City of Girard v. Youngstown Belt Railway Co. , 134 Ohio St. 3d 79 ( 2012 )

[Cite as Girard v. Youngstown Belt Ry. Co., 134 Ohio St. 3d 79, 2012-Ohio-5370.]
THE CITY OF GIRARD, APPELLANT, v. YOUNGSTOWN BELT RAILWAY
COMPANY ET AL., APPELLEES.
[Cite as Girard v. Youngstown Belt Ry. Co.,
134 Ohio St. 3d 79, 2012-Ohio-5370.]
Federal preemption—Interstate Commerce Commission Termination Act—49
U.S.C. 10101 et seq.—Eminent domain.
(No. 2011-1850—Submitted June 19, 2012—Decided November 21, 2012.)
APPEAL from the Court of Appeals for Trumbull County,
No. 2010-T-0079, 196 Ohio App. 3d 271, 2011-Ohio-4699.
__________________
MCGEE BROWN, J.
{¶ 1} In this case, we are called upon to determine the extent to which
the Interstate Commerce Commission Termination Act (“ICCTA”), 49 U.S.C.
10101 et seq., preempts a state’s eminent-domain action over a parcel of property
owned by a railway company. Based on our interpretation of the legislation at
issue and its application to the unique facts of this case, we find no preemption,
and we therefore reverse the judgment of the court of appeals.
Factual and Procedural Background
{¶ 2} Since 1997, Youngstown Belt Railway Company (“Youngstown
Railway”) has been the owner of a 55-acre parcel of land, called Mosier Yard.
Youngstown Railway operates an active track that runs along the outside of the
eastern border of Mosier Yard. The remainder of the parcel is vacant, though
Youngstown Railway uses three to four acres for temporary staging and storage
approximately once or twice per year.
{¶ 3} In July 2004, Youngstown Railway entered into an initial purchase
agreement with Total Waste Logistics of Girard, L.L.C., for the purchase of
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Mosier Yard in fee simple at the rate of $5,000 per acre. In April 2005, the
parties entered into a more comprehensive purchase agreement for the purchase of
Mosier Yard for a total of $275,000. The sale was contingent upon Total Waste
Logistics’ attainment of appropriate permits to use the property as a construction-
and-demolition-debris landfill. The purchase agreements make no mention of any
future intent by Total Waste Logistics to grant easements to Youngstown Railway
or any future intent to enter into a debris-hauling-service agreement with
Youngstown Railway. The sale to Total Waste was never consummated.
{¶ 4} In April 2006, the city of Girard passed a resolution declaring its
intent to appropriate a portion of Mosier Yard, covering approximately 41.5 acres.
The 13.5 acres to be retained by Youngstown Railway included the existing track
and right-of-way as well as additional space for the staging and storing of
materials or for the potential future construction of an additional track. In June
2006, the city passed an additional resolution, declaring the value of the property
to be $41,500. After the city and Youngstown Railway were unable to reach any
agreement, the city commenced an appropriation action at the Trumbull County
Court of Common Pleas in November 2006.
{¶ 5} Youngstown Railway filed a motion for summary judgment,
asserting that the appropriation proceedings were preempted by the ICCTA and
subject to the exclusive jurisdiction of the Surface Transportation Board (“STB”)
because the intended appropriation would have the effect of burdening or
interfering with railway transportation. Youngstown Railway pointed out that its
current location for storing materials is outside the 13.5-acre area and further
asserted that it had planned since purchasing the property in 1997 to develop the
property for “industrial, transloading, and/or warehousing purposes to be serviced
by rail,” as evidenced by its current purchase agreement with Total Waste
Logistics.
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{¶ 6} The city opposed Youngstown Railway’s motion and filed its own
motion for summary judgment, arguing that the appropriation would have no
effect on Youngstown Railway’s operation of its railway. The city pointed out
that the appropriated 41.5 acres did not contain any existing or abandoned rail
lines or approach the right-of-way of any neighboring rail lines and that
Youngstown Railway’s chief engineering officer agreed that the 13.5 acres to be
retained by Youngstown Railway would accommodate its need for storage space.
The city further asserted that Youngstown Railway’s plan to sell the entire 55-
acre parcel in fee simple to a landfill company undermined Youngstown
Railway’s stance that the land would be used for railway transportation.
