Grafton & Upton Railroad Company v. Surface Transportation Board and United States of America

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 28, 2025 Decided June 5, 2026
No. 25-1058
GRAFTON & UPTON RAILROAD COMPANY,
PETITIONER
v.
SURFACE TRANSPORTATION BOARD AND UNITED STATES OF
AMERICA,
RESPONDENTS
TOWN OF HOPEDALE, MASSACHUSETTS,
INTERVENOR
On Petition for Review of an Order
of the Surface Transportation Board
David L. Meyer was on the brief for petitioner. With him
on the briefs were John M. Scheib and Emily S. Mordecai.
Sarah Yurasko was on the brief for amicus curiae for
petitioner American Short Line and Regional Railroad
Association
Erik G. Light, Attorney, Surface Transportation Board,
argued the cause for respondents. With him on the brief were

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Robert B. Nicholson and Avi Grunfeld, Attorneys, U.S.
Department of Justice, Anika S. Cooper, General Counsel,
Surface Transportation Board, and Adam M. Kress, Acting
Deputy General Counsel.
Sean Grammel argued the cause for intervenor. With him
on the brief were David S. Mackey, W. Eric Pilsk, and Charles
A. Spitulnik.
Before: PILLARD and WALKER, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed PER CURIAM.
PER CURIAM: Grafton & Upton Railroad thinks it
purchased a parcel of land in Hopedale, Massachusetts. It
wants to build a railroad on that land.
Hopedale thinks Grafton does not own the land. It points
to a state law giving the town a right of first refusal when
certain land is sold.
Hopedale sued Grafton in Massachusetts state court. But
while that suit was pending, Grafton petitioned before the
Surface Transportation Board. It asked the Board to declare
that the Interstate Commerce Commission Termination Act
preempts the state law.
The Board denied Grafton’s petition — as do we.
I
A
Grafton & Upton Railroad Company owns and operates a
16.5-mile rail line in Massachusetts. The line runs from

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Milford through Hopedale to North Grafton, where it connects
to the national freight network. To support recent growth by
constructing a new transloading facility along that line, Grafton
sought to acquire and develop a 155-acre parcel in Hopedale
owned by the One Hundred Forty Realty Trust.
Years earlier, the Trust had voluntarily applied for and
obtained certification of roughly 130 acres of the land as forest
land under Massachusetts General Law Chapter 61. That
statute allows landowners to obtain a reduced tax rate on
qualifying forest land. See Mass. Gen. Laws ch. 61, § 2. In
exchange, the owner must notify the municipality before
selling the land for, or converting it to, “residential, industrial
or commercial use.” Id. § 8.
In that scenario, the municipality holds a right of first
refusal to match a bona fide offer, or — if the owner plans to
convert the land without a sale — an option to purchase at fair
market value. Id. No sale or conversion of the certified forest
land is valid until the municipality’s option period has expired.
Id. A landowner may elect to remove its parcel’s Chapter 61
designation by paying roll-back taxes, id. § 3, but Grafton does
not contend that occurred.
In June 2020, Grafton and the Trust agreed that Grafton
would buy the parcel for $1.175 million. To comply with
Chapter 61, the Trust sent Hopedale a notice of intent to sell
after it reached the initial sale agreement with Grafton. But the
notice didn’t distinguish the price of the contiguous non-forest
portion of the parcel from the purchase price for the classified
forest land (which price, if bona fide, Hopedale would have to
match to exercise its Chapter 61 rights). So Hopedale
responded that the Trust’s notice was deficient under Chapter
61 and advised the Trust that it reserved all rights and remedies
available to it regarding its right of first refusal.

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Rather than correct the deficiency, the Trust withdrew the
notice and stated that any future sale or conversion would be
“subject to a new Notice of Intent.” Hopedale told the Trust it
believed the withdrawal was ineffective and that the town
retained its right of first refusal. Neither the Trust nor Grafton
sent any new notice of intent to sell or convert after that initial
notice.
Instead, in October 2020, Grafton and the Trust structured
a transaction that was different in form but had nearly the same
effect. Grafton paid $1.175 million to purchase a small,
unforested portion of the parcel and to acquire 100% of the
Trust’s beneficial interest. As a result, Grafton claimed to have
obtained control of the entire property.
On October 15, 2020, Grafton notified Hopedale that it had
acquired full beneficial ownership of the Trust. Six days later,
Hopedale again asserted its Chapter 61 rights in a letter to
Grafton. It explained that under Massachusetts law, the
transfer of beneficial interest constituted a transfer of title that
gave the Town an independent opportunity to exercise its right
of first refusal.
At a Special Town Meeting later that week, residents voted
in favor of the Town purchasing the land. In the meantime,
Grafton had begun clearing the property of trees, which
Hopedale contends gave rise to yet another opportunity to
exercise its right of first refusal. The Town then sued in
Massachusetts Land Court to stop Grafton from clearing trees
and to enforce its Chapter 61 purchase rights, and Grafton
petitioned the Board for a declaration that the Interstate
Commerce Commission Termination Act (ICCTA1) preempts
Chapter 61.
1 For anyone curious, ICCTA can be pronounced ICK-tuh.

