BNSF Ry. Co. v. Tri–City & Olympia R.R. Co.
| Decision Date | 14 December 2011 |
| Docket Number | No. CV–09–5062–EFS.,CV–09–5062–EFS. |
| Citation | 835 F.Supp.2d 1056 |
| Court | U.S. District Court — District of Washington |
| Parties | BNSF RAILWAY COMPANY, Plaintiff, Union Pacific Railroad Company, and Port of Benton, Plaintiff–Intervenors, v. TRI–CITY & OLYMPIA RAILROAD COMPANY LLC, Defendant. |
OPINION TEXT STARTS HERE
Leland Barrett Kerr, Patrick J. Galloway, Kerr Law Group, Kennewick, WA, Matthew R. Brodin, Timothy R. Thornton, Briggs and Morgan, PA, Minneapolis, MN, for Plaintiff.
Tim D. Wackerbarth, Lane Powell, P.C., Rob J. Crichton, Keller Rohrback, LLP, Seattle, WA, Lucinda Jean Luke, Thomas A. Cowan, Jr., Cowan, Moore, Stam, Luke & Petersen, Richland, WA, for Intervenors Plaintiffs.
David Lawrence Meyer, Morrison & Foerster, LLP, Washington, DC, Derek F. Foran, Morrison & Foerster, LLP, San Francisco, CA, Nicholas D. Kovarik, Dunn & Black, PS, Spokane, WA, Paul J. Petit, Kennewick, WA, Robert A. Dunn, Dunn & Black, PS, Spokane, WA, Brandon L. Johnson, Minnick Hayner, P.S., Walla Walla, WA, for Defendant.
ORDER GRANTING BNSF'S MOTION FOR SUMMARY JUDGMENT, DENYING TCRY'S MOTION FOR SUMMARY JUDGMENT, AND DENYING ALL OTHER PENDING MOTIONS AS MOOT
Before the Court, without oral argument, are Plaintiff BNSF Railway Company's (hereinafter “BNSF”) Motion for Summary Judgment, ECF No. 267, and Defendant Tri–City & Olympia Railroad Company LLC's (hereinafter “TCRY”) Motion for Summary Judgment, ECF No. 273. Also before the Court are BNSF's Motion to Compel Discovery Propounded to Defendant Tri–City & Olympia Railroad Company, L.L.C., ECF No. 305, and TCRY's Motion for Protective Order, ECF No. 316. After reviewing the submissions of the parties and applicable authority, the Court is fully informed. For the reasons discussed below, the Court grants BNSF's Motion for Summary Judgment, denies TCRY's Motion for Summary Judgment, and denies all other pending motions as moot.
I. BACKGROUND1A. 1947 Agreement
On November 6, 1947, the United States, acting through the U.S. Atomic Energy Commission (“Commission”), entered into an agreement (“1947 Agreement”) with several railroads to establish service to the Hanford Nuclear Reservation (“Hanford site”). BNSF and Union Pacific Railroad Company (“UP”), the undisputed successors-in-interest to the 1947 Agreement, were granted “equal joint” operating rights over trackage beginning near Kennewick and extending north of Richland to the Hanford site (“Richland Trackage”).
The 1947 Agreement identifies the rights of the parties to railway lines as shown on an August 25, 1947 map attached to the Agreement as “Exhibit A.” The 1947 Agreement acknowledges that “the Government has constructed on its property a line of railway ... extending from Hanford, Washington, southerly to a point near the north bank of the Yakima River,” and states as its purpose that “the Government desires to have a direct rail connection to the south so as to interchange business with [BNSF and UP's predecessors in interest].” To this end, Article V of the 1947 Agreement grants BNSF and UP's predecessors in interest the “equal joint right” to operate on the rail line and “to use said interchange facilities and wye for the purpose of interchanging business with the Government.” Article VII of the Agreement states that BNSF and UP's predecessors in interest “each of itself agrees to deliver and receive at said interchange facilities all business which either is obligated to transport as a common carrier railroad.” Article IX of the Agreement imposes an obligation on BNSF and UP's predecessors to “agree from time to time upon rules and regulations covering the movement of engines, cars and trains over the line B–E and on said interchange facilities.”
The map attached to the 1947 Agreement identifies several points, labeled A through E. Point A is in Kennewick, and points B, C, and D extend along the rail line in a northwesterly direction toward the Hanford site. The map identifies point E as a location to the north of Richland upon which interchange tracks were to be built. The government later constructed an interchange facility at Point E, and today, Point E is TCRY's rail yard and is still operated as an interchange facility. Though the 1947 map identified a location to the south of the interchange tracks for the wye, the wye was in fact later built to the north of the interchange tracks.2
In 1948, the 1947 Agreement was the subject of a ruling by the Interstate Commerce Commission (ICC). Because the government was the only “customer” served by BNSF and UP's predecessors, the railroads sought exemption from the required public convenience and necessity certifications for common rail carriers. The ICC's Order held that a certificate was required because the railroads would also provide common carrier services to businesses in and around Richland. The ICC's Order modified terms in the 1947 Agreement regarding payment and rights to termination, but left the remainder of the Agreement undisturbed.
