Monday, November 11, 2013

STB decision upholds federal preemption of state statutes

Written by  William C. Vantuono, Editor-in-Chief
The Surface Transportation Board has ruled that claims filed against Norfolk Southern in certain Virginia state court lawsuits are preempted by federal law. STB, in “NORFOLK SOUTHERN RAILWAY COMPANY—PETITION FOR DECLARATORY ORDER” (Docket No. FD 35701), granted NS’s petition on Nov. 4, 2013.

Norfolk Southern is a defendant in 18 substantially identical lawsuits filed in the Circuit Court of Roanoke County, Va. The plaintiffs in the state lawsuits are property owners (“Owners”) who live in a neighborhood near a railroad line owned and operated by NS in Roanoke County. In their lawsuits, the Owners filed claims against NS for damage to their properties allegedly caused by “noise and vibration as well as the discharge of smoke, dust, dirt, and other particulates” from the trains operating on the NS line. NS filed a Petition for Declaratory Order with STB asking the Board to declare that the claims raised against NS in the state lawsuits are preempted under federal law.

The Appalachian Power Company (APCO) owns a strip of property that is adjacent to the rail line and lies between the rail line and the Owners’ properties. In 2009, APCO began removing trees and erecting electrical transmission towers and lines on that strip of property. The complaints alleged that part of the clearing process included cutting down and uprooting trees that insulated Owners’ homes from the “damaging effects of NS’s public use of property for its rail operations, which includes transporting large quantities of coal.” Further, since APCO cleared the land to build its towers and transmission lines, the Owners’ property “has been and is substantially damaged by the operation of NS’s rail line” and “has experienced noise and vibration as well as the discharge of smoke, dust, dirt, and other particulates.”

The lawsuits maintain that the rail line’s operation “now constitutes a nuisance,” and that the alleged damages to the Owners’ properties “were caused pursuant to a public use—namely, operation of NS’s rail line.” Further, the lawsuits claim that NS “failed to engage in lawful condemnation procedures” to allow the Owners to receive “just compensation for the damage and/or taking” that the rail line caused to their properties. These claims, the Owners asserted, fall within the meaning of Article I, Section 11 of the Constitution of Virginia, which provides that “no private property shall be taken or damaged for public use without just compensation” to the property owner.

According to NS’s petition, in 1890 an NS predecessor railroad condemned and took possession of the right-of-way on which the NS now operates. Between 1890 and 1900, that railroad constructed the line and began operations. NS stated that the line has been in active use ever since and that its operations predate the development of the neighborhood in which the Owners’ properties are located.

NS, STB said, “does not dispute that its operation of the rail line constitutes a public use, but contends that the Owners’ claims are preempted under 49 U.S.C. § 10501(b).” In a decision served on Dec. 12, 2012, STB instituted a Declaratory Order proceeding and set a procedural schedule. The Owners submitted an opposition to which NS filed a reply.

“The Board has broad discretion in determining whether to issue a Declaratory Order,” STB ruled. The Interstate Commerce Act (ICA) of 1887, which STB (the Interstate Commerce Commission’s successor) interprets, “is among the most pervasive and comprehensive of federal regulatory schemes. It vests in the Board exclusive jurisdiction over transportation by rail carrier.” The ICA “broadly extends to property, facilities, instrumentalities, equipment, or services related to the movement of passengers or property, or both, by rail.” Further, the ICA “specifically provides that the remedies provided . . . with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.”

“Two broad types of state regulation are categorically preempted as to transportation by rail carriers,” STB said. They are “permitting or preclearance requirements that, by their nature, could be used to deny a railroad the right to conduct rail operations or proceed with activities the Board has authorized,” and “attempts to regulate matters that are regulated by the Board (such as, for example, the construction, operation, and abandonment of rail lines).” State and local actions “may also be preempted . . . if they would have the effect of unreasonably burdening or interfering with rail transportation. In determining whether an action under state law . . . would unreasonably burden interstate commerce or unreasonably interfere with railroad operations, we inherently exercise our policy-based judgment.”

“It is undisputed that Norfolk Southern is a rail carrier, and that NS’s activity that Owners allege is damaging their property—operating freight trains over NS’s line near the Owners’ neighborhood—constitutes ‘transportation by rail carrier’ subject to the Board’s exclusive jurisdiction,” STB ruled. “Subjecting NS to claims based on the alleged byproducts (such as noise, vibration, and various discharges) of conventional and routine rail operations on the rail carrier’s own property—which could be invoked by owners of property near operating rail lines anywhere—would unduly burden interstate commerce and significantly hinder NS’s ability to function as a rail carrier, amounting to impermissible state regulation of NSR’s operations.”

The Owners maintained that their claims are not preempted because, “rather than asserting a common law nuisance theory, they are asserting ‘inverse condemnation’ claims under the Constitution of Virginia,” STB said. “Given the true nature of the Owners’ claims—state law claims for alleged damages caused by the byproducts of conventional rail operations—we find that these claims are preempted regardless of whether they are brought as nuisance claims or under a ‘property damage’ provision contained in Virginia’s inverse condemnation clause. Such claims unreasonably burden interstate commerce and unreasonably interfere with railroad operations. Absent federal preemption, all railroads on the interstate rail network could be subject to inverse condemnation actions from adjacent landowners throughout the country, based upon the effects of normal railroad operations. The broad preemption provisions in 49 U.S.C. § 10501(b) foreclose such an unreasonable result.”

STB ruled that its action “will not significantly affect either the quality of the human environment or the conservation of energy resources.”