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The dispute has since taken several (more) turns.
Hopedale’s Select Board and Grafton reached a settlement
agreement under which Hopedale would purchase part of the
land and waive its right of first refusal. The parties then filed
for dismissal of their respective suits at the Land Court and the
Board. But several town taxpayers sued, claiming — among
other things — that the Select Board lacked authority to settle
without town approval. See Reilly v. Town of Hopedale, No.
2185-cv-238, 2021 WL 6297927, at *3–5 (Mass. Super. Nov.
4, 2021), judgment entered, 2021 WL 6973730 (Mass. Super.
2021), and opinion clarified, 2022 WL 20842182 (Mass.
Super. 2022), and aff’d, 102 Mass. App. Ct. 367, 206 N.E.3d
572 (2023).
The Massachusetts Superior Court agreed with the
taxpayers and enjoined execution of the settlement agreement.
Id. at *3–6. Then, after further proceedings, the Land Court
vacated the stipulation of dismissal.
After all of that, according to the parties, Hopedale’s suit
to enforce its Chapter 61 purchase right is now in discovery in
state court.
B
With the revival of Hopedale’s state-court suit to enforce
its Chapter 61 right to prevent Grafton’s acquisition, Grafton
again petitioned the Surface Transportation Board for a
declaratory order that ICCTA preempts Hopedale’s exercise of
Chapter 61.
ICCTA grants the Board exclusive jurisdiction over:
(1) transportation by rail carriers . . . and

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(2) the construction, acquisition, operation,
abandonment, or discontinuance of . . . [rail]
facilities.
49 U.S.C. § 10501(b). ICCTA provides that its remedies
“with respect to regulation of rail transportation are exclusive
and preempt the remedies provided under Federal or State
law.” Id.
The Board denied the petition. It noted that Grafton’s
renewed petition appeared to have abandoned any argument for
facial or categorical ICCTA preemption of Chapter 61, and in
any event observed that Chapter 61’s right-of-first-refusal
provisions “do not intrude on matters that are directly regulated
by the Board.” See Grafton & Upton Railroad Co.—Petition
for Declaratory Order, FD 36464, slip op. at 7 (STB served
Dec. 18, 2024). The Board acknowledged that “[i]t is difficult
to imagine a broader statement of Congress’s intent to preempt
state regulatory authority over railroad operations” (quoting
City of Auburn v. United States, 154 F.3d 1025, 1030 (9th Cir.
1998)), but held that ICCTA does not oust Chapter 61. Instead,
it recognized Chapter 61 as a generally applicable state
property-acquisition rule not “subject to categorical
preemption” just because a would-be buyer might have plans
to build railroad facilities on land the potential seller had had
certified as forest land. Id. at 7.
The Board then turned to Grafton’s as-applied preemption
arguments. Grafton asserted that, given “the unique factual
circumstances” here, Hopedale’s right of first refusal poses an
unreasonable burden on or interference with Grafton’s railway
land use. According to Grafton, its tree-clearing and other site
work amounted to rail activities on the site supporting ICCTA
preemption of a Chapter 61 claim that could interfere with
those activities. Id. at 9.

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The Board held that Hopedale’s assertion of its Chapter 61
rights in this situation “would not unreasonably burden or
interfere with rail transportation.” Id. at 8–9. Consistent with
its prior decisions, the Board explained that state law
determines property ownership and that a municipality may
“eject a railroad . . . if the court determines that the railroad
does not have a state law property interest in the land.” Id. at
9 (citing City of Milwaukie—Petition for Declaratory Order,
FD 35625, slip op. at 4 (STB served Mar. 25, 2013)).
Grafton now petitions for review.
II
We review the Board’s order under the Administrative
Procedure Act. See Eagle County v. Surface Transportation
Board, 82 F.4th 1152, 1174 (D.C. Cir. 2023), rev’d and
remanded on other grounds sub nom. Seven County
Infrastructure Coalition v. Eagle County, 145 S. Ct. 1497
(2025). Under that framework, we will set aside the Board’s
action if it is arbitrary or capricious, contrary to law, in excess
of statutory authority, or unsupported by substantial evidence.
See 5 U.S.C. § 706(2)(A)–(C), (E). We assess questions of
statutory interpretation — including whether ICCTA preempts
state law — using the court’s independent judgment and
consider the Board’s reasoning only to the extent it is
persuasive. Loper Bright Enterprises v. Raimondo, 144 S. Ct.
2244, 2262 (2024).
Grafton challenges the Board’s decision on two grounds.
First, it contends that Chapter 61 is preempted by ICCTA
because Chapter 61 cannot be “used to force the sale of
property under development by a railroad for rail
transportation.” Pet’r’s Br. at 25–26. Second, it argues that the
Board erred (a) by failing to consider whether Hopedale’s
invocation of Chapter 61, as applied, would unreasonably

