Court Opinion

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Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-4-2007

NY Susquehanna v. Jackson
Precedential or Non-Precedential: Precedential

Docket No. 07-1675

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Recommended Citation
"NY Susquehanna v. Jackson" (2007). 2007 Decisions. Paper 355.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/355

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                                       PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT

                      No. 07-1675

    NEW YORK SUSQUEHANNA AND WESTERN
          RAILWAY CORPORATION,

                        Plaintiff/Fourth Party Defendant

                           v.

      LISA P. JACKSON, in her official capacity as
      Commissioner of the New Jersey Department of
               Environmental Protection;
   NEW JERSEY MEADOWLANDS COMMISSION;
ROBERT R. CEBERIO, in his official capacity as Executive
        Director of the New Jersey Meadowlands
Commission; JAMES ANZEVINO, in his official capacity as
    a Commissioner of the Meadowlands Commission;
  MICHAEL J. GONNELLI, in his official capacity as a
Commissioner of the New Jersey Meadowlands Commission;
   LEONARD R. KAISER, in his official capacity as a
Commissioner of the New Jersey Meadowlands Commission;
 MIA M. MACRI, in her capacity as a Commissioner of the
         New Jersey Meadowlands Commission;
    ELEANORE NISSLEY, in her official capacity as
     a Commissioner of the New Jersey Meadowlands
  Commission; CHARLES A. RICHMAN, in his official
capacity as a Commissioner of the New Jersey Meadowlands
        Commission; ARLENE WALTHER, in her
   official capacity as a Commissioner of the New Jersey
                 Meadowlands Commission,

                        Appellants
                        Defendants/Counterclaimants/
                        Third Party Plaintiffs

                           v.

  CARDELLA TRUCKING CO., INC.; CROSSROADS
 RECYCLING, INC.; HUDSON-NATIONAL, LLC; MHF
         LOGISTICAL SOLUTIONS, INC.;
    MILLENIUM RESOURCE RECOVERY, LTD.;
      ONTRACK LOADING COMPANY, INC.;
  PRECISE CONSTRUCTION CONTRACTING, INC.;
RAIL-TECH, LLC.; SCOTT EXCAVATING, LLC; SLANE
  RAIL TRANSPORT, LLC; SUSQUEHANNA BULK
 SYSTEMS; X-PRESS RAIL TRANSFER, LLC d/b/a 94th
             Street Rail Transfer, LLC,

                        Third Party Defendants

                           v.

           SLANE RAIL TRANSPORT, INC.,

                        Fourth Party Plaintiff

                           2
        Appeal from the United States District Court
                 for the District of New Jersey
            (D.C. Civil Action No. 05-cv-04010)
       District Judge: Honorable Katharine S. Hayden

                   Argued July 10, 2007

     Before: AMBRO and HARDIMAN, Circuit Judges,
               SHAPIRO,* District Judge

                    (Opinion filed September 4, 2007)

Stuart Rabner
  Attorney General of New Jersey
Nancy Kaplen
  Assistant Attorney General
Kevin P. Auerbacher (Argued)
  Deputy Attorney General
Jung W. Kim
  Deputy Attorney General
R.J. Hughes Justice Complex
25 Market Street, P.O. Box 093
Trenton, NJ 08625-0093

      *
       Honorable Norma L. Shapiro, Senior District Judge for
the Eastern District of Pennsylvania, sitting by designation.

                             3
          Counsel for Appellants

G. Paul Moates, Esquire (Argued)
Paul A. Hemmersbaugh, Esquire
Matthew J. Warren, Esquire
Sidley Austin LLP
1501 K. Street, N.W.
Washington, DC 20005

       Counsel for Appellee
       NY Susquehanna and Western Railway Corp.

John M. Scagnelli, Esquire (Argued)
Kathleen J. Devlin, Esquire
Scarinci & Hollenbeck, LLC
1100 Valley Brook Avenue, P.O. Box 790
Lyndhurst, NJ 07071-0790

       Counsel for Appellee
       Third-Party Defendant
       MHF Logistical Solutions, Inc.

Carter H. Strickland, Jr., Esquire (Argued)
Rutgers Environmental Law Clinic
123 Washington Street
Newark, NJ 07102-3094

       Counsel for Amicus Curiae Appellant
       Raritan Baykeeper, Inc., Hackensack Riverkeeper, Inc.
       and Pinelands Preservation Alliance

                               4
Harold L. Segall, Esquire
Beveridge & Diamond, P.C.
1350 I Street N.W., Suite 700
Washington, DC 209995-3311

Stephen M. Richmond, Esquire
Marc J. Goldstein, Esquire
Beveridge & Diamond, P.C.
45 William Street, Suite 120
Wellesley, MA 02481

       Counsel for Amicus Curiae Appellant
       National Solid Wastes Management Association

Susan Shinkman, Esquire
Richard P. Mather, Sr., Esquire
Susan M. Seighman, Esquire
Commonwealth of Pennsylvania,
Department of Environmental Protection
Rachel Carson State Office Building
P.O. Box 8464
Harrisburg, PA 17105-8464

       Counsel for Amici Curiae Appellant
       Commonwealth of Pennsylvania, Commonwealth of
       Massachusetts, State of New York, State of Maine, and
       State of Colorado

Christine D. Petruzzell, Esquire
Wilentz, Goldman & Spitzer
90 Woodbridge Center Drive

                               5
P.O. Box 10, Suit 900
Woodbridge, NJ 07095

        Counsel for Appellees
        OnTrack Loading Co., Cardella Trucking Co.

                  OPINION OF THE COURT

AMBRO, Circuit Judge

       Shipping solid waste to Midwestern landfills has become
big business—particularly in places like New Jersey where
capacity at in-state landfills is scarce. Railroads are prime
beneficiaries of the increased demand for the means of shipping
waste across the country. Many railroads accommodate this
demand by building facilities within their rights-of-way for the
storage and loading of waste, which often is brought to the
loading facility by truck. As one might imagine, transferring
solid waste from truck to rail car is not the cleanest of
businesses, and so the State of New Jersey has tried to regulate
it. Railroading, however, is historically the subject of federal
regulation, so any state regulation affecting it raises the question
of preemption. Because we conclude that the District Court’s
factfinding does not support its conclusion that all of the State’s
environmental regulations at issue are preempted here, we
remand for consideration of each regulation individually.

