American Rocky Mountaineer v. Grand County, Utah

• Decision Date: 21 October 2021
• Docket Number: Case No. 4:21-cv-72-DN-PK
• Citation: 568 F.Supp.3d 1231
• Parties: AMERICAN ROCKY MOUNTAINEER, Plaintiff, v. GRAND COUNTY, State of UTAH, Defendant.
• Court: U.S. District Court — District of Utah

568 F.Supp.3d 1231

AMERICAN ROCKY MOUNTAINEER, Plaintiff,

v.GRAND COUNTY, State of UTAH, Defendant.

Case No. 4:21-cv-72-DN-PK

United States District Court, D. Utah.

Signed October 21, 2021

Amy F. Sorenson, Cameron J. Cutler, Snell & Wilmer LLP, Salt Lake City, UT, Kathryn L. Lannon, Pro Hac Vice, Kevin Michael Sheys, Pro Hac Vice, Hogan Lovells US LLP, Washington, DC, for Plaintiff.

Christina R. Sloan, Moab, UT, for Defendant.

MEMORANDUM DECISION AND ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

David Nuffer, United States District Judge

This action arises out of a permitting process imposed by Grand County, Utah on a rail service provided by American Rocky Mountaineer ("ARM"). Grand County seeks to require ARM to meet a series of permitting requirements before ARM can operate a temporary train station in Grand County.¹ ARM filed a complaint seeking a declaratory judgment that the permitting process was preempted by federal law, and subsequently filed a motion for summary judgement ("Motion").² Grand County filed a response in opposition to the Motion ("Response").³ ARM filed a reply. ("Reply").⁴ The parties were heard in a hearing on October 4, 2021.⁵ For the reasons stated below, the Motion is GRANTED.

Contents

Background...1234

ARM's Attempts to Secure Approval for the Station...1234

Conditional Use Permit Requirement...1234

Additional Specific Land Use Requirements...1235

Final Statement of Land Use Requirements...1235

Business License Requirements...1236

Litigation and Pending Motion...1236

Discussion...1236

ICCTA and STB – An Exclusive, Preemptive, National Regulatory Scheme for Railroads...1237

The ICCTA Prohibits Local Preclearance Permitting for Railroads Even If Based on Public Health and Safety...1239

Overview of Grand County's Land Use Code Provisions...1241

Grand County's Conditional Use Permit Requirement is Preempted...1241

Grand County's CUP Process is a Prohibited Permitting Process...1241

The Grand County CUP Process is Too Indefinite to Survive Pre-emption...1242

The Grand County Business License Requirements Are Preempted...1244

Conclusion and Order...1244

BACKGROUND⁶

ARM is a Delaware corporation which has been developing a luxury rail service between Denver, Colorado, and Moab, Utah. ARM has leased property in Grand County, Utah, near Moab⁷ , to serve as a loading and unloading station (the "Station") for passengers.⁸ Currently, ARM intends for the Station to only serve as a temporary staging area without any permanent structures.⁹

ARM's Attempts to Secure Approval for the Station

In 2020, ARM began communications with Grand County's Planning and Zoning Department, seeking regulatory approval of the Station.¹⁰ Initially, due to its belief that all activity was taking place in a preexisting right-of-way, Grand County only required ARM to provide a business license application and a site plan.¹¹

Conditional Use Permit Requirement

In April 2021, Grand County informed ARM through email that it would now require a Conditional Use Permit ("CUP") application before ARM could commence operations.¹² In the same email, Grand County indicated it would require "at a minimum," pursuant to Grand County Land Use Code ("LUC") §§ 3.2.4 N and 9.11, a site plan and letters of acceptance from various agencies, include (1) the Utah Department of Transportation ("UDOT"), (2) the State Sanitarian, (3) Grand County Engineering, and (4) Grand County Building Department, as well as a letter for approval from Union Pacific, a railroad that did business in the area.¹³ Grand County also referenced a public hearing requirement that would need to be fulfilled prior to issuance of the CUP.¹⁴

Additional Specific Land Use Requirements

As communications continued between Grand County and ARM, and more information was exchanged regarding the proposed Station, Grand County's list of requirements continued to grow. In June, Grand County informed ARM that to obtain a CUP, ARM must also provide statements that no public services would be required; that no facilities remain onsite after the close of business; and that no infrastructure is being constructed.¹⁵ Grand County also indicated that ARM might no longer need to have a public hearing, as that requirement was inconsistent with state law and Grand County was in the process of amending its ordinance.¹⁶ In July, Grand County informed ARM that the submitted site plan also required inclusion of the radius of ingress of HWY 313; radius of the turnaround to enter the property; an "all-weather surface;" a "minimum acceptable driveway width;" and, potentially, a grading permit.¹⁷ Grand County also clarified that it was only requiring ARM to meet some of the requirements of LUC 3.2.4.N; namely, the requirements that were "health and safety related."¹⁸

