A new STB decision intensifies the waste by rail debate.

In July, the Federal Surface Transportation Board (STB) issued an important decision with implications for solid waste haulers, transfer stations and railroads. In an unusual split decision, the STB ruled that some activities at a proposed Massachusetts transloading facility are subject to federal preemption, but that the shredding of construction and demolition (C&D) debris and the use of conveyor belts to facilitate the shredding and manipulation of waste are not integrally related to rail transportation and are, therefore, subject to state and local requirements.

New England Transrail, LLC (NET) requested authority from the STB to acquire 1,300 feet of an existing rail line, construct an additional 6,200 fee of new track, and operate as a rail carrier over on and adjacent to property owned by Olin Corporation in Massachusetts.

NET proposes to build a facility at the site at which it will receive various commodities and process them for shipment by rail. These commodities include municipal solid waste (MSW) and C&D debris. NET plans to perform certain activities at the facility including: (1) segregating large pieces of wood and metal from the C&D; (2) shredding the remaining C&D; (3) baling MSW; and (4) loading MSW and C&D onto railcars for shipment.

The proposal is controversial because it seeks approval from a federal rail authority to construct and operate a solid waste transfer station immune from most state and local laws, including all permitting requirements.

Led by Northeast Regional Manager Steve Changaris, the National Solid Wastes Management Association (NSWMA) has spearheaded local and state opposition to the suggestion that solid waste facilities can be constructed and operated under the preemption provisions that govern rail operations. NSWMA has filed numerous pleadings with the STB and courts seeking to maintain a level playing field in the solid waste industry so that all industry members will be subject to the same permitting requirements and protective environmental and public health regulations.

The STB ruled NET would be considered a rail carrier subject to the STB's jurisdiction and that many of NET's proposed activities at the transload facility would be subject to federal preemption. The STB concluded NET “plans to transport a variety of different materials for the shipping public, operating its own trains with its own locomotive operated by its own employees to a connection with other carriers, [and] plans to offer its service to the general public in its own name and not on behalf of any other carrier.” The STB rejected the argument that because NET's track is about 1.5 miles in length, it could not qualify as a rail carrier.

The STB concluded the baling of MSW, the unloading of waste on the floor of a proposed transload structure, the temporary storage of that waste in the facility, and the loading of the waste from that tipping floor onto rail cars, are all subject to the STB's exclusive jurisdiction, but that the shredding of C&D prior to loading onto railcars is not. The STB ruled “NET could not accomplish its planned rail operations without the ability to first store and then load the waste materials,” thus these activities are “integrally related to transportation and covered” by federal preemption. The STB similarly ruled that baling and/or wrapping MSW is integrally related to transportation as is extracting refrigerators so as to avoid a legal impediment to the delivery of a shipment at a receiving landfill.

The STB rejected NET's argument that the shredding of C&D is covered by preemption. Testimony provided by NSWMA persuaded the STB that shredding and the use of a conveyor belt enable NET to separate out recyclable materials for resale. The STB stated “a shredder is not required to pack into rail cars material that has arrived at [the] facility packed into trucks,” and noted shredding a common landfill and waste management practice.

The STB's decision marks an important milestone for this facility and the long-running battle between short-line railroads and local/state governments and the solid waste industry concerning the scope of federal preemption. While the decision constitutes important precedent, because the analysis of the facility and its operations was so site-specific, it likely provides only limited guidance to other rail carriers, their opponents, the solid waste industry, or reviewing courts. However, it could spur Congress to modify the scope of the preemption authority provided to railroads. A bill introduced earlier this year, the Clean Railroads Act of 2007, would allow states to regulate rail-based transfer and processing activities.

David Biderman is general counsel for the National Solid Wastes Management Association. E-mail him at [email protected].