                                 6
I.     Facts and Procedural History

          In business since the mid-19th century, the New York
S u s q u e h a n n a a n d W e s te rn R a ilw a y C o rp o ra ti o n
(“Susquehanna”) operates 400 track-miles in New York, New
Jersey, and Pennsylvania. This dispute centers on activities at
five of its New Jersey solid waste transloading facilities.1

        Four of the facilities at issue dealt primarily or
exclusively in solid waste generated at construction and
demolition sites (“C&D waste”). Susquehanna built these
facilities itself and either leased or owned the land. At each
facility, Susquehanna sold most of its shipping capacity to a
primary customer. These primary customers, known as
“shippers,” acted as middlemen between the generators of waste
and the railroad. For a fee, they took title to C&D waste from
the operators of the sites that generated it and hauled it by truck
to Susquehanna’s C&D transloading facilities. They then paid

       1
         “Transloading” is a term of art in the bulk transportation
industry. It means “[t]ransferring bulk shipments from the
vehicle/container of one mode to that of another at a terminal
interchange point.” U.S. Dep’t of Transp., Fed. Highway
Admin., Freight Prof’l Dev. Prog., Freight Glossary, available
at http://ops.fhwa.dot.gov/freight/FPD/glossary/index.htm. In
the context of this case, it refers to transferring solid waste from
trucks (which carried it from its point of origin) to Susquehanna
rail cars (for carriage to landfills).

                                  7
Susquehanna to load the waste onto rail cars and ship it to out-
of-state landfills (which they paid to take final title to the waste).
Because the shippers’ value added was their ability to move
waste efficiently from C&D sites to landfills, they used
guaranteed-capacity contracts with Susquehanna to ensure that
they could do so. Rather than operating the transloading
facilities itself, Susquehanna hired a loading company to unload
the trucks bringing in the waste, oversee its storage, and load it
onto rail cars.

        The fifth facility dealt only in contaminated soil, which
was stored in sealed containers and emptied directly into sealed
rail cars. The loading agent at that facility was a Susquehanna
subsidiary, and the shipper had an exclusive contract with
Susquehanna. Because the facility catered to only one customer,
that customer controlled access to the facility.

      At least initially, the transloading facilities were a mess.2
Nearby residents complained that their houses and yards were
covered in dust and grime, the noise was excessive, and the
wastewater and stormwater runoffs were dirty. Of equal (if not

       2
         Susquehanna notes that the facilities are now much
cleaner than they were when they opened. Given the question
presented (to what extent the State may regulate the facilities
under federal railroad law), we believe that Susquehanna’s
voluntary efforts to clean up the facilities, while perhaps
laudable, are not relevant to our disposition of the case.

                                  8
more) concern to state officials was that the facilities posed, in
the officials’ judgment, potentially deadly fire hazards. The
pollution and its perceived danger caused a public outcry, and
New Jersey officials responded by promulgating a series of
health, safety, and environmental rules that have come to be
known as the “2D regulations”. See N.J.A.C. § 7:26-2D.1.

       For transloading facilities that deal only in containerized
solid waste, the 2D regulations require that:

       •      the rail carrier provide the State with a
              narrative from an officer of the rail carrier
              describing the facility operations and
              certifying that containers will not be
              opened and that employees, the public or
              the environment will not be exposed to
              solid waste except as allowed in
              accordance with state law;

       •      nonputrescible [not decaying] solid waste
              not remain at the rail facility for more than
              10 days, putrescible [decaying] solid waste
              for not more than 72 hours, and non-
              hazardous liquid waste in sealed containers
              not more than 180 days;

       •      solid waste received, stored or transferred
              at the rail facility be contained in sealed

                                9
    containers that do not leak any liquids or
    solid materials and are not opened for any
    purpose at the facility, except that a
    container holding liquid waste may be
    opened briefly for the purpose of sampling
    the liquid provided the container is
    immediately resealed;

•   the operation not result in the migration of
    odors outside the confines of the rail
    carrier’s property;

•   all solid waste containers staged or stored
    at the facility be secured at all times in a
    manner that prevents unauthorized access
    to the containers and their contents;

•   an adequate water supply and adequate
    fire-fighting equipment be maintained or
    be readily available to extinguish any and
    all types of fires;

•   solid waste vehicles not be queued or
    staged on any public roadway;

•   the queuing and staging of solid waste
    vehicles be conducted so as to prevent
    traffic backups and related traffic hazards

                     10
    on access roads servicing the facility;

•   facilities and all appurtenances, other than
    those owned or operated by rail carriers,
    including vehicles while on-site, be
    positioned and buffered in such a manner
    that sound levels generated by the
    operation not exceed limits established
    pursuant to noise control rules;

•   only solid waste vehicles properly
    registered and displaying the appropriate
    registration number and solid waste decal
    be admitted at the facility;

•   the State’s designated representatives and
    inspectors be admitted to inspect any
    building, or any other portion of the rail
    facility, at any time;

•   any release or discharge of any solid waste
    that would harm human health and the
    environment at the facility be immediately
    reported by the facility operator or its
    designee to the State;

•   an on-site emergency coordinator be
    designated who will be available during all

                     11
              hours of operation for the purpose of
              handling emergency situations, such as,
              but not limited to, spills, discharges or
              releases of solid wastes at the facility; and

       •      the facility maintain daily records of waste
              and submit quarterly reports within 20
              days of the end of each calendar quarter
              summarizing waste receipts.

See generally N.J.A.C. § 7:26-2D.1(c).3

       For facilities that deal in waste that is not confined to
sealed containers, the regulations provide that:

       •      all facility processing, tipping,4 sorting,
              loading, storage and compaction of
              materials (that is, solid waste and mixtures
              of solid waste and recyclable materials)

       3
        Because much of the language in the regulations is
technical and unnecessary for our purposes, we have
paraphrased them rather than quoting them directly.
       4
         “Tipping” refers to the process of unloading waste from
a truck into a storage facility. The “tipping floor” is the place
where the waste is placed after it is unloaded from a truck and
before it is loaded onto a rail car. Cf. LaFleur v. Whitman, 300
F.3d 256, 259–60 (2d Cir. 2002).

