Texas Central Business Lines v. City of Midlothian ( 2012 )

REVISED FEBRUARY 2, 2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 1, 2012
No. 10-11041 Lyle W. Cayce
Clerk
TEXAS CENTRAL BUSINESS LINES CORPORATION,
Plaintiff-Appellee Cross-Appellant
v.
CITY OF MIDLOTHIAN, a Municipal Corporation,
Defendant-Appellant Cross-Appellee
v.
MAALT L.P.; TEXAS PROPERTIES TRUST,
Third Party Defendants-Appellees
Appeals from the United States District Court
for the Northern District of Texas
Before JONES, Chief Judge, STEWART and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
Texas Central Business Lines is a terminal and switching railroad
operating in the City of Midlothian, Texas. In the fall of 2008, the railroad
endeavored to expand its operations with two new projects. The City opposed
that expansion, claiming it violated several municipal ordinances. In response,
the railroad brought a declaratory judgment action alleging that a federal
statute preempted all City ordinances that affect its transloading operations.
No. 10-11041
Transloading is the transfer of commodities between rail cars and trucks, a
process used when the ultimate destination of a commodity is not served by a
railroad. This is an appeal from the district court’s ruling that all except two
of the City’s requirements were preempted.
We conclude that all efforts by the City to regulate activities that are
involved with what is called the Silo Project are preempted. On the other hand,
we determine that uses of other parts of the property involved in this litigation
were not shown on this record to be subject to preemption. Accordingly, we
AFFIRM in part, REVERSE in part, and REMAND.
FACTUAL AND PROCEDURAL HISTORY
Plaintiff Texas Central Business Lines (TCB) operates as a railroad
common carrier on a line of trackage in Midlothian, Texas. Since 2002, TCB has
been in the business of transloading on various portions of a 600-acre industrial
park owned by Texas Properties Trust. MAALT, L.P., is a trucking company
servicing the oil and natural gas industry. It provides transloading services for
sand owned and shipped by Halliburton Energy Services, in Midlothian and in
southeast Oklahoma.
At first, TCB transloaded exclusively on 20 acres. Then, on September 1,
2008, TCB acquired a leasehold from Texas Properties Trust for a total of 243
acres. Some of the additional land would facilitate a transloading expansion
that is at the center of this litigation. Halliburton experienced increased
demand for the sand (referred to as “frac sand”) used in hydraulic fracturing
(commonly known as “fracking”) at its natural gas wells.1 TCB, MAALT, and
Halliburton entered into an agreement to construct and operate a silo-elevation
facility to replace a facility that handled transloading by conveyor belt.
1
To improve the flow of natural gas, the surrounding rock is fractured by the
application of pressure. Frac sand is pumped into the well in order to prevent the fractures
from closing once the pressure is removed.
2
No. 10-11041
To this end, from 2008 to 2009 a “Silo Project” and a “North End Loop”
were constructed adjacent to the 20-acre transloading site. The Silo Project
consists of twelve large silos in a three-by-four array, a rail spur, and a sand pit
that can accommodate the frac sand cargo from two rail cars, an elevator
mechanism to lift the sand into a silos, and a truck scale. In addition, there is
a small office as well as roadways for trucks to approach the scales and to leave
the facility. TCB constructed the roads and rail lines that service the project.
It also owns the cement foundation underneath the silos, as well as the rail spur
and the access roads. MAALT constructed the silos, which are movable personal
property, and other project features. Halliburton has no ownership interest, and
neither it nor MAALT has a leasehold. The entire Silo Project, which accounts
for 85 percent of TCB’s business, is concentrated on four acres.
Much of the remaining 243 acres leased by TCB is undeveloped. In fact,
all of TCB’s transloading activity aside from the Halliburton frac sand
operations continues exclusively on the originally leased 20 acres. The North
End Loop consists of four lines of track.2 That track leads to the Silo Project,
but also extends beyond it establishing a link with TCB’s other transloading
activities. No track is dedicated for a given customer.
