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New Jersey Dep't of Environmental Protection v. J.P. Rail

January 21, 2009


On appeal from the Superior Court of New Jersey, Chancery Division - General Equity, Atlantic County, Docket No. C-41-06.

Per curiam.


Argued December 17, 2008

Before Judges Cuff, Fisher and Baxter.

Plaintiff, the Department of Environmental Protection (DEP), appeals from an August 14, 2007 order that sharply limited DEP's enforcement rights at a solid waste transfer station (the facility) owned by defendant J.P. Rail, Inc. and its subsidiary, defendant SRNJ Logistics, and operated by defendant Magic Disposal, Inc. At issue was the scope of federal preemption under the Interstate Commerce Commission Termination Act (ICCTA), 49 U.S.C.A. §§ 10101 to 16106. The trial judge found that because federal preemption applies, DEP's regulatory activities are limited to enforcement of regulations promulgated pursuant to the Solid Waste Management Act (SWMA), N.J.S.A. 13:1E-1 to -48, namely N.J.A.C. 7:26-2D.1 ("the 2D regulations").

In this appeal, we are presented with the issue of whether the transloading activities conducted at the facility constitute "transportation by rail carrier" within the meaning of 49 U.S.C.A. § 10501(b) of the ICCTA, thereby triggering federal preemption, or whether, as DEP contends, any railroad activity is merely incidental to the operation of a widescale waste processing facility that is, and should be, subject to the full regulatory powers of DEP. However, the scope of this appeal has been dramatically altered by the recent enactment of the Clean Railroads Act (CRA), effective on October 16, 2008. Clean Railroads Act of 2008, Pub. L. No. 110-432, §§ 601-605, 122 Stat. 4900 (codified as amended at 49 U.S.C.A. §§ 10501(c)(2), 10908 to 10910).

The CRA clarified the ICCTA's preemptive scope by requiring all solid waste rail facilities, which J.P. Rail asserts that the facility is, to comply with all federal--and of even greater significance--all state solid waste and environmental requirements, both procedural and substantive, "to the same extent required for any similar solid waste management facility . . . that is not owned or operated on behalf of a rail carrier[.]" 49 U.S.C.A. § 10908(a). Therefore, the CRA amended the ICCTA and effectively resolved a majority of the issues that are the subject of DEP's appeal.

DEP now argues in effect that the enactment of the CRA has so altered the applicable "legal landscape" that the trial judge's comprehensive written opinion has become almost superfluous. For that reason, DEP filed a motion on December 15, 2008, seeking a stay of the instant appeal to enable the parties to pursue the administrative mechanisms established by the CRA. We agree with DEP's assessment of the enormous impact of the CRA; however, we disagree with its proposal that we stay the instant appeal. Having carefully reviewed the record and applicable law in light of the parties' contentions, we conclude that this appeal should be dismissed.


The record, as developed during a three-day non-jury trial in July 2007, reveals the following facts. Magic is licensed by DEP as a solid waste hauler. In the latter part of 2005, at the request of J.P. Rail, Magic constructed a facility on land owned by J.P. Rail in Pleasantville. Magic provided all the materials and labor used in the construction of the facility, which has no fire suppression system or any method to control air pollution. The building is constructed above a pre-existing railroad track that runs through the property. The building is covered by a roof, with walls on three sides and openings at each end to permit railcars to move through the facility.

Magic contracted with builders and demolition companies to collect their construction and demolition debris. Magic's trucks entered the building and dumped the debris onto the floor, where objects that can be sold as recycled materials were extracted. The remaining debris was then transloaded, or transferred, to J.P. Rail's railcars for eventual disposal at landfills. Magic provided an excavator, wheel loader, grappler, and small skid machine that it used for processing and loading the construction debris onto those railcars. Magic was the only entity that brought such solid waste to the facility. Despite that exclusive arrangement, no written agreement between J.P. Rail and Magic has ever existed.

According to the testimony provided by DEP witnesses, the materials dumped onto the facility floor included metals, wooden palettes, cardboard, tires, cans of paint, and newspapers. These items contained insecticides and rodenticides, paint-laden dust, glues and adhesives, which can affect "human health as a respiratory irritant" and have the potential to adversely affect surface water or ground water quality.

Because the facility is located within a coastal zone, DEP contends the facility is subject to environmental review and permitting requirements under the Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19-1 to -33. This is significant because neither J.P. Rail nor Magic ever obtained permits pursuant to CAFRA to construct or operate the facility. Additionally, DEP asserted that defendants' operation of the facility violated both the SWMA registration and approval requirements and the 2D regulations promulgated pursuant to the SWMA.*fn2 Accordingly, on May 8, 2006, DEP filed a three-count complaint, asserting in count one that defendants violated the Coastal Zone Management Act and CAFRA by failing to obtain appropriate permits prior to constructing and operating the facility. The second count alleged that defendants violated SWMA by failing to undertake proper environmental mitigation and failing to obtain DEP approval prior to beginning operation at the facility. The third count alleged violations of the 2D regulations. DEP sought and obtained an interlocutory injunction against further operation of the facility on June 22, 2006.

Shortly after the trial concluded, Judge William C. Todd issued a comprehensive written opinion and judgment. He addressed the issue of ICCTA preemption as it relates to SWMA, the 2D regulations promulgated thereunder, and CAFRA. He observed that the relevant federal case law and Surface Transportation Board (STB)*fn3 administrative decisions present "somewhat conflicting analyses," and that "the type of fact sensitive and case specific analysis" suggested by various reported decisions "may not be necessary."

After reviewing the 2D regulations, the judge found that "New Jersey's regulatory scheme, as implemented through NJDEP's own [2D] regulations, does not subject [rail] carriers to the permitting process. The permitting issue, under SWMA, [was] not before th[e] court." Furthermore, Judge Todd disagreed with NJDEP's attempt to regulate the facility under the SWMA as "a solid waste transfer station being operated by Magic," a non-rail carrier. He concluded that because "J.P. Rail has retained control over the facility itself and the ...

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