                               12
    occur within the confines of an enclosed
    building that com plies w ith all
    requirements of the Uniform Construction
    Code;

•   the facility have concrete or equivalent
    tipping floors or ramps to ensure proper
    containment and channeling of wastewater
    to sanitary sewer connections or holding
    tanks and be constructed to withstand
    heavy vehicle usage, in compliance with
    applicable rules regarding the discharge of
    wastewater and the use of holding tanks;

•   the facility have a system that collects,
    stores, and properly disposes of
    wastewater generated during normal
    operations, including wash-out and
    cleaning of equipment, trucks, and floors,
    in compliance with the applicable rules
    regarding wastewater and stormwater
    management;

•   the operator clean each area where waste
    has been deposited or stored within each
    24-hour period;

•   no waste be stored overnight without

                    13
    effective treatment to prevent odors
    associated with putrefaction;

•   the facility property surrounding the actual
    waste management area be maintained free
    of litter, debris, and accumulations of
    unprocessed waste, process residuals, and
    effluents, and methods (such as fencing) of
    effectively controlling windblown papers
    and other lightweight materials be
    implemented;

•   methods of effectively controlling dust be
    implemented in order to prevent migration
    outside the enclosed building and off-site;

•   the operation not result in the migration of
    odors outside the confines of the enclosed
    building;

•   an adequate water supply and adequate
    fire-fighting equipment be maintained or
    be readily available to extinguish any and
    all types of fires;

•   the operator effectively control insects,
    other arthropods and rodents at the facility
    by means of a program implemented by an

                     14
    applicator of pesticides, certified in
    accordance with the New Jersey Pesticide
    Control Code;

•   the facility operate certified scales for the
    reporting requirements for waste
    transported by trucks;

•   facilities’ on-site roadways and storage
    areas have concrete or asphalt paving in
    those areas subject to vehicle loading and
    unloading activities;

•   the facility not queue or stage solid waste
    vehicles on any public roadway;

•   the queuing and staging of solid waste
    vehicles be conducted so as to prevent
    traffic backups and related traffic hazards
    on access roads servicing the facility;

•   the facility and all appurtenances be
    positioned and buffered in such a manner
    that sound levels generated by the
    operation shall not exceed limits
    established pursuant to applicable noise
    control rules;

                     15
•   only solid waste vehicles properly
    registered and displaying the appropriate
    registration number and solid waste decal
    be admitted for loading or unloading of
    any solid waste at the facility;

•   the facility designate a secure area under
    the facility’s control, located at a safe
    distance from the tipping area, where solid
    waste may be unloaded from those solid
    waste vehicles that are either exempt from
    state registration requirements or which
    must be manually unloaded;

•   the facility not accept or in any manner
    handle hazardous waste or regulated
    medical waste as defined by state law,
    except in compliance with all applicable
    requirements for such activities;

•   nonputrescible solid waste not remain at
    the rail facility for more than 10 days,
    liquid solid waste not more than 180 days
    in sealed containers, and putrescible solid
    waste not more than 72 hours;

•   effective security procedures be
    implemented to control entry to the rail

                    16
             facility, and exit from it, at all times;

      •      the State’s designated representatives and
             inspectors be admitted to inspect any
             building or other portion of a rail facility at
             any time;

      •      any release or discharge of any solid waste
             at the rail facility be immediately reported
             by the facility operator or its designee to
             the State;

      •      an on-site emergency coordinator be
             designated who will be available during all
             hours of operation for the purpose of
             handling emergency situations such as, but
             not limited to, spills, discharges, or
             releases of solid wastes at the facility;

      •      the rail carrier maintain daily records of
             wastes received, a waste origin/disposal
             form for each load of solid waste received,
             and submit to the State monthly summaries
             of wastes received no later than 20 days
             after the last day of each month.

See generally N.J.A.C. § 7:26-2D.1(d).

                               17
        Susquehanna asserted from the outset that it did not need
to comply with the 2D regulations because they were preempted
by the Interstate Commerce Commission Termination Act, 49
U.S.C. § 10501(b). After negotiations between Susquehanna
and the State failed, the State, alleging multiple violations of the
regulations at each site that continued for 250 days, assessed a
civil penalty against Susquehanna of $2.5 million—$2,000 per
day per site. Specifically, the State alleged that one or more of
the sites:

       •       did not store waste in a fully enclosed
               building complying with the Uniform
               Construction Code (all sites);

       •       did not properly channel wastewater from
               the tipping floor into sewer system
               connections (all sites);

       •       did not properly collect, store, and dispose
               of wastewater generated through normal
               facility operations (all sites);

       •       did not properly control dust migration (all
               sites);

       •       failed to operate certified scales for
               purposes of reporting waste transported by
               trucks (all sites);

                                18
•   spilled hazardous waste onto tracks and
    adjoining areas rather than keeping it
    contained (one site);

•   failed to clean waste storage areas every
    24 hours (four sites);

•   failed to keep property surrounding waste
    management areas free of litter and debris
    (four sites);

•   did not properly control odor emissions
    (four sites);

•   did not properly control insects and
    rodents (four sites);

•   failed to pave roadways and areas where
    waste was loaded or unloaded (two sites);

•   allowed particulates to be released into the
    atmosphere causing air pollution (one
    site);

•   allowed nonputrescible waste to remain
    on-site for more than 10 days (one site),
    and

                     19
       •      failed adequately to control access to the
              facility (one site).

App. at Aa217–28.

        In response to the civil penalty, Susquehanna sued the
State in the federal District Court for the District of New Jersey,
asking the Court to declare that all of the 2D regulations were
preempted by federal law and to enjoin New Jersey from
enforcing the penalty. After the parties took limited discovery,
the District Court held a hearing in December 2005 to assess the
then-current conditions of the facilities and the issue of federal
preemption. Two days into the hearing, after Susquehanna had
called all of its witnesses but the State had only begun
examining its first, the Court discontinued the hearing to attend
to other matters. Over the next eight months, the parties tried to
settle the dispute. In August 2006, they gave up. The Court
asked for a final round of briefing and proposed to rule on
preemption without concluding the hearing. Neither party
objected, and the Court held that the Termination Act preempted
all of the 2D regulations. The State appeals.5

       Because the District Court heard live testimony and
resolved disputed factual issues on that basis, we treat this case

       5
        The District Court had jurisdiction under 28 U.S.C.
§ 1331. We have appellate jurisdiction under 28 U.S.C. § 1291.

                                20
as though it comes to us after a bench trial.6 Thus we review the
Court’s factual findings for clear error and its conclusions of
law de novo. Frederick L. v. Dep’t of Pub. Welfare of Pa., 422
F.3d 151, 154 (3d Cir. 2005).

