By LISA SCAGLIOTTI
Once again, federal laws that exempt railroad development from local review and control have protected Vermont Railway Inc.’s Shelburne salt facility from local regulation.
In a decision issued late last week, the U.S. Court of Appeals for the Second Circuit in New York City ruled that a Shelburne ordinance enacted in 2017 to regulate the handling, storage, and transport of hazardous materials does not apply to the railroad’s new road-salt facility off U.S. Route 7 north of Shelburne village.
In January 2018, the town of Shelburne appealed a decision made in December 2017 by U.S. District Court Senior Judge William K. Sessions III in Burlington. The appeals court agreed with Sessions’ ruling.
The appeal decision is the latest development in the simmering dispute between the municipality and Vermont Railway that began in 2015 when the railroad acquired the 32-acre site along the railroad line and within sight of the busy Route 7 truck route. The spot is adjacent the LaPlatte River which empties into Lake Champlain nearby.
The railroad along with its partner Barrett Trucking of Burlington built two large structures that together can store up to 80,000 tons of road salt brought in from out-of-state by rail. The salt is offloaded into the storage buildings and later put on trucks to be hauled to customers – mainly municipalities – around Vermont to use for winter road maintenance.
The Shelburne facility replaced a smaller salt handling operation that the railroad outgrew in the South End of Burlington. The railroad sold the property to City Market for a new grocery store.
The new salt-handling project received no local zoning review or permitting; it was subject to a few federal permits administered by the state. Local officials, townspeople and environmental advocates objected to the process and argued that potential impacts of the development on the environment, traffic and noise in the area should have had more scrutiny.
Nearly three years in court
The issue went before the federal district court in 2016 and 2017 and Judge Sessions maintained that the Interstate Commerce Commission Termination Act, which applies to rail commerce, allowed the project to skip local and state development review processes.
In late summer 2017, town officials adopted a local ordinance governing the handling, storage, and transportation of hazardous materials and said that it applied to the salt facility. The ordinance considered road salt hazardous and it set limits that would have prevented the railroad’s facility from operating.
The railroad disagreed that it needed to follow the new ordinance and returned to federal court in fall 2017. The court sided with the railroad, issuing an injunction that ordered the town to not enforce the ordinance with regard to the salt facility.
The nonprofit Vermont Natural Resources Council, an environmental advocacy organization, supported the town’s attempts to regulate the project. It contributed $20,000 to cover legal costs of the appeal. The town’s law firm, Monaghan Safar Ducham, agreed to cap its fees for the appeal within that amount.
The Shelburne Selectboard in January 2018 decided to appeal. It wasn’t until November when a three-judge panel of the Circuit Court heard oral arguments in the case and it issued its decision last Friday.
“We identify no error in either the District Court’s legal analysis of the Town’s police powers or its factual findings underlying that analysis, and we thus affirm the judgment of the District Court,” the appeals judges wrote in their decision.
Parsing local ‘police powers’
A key part of the town’s legal argument was that the new ordinance was an example of the town exercising its police powers – something the interstate commerce act recognizes as an instance where local regulations may override the federal rule.
Both courts agreed that a local regulation to protect public health and safety are an example of local police powers that could be exempt from federal preemption.
But both courts also agreed that the Shelburne ordinance did not meet that test.
“The District Court correctly determined the Ordinance is not a valid exercise of the Town’s police powers, and we therefore affirm the District Court’s grant of a permanent injunction barring the Town from enforcing the Ordinance against the Railway,” the appellate court’s decision states.
The District Court found – and the appeals court agreed – that the ordinance did not promote health and safety. The appeals court judges explained their rationale noting that the town’s experts “knew of no other legislation that classified road salt as a hazardous material.” It also points out that the town’s own salt storage building nearby lacks “the environmental monitoring mechanisms that were in place at the (railroad’s) facility.”
The Circuit Court also pointed out that the town ordinance outlaws spilling road salt at the railroad’s facility “but permits the spreading of road salt for the purpose of de-icing motorways, driveways, and sidewalks; and the Town itself spreads road salt throughout the winter months.”
The decision added: “Indeed, the town’s own expert admitted that the mere storage of road salt causes no environmental impact.”
What comes next
The town’s attorney Claudine Safar called the appeals ruling disappointing. She will review the decision with the Shelburne Selectboard, which will decide what if any next steps it might take.
Town Manager Lee Krohn said the board will likely discuss the matter at its regular March 26 meeting. “The Town intends to make a more thorough public statement once we’ve had an opportunity to assess and discuss the decision,” Krohn said.
Shelburne residents spoke up about the courts’ ruling at Tuesday’s selectboard meeting.
Sean Moran compared the court case to “the 50th rerun of ‘I Love Lucy.’
“We cannot afford to pay to go forward with this… the budget is strained. We were very happy fire and rescue passed, it was needed,” Moran said.
As for continuing the lawsuit, he urged the board to “use your head folks. We don’t have the money to be slapped down again, and again and again.”
Residents Linda Riell and Vivian Jordan agreed, asking the board not to continue the case. The board also said it would be meeting in executive session at the March 26 meeting with the town attorney to discuss the case further.
The case has resulted in significant legal bills for the municipality. Finance director Peter Frankenburg said that since 2015, the town has paid $516,300 in legal fees associated with the case including the appeal.
For comparison, prior to the salt facility issue, the town in fiscal years 2014 and 2015 budgeted $30,000 each year for all of its legal work.
Safar’s firm capped its fee for the appeal portion of the work at $17,500, Frankenburg said, however its costs have been $65,000. An initial $2,500 from the Vermont Natural Resources Council’s contribution was used to pay another Burlington law firm, Dinse Knapp & McAndrew, which assisted in the initial preparation of the Circuit Court filing, Frankenburg explained.
VNRC Executive Director Brian Shupe said his organization wasn’t involved with the details of the appeal. It agreed to offer financial support because it had members eager to see the town pursue the case, he said.
They also were hoping for a different answer from the court.
“We are disappointed because the salt sheds pose a threat to a very important natural resource,” Shupe said.
In contrast, the Circuit Court’s decision was just what Vermont Railway had hoped for.
“We are very pleased with the result,” said Jennifer McDonald, a lawyer for the railroad. “Judge Sessions’ decision was very well-reasoned, and the Circuit Court agreed.”