UPDATE: GU Asks for Abeyance on Hopedale Parcel Petition

CITING ITS OWN PRECEDENT ESTABLISHED BY THE 2014 GRAFTON CROSS-COURT BACKHAND GRAB, GRAFTON & UPTON RAILROAD TRIES TO PUT AWAY TOWN OF HOPEDALE IN STRAIGHT SETS TO WIN 155-ACRE FUTURE YARD PARCEL.

04.December, Hopedale MA – Grafton & Upton Railroad Company filed a Motion to Hold Proceeding in Abeyance, regarding their 23.November Petition for Declaratory Order, seeking to preempt the Town of Hopedale MA from invoking state and local statutory impediments to G&U’s (prospective) acquisition and use of a Hopedale property, to which the railroad holds title:

G&U STB Motion to hold in abeyance

Published 26.November on railsandports.com:

23.November, Hopedale MA — Grafton & Upton Railroad Company filed a Petition for Declaratory Order with the STB, seeking to preempt the Town of Hopedale MA from invoking state and local statutory impediments to G&U’s (prospective) acquisition and use of a Hopedale property, to which the railroad holds title.

GU’s Petition asserts that Hopedale’s Massachusetts Land Court suit (filed 28.Oct.) seeks to not only block the construction of new tracks and a transload facility by GU on a recently possessed 130-acre forested parcel, but to dispossess GU of the property, and  a connecting 25-acre parcel that the railroad possesses. The Petition states that “this blatant attempt by [the Town of] Hopedale to interfere with rail transportation is preempted by 49 U.S.C. § 10501” {STB Document #301307}.

Hopedale MA parcel
The right to acquire this 155-acre forested parcel on the western end of Hopedale MA is the bone of contention between Grafton & Upton Railroad and the Town of Hopedale. Hopedale is arguing in Massachusetts Land Court that its Right of First Refusal (to purchase 130 acres) was absconded. GU is seeking an STB declaration that, being in possession of the parcel’s title, GU’s rights to the property fall under 49 U.S.C. § 10501 preemption.

Growth requires new yard

GU’s 25-mile north-south line runs between the CSX Mainline in North Grafton MA and a recently reestablished connection with CSX Milford Line terminating in Franklin MA. Over 10 years, GU has substantially upgraded its tracks and yards, including specialized transload facilities. At North Grafton, GU stores and distributes LPG to trucks. The Upton MA yard handles chemicals and fly ash. Until the recent Milford Line GU’s Hopedale MA yard is the line’s smallest facility, handling cement and sheet rock. (GU yards also handle other commodities and cargoes).

GU has experienced significant traffic growth over recent years. In 2010, GU interchanged approximately 200 cars with CSX, and by 2019 the number of cars interchanged was approximately 3000. A steady growth in business is expected to continue into the future.  For calendar year 2021, GU anticipates moving 3500 carloads, including an estimated 400 new carloads off of GU’s recently-agreed lease of an 8.4-mile section of CSX track between GU’s current Milford terminus and Franklin MA. In addition to the additional carloads, the lease establishes a second interchange with CSX’s operations in southeastern Massachusetts.

GU’s consistent development and volume growth has led the railroad to seek additional yard capacity. In 2018, GU initiated discussions with the owner of a 155-acre Hopedale parcel bisected by the GU right-of-way at “an ideal location” for expansion of GU’s existing Hopedale yard. 

For the taking

The Petition states that negotiations with the property owner were unsuccessful. As an alternative means to acquire the property, GU turned to state statutes enabling railroads to request state approval acquire land by eminent domain. Massachusetts General Law MGL c. 160, § 83 provides … that if a railroad requires land for any of the purposes specified in MGL c. 160 § 78 and is unable to obtain the property by agreement with the owner, the railroad may apply to the State’s Department of Public Utilities (DPU), which after notice and hearing can authorize the taking of the property by the railroad by eminent domain. 

(MGL c. 160 § 78 authorizes a railroad to purchase land that may be “reasonably necessary” for the “proper construction and security” and the “convenient operation” of the railroad […].)

The DPU proceeding was initiated by GU on March 15, 2019. Among several responding parties filing with the DPU to intervene or participate, the Town contended that GU had not presented sufficiently specific plans for its use of the parcel. The Town also expressed a desire to maintain Town park and trail lands, and suggested that GU’s acquisition of the property may pose risks to the Town’s water supply. 

Significantly, the Town neither contended GU’s standing to acquire the property for rail transportation purposes, nor cited the its own potential eminent right of first refusal to purchase the property. in Feb.2020 the DPU decided which parties would be permitted to participate.