II.    Whether Susquehanna’s Activities Are Covered by
       the Termination Act’s Preemption Clause

       In relevant part, the Termination Act provides that “[t]he
jurisdiction of the [Surface Transportation] Board over
transportation by rail carrier . . . is exclusive. . . . [T]he remedies
provided under this part with respect to the regulation of rail
transportation are exclusive and preempt the remedies provided
under Federal and State law.” 49 U.S.C. § 10501(b) (internal
paragraph divisions omitted). The Act defines “transportation”

       6
          In the usual case, to rule for one side on legitimately
disputed, material factual issues without taking the adverse
side’s evidence would not be “according to Hoyle.” (Moreover,
the Federal Rules of Civil Procedure only allow judgment after
partial findings against a party that has been fully heard on the
relevant issue. See Fed. R. Civ. P. 52(c).) But because the State
had notice of the Court’s intention to rule without additional
testimony and did not object or otherwise raise the issue until
now, any defect is waived. Brenner v. Local 514, United Bhd.
of Carpenters & Joiners, 927 F.2d 1283 (3d Cir.1991) (“It is
well established that failure to raise an issue in the district court
constitutes waiver of the argument.”).

                                  21
as

               (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[.]

49 U.S.C. § 10102(9). It defines “rail carrier,” in relevant part,
as “a person providing common carrier railroad transportation
for compensation.” 49 U.S.C. § 10102(5).

        The first question to which we turn is whether the
activities at issue are “transportation by rail carrier,” and thus
subject to the Termination Act. We begin with whether
Susquehanna engages in “transportation” activities, and follow
up with whether it acts as a “rail carrier.”

     A.    Whether          Susquehanna’s       Activities    are
“Transportation”

                               22
       It is undisputed that operations of the facilities include
dropping off cargo, loading it onto Susquehanna trains, and
shipping it. Thus the facilities engage in the receipt, storage,
handling, and interchange of rail cargo, which the Termination
Act explicitly defines as “transportation.” See 49 U.S.C. §
10102(9)(B). These operations fit within the plain text of the
Termination Act preemption clause.

         The State, however, argues that the operations must be
“integrally” or “closely” related to providing rail service to
qualify as “transportation” under the Surface Transportation
Board’s prevailing interpretation of the Act.7 But the State’s
position seems based on a misreading of the Board’s caselaw.
It is true that the Board wrote in Borough of Riverdale, 4 S.T.B.
380 (1999) (declaratory order), that “facilities not integrally
related to the provision of interstate rail service are not subject
to our jurisdiction or subject to federal preemption.” Id. at 387.
But consider the entire paragraph:

       Finally, it should be noted that manufacturing
       activities and facilities not integrally related to the
       provision of interstate rail service are not subject

       7
        Though both sides rely on Board decisions, neither has
argued that we owe it deference under Chevron U.S.A., Inc. v.
Natural Res. Def. Council, 467 U.S. 837, 843–44 (1984).
Because we believe the Board’s interpretation of the Act’s
preemption clause is correct in all respects pertinent to this case,
we need not decide whether formal deference is required.

                                 23
      to our jurisdiction or subject to federal
      preemption.        According to the Borough,
      [Susquehanna] has established a corn processing
      plant. If this facility is not integrally related to
      providing transportation services, but rather
      serves only a manufacturing or production
      purpose, then, like any non-railroad property, it
      would be subject to applicable state and local
      regulation.      Our jurisdiction over railroad
      facilities, like that of the former [Interstate
      Commerce Commission], is limited to those
      facilities that are part of a railroad’s ability to
      provide transportation services, and even then the
      Board does not necessarily have direct
      involvement in the construction and maintenance
      of these facilities. See Growers Marketing Co. v.
      Pere Marquette Ry., 248 I.C.C. 215, 227 (1941).
      We cannot determine from the current record
      whether this facility is actually a corn processing
      plant or some sort of transloading operation (for
      the transfer of corn syrup, for example) that is
      related to transportation services.

Id. (emphasis added). In other words, the Board distinguished
“manufacturing,” which is not sufficiently related to
transportation by rail, and “transloading,” which is.

      Accepting the factual findings of the District Court in our

                              24
case as true, it deals with “transloading.” Hence, whatever the
legal effect of the Board’s adverb “integrally” (which we
suspect is minimal or none), transloading qualifies as
transportation.

       In addition, the Court of Appeals for the Second Circuit
has held that transloading activities fall within the Termination
Act’s definition of “transportation.” See Green Mountain R.R.
Corp. v. Vt. (Green Mountain 2d Cir.), 404 F.3d 638, 642 (2d
Cir. 2005) (“Certainly, the plain language [of the Termination
Act] grants the [Surface] Transportation Board wide authority
over the transloading and storage facilities undertaken by Green
Mountain.”). Thus we hold that transloading operations are
“transportation” under the Termination Act.

       The State claims, however, that the District Court erred
in not recognizing that Susquehanna engages in waste sorting
and processing as well as transloading at its facilities. Sorting
and processing, it argues, are not “transportation” because they
do not have the requisite nexus to the movement of property by
rail. Rather, those activities can be done anywhere and need not
have anything to do with the loading or shipment of solid waste.
Amicus curiae National Solid Wastes Management Association,
a trade association of solid waste collectors and processors,
agrees. It explains that separating recyclables from other C&D
waste is part of its members’ function as waste processors.
Nat’l Solid Waste Mgmt. Ass’n Br. at 12–14. According to the
Association, the food chain works as follows: people with waste

                               25
pay a shipper to take title to it. The shipper then delivers the
waste to a processor who, for a fee, separates out valuable
materials, such as scrap metal, wood, and appliances. The
shipper sells the valuables to recycling plants. It also engages
a railroad to take the remaining waste to a landfill, and it pays
the landfill to take title to the waste. Shippers make money by
getting more for the waste—from the initial owner and from
recycling plants—than they pay for processing, transport, and
ultimate disposal. Here, according to the Association, we have
a railroad acting as transport company, transloader, and
processor. By charging a low combined transloading/sorting fee
(Susquehanna’s expert refers to the transloading process as a
“loss leader”), the railroad increases demand for its real service,
which is hauling waste to landfills. But here’s the rub: waste
processing is a heavily regulated industry. According to the
Association, the railroad gains a competitive advantage if it can
shield its processing activities from regulation by characterizing
them as “transportation by a rail carrier” and thus preempting
burdensome state regulations. Id.

       The District Court characterized the sorting activities at
the facilities as the de minimis removal of items that did not
comply with the shipper and landfill’s disposal contract. It
further found that because sorting and loading took place at the
same time, they were actually one process, the dominant
character of which was loading. App. at Aa38 (D. Ct. Op.).
The Court likened it to a loader removing a Toyota Camry from
a shipment it knew was supposed to be Ford Explorers. Id.

