Summary of a Recent
Judicial Development in
Renewable Energy

City Ordinance Prohibiting Hauling of Ethanol on City Streets
Preempted by Federal Law

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Norfolk Southern Railway Co. v. City of Alexandria, No. 1:08cv618 (JCC), 2009 WL 1011653 (E.D. Va. Apr. 15, 2009), the United States District Court for the Eastern District of Virginia granted in part and denied in part the parties' cross motions for summary judgment. Norfolk Southern Railway Company filed suit against the City of Alexandria challenging the City's ordinance that prohibited hauling bulk ethanol without a permit. The instant court held that the ordinance was preempted by federal law.

Background

Norfolk Southern Railway Company ("Norfolk"), a railroad carrier, operated an interstate railroad system. Id. at *1. It was defined as a rail carrier by the Interstate Commerce Commission Termination Act. Id. Norfolk's railroad system included the Van Dorn Yard in Alexandria, VA, which "contain[ed] a segregated area used for transloading ethanol shipped to the Yard via [Norfolk's] rails from rail tank cars to tank trucks." Id. Various shippers contracted with Norfolk to ship ethanol, a chemical classified and regulated as a flammable, hazardous material by the United States Department of Transportation, to Van Dorn Yard. Id. Norfolk would then transload the ethanol from rail cars to trucks, and the trucks would transport the ethanol to its next destination over city roads and interstate highways. Id. This transportation system began operating on April 9, 2008. Id.

On April 29, 2008, in response to the unique risks associated with the transportation of ethanol, the City of Alexandria informed Norfolk that bulk tanks leaving the facility would be required to obtain a city permit under City Ordinance 5-2-27. Id. at *2. Norfolk believed that its activities did not require the permit; however, on June 3, 2008, the City issued a thirty-day permit for the facility. Id. Thereafter, Norfolk filed a complaint against the City alleging that the ordinance did "not apply to ethanol hauling and . . . [was] preempted by a number of federal statutes." Id.

Arguments

Norfolk's complaint alleged the following five claims for relief: (1) the ordinance did not apply to ethanol hauling; (2) it was void for vagueness and denied Norfolk due process pursuant to the Fourteenth Amendment; and (3) it was preempted by the Federal Rail Safety Act, the Interstate Commerce Commission Termination Act, and the Hazardous Materials Transportation Act. Id. at *3.

Analysis and Holdings

The court first addressed whether the city ordinance was preempted by federal law. Id. at *4. The City argued that the ordinance was "preempted by the Federal Rail Safety Act of 1994 (FRSA), 49 U.S.C. §§ 20101-53." Id. at *5. Norfolk argued that "Congress intended the FRSA to preempt all regulation of railroad safety by municipalities, such as the City." Id. The court stated that the intent of the FRSA preemption provision was to ensure, "to the fullest extent possible," a series of nationally uniform railway safety regulations. Id. at 5 (citing 49 U.S.C. § 20106(a)(1)). The court explained that the intent of the preemption "would be defeated if every local government with some connection to a railway had the authority to make and enforce its own unique railway safety regulations." Id. However, Norfolk was unable to show whether or how decreasing the number of Hazmat-carrying rail cars entering the facility would impact railway safety. Id. at *7. For this reason, the court found that the ordinance was not preempted by FRSA. Id.

Next, the court addressed whether the city ordinance was preempted by the Interstate Commerce Commission Termination Act (ICCTA), 49 U.S.C. § 10101. Id. The ICCTA gives exclusive jurisdiction over transportation by rail carriers and "construction, acquisition, operation, abandonment, or discontinuance of . . . tracks, or facilities" to the Surface Transportation Board (STB). Id. However, "manufacturing activities and other facilities owned by railroads which are not integrally related to the railroad's provision of interstate rail service . . . are not subject to STB jurisdiction or [ ] federal preemption." Id. (quoting Flynn v. Burlington N. Santa Fe Corp., 98 F. Supp. 2d 1186, 1189 (E.D.Wash.2000)). The court stated that the key factor in determining whether the ICCTA preempted the city ordinance was whether it "(1) regulate[d] transportation or the operation of tracks or facilities by rail carriers, but (2) [was] nevertheless not subject to federal preemption because it [was] an exercise of the local police power to protect the health and safety of the local community that [did] not (a) unreasonably burden, or (b) discriminate against, rail carriage." Id. at *9. Ultimately, the court held that, as applied, the ordinance was not "a proper exercise of the local police power," and that the "Permit requirements clearly conflict[ed] with federal law." Id. For these reasons, the court held that the local ordinance was preempted by the ICCTA. Id.

The court then addressed whether the city ordinance was preempted by the Hazardous Materials Transportation Act (HMTA), 49 U.S.C. § 5101. Id. at *12. The HMTA "governs the movement of hazardous materials by all methods of transportation and protects against the inherent risks associated with such transportation." Id. Ultimately, the court held that the HMTA preempted the ordinance "because it contain[ed] route-designations that fail[ed] to comply with HMTA route-designation procedures." Id. at *16.

The case was decided on April 15, 2009.