Derailed for Now

Appeals court overturns ruling on N.J. rail-yard regulations.

Afederal Appeals Court in Philadelphia has overturned a district court's decision that prevented New Jersey from imposing health, safety and environmental regulations on rail-yard waste handling sites owned by the New York, Susquehanna and Western Railway (NYS&WR). The 3rd U.S. Circuit Court of Appeals decided to overturn the lower court's ruling because the district court failed to conduct a regulation-by-regulation analysis in its decision. It called the district court's decision “too broad.” The appeals court remanded the case for reconsideration to the same district court.

Solid waste legal experts are not optimistic about New Jersey's chances as the case returns to the district court. “The state has its work cut out for it,” says Barry Shanoff, general counsel for the Solid Waste Management Association (SWANA). “The state will likely have to present witnesses and statements of fact to substantiate each regulation one by one. I wouldn't be surprised at all if a good number of the regulations were tossed out,” Shanoff says. David Biderman, general counsel for the National Solid Wastes Management Association (NSWMA), agrees and says the language in the appellate court's decision hints that the initial decision by the district court would be upheld if the underlying analysis is done differently, and the case returns on a second appeal.

In February, U.S. District Court Judge Katherine S. Hayden ruled that NYS&WR could operate its five rail-yard waste-handling facilities in New Jersey without state regulation, after concluding that federal law exempts the sites from such oversight. The district court ruled that the activities of NYS&WR facilities were covered as “transportation” as identified by the Interstate Commerce Commission Termination Act (ICCTA). The act created the Surface Transportation Board (STB) and subsequently gave it the authority to regulate transportation by rail carriers.

Shanoff says the state has a legitimate interest and that railroads are jealously guarding the protection that federal legislation provides. States and local governments and the solid waste industry are concerned that sorting and processing — instead of mere transloading — occurs at the facilities, especially since many communities in the Northeast have begun shipping their waste to out-of-state landfills.

Federal legislators already have proposed a bill that would eliminate the exemption and give the states authority to regulate sites like the ones operated by NYS&WR. In February, U.S. Sens. Frank Lautenberg, D-N.J., and Robert Menendez, D-N.J., introduced the Clean Railroads Act of 2007. Rep. Frank Pallone Jr., D-N.J, also introduced a similar bill in the U.S. House. The U.S. Senate bill, S. 719, is currently under the consideration of the Senate Committee on Commerce, Science and Transportation but hasn't been put to a vote.

“Federal legislation could end up erasing a court decision,” Shanoff says. “If passed, the STB loses its authority over solid waste facilities.”

In the meantime, Lautenberg has proposed a temporary solution. The Senate Appropriations Committee, in July, adopted an amendment sponsored by Lautenberg that directs the STB to allow local and state governments to regulate waste-by-rail facilities during the current fiscal year.

In July, the STB ruled that bailing and wrapping of municipal solid waste at New England Transrail's proposed rail-yard waste handling facility in Wilmington, Mass., would be covered by the federal exemption.

However, in September, the STB decision was appealed in the 1st U.S. Circuit Court of Appeals in Boston. “This seems to demonstrate that this issue will be a live one unless Congress steps in and passes a law,” Biderman says.