{¶ 7} Youngstown Railway’s response to the city’s motion pointed to the
affidavit of Youngstown Railway’s president, in which he averred that in addition
to the parties’ written contract, Youngstown Railway and Total Waste Logistics
“entered a verbal agreement regarding future business relations” between the two
companies. The president as well as the director of operations for Total Waste
Logistics averred that once Total Waste Logistics obtained the necessary permits
to create the landfill, Total Waste Logistics planned to grant easements to
Youngstown Railway so that Youngstown Railway could transport landfill debris
into the landfill by rail.
{¶ 8} In its May 2010 judgment entry, the trial court held that the city’s
appropriations proceedings were preempted by the ICCTA. However, the court
ordered the parties to apply to the STB “for a determination as to whether it
chooses to exercise its right of preemption” under the ICCTA and held that it was
temporarily retaining jurisdiction pending the STB’s response. The Eleventh
District Court of Appeals held that the trial court’s order was not appealable and
remanded the matter for a definitive ruling on whether preemption applied.
{¶ 9} Upon remand, the trial court held that when a railway company
uses land on an annual basis for storing and staging materials, an appropriation
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action for that land would be preempted by the ICCTA both expressly, under a
per se analysis, and impliedly, under an as-applied analysis. The trial court held
that it would be inappropriate to consider Youngstown Railway’s potential sale to
Total Waste Logistics or any other “futuristic intention,” but determined that
Youngstown Railway’s use of a portion of the appropriated land for storage
caused the city’s action to be preempted by the ICCTA. The trial court therefore
committed jurisdiction to the STB.
{¶ 10} A majority of the panel from the Eleventh District affirmed the
trial court’s decision, though not without rejecting a large portion of the trial
court’s underlying reasoning. Girard v. Youngstown Belt Ry. Co., 196 Ohio
App.3d 271, 2011-Ohio-4699, 963 N.E.2d 193. Contrary to the trial court’s
conclusion, the Eleventh District held that the city’s appropriation action was not
expressly preempted by the ICCTA, because its “remote” and “incidental” effect
“would not function to regulate railroad transportation.” Id. at ¶ 41. Under the
as-applied analysis, the Eleventh District held that Youngstown Railway’s use of
a small portion of the appropriated land for storage was not enough, by itself, to
trigger implied preemption. The appellate court further held that it was not
inappropriate to consider Youngstown Railway’s future plans within the federal-
preemption analysis. The Eleventh District then determined that Youngstown
Railway’s role in its future plans with Total Waste Logistics fell within the
definition of railway transportation and held that the city’s appropriation action
was impliedly preempted by the ICCTA because it would unreasonably interfere
with that railway transportation. Alternatively, the Eleventh District held that the
city’s appropriation action would be preempted even if Youngstown Railway’s
plans with Total Waste Logistics were not realized, because the appropriation
action would interfere with Youngstown Railway’s unspecified future plans to
expand railway operations. The Eleventh District further held that Youngstown
Railway’s unspecified plans could have an effect on interstate commerce, that
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future plans related to the “economic realm” of a railway fall within the purview
of the ICCTA, id. at ¶ 54, and that the city’s prevention of the development of
such plans would have a negative economic impact on the railway, requiring
preemption.
{¶ 11} A dissenting judge would have found that federal preemption did
not apply to the city’s action because Youngstown Railway would have been able
to continue its present railway operations and store its materials on the 13.5 acres
that it would retain after the appropriation, because Youngstown Railway did not
meet its burden of proving that the appropriation would interfere with future
operations, and because Youngstown Railway’s hypothetical services to Total
Waste Logistics do not fall within the definition of railway transportation.
{¶ 12} We accepted discretionary jurisdiction to hear the city’s appeal,
131 Ohio St. 3d 1437, 2012-Ohio-331, 960 N.E.2d 986, which addresses two main
issues: first, the extent to which a state court of common pleas may exercise
jurisdiction to determine whether ICCTA preemption applies, and second,
whether preemption under the ICCTA applies to the particular appropriation
action in this case.
Analysis
Federal Preemption of State Law
{¶ 13} The doctrine of federal preemption originates from the Supremacy
Clause of the United States Constitution, which provides that “the Laws of the
United States * * * shall be the supreme Law of the Land; and the Judges in every
State shall be bound thereby, anything in the Constitution or Laws of any State to
the contrary notwithstanding.” U.S. Constitution, Article VI, cl. 2. Pursuant to
the Supremacy Clause, the United States Congress has the power to preempt state
laws. In re Miamisburg Train Derailment Litigation, 68 Ohio St. 3d 255, 259, 626
N.E.2d 85 (1994).
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{¶ 14} Preemption may be either expressed or implied. Gade v. Natl.