Throughout construction of the Silo Project and the North End Loop, the
City expressed its view that MAALT and TCB were in violation of various of its
substantive and procedural ordinances. This case began when TCB filed suit to
enjoin the City, under the preemptive force of the Interstate Commerce
Commission Termination Act (ICCTA), from enforcing any ordinances against
it. 49 U.S.C. § 10101 et seq. Those include: (1) a zoning ordinance that disallows
TCB’s silo operations as an unauthorized land use and imposes a height
restriction on the leasehold (Ordinance No. 89-13 as amended by 2008-16 and
2
For clarity, we adopt the parties’ term “North End Loop” while recognizing it is not an
actual loop. TCB does not presently have sufficient business to warrant that construction.
3
No. 10-11041
2008-31), (2) a grading ordinance setting a maximum slope for rail embankments
and roads (Ordinance No. 2004-15), (3) a paving requirement contained in the
City’s standard construction details (Ordinance No. 2004-19), and (4) a flood
plain ordinance (Ordinance No. 2005-61).3
The City counterclaimed on the issue of preemption and brought claims
for the purported violations of its ordinances. It also asserted third-party claims
against the property owner – Texas Properties Trust – and against MAALT. The
City sought injunctive relief and civil penalties against all the parties.
After a bench trial, the district court held all of the City’s ordinances
preempted except for the paving requirement, flood plain, and grading
ordinances. It dismissed the City’s claims and entered judgment. The City
timely appealed, and TCB timely cross-appealed arguing that the ICCTA
preempted all of the applicable regulations.
DISCUSSION
The preemptive effect of the ICCTA is a question of law that we review de
novo. Franks Inv. Co. v. Union Pac. R.R. Co., 593 F.3d 404, 407 (5th Cir. 2010)
(en banc). Because of the presumption against preemption, the party contending
that preemption applies has the burden of persuasion. Elam v. Kansas City So.
Ry. Co., 635 F.3d 796, 802 (5th Cir. 2011). Yet, that presumption “applies with
less force when Congress legislates in a field with ‘a history of significant federal
presence’” such as railroads. Id. at 804 (quoting United States v. Locke, 529 U.S.
89, 108 (2000)). Factual findings by the district court are accepted unless clearly
erroneous. See Fed. R. Civ. P. 52(a)(6).
“When a federal law contains an express preemption clause,” it is “the
plain wording of the clause, which necessarily contains the best evidence of
Congress’ preemptive intent.” Chamber of Commerce of the U.S. v. Whiting, 131
3
The City has a building code that requires all construction plans to be submitted for
pre-clearance and that all construction be open to inspection. City Ordinance 2005-59.
4
No. 10-11041
S. Ct. 1968, 1977 (2011) (quotation marks and citation omitted). “If a state law
is not expressly preempted by the ICCTA, it still may be impliedly preempted if,
as applied to a particular case, it has ‘the effect of unreasonably burdening or
interfering with rail transportation.’” Elam, 635 F.3d at 805 (quoting Franks,
593 F.3d at 414).
In the ICCTA, Congress established the Surface Transportation Board
(“Board” or STB). Congress intended to preempt state and local laws that come
within the Board’s jurisdiction. See Franks, 593 F.3d at 406-07. The Board has
jurisdiction over “transportation by rail carriers.” 49 U.S.C. § 10501(b)(1).
Determining whether the ICCTA preempts a state or local law is a two-step
inquiry. First, the law must seek to regulate “transportation,” and second, that
transportation must be conducted “by a rail carrier.”
I. Applicability of the Federal Statute
The ICCTA defines transportation as “services related to . . . movement”
by locomotive “including receipt, delivery, elevation, transfer in transit,
refrigeration, icing, ventilation, storage, handling, and interchange of passengers
and property.” Id. § 10102(9). As noted, this case involves a category of
industrial activity known as transloading. Of preliminary concern then, is
whether the statutory term “transportation” encompasses transloading. This
inquiry need not detain us long.