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burden Grafton’s “ability to provide rail transportation services
to its current and potential future customers,” id. at 43, and
(b) by concluding that Grafton had not relied on the settlement
agreement when it developed the property. Id. at 49.
As a general matter, ICCTA preempts state law that would
control or frustrate a railroad’s use of its own land for rail
transportation. See 49 U.S.C § 10501(b). But ICCTA does not
displace generally applicable property law governing land a
railroad does not own. And whether Grafton has a valid
property interest in the land remains a contested issue in the
Massachusetts litigation. So Grafton’s arguments fall short.
A
The Board correctly held that ICCTA does not preempt
Chapter 61’s right-of-first-refusal provisions.
ICCTA preempts state laws that “have the effect of
managing or governing rail transportation,” but not those
“having a more remote or incidental effect on rail
transportation.” Delaware v. Surface Transportation Board,
859 F.3d 16, 18 (D.C. Cir. 2017) (quoting New York
Susquehanna & Western Railway Corp. v. Jackson, 500 F.3d
238, 252 (3d Cir. 2007)). The Board has treated laws as
preempted when they intrude into its regulated areas — “rates,
services, construction, or abandonment” — or when they
functionally block a railroad from constructing or maintaining
facilities or conducting operations, including through
permitting or preclearance regimes. CSX Transportation,
Inc.—Petition for Declaratory Order, FD 35832, slip op. at 4
(STB served July 31, 2015).
The principle is straightforward: “The interstate rail
network could not function properly if states and localities
could impose their own potentially differing standards for

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railroad activities that are an integral part of, and directly affect,
rail transportation.” Id. But the Board has not applied this
rationale to property-acquisition laws. It has instead
recognized that state and local exercises of traditional police
powers fall outside § 10501(b) so long as “they do not
unreasonably interfere with railroad operations or the Board’s
regulatory programs.” Id.
Chapter 61 fits none of the categories that trigger
preemption. It does not intrude into any field the Board
regulates — rates, services, construction, or abandonment. It
is not a permitting or preclearance regime that requires the
railroad to obtain state approval before developing land it
owns. It creates no “differing standard[]” for railroad activities
in Massachusetts. Id.
Instead, Chapter 61 establishes a mechanism for the state
to buy property from an owner who accepted a tax benefit in
exchange for granting that right. It is a generally applicable
property-acquisition law. Though it may have the “incidental
effect” of preventing a railroad from acquiring land it seeks to
develop — just as many other right-to-purchase contracts
would — it does not “have the effect of managing or governing
rail transportation.” See Delaware, 859 F.3d at 18 (quoting
New York Susquehanna & Western Railway Corp., 500 F.3d at
252).
Consider this hypothetical. Milburn Pennybags owns land
that the Reading Railroad would like to purchase. But he won’t
sell. So the railroad sends him a check for the fair market value
of the land, asserts ownership, and prepares to build.
Pennybags then files a quiet title action in state court.
Does ICCTA preempt the state law that gives title of the
land to Pennybags and prevents the Railroad from building on
it? No, because ICCTA does not preempt generally applicable

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state property laws that “do not unreasonably interfere with
railroad operations or the Board’s regulatory programs.” CSX
Transportation, Inc.—Petition for Declaratory Order, slip op.
at 4. Indeed, not even Grafton argues that ICCTA preempts
every state law that prevents a railroad from acquiring land it
wants.
Here, Chapter 61 is a generally applicable property law
that may prevent Grafton from acquiring a valid interest in the
land it wants. Until that issue is resolved, the land is not
railroad property within the Board’s exclusive jurisdiction.
This is consistent with Board precedent. In City of
Milwaukie, even though the railroad claimed a property interest
in land it used to store railroad material, the Board deemed it
“appropriate for a state or municipal court to resolve the
parties’ property law dispute.” City of Milwaukie—Petition for
Declaratory Order, FD 35625, slip op. at 3 (STB served Mar.
25, 2013). And in Eastside Community Rail, the Board
explained that “disputes concerning state contract and property
law should be decided by the appropriate courts with expertise
in those matters, rather than by the Board.” Eastside
Community Rail, LLC—Acquisition and Operation
Exemption—GNP RLY Inc., FD 35730, slip op. at 3 (STB
served Mar. 8, 2022).
Grafton points to various Board orders and federal cases
for the proposition that the Board’s “broad and exclusive
jurisdiction over railroad transportation prevents the
application of state laws . . . if those laws would have the effect
of foreclosing, or unduly restricting, present or future
transportation by rail carrier.” See Pet’r’s Br. at 15 (citing
Grafton & Upton Railroad Co.—Petition for Declaratory
Order, FD 36696, slip op. at 7 (STB served Nov. 15, 2023)
(collecting cases)). But in each cited decision, the railroad