Solid Wastes Mgt. Assn., 505 U.S. 88, 98, 112 S. Ct. 2374, 120 L. Ed. 2d 73 (1992).
Express preemption occurs when Congress explicitly defines “the extent to which
its enactments pre-empt state law.” English v. Gen. Elec. Co., 496 U.S. 72, 78,
110 S. Ct. 2270, 110 L. Ed. 2d 65 (1990). Implied preemption of state law may
occur when Congress has created a “ ‘scheme of federal regulation * * * so
pervasive as to make reasonable the inference that Congress left no room for the
States to supplement it,’ or where an Act of Congress ‘touch[es] a field in which
the federal interest is so dominant that the federal system will be assumed to
preclude enforcement of state laws on the same subject.’ ” Id. at 79, quoting Rice
v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 91 L. Ed. 1447
(1947).
{¶ 15} Preemption is fundamentally a question of congressional intent.
Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S. Ct. 2608, 120 L. Ed. 2d
407 (1992). However, in all preemption cases, we start with the presumption that
the states’ historic police powers shall not be superseded by federal law unless
that is shown to be the clear and manifest purpose of Congress. Rice at 230. See
also Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S. Ct. 2240, 135 L. Ed. 2d 700
(1996) (“because the States are independent sovereigns in our federal system, we
have long presumed that Congress does not cavalierly pre-empt state-law causes
of action”). The party seeking to overcome the presumption against preemption
bears a heavy burden. De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520
U.S. 806, 814, 117 S. Ct. 1747, 138 L. Ed. 2d 21 (1997). Further, the scope of
preemption, if any, is to be determined while keeping this presumption in mind.
Medtronic at 485. Accordingly, “[t]he applicable preemption provision must be
read narrowly ‘in light of the presumption against pre-emption of state police
power regulations.’ ” In re Miamisburg at 264, quoting Cipollone at 518.
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State Court Jurisdiction to Determine Preemption
{¶ 16} As an initial matter, we note that the Trumbull County Court of
Common Pleas correctly exercised jurisdiction to entertain the city’s action and to
consider the merits of Youngstown Railway’s preemption claim under the
ICCTA. In the absence of a patent and unambiguous lack of jurisdiction, a court
of general subject-matter jurisdiction has the ability to determine the bounds of its
own jurisdiction. State ex rel. Enyart v. O’Neill, 71 Ohio St. 3d 655, 646 N.E.2d
1110 (1995). In determining the scope of its jurisdiction under a federal statute, a
state court of general subject-matter jurisdiction possesses a “ ‘deeply rooted
presumption in favor of concurrent’ ” state and federal jurisdiction. Mims v.
Arrow Fin. Servs., L.L.C., ___ U.S. ___, ___, 132 S. Ct. 740, 748, 181 L. Ed. 2d
881 (2012), quoting Tafflin v. Levitt, 493 U.S. 455, 459, 110 S. Ct. 792, 107
L. Ed. 2d 887 (1990); see also Herbst v. Resolution Trust Corp., 66 Ohio St. 3d 8,
10, 607 N.E.2d 440 (1993). The presumption of concurrent jurisdiction can be
overcome only if (1) the federal statute expressly vests jurisdiction exclusively in
the federal courts, (2) the legislative history unmistakably implies that jurisdiction
was to be vested exclusively in the federal courts, or (3) state jurisdiction is
clearly incompatible with concurrent federal jurisdiction. Elek v. Huntington
Natl. Bank, 60 Ohio St. 3d 135, 138, 573 N.E.2d 1056 (1991), quoting Gulf
Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478, 101 S. Ct. 2870, 69 L. Ed. 2d
784 (1981).
{¶ 17} State courts across the nation regularly evaluate preemption under
the ICCTA. See, e.g., Wolf v. Cent. Oregon & Pacific RR., Inc., 230 Or.App. 269,
216 P.3d 316 (2009) (the ICCTA did not preempt state jurisdiction over grade
crossings); Seattle v. Burlington N. RR. Co., 145 Wash.2d 661, 669, 41 P.3d 1169
(2002) (the ICCTA preempted regulations regarding signaling at railroad
crossings); In re Vermont Ry., 171 Vt. 496, 503, 769 A.2d 648 (2000) (the ICCTA
did not preempt a city’s zoning conditions for a railway’s salt-shed facility).
