[00:00:00] Speaker 00: Base number 25-1058, Grafton and Upton Railroad Company conditioner versus Surface Transportation Board and United States of America. [00:00:10] Speaker 00: Mr. Meyer for the petitioner, Mr. Light for the respondents, Mr. Gremmel for the intervener. [00:00:17] Speaker 01: Good morning, Mr. Meyer. [00:00:18] Speaker 01: You may proceed when you're ready. [00:00:19] Speaker 05: Good morning, Your Honours, and may it please the court. [00:00:22] Speaker 05: My name is David Meyer, appearing for petitioner, Grafton and Upton Railroad Company. [00:00:28] Speaker 05: I've reserved three minutes for rebuttal. [00:00:30] Speaker 05: Grafton comes before this court seeking an order vacating the December 2024 decision of the Surface Transportation Board, in which the board affirmatively found that ICTA, Interstate Commerce Commission Termination Act, I'll call it ICTA, did not preempt the town of Hopedale's effort to invoke a Massachusetts regime of land use regulation to block Grafton's planned expansion of its railroad facilities. [00:00:56] Speaker 05: Grafton submits that the order is contrary to law and that this case is straightforward. [00:01:01] Speaker 05: Each of the elements of ICTA preemption under 49 USC 10501A2 is satisfied here. [00:01:08] Speaker 05: First, it is undisputed that Grafton is a rail carrier. [00:01:12] Speaker 05: Second, it is also undisputed that the activity Grafton seeks to undertake is rail transportation as defined in the statute. [00:01:22] Speaker 05: is the expansion of Grafton's facilities to permit increased rail traffic as Congress intended. [00:01:28] Speaker 05: Third, the town of Hopedale seeks to use state land use law to regulate that rail transportation. [00:01:36] Speaker 05: Regulation means control and taking property away to prevent its rail use is the most extreme type of control. [00:01:45] Speaker 01: You say taking property away, I'm going to let you finish your four points, but that is the issue in dispute, whether the property in fact belonged to Grafton when there was a state property law requirement that given the tax benefit applicable to this land as forest use, the town was entitled to a right of first refusal and sought to exercise it in a timely manner. [00:02:10] Speaker 05: With respect, Your Honor, there's no dispute about who owns this land. [00:02:15] Speaker 05: This land has always been owned, at least back in time for many years prior to this dispute arising, by the 140 Trust. [00:02:25] Speaker 05: The 140 Trust is still the owner of this land. [00:02:28] Speaker 05: So the question here is whether the state and the town of Hopedale, working together using this Massachusetts land use framework, [00:02:40] Speaker 05: which basically designs or expresses a state policy to preserve forest land as forest land and not allow for certain commercial uses, as well as residential uses, whether that law, which has a remedy of a right of first refusal associated with it, whether that law in the town of Hopedale's decision to regulate the use of this land to keep it forest, [00:03:10] Speaker 05: can limit what the 140 Trust can do with its land. [00:03:16] Speaker 05: We have no quarrel with the 140 Trust being told that it can't develop a shopping center on this land. [00:03:23] Speaker 05: That's legitimate land use regulation by the Commonwealth of Massachusetts. [00:03:28] Speaker 05: When the Commonwealth of Massachusetts and the town of Hopedale say you can't have a railroad facility on this land, that's where ICTA preemption kicks in. [00:03:38] Speaker 05: And I submit that all of the cases that we have cited express this principle [00:03:46] Speaker 05: that the state is not allowed to decide to call its regulation a property regulation, and thereby escape a preemption. [00:03:55] Speaker 05: We have the eminent domain cases. [00:03:57] Speaker 05: That's a regime of state law that decides that under certain conditions, the state can assert a property right, i.e. [00:04:05] Speaker 05: ownership of the land, and take it away from a private owner. [00:04:09] Speaker 01: You are going through your four factors, [00:04:14] Speaker 01: rail carrier, the activity relates to rail transportation, then you said the town seeks to use state land use law to take the land from the rail carrier. [00:04:24] Speaker 05: And then what's your fourth? [00:04:26] Speaker 05: Well, it's really there are three. [00:04:28] Speaker 05: And the third is to regulate. [00:04:31] Speaker 05: The state regime and the government here, the town of Hopedale and the state working together, are seeking to regulate rail transportation on this property by prohibiting it and prohibiting [00:04:43] Speaker 05: prohibiting or taking property or preventing property from being used for rail transportation, a complete bar isn't just an extra cost associated with the rail transportation. [00:04:55] Speaker 05: It's a prohibition. [00:04:56] Speaker 05: And that's what the courts have said is the most extreme form of regulation. [00:05:01] Speaker 05: So those three elements we submit are satisfied. [00:05:06] Speaker 05: Again, there's no dispute about the fact that this was 140 Trust's land. [00:05:10] Speaker 05: 140 Trust had an arm's length agreement with Grafton, a railroad, for Grafton to build a transload facility on the property. [00:05:20] Speaker 05: No question at all that the transload facility is rail transportation, undisputed in this case. [00:05:25] Speaker 05: So the only question is whether the board just missed the issue when it decided that there was no preemption because it was somehow confused into thinking that this was a question of property ownership rather than a question of regulation. [00:05:41] Speaker 05: But questions of property ownership, as I said, within the eminent domain setting, also in the setting where adverse possession claims are being adjudicated in state court. [00:05:54] Speaker 05: But we have cases after cases. [00:05:57] Speaker 05: finding that private landowners, adjacent landowners, who may have an absolutely ironclad state adverse possession claim to land that's in the right of way, not being used for the railroad right now, nonetheless have an absolute prohibition against asserting those rights against a railroad. [00:06:21] Speaker 05: Again, that's a property dispute resolution, but property dispute and state court just can't be used to constrain the railroad's activity. [00:06:30] Speaker 06: Wonderful railroad owns a piece of empty land, and then it sells the land to John Doe. [00:06:42] Speaker 06: The year after the sale is complete, the railroad says, I would like to build a railroad right through that land. [00:06:51] Speaker 06: They would not be able to do that, correct? [00:06:53] Speaker 05: Well, so we certainly, I don't believe that that hypothetical is presenting a scenario that is this case. [00:07:02] Speaker 05: My answer would be, in a situation where the railroad conveys title to a third party voluntarily, [00:07:10] Speaker 05: without regulatory compulsion or regulatory incentivization, right? [00:07:14] Speaker 05: This is not pursuant to a regime of land use. [00:07:18] Speaker 05: It's just an arm's length transaction. [00:07:20] Speaker 05: We want to make money selling our real estate. [00:07:22] Speaker 05: We're selling it to a third party. [00:07:24] Speaker 05: And then the railroad regrets that decision. [00:07:26] Speaker 05: I think that that would present a very different scenario where the railroad would have to come back into the state processes for eminent domain in order to obtain a right to build across that property. [00:07:39] Speaker 06: I think it's a really simple answer. [00:07:41] Speaker 06: I think the answer is, no, it's... There may be some... [00:07:48] Speaker 06: some eminent domain avenues they can pursue. [00:07:50] Speaker 06: But the point is, if the property belongs to John Doe, the railroad can't just hop in tomorrow. [00:07:56] Speaker 06: No, that's absolutely right. [00:07:57] Speaker 06: We don't contest that proposition. [00:07:59] Speaker 06: There's a different hypothetical. [00:08:00] Speaker 06: Imagine the railroad owns the land, it's empty, and it leases [00:08:05] Speaker 06: the land to John Doe. [00:08:07] Speaker 06: And the lease says, you can use this land. [00:08:12] Speaker 06: And if we ever do not extend your lease, you have a right to buy the land from us and its market value. [00:08:26] Speaker 06: OK. [00:08:27] Speaker 06: Years pass, and then the railroad says, you know what? [00:08:30] Speaker 06: We've decided we want to build a railroad here. [00:08:33] Speaker 06: We are not going to extend your lease. [00:08:35] Speaker 06: Can they build a railroad there? [00:08:37] Speaker 06: I think they could, yes. [00:08:38] Speaker 06: Even if John Doe was willing to buy it at market value? [00:08:42] Speaker 05: think they could because I think I mean again I don't I don't believe that's this case for reason of the source of the property rights in this case or the alleged property rights in this case which is coming out of a land use regulatory scheme you know it's the state deciding we want to preserve this forest land and not let things like railroads here when they say that your question your question to in response to your question I think the answer is [00:09:10] Speaker 05: Again, if the railroad had voluntarily entered into this contractual undertaking, and I think it does matter somewhat to that hypothetical, to the answer to that hypothetical, whether the lease or the easement or whatever it's being granted, the rights that are being granted