The undisputed facts of this case are that sand arrives in rail cars
traveling on interstate railroad lines operated by the Burlington Northern Santa
Fe and Union Pacific railroads. From there, the rail cars switch onto a short
stretch of railroad track that leads to the Silo Project. At that point, the sand
exits into a pit through ports on the cars, is elevated, and is later off-loaded onto
trucks that carry the sand to natural-gas wells at distant locations. This activity
satisfies the coverage of the statute as it concerns the “elevation” and also the
“storage, handling, and interchange of . . . property” involving the movement of
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No. 10-11041
a locomotive. Id. § 10102(9). Though authority is hardly necessary for this
indisputable point, authority is available. See, e.g., Norfolk So. Ry. Co. v. City
of Alexandria, 608 F.3d 150, 158 (4th Cir. 2010); N.Y. Susquehanna & W. Ry.
Corp. v. Jackson, 500 F.3d 238, 248 (3d Cir. 2007); Green Mountain R.R. Corp.
v. Vermont, 404 F.3d 638, 642 (2d Cir. 2005).
Having determined that transloading qualifies as rail transportation, we
now must answer whether the particular transloading that is the subject of this
appeal is “by a rail carrier,” here TCB.4
II. Preemption Under the ICCTA
“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, *3 (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
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 *2; see Babylon, 2008 WL 275697, at *3-4.
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
*3. 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 *4.
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
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 *4.
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 *4.
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 *3, with Babylon, 2008 WL 275697, at *4.
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
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 *4, and the non-
railroad 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.
III. ICCTA’s Impact on the City’s Ordinances
The nature and effect of a local law or regulation is the touchstone for the
preemption analysis. Franks, 593 F.3d at 410-11. Federal regulation of railroad
operations has a long history in this country. Its purpose is to promote
“uniformity in such operations and expediency in commerce.” Friberg v. Kansas
City So. Ry. Co., 267 F.3d 439, 443 (5th Cir. 2001). Those enactments that “have
the effect of managing or governing,” and not merely incidentally affecting, rail
transportation are expressly or categorically preempted under the ICCTA.
Franks, 593 F.3d at 410. Consequently, we must consider the effect of each
contested City ordinance on the transportation operations of TCB to determine
whether they manage or govern its operations. In that analysis we are guided
by the principle that we are to rely on the district court’s factual findings,
“unless we are left with ‘the definite and firm conviction that a mistake has been
committed.’” S.E.C. v. Res. Dev. Int’l, 487 F.3d 295, 303 (5th Cir. 2007) (quoting
Anderson v. Bessemer City, 470 U.S. 564, 573 (1985)).
9
No. 10-11041
A. Height Restrictions
After the trial, the district court found that TCB and MAALT were unable
to accommodate Halliburton’s demand for frac sand using the older conveyor
system. The new silo method reduced the time to unload a rail car from
approximately four hours down to between 10 and 15 minutes. Each silo stands
at 85 feet, and when their foundations and the elevator system that propels the
operation are included, the Silo Project reaches 110 feet skyward. Were the
City’s 35 foot height restriction enforced, the district court properly found that
the Halliburton transloading would be prevented. Because ordinances that “may
reasonably be said to have the effect of ‘managing’ or ‘governing’ rail
transportation” are expressly preempted, this restriction must yield to the
ICCTA. Franks, 593 F.3d at 410 (quotation marks and citation omitted).
B. Standard Construction Details and Grading Ordinance
1. Rail Embankments
The City’s grading ordinance prohibits slopes steeper than 4:1, meaning
for every four feet in distance there cannot be more than a one foot change in
height. The current tracks were constructed according to the undisputed
industry-standard grades of 3:1 and 2:1, which are steeper. The ICCTA
prohibits the City from controlling how railroad track embankments are
constructed. The district court found the City’s regulation would directly affect
where rail lines could be situated, as well as influence the distance between
railroad tracks and the position of track-side equipment. On appeal, the City
has not directed us to any evidence that casts doubt on this finding.
We have held express preemption to bar a related restriction that
regulated the length of time a train might occupy a road crossing. See Elam, 635
F.3d at 807 (Mississippi statute); and Friberg, 267 F.3d at 444 (Texas statute).