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Because the ICCTA does not explicitly deny concurrent jurisdiction to state
courts and state courts routinely adjudicate matters regarding the ICCTA, the
Trumbull County Court of Common Pleas did not exceed its authority in
evaluating whether the ICCTA preempted the city of Girard’s ability to institute
eminent-domain proceedings against Youngstown Railway. Consequently, this
court possesses the authority to review the decisions of the trial and appellate
courts and offer final judgment.
Application of the ICCTA
{¶ 18} The federal law at issue in this case is the ICCTA, which abolished
the Interstate Commerce Commission, created the STB, and granted the STB
exclusive jurisdiction over certain aspects of interstate rail activity. 49 U.S.C.
10101 et seq. The ICCTA was enacted to encourage competitive rates for rail
transportation, to minimize regulatory control, and to promote efficiency as well
as public health and safety. 49 U.S.C. 10101.
{¶ 19} The ICCTA grants exclusive jurisdiction to the STB over
(1) transportation by rail carriers, and the remedies
provided in this part with respect to rates, classifications, rules
(including car service, interchange, and other operating rules),
practices, routes, services, and facilities of such carriers; and
(2) the construction, acquisition, operation, abandonment,
or discontinuance of spur, industrial, team, switching, or side
tracks, or facilities, even if the tracks are located, or intended to be
located, entirely in one State.
49 U.S.C. 10501(b)(1) and (2).
{¶ 20} The ICCTA defines “transportation” to include
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(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)(A) and (B).
{¶ 21} The ICCTA contains an express preemption clause, which
provides: “Except as otherwise provided in this part, the remedies provided under
this part with respect to regulation of rail transportation are exclusive and preempt
the remedies provided under Federal or State law.” 49 U.S.C. 10501(b).
{¶ 22} In shorter form, the ICCTA provides the STB with exclusive
jurisdiction over all physical instrumentalities possessed and all services provided
by rail carriers that are related to the movement of passengers and/or property.
This broad, sweeping language shows Congress’s intent to preempt any state
effort to regulate rail transportation. However, although the ICCTA’s wording is
expansive, the ICCTA’s legislative history indicates that Congress did not intend
to preempt any and all state laws that might touch upon or indirectly affect
railway property. Emerson v. Kansas City S. Ry. Co., 503 F.3d 1126, 1131 (10th
Cir.2007), quoting H.R.Rep. No. 104-422, at 167 (1995), reprinted in 1995
U.S.C.C.A.N. 850, 852 (“the exclusivity [of 49 U.S.C. 10501(b)] is limited to
remedies with respect to rail regulation-not State and Federal law generally. * * *
[State and federal laws] remain fully applicable unless specifically displaced,
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because they do not generally collide with the scheme of economic regulation
(and deregulation) of rail transportation”).
{¶ 23} Further, various federal circuit courts have adopted the position
that “Congress narrowly tailored the ICCTA pre-emption provision to displace
only ‘regulation,’ i.e., those state laws that may reasonably be said to have the
effect of ‘manag[ing]’ or ‘govern[ing]’ rail transportation, Black’s Law
Dictionary 1286 (6th Ed.1990), while permitting the continued application of laws
having a more remote or incidental effect on rail transportation.” Florida E.
Coast Ry. Co. v. W. Palm Beach, 266 F.3d 1324, 1331 (11th Cir.2001). See also
Franks Invest. Co., L.L.C. v. Union Pacific RR. Co., 593 F.3d 404, 410 (5th
Cir.2010); PCS Phosphate Co., Inc. v. Norfolk S. Corp., 559 F.3d 212, 218 (4th
Cir.2009); Adrian & Blissfield RR. Co. v. Blissfield, 550 F.3d 533, 539 (6th
Cir.2008); New York Susquehanna & W. Ry. Corp. v. Jackson, 500 F.3d 238, 252
(3d Cir.2007). We therefore adopt this interpretation of the ICCTA.
Categorical Preemption
{¶ 24} The preemption analysis regularly employed by the STB
distinguishes between express and implied preemption by classifying actions as
“per se preempted,” or “categorically preempted,” versus “preempted as applied.”
Adrian & Blissfield R. Co., 550 F.3d at 539-540. Turning first to the issue of
categorical preemption, the Eleventh District Court of Appeals held, and we
agree, that the city’s eminent-domain action against a portion of Mosier Yard is
not categorically preempted by the ICCTA.