are ones that are compatible with rail use or incompatible with rail use. [00:09:36] Speaker 05: If this is an active rail line, for example, [00:09:40] Speaker 05: And let's say it's incompatible. [00:09:43] Speaker 05: Then if it's incompatible, then I think there's a very good argument that that might well be a preempted enforcement state law. [00:09:51] Speaker 06: For one thing, I don't think it's very good for landowners, including railroad landowners, because you've now said, [00:09:59] Speaker 06: You're not going to be able to really enter into a gains for trade contract with John Doe to lease out your land to John Doe, because whatever you promise John Doe is going to be legally go up and smoke any time the railroad wants to back up. [00:10:14] Speaker 05: So there's a case that I think is close to, perhaps close to your hypothetical. [00:10:19] Speaker 05: It's the Union Pacific versus Chicago Transit Authority case. [00:10:23] Speaker 05: In that case, Union Pacific had entered into, it may have been a lease of part of its right-of-way where the Chicago Transit Authority ran, I believe, tracks across part of Union Pacific's right-of-way. [00:10:36] Speaker 05: And then Chicago wanted to come and condemn the property. [00:10:41] Speaker 05: So it was no longer just a leasehold right or an easement. [00:10:45] Speaker 05: It was they wanted to take and condemn that that segment of land. [00:10:50] Speaker 06: The landowner didn't enter into an agreement allowing Chicago to continue their land. [00:10:56] Speaker 05: Union Pacific. [00:10:58] Speaker 05: Well. [00:11:02] Speaker 05: I don't know the facts well enough to be certain, but the outcome of the case was that they're converting an existing lease right into an ownership was a change in circumstances that was regulation of transportation. [00:11:21] Speaker 05: And so that was found preemptive. [00:11:22] Speaker 06: But it wasn't a consensual [00:11:25] Speaker 06: Conversion between right. [00:11:28] Speaker 06: So my so I have any case either board or federal court that says when the railroad has a consensual quick propo contract with another party. [00:11:44] Speaker 06: And the other party is entitled under that contract to the land, or at least to stopping the railroad building the land, that the federal statute preempts the contract. [00:11:59] Speaker 05: No, I don't, Your Honor. [00:12:00] Speaker 05: And again, that is not this case. [00:12:02] Speaker 05: In this case, Grafton and Upton did not enter into any contract with the town of Hopedale regarding the development of this land. [00:12:10] Speaker 05: Well, with the 140 Trust, [00:12:12] Speaker 06: It did engage in, whether you want to call it a contract or not, a quid pro quo bargain. [00:12:19] Speaker 06: They got really low tax rates in exchange for using the land as forest until they, until at some point, if they want to convert it, they agree not to convert it without allowing the city to buy it first. [00:12:34] Speaker 01: Or if they want to sell it for conversion. [00:12:39] Speaker 05: As to 140 Trust, [00:12:41] Speaker 05: Yes, they signed up for this tax break at some point back in time before there was any prospect of real use of this property. [00:12:51] Speaker 05: They obtained some tax breaks. [00:12:54] Speaker 05: Just as a factual matter, and it's in our reply brief, [00:12:57] Speaker 05: Those tax breaks had been rolled back by the town. [00:13:01] Speaker 05: The town assessor sent a demand for payment of all of those tax breaks, and they've been paid. [00:13:07] Speaker 05: And the tax lien's been released, just as a matter of fact. [00:13:10] Speaker 05: So they did not end up getting the benefit of their partnership. [00:13:14] Speaker 06: But did they take the tax breaks back after you cut down all the trees? [00:13:18] Speaker 06: In 2022. [00:13:20] Speaker 05: Is that after you cut down the trees? [00:13:22] Speaker 05: I don't know precisely when in the sequence of events that occurred. [00:13:28] Speaker 05: So with respect to that question of whether 140 trust decision voluntarily to partake of this benefit converts this case into something other than a regulation, the government makes this argument in its brief at pages 33 to 34 about this voluntary commitment. [00:13:47] Speaker 05: With respect, number one, that issue is not in the decision. [00:13:52] Speaker 05: That rationale is not in the decision rendered by the board, which I think disqualifies it as a ground for upholding the decision. [00:14:00] Speaker 05: But on the merits, the government's argument is telling here. [00:14:04] Speaker 05: What the government says and the cases it relies upon in the preemption field are all situations where a railroad's voluntary commitment is evidence [00:14:14] Speaker 05: that the burden on transportation associated with the railroad making that commitment will not be unreasonable. [00:14:22] Speaker 05: So it's cases like in the PCS phosphate case where the railroad in order to get a right of way across a mines property agrees that when the mine needs to mine under their tracks the railroad will pay for the relocation. [00:14:37] Speaker 05: The railroad is deciding that the burden of doing that by making the voluntary commitment is not unreasonable. [00:14:45] Speaker 05: Similarly, the township of Woodbridge case, where the railroad agrees with the town fathers about when it will idle locomotives or for how long, what hours it will idle the locomotives. [00:14:56] Speaker 05: Again, that's not preempted only because it's a voluntary commitment by the railroad, which is deemed evidence that it's not an unreasonable interference with railways. [00:15:06] Speaker 06: And the next break thing was a voluntary commitment by 140 Trust. [00:15:09] Speaker 05: It was, but it wasn't, all the cases stand for the proposition that it's only because the railroad is consenting to a certain. [00:15:18] Speaker 06: I don't understand. [00:15:20] Speaker 06: The railroad now controls 140 trust, correct? [00:15:23] Speaker 06: The railroad does control 140 trust. [00:15:24] Speaker 06: So why shouldn't the railroad be responsible for the agreements and obligations of 140 trust? [00:15:31] Speaker 05: Well, I think, I think in [00:15:36] Speaker 05: With respect, I think the answer is found in ICTTA, right? [00:15:40] Speaker 05: Because this was a regulation that is limiting rail development, restricting rail development. [00:15:45] Speaker 01: Targeting rail development. [00:15:46] Speaker 01: It's preserving forests, and it's doing it. [00:15:50] Speaker 01: So if you have a town that has residential zoning, and most of there's a [00:16:01] Speaker 01: commercial center that can have more dense zoning and can have parking and can have shops. [00:16:06] Speaker 01: But the rest of it is, let's say, 10-acre zoning. [00:16:10] Speaker 01: And the railroad wants to come through, and it just buys land. [00:16:15] Speaker 01: And if the land is, I mean, I just don't know the general ICTA law. [00:16:20] Speaker 01: They just want to buy up a bunch of houses and run a railroad right through the center of town. [00:16:24] Speaker 01: They can do that. [00:16:25] Speaker 05: Absolutely not. [00:16:27] Speaker 05: I'm sorry. [00:16:28] Speaker 05: I'm sorry. [00:16:28] Speaker 05: I got confused about who you're asking. [00:16:31] Speaker 05: The town cannot prevent the railroad using its zoning laws from building on any property that is suitable for building a railroad. [00:16:39] Speaker 05: And that's very clear in the case law. [00:16:41] Speaker 01: So they can just build right through this historic center of town, no problem. [00:16:48] Speaker 05: So the exceptions from ICTA are health and safety regulation, basically. [00:16:55] Speaker 05: Land use regulation, zoning restrictions. [00:17:00] Speaker 05: You may have the tightest zoning regarding no commercial use, no industrial use. [00:17:08] Speaker 05: But railroad use, when a state or other government says these zoning laws create a restriction on how a railroad can use its property, the railroad wants to build. [00:17:20] Speaker 01: Wait, you added the state in there. [00:17:22] Speaker 01: When the state says it's creative or sovereign, you can't restrict water when just railroads unilaterally under your theory. [00:17:35] Speaker 05: Going back to the structure, the structure has an expressed preemption of all state law and that of course applies as well to municipal ordinances and everything else underneath the state that regulates rail transportation. [00:17:54] Speaker 05: And all of the case law is very clear that zoning [00:17:59] Speaker 05: condemnation, adverse possession, anything, no matter whose rights they are, property owners, private property owners, or the town fathers, or anyone else who wants to regulate railroad transportation cannot do so because of that express preemption clause. [00:18:17] Speaker 05: And so there are cases. [00:18:21] Speaker 01: It's not the town or the state taking land or asserting [00:18:28] Speaker 01: on behalf of the town or the state. [00:18:33] Speaker 01: It's these parties saying, you know, the trust said it's worth it to us to give this right of first refusal and to give up the flexibility of how our land is used for this fixed period of 10 years, plus [00:18:49] Speaker 01: to agree to write a first refusal by the town because we're getting a big tax break. [00:18:56] Speaker 01: So one of the things that the tax break [00:19:00] Speaker 01: that they give in consideration for the tax break that they got was right of first refusal. [00:19:07] Speaker 01: And you