                                26
Determining how to review the Court’s characterization is
difficult because the line between fact and law here is blurry.
On one hand, Susquehanna’s expert plausibly characterized the
removal of some items as an incidental and normal part of the
loading process, id. (quoting App. at Aa1390–91 (Test. of
William Rinnicke)), and the District Court, as factfinder, was
entitled to credit that testimony. See T.R. v. Kingwood Twp. Bd.
of Educ., 205 F.3d 572, 577 (3d Cir. 2000). Moreover, the
Association’s characterization of this kind of sorting as “waste
processing” with value independent of the transloading process,
while perhaps persuasive, is not in the record. On the other
hand, even accepting the facts underlying Susquehanna’s
characterization as true, we must apply those facts to the
Termination Act’s definition of “transportation” to decide
whether they fit. See Evans v. United Arab Shipping Co. S.A.G.,
4 F.3d 207, 213 (3d Cir. 1993) (noting that “whether the facts
meet [a] statutory standard is an issue of law” (citations
omitted)).

        Given all of the record evidence, we conclude that
whether the District Court’s characterization of the sorting
process was correct is immaterial. The 2D regulations do not
specifically regulate the sorting/processing aspect (to whatever
extent there is one) of Susquehanna’s facilities, nor does the
civil penalty order have anything specifically to do with sorting
or processing as opposed to storage and loading. Thus the
question of whether a state could specifically regulate the
sorting process (apart from the loading process) is not before us.

                               27
The regulations and penalty assessment here broadly regulate
storage and transloading, irrespective whether the rail carrier
also processes waste. Since both storage and transloading fall
within the definition of “transportation,” we need not consider
whether the incidental processing activities do as well.

       B.     Whether the Transloading Activities Are
              Undertaken “by a Rail Carrier”

        The State argues that Susquehanna is not acting as a “rail
carrier” when it ships waste from the transloading facilities for
two reasons: (1) Susquehanna does not operate the transloading
facilities itself, and (2) it grants virtually all of its hauling
capacity at each facility to one shipper.

              1.      Susquehanna’s Control           over    the
                      Transloading Process

        Our Hi Tech decision dealt with whether transloading
activities were performed “by a rail carrier.” Hi Tech Trans,
LLC v. N.J., 382 F.3d 295, 308–10 (3d Cir. 2004). In that case,
we noted that Hi Tech, the transloader, operated the transloading
facility under a license agreement with CPR, the rail carrier and
owner of the land. Id. at 308. Hi Tech constructed and
maintained the facility. Id. Moreover, the license agreement
established that Hi Tech was not CPR’s agent, and CPR
disclaimed any liability from Hi Tech’s operations. Id. CPR did
not charge shippers a fee for using the Hi Tech transloading

                               28
facility (presumably, the shippers paid Hi Tech for the service).
Id.

        This case is different because (1) the rail carrier owned
(or leased) the land and built the transloading facilities, (2)
shippers pay the rail carrier to load their freight, and (3) the rail
carrier does not disclaim liability for the loading process. The
Board noted that the Hi Tech situation was “substantially
different from a situation in which a rail carrier builds and owns
a truck-to-rail transloading facility, and holds it out to the public
as its own facility, but chooses to have a contract operator,”
which, presumably, would qualify as transportation by rail
carrier. Hi Tech Trans, LLC (Hi Tech STB), 2003 WL
21952136, at *5 n.13 (denying request for a declaratory order).
Relying on this language, the District Court concluded that our
case is just what the Board describes: a rail carrier
(Susquehanna) building, owning, and advertising its own
transloading facilities, which it uses a contract agent to operate.

          While the District Court’s conclusion that this case is
distinguishable from Hi Tech is correct, a footnote from our Hi
Tech decision complicates the issue. We wrote that “[w]e do
not . . . suggest that a party can contractually determine its status
as a railroad carrier for regulatory purposes.” 382 F.3d at 308
n.19. This is a perplexing statement because the contract before
us obviously plays some role in determining the “nature of [the
loader’s] . . . relationship to [the railroad].” Id. That is, after all,
why it exists—to define the parties’ relationship. Our point in

                                  29
Hi Tech, though, was that railroads and loaders may not change
by contract what in practice is a substantively different
relationship.

        Here, Susquehanna contracts with shippers to load their
waste, which it then pays a loading agent to do on its behalf. In
Hi Tech, the loader contracted with shippers directly. The State
argues that this is a distinction without a material difference, as
Susquehanna essentially just funneled money from shipper to
loader (often the exact same amount). The difference, however,
is that Susquehanna, by contracting directly with the shipper,
assumed more liability than the Hi Tech rail carrier.
Susquehanna could be sued for breach of contract (or potentially
negligence or some other tort) if something went wrong; the Hi
Tech railroad could not, as it was not a party to the shippers’ and
loaders’ agreements. We regard this as a substantive difference
between the Hi Tech case and this one, and therefore conclude
that the District Court appropriately distinguished it.

              2.      Susquehanna’s       Guaranteed-Capacity
                      Contracts

        The State also argues that Susquehanna does not qualify
as a rail carrier when it hauls freight from the transloading
facilities because it does not act as a common carrier (though the
State concedes that Susquehanna does so in other contexts).
This is relevant because only common carriers fit the
Termination Act’s definition of “rail carrier.” 49 U.S.C.

                                30
§ 10102(5). The statute does not further define the term
“common carrier,” but the general definition is “[a] carrier that
is required by law to transport passengers or freight, without
refusal, if the approved fare or charge is paid.” B LACK’S L AW
D ICTIONARY 205 (7th ed. 1999). The core of the State’s
argument is that, because Susquehanna sells in advance all (the
contaminated-soil facility) or nearly all (the C&D facilities) of
its capacity to one shipper, it offers nothing to the general
public, as the definition of “common carrier” requires.

       The common law differentiates between “private
carriers” and “common carriers.” See, e.g., York Co. v. Cent.
R.R., 70 U.S. 107, 112 (1865) (holding that common carriers
may limit their liability by undertaking private carriage). We
have held that

       [t]he distinctive characteristic of a common
       carrier is that he undertakes to carry for all people
       indifferently, and hence is regarded in some
       respects as a public servant. The dominant and
       controlling factor in determining the status of one
       as a common carrier is his public profession as to
       the service offered or performed.

Kelly v. Gen. Elec. Co., 110 F. Supp. 4, 6 (E.D. Pa.), aff’d and
adopted as circuit precedent, 204 F.2d 692, 692 (3d Cir. 1953).
A private carrier, on the other hand, offers services to limited
customers under limited circumstances and assumes no

                                31
obligation to serve the public at large. Lone Star Steel Co. v.
McGee, 380 F.2d 640, 645 (5th Cir. 1967) (citing Ward Transp.,
Inc. v. Pub. Untils. Comm’n, 376 P.2d 166, 169 (Colo. 1962)).