{¶ 25} The STB has recognized that categorical preemption applies to two
main categories of state or local actions:
The first is any form of state or local permitting or
preclearance that, by its nature, could be used to deny a railroad the
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ability to conduct some part of its operations or to proceed with
activities that the Board has authorized. * * *
Second, there can be no state or local regulation of matters
directly regulated by the Board–such as the construction,
operation, and abandonment of rail lines (see 49 U.S.C. 10901-
10907); railroad mergers, line acquisitions, and other forms of
consolidation (see 49 U.S.C. 11321-11328); and railroad rates and
service (see 49 U.S.C. 10501(b), 10701-10747, 11101-11124).
CSX Transp., Inc.—Petition for Declaratory Order, STB Finance Docket No.
34662, 2005 WL 1024490, at *2 (May 3, 2005).
{¶ 26} Clear-cut examples of categorically preempted state actions
include state and local permitting laws and zoning regulations. See Auburn v.
United States Govt., 154 F.3d 1025 (9th Cir.1998) (attempt to impose local
environmental-permitting laws on improvements and repairs to a rail line that had
been approved by the STB); Norfolk S. Ry. Co. v. Austell, N.D.Ga. No.
CIVA1:97-CV-1018-RLV, 1997 WL 1113647 (Aug. 18, 1997) (attempt to
impose land-use-permitting requirement pursuant to local zoning ordinance).
Courts also generally recognize that eminent-domain actions that seek to take
property containing active rail lines are categorically preempted by the ICCTA.
See Union Pacific RR. Co. v. Chicago Transit Auth., N.D.Ill. No. 07-cv-229, 2009
WL 448897, at *6-7 (Feb. 23, 2009) (a city’s attempted condemnation of a 95-
foot, 2.8-mile strip of rail line’s right-of-way, including multiple active tracks,
was categorically preempted by the ICCTA); Wisconsin Cent. Ltd. v. Marshfield,
160 F. Supp. 2d 1009 (W.D.Wis.2000) (holding that the city’s attempted
condemnation of a portion of a railroad’s track was categorically preempted by
the ICCTA).
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{¶ 27} However, neither the federal circuit courts nor the STB has held
that there is any “blanket rule that any condemnation action against railroad
property is impermissible.” Lincoln Lumber Co.—Petition for Declaratory
Order, STB Finance Docket No. 34915, 2007 WL 2299735 (Aug. 10, 2007).
Instead, because eminent-domain actions are specific to the unique parcel of land
the state seeks to control, they cannot necessarily be categorized as laws or
regulations of general applicability that seek to manage or govern rail
transportation in general. Union Pacific RR. Co. v. Chicago Transit Auth., 647
F.3d 675, 679 (7th Cir.2011). Because eminent-domain actions are unique, and
because this case does not involve more extreme circumstances such as an
attempted taking of an active rail line, we hold that the categorical-preemption
analysis is inapplicable here.
As-Applied Preemption
{¶ 28} When a proposed state action against a rail carrier is not
categorically preempted pursuant to the foregoing analysis, courts have generally
applied the STB’s standards to determine if the action is preempted as applied.
See Franks Invest. Co., L.L.C., 593 F.3d at 413-414; PCS Phosphate Co., Inc.,
559 F.3d at 220-221; Adrian & Blissfield RR. Co., 550 F.3d at 540-541; Emerson
v. Kansas City S. Ry. Co., 503 F.3d 1126, 1133 (10th Cir.2007). The STB has
articulated the standard for as-applied ICCTA preemption as follows: “For state
or local actions that are not facially preempted, the section 10501(b) preemption
analysis requires a factual assessment of whether [the] action would have the
effect of preventing or unreasonably interfering with railroad transportation.”
CSX Transp., Inc., 2005 WL 1024490, at *3. Thus we are required to conduct a
fact-specific inquiry to determine whether the city’s action is preempted by the
ICCTA in this case. Because it is Youngstown Railway who is seeking ICCTA
preemption, and because of our general presumption against preemption,
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Youngstown Railway bears the burden of persuasion here. See Elam v. Kansas
City S. Ry. Co., 635 F.3d 796, 802 (5th Cir.2011).
{¶ 29} Our analysis at this point risks becoming tenuous, because the
parties have presented us not with the mere present reality of Youngstown
Railway’s operations at Mosier Yard, but with multiple hypothetical future
scenarios. Under normal circumstances, we decline to address hypothetical
questions. In re Application of Columbus S. Power Co., 128 Ohio St. 3d 512,
2011-Ohio-1788, 947 N.E.2d 655, ¶ 48; Fortner v. Thomas, 22 Ohio St. 2d 13, 14,
257 N.E.2d 371 (1970). However, some courts have found it appropriate to
examine a railway company’s future intentions when determining whether a state
action will unreasonably interfere with railway transportation. See Lincoln v.