argue that your ownership of the property is not in doubt, but chapter 61 says, no sale of the land shall be consummated until the option period has expired for the notice of non-exercise has been recorded [00:19:26] Speaker 01: the register of deeds. [00:19:27] Speaker 01: So the town and the state court has said that there's no valid sale unless and until the right of first refusal is given. [00:19:36] Speaker 01: The right of first refusal was accepted when the town had an opportunity to accept it. [00:19:41] Speaker 01: So how can you say that ownership of the property is not in doubt? [00:19:46] Speaker 05: The 140 trusts [00:19:49] Speaker 05: own this property. [00:19:50] Speaker 05: And the question in state court, I absolutely agree that the question from the perspective of the state court is whether the 140 trust can keep this property or whether the town of Hopedale is allowed by state law to take it away. [00:20:08] Speaker 05: No question. [00:20:10] Speaker 05: Well, yes, yes, to force a sale. [00:20:12] Speaker 05: Yes, absolutely. [00:20:14] Speaker 01: 140 Trust was selling, or they could force a sale if they were going to keep it and convert it. [00:20:21] Speaker 05: Yeah. [00:20:23] Speaker 05: Grafton has not purchased this property. [00:20:25] Speaker 05: The 140 Trust, it stays in the 140 Trust. [00:20:28] Speaker 01: Because Grafton purchased the 140 Trust. [00:20:30] Speaker 05: Grafton acquired the beneficial interest in 140 Trust, yes. [00:20:34] Speaker 05: I think if you step back, there are multiple layers in this case where when you step back and look at what's going on here, it's land use regulation. [00:20:43] Speaker 05: So you start with the proposition that Chapter 61 itself [00:20:48] Speaker 05: is about the state attempting to erect a regime that favors forest preservation, laudable objective, over rail development. [00:20:59] Speaker 01: No, it favors forest preservation, unlike the Dakota, Minnesota, and Eastern Railroad, where South Dakota was making it harder for railroads. [00:21:10] Speaker 01: In particular, here, there's no disfavor of railroads. [00:21:13] Speaker 05: Is that entirely fair? [00:21:15] Speaker 05: I'm not contending that Chapter 61 was targeting railroads. [00:21:20] Speaker 05: Indeed, that's why we proceeded with this claim as an as-applied preemption claim. [00:21:27] Speaker 05: Chapter 61, when applied to the shopping center, we'd have no ICTA claim. [00:21:33] Speaker 05: When applied to railroad development, it is regulating railroads. [00:21:36] Speaker 05: It is preventing railroad development. [00:21:39] Speaker 06: So another hypothetical that would be helpful to try to think through the case. [00:21:46] Speaker 06: I have a piece of land, my house is on it, I've lived there my whole life. [00:21:52] Speaker 06: And a railroad comes and says, I would like to buy your land for, let's say it's in a very valuable real estate area. [00:22:01] Speaker 06: I'd like to buy your land for a million dollars. [00:22:04] Speaker 06: And I say, oh man, I could use a million. [00:22:09] Speaker 06: it's really worth a million dollars to me to know that my childhood home will not be torn down. [00:22:13] Speaker 06: It's very sentimental to me. [00:22:15] Speaker 06: So I say, I don't really need this land. [00:22:19] Speaker 06: I'll sell you the land for a dollar, but there's going to be a covenant on it. [00:22:25] Speaker 06: And the deal is I'll sell it to you for a dollar if you promise you won't tear down my childhood home. [00:22:31] Speaker 06: And you're like, okay, yeah, sure. [00:22:32] Speaker 06: It's a deal. [00:22:33] Speaker 06: And then you get title. [00:22:36] Speaker 06: I get the dollar. [00:22:37] Speaker 06: I think I have, [00:22:39] Speaker 06: a million dollar promise from you that's worth a million dollars to me that you won't tear it down. [00:22:44] Speaker 06: And then the next day, like I'm a railroad, because of preemption, I can build a railroad here. [00:22:50] Speaker 06: And the deal I made with you is preempted. [00:22:53] Speaker 06: That doesn't sound like it's right. [00:22:55] Speaker 05: No, I don't think that would be preempted. [00:22:57] Speaker 05: Okay. [00:22:57] Speaker 05: Why wouldn't it be preempted? [00:22:58] Speaker 05: I think that's the kind of case, like the voluntary commitment cases that the government cites, where the railroad is making a voluntary undertaking, a voluntary commitment, entering a contract or some other form of obligation. [00:23:12] Speaker 05: And the fact that the railroad is [00:23:15] Speaker 05: willing to make that commitment is an indication that keeping the home intact, not tearing it down, is not incompatible, not an unreasonable burden on its rail transportation. [00:23:27] Speaker 06: OK. [00:23:27] Speaker 06: And here, the 140 Trust made that commitment. [00:23:31] Speaker 06: There was no railroad in prospect when this commitment was made. [00:23:35] Speaker 06: Right. [00:23:35] Speaker 06: The 140 Trust made the commitment to the city. [00:23:38] Speaker 06: And then when the railroad purchased [00:23:43] Speaker 06: 140 trusts beneficial interest. [00:23:46] Speaker 06: In other words, when the railroad gained control of 140 trust, they also became responsible for 140 trusts commitments. [00:23:55] Speaker 06: That's what they bought. [00:23:55] Speaker 06: They bought the land and the commitments. [00:24:00] Speaker 06: They acquired control of the trust. [00:24:03] Speaker 06: Yes. [00:24:03] Speaker 06: It's a general matter when you say that when someone buys control of the trust, they become responsible for the trust's agreements. [00:24:11] Speaker 06: I don't have any quarrel with that. [00:24:14] Speaker 06: But then why here, when the railroad gained control of the trust, did the railroad not become responsible for the trust's agreements? [00:24:22] Speaker 05: Because ICTA preemption does not allow predecessors to railroads to [00:24:30] Speaker 05: enter into regulatory arrangements to accept regulatory arrangements that prohibit rail transportation development. [00:24:39] Speaker 05: And if Grafton had purchased this property and Grafton had said to the town, look, we are willing to keep this tree line over here. [00:24:51] Speaker 05: We'll do these other things over here that, you know, [00:24:55] Speaker 05: serve the interests that you have in, you know, whatever they are, noise or, you know, water cleanliness or what have you, and Grafton had entered into those commitments with the town and the town were seeking to enforce them. [00:25:09] Speaker 01: What kind of numbers does the town have to get any commitments from railroads under your view of the breadth of preemption that it preempts any land use contractual [00:25:25] Speaker 01: covenants that would in practice impede or disfavor railroads? [00:25:33] Speaker 05: So I suppose the answer to that question would be probably an unsatisfactory, it depends. [00:25:40] Speaker 05: ICDA has been interpreted and applied in ways that allow for health and safety regulation that's not incompatible with the rail use. [00:25:48] Speaker 05: So there are cases like the railroad dumping, railroad ties and streams, that's not preempted. [00:25:54] Speaker 05: There are cases about [00:25:55] Speaker 05: the board, the STB, encouraging railroads to enter into commitments with respect to new projects to deal with environmental mitigation concerns by the community. [00:26:06] Speaker 05: And at the margin, when there's a concern about health and safety related to the adjoining transload facility or the rail facility, [00:26:17] Speaker 05: There's a margin of allowable regulation, and there's an encouragement from the board to reach consensual arrangements between the railroad and the community. [00:26:28] Speaker 06: What's your best authority for a case that says, because of preemption here, a railroad does not have to be faithful to [00:26:46] Speaker 06: commitments that it made about how the land would be used. [00:27:06] Speaker 05: Your honor, I'm not sure I have a case that deals in a context where the railroad had made commitments that prohibit any rail development and where we have a preemption in ruling one way or the other. [00:27:19] Speaker 06: And I think there's, tell me if I'm wrong, I think there's not a case where the railroad has bought land that came encumbered with voluntary commitments. [00:27:29] Speaker 06: Well, you know, and the railroad didn't have to be faithful to the voluntary commitments that came with the land at purchase. [00:27:34] Speaker 05: With respect, I think that that's somewhat in the eye of the beholder of how you how you think of zoning restrictions, for example, in the zoning context, I think there are lots of situations I certainly I can imagine where a property owner may have embraced [00:27:51] Speaker 05: some designation of the owner's property as residential, for example, or as zoned single family. [00:28:03] Speaker 05: That may have been that that property owner sought that zoning designation for that part of the community. [00:28:09] Speaker 05: Thinking in that setting, there's no question that those pre-existing zoning restrictions on use, which predate the acquisition by the railroad of the property, are swept away by ICDA to the extent [00:28:24] Speaker 05: of supporting rail transportation and expansion of the rail network. [00:28:27] Speaker 05: Now, we haven't in this country had, in a sense, ICDA, 1996, had a lot of new railroads being built through communities. [00:28:36] Speaker 05: So we don't have a lot of reservoir of this kind of case. [00:28:40] Speaker 