        Susquehanna was certified by the Interstate Commerce
Commission as a common carrier decades ago, and that
certification is current. But, as then-Circuit Judge Warren
Burger noted, “a common carrier may in some circumstances
operate as a private carrier.” Overseas Nat’l Airways, Inc. v.
Civil Aeronautics Bd., 307 F.2d 634, 636 (D.C. Cir. 1962); see
also York Co., 70 U.S. at 112. Even so, “a claim of such private
carriage must show that the private activity is distinguishable
from the public or common transportation business regularly
carried on. The claimed private carriage must be viewed in
relation to and against the background of the entire carrying
activity.” Overseas Nat’l Airways, 307 F.2d at 636.

        Here, though the record on this issue is scant, a
Susquehanna officer testified that it publishes its charges for
hauling waste, App. at Aa1216, which indicates that it holds
itself out to the public as available to transport waste. Cf. 49
U.S.C. § 11101(b) (requiring that common carriers provide their
rates upon request). Moreover, as Susquehanna points out, there
is nothing in the record (and no apparent allegation) that it has
ever turned away a potential waste customer. Thus, if we follow
the D.C. Circuit Court of Appeals’s command to view
Susquehanna’s waste-hauling operation “against the background
of the entire carrying activity,” it appears merely part of its

                               32
overall common-carriage operation. Overseas Nat’l Airways,
307 F.2d at 636. Susquehanna holds itself out as willing to haul
waste for a reasonable and publicly available rate; it does, in
fact, haul waste for multiple customers; and there is no evidence
of it turning away a customer. Moreover, Susquehanna’s expert
testified (credited by the District Court) that the waste-hauling
industry lends itself to arrangements in which a middleman
“shipper” consolidates demand so as to generate multiple car-
loads that can be transported to a landfill as a group. This saves
the cost of car-switching down the line. Allowing multiple
shippers to load at a single transload facility would be difficult
because their waste would have to be stored separately (as they
presumably would not have contracts with the same landfills),
requiring more space than many facilities can easily muster
given the narrowness of railroad rights-of-way. Thus the norm
is for railroads to build large customers their own dedicated
facilities at different points on the same rail line (and to leave
some capacity open for smaller shippers).

       In the context of shipping bulk waste, we believe the
concept of “common carrier” must be flexible enough to
accommodate reasonable commercial practice. Indeed, in its
decisions the Board merely defines the term “common carrier”
as “a person or entity that holds itself out to the general public
as engaged in the business of transporting persons or property
from place to place for compensation.” Am. Orient Express Ry.
Co., 2005 WL 3552968, at *3 (S.T.B. Dec. 27, 2005)
(declaratory order). “In determining whether there has been a

                               33
holding out, ‘one must look to the character of the service of the
party in relation to the public.’” Id. (quoting Penn. R.R. Co., 347
I.C.C. 536, 549 (I.C.C. 1974)). On this record it appears that
Susquehanna holds itself out to the public as providing waste
transport services in the manner common in the industry. This,
we believe, is sufficient to affirm the District Court’s
determination that Susquehanna acts as a common carrier.

III.   Whether the 2D Regulations Fall Within the Scope of
       Federal Preemption

       A.     The Scope of the Termination Act Preemption
              Clause

        Having established that Susquehanna’s storage and
transloading activities qualify as “transportation by a rail
carrier” under the Termination Act, the next question is whether
the Act preempts the State’s attempt to regulate the
environmental effects of these activities. The Termination Act
states that “the remedies provided under this part with respect to
the regulation of rail transportation are exclusive and preempt
the remedies provided under Federal and State law.” 49 U.S.C.
§ 10501(b) (internal paragraph divisions omitted). Keeping in
mind that a federal law does not preempt state laws “where the
activity regulated [by the state is] merely a peripheral concern”
of the federal law, San Diego Bldg. Trades Council, Millmen’s
Union, Local 2020 v. Garmon, 239 U.S. 236, 243 (1959), we
must look to the Termination Act’s “remedies . . . with respect

                                34
to the regulation of rail transportation,” 49 U.S.C. § 10501(b),
to determine its core concerns. The Termination Act regulates,
inter alia, rail carriers’ rates, terms of service, accounting
practices, ability to merge with one another, and authority to
acquire and construct rail lines. See generally 49 U.S.C.
§§ 10101–11908. Thus it regulates the economics and finances
of the rail carriage industry—and provides a panoply of
remedies when rail carriers break the rules. See 49 U.S.C.
§§ 11701–11707.

        Because the Act’s subject matter is limited to
deregulation of the railroad industry, Fla. E. Coast Ry. Co. v.
City of W. Palm Beach, 266 F.3d 1324, 1337 (11th Cir. 2001),
courts and the Board have rightly held that it does not preempt
all state regulation affecting transportation by rail carrier. See
Green Mountain 2d Cir., 404 F.3d at 643; J.P Rail, Inc. v. N.J.
Pinelands Comm’n, 404 F. Supp. 2d 636, 652 n.31 (D.N.J.
2005); Vill. of Ridgefield Park v. N.Y., Susquehanna & W. Ry.
Corp., 750 A.2d 57, 63 (N.J. 2000); Riverdale, 1999 WL
715272, at *5 (“[S]tate or local regulation is permissible where
it does not interfere with interstate rail operations . . . .”).
Contrary to New Jersey and the amici’s argument, the
Termination Act does not preempt only explicit economic
regulation. Rather, it preempts all “state laws that may
reasonably be said to have the effect of managing or governing
rail transportation, while permitting the continued application of
laws having a more remote or incidental effect on rail
transportation.” Fla. E. Coast. Ry. Co., 266 F.3d at 1331

                               35
(internal quotation marks, citations, and alterations omitted).
What matters is the degree to which the challenged regulation
burdens rail transportation, not whether it is styled as
“economic” or “environmental.”

       Soon after Congress enacted the Termination Act, the
newly created Surface Transportation Board ruled that, while
broad, the Act’s preemption clause “does not usurp the right of
state and local entities to impose appropriate public health and
safety regulation on interstate railroads,” so long as those
regulations do not interfere with or unreasonably burden
railroading. King County, 1996 WL 545598, at *3–4. In Cities
of Auburn & Kent, WA, 2 S.T.B. 330, 1997 WL 362017, at *6
(1997) (declaratory order), the Board expounded further:

               [T]here are areas with respect to railroad
       activity that are reasonably within the local
       authorities’ jurisdiction under the Constitution.
       For example, even in cases where we approve a
       construction or abandonment project, a local law
       prohibiting the railroad from dumping excavated
       earth into local waterways would appear to be a
       reasonable exercise of local police power.
       Similarly, as noted by the Secretary [of
       Transportation], a state or local government could
       issue citations or seek damages if harmful
       substances were discharged during a railroad
       construction or upgrading project. A railroad that

                              36
      violated a local ordinance involving the dumping
      of waste could be fined or penalized for dumping
      by the state or local entity. The railroad also
      could be required to bear the cost of disposing of
      the waste from the construction in a way that did
      not harm the health or well being of the local
      community. We know of no court or agency
      ruling that such a requirement would constitute an
      unreasonable burden on, or interfere with,
      interstate commerce.           Therefore, such
      requirements are not preempted.

