Soo Line R. Co. v. Iowa Dept. of Transp.

• Citation: 521 N.W.2d 685
• Decision Date: 21 September 1994
• Docket Number: No. 93-853,93-853
• Parties: SOO LINE RAILROAD COMPANY, Appellant, v. IOWA DEPARTMENT OF TRANSPORTATION and the City of Spencer, Iowa, Appellees.
• Court: United States State Supreme Court of Iowa

Page 685

521 N.W.2d 685

SOO LINE RAILROAD COMPANY, Appellant, v. IOWA DEPARTMENT OF TRANSPORTATION and the City of Spencer, Iowa, Appellees.

No. 93-853.

Supreme Court of Iowa.

Sept. 21, 1994.

Rehearing Denied Oct. 17, 1994.

Patrick J. Nugent of C.P. Legal Services, Minneapolis, MN, for appellant.

Bonnie J. Campbell, Atty. Gen., and Carolyn J. Olson, Asst. Atty. Gen., for appellee Iowa Dept. of Transp.

Donald J. Hemphill of Hemphill Law Office, Spencer, for appellee City of Spencer.

Considered by McGIVERIN, C.J., and CARTER, LAVORATO, SNELL, and TERNUS, JJ.

TERNUS, Justice.

This case is an appeal of agency action pursuant to Iowa Code chapter 17A (1991). The Soo Line Railroad Company (Soo Line) appeals from the district court's decision on judicial review. The district court upheld the Department of Transportation's (DOT) grant of the City of Spencer's request for an additional grade crossing. Soo Line argues that (1) the DOT unconstitutionally delegated its decision-making authority; (2) the DOT failed to explain the standards for its decision to allow a new crossing; (3) the DOT erroneously refused to close other crossings; (4) the DOT incorrectly allocated the costs and failed to explain the basis for the allocation it made; and (5) the DOT's decision results in a taking of Soo Line's property without due process or just compensation. We affirm.

I. Background Facts and Proceedings.

In 1991 the City of Spencer, Iowa (City) filed an application with the DOT concerning a grade crossing dispute it had with the Soo Line Railroad Company. See Iowa Code § 327G.16 (1991) (where railroad and city cannot agree on location of street crossing, either party may apply to the DOT to resolve the disagreement). This dispute arose when the City requested permission to extend First Avenue West across the railroad tracks in downtown Spencer. The City wanted to divert traffic onto First Avenue West primarily to reduce traffic on the City's main thoroughfare, Grand Avenue.

Soo Line resisted the establishment of the crossing. Its primary objections centered on (1) the existence of six crossings within a mile of the proposed crossing, and (2) the difficulties Soo Line would encounter in its switching operations. Soo Line requested that one or more existing crossings be closed if the new crossing was allowed.

The City's application was assigned to an administrative law judge (ALJ) who conducted an evidentiary hearing. See id. §§ 327G.16, .17 (the application to the DOT is referred to the department of inspections and appeals for hearing and decision). The ALJ granted the City's request for an additional crossing and refused to close any of the existing crossings. He assessed the construction costs to the City and the maintenance costs to Soo Line. In addition, the ALJ required Soo Line to grant an easement to the City for the crossing. The City was ordered to pay Soo Line $10,000 for this easement.

Soo Line appealed the ALJ's decision to the DOT. See id. § 327G.17 (the order of the department of inspections and appeals is subject to review by the DOT). Soo Line requested that the director of the DOT, not the director's designee, decide the case. However, the director appointed a designee to make the final agency decision. The director's designee affirmed the ALJ's order. ¹

Soo Line filed a petition for judicial review of the agency action. See id. (the decision of the DOT is the final agency action). The district court affirmed the agency's decision and Soo Line appealed. See id. § 17A.20 (losing party in judicial review proceeding may appeal as in other civil cases).

II. Scope of Review.

Our review is for correction of errors at law. Peterson v. Iowa Dep't of Transp., 508 N.W.2d 689, 691 (Iowa 1993). However, when constitutional issues are raised, our review is de novo. Jones v. Madison County, 492 N.W.2d 690, 694 (Iowa 1992).

III. Use of Director's Designee.

Soo Line argues that the DOT unconstitutionally delegated its decision-making responsibility. The City asserts that Soo Line did not preserve error on this issue. Additionally, the City argues that the designation was not unconstitutional.

