By Lisa Scagliotti
and Eileen O’Grady
The Shelburne town government was dealt another blow in federal court last week in its efforts to thwart Vermont Railway Inc.’s construction and opening of a salt storage and distribution facility near the LaPlatte River without any significant local or state regulatory review.
A U.S. District Court Judge ruled that federal law allowed Vermont Railway to bypass key state and local permit processes regarding its newly constructed facility west of U.S. 7 and north of Shelburne Village.
And, despite objections from the town that the project is Vermont Railway’s in name only, the court also concluded that Barrett Trucking’s role in the enterprise is not significant enough to trigger local zoning or state Act 250 scrutiny.
In a decision dated June 28 — just one day shy of a year from the court’s original judgment on this issue — Judge William K. Sessions III denied the Shelburne town government’s request that the court issue a temporary restraining order against Vermont Railway and essentially reconsider its ruling on local permitting review.
Vermont Railway’s Assistant Vice President Selden Houghton said the company had remained confident in its case over the past year, and is pleased with the court’s reaffirmation of its June 2016 ruling.
In a statement issued after the ruling on Friday, Shelburne Town Manager Joe Colangelo emphasized the town’s priorities in the case: “Town officials have repeatedly acknowledged an obligation to protect Shelburne’s natural resources, along with the health, safety and general welfare of its citizenry. Furthermore, the relationship between Barrett Trucking and Vermont Railways Inc. raised questions that warranted additional scrutiny.”
The ruling is the latest development in a relatively short but intense confrontation between the railroad and the town government that began in early 2016 when Vermont Railway announced it had purchased 32 acres adjacent to Harbor Industries and the LaPlatte River. The railroad said it wanted to use the land for a so-called intermodal facility where train cars laden with road salt would be unloaded for storage and distribution to municipalities and other customers in the region. The facility would be operated by Barrett Trucking and would replace a similar operation in Burlington’s South End on a site that was purchased by City Market to build a new store.
The project surprised town officials and residents, prompting calls for more information, more time to discuss and review the proposal, along with many objections and even a street protest over potential traffic and environmental impacts.
The first legal challenge came after the Shelburne town manager, acting as zoning enforcement officer, issued Vermont Railways a notice of violation for its plans to clear-cut 19 acres to develop a large-scale salt trans-loading and warehousing facility.
In response, the railroad filed suit in federal court, citing the Interstate Commerce Commission Termination Act, the federal law that “pre-empts” rail projects from local zoning regulations and state environmental and land-use review such as Act 250.
In June 2016, Judge Sessions sided with the railroad. Not long after that ruling, the town leveled new objections, focusing on the nature of the relationship between Barrett and Vermont Railway. The town claimed Barrett’s role in the property purchase and construction financing was greater than originally described. It said Barrett’s loan requests to the Vermont State Infrastructure Bank and Merchants Bank made it appear that the trucking company, not the railroad, was the lead partner in the project, and if that was the case, the railroad’s federal protection from local and state review processes wouldn’t apply.
“It has been the town’s suspicion that this is a Barrett Trucking project hiding behind Vermont Railway’s assertion of federal pre-emption,” the town said in a news release in September.
After several other legal twists and turns, the court held additional hearings this spring, receiving extensive testimony from bankers, the trucking company, and the railroad, detailing the financial relationship and each party’s role.
Sessions wrote that he was satisfied that the railroad is leading the decision-making, construction and operations of the project: “Accordingly, the railway is ultimately the party on the hook for a large portion of the construction financing if the transload project is unsuccessful.”
Lisa Winkler, a member of the Vermont United citizens group opposed to the project, said she was extremely disappointed by the ruling but wants to believe there still may be avenues the town could pursue.
“The court has denied all our motions, so at this point we don’t have any clear path forward,” Winkler said. “I’m really disappointed, but I’m not hopeless. I still have hope.”
Selectboard Vice Chair John Kerr agreed. “It’s disappointing that there wasn’t a case for our position,” he said.
Colangelo wouldn’t speculate on the town’s next move. “I can’t say what the town will do about it yet,” he said Monday. “The Selectboard hasn’t had the opportunity to meet since the ruling came out.” The board meets briefly Friday at noon to set the tax rate; its next regular meeting is 7 p.m. Tuesday.
Meanwhile, Vermont Railway completed construction on a second 40,000-square-foot salt storage shed last week, according to Houghton. Salt deliveries are expected to begin soon.
Shelburne News reporter Gillian English contributed to this report.