      ....

             [W]here the local permitting process could
      be used to frustrate or defeat an activity that is
      regulated at the Federal level, the state or local
      process is preempted.

For the Board, the touchstone is whether the state regulation
imposes an unreasonable burden on railroading. Id. at *5.

       In subsequent cases, the Board has explained that
uniform building, plumbing, and electrical codes generally are
not preempted because they do not unreasonably interfere with
railroad operations. Riverdale, 1999 WL 715272, at *6. On the
other hand, some local zoning ordinances, local land-use
regulations, and environmental permitting requirements are

                             37
preempted because they unreasonably prevent, delay, or
interfere with activities protected by the Act. Id. at *5–6. The
Board has emphasized, however, that even pedestrian
regulations like building codes must be applied in a manner that
does not discriminate against railroad operations to avoid
preemption. Green Mountain R.R., 2002 WL 1058001, at *4
(S.T.B. 2002) (denial of request for a declaratory order).

        Thus, according to the Board, state regulation is
permissible if it passes a two-part test: (1) it is not unreasonably
burdensome, and (2) it does not discriminate against railroads.
See Maumee & W. Ry. Corp., 2004 WL 395835, at *2 (S.T.B.
2004) (denying request for declaratory order). This is a fact-
intensive inquiry. For example, the Board has ruled that a state
may take easements over rail lines when the facts show that
doing so will not significantly interfere with the railroad’s
ability to conduct business. See id. On the other hand, the
Board has held that even compelling state concerns like
preventing terrorism will not save a local regulation that
imposes too heavy a burden. See CSX Transp., Inc., 2005 WL
584026, at *8 (S.T.B. 2005) (declaratory order) (ruling that a
D.C. law that prohibited transporting hazardous material within
2.2 miles of the U.S. Capitol without a permit was preempted).

       The Court of Appeals for the Second Circuit has
endorsed the Board’s approach. In Green Mountain 2d Cir., it
stated that while pre-construction permitting programs often
unreasonably interfere with rail travel, less burdensome and

                                38
non-discriminatory regulations would pass muster. It explained
further:

       It therefore appears that states and towns may
       exercise traditional police powers over the
       development of railroad property, at least to the
       extent that 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 can be approved (or
       rejected) without the exercise of discretion on
       subjective questions. Electrical, plumbing and
       fire codes, direct environmental regulations
       enacted for the protection of the public health and
       safety, and other generally applicable, non-
       d isc rim inatory regulation s a n d p e rm it
       requirements w ould seem to withstand
       preemption.
404 F.3d at 643.

        We believe that the approach of the Board and the
Second Circuit Court is sound. In particular, we agree that a
state law that affects rail carriage survives preemption if it does
not discriminate against rail carriage and does not unreasonably
burden rail carriage.         The nondiscriminatory prong is
particularly useful in determining whether a state is regulating
principally to discriminate against a specific industry. Much of

                                39
the Board’s logic in finding that standard building, fire, and
electrical codes are not preempted is that, while the costs of
compliance may be high in some sense, they are “incidental”
when they are subordinate outlays that all firms build into the
cost of doing business. See Riverdale, 1999 WL 715272, at *6.
Thus, for a state regulation to pass muster, it must address state
concerns generally, without targeting the railroad industry.

        As for the unreasonably burdensome prong, the most
obvious component is that the substance of the regulation must
not be so draconian that it prevents the railroad from carrying
out its business in a sensible fashion. In addition, as the Green
Mountain Court held, regulations must be settled and definite
enough to avoid open-ended delays. See 404 F.3d at 643.8 The
animating idea is that, while states may set health, safety, and
environmental ground rules, those rules must be clear enough
that the rail carrier can follow them and that the state cannot
easily use them as a pretext for interfering with or curtailing rail
service. On this point, the Board’s decision in Cities of Auburn
& Kent is illustrative. See 1997 WL 362017, at *6. In that
case, the Board found it relevant that the cities’ real goal in
creating an environmental permitting process was to constrain

       8
        The Green Mountain Court held that only regulations
that do not involve “the exercise of discretion on subjective
questions” are permissible. 404 F.3d at 643. We believe this
statement, taken alone, goes too far because, as we explain infra,
some discretion is inherent in even the clearest regulatory
schemes.

                                40
(rather than render safe) a railroad’s operations. Id. It noted
that one of the problems with the permitting process was that it
gave the cities too much room to give effect to their anti-
railroading policy in the guise of non-discriminatory
environmental regulation. Id.

       We do not hold that local regulations may not give state
and local officials any discretion at all, for that would be
impractical. Standard building, electrical, and fire codes no
doubt give local officials some discretion. See, e.g., Int’l Fire
Code § 304.2 (2000) (“Storage of combustible rubbish shall not
produce conditions that will create a nuisance or a hazard to the
public health, safety, or welfare.”); id. §§ 401.2 & 404 (giving
local code official discretion to determine if fire safety plan is
adequate). But such regulations may not (1) be so open-ended
as to all but ensure delay and disagreement, or (2) actually be
used unreasonably to delay or interfere with rail carriage. In
other words, some regulations, like those at issue in the Green
Mountain litigation, give too much discretion to survive a facial
challenge because they invite delay.9 In addition, even a
regulation that is definite on its face may be challenged as-
applied if unreasonably enforced or used as a pretext to carry out
a policy of delay or interference.

       9
        In Green Mountain, the permitting scheme at issue was
so open-ended that it allowed the State to impose site-specific,
burdensome regulations as conditions for permit approval. This
process gave the State too much room to delay and burden rail
travel. See 404 F.3d at 643.

                               41
       B.     Application to Susquehanna’s Activities

       Against this backdrop, the District Court found six
problems with the 2D regulations. First, it noted that potential
fines of up to $50,000 per day per violation were excessive to
the point of threatening Susquehanna with immediate shutdown.
While this may be true, there appears to be little in the record
demonstrating the (un)reasonableness of this amount (and the
Court cites nothing). Nothing prevents a state from imposing a
significant fine on months of noncompliance with valid
regulations, Cities of Auburn & Kent, 1997 WL 362017, at *6,
and so one would expect some evidence to support the Court’s
factual finding. Moreover, the fine in this case is only $2,000
per day; nothing in the record indicates that it is unreasonable.

