Anderson v. Bnsf Ry. Co.

• Decision Date: 30 January 2009
• Docket Number: No. 08-232.,08-232.
• Citation: 291 S.W.3d 586,375 Ark. 466
• Parties: Roger and Ruth ANDERSON, d/b/a Anderson Auto Salvage, Appellant, v. BNSF RAILWAY COMPANY, Appellee.
• Court: Arkansas Supreme Court

291 S.W.3d 586

375 Ark. 466

Roger and Ruth ANDERSON, d/b/a Anderson Auto Salvage, Appellant, v. BNSF RAILWAY COMPANY, Appellee.

No. 08-232.

Supreme Court of Arkansas.

January 30, 2009.

Eichenbaum, Liles & Heister, P.A., by Christopher O. Parker, Little Rock, for appellants.

Barrett & Deacon, by John C. Deacon, Brandon J. Harrison, and Andrew H. Dallas, Jonesboro, for appellee.

ELANA CUNNINGHAM WILLS, Justice.

This case requires the court to decide whether federal law preempts an order of the Arkansas State Highway Commission (Commission) forcing Burlington Northern Santa Fe Railway Company (BNSF) to reopen a private "at-grade" railroad crossing.¹ We hold that the Interstate Commerce Commission Termination Act of 1995 (ICCTA) preempts the Commission's jurisdiction in this instance; therefore, we vacate the Commission's order.

The private railroad crossing at issue in this case is located between the cities of Hoxie and Walnut Ridge and has been in existence for over eighty years.² In 1999, Roger and Ruth Anderson entered into an agreement to purchase the property accessed by the crossing and began using the property for their salvage yard business, Anderson Auto Salvage. BNSF and the Andersons later began negotiations to enter into an "Agreement for Private Crossing." BNSF drafted an agreement that, among other provisions: (1) granted the Andersons a license "to construct, maintain, and use" the crossing; (2) required the Andersons to pay BNSF $10,000; (3) required the Andersons to indemnify BNSF; and (4) required the Andersons to procure and maintain liability insurance in connection with the crossing. The draft agreement also provided that either party could terminate the license by serving the other party thirty-days' notice.

The Andersons refused to sign the agreement, and BNSF later posted notice that the crossing would be closed. After the Andersons contacted city officials in Walnut Ridge regarding the dispute, both the Walnut Ridge city attorney and the Andersons requested that the Commission hold a hearing on BNSF's proposed closing of the crossing. The Commission's counsel sent letters to BNSF asserting that an administrative hearing was required under Ark.Code Ann. § 23-12-304(b) before BNSF could close the crossing.³ BNSF responded by contending that the Commission's authority to prevent it from closing a private crossing was preempted by federal law, and BNSF later barricaded the crossing.

The Commission held a hearing and ordered BNSF to reopen the crossing within ten days after it found that: the Commission's action was not preempted by ICCTA and was authorized by Ark.Code Ann. § 23-12-304(b); BNSF merely held an easement in perpetuity for railway purposes over the Andersons' property; there were no unsafe conditions that supported BNSF's decision to close the crossing; and the crossing was the Andersons' only access to their property. Further, the Commission ordered BNSF to draft an agreement with the Andersons, modeled on an earlier 1921 agreement regarding the crossing that was submitted into evidence, including a provision that stated that "Railway Company may seek to eliminate this crossing by requesting a hearing for that purpose, with notice to Licensee, before the Arkansas State Highway Commission." The Commission's order also prohibited BNSF from charging the Andersons a fee "because no fee was recited in the 1921 agreement," and likewise prohibited BNSF from requiring the Andersons to procure and maintain "insurance of any kind."

BNSF appealed the Commission's decision to the Craighead County Circuit Court, repeating its arguments before the Commission and asserting several procedural errors underlying the Commission's findings and order. Upon review, the circuit court vacated the Commission's order holding that ICCTA preempted the Commission's authority over any matter in the case, including the safety issues raised by BNSF as well as "the terms and conditions which a railroad may impose in connection with permissive use of such private crossing." Additionally, the circuit court held that the Commission had essentially and unlawfully "prejudged" the issues underlying the dispute between BNSF and the Andersons and committed other procedural errors, as well as exceeded the Commission's constitutional and statutory authority by mandating the terms of the private crossing agreement.

