Ass'n of Am. Railroads v. Hudson

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ASSOCIATION OF AMERICAN RAILROADS, Plaintiff, v. JEHMAL T. HUDSON, et al., Defendants.

CIVIL No. 1:23cv815(DJN)

United States District Court, E.D. Virginia, Alexandria Division

April 15, 2024

MEMORANDUM OPINION

DAVID J. NOVAK, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Defendants Stephen Brich and Michael Rolband's (“Brich and Rolband”) Motion to Dismiss the Amended Complaint, (ECF No. 47), and Defendant Jehmal T. Hudson's (“Hudson”) Motion to Dismiss the Amended Complaint, (ECF No. 49). For the reasons set forth below, the Court will GRANT the Motions to Dismiss, (ECF Nos. 47 and 49). Specifically, the Court will dismiss Counts I-II for lack of standing, Counts III-IV for failure to state a claim on the merits and Counts V-VI as barred by sovereign immunity.

I. BACKGROUND

Plaintiff the Association of American Railroads (“Plaintiff” or “AAR”) brings this action attacking the constitutionality of Virginia Code § 56-16.3, a state law that went into effect July 1 2023, and which gives Internet broadband service providers access rights to railroad property. Plaintiff seeks (i) declaratory relief holding that the Commonwealth's law violates federal and state constitutional and statutory law (ii) injunctive relief enjoining the Defendants in their official capacities from enforcing the law, and (iii) nominal damages and attorney fees against the Defendants in their personal capacities. The Court first examines the challenged statute, then overviews the Parties and six counts of the Amended Complaint.

At this stage, the Court must accept as true the facts set forth in the Amended Complaint (ECF No. 35). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Against this backdrop, the Court accepts the following facts as alleged for purposes of resolving the instant motion.

A. Preexisting Processes and Regulations of Railroads

Railroads have maintained policies and procedures regarding the installation of broadband services before the enactment of Va. Code § 56-16.3. AAR's two “Class I” members in Virginia - Norfolk Southern Railway Co. (“NSR”) and CSX Transportation, Inc. (“CSXT”) - maintain a process by which the relevant railroad or its outside contractors conducts an engineering and design review of any proposed broadband installation to ensure compliance with the railroad's engineering and safety requirements. (Am. Compl. ¶¶ 21-22.) Given that a broadband installation often requires railroad personnel to be on site for safety and operational purposes, broadband providers generally reimburse the railroads for certain charges related to administrative, engineering review and inspection costs. (Id.) Railroads also require that broadband installation applicants agree to standard contractual terms regarding maintenance, the relocation of crossings if necessary for railroad operations, indemnification and insurance coverage. (Id.)

The application process for a broadband installation takes substantial time, with applicants requiring several months on average to provide railroads with necessary information and then secure approval. (Id. ¶¶ 24-25.) Scheduling the installation of a broadband crossing of railroad property takes additional time, with railroads having to arrange flaggers, crossing site inspections, marking of utility lines and other logistical issues. (Id. ¶ 26.)

Railroads also face federal oversight. Since Congress' enactment of the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”), the Surface Transportation Board (“STB”) has maintained exclusive jurisdiction over (1) “transportation by rail carriers ... with respect to rates, classifications, rules ..., practices, routes, services, and facilities of such carriers” and (2) “the construction, acquisition, operation, abandonment, or discontinuance of [tracks] or facilities.” (Id. ¶¶ 31-32, citing 49 U.S.C. § 10501(b).) ICCTA applies to any “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,” along with “the road used by a rail carrier” and any “switch, spur, track, terminal, terminal facility, and a freight depot, yard, and ground, used or necessary for transportation.” 49 U.S.C. § 10102(6), (9)(A). The Amended Complaint notes that ICCTA provides that “a rail carrier cannot lawfully ‘abandon any part of its railroad lines' or ‘discontinue operation of all rail transportation over any part of its railroad lines' unless the STB ‘finds that the present or future public convenience and necessity' are satisfied.” (Am. Compl. ¶ 32, citing 49 U.S.C. § 10903(d).)