05: Most of the cases arise in the context of transload facilities or other unloading and loading facilities, which are being expanded across the country. [00:28:48] Speaker 05: This is what this case is about. [00:28:50] Speaker 05: And there's specifically the case [00:28:52] Speaker 05: where one of the arguments from the town was, don't build your transload here, go down there where it's zoned industrial, you can't build it here. [00:29:04] Speaker 05: That was squarely preempted without hesitation. [00:29:08] Speaker 06: I think the zoning analogy is your best analogy and I'll have some questions for the government about why they think this is different than a zoning case. [00:29:19] Speaker 06: I'm guessing that you don't have any authorities you can point me to where [00:29:27] Speaker 06: the zoning-like regulation was the product of a quid pro quo exchange of benefits. [00:29:40] Speaker 05: I can't tell you that none of the zoning situations were not such events, but I don't have a case at hand that says that. [00:29:49] Speaker 05: All right, thank you. [00:29:51] Speaker 01: Are there any cases where [00:29:54] Speaker 01: The unique suitability of a parcel of land for the railroads plan development factored into the burden assessment. [00:30:06] Speaker 05: Frankly, your honor, most of the cases that helpful. [00:30:10] Speaker 05: Just yes or no. [00:30:12] Speaker 05: Oh, well, I'm sorry. [00:30:12] Speaker 05: I'm not. [00:30:15] Speaker 05: No specific case comes to mind. [00:30:17] Speaker 05: I think in most cases where there's a prohibition on the use, it doesn't matter whether that specific parcel is uniquely beneficial. [00:30:26] Speaker 05: I think in our case, if we get to the point where it's determined that we didn't have a property interest and it was not a regulation by the state or the town in order to [00:30:42] Speaker 05: enforce the land use restriction here, which, of course, we think it was, there's still this question of whether this parcel is uniquely suited. [00:30:52] Speaker 05: And there's record evidence in our petition that it is the only place along our rail line for this kind of facility to be built. [00:31:01] Speaker 05: And so there is a unique burden here, I would submit. [00:31:03] Speaker 05: The board truncated its consideration of facts in this case and never got to the question of burden [00:31:09] Speaker 01: Your answer would be different if the purchaser were not the town of Oakdale. [00:31:14] Speaker 01: If I have a big farm and I sell land to my cousin and I say, I want you to be farming to my farm. [00:31:24] Speaker 01: And if you're planning to do anything else with that land, I have a right of first refusal to purchase it back. [00:31:32] Speaker 01: And the cousin wants to sell it to your client. [00:31:37] Speaker 01: And I exercise my right of first refusal and say, no, I don't want that. [00:31:42] Speaker 01: I want this to be my farm. [00:31:44] Speaker 01: And I was willing to let you be an adjacent farm. [00:31:47] Speaker 01: I'm not willing to let you sell to the railroad. [00:31:52] Speaker 01: Is that also freedom? [00:31:54] Speaker 05: I'm not sure what your question meant by, would my answer be different? [00:31:58] Speaker 05: I would say the answer to your question is, [00:32:01] Speaker 05: That would be a question of whether the railroad isn't able to acquire from the landowner the rights to build a railroad. [00:32:11] Speaker 05: And it's not a state regulating the existence of land use or the town deciding to enforce, we could call it the equivalent of a zoning restriction on commercial development. [00:32:24] Speaker 01: That's what I'm asking is whether the fact that the town is a town as opposed to a private purchaser is the whole fulcrum of your argument. [00:32:33] Speaker 01: And you're saying that the town is [00:32:35] Speaker 05: There are two parts. [00:32:40] Speaker 05: One is that, yes, the town is choosing to exercise a right of first refusal as part of a policy judgment about regulating the land use on this property. [00:32:51] Speaker 05: Second, it's the entire Chapter 61 regime is where this right came from. [00:32:57] Speaker 05: It's not the sale of the right of first refusal to your [00:33:03] Speaker 05: or other cousin, sibling who has the adjacent farm. [00:33:07] Speaker 05: It's not that private transaction. [00:33:09] Speaker 05: If it were that, then we'd just have a straightforward property law question of who owns the rights to sell the farm. [00:33:18] Speaker 05: And that would be in state court. [00:33:20] Speaker 05: And if the railroad wanted to build there or needed to build there, it would proceed, presumably, by eminent domain. [00:33:26] Speaker 05: And in the eminent domain setting, again, to your question about unique suitability, [00:33:32] Speaker 05: If the state has erected an imminent domain regime that makes it effectively impossible for railroads to buy the transport to build the lines that they need, that may well be preempted. [00:33:45] Speaker 05: That's a different case. [00:33:47] Speaker 01: What do you have as something like Chapter 61? [00:33:49] Speaker 01: But it is just trying to help family farms where the price of real estate is pricing them out. [00:33:54] Speaker 01: And they say, we're going to give you a low conservation tax rate if everyone you sell to of what used to be your open fields agrees to use it as farmland. [00:34:12] Speaker 01: But it's a private. [00:34:13] Speaker 01: You know, I'm the farmer. [00:34:15] Speaker 01: I get a break on my land if I sell it, if they do farm. [00:34:19] Speaker 01: But it's all private parties. [00:34:21] Speaker 01: So it's a law that sort of invites it and gives you a better tax break. [00:34:26] Speaker 01: But it's all private parties that are buying and selling. [00:34:29] Speaker 01: I'm just trying to separate your two, your A and your B, your right of first refusal purchased by the town and then the... [00:34:40] Speaker 01: the usage that's being enforced is one identified by the state law. [00:34:43] Speaker 01: And I'm saying, if you had that identified by state law, but the purchasers are private, does that change your answer? [00:34:49] Speaker 05: The question that I have about your farming hypothetical that I think is necessary for me to give an answer is whether a landowner in that situation can decide to sell his or her land to the railroad for railroad construction. [00:35:08] Speaker 01: No, there's a right of first refusal. [00:35:09] Speaker 01: I mean, they could, but there's a right of first refusal. [00:35:12] Speaker 01: And if the farmer wants to buy it back, they can. [00:35:17] Speaker 01: So you wouldn't be able to get the land. [00:35:19] Speaker 05: You'd go to the farmer and the landowner. [00:35:21] Speaker 05: And if they both agree, you could build the railroad, or would the state prevent that from happening? [00:35:25] Speaker 01: You go to the cousin who's bought the farm, and the grower goes to the cousin. [00:35:29] Speaker 01: And the cousin says, yeah, I'll sell it to you, except my uncle has, or my cousin has a right of first refusal. [00:35:35] Speaker 01: And the cousin says, yeah, I want it back. [00:35:38] Speaker 05: I think that's a difficult, uh, hypothetical, but, um, it's just asking what if there were no chapter 61? [00:35:49] Speaker 05: Well, with respect, your honor, I think it's asking if there's a chapter 61, but the town isn't the holder of the right of first refusal. [00:36:01] Speaker 03: Just take it to the next step. [00:36:02] Speaker 03: Then there's no chapter 16. [00:36:04] Speaker 05: There's no Chapter 61, I don't think there's any preemption claim barring some effort to block eminent domain acquisition or to prohibit, if there were something different from Chapter 61, so for example, a prohibition on selling to commercial use or non-farming use. [00:36:22] Speaker 05: I think that would be preempted. [00:36:25] Speaker 05: If it's just two private landowners deciding this is how we don't want to sell the railroad or I'm going to give you half interest in my land, then yeah, we have to go negotiate with those holders of the property rights. [00:36:39] Speaker 05: And if they don't want to sell, then we have to go to eminent domain or build somewhere else. [00:36:42] Speaker 03: And here the successor or the holder of the right of first refusal is a town. [00:36:50] Speaker 05: But there was a Chapter 61. [00:36:53] Speaker 05: And so let's come back to that part to your question, which is the town here is making a decision. [00:37:07] Speaker 05: Even if you grant all the rest of the government's argument, the town is still making a decision to exercise the right of first refusal. [00:37:14] Speaker 05: And why is it doing that? [00:37:16] Speaker 05: It's exercising the right of first refusal to control the land use, [00:37:23] Speaker 05: Because of the conversion of land use, it's not just a sale. [00:37:28] Speaker 05: It's a sale for conversion or it's a conversion under Chapter 61. [00:37:32] Speaker 05: It's the conversion of the land use that is triggering the town's interest in taking the land away from 140 Trust. [00:37:42] Speaker 03: That's equally true if it's a conversion to some use other than railroading. [00:37:49] Speaker 05: it would be. [00:37:49] Speaker 05: And in that case, we wouldn't be here because it would have nothing to say about it. [00:37:53] Speaker 01: Well, let's ask about if you had no right of first refusal, you had no [00:38:00] Speaker 01: No Chapter 61. [00:38:01] Speaker 01: You just have a town where people know each