Surface Transp. Bd., 414 F.3d 858, 862 (8th Cir.2005); Union Pacific RR. Co.,
647 F.3d at 681; Reading Blue Mountain & N. RR. Co. v. UGI Util., Inc.,
M.D.Penn. No. 3:11-CV-2182, 2012 WL 251960 (Jan. 25, 2012). We therefore
find it appropriate to entertain Youngstown Railway’s hypothetical scenarios only
in the specific context of our as-applied ICCTA preemption.
Present Use of Property Does Not Call for Preemption
{¶ 30} Starting with the present status of Mosier Yard, we hold that there
is no preemption under the ICCTA. It is undisputed that the portion of Mosier
Yard sought to be appropriated by the city contains no active or abandoned tracks,
contains no portion of rights-of-way of any rail lines, contains no permanent
structures, and is undeveloped as a whole. These facts make Youngstown
Railway’s situation completely distinguishable from many cases finding
preemption as applied under the ICCTA. See, e.g., Lincoln, 414 F.3d 858
(preemption based on interference with right-of-way); Soo Line RR. Co. v. St.
Paul, 827 F. Supp. 2d 1017 (D.C.Minn.2010) (preemption based on interference
with right-of-way); Wisconsin Cent. Ltd. v. Marshfield, 160 F. Supp. 2d 1009
(W.D.Wisc.2000) (preemption based on attempted taking of rail line); Union
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Pacific RR. Co., N.D.Ill. No. 07-cv-229, 2009 WL 448897 (preemption based on
interference with right-of-way).
{¶ 31} The sole factor that could potentially support a finding of
unreasonable interference with railway transportation is the fact that Youngstown
Railway uses “three to four random acres” of Mosier Yard annually for staging
and storing materials. Girard, 196 Ohio App. 3d 271, 2011-Ohio-4699, 963
N.E.2d 193, at ¶ 15. However, Youngstown Railway’s agents have admitted that
their need for the staging and storage of materials is not married to one specific
area of Mosier Yard and that the remaining land after the taking would
accommodate the storage of materials. Compare Lincoln, 414 F.3d at 861
(storage and loading area, located in right-of-way, could not be accommodated
elsewhere). There is no permanent structure or any other impediment that
prevents Youngstown Railway from storing materials in one area versus another
on the property; the only requirement is a general need for three to four acres near
the rail line, which Youngstown Railway would still have after the taking.
Accordingly, under the present scenario, Youngstown Railway has not established
that the proposed taking would interfere with railway transportation, and
preemption under the ICCTA would not be called for.
Future Operations by Total Waste Logistics Do Not Constitute
Transportation by a Railway Carrier
{¶ 32} As for Youngstown Railway’s proposed future scenario of selling
Mosier Yard to Total Waste Logistics, we hold that there is also no preemption
under the ICCTA. Based on the plain and straightforward language of the written
contract between Total Waste Logistics and Youngstown Railway, Total Waste
Logistics will become the owner in fee simple of the entirety of Mosier Yard,
including the area sought to be appropriated by the city. Despite this finalized
written instrument, agents of both Total Waste Logistics and Youngstown
Railway averred that the parties entered into contemporaneous oral agreements
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that Total Waste Logistics would grant easements and enter into service contracts
with Youngstown Railway in order to transport waste into Total Waste Logistics
landfill. Even if we were to give credence to this parol evidence, the future
activities that would take place on Total Waste Logistics property would not
constitute railway transportation.
{¶ 33} It is true that the loading and unloading of transported materials,
including waste materials, may fit within the broader definition of
“transportation” as defined by the ICCTA. 49 U.S.C. 10102(9). However,
satisfaction of the term “transportation” does not end the analysis. In order for
transportation to constitute railway transportation under the ICCTA, the activity
must be “ ‘performed by, or under the auspices of, a “rail carrier.” ’ ” New York
& Atlantic Ry. Co. v. Surface Transp. Bd., 635 F.3d 66, 71-72 (2d Cir.2011),
quoting Babylon—Petition for Declaratory Order, STB Finance Docket No.
35057, 2008 WL 4377804 (Sept. 24, 2008). A “rail carrier” is defined as an
entity “providing common carrier railroad transportation for compensation.” 49
U.S.C. 10102(5). “The fundamental test of common carriage is whether there is a
public profession or holding out to serve the public.” New England Transrail,
L.L.C.—Construction, Acquisition, and Operation Exemption, STB Finance
Docket No. 34797, 2007 WL 1989841, *6 (June 29, 2007).
