City of Lincoln v. Surface Transp. Bd.

• Decision Date: 12 July 2005
• Docket Number: No. 04-3453.,04-3453.
• Parties: CITY OF LINCOLN, Petitioner, v. SURFACE TRANSPORTATION BOARD; United States of America, Respondents.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 858

414 F.3d 858

CITY OF LINCOLN, Petitioner, v. SURFACE TRANSPORTATION BOARD; United States of America, Respondents.

No. 04-3453.

United States Court of Appeals, Eighth Circuit.

Submitted: May 13, 2005.

Filed: July 12, 2005.

Charles H. Montange, argued, Seattle, WA, for appellant.

Alice C. Saylor, argued, the Surface Transportation Board, Washington, D.C, for appellee.

Before MORRIS SHEPPARD ARNOLD, LAY, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

The City of Lincoln, Nebraska sought to acquire a portion of the right of way of a rail line owned by Lincoln Lumber Company (LLC) to use as a bicycle and pedestrian trail and to improve the city's storm drainage system. Lincoln planned to acquire the property through state eminent domain law and petitioned the Surface Transportation Board for a declaratory order that the proposed acquisition would not be federally preempted as state regulation of rail transportation under 49 U.S.C. § 10501(b). The Board determined that the proposed taking was preempted, and Lincoln seeks review of this order. We affirm.

The rail line at issue runs between 19th Street and 24th Street in Lincoln and has a 100 foot right of way. LLC acquired this segment from the Union Pacific Railroad Company in 2000 through the offer of financial assistance procedures provided in 49 U.S.C. § 10904. LLC is currently the only rail customer on the dead end line and receives approximately 50 carloads annually. The Omaha, Lincoln & Beatrice Railway Company (OLB) owns a connecting line and provides rail service to LLC pursuant to an operating agreement. LLC has leased portions of the right of way to neighboring entities which have primarily used the space for parking, but LLC is trying to terminate these long term leases. LLC uses other portions of the right of way for storage.

Lincoln wants to acquire a 20 foot strip along the northern edge of the right of way to improve its storm drainage system and complete the Husker Link Trail, a commuter trail for pedestrians and bicyclists. The storm sewer project would run along the whole five block length, but the Husker Link Trail would not since alley space between 23rd Street and 24th Street is available for the trail. The completed trail would connect the University of Nebraska main campus to its east campus and connect downtown Lincoln to the Mo Pac East Trail, which extends from Lincoln to Omaha. Lincoln planned to erect a chainlink fence along the edge of the trail to separate it from the rest of the right of way.

After LLC indicated to Lincoln that it would argue federal preemption if Lincoln instituted state condemnation proceedings, Lincoln sought a declaratory order from the Board that it would not be preempted. In its petition Lincoln asserted that LLC's rail operations would be unaffected by its proposed projects and cited other Board decisions in which railway property was converted to public use. The city also included the verified statement of Walter Schuchmann, a rail operations consultant. Schuchmann had reviewed the city's plans; examined various maps, photos, and surveys; conducted interviews; and made a site visit. His statement focused on existing obstructions of the right of way, including use of the leased portions for parking, a utility line running between the rail and the proposed trail, and lumber storage in the area foreseen for the trail. He concluded that these existing obstructions interfered with rail operations more than the city's projects would.

LLC originally did not oppose the storm sewer project or construction of the trail between 19th Street and 22nd Street, but it changed its position about the trail after the Board commenced proceedings. In its reply brief it stated that it would not be able to get equipment to the tracks for maintenance or to handle derailments if its right of way were narrowed. LLC expressed concerns about the safety of trail users in the case of a derailment or while I joists or large pieces of lumber were being unloaded from center beam cars. These concerns were heightened by the fact that its calculations showed that at one point the trail would be only 7.5 feet from the rail. LLC also projected significant increases in rail traffic and described its plans to develop a railroad terminal area and rebuild a sidetrack. It proposed several alternative routes for the trail.

Lincoln stated in its rebuttal that the possibility of alternative routes was irrelevant to whether the trail would interfere with LLC's operations and that the alternative proposals were unworkable. It contested LLC's claims that the trail would be too close to the rails for safety, asserting that the trail would generally be more than 30 feet from the center line and that the fence running along the trail would never be closer than 10 feet from the center line. Lincoln contended that the northern 20 feet of the right of way between 22nd Street and 23rd Street, which LLC said it needed for unloading, has been used for storage and that LLC was only receiving on average one carload per year of I joists.

Included with the rebuttal was another statement from Schuchmann, the city's consultant, suggesting that the I joist shipments could be unloaded by different methods and that the current trackage could accommodate LLC's projected increase in rail traffic. He believed it unlikely LLC's line would be used by anyone else because other users would more likely use the nearby OLB facilities to avoid paying both rail servers. LLC sought to file a surrebuttal, and Lincoln's opposition to that motion included a statement by Schuchmann in which he addressed LLC's plans in more detail, explaining that in his view there would be no rail operation or business reason to reactivate a sidetrack or construct a terminal facility. The Board denied LLC's motion for leave to file a surrebuttal.

In its order the Board framed the issue as whether the proposed taking would prevent or unduly interfere with railroad operations and interstate commerce. If so, it would be preempted by 49 U.S.C. § 10501(b), as broadened by the ICC Termination Act of 1995 (ICCTA). The Board distinguished the cases relied on by Lincoln. It said that State of Texas¹ dealt with a relocation of a right of way instead of a narrowing and that the railway in Sacramento Regional Transit District² had voluntarily sold the right of way to the local government entity. The Board found that Lincoln had not adequately refuted LLC's contention that it needed all of the right of way to satisfy its present and future rail needs. LLC had argued to the Board that it currently used the space to move freight, store lumber, unload railroad cars, and stage unloaded freight for further movement into shipper facilities, and it asserted that it might rebuild a sidetrack and construct a terminal facility. According to the Board all of these activities are part of transportation by rail as defined in 49 U.S.C. § 10102(9), and the proposed trail could interfere with these transportation activities. Additionally, the Board determined that Lincoln had not adequately refuted LLC's contentions that the trail would create safety hazards. In conclusion it urged the parties to renew negotiations to resolve their dispute.

In its petition for review of the order, Lincoln advances several arguments with respect to the Husker Link Trail. Lincoln contends that the Board's decision is not supported by substantial evidence and is arbitrary and capricious, that it misallocated the burden of proof, and that it violated precedent. Lincoln also states that it needs clarification on the Board's action regarding the storm sewer project because it does not believe the disposition is clear from the order. It argues that the decision should be vacated if the Board intended to deny relief because acquisition of the right of way for that project is not...