other and they're close. [00:38:04] Speaker 01: And somebody's land trust here is getting ready to sell its land. [00:38:09] Speaker 01: And so there's no encumbrance or anything. [00:38:12] Speaker 01: And there are two offers, one from the railroad and one from the town. [00:38:17] Speaker 01: And the town says, let's make this into a nature park with a trail and playground. [00:38:25] Speaker 01: And the seller of the trust says, great. [00:38:30] Speaker 01: That sounds really nice. [00:38:32] Speaker 01: I'm going to sell to the town, because I like the idea of having a nature park and a playground. [00:38:40] Speaker 01: The railroad's position there would be, can't do that? [00:38:45] Speaker 05: I think my position on that would be, [00:38:52] Speaker 05: If this occurred just as a property acquisition. [00:38:56] Speaker 05: And the question was landowner sell to railroad or sell to someone else. [00:39:05] Speaker 05: no regulatory influence on the choice, no command, no restriction on how the land can be used. [00:39:17] Speaker 05: So, for example, if there were a restriction on the landowner's ability to do something, so had to sell to a town if [00:39:24] Speaker 05: if the railroad wanted to come. [00:39:26] Speaker 05: That would be a different case. [00:39:27] Speaker 05: But I think you still would have to ask the question in that case whether what the town was about in that setting was about restricting the rail development [00:39:39] Speaker 05: picking it out of the path of the railroad. [00:39:43] Speaker 05: And that might well be regulation in that case. [00:39:46] Speaker 05: I don't look into different facts from this case. [00:39:49] Speaker 06: Can I get sort of a factual question answered? [00:39:54] Speaker 06: Chapter 61 is triggered when a sale happens. [00:39:57] Speaker 06: Chapter 61 is also triggered when a conversion without sale happens. [00:40:03] Speaker 06: Which of the two triggered chapter 61 here? [00:40:06] Speaker 06: Well, I believe it's the position of the town that both were triggered. [00:40:10] Speaker 06: What's your position? [00:40:12] Speaker 06: I know you think Chapter 61 is preempted, but if there had been no ICTTA, if there had been no preemption, when was Chapter 61 triggered? [00:40:22] Speaker 05: I'm reluctant to speak for Grafton on that question, which is in dispute and being litigated in state court in Massachusetts. [00:40:32] Speaker 05: And I can [00:40:34] Speaker 05: I just don't know what position Grafton would take on that. [00:40:39] Speaker 06: And you don't know what position they've taken in state court on that? [00:40:41] Speaker 05: I believe they've taken the position that it wasn't triggered by a sale. [00:40:46] Speaker 06: That it was triggered by a sale? [00:40:48] Speaker 05: It was not triggered by a sale because 140 Trust continues to hold the land. [00:40:54] Speaker 05: Okay. [00:40:54] Speaker 05: So if it was triggered at all, it wouldn't have been triggered by the conversion. [00:40:58] Speaker 05: I believe that's their position. [00:41:00] Speaker 05: Okay. [00:41:01] Speaker 05: Thank you. [00:41:04] Speaker 05: Thank you, guys. [00:41:10] Speaker 01: We have Mr. Light from the board. [00:41:22] Speaker 04: May please support my name is Eric light attorney with the surface transportation board here on behalf of the board and the United States. [00:41:29] Speaker 04: One of the questions that was asked was whether or not railroads can be held to the voluntary commitments of their predecessors in interest. [00:41:39] Speaker 04: And there is such a case. [00:41:41] Speaker 04: I just want to point that out at the beginning. [00:41:42] Speaker 04: It's PCS phosphate, fourth circuit case. [00:41:45] Speaker 04: In that case, a railroad had agreed to fund the rerouting of a rail line if it became necessary for the mine's operations. [00:41:57] Speaker 04: And the railroad's successor was bound by that commitment. [00:42:02] Speaker 04: And the preemption did not bar that agreement from being enforced. [00:42:09] Speaker 06: And they have that somewhere, but do you happen to have the the reporter number on that? [00:42:23] Speaker 04: It is 559 F 3rd, 212. [00:42:27] Speaker 06: Thank you. [00:42:29] Speaker 04: In seeking reopening in this case, Grafton assured the board that the preemption issue here was simple and straightforward. [00:42:38] Speaker 04: And consistent with that description, Grafton presented the board with two very simple arguments in favor of preemption, both focused on the facts of this particular case. [00:42:49] Speaker 04: The first argument was that it was a preclusion argument based on the idea that there's this analogy between eminent domain and Chapter 61. [00:42:58] Speaker 04: The second argument was the unreasonable burden argument based on the town's alleged reneging on the settlement agreement. [00:43:07] Speaker 04: Here the board properly rejected both of these arguments. [00:43:11] Speaker 04: Turning first to the preclusion argument, [00:43:15] Speaker 04: The argument was that the board's preemption conclusion in the eminent domain decision precluded a contrary finding in the Chapter 61 decision. [00:43:27] Speaker 06: And the re... And interrupt because the brief was extremely well done. [00:43:35] Speaker 06: I think what you're about to say is in your brief. [00:43:40] Speaker 06: To the extent that there's any obstacle to me getting to where you want the court to go, it's this analogy between what's going on here and a zoning regulation. [00:43:54] Speaker 06: If you could probably tell from my questions, if I think of this as the product of a contractual agreement between 140 Trust and the city, then I think it's a pretty tough road for the railroad here. [00:44:11] Speaker 06: And I'll tell you, the reason it's a tough road is the reason that I'm getting a little hung up on the zoning thing. [00:44:18] Speaker 06: So I think it would otherwise be a tough road because just like in law school, you learn about the property law and the bundle sticks. [00:44:24] Speaker 06: And it seems pretty clear that [00:44:28] Speaker 06: when the railroad gained control of 140 trust, they didn't gain control of all the bundle of sticks that you could imagine gaining control of when you gain control to property. [00:44:40] Speaker 06: And in particular, they didn't gain control of this one bundle of sticks, this one stick that would say, you can do whatever you want with this property. [00:44:49] Speaker 06: Rather, what came with the deal is, [00:44:52] Speaker 06: you have to let the city buy the land if you want to do something other than a forest with your property. [00:44:59] Speaker 06: So the railroad never owned the right to do this, the right not being taken away from the railroad. [00:45:05] Speaker 06: Premature doesn't have anything to say about how a railroad can get more property than it's already owned. [00:45:14] Speaker 06: So that all seems good. [00:45:15] Speaker 06: But that argument, I think, works sort of with zoning as well. [00:45:20] Speaker 06: And we've got [00:45:21] Speaker 06: all these cases that say that even if you purchase a property that's zoned for, say, residential use, which means you didn't get the stick that would allow you to use your property for industrial use, even if you bought that bundle of sticks without the stick for industrial use, because of preemption, once you've got those other sticks, the zoning regulation goes out the window, and voila, you now [00:45:49] Speaker 06: have the stick that allows you to use your property for industrial use, use it to build a railroad. [00:45:56] Speaker 06: So why isn't that this case? [00:46:00] Speaker 04: The difference, Your Honor, is that zoning is regulatory. [00:46:05] Speaker 04: It's top-down imposition of government policy, whereas Chapter 61 is a voluntary tax program. [00:46:14] Speaker 04: I mean, that's how the Massachusetts Appeals Court described it. [00:46:18] Speaker 04: It says it's a voluntary tax program involving lower taxes in exchange for continued forest use and a right of first refusal. [00:46:28] Speaker 04: Draft in itself and its brief acknowledges that Chapter 61 is an opt-in. [00:46:34] Speaker 04: That's page 18 of the reply brief that landowners under Chapter 61 landowners opt into the program to get lower rates. [00:46:43] Speaker 04: And in fact, in this particular case, the 140 Trust voluntarily designated this property as forest land. [00:46:51] Speaker 06: In my hypothetical, the purchaser of the land that comes with the residential zoning requirement, [00:47:00] Speaker 06: it has voluntarily agreed to the residential zoning requirement. [00:47:04] Speaker 06: They bought the land accepting that there's a residential zoning requirement. [00:47:08] Speaker 06: It may well have been that the land was worth less than it otherwise would have been, and they paid less. [00:47:19] Speaker 06: So in other words, they were, in terms of the money that they didn't have to pay to get the land, they were in effect paid to accept [00:47:28] Speaker 06: the incumbent residential zoning requirement? [00:47:36] Speaker 04: I don't think that analogy or that argument works, Your Honor. [00:47:40] Speaker 04: Again, zoning was the restriction in zoning was imposed by the government. [00:47:47] Speaker 04: And it was perhaps acquiesced in by the homeowner because they had no alternative. [00:47:52] Speaker 04: Well, they could have not bought the home. [00:47:53] Speaker 04: Well, that's true. [00:47:57] Speaker 04: But still, it's a government-imposed policy. [00:48:01] Speaker 04: I think there's no question