Those cases instruct that state and local law cannot “govern a railroad’s
decisions in the economic realm.” Elam, 635 F.3d at 807. Although we have not
10
No. 10-11041
precisely indicated the meaning of “economic” decisions, we have held that they
include decisions “pertaining to train length, speed or scheduling.” Friberg, 267
F.3d at 444. A city regulation which dictates the construction design and layout
of railroad tracks would frustrate economic decision making.
In Friberg, the dispute arose after the railroad lengthened a track and
started to utilize a formerly little-used portion of track. Id. at 440-41. We held
that in enacting the ICCTA, Congress had functionally forestalled the Texas
legislature from influencing business decisions such as increasing the use of
certain portions of track. See id. at 444. Similarly here, the ICCTA grants the
Board exclusive jurisdiction over the “construction . . . of spur, industrial, team,
switching, or side tracks, or facilities,” leaving no room for local regulation. 49
U.S.C. § 10501 (b)(2).
If the Board directly regulates the activity, as it does the construction of
rail lines, state and local regulation is prohibited. New Orleans & Gulf Coast Ry.
Co. v. Barrois, 533 F.3d 321, 332 (5th Cir. 2008). Thus, the ordinances that
would apply to the slope or other features of the embankments for the railroad
tracks themselves are expressly preempted throughout the 243 acres.
2. Road Grading & Paving
Whether the grading ordinance is preempted as applied to the vehicular
roads and parking areas requires separate analysis. Franks, 593 F.3d at 410.
We also now consider the City’s requirement that all roads and parking areas be
paved in concrete. Congress’s intent is the foundation which supports the reach
of preemption under any statute. Elam, 635 F.3d at 803. Congress best
expresses itself through statutory language. Whiting, 131 S. Ct. at 1977.
Roads for vehicles can satisfy the ICCTA’s definition of transportation:
any “property, facility, [or] instrumentality . . . related to the movement of
passengers or property, or both, by rail.” Id. § 10102(9)(A). That definition
assists, but does not answer whether these roads and parking lots relate to
11
No. 10-11041
movement of property by a rail carrier. We must again engage in the fact-
intensive inquiry that takes full cognizance of the parties’ respective roles in
transloading rather than viewing the transloading in the abstract.
Undertaking our de novo review, Franks, 593 F.3d at 407, we hold that the
City’s grading ordinance and its requirement that roads be paved in concrete are
expressly preempted insofar as the roads support the TCB-MAALT-Halliburton
transloading. The reasoning is similar to that discussed for the rail
embankments. Such regulations have the effect of managing the economic
decisions of TCB in the context of transportation covered under the ICCTA.
Thus, the City may not enforce these regulations against: (1) the roads used to
connect the Midlothian Parkway Gate with the Silo Project,6 or (2) any other
roads and areas specifically constructed for or used in this transloading.
Before moving further in our analysis, we pause to fix the outer
boundaries of today’s decision. Other than as we just discussed with the railroad
track embankments, we are not deciding whether ICCTA preemption applies to
TCB’s entire 243-acre lease, or whether it applies to the 20 acres of the original
transload yard, which continues to be used to facilitate transloading for
customers other than Halliburton. This is because – as we have explained – not
even all transloading involving railroad cars and tractor-trailer rigs constitutes
“transportation by rail carriers.” See 49 U.S.C. § 10501(b)(1). All we determine
in this appeal, on this record, is that the TCB-MAALT-Halliburton operations
concerning the Silo Project and North End Loop meet this definition. Our
express-preemption conclusions only pertain to the roads and parking areas used
in connection with that transloading.
On cross-appeal, TCB asks that we rule that everything it does or might
do on its largely vacant 243-acre leasehold is beyond the reach of the City’s
6
Uncontested trial testimony revealed that all vehicle traffic enters and exits through
this gate at the north end of the property.
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No. 10-11041
regulation. We decline that invitation. This litigation began as a request for a
declaratory judgment brought by TCB. Under the Declaratory Judgment Act,
a federal court may only “declare the rights and other legal relations” of parties
in “a case of actual controversy.” 28 U.S.C. § 2201; Fed. R. Civ. P. 57. That
controversy must be “of a justiciable nature, thus excluding an advisory decree
upon a hypothetical state of facts.” Ashwander v. Tenn. Valley Auth., 297 U.S.