{¶ 34} When the loading, unloading, or transloading of materials is
performed by a rail carrier, on property owned by the rail carrier, through services
rendered as a common carrier to the public, such activity has been found to fall
under the purview of the ICCTA. See, e.g., New England Transrail at *8-10
(transloading and storage of various commodities and waste materials, but not
processing of waste, would constitute rail transportation if the owner and operator
of the facility were authorized as a rail carrier); Green Mountain RR. Corp. v.
Vermont, 404 F.3d 638, 644 (2d Cir.2005) (transloading and temporary storage of
commodities by a rail carrier constituted rail transportation and was governed by
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the ICCTA); Norfolk S. Ry. Co., 1997 WL 1113647, at *6 (operation of
intermodal facility by rail carrier constituted rail transportation and was governed
by the ICCTA).
{¶ 35} However, when a transloading, shipping, or receiving facility is
operated by an entity that is not a rail carrier, the facility’s activities are not
considered to fall under the ICCTA, regardless of whether railway transportation
is used up to the point that the materials arrive or depart from the facility. See,
e.g., Babylon, 2008 WL 4377804 (transloading of construction and demolition
debris by non-rail-carrier tenant of railway property did not constitute rail
transportation and was not governed by the ICCTA); New York & Atlantic Ry.
Co., 635 F.3d at 73 (waste-transfer facility, operated by a nonrail carrier that was
not acting as an agent for any rail carrier, did not constitute rail transportation and
was not governed by the ICCTA); Florida E. Coast Ry. Co., 266 F.3d at 1332-
1336 (construction-aggregate distribution center, operated by a non-rail-carrier
lessee of railway property, did not constitute rail transportation and was not
governed by the ICCTA); Milford, Mass.—Petition for Declaratory Order, STB
Finance Docket No. 34444, 2004 WL 1802301 (Aug. 11, 2004) (despite
contractual agreement with a rail carrier, the transloading of steel by a nonrail
carrier in a manner that was not being offered as part of common-carrier services
for the public did not constitute rail transportation and was not governed by the
ICCTA); Hi Tech Trans, L.L.C. v. New Jersey, 382 F.3d 295, 308-309 (3d
Cir.2004) (bulk-waste transloading facility, operated by a nonrail carrier on rail
carrier’s property, did not constitute rail transportation and was not governed by
the ICCTA). The proposed ownership and operation of Mosier Yard by Total
Waste Logistics would fall squarely within this latter category.
{¶ 36} The Hi Tech decision in particular informs our decision today. In
that case, a nonrail carrier, Hi Tech, and a rail carrier, Canadian Pacific Railroad,
contracted for Hi Tech to build and operate a solid-waste facility on the railroad’s
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property. Id. at 298-299. Construction and demolition waste was to be delivered
to Hi Tech’s facility by truck, and after processing the waste at Hi Tech’s facility,
the waste was loaded into rail cars to be transported out of the property by
Canadian Pacific Railroad. Id. The Third Circuit determined that Hi Tech’s
facility
does not involve “transportation by rail carrier.” The most it
involves is transportation “to rail carrier.” * * * The mere fact
that the [Canadian Pacific Railroad] ultimately uses rail cars to
transport the [construction and demolition] debris Hi Tech loads
does not morph Hi Tech’s activities into “transportation by rail
carrier.” Indeed, if Hi Tech’s reasoning is accepted, any nonrail
carrier’s operations would come under the exclusive jurisdiction of
the STB if, at some point in a chain of distribution, it handles
products that are eventually shipped by rail by a railcarrier [sic].
The district court could not accept the argument that Congress
intended the exclusive jurisdiction of the STB to sweep that
broadly, and neither can we.
(Emphasis sic.) Id. at 308-309.
{¶ 37} The facts here are strikingly similar to those in Hi Tech, with a few
exceptions: Youngstown Railway will be delivering rather than receiving
construction and demolition debris, and Total Waste Logistics will have
ownership and control of both the waste facility and the property as a whole.
Thus, unlike in Hi Tech, what we have here is “transportation from rail carrier”
rather than “transportation by rail carrier.” We cannot conclude that the activities
on Mosier Yard would constitute railway transportation from the mere fact that
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SUPREME COURT OF OHIO
waste materials are delivered into the property through the use of railway
transportation.