about that. [00:48:03] Speaker 04: Whereas in the Chapter 61 context, it's something that the landowner voluntarily agrees to. [00:48:15] Speaker 06: What's the best case for that distinction in the preemption context? [00:48:24] Speaker 04: Uh, specifically in terms of zoning or just, I guess, specifically in terms of voluntary commitment. [00:48:31] Speaker 04: Yeah. [00:48:31] Speaker 04: Well, PCS phosphate on the board's town of Woodbridge case. [00:48:36] Speaker 04: Um, yeah. [00:48:38] Speaker 04: So, I mean, I think that's the difference that I don't think in zoning, you can get away from the fact that it's really is a top down government imposition of a policy. [00:48:48] Speaker 04: I think it would be easier. [00:48:50] Speaker 06: You'd be on even stronger ground about Chapter 61 if the rule about zoning was, it doesn't preempt zoning rules. [00:49:04] Speaker 06: that pre-exists the railroad's purchase of the property. [00:49:07] Speaker 06: But ICTTA does preempt zoning rules that are imposed on the land after ICTTA has purchased the property. [00:49:15] Speaker 06: Because in that second scenario, it really does seem like there's nothing voluntary about what the railroad is doing. [00:49:22] Speaker 06: They're not agreeing to a zoning rule that is being imposed on property they already own. [00:49:32] Speaker 06: But in the first scenario, [00:49:34] Speaker 06: They're sort of agreeing to the zoning rule because they could have bought land anywhere in the world. [00:49:42] Speaker 06: They chose to buy this land with this zoning limit on it. [00:49:48] Speaker 06: Nick, the pre-empt stat. [00:49:49] Speaker 04: I would say it wasn't an agreement between the land, the homeowner in that case, and the authority that imposed the zoning restriction. [00:50:03] Speaker 04: There's no agreement. [00:50:04] Speaker 04: It's just like, OK, well, you imposed it on me. [00:50:06] Speaker 06: It could have been. [00:50:06] Speaker 06: This happens all the time, I think. [00:50:09] Speaker 06: You go to the city, you're like, all right, I need a permit. [00:50:11] Speaker 06: The permit's like, the city will give you your permit, but you have to accept this. [00:50:16] Speaker 06: new change in the regulatory regime. [00:50:20] Speaker 04: Again, in that case, I think there is a backing of government imposition in that sort of a situation where there is no imposition in Chapter 61, as I understand it. [00:50:36] Speaker 04: And as the Massachusetts Appeals Court explained it, it's just a purely voluntary program. [00:50:44] Speaker 06: I mean, you could imagine it being viewed as coercive because what Massachusetts is saying is we will raise your tax rates to whatever they would normally be unless you make your land a forest, in which case we'll give you [00:51:06] Speaker 06: It just depends on where you set the baseline with that. [00:51:08] Speaker 06: But let me just totally change. [00:51:09] Speaker 06: At what point did the town's right to purchase the land get triggered? [00:51:12] Speaker 06: Was it from the sale or was it from conversion without a sale? [00:51:18] Speaker 04: I think it's possibly both. [00:51:21] Speaker 04: That's an issue of state law that the board didn't really take a position on. [00:51:26] Speaker 04: It's probably a better question for council for the town. [00:51:29] Speaker 04: OK, I'll ask them. [00:51:30] Speaker 04: Yeah. [00:51:33] Speaker 04: So. [00:51:36] Speaker 04: Unless there are any questions about the eminent domain analogy kind of thing, I'm going to turn to the second preemption argument, which was equally simple as its first and we believe equally as without merit. [00:51:53] Speaker 04: Grafton argued that the board should, that the town's pursuit of its Chapter 61 right of first refusal [00:52:00] Speaker 04: was an unreasonable burden on rail transportation because Grafton had relied on the settlement agreement to make significant investments in the property and then D-Town reneged on the settlement agreement. [00:52:17] Speaker 04: The board properly rejected this argument. [00:52:21] Speaker 04: First of all, as the board found, there was no reneging on the settlement agreement. [00:52:24] Speaker 04: It wasn't the town that backed out. [00:52:26] Speaker 04: It was the town's citizens which independently challenged the settlement agreement. [00:52:30] Speaker 04: That is undisputed in the record. [00:52:32] Speaker 01: But they act as the town. [00:52:34] Speaker 04: These were 10 individual citizens who challenged it, who challenged the settlement agreement. [00:52:43] Speaker 01: But they were able to assert their right as members of the town? [00:52:50] Speaker 04: No, they were asserting their rights individually. [00:52:52] Speaker 01: But then the town has to be ready to exercise that right of first refusal if they're defending it. [00:52:57] Speaker 01: I'm sorry, maybe I missed the beginning of your comment. [00:53:01] Speaker 04: Right, I think the town changed its mind later to say, okay, we're now going to exercise a right of first refusal. [00:53:10] Speaker 04: But it wasn't the town which invalidated the right of first refusal. [00:53:13] Speaker 04: That was by the citizens through an independent action. [00:53:16] Speaker 01: They didn't invalidate the right of first refusal. [00:53:18] Speaker 01: I'm not the right of first refusal. [00:53:20] Speaker 01: I'm sorry. [00:53:20] Speaker 04: The settlement agreement. [00:53:21] Speaker 04: The settlement agreement. [00:53:22] Speaker 01: They invalidated the settlement agreement for failure to... [00:53:25] Speaker 01: abide by the Chapter 61 right of first refusal? [00:53:29] Speaker 04: No, it was, as I understand it, it was because the town had been given certain authority to buy. [00:53:36] Speaker 01: And they ceded the authority by chopping up the parcel. [00:53:39] Speaker 04: They tried to buy less. [00:53:41] Speaker 04: They settled for less than the entire amount. [00:53:43] Speaker 01: So they invalidated, the 10 members invalidated the settlement saying that [00:53:51] Speaker 01: Basically that the people who negotiate the settlement on behalf of the town acted ultra virus. [00:53:56] Speaker 04: Yes, that's the basis on which it was invalidated. [00:53:59] Speaker 04: Yeah. [00:54:01] Speaker 04: So, there's no question that it wasn't the town backing away. [00:54:04] Speaker 04: Moreover, the board reasonably questioned how much reliance Grafton actually placed on the agreement given that it started. [00:54:13] Speaker 04: these investment activities, clear-cutting the forest even before there was a settlement agreement. [00:54:18] Speaker 04: That's undisputed in the record. [00:54:20] Speaker 04: Moreover, the board questioned whether any reliance by the town, I mean, by Grafton was reasonable to the extent it did rely on the settlement agreement, whether any of that reliance was reasonable given the fact that the citizens challenged the settlement agreement almost immediately after it was signed. [00:54:39] Speaker 01: If, going back to the other issue, if the state court were to determine that the railroad had lawfully obtained the property at issue, I mean, let's say the town didn't act promptly, its right of first refusal expired, then Chapter 61 would not be at issue. [00:55:00] Speaker 01: It would be satisfied, right? [00:55:03] Speaker 04: So if I understand the question, if there was a state court determination that [00:55:07] Speaker 01: that the purchase by the railroad was valid, then [00:55:15] Speaker 01: Chapter 61 falls out of the picture. [00:55:17] Speaker 01: I mean, presumably, it's reflected in whatever the state court does. [00:55:21] Speaker 01: The treatment of Chapter 61 is a state law issue. [00:55:25] Speaker 04: I suppose it's possible that the state court could say, yes, the railroad actually bought the property, but it's still subject to the right of first refusal. [00:55:36] Speaker 01: Right, which is, in effect, since they've now become a controlling measure in the trust, then it wouldn't still be subject to that right of first refusal. [00:55:45] Speaker 01: All right, and now we'll hear from. [00:55:52] Speaker 01: For. [00:56:00] Speaker 02: Good morning, Your Honors. [00:56:01] Speaker 02: I'm Sean Graham and I represent the Intervenor Town of Hopedale. [00:56:05] Speaker 02: I'd like to start by answering Your Honor's question about when the right of first refusal was triggered. [00:56:09] Speaker 02: So it was triggered not because of the sale, but because of the notice of the proposed sale on July 7th or 9th of 2020. [00:56:18] Speaker 02: no sale was ever legally consummated here. [00:56:22] Speaker 02: That's what the terms of Chapter 61, Section 8 say. [00:56:25] Speaker 02: For 120 days, the town had a right of first refusal to decide whether to exercise its right or not. [00:56:31] Speaker 06: That was a notice that who would sell to who? [00:56:34] Speaker 06: I'm sorry, could you repeat that? [00:56:36] Speaker 06: You said that the Chapter 61 was triggered when there was a notice of sale. [00:56:41] Speaker 06: And I'm asking, it was a notice of [00:56:44] Speaker 06: a sale from whom to whom? [00:56:46] Speaker 02: By the 140 Realty Trust to another Realty Trust that's indirectly controlled by the railroad or the railroad's owner. [00:56:54] Speaker 06: Did the railroad already [00:56:57] Speaker 06: had owned the beneficiary interest in 140 Trust before that? [00:57:02] Speaker 06: No. [00:57:03] Speaker 06: Notice? [00:57:03] Speaker 06: No. [00:57:04] Speaker 06: No. [00:57:04] Speaker 06: So it was when the Chapter 61 was