[S]HELBURNE — Opposition to a road salt storage facility off Route 7 has boiled over into a court battle that could test the ability of the state and municipalities to regulate rail projects that fall under federal jurisdiction.
Vermont Rail System bought a 32-acre parcel behind Harbor Industries on Dec. 28 and plans to build two road salt storage facilities, a fueling station, an access road, offices and parking on 19-acres of the property.
The facility will replace an existing salt shed in Burlington and double the company’s storage capacity. Vermont Rail System says it has long needed more storage to meet regional demand. The company ships in road salt by rail and then the material is trucked to towns across northern Vermont.
Shelburne residents and town officials are concerned that trucking salt from the Route 7 site will increase congestion, possibly threaten public safety, and potentially damage wetlands and other sensitive habitat on the property stretching along the LaPlatte River.
Tension between Vermont Rail System and residents escalated recently when the railroad placed chains and concrete blocks on a strip of parking near the Shelburne Craft School, which had become a popular cut through for bypassing Route 7 traffic.
In an expletive laced screed to the Burlington Free Press, Selectboard Chair Gary von Stange, accused the company of a “callous” disregard for public safety, noting that police, fire and other emergency responders use the shortcut.
In a letter to the town refuting allegations leveled against his company, Vermont Rail Systems CEO David Wulfson wrote that he closed the parking lot after hearing concerns about illegal activity there at night. Wulfson said he provided police and fire departments with keys to the locked chains.
The Selectboard met in executive session with company officials Tuesday night, and Wulfson agreed to remove the barriers, which were gone Wednesday. Town manager Joseph Colangelo said he and Wulfson are discussing a lease agreement to allow public access to the parking lot.
Colangelo described Tuesday’s meeting as “generally positive,” adding that it could “set the foundation for future negotiations.” Wulfson said the meeting was a “first step” toward addressing the town’s concerns.
The meeting may have gone a long way to de-escalating the rancor between the two sides, but the town’s jurisdiction over the project will proceed in court. The storage facility is likely to dominate public discussion at Shelburne’s next selectboard meeting Feb. 9, which Wulfson said the company will attend.
They’ve attended two previous selectboard meetings in January, but Colangelo said officials and residents have been unable to get satisfactory answers about the project’s potential impact on the town.
Wulfson said he can provide answers if town officials sign confidentiality agreements, but making details public would violate federal law.
For instance, the federal Surface Transportation Board, which regulates railroads, won’t allow him to release the number of salt trucks that would be coming to and from the facility because that information could be used to calculate how much salt is shipped. The feds require that shipping information remain confidential, he said.
“That rubs that town the wrong way and I don’t blame them,” Wulfson said.
The federal rules have created a perception that the rail company is operating under a “veil of secrecy,” but it’s unavoidable under federal law, he said.
That’s frustrating for residents and town officials who are used to having a much greater role vetting development. Projects typically require local zoning approval and state environmental approval through the Act 250 process.
Colangelo, who is acting as the town’s zoning enforcement officer, said the potential negative impacts on the town and the environment, not to mention the future of a recreational easement the town has on the property, are all reasons the project should go through the state and local review process.
When the Vermont Rail System began removing trees and excavating areas of the property, Colangelo sent a notice to the company that it was violating the Shelburne’s zoning rules.
When that didn’t work, Colangelo said he decided to go to court in order to “protect the interests of the town and its residents.”
In a Jan. 25 filing in the Environmental Division of Vermont Superior Court the town sought an injunction to block further construction related activities saying they could cause “irreparable harm,” the legal threshold for granting an injunction.
Work at the site has stopped, pending a separate review by the Department of Environmental Conservation, which is acting on the authority of the federal Environmental Protection Agency.
In response to Shelburne’s filing, the railroad filed suit in federal court arguing that it’s regulated by the federal Surface Transportation Board, which preempts most state and local regulations, including municipal zoning rules and the state Act 250 environmental review.
Eric Poelhmann, an attorney with Downs Rachlin Martin, is representing Vermont Rail System. He represented the Green Mountain Railroad Company in a similar case, where that railroad wanted to build a road salt storage facility along the Connecticut River.
The state argued the project was subject to Act 250 review, but the Second Circuit Court of Appeals sided with Green Mountain Railroad in a decision that state and local regulation are preempted by federal regulation of railways. The state appealed all the way to the U.S. Supreme Court, but the Supreme Court declined to hear the case.
Poelhmann said he sees the two cases as analogous and “the current situation in Shelburne is governed by the Second Circuit Court of Appeals ruling.” Both Poelhmann and town officials said they anticipate the separate filings will be rolled into one case that will proceed in federal court.
The EPA delegates its stormwater review to the state Department of Environmental Conservation. After observing the excavation work, DEC sent its own notice of violation to Vermont Rail Systems.
The company applied for a stormwater permit that would allow construction to proceed, but they began excavating to install silt fencing without DEC granting the permit, said Kevin Burke, a DEC stormwater analyst. The department is still reviewing the permit, he said.
The company also has not yet applied for a separate stormwater permit that would cover discharge from the project once it’s started operation, Burke said. In addition, the Fish and Wildlife Department will review the project’s potential impact on listed, threatened and endangered species, he said.
Correction: An earlier version of this story misstated where the strip of parking that the railroad blocked was located. The name of Selectboard Chair Gary Von Stange was also misspelled.