The Andersons bring this appeal, arguing that the circuit court erred in holding that the Commission's authority was preempted by ICCTA. The Andersons also argue that the circuit court erred for the following reasons: their property right in the private crossing was not a revocable license; the Commission properly allocated the burden of proof according to the hearing procedures set out under Ark.Code Ann. § 23-12-304; substantial evidence supported the Commission's findings; and that any procedural errors "did not justify [the circuit court] declaring the hearing officers findings and conclusion void."

We review the Commission's order under the Arkansas Administrative Procedure Act (APA), Ark.Code Ann. §§ 25-15-201 to -218 (Repl.2002 & Supp. 2007). Review of administrative agency decisions is limited in scope. Ark. Dep't of Human Servs. v. Bixler, 364 Ark. 292, 219 S.W.3d 125 (2005). The appellate court's review is directed not to the decision of the circuit court but to the decision of the administrative agency. Id. The APA provides that a reviewing court may reverse or modify the agency's decision if the decision: (1) violates the constitution or a statute; (2) exceeds the agency's statutory authority; (3) is affected by an error of law; (4) is procedurally unlawful; (5) is unsupported by substantial evidence in the record; or (6) is arbitrary, capricious, or is an abuse of discretion. Ark.Code Ann. § 25-15-212(h); Ark. Dep't of Correction v. Bailey, 368 Ark. 518, 247 S.W.3d 851 (2007).

The primary question presented by this case is whether 49 U.S.C. § 10501(b) of ICCTA preempts the Commission's exercise of jurisdiction to order BNSF to reopen a private crossing under Ark.Code Ann. § 23-12-304. The Supremacy Clause of the United States Constitution provides that state laws that "interfere with, or are contrary to the laws of congress, made in pursuance of the constitution" are invalid. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824); U.S. Const. art. VI, cl. 2. Under the principle of federal law supremacy, there are three ways that federal law can preempt state law: (1) where Congress makes its intent to preempt state law explicit in statutory language; (2) where state law regulates conduct in a field that Congress intends for the federal government to occupy exclusively; or (3) where there is an actual conflict between state and federal law. English v. Gen. Elec. Co., 496 U.S. 72, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). Where a federal statute contains an express preemption clause, the focus of statutory construction is "on the plain wording of the clause, which necessarily contains the best evidence of Congress' pre-emptive intent." CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993).

As the title of the legislation implies, ICCTA abolished the Interstate Commerce Commission, while simultaneously creating the Surface Transportation Board (STB) to replace it and to perform many of the same regulatory functions. See Friberg v. Kan. City S. Ry. Co., 267 F.3d 439 442 (5th Cir.2001). ICCTA contains an express preemption clause, stating as follows:

(b) The jurisdiction of the Board 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 rules), practices, routes, services, and facilities of such carriers; and

(2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State,

is exclusive. Except as otherwise provided in this part, the remedies provided under this part with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.

49 U.S.C. § 10501(b) (2000).

This court has addressed issues of federal preemption and ICCTA in two cases — Ouachita R.R., Inc. v. Circuit Court of Union County, 361 Ark. 333, 206 S.W.3d 811 (2005) and 25 Residents of Sevier County v. Ark. Highway & Transp. Comm'n, 330 Ark. 396, 954 S.W.2d 242 (1997). In the former, Ouachita Railroad brought an ejectment action against a married couple, the Harbours, alleging that they had wrongfully taken possession of the railroad's land and removed the company's railroad tracks. The defendant Harbours answered the complaint and counterclaimed, contending that they acquired the land through adverse possession and that Ouachita Railroad had abandoned the tracks.

Ouachita Railroad filed a motion for summary judgment, arguing that "the STB had exclusive jurisdiction over the abandonment or discontinuation of use of the right-of-way, and that the STB's authority to regulate the matter preempted all state law relating to it." 361 Ark. at 338-39, 206 S.W.3d at 813. The chancery court issued a letter opinion, finding that the question of whether the property had been abandoned by the railroad could only be resolved by the STB, but the court retained jurisdiction to address state-law claims after the STB's final determination. As directed by the chancery court, the Harbours filed a petition with the STB requesting a waiver of the filing fee, which was declined. Ouachita Railroad then filed a supplemental motion for summary judgment, arguing that, because the STB denied the Harbours' request to waive the filing fee, "since the court had already determined that the STB had exclusive jurisdiction over the Harbours' counterclaim, it was...