triggered, you think, when there was notice that the railroad was seeking to purchase control of the trust. [00:57:18] Speaker 02: So at that point, the railroad was seeking to buy the land directly from the trust. [00:57:23] Speaker 02: It was only later on in October that the railroad decided to buy the beneficial interest of the trust. [00:57:29] Speaker 02: The change of the beneficial interest triggered a second independent right of first refusal because a Realty Trust is a I think it's unique Massachusetts. [00:57:40] Speaker 02: creation where a realty trust is just a bear title holding entity in Massachusetts state courts, we cite some cases in our brief, when the beneficial interest of a realty trust changes hands, that just means the sale of land happened. [00:57:53] Speaker 02: Because the only thing the trust really can do, it can make agreements, of course, it's the trust, but it just holds title to property. [00:57:59] Speaker 02: So that in July of 2020, [00:58:02] Speaker 02: the right of first refusal was triggered and the town had a right at that point to buy the land directly from the 140 Realty Trust. [00:58:11] Speaker 02: So this land should have gone from a non-railroad, the trust, to a non-railroad, the town. [00:58:19] Speaker 02: The railroad is saying that rail preemption preempts that non-railroad to non-railroad transaction. [00:58:26] Speaker 02: But I heard from attorney Meyers. [00:58:29] Speaker 06: I just want to make sure I'm 100% clear, especially who knows who will write this. [00:58:32] Speaker 06: But if I write it, I want to make sure I have this fact exactly clear. [00:58:35] Speaker 06: At that moment of notice that you're describing, the railroad had no interest whatsoever in 140 Trust. [00:58:45] Speaker 06: Correct. [00:58:46] Speaker 02: Correct. [00:58:47] Speaker 02: And the purchase and sale agreement had to be attached to that notice of intent that was sent to the town. [00:58:55] Speaker 02: The railroad itself, in section 1.1 of that purchase and sale agreement, that 2.20 of the joint appendix, was agreeing to buy the property subject to Chapter 61. [00:59:05] Speaker 02: In section 4.7 of the purchase and sale agreement that the railroad agreed to, they agreed that if the town exercises the Chapter 61 rights, then the purchase and sale agreement would just terminate of its own accord. [00:59:17] Speaker 02: The railroad made those agreements, not the trust. [00:59:23] Speaker 03: Under Massachusetts law, if the state court resolution is in favor of, is not favorable to the railroad, [00:59:35] Speaker 03: Does the railroad have the ability to, by delegation from the state, to exercise the power of eminent domain? [00:59:49] Speaker 02: So if the town were to buy this property, could the railroad later use eminent domain? [00:59:56] Speaker 02: It's a feature of Massachusetts law that once land is held for some public interest, like a park, a nature preserve, conservation, another form of eminent domain can't come in and take it because otherwise cities and towns and the MBTA could just take it from each other over and over again. [01:00:14] Speaker 03: important in understanding why this is being litigated now, rather than later. [01:00:18] Speaker 02: Yes, but there is rail eminent domain in Massachusetts, and the railroad tried to obtain this property under Chapter 160, Section 83. [01:00:26] Speaker 02: They abandoned that in the spring of 2020 because it was taking too long. [01:00:31] Speaker 02: So instead, they tried to take this property right from the town of Hopedale. [01:00:36] Speaker 02: That's whose right is being taken here, is the town. [01:00:39] Speaker 02: They tried to take this right away from the town of Hopedale by depriving the town of its Chapter 61 rights. [01:00:45] Speaker 06: And when there was notice of the sale from the 140 trust to the trust that the railroad controlled, the Chapter 61 was triggered as we discussed and the town timely asserted its preference to buy the land? [01:01:03] Speaker 02: Yes. [01:01:04] Speaker 02: Yes, so under the statute, the town was required to tell the railroad that some of the notice was defective for reasons that aren't relevant here. [01:01:14] Speaker 02: And then the town held the town meeting, which appropriates the money in town and authorized the select board to buy this property. [01:01:20] Speaker 02: The select board then voted unanimously to exercise the right of first refusal and then recorded the right of first refusal in the registry of deeds. [01:01:28] Speaker 02: So the town checked all of its statutory boxes. [01:01:32] Speaker 02: And if there are no other questions, I'm happy to rest on our brief. [01:01:38] Speaker 02: Thank you. [01:01:41] Speaker 01: There were two other rights of first refusal. [01:01:43] Speaker 01: I'm sorry. [01:01:43] Speaker 01: It's all like belted suspenders, because there was conversion of the forest property. [01:01:54] Speaker 01: Tell me what they were. [01:01:56] Speaker 01: I think there were three in my notes anyway. [01:01:59] Speaker 02: There are three independent. [01:02:01] Speaker 02: that gave rise to the right of first refusal. [01:02:04] Speaker 02: So there's the notice of intent in July of 2020, which was the notice of the proposed sale. [01:02:10] Speaker 02: And then in October of 2020, when the railroad bought the beneficial interest of the trust, which is the equivalent under mass law of just buying the land while they bought the land to convert it. [01:02:22] Speaker 02: So that's [01:02:23] Speaker 02: also triggers the statute. [01:02:24] Speaker 02: And then when they started to convert the land from non-forest use by clear cutting the trees in October of 2020, a few weeks later, that also triggered the right of first refusal. [01:02:36] Speaker 01: And did they give notice when they bought the beneficial interest in the trust? [01:02:40] Speaker ?: No. [01:02:42] Speaker 01: But they should have. [01:02:43] Speaker 02: They should have. [01:02:44] Speaker 02: The trust said they would have, but they didn't. [01:02:47] Speaker 02: And then the day after, the then president of the railroad wrote a letter to the town. [01:02:52] Speaker 02: And I don't believe they gave notice of the clearcutting either. [01:02:54] Speaker 01: OK. [01:02:55] Speaker 01: That was my other question. [01:02:56] Speaker 01: OK. [01:02:56] Speaker 01: Thank you. [01:02:57] Speaker 01: Thank you. [01:03:01] Speaker 05: Way overstayed by welcome, if I may have a few minutes. [01:03:07] Speaker 05: I'd like to start where the government started with the PCS phosphate case. [01:03:12] Speaker 05: He described it as a case where there was a voluntary commitment made by a predecessor to the railroad. [01:03:18] Speaker 05: It was a predecessor railroad. [01:03:20] Speaker 05: The railroad in the case was the Norfolk Southern Railway Company. [01:03:25] Speaker 05: The predecessor was old Norfolk Southern prior to a corporate transaction that restructured the railroad. [01:03:32] Speaker 05: And in that case, and I think this is the most important principle coming out of the voluntary commitment law that the government relies upon here, [01:03:41] Speaker 05: This is at 559F3 at 224. [01:03:45] Speaker 05: As the STB has recognized, voluntary agreements must be seen as reflecting the carrier's own determination and admission that the agreements would not unreasonably interfere with interstate commerce. [01:03:59] Speaker 05: So when a railroad makes a voluntary commitment, it is [01:04:04] Speaker 05: It is as a railroad making a judgment about whether that commitment is or is not consistent with its operation of part of the rail transportation network of the United States. [01:04:16] Speaker 05: In this case, the predecessor, 140 Trust, was not capable of making any such judgment or determination. [01:04:23] Speaker 05: And so it's not the voluntary commitment in this case, I would argue, is just not qualifying for purposes of this exception to ICTTA preemption. [01:04:30] Speaker 06: I don't want to go all the way around all over again, but the argument we discussed is the railroad cursed [01:04:36] Speaker 06: that voluntary commitment when they purchased the land. [01:04:39] Speaker 06: So I guess to help me think through whether that is the case or is not the case, what if for the past 100 years, the railroad had just owned the land, period. [01:04:47] Speaker 06: And at some point, they decide, we're going to make this forest and get the tax breaks. [01:04:54] Speaker 06: And then some point later after that, they decide, OK, we want to build a railroad on this. [01:05:01] Speaker 06: Could they build the railroad on it or would the city have the right of first? [01:05:07] Speaker 05: So I think if this were the railroad proceeding down that path, one of the features of Chapter 61 that's been overlooked is the ability to opt back out of Chapter 61. [01:05:17] Speaker 06: I think when you opt back out, then the city has a chance to purchase if you then convert. [01:05:28] Speaker 05: I think, I would submit that to the extent that the opt-out is prohibited because this has become regulated essentially zoned as forest land by virtue of some commitment made years ago, that's the kind of burden on interstate commerce and rail transportation that I think is designed to... [01:05:47] Speaker 06: And I think it's a principled answer, a consistent answer. [01:05:50] Speaker 06: This case would be exactly the same outcome if 140 trusts had never existed and if for the past hundred years the railroad had owned the land and had done with the land everything that 140 trusts