{¶ 38} Accordingly, under this primary hypothetical scenario, the
activities in Mosier Yard would not constitute rail transportation. The city’s
eminent-domain action would therefore not be preempted by the ICCTA under
the as-applied analysis.
Future Unspecified Use Is Too Vague to Be Considered
{¶ 39} Under Youngstown Railway’s secondary hypothetical scenario, we
also hold that there is no preemption under the ICCTA. Youngstown Railway
claims that it wants to use Mosier Yard in the future for expansion and
development in order to accommodate the growing interstate railway business in
the area. However, Youngstown Railway has no concrete plans to put these
hypothetical plans into execution and in fact is selling the property to Mosier
Yard. Without anything more specific, Youngstown Railway’s evidence of a
general desire for future development is not enough to establish that the property
will be used for railway transportation.
{¶ 40} While it is acceptable and sometimes necessary to consider a
railway company’s future plans when determining if the ICCTA applies to an
eminent-domain action, it is also necessary to consider whether it is likely that the
railway company’s plans “will come to fruition.” Lincoln, 414 F.3d at 862.
Keeping in mind that Youngstown Railway bears the burden of demonstrating
that the city’s action is preempted by the ICCTA, mere “conclusory allegations
are not sufficient to support removal.” Bayou DeChene Reservoir Comm. v.
Union Pacific RR. Corp., W.D.La. No. 09-0429, 2009 WL 1604658, at *3-4 (June
8, 2009); see also Texas Cent. Business Lines Corp. v. Midlothian, 669 F.3d 525,
535 (5th Cir.2012) (“The mere prospect that there will be less space going
forward, on this extensive tract, without definite plans to develop, and without an
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January Term, 2012
explanation of how future projects would be affected does not amount to an
unreasonable burden [on rail transportation]”).
{¶ 41} It is true that in some cases it has been appropriate to look to a
railway company’s future intentions, even without concrete plans, in order to
determine whether a taking would eventually unreasonably interfere with railway
transportation. Lincoln at 862; Norfolk S. Ry.—Petition for Declaratory Order,
STB Finance Docket No. 35196, 2010 WL 691256 (Feb. 26, 2010). However,
those cases are distinguishable from the one at hand because they involved
already existing tracks or rights-of-way. Both Lincoln and Norfolk S. stand for
the principle that a locality cannot justify an eminent-domain action over a rail
line or right-of-way merely because the line is not currently being used. This
principle does not extend to an undeveloped parcel of land containing no rail line
and no right-of-way.
{¶ 42} Here, Youngstown Railway is not being asked to justify the
continued existence of an already developed rail line. Instead, the property sought
to be acquired is vacant land, with which Youngstown Railway has done nothing
in terms of development from its purchase of the land in 1997 up to the present
day. It is far from evident that Youngstown Railway’s alleged intentions for the
future will ever actually be executed. We are therefore not confronted with a
situation in which the city’s eminent-domain action could forever close off the use
of a previously constructed rail line.
{¶ 43} Youngstown Railway’s alternative future plans are too vague and
speculative to allow us to conclude that the city’s eminent-domain action would
unreasonably interfere with railway transportation. Consequently, Youngstown
Railway has failed to establish that the city’s eminent-domain action would be
preempted by the ICCTA.
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SUPREME COURT OF OHIO
Conclusion
{¶ 44} We hold that the Trumbull County Court of Common Pleas had
jurisdiction to determine the question of ICCTA preemption. Applying the
generally accepted fact-intensive test for as-applied preemption under the ICCTA,
we hold that the city’s proposed eminent-domain action against an undeveloped
portion of Youngstown Railway’s property, which does not contain any tracks or
rights-of-way and does not have any concrete projected use that would constitute
rail transportation by a rail carrier, is not preempted under the ICCTA.
{¶ 45} For these reasons, we reverse the appellate court’s decision finding
preemption by the ICCTA and committing the matter to the STB, and we remand
the case to the trial court for further proceedings consistent with this opinion.
Judgment reversed
and cause remanded.
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL,
LANZINGER, and CUPP, JJ., concur.
__________________
Frank R. Bodor; and Brian C. Kren, Girard City Law Director, for
appellant.
Manchester, Bennett, Powers & Ullman, L.P.A., C. Scott Lanz, and
Thomas J. Lipka, for appellee Youngstown Belt Railway Company.
Michael DeWine, Attorney General, Alexandra T. Schimmer, Solicitor
General, and Michael L. Stokes, Assistant Attorney General, for amicus curiae,
state of Ohio.
______________________
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