Final Statement of Land Use Requirements

Grand County's final requirements were that ARM provide seven items in its CUP application:

(1) A letter from Union Pacific approving ARM's use of the rail line;

(2) a UDOT access permit (if required by UDOT);

(3) a statement that no public services would be required;

(4) a traffic analysis if required by UDOT;

(5) a site plan showing legal access, parcel size, ownership of each affected parcel, and any land use conflicts or impacts, along with showing:

(a) a depiction of where buses turn around ("traffic circulation") including selected spur line/track, drop off, loading and unloading;

(b) legal access to titled parcels;

(c) Hard surface modifications and drainage implications; and

(d) A statement that no other services or construction are anticipated at this time;

(6) a statement that no facilities remain onsite after close of business, to show that a security plan is not required; and (7) a statement that no infrastructure is being constructed, to show that a reclamation plan is not required.¹⁹

Business License Requirements

Grand County also required ARM to provide a business license application.²⁰ Grand County Code § 5.01.080(A) ("Title Five") requires that a business license application contain:

1. The name and contact information of the Person to whom the license shall be issued;

2. The nature of the Business;

3. The Principal Office Address;

4. The mailing address, if different;

5. The place of Business, if different;

6. A Fleet Inventory, as applicable;

7. A Noise Compliance Certificate, as applicable;

8. The signatures of various County officials and designees;

9. Fee(s) established by the Grand County Consolidated Fee Schedule, prorated on a quarterly basis for applications submitted after Quarter 1 (January-March); and

10. Additional documentation as the County may reasonably require.²¹

Prior to July 2021, Grand County Code § 5.01.030 (B)(ii) allowed reciprocity for business licenses which had been issued by the City of Moab.²² In June 2021, ARM emailed Grand County its Moab business license application, informing Grand County it believed this qualified it for a business license under Grand County Code § 5.01.030(B)(ii).²³ Grand County did not respond to this email, and on July 5, 2021, it amended Grand County Code § 5.01.030(B)(ii) to clarify that the reciprocity was only applicable to businesses which did not have a physical location in Grand County.²⁴ Accordingly, the business license requirements in Title Five applied to ARM's application.

Litigation and Pending Motion

ARM filed a complaint seeking a declaratory judgment that the CUP scheme was preempted by federal law.²⁵ Subsequently, ARM filed a motion for summary judgment, arguing that the CUP process was preempted as a matter of law.²⁶ ARM argues that because the CUP process is a preclearance requirement, it is categorically preempted.²⁷ Grand County responds that the CUP process is a permissible exercise of Grand County's police power to regulate health and safety.²⁸

DISCUSSION

For much of the United States’ history, Congress has regulated interstate railways under the power of the Commerce Clause.²⁹ The Supreme Court has long recognized the preclusive effect of these regulations.³⁰

ICCTA and STB – An Exclusive, Preemptive, National Regulatory Scheme for Railroads

In 1995, in an attempt to further reduce local regulatory controls over the railway industry, Congress passed the Interstate Commerce Commission Termination Act of 1995 (the "ICCTA").³¹ The ICCTA aimed to prevent "the development of a patchwork of local and state regulations affecting the railroad industry," as such a patchwork would be detrimental to a uniform railway system.³² Accordingly, the previous system of dual regulation between local and federal governments was eliminated and replaced with a system of regulation entirely by the federal government.³³

Among other provisions, and consistent with prior law, the ICCTA contains a clause which states that "the remedies provided under this part with respect to regulation of rail transportation are exclusive" and that the statute expressly preempts "remedies provided under Federal or State law."³⁴ This preemption is an exercise of congressional power under the Commerce Clause.³⁵ The ICCTA defines rail transportation as

(A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail, regardless of ownership or an agreement concerning use; and (B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property.³⁶

The ICCTA created the Surface Transport Board ("STB"), an agency tasked with regulating and administering "almost all matters of rail regulation."³⁷ After the passage of the ICCTA, direct regulation of rail transport became the exclusive province of the STB.³⁸ Specifically, the STB has exclusive jurisdiction over

"(1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating

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