon, 2008 WL 275697, at -4. As to the first factor, TCB markets its transloading services to third parties, serves many other customers, and reserves the right to contract with any competitor of MAALT or Halliburton. See Alexandria, 2009 WL 381800, at . MAALT, though, cannot sell, process or store sand, nor can it engage in other business at the property. In contrast, the transloader in Babylon could “enter into separate disposal agreements in its own name with customers for disposition of commodities.” Babylon, 2008 WL 275697, at . Second, TCB’s control is shown by its essential role in day-to-day operations. TCB determines where to place the arriving rail cars and switches them from the originating main railroad line to a short-haul track using its own locomotive. When MAALT is ready to unload them, TCB switches the cars to the Silo Project approximately eight to ten at once. TCB alerts MAALT once it has maneuvered two cars into position over the pit. After testing each car’s contents, MAALT personnel release the sand through a bottom-hopper door and reseal the car. Then, an elevator transports the sand into the silos. Next, TCB transports two additional cars, which push the now empty cars beyond the pit. This process continues until all the cars are unloaded. It is true that MAALT off-loads the sand during and after TCB business hours, but at all times it operates with TCB’s permission and according to its operating guidelines. These guidelines include rules about where MAALT trucks may drive and park as well as a prohibition on any MAALT logos or signs on the premises. Additionally, TCB pre-approves all of MAALT’s truck drivers, and sets transloading safety regulations and other protocols that MAALT must heed 7 Case: 10-11041 Document: 00511744889 Page: 8 Date Filed: 02/01/2012 No. 10-11041 as conditions of entry. The Babylon rail carrier had “essentially no involvement in the operations at the facility.” Babylon, 2008 WL 275697, at . The third factor, though more mixed, also supports our ultimate conclusion. TCB was not the landowner, but it is the lessee of the tract. It is the only party to the transloading with a real-property interest. Although MAALT owns the transload silos, they are personal property and TCB decided where to place them on its leasehold.5 Also, TCB owns the permanent improvements, including the silos’ concrete foundations and pits. Unlike in Babylon, TCB has the obligation to maintain the rail tracks. Babylon, 2008 WL 275697, at . TCB also designed and constructed those tracks, as well as the spurs and driveways that serve the silos. Unlike the preceding factors, the fourth factor parallels Babylon, the case without ICCTA preemption. There, liability ended for the rail carrier once the train cars where uncoupled at the transloading yard from the delivering locomotive. Id. Here, liability similarly ends when transloading begins; under the agreement’s terms TCB is indemnified by MAALT for damages once the cars are spotted. The fifth and final factor, which concerns the financing arrangement, is more neutral. Halliburton pays both TCB and MAALT for their respective services. This is unlike Alexandria in which the third-party shipper exclusively paid the railroad, and it is also dissimilar from Babylon, because there customers only paid shipping revenues to the transloader. Compare Alexandria, 2009 WL 381800, at , with Babylon, 2008 WL 275697, at . Three factors support the conclusion that the transload operations are by a rail carrier, the first two decisively, and only one factor weighs against it. 5 Additionally, the construction plans for the silos were subject to pre-approval by TCB. During that process TCB modified their design to ensure compliance with its procedures and the needs of Halliburton. 8 Case: 10-11041 Document: 00511744889 Page: 9 Date Filed: 02/01/2012 No. 10-11041 The City urges consideration of authority from the Eleventh Circuit that held there was no preemption on the facts presented there. Fla. E. Coast Ry. Co. v. City of W. Palm Beach, 266 F.3d 1324 (11th Cir. 2001). In that case, the railroad’s involvement ended as soon as the commodity – aggregate for cement – entered the property, akin to Babylon, 2008 WL 275697, at , and the nonrailroad shipper was responsible for maintenance. Fla. E. Coast Ry., 266 F.3d at 1327. The railroad’s only meaningful connection to the operation was as the lessor of the premises. Id.; see also Norfolk So. Ry. Co, 608 F.3d at 159 (distinguishing a transloading operation from Florida East Coast Ry. on similar grounds). The Florida East Coast Ry. decision is factually inapposite. We conclude that ICCTA preemption applies. We now turn to the City’s efforts to affect activities on the site in order to determine preemption’s reach.