did. [01:06:01] Speaker 05: I think it would be a harder judgment to get to that conclusion in that scenario because you'd have to proceed through the burden on, you know, the degree to which there was a burden and whether the, you know, whether the railroad's judgment about putting the land into forest preserve or whatever it was was [01:06:20] Speaker 05: It was a reflection of some judgment that it didn't need this property. [01:06:24] Speaker 05: And so you have this debate over whether this property was needed by the railroad. [01:06:28] Speaker 05: Here, right, 140 Trust couldn't make that determination. [01:06:32] Speaker 05: The railroad did make that determination that this property was uniquely suitable along its right-of-way. [01:06:38] Speaker 05: But it's blocked. [01:06:39] Speaker 05: It's blocked by land use regulations. [01:06:41] Speaker 01: I just heard Mr. Gramel say that in the agreement of purchase, that the railroad actually agreed that it purchased this land subject [01:06:50] Speaker 01: to the town's right of first refusal. [01:06:52] Speaker 01: In that case, then your argument about eyes wide open, railroad makes a judgment, surely it's not our business under ICTTA to rescue the railroad from its erroneous judgment about what's in the railroad's interest as a carrier. [01:07:10] Speaker 05: So I'll say the following about the agreement that he referenced. [01:07:13] Speaker 05: It's not part of the record. [01:07:14] Speaker 05: I haven't seen it. [01:07:16] Speaker 05: I don't know what the context is of that provision. [01:07:20] Speaker 05: If there is a provision, I'm fairly confident that the railroad would have acquired its interest in this property, reached the agreement initially with 140 Trust to buy the property and then acquire the 140 Trust, understanding that efforts to prevent a railroad from building a transload facility through land use regulation would be preempted. [01:07:46] Speaker 05: My client had [01:07:48] Speaker 05: had a very similar episode with another town in this part of Massachusetts along its line, where a different form of land use was, in fact, held preemptive. [01:07:58] Speaker 05: So I think there may be a chicken and egg problem in relying upon subject to chapter 61. [01:08:06] Speaker 05: Chapter 61 certainly was out there. [01:08:09] Speaker 05: It's our position that the effort to enforce it is preemptive. [01:08:13] Speaker 01: I think I'm reading from what he referenced, which is a JA-220 purchase-sale agreement. [01:08:27] Speaker 01: And it's the, the railroads, the Huffington Burke Realty Trust. [01:08:31] Speaker 01: Was that the one? [01:08:33] Speaker 01: And then it talks about subject to the forest land tax lien and more particularly described with all privileges, rights, easements, and appurtenances belonging to such land. [01:08:41] Speaker 01: All right. [01:08:43] Speaker 01: Title and interest of seller. [01:08:44] Speaker 01: Other right away, appurtenances, interests, blah, blah, blah. [01:08:49] Speaker 05: Are you reading from 220? [01:08:51] Speaker 01: I'm just trying to find a paragraph. [01:08:53] Speaker 01: 1.1. [01:08:54] Speaker 01: I mean, this was just, um, [01:08:59] Speaker 01: Referenced and even on page 226. [01:09:13] Speaker 01: Notice to the town pursuant to chapter 61, buyers will file with the town hotel notice required. [01:09:19] Speaker 01: The properties intended to be conveyed. [01:09:31] Speaker 01: In the event the town exercises the right of 1st refusal. [01:09:34] Speaker 01: This agreement shall terminate so basically contemplating that the railroad won't buy it. [01:09:43] Speaker 01: If the town exercises the right of 1st refusal. [01:09:46] Speaker 01: Looks like, I mean, I was looking at this for the 1st time, but. [01:09:54] Speaker 05: I do see that, Your Honor. [01:09:55] Speaker 05: I don't think that this is an eyes wide open example of the railroad choosing to acquire property that it couldn't use for rail transportation. [01:10:06] Speaker 01: It wasn't acknowledging- It sounds like beef with the seller, not with the town, under this provision. [01:10:13] Speaker 05: My understanding is that this disagreement is the agreement to purchase the land that was described as the first [01:10:22] Speaker 05: the source of the first notice to the town and where the status quo rests today is that this transaction was not consummated. [01:10:32] Speaker 01: And so which notice do you think we're operating under? [01:10:38] Speaker 05: I don't know, Your Honor. [01:10:41] Speaker 05: I do know that the town continues to assert these three different bases for there being a trigger under Chapter 61. [01:10:51] Speaker 05: And again, it may be a belt suspender strategy on their part. [01:10:57] Speaker 05: I don't know which is the one that if the state decides to [01:11:03] Speaker 05: enforce the Chapter 61 rights. [01:11:05] Speaker 05: I don't know which leg of that stool the state will rely upon. [01:11:08] Speaker 05: From my perspective, our perspective, it doesn't matter because in all cases, it's enforcing a judgment by the state and by the town to preserve this as forest land, notwithstanding the fact that we have a rail development project that's being blocked. [01:11:26] Speaker 05: What's the status of the state court litigation? [01:11:29] Speaker 05: I don't know precisely. [01:11:30] Speaker 05: I know it's pending and the town is continuing to assert the right to force the sale to it of the property. [01:11:38] Speaker 05: What court is it in? [01:11:40] Speaker 05: I believe it's at least in the land court. [01:11:44] Speaker 05: Um, it may, there may, there have been several state adjudicative bodies that have been involved. [01:11:51] Speaker 06: I believe the land court, at least a couple of times your, your answers. [01:11:55] Speaker 06: And I think they've been fine. [01:11:56] Speaker 06: They've been candid, but it had been when we have questions that are potentially relevant to deciding the preemption issue. [01:12:04] Speaker 06: Your answer sometimes are that that. [01:12:07] Speaker 06: you don't know. [01:12:08] Speaker 06: I think it's not that you don't know. [01:12:10] Speaker 06: I think it's that the state court probably has not clarified state laws all the way. [01:12:17] Speaker 06: Maybe we should wait for the state court to issue its decision and then decide whether whatever the state court's understanding of the state property law here is in conflict with ICTA. [01:12:34] Speaker 05: Well, I think Grafton's position would be that [01:12:38] Speaker 05: Deferring to state the state to determine what is legally acceptable in the way of this property, which the landowner wanted to sell to us. [01:12:51] Speaker 05: The landowner wanted to give Grafton control of the property and did so. [01:12:56] Speaker 06: Subject to, I understand there's- That is in some ways the whole case. [01:13:01] Speaker 05: I understand that. [01:13:02] Speaker 05: Did you purchase all the sticks or did you purchase some of the sticks? [01:13:06] Speaker 05: But Your Honor, no matter, the reason why, if you use the bundle of sticks framework, right, if it's true that a state court decides that not all of the sticks [01:13:20] Speaker 05: are in the bundle that 140 Trust is allowed to wield or to exercise or to operate under. [01:13:30] Speaker 05: The reason why that stick is absent is because of a state land use program and a judgment made for whatever reasons it was made sometime in the past to get some tax breaks that have now been repaid [01:13:48] Speaker 05: by a non-railroad that is burdening interstate commerce and interfering with rail transportation in an absolute way. [01:13:56] Speaker 05: This isn't just some small thing that can't be a transload facility built on this property because of these restrictions. [01:14:03] Speaker 05: So I think first answer to that question is it kind of doesn't matter how it turns out in state court. [01:14:08] Speaker 06: What if the state court finds that the sale of the 140 trust was never valid as a matter of state law? [01:14:16] Speaker 06: I'm sorry. [01:14:18] Speaker 06: You mean the transfer of control? [01:14:20] Speaker 01: Yeah, the acquisition of the beneficial interests or whatever you called it in the 140 trust, if that wasn't valid. [01:14:28] Speaker 05: Well, we know that one foot, I don't know what would happen under state law with trustees of 140 trusts. [01:14:36] Speaker 06: We don't either. [01:14:39] Speaker 06: You don't know because you can't know. [01:14:41] Speaker 06: It's not that you aren't prepared for it. [01:14:42] Speaker 06: It's just that you can't know. [01:14:44] Speaker 05: I can't know precisely how the state court navigates whatever intricacies there may be about how to apply Chapter 61. [01:14:53] Speaker 05: Our point would be the town is trying to apply Chapter 61 [01:14:58] Speaker 05: to prevent this property from being used for rail transportation. [01:15:03] Speaker 05: That ought to have been found preempted by the service transportation board. [01:15:08] Speaker 05: Now, if there's some other outcome in state court where some other path gets taken, well, as long as it's not the town enforcing a right to prevent the property from being used for rail transportation, [01:15:21] Speaker 05: There may be another issue. [01:15:22] Speaker 05: It doesn't matter. [01:15:23] Speaker 05: The point is that effort ought to have been ruled preempted. [01:15:28] Speaker 05: I think if, I think that's our position. [01:15:36] Speaker 07: All right. [01:15:36] Speaker 05: Thank you. [01:15:38] Speaker 07: Thank you.