B. Va. Code § 56-16.3

Enacted by Virginia's General Assembly in 2023 as part of a push to expand broadband internet access in the Commonwealth, Va. Code § 56-16.3 extends a license to broadband service providers to cross and occupy railroad property, including “tracks, bridges, facilities, and all... rights of way or easements” for a one-time, default fee of $2,000 and direct expenses (which the provider pays to the railroad) not to exceed $5,000. Va. Code § 56-16.3(G), (I). The statute stipulates, in relevant part, that:

• “If a broadband service provider deems it necessary in the construction of its systems to cross the works of a railroad company, including its tracks, bridges, facilities, and all railroad company rights of way or easements, then the broadband service provider shall submit an application for such crossing to the railroad company,” see id § 56-16.3(B);

• “The railroad company shall approve the broadband service provider's crossing application within 35 days after the application is received,” id. § 56-16.3(C)(4); and

• “A broadband service provider that locates its fiber optic broadband line within a railroad right-of-way shall pay the railroad company for the right to make a crossing of the railroad company's works a license fee of $2,000 for each crossing.” Id. § 56-16.3(G).

The statute sets a $1,000 fee if the applicant's railroad crossing lies at “a section of track that has been legally abandoned pursuant to an order of a federal or state agency,” and “is not being used for railroad service.” Id. § 56-16.3(1). The measure exempts broadband providers from paying a license fee for “a crossing of the railroad company's works within a public right of-way.” Id. § 56-16.3(K).

To secure the right to cross railroad property, a broadband provider must submit an application to the railroad with design and construction plans for the proposed crossing, including “bore plans, fraction mitigation plans, dewatering plans, rigging and lifting plans, and any other pertinent plans deemed necessary and prepared by a registered professional engineer.” Id. § 5646.3(C)(1). The provider's application must also disclose “the location of the crossing, including whether it is located in a public right-of-way;” (2) “the anticipated duration of the work in the crossing;” and (3) “the areas in which the project personnel will work.'” Id. Broadband providers “shall be responsible for all aspects of the implementation of the physical crossing,” including compliance with “accepted industry standards,” but a railroad company would bear responsibility “for flagging operations and other protective measures that it deems appropriate during the actual construction of fiber optic broadband lines.” Id. § 56-16.3(F). The statute does not exempt broadband providers from any applicable state statutes and regulations regarding roadway safety, environmental protection, storm or groundwater management or related approval or permitting requirements. (Am. Compl. ¶ 45.)

A railroad in receipt of a provider's application for a crossing “shall approve the broadband service provider's crossing application within 35 days after the application is received,” unless the railroad petitions the Virginia State Corporation Commission (“SCC” or “the Commission”) for relief. Va. Code § 56-16.3(C)(2)-(4). The railroad may only seek relief on three bases: (1) the license fee does not suffice as “adequate compensation” for a particular crossing, (2) a proposed crossing will impose “undue hardship” on the railroad company, or (3) a proposed crossing “will create the imminent likelihood of danger to public health or safety.” Id. § 56-16.3(H). The SCC may then:

make any necessary findings of fact and determinations related to the adequacy of compensation, the existence of undue hardship on the railroad company, or the imminent likelihood of danger to public health or safety, as well as any relief to be granted, including any amount to which the railroad company is entitled in excess of the [default] license fee.

Id. The railroad can appeal a decision of the SCC to the Supreme Court of Virginia. Id. § 12.139. In Plaintiff's telling, the statute does not permit railroads to rely on a proposed crossing's failure to comply with railroad safety requirements or failure to agree to a railroad's “other standard conditions” as bases for rejecting a proposed crossing. (Am. Compl. ¶ 48.)

C. The Parties

Plaintiff an industry trade association representing freight and passenger railroads that operate nationwide and in Virginia, brings this action in its representative capacity on behalf of its member railroads that operate in Virginia. (Am. Compl. ¶ 9.) Plaintiff argues that the Court has jurisdiction over its “associational claim,” because: (1) AAR's “‘members would otherwise have standing to sue as individuals; (2) the interests at stake are germane to the group's purpose; and (3) neither the claim made nor the relief requested requires the participation of individual members in the suit.'” (Id., quoting Friends for Ferrell Parkway, LLC v. Stasko, 282 F.3d 315, 320 (...