In contested cases our review is limited to those questions considered by the administrative agency. Chicago & N.W. Transp. Co. v. Iowa Transp. Regulation Bd., 322 N.W.2d 273, 276 (Iowa 1982). Constitutional issues must be raised at the agency level to be preserved for judicial review. Fisher v. Board of Optometry Examiners, 478 N.W.2d 609, 612 (Iowa 1991); Office of Consumer Advocate v. Iowa State Commerce Comm'n, 465 N.W.2d 280, 283 (Iowa 1991). This is true despite the agency's lack of authority to decide constitutional questions. Office of Consumer Advocate, 465 N.W.2d at 283; Shell Oil Co. v. Bair, 417 N.W.2d 425, 430 (Iowa 1987). Therefore, we look to the record before the agency to see if Soo Line raised this constitutional issue there.

In the cover letter for its appeal to the DOT, Soo Line asked that the director, not a designee, make the agency decision. In its appeal to the director, Soo Line raised the issue as follows: "Must the Director of Transportation, rather than a designee, decide this appeal? Explain." In his decision on appeal, the designee simply noted Soo Line's request and the director's subsequent appointment of a designee.

In its petition for judicial review of agency action, Soo Line argued that the director had "improperly, illegally, and unconstitutionally delegated agency decision-making authority" to the director's designee. The district court ruled that there was no basis for Soo Line's contention that the director erroneously delegated his authority.

The City argues that Soo Line did not raise the constitutional issue of improper delegation before the agency. We agree. Although Soo Line questioned whether the director, not the director's designee, should make the final agency decision, it did not alert the agency to the constitutional issue it seeks to raise here. Therefore, this issue was not preserved for our review.

IV. Standards For New Crossings.

Soo Line contends that the DOT's decision was unreasonable, arbitrary and capricious. See Iowa Code § 17A.19(8)(g) (1991) (agency action may be reversed if it is unreasonable, arbitrary or capricious). An agency's action is "arbitrary" or "capricious" when it is taken without regard to the law or facts of the case. Office of Consumer Advocate v. Iowa State Commerce Comm'n, 432 N.W.2d 148, 154 (Iowa 1988). Agency action is "unreasonable" when it is "clearly against reason and evidence." Frank v. Iowa Dep't of Transp., 386 N.W.2d 86, 87 (Iowa 1986).

Soo Line asserts two reasons that the agency's decision was unreasonable, arbitrary and capricious. First, it claims that the DOT failed to explain the standards it used in its decision to allow a new crossing in the City. Second, it criticizes the agency for failing to discuss in its decision certain "study variables" mentioned in the agency's regulations for safety evaluations of rural crossings.

We have examined the agency's decision. When read with the ALJ order it affirmed, we conclude the agency sufficiently explained the standards it used. The ALJ stated in detail his findings of fact. He concluded that he must balance the interests of the parties in arriving at a just decision. He then analyzed the benefits and burdens of a new crossing on the City and Soo Line. The balance struck by the ALJ is easily deduced from his ultimate decision to allow the new crossing. He decided that the interests of the City in having a new crossing outweighed the disadvantages to Soo Line if the new crossing was allowed. We find no merit in Soo Line's criticism that the agency failed to explain the standards used in its decision.

We turn now to the second argument made by Soo Line to support its claim of unreasonable, arbitrary and capricious agency action--that the agency did not discuss certain "study variables." The DOT has adopted guidelines to be used in evaluating the safety of rural railroad-highway crossings. 761 Iowa Admin.Code ch. 812 (1990). Although these guidelines apply only to rural crossings, section 812.4 lists some of the "study variables" that would be involved in evaluating the safety of a municipal crossing. Soo Line claims the agency should have discussed these factors in its decision.

Although the safety of the proposed crossing was a relevant consideration here, it does not follow that the DOT had to discuss each variable, item by item. Moreover, a review of the ALJ's order reveals that he discussed many of the variables listed in section 812.4, such as vehicle traffic, the existence of switch tracks, and switching and through train movements. There is no merit to this assignment of error.

Although Soo Line also challenges the agency's decision to allow a new crossing on other grounds which may be raised on judicial review (see Iowa Code section 17A.19(8)), it cites no authority nor offers any substantive argument in support of these additional grounds. Therefore, we do not consider them. Moore v. Vanderloo, 386 N.W.2d 108, 113 (Iowa 1986); Iowa R.App.P. 14(a)(3).

V. DOT's Refusal to Close Other Crossings.

The ALJ ruled that Soo Line had failed to justify the closing of an existing crossing in view of the substantial use of these crossings by vehicular and pedestrian traffic. Soo Line complains that this conclusion was erroneous. The City contends that the closing of other crossings should not have been considered in this proceeding. It also argues that there was substantial evidence to support the agency's decision not to close other crossings in the City.

We defer to an administrative agency's interpretation of a statute that it administers. Furry v. Iowa Dep't of Transp., 464 N.W.2d 869, 873 (Iowa 1991). Additionally, we are bound by the DOT's findings of fact if substantial evidence supports them. Id. at 871.

Initially, we hold that the DOT properly considered Soo...