On appeal from a final decision of the Department of Transportation, Docket No. 05-12-001.
The opinion of the court was delivered by: Yannotti, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Yannotti, Espinosa and Kennedy.
The opinion of the court was delivered by YANNOTTI, J.A.D.
Intermodal Properties, L.L.C. (Intermodal) appeals from a final determination of the New Jersey Department of Transportation (NJDOT) authorizing Norfolk Southern Railway (Norfolk) to condemn Intermodal's property in Secaucus, New Jersey. For the reasons that follow, we reverse and remand the matter to the Office of Administrative Law (OAL) for further proceedings.
Norfolk is the owner of between 240 and 275 acres of land in Secaucus, upon which Norfolk operates an intermodal freight facility known as Croxton Yard. Intermodal traffic generally involves two or more types of transportation. At an intermodal rail facility, goods are transported by ship or truck to a railhead for movement on rail cars. At Croxton Yard, containers containing goods are loaded upon or removed from rail cars.
There are five rail tracks at Croxton Yard for loading and unloading containers, along with five loading pads, a storage track, a running track, an engine track and a track used for rail car repairs. The railroad and the contractor that loads and unloads the freight have offices on the property. There are three trailer maintenance buildings at the yard.
In 2007, there were an estimated 18,000 lifts (the loading and unloading of containers) per month at Croxton Yard. The traffic at the yard comes from New York and New Jersey ports, trains and trucks. The freight coming into the yard is shipped to locations in New York, New Jersey and New England.
Intermodal owns 5.88 acres of property in Secaucus, which are adjacent to Norfolk's property. Intermodal's property contains a building of about 80,000 square feet that had been used as a freight-forwarding facility, and is presently being used for truck parking and container storage. In 2004 and 2005, Norfolk made several offers to purchase the property but Intermodal rejected the offers. On October 31, 2005, Norfolk filed a petition with the NJDOT pursuant to N.J.S.A. 48:3-17.6 and N.J.S.A. 48:12-35.1, for authorization to acquire Intermodal's property through the exercise of the power of eminent domain.
N.J.S.A. 48:3-17.6 provides that railroads and other public utilities may take or acquire property by condemnation. N.J.S.A. 48:3-17.7 states that a public utility may not exercise this condemnation power unless the applicable regulatory authority finds that the land or other property or interest therein desired is reasonably necessary for the service, accommodation, convenience or safety of the public, and that the taking of such land or other property or interest therein is not incompatible with the public interest and would not unduly injure the owners of private property.
In addition, N.J.S.A. 48:12-35.1 establishes additional conditions for the condemnation of property by railroads. Among other things the statute states that a railroad may take land by condemnation "as exigencies of business may demand[.]"
On August 10, 2006, the NJDOT referred Norfolk's petition to the OAL for a hearing. On March 20, 2007, the ALJ issued a pre-hearing decision on several issues. The ALJ noted that Intermodal wanted to present evidence to show that use of its property as a parking lot for the Secaucus Junction rail passenger station would be more compatible with the public interest than use of the property for intermodal freight operations.
The ALJ determined that Intermodal would not be permitted to present this evidence. The ALJ stated that Norfolk's proposed use of the property was for a recognized public purpose. She noted that railroads serve a public purpose and have been declared by statute to be public utilities. Moreover, Intermodal had not shown that it could use the property as a parking lot for the railroad station.
The ALJ noted that the Intermodal property was not then zoned for use as a parking garage, and there was no indication that the property would be rezoned for that use in the future. The ALJ also pointed out that no State or local government agency had expressed a willingness to enter into a contract with Intermodal to provide public parking on the site.
In the March 22, 2007 opinion, the ALJ additionally addressed the provision in N.J.S.A. 48:12-35.1, which states that a railroad may only take property by condemnation "as exigencies of business may demand[.]" The ALJ determined that this statutory provision did not limit the exercise of the condemnation power to emergency situations, as Intermodal had argued. The ALJ interpreted the statute to allow a railroad to condemn property as the needs of its business reasonably demand.
In addition, the ALJ addressed the question of whether Norfolk or Intermodal would have the burden of proof on the issue of whether the taking of the property would "unduly injure" Intermodal. The ALJ stated that Intermodal should bear the burden of proof because it had the relevant information on this issue.
After the ALJ's decision, amendments to N.J.S.A. 48:12-35.1 were enacted into law, which became effective on January 13, 2008. L. 2007, c. 290, § 1. As amended, N.J.S.A. 48:12-35.1 states that a railroad seeking authorization to condemn also must establish that alternative property suitable for the specific proposed use of the property to be taken is unavailable, either through on-site accommodation or through voluntary sale of alternative, reasonably situated property, and that the interest in the property to be taken does not exceed what is necessary for the proposed use, and shall also demonstrate to the Department of Transportation at an informal hearing the specific use to be made of the land or other property or interest to be acquired and that such proposed use is necessary and consistent with the purposes enumerated for such railroad utility and with the extent of the land or other property or interest to be condemned; . . . .
Thereafter, Norfolk filed a motion and argued, among other things, that the amendments to N.J.S.A. 48:12-35.1 were preempted by the Interstate Commerce Commission Termination Act of 1995 (ICCTA), specifically 49 U.S.C.A. § 10501(b), which grants the Surface Transportation Board (STB) regulatory authority over the operations of rail carriers. The ALJ issued a decision dated May 14, 2008, in which she determined that federal law preempted the "requirement that a railroad utility show that alternative on-site accommodations are unavailable" because this statutory provision "directly regulates railroad transportation." The ALJ concluded, however, that the other statutory requirements were not preempted.
Following the evidentiary hearings, the ALJ issued a decision dated December 11, 2009, authorizing Norfolk to commence condemnation proceedings to acquire Intermodal's property. The ALJ found that Norfolk had established all of the criteria for condemnation under N.J.S.A. 48:3-17.7 and N.J.S.A. 48:12-85.1.
The Commissioner of the NJDOT did not issue a decision accepting or rejecting the ALJ's decision within forty-five days after its issuance. Therefore, the ALJ's decision became the final decision in the matter pursuant to N.J.S.A. 52:14B-10(c). This appeal followed.
We turn first to Intermodal's contention that the ALJ erred by finding that the taking of its property was "not incompatible with the public interest," as required by N.J.S.A. 48:3-17.7.
"Appellate review of an agency's determination is limited in scope." Circus Liquors, Inc. v. Governing Body of Middletown, Twp., 199 N.J. 1, 9 (2009). In reviewing an agency's decision, we consider (1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. [Id. at 10 (citing Mazza v. Bd. of Trs., 143 N.J. 22, 25 (1995)).]
In her decision on December 11, 2009, the ALJ noted that Susan S. Gruel (Gruel), a licensed planner in this State, had testified that condemnation of Intermodal's property would be compatible with the objectives of the Meadowlands Master Plan, which identified the Meadowlands as a prime location for the expansion of intermodal facilities. Gruel stated that Norfolk's proposed use of the property also was consistent with the Hudson County Master Plan of 2002, which recommended, among other things, public investment in rail infrastructure to expand the capacity of intermodal traffic and reduce truck traffic on the State's roads.
Gruel additionally testified that a Regional Transportation Plan for North Jersey prepared by the New Jersey Turnpike Authority (NJTA) indicated that intermodal rail freight traffic will grow three to four times by 2030, and there will be a doubling of non-container freight traffic by that time. The NJTA plan noted there was a need to reduce reliance on trucks to move freight and to increase rail capacity. The plan stated that freight, trucking, and warehouse facilities should be located near rail centers to prevent freight sprawl. Gruel testified that the taking of the ...