288, 325 (1936). “This circuit interprets the § 2201 ‘case of actual controversy’
requirement to be conterminous with Article III’s ‘case or controversy’
requirement.” Hosein v. Gonzales, 452 F.3d 401, 403 (5th Cir. 2006).
The district court properly declined to “make findings concerning
prospective transloading” because they were “insufficiently concrete to permit
the required factually intense evaluation.” In addition to speculative uses, the
trial record also indicates that TCB currently provides transloading services on
the 20-acre tract, in part using its older conveyor system, for a variety of
commodities aside from frac sand, and for many customers besides Halliburton.7
The evidence discernable from the record about those other operations suggests
that they are highly individualized with respect to each customer and each
commodity. The district court’s careful analysis of the relationships among the
trucker, the owner of the silos, and the railroad at the small Silo Project was not
undertaken as to the larger and older transloading operation.
The problem with too large a preemption blanket over TCB’s operations
is revealed by TCB’s own briefing. It acknowledges it has
transload agreements with shippers, consigners and their agents to
fit the unique circumstances of each. TCB performs the physical act
of transloading itself for some of its customers and has contracts
with independent contractors to perform the transloading for others.
TCB [also] allows certain customers to self-transload . . . .
7
Additionally, at an adjacent distribution and processing center, TCB serves a client
by interchanging and switching (but not transloading) rail cars carrying automobiles.
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No. 10-11041
TCB insists that it has made an adequate case for preemption as to the
entire 243 acres. We see no express preemption. Implied preemption applies if
the regulation has “the effect of unreasonably burdening or interfering with rail
transportation.” Franks, 593 F.3d at 414. TCB argues that the City’s
limitations diminish the potential locations for expansion to meet potential
future customer demand. The mere prospect that there will be less space going
forward, on this extensive tract, without definite plans to develop, and without
an explanation of how future projects would be affected does not amount to an
unreasonable burden at this time.
In a similar vein, TCB contends that road placement is dictated by
demand from customers, whose requirements and identities are constantly in
flux. Being obligated to pave any roads would hamper its flexibility to redesign
the path of its roads. Yet certain other district court findings belie this account
of recurring facility reorganization. To illustrate, TCB admitted at trial that no
current users require it to alter the configuration of its roads. Relatedly, the
court found that “[m]oving the silos would be a substantial undertaking, and
there is no evidence in the record that any party contemplates moving the silos
in the foreseeable future.” In Franks, we rejected a railroad’s implied
preemption argument that rested on similar generalizations and held that the
proponent of preemption must make specific record showings to prevail on
“unreasonabl[e] burden or interfere[nce].” Franks, 593 F.3d at 415. TCB’s
implied preemption claims therefore fail for inadequate support.
Notwithstanding the multiplicity of factual situations, TCB sought a
ruling from the district court that all of TCB’s third-party transloaders,
including MAALT, as well as customers that empty rail cars themselves (so
called self-transloaders) were within the jurisdiction of the STB because they
allegedly work under the auspices of TCB. We are uncertain whether the
district court meant to embrace that reasoning in its holding that in addition to
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the “Halliburton transloading,” the “other transloading done at the Transload
Center constitutes transportation by a rail carrier.”8 If the district court did
intend to hold that all transloading outside of the Silo Project was covered by
preemption, the evidence recited in the district court’s memorandum order and
in the briefing before us does not support such a conclusion.
We remand on the question of preemption as to transloading outside of
the Silo Project and North End Loop, specifically as to the 20 acres of the earlier
transloading. The district court on remand will be better positioned than this
court to apply the two STB precedents to the full array of facts presented. In
that inquiry, the district court should apply Alexandria and Babylon in
determining whether Congress expressly preempted the road grading and
paving requirements on parts of the property other than those related to the Silo
Project and North End Loop. The district court may also weigh the facts to
evaluate whether the test for implied preemption, discussed earlier, is satisfied.