B. 1961 Agreement
In 1961, the Commission entered into a second agreement (“1961 Agreement”) with the Railroads. Section 1 of the 1961 Agreement leased three specified areas of track to the railroads. Section 2 of the Agreement granted “the Railroads, and the industries served by them, the right to construct additional industrial spur, set-out, and such other tracks connecting with the Government's main tracks or classification yards as may be required to provide rail service for industries.” Section 3 of the 1961 Agreement states as follows:
The Commission hereby grants the Railroads the right to operate with their employees and equipment over such segments of the Government's tracks shown on Exhibit “A” as it may be necessary to use for the purpose of moving freight shipments to or from the tracks covered by this agreement.
Section 3's grant of authority was consistent with the agreement's stated purpose of allowing the railroads to operate on the United States' tracks “for the sole purpose of receiving and delivering shipments routed via the Railroads and consigned by or to shippers and receivers located on said spur or side tracks.”
The rail line depicted in a 1960 map attached as Exhibit A to the 1961 Agreement begins south of Richland at the Yakima River Bridge, and extends to a Department of Energy (DOE) “barricade” roughly one thousand feet north of the wye tracks. The three segments of track leased in the 1961 Agreement are all south of the interchange facility and wye.
In 1979, the United States entered into an agreement with the railroads converting the 1961 lease agreement into a permit so that the tracks could be classified as surplus under the Federal Property and Administrative Services Act of 1949. This agreement deleted Sections 1 and 4 of the 1961 Agreement, which detailed the terms of the lease and the railroads' maintenance obligation, but left the 1961 Agreement's other provisions “in full force and effect.”C. 1998 Indenture
In 1998, the United States, acting through the DOE, conveyed ownership of a six-mile section of track to the Port of Benton (“Port”) through an Indenture, thereby assigning the DOE and Commission's rights under the 1947 and 1961 Agreements to the Port. The indenture stated that the 1947 and 1961 Agreements and the 1979 permit agreement governed access to the Railroad. The Indenture also stated that the Port, as assignee, agreed to be bound by the obligations and considerations in the United States' permit. As a result of these agreements, the Port has the right to terminate BNSF and UP's rights to use the Richland Trackage upon six months notice.
D. Interchange Agreement
On October 1, 1998, the Port entered into a Maintenance and Operation Agreement with TCRY's predecessor, Livingston Rebuild Center, Inc. (“Livingston”), under which it agreed to pay Livingston $325, 000 per year for the maintenance of the Richland Trackage. These contractual rights and obligations were subsequently assigned to TCRY.
In May 2000, BNSF and TCRY contracted to interchange cars going into the Richland Trackage (“Interchange Agreement”). They exchanged cars at the Richland Junction, and TCRY served BNSF's customers along the Richland Trackage. TCRY maintained the trackage at its own expense and began charging a per-car fee for its services. This contract specifically reserved BNSF's rights under the 1947 and 1961 Agreements.
In a September 12, 2000 letter to then-TCRY President John Haakenson, the Port's Assistant Executive Director Scott Keller acknowledged that the Port was paying TCRY to maintain the railroad under a contract that allowed TCRY to charge a fee for its railroad operations, the revenue from which would offset the cost of maintenance. Recognizing that UP was using the Richland Trackage without paying a fee, the Port directed TCRY “to give written notice to [UP] terminating its rights to use the Port of Benton track.” Beginning November 14, 2000, UP could no longer continue its unauthorized use of the Richland Trackage: it would need to establish an interchange agreement with TCRY.
From approximately April 2001 through November 2001, TCRY and BNSF continuously disagreed about BNSF's right to operate on the Richland Trackage. BNSF claimed the 1947 and 1961 Agreements allowed it to directly operate on the Richland Trackage without interchanging; TCRY maintained that BNSF could only operate on the Richland Trackage if it operated under the Interchange Agreement. This disagreement about BNSF's rights to operate on the Richland Trackage forms the essential controversy before the Court today.
E. Railroad Lease
In 2002, TCRY and the Port negotiated a lease agreement (“Railroad Lease”) that authorized TCRY to provide rail and track maintenance services on the Richland Trackage. Paragraph 7.4 of the lease agreement states that TCRY “shall not take any actions which will amend, modify, terminate or invalidate any existing contracts which the Port has with any other railroad carrier, without the Port's...
To continue reading
Request your trial