        Second, the Court stated that the provisions dictating the
design, construction, and operation of the facilities made
immediate compliance nearly impossible. In effect, they
operated much like a permit system. This logic is sound: if a
state imposes new regulations on existing rail facilities without
giving reasonable time for them to come into compliance, then
it would cause a delay (likely unwarranted) in the provision of
rail service. Again, however, the District Court did not connect
its finding to anything in the record showing that the State’s
demands were unreasonable or were imposed without sufficient
notice.

       Third and fourth, the Court found that the regulations

                               42
gave the State too much discretion and invited open-ended
delays. It noted that

       provisions authorize the State to penalize
       [Susquehanna] if the company does not maintain
       “[e]ffective security procedures . . . to control
       entry and exit at all times,” and “adequate water
       supply and adequate fire-fighting equipment”; or
       if waste containers are not “secured at all times in
       a manner that prevents unauthorized access”; or if
       dust migrates outside the facilities; or if the
       staging of waste vehicles causes “traffic backups
       and related traffic hazards” on public roadways.
       N .J.A .C . 7:26 -2D .1(c)(2)(iv), (c )(2)(v),
       (c)(2)(vii), (d)(7), (d)(9), (d)(22) (emphases
       added).

App. at Aa 46. We agree that many of the 2D regulations
appear to grant significant discretion. The State protests that
many of the regulations are written to give the rail carrier
flexibility in determining how to comply, rather that set strict
standards. The problem comes when the goal to be achieved is
so subjective that the compliance process is open to
unreasonable delay. In making this determination, it is
important for a court to hone in on how wide the range of

                               43
discretion really is.10 We leave to the District Court on remand
the task of determining whether a particular regulation is too
subjective.

       Fifth, the Court took issue with the State’s power to enter
and inspect rail facilities at any time to ensure compliance.
Perhaps this power is open to abuse (and thus might give rise to
an as-applied challenge). See Riverdale, 1999 WL 715272, at
*5. But, given the State’s interest in effectively enforcing its
regulatory scheme, such a rule is not per se unreasonable, and
the District Court did not find facts to suggest that it is in the
context of this case.

        Sixth, the Court noted that the 2D regulations are
discriminatory because by their terms they apply only to rail
carriers. The State counters that they are similar in kind to
regulations that apply to other solid waste facilities. See, e.g.,
N.J.A.C. § 7:26-2.11 (general operational requirements for solid
waste facilities); N.J.A.C. § 7:26-2B.5 (additional design
requirements for transfer stations and materials recovery
facilities); N.J.A.C. § 7:26-2B.9 (additional operational
requirements for transfer stations and materials recovery
facilities). At first glance, the regulations do appear to be
similar, but it is difficult to assess how similar they are without
       10
          For example, it is possible that a standard like
“adequate fire protection” has a common enough meaning in the
relevant industry that the range of discretion is actually narrow
and compliance is straightforward.

                                44
knowing more about the industry. It appears, however, that the
2D regulations are, if anything, more relaxed than those that
apply to other solid waste facilities—probably because the State
was trying to steer clear of a preemption problem. Indeed,
permitting requirements abound for other solid waste facilities.
See, e.g., N.J.A.C. § 7:26-3.6 (specifying permitting
requirements for non-rail solid waste transfer facilities). As
those are not allowed in this context, it would be impossible for
the State to regulate rail facilities in the same way. Thus,
evaluating the nondiscriminatory prong requires comparing the
substance of the solid waste regulations that apply to railroads
with those that apply to similar industries that deal in solid waste
to determine if the State is discriminating against rail carriage.
As the record before us does not show that was done, we cannot
determine whether the 2D regulations are impermissibly
discriminatory at this point.

       The core concern for us is that the District Court did not
make its findings regulation-by-regulation; rather, it found that
all were preempted. This determination is, we believe, too
broad. At least some of the regulations seem sufficiently certain
and identical to those applied to non-rail facilities. For example,
one of the regulations requires that all storage activities occur
“within the confines of an enclosed building that complies with
all the requirements of the Uniform Construction Code.”
N.J.A.C. § 7:26-2D.1(d)(1). Under Riverdale and Green
Mountain 2d Cir., this seems reasonable, certain, and

                                45
nondiscriminatory.11 We, however, are not in a good position to
analyze each individual regulation because neither the briefing,
the District Court’s decision, nor the appellate record is
sufficiently detailed. Thus we remand for the District Court to
make a determination of preemption for each regulation in the
first instance. It may turn out that most of the regulations are
preempted, but it would be premature to invalidate those (like
the construction-code requirement) that might survive on a more
developed record.

        At oral argument, Susquehanna objected to this sort of
remand by arguing that the State did not ask the District Court
to examine the regulations individually. That is irrelevant.
Susquehanna approached the District Court as a declaratory-
judgment plaintiff asking the Court to strike down all of the 2D
regulations. New Jersey answered, asking the Court to uphold
all of them. The Court sided with Susquehanna. Nothing
prevents us, in our de novo review of the District Court’s
application of law to facts, see VFB LLC v. Campbell Soup Co.,
482 F.3d 624, 632 (3d Cir. 2007), from recognizing that the law
in this area admits of more nuance than any of the parties (or the
amici) argued and fashioning our remand accordingly. Nor does

       11
          We do not hold that this regulation is permissible, as
we leave that question for the District Court to resolve on
remand. We merely point it out as an example of a regulation
that appears permissible on its face. On remand, the District
Court is free to conclude otherwise with the benefit of a full
factual record.

                               46
anything prevent us from concluding that the District Court’s
factfinding does not appear to support the breadth of the
injunction it entered, and thus remanding for a more detailed
inquiry.

                       *    *    *    *   *

        We hold that the Termination Act does not preempt state
regulation if it is nondiscriminatory and not unreasonably
burdensome. Because it appears from this record that some, but
not all, of the 2D regulations may meet this test, we vacate the
District Court’s order permanently enjoining the State from
enforcing the regulations, and remand for consideration of
whether each regulation is preempted.12

       12
         As to the civil penalty, if it is based in part or in whole
on preempted regulations, the District Court should enjoin its
enforcement. If this happens, New Jersey may, subject to
relevant state laws and regulations, assess a new penalty based
only on the regulations that survive.

                                47