Among the questions for a declaratory judgment is whether the issue as
to other tracts and activities is sufficiently joined, too speculative, or otherwise
inappropriate for a ruling. The evidence suggests this dispute has been
generated by the Silo Project. If in fact the Silo Project is not just the principal
but is the only true concern, the district court must be alert to avoid issuing an
advisory opinion on all of the remainder.
C. Health & Safety Exception
The City and amici9 argue that Midlothian’s ordinances are exempt from
preemption on the basis of an exception for health and safety regulations. See,
8
Though it never expressly defined “Transload Center,” the district court’s opinion
suggests that the term refers at least to the 20-acre old transload yard as well as the
approximately four acre Silo Project and North End Loop. In some places in the analysis, the
court seemingly refers to the entire 243-acre leasehold as the “Transload Center.”
9
The Texas Municipal League, National League of Cities, and Texas Chapter of the
American Planning Association filed a joint amicus brief in this case.
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e.g., N.Y. Susquehanna & W. Ry. Corp., 500 F.3d at 253-54; Green Mtn. R.R.
Corp., 404 F.3d at 643; Fla. E. Coast, 266 F.3d at 1329. We disagree.
This circuit sitting en banc in Franks set out the framework for ICCTA
preemption. Applying Franks, we have already concluded today that the City’s
ordinances manage or regulate rail transportation. Nothing about that analysis
calls on us to evaluate the wisdom or propriety of an exception for health and
safety. Cf. Island Park, LLC v. CSX Transp., 559 F.3d 96, 105 (2d Cir. 2009)
(noting some courts and the STB “have declined to find pre-emption where state
or local regulations does not interfere with rail operations”); Fla. E. Coast, 266
F.3d at 1331 (holding laws having the “effect of managing or governing rail
transportation” preempted, “while permitting the continued application of laws
having a more remote or incidental effect on rail transportation.”).
Perhaps in some other context, an exception for health and safety
regulations would apply. Not here.
D. Flood Plain Ordinance
There remains one final matter to address. The district court found that
nothing about the Silo Project or North End Loop construction violated the City’s
flood plain ordinance. The court credited testimony that very little of the
existing construction was in the flood plain and that any impact would be
negligible. We find no clear error. See Fed. R. Civ. P. 52(a).
Though the parties continue to disagree over whether the ICCTA preempts
the City’s floodplain ordinance, this is little more than “an abstract dispute
about the law” without an existing or impending violation of the ordinance.
Alarez v. Smith, 130 S. Ct. 576, 580 (2009). And the Supreme Court has
instructed that “a dispute solely about the meaning of a law, abstracted from
any concrete actual or threatened harm, falls outside the scope of the
constitutional words ‘Cases’ and ‘Controversies’” and resultantly is beyond our
province under Article III. Id. at 580-81 (citations omitted).
16
No. 10-11041
At oral argument, TCB argued that if economic conditions warrant, it may
decide to expand into the flood plain on some future date. That claimed injury
is “contingent on future events that may not occur as anticipated, or indeed may
not occur at all [and thus] the claim is not ripe for adjudication.” Lopez v. City
of Houston, 617 F.3d 336, 342 (5th Cir. 2010) (quoting Thomas v. Union Carbide
Agric. Prods. Co., 473 U.S. 568, 580-81 (1985)); see also id. (explaining that the
“the doctrines of ripeness and standing often overlap in practice, particularly in
an examination of whether a plaintiff has suffered a concrete injury”) (quotation
marks and citation omitted).
CONCLUSION
We REVERSE the district court’s holding of no preemption as to the
standard construction details and road grading ordinance, resting our decision
on express preemption under the ICCTA. As explained, our express preemption
holding only pertains to the road and paving areas used in connection with the
TCB-MAALT-Halliburton transloading analyzed herein. This preemption
renders the City’s appeal from the denial of its request for civil penalties for
ordinance violations moot. We REVERSE what we have concluded is likely a
holding by the district court that there is express preemption as to the older, 20-
acre transloading center and REMAND for further proceedings. The proceedings
should consider whether there is a live controversy as to some or all of the other
property. We AFFIRM the district court’s other rulings.
17