According to GU’s Petition, the railroad and the Town had numerous conversations beginning in 2019 and continuing through Oct.2020, to discuss a public-private partnership whereby Hopedale would forego its (potential) first-refusal rights. The Petition asserts that GU made clear its willingness to take steps to mitigate reasonable concerns by (potentially,) 1. Conveying a portion of the 155 acre parcel to enable the Town to increase the size of its park land, 2. Paying for infrastructure improvements to the Town’s existing park land, and 3. Protecting well sites.

Owner decides to sell after all

The Petition asserts that, while GU and the Town continued to discuss a public-private partnership, GU and the property owner resumed negotiations in an effort to agree on the terms of a private sale. On 27.June.2020, the parties entered into an agreement for the purchase by a realty trust that was indirectly controlled by GU. Because approximately 130 acres of the property was classified as “Chapter 61” forest land, the owner gave notice to Hopedale of its intention to sell the parcel to be used for rail transportation purposes, triggering the Town’s 120-day right of first refusal.

(Chapter 61 is a state tax statute that provides for lower taxation rate for forest land. According to that provision, when land classified under Chapter 61 is converted, or sold with the intent to convert, from forestry use to a different use, the local taxing authority acquires a right of first refusal to purchase the land.)

On 19.Aug.2020, the Town advised the owner that, in the view of the Town, the notice was defective, for reasons clarified at the 23.Nov. hearing “because it encompassed both Chapter 61 forest land and another parcel of land without Chapter 61 protections, but did not include segregated valuations for each parcel. The NOI was defective because it did not provide adequate statutory notice to the Town of the cost to purchase the Chapter 61 land as required and therefore did not constitute a bona fide offer” {Massachusetts Trial Court Case 20 MISC 000467}.

Double-reverse

On 07.Oct.2020, the property’s trustee withdrew the notice of intent to sell the Chapter 61 acreage. on 12.October, the trust transferred ownership of the Chapter 61 acreage to GU, by means of the trust beneficiaries selling their beneficial interest to GU. The trust also conveyed by quitclaim deed to GU the 25 acre portion of the property that was not subject to Chapter 61. The owner and President of GU became the new trustees of the trust that owns the Chapter 61 acreage. As a result of these transactions, GU now owns the beneficial interest in the trust, which holds legal title to the Chapter 61 acreage.

On  28.Oct.2020 the Town filed a complaint against the trust and GU in the Massachusetts Land Court, requesting declaratory and injunctive relief. The Complaint asserts that the Town held and holds a primary option to purchase the Chapter 61 acreage, and asked the court to prohibit GU from taking any actions or engaging in any activities that would convert the use of the property from the Chapter 61 forestry designation. The Complaint also requests the court to order GU to convey the Chapter 61 acreage to the Town. The Town’s request for such injunctive relief was heard by the court on November 23 , 2020. No decision was handed down.

By letter dated 02.Nov.2020, Hopedale advised the trust that the Town had decided to exercise the right of first refusal to acquire the Chapter 61 acreage while acknowledging that the trust “retains legal title to the [Property].” In addition, the Town’s governing body, the Board of Selectmen, voted in favor of using eminent domain in order to acquire the 25 acre portion of the property owned in fee by GU.

An ounce of preemption

GU’s Petition urges the Land Court to yield to an (anticipated) STB decision that such relief is preempted by Section 10501 for two reasons:

  1. The Town’s efforts to prevent GU from using the Chapter 61 Property for rail transportation purposes amount to an attempt to impose preclearance or permitting requirements that would deny or unreasonably delay GU’s ability to conduct rail transportation operations and, consequently, are categorically preempted. 
  1. Reliance on Chapter 61 and state court proceedings to compel a conveyance of real estate owned by GU is tantamount to an attempted eminent domain taking that cannot be permitted, because it would unreasonably burden and interfere with rail transportation and interstate commerce.

The Petition characterizes the Board’s jurisdiction as derived from Section 10501 (b)’s core principle that preemption applies in all instances where “transportation” is being or will be provided by a “rail carrier.” Ergo, GU is a rail carrier that currently provides transportation and will provide transportation services by [use of the Chapter 61 acreage]. “Transportation” is broadly defined by statute as including any “yard, property, facility, instrumentality, or equipment of any kind related to the movement of … property … by rail regardless of ownership or an agreement concerning use” and “services related to that movement.”  The term “railroad” is also expansively defined as including “a switch, spur, track, terminal, terminal facility, and a freight depot, yard, and ground, used or necessary for transportation.”

GU’s Petition cites the Board’s rationale and in its 2014 Decision favoring GU’s 2014 acquisition of a five-acre parcel in Grafton MA: “In that matter [that shares many of the substantial characteristics of this one] … The Board concluded that the regulations and permitting requirements relied upon by the Town of Grafton were categorically preempted …” {STB Decision #43441}