Steve Thomas doesn't like his neighbor.

From a tree perch 30 feet off the ground, he can keep close watch on the next-door property in Hainesport, Burlington County, and snap photos of activities there.

He plants numbered flags in his yard, marking pieces of trash that blow from the neighbor's side, and complains to local, state and federal authorities about health and environmental concerns.

So far to no avail.

His neighbor is a solid-waste transfer station called the Hainesport Industrial Railroad. It serves as the drop point for trucks laden with building-demolition debris, which is dumped onto "tipping" floors there, then loaded onto rail cars and hauled to a disposal site in Ohio.

Because Thomas' neighbor is technically a federally regulated short-line railroad - and not a trash-transfer station - it is exempt from local and state environmental, health and safety regulations.

His complaints about noise, vibration, dust and pollution hazardous to his family have gone nowhere, derailed by the jurisdictional question.

"I've been fighting a losing battle for a long time," Thomas said as he gazed at a wall of stacked metal trash containers towering over his property. "My family can't even use the backyard anymore."

That might soon change. Thomas' problem – his backyard train wreck – and those of other residents living near railroad operations are now being scrutinized by a federal board that is likely to issue a decision in about a month.

The Surface Transportation Board's determination could affect operations at all 12 railroad trash-transfer stations in New Jersey and scores more across the country. Pennsylvania has no permanent rail trash stations, though the state monitors rail locations such as the tracks along the Schuylkill near South Street, where CSX allows its garbage-laden rail cars to linger.

The board appears poised to allow state regulatory monitoring of the railroad trash stations, officials said, although it still could affirm that the current railroad exemption is necessary to protect interstate commerce.

Board action can't come too soon for Steve Thomas, who grew up in the house on Mount Laurel Road and watched the Hainesport Industrial Railroad start operations next door last year.

Thomas lives there with his wife, Donna, and their twin 4-year-olds, and has waged a campaign against his neighbor ever since. He retired from Fort Dix in 1998.

"I can't cut the grass because I'm concerned about what's on my ground. That could be asbestos," he said, pointing to a white granular substance in the grass.

"We've had oil droplets from diesel fumes coming down on us, and the vibration from containers being dropped has made cracks in our walls. It affects everything.

"The large fish in our pond have died, and our dog has had sores on his paws and body - and is on steroids," Thomas said.

From the tree perch, Thomas can watch the debris-filled trucks enter the rail yard. The trucks are weighed and then enter a large building, where the trash is transferred to rail cars. The rail cars are then pushed down a siding to Conrail tracks and continue through Moorestown to Ohio.

The state Department of Environmental Protection and Burlington County Board of Health have received complaints about the railroad's noise and stacked trash containers. But state and local officials have not issued any citations.

The railroad declined to comment last week.

"There have been a couple dozen incidents out there and they've been investigated," Hainesport Township Administrator Paul Tuliano said. "Not one complaint has been founded.

"When we receive complaints, we relay them to the owner. We're closely monitoring the situation, and if we get legitimate complaints, we will act on them."

Tuliano, whose township receives a 50-cent-a-ton host fee from the railroad, said the federal court had ruled that railroad trash facilities fall under federal - not state or local - regulation.

"We're shut out of oversight," he said. "We have to work with the owner."

Court cases challenging the so-called short-line railroad loophole are pending in North Jersey, New York and Massachusetts.

Meanwhile, both of New Jersey's U.S. senators have sponsored a bill called the Clean Railroads Act that would allow states to regulate solid waste on rail property.

"Unregulated waste facilities, whether on a rail line or not, are bad for communities," said Sen. Frank Lautenberg (D., N.J.).

At a hearing before the Surface Transportation Board last month, Lautenberg said: "States like New Jersey need the ability to regulate them to protect the health and safety of their residents . . . While I have a bill that would give states the tools they need, the board could resolve this problem far sooner."

The Surface Transportation Board's decision could shortcut the litigation and the lawmaking. As more companies exploit the legal loophole and use rail lines as trash-transfer stations, pressure has mounted on the transportation board to make a distinction between oversight of the rails and trash.

Over the summer, days before his confirmation as the Surface Transportation Board's chairman, Charles "Chip" Nottingham wrote in a letter to Lautenberg that the board's "exclusive jurisdiction over rail operations was never intended to be applied to solid-waste possessing activities."

He said he would "interpret and apply the [federal] statute to ensure that only legitimate rail transportation providers receive the benefit of the federal preemption and only for what constitutes transportation."

Nottingham added: "I anticipate significant clarification of the differences between rail-transportation operations and processing and manufacturing operations."

Dennis Watson, a Surface Transportation Board spokesman in Washington, said last week that Nottingham and the other two board members "regard this as a high-priority issue and will look at it on an expedited basis."

The construction debris at short-line railroad dump stations, similar to the one next door to Thomas, can include high levels of arsenic and mercury, said Lautenberg and Sen. Robert Menendez (D., N.J.).

"It is unconscionable that anyone should be forced to live and work near garbage piles that are not simply unpleasant eyesores but contain materials that pose health and environmental dangers," Menendez said.

U.S. Rep. Frank Pallone, a Democrat who represents parts of Monmouth and Middlesex Counties, has sponsored a bill in the House similar to the Senate version backed by Menendez and Lautenberg.

"Railroad companies," Pallone said, "should not be allowed to exploit a supposed loophole in federal law to set up unregulated waste-transfer facilities."

Last week, standing at their kitchen table, Thomas and his wife displayed dozens of photos of the railroad operations behind them.

"We were here first," Donna Thomas said. "You don't put solid waste and hazardous waste next to residential homes. Our kids have to ride their bikes in the basement because they can't go outside."