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already held a recognized property interest. None addresses
whether ICCTA preemption attaches before the railroad
establishes such an interest. Grafton identifies no authority that
extends preemption that far.
B
Grafton contends the Board’s preemption analysis also fell
short by failing to consider certain fact-specific ways in which
its activities on the disputed parcel are burdened by Hopedale’s
Chapter 61 claim. Id. at 43–52; see Franks Investment Co. v.
Union Pacific Railroad Co., 593 F.3d 404, 414 (5th Cir. 2010)
(laying out analytical framework for as-applied preemption
under ICCTA); Norfolk Southern Railway Co.—Petition for
Declaratory Order, FD 35701, slip op. at 3 (STB served Nov.
4, 2013) (same). We disagree.
Grafton’s burden argument focuses on two premises.
First, it argues that the Board should have considered whether
the Town’s exercise of its right of first refusal would burden
the railroad’s ability to find suitable property for business
expansion. Id. at 45–49. Second, Grafton asserts that the
Board should have considered the railroad’s reliance interest
when it developed the property after the Settlement Agreement.
Id. at 49–52.
These arguments again presuppose an answer to the issue
in dispute in state court: whether Grafton has ever held valid
title to the parcel.
For starters, Grafton failed to make its suitable-property
argument before the Board, so it is forfeited. In any event, it is
meritless. Grafton invokes Board precedent that the
application of a statute or regulation may be preempted if it
would result in unreasonable interference with railroad
operations. Id. at 43 (citing Mid-America Locomotive and Car

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Repair, Inc.—Petition for Declaratory Order, FD 34599, slip
op. at 5 (STB served June 6, 2005)). But Grafton points to no
authority that assesses potential interference with railroad
operations before the railroad has established a legal interest in
the property.
The Board precedent cited by Grafton concerns property
that was undisputedly “railroad-owned.” Mid-America
Locomotive and Care Repair, Inc., slip op. at 5. If Hopedale
were attempting a “seizure by adverse possession” of
established railroad property,2 or if it were interfering with an
“established railroad right[]-of-way,” the analysis could well
differ. See Pet’r’s Br. at 42 (quoting Skidmore v. Norfolk
Southern Railway Co., 1 F.4th 206, 217 (4th Cir. 2021)). But
Grafton’s cited precedent is inapplicable where the railroad has
not established a property interest.
As for Grafton’s reliance theory, the Board reasonably
concluded that Grafton had not shown that it relied on the
settlement agreement in developing the property or that any
such reliance was reasonable under the circumstances. It found
that Grafton had already begun clearing trees months before it
entered the settlement agreement — at a time when any
reliance could not have been reasonable. And the Board noted
that Grafton presented no evidence that any grading, clearing,
or acquisition work occurred while the settlement agreement
was in place.
Indeed, Grafton failed even to “specify the timing of the
engineering and development costs it purportedly incurred in
reliance on the settlement agreement,” Grafton & Upton
Railroad Co.—Petition for Declaratory Order, FD 36464, slip
op. at 8, facts relevant to reasonableness given that the
settlement agreement was in effect for less than a month before
2 See Petitioner’s Br. at 34 (attempting this framing).

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the successful court challenge was filed. No party appealed the
state court’s decision invalidating the agreement and Grafton
presented no argument to the Board that it was wrongly
decided. See id. Taken together, that evidence supports the
Board’s finding that Grafton did not perform site work in
reasonable reliance on a claim of ownership of the site.
More fundamentally, Grafton’s theory presumes that it
was developing property it undisputedly controlled. See id. at
39–40 (describing its rail development activities as “carried out
on property then controlled by Grafton (and still owned by 140
Trust), as to which Hopedale had at most a pending claim
asserting the right to take over that property”). But if the state
courts decide Grafton never validly acquired title, the situation
is different: Grafton was developing property it never legally
controlled under an unauthorized and unexecuted agreement.
Until the state court decides the property dispute, we cannot
properly assess Grafton’s reliance theory.
* * *
Grafton strains to reframe this case as if it already owns
and controls the parcel. But Chapter 61 is a generally
applicable state law under which a municipality may enforce
its right of first refusal before covered forest land can be
conveyed to a railroad (or any other potential owner). As such,
it is not categorically preempted by ICCTA. And here, Grafton
lacks any claim that Hopedale’s exercise of Chapter 61
somehow unreasonably burdens rail transportation on the facts
as the Board found them.
For these reasons, we deny Grafton’s petition for review
of the Board’s order.
So ordered.

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