Wagon Wheel Gap Route

and the

Denver & Rio Grande Railway

S.T.B. Rulings

Rail Line into Creede 

As many of you know there has been a law suit against the Foundation by the past Mayor B.J. Myers & a few citizens in Creede attempting to overturn the rail line purchase by the Foundation from Union Pacific. This suit has been going on for over five years and has drained the foundation of many tens of thousands of dollars that was needed to be put into the rebuild of the line not into lawyers pockets.  This case was carried through local courts, to federal courts and into the Surface Transportation Board ( STB ). 

May 3, 2005 Rulings:

Their was two rulings one on the reopening of the purchase and the other on D&RGHF's use of the full width of the rail line.  A copy of the rulings follows. 

Reopening of Purchase Ruling....

35289 SERVICE DATE – LATE RELEASE MAY 3, 2005
EB
SURFACE TRANSPORTATION BOARD
DECISION
STB Docket No. AB-33 (Sub-No. 132X)
UNION PACIFIC RAILROAD COMPANY
– ABANDONMENT EXEMPTION –IN RIO GRANDE AND MINERAL COUNTIES, CO
Decided: May 3, 2005

This decision denies a petition to reopen prior decisions in this proceeding served on May 11, 1999 (1999 Decision), May 24, 2000 (2000 Decision), and June 22, 2004 (2004 Decision). The 1999 Decision authorized the sale of a 21.6-mile rail line known as the Creede Branch by Union Pacific Railroad Company (UP) to the Denver & Rio Grande Railway Historical Foundation (D&RGHF) under the offer of financial assistance (OFA) procedures of 49 U.S.C. 10904 and 49 CFR 1152.27. In the 2000 Decision and the 2004 Decision, the Board declined to reopen the 1999 Decision.

BACKGROUND
The Creede Branch, located in Rio Grande and Mineral Counties, CO, historically served local mines. The line had long been out of service when, in December 1998, UP filed a notice of exemption with the Board for authority to abandon the line. Two parties, the D&RGHF and the Rio Grande & San Juan Railroad Co., submitted OFAs to acquire the line. The Director of the
Office of Proceedings (Director) found both parties to be financially responsible and accepted their OFAs.
When faced with multiple qualified offerors, the railroad may choose the one with which it will negotiate. UP selected D&RGHF. Following a brief period of negotiation, UP and D&RGHF advised the Board that they had reached an agreement for D&RGHF’s purchase of the rail line. In the 1999 Decision, UP’s abandonment exemption was dismissed effective on the date the sale was consummated, and D&RGHF was authorized to acquire the line. On November 26, 1999, more than 6 months after the approval of the sale, the City of Creede, CO (City), which lies along the Creede Branch, filed a letter opposing reinstitution of service over the line. The Board treated the City’s letter as a petition to reopen UP’s abandonment exemption and the sale to D&RGHF. On May 24, 2000, the Board denied the City’s petition to reopen, finding that the City had not satisfied the criteria at 49 CFR 1152.25(e)(4) for reopening an administratively final proceeding. Also on May 24, 2000, D&RGHF and UP consummated the sale of the line, with D&RGHF paying $350,000 in cash and financing the remaining $274,616 by a note held by UP.
On November 2, 2000, the City filed an action against D&RGHF in state court, seeking a declaration that a City residential zoning ordinance applied to the railroad right-of-way (ROW), except for the 25-foot wide center portion that the City claimed was the only part necessary for rail operations. City of Creede v. Denver & Rio Grande Railway Historical Foundation, Dist. Ct., Mineral Cty., Colo., No. 00-CV-4. The case was removed to the U.S. District Court for the District of Colorado (U.S. District Court). City of Creede v. Denver & Rio Grande Railway Historical Foundation, No. 01-RB-318 (CBS) (D. Colo. May 9, 2003). The U.S. District Court subsequently referred certain issues of federal preemption to the Board.
On July 2, 2003, the City filed a petition with the Board in STB Finance Docket No. 34376, City of Creede, CO—Petition for Declaratory Order, seeking a declaratory order to address the issues referred by the court. D&RGHF and the City made their evidentiary submissions to the Board on July 21, 2003, and October 14, 2003, respectively.1 The City also contemporaneously filed a petition in this abandonment proceeding, asking again that the Board void the authorization of the sale of the line to D&RGHF. Two adjacent landowners submitted comments in support of reopening the 1999 Decision and D&RGHF and UP filed a response in opposition. In the 2004 Decision, the Board denied the City’s petition to reopen.
On November 5, 2004, the Concerned Citizens of Creede and Mineral County, CO (Concerned Citizens), a group of permanent area residents, filed another petition to reopen the
1999 Decision. Petitioners ask that the Board: (1) find that D&RGHF did not satisfy the requirements of 49 U.S.C. 10904; (2) authorize abandonment of the line; and (3) exempt this line
from the OFA provisions of section 10904. Concerned Citizens also request an oral hearing. D&RGHF and UP replied separately on December 16, 2004. On December 27, 2004, the Upper
Rio Grande Economic Development Council filed a letter urging denial of Concerned Citizens’ petition.
On January 12, 2005, Concerned Citizens filed a motion for leave to file a limited reply to the replies of D&RGHF and UP, and included that reply in their filing. By separate pleadings filed on February 1, 2005, D&RGHF and UP oppose acceptance of Concerned Citizens’ reply to their replies.
 

PRELIMINARY MATTERS
Oral Argument
As discussed below, the petition does not raise any novel issues of law or fact. Because substantially all material issues of fact can be resolved through the written record already submitted, and because efficient disposition of the proceeding can be accomplished without oral testimony, the request for oral hearing will be denied. See 49 CFR 1112.1.
Reply to a Reply
The Board’s rules at 49 CFR 1104.13(c) state that a reply to a reply is not permitted. On occasion, however, we will accept a reply to a reply where no party objects or will be prejudiced
1 A decision in the declaratory order proceeding is also being issued today. by its acceptance. Here, however, both UP and D&RGHF object to petitioners’ filing and Concerned Citizens have not presented any justification for allowing this extra pleading. Therefore, petitioners’ request for leave to file a reply will be denied.

DISCUSSION AND CONCLUSIONS
Under 49 CFR 1152.25(e)(4), a petition to reopen an administratively final action must state in detail the respects in which the challenged decision involves material error, or is affected by new evidence or substantially changed circumstances. Such a petition will be granted only upon a showing that the challenged action would be materially affected by one or more of those criteria. 49 CFR 1152.25(e)(2)(ii).
Here, Concerned Citizens argue that new evidence shows that D&RGHF’s OFA failed to meet the standards of 49 U.S.C. 10904, and that the Board’s approval of D&RGHF’s OFA and subsequent denials of the two prior petitions to reopen involved material error. Specifically, petitioners contend that their evidence demonstrates that there is no need for freight service on the line, that D&RGHF is not financially able to fully purchase, rehabilitate, and operate the line, and that the line was “de facto” abandoned years ago.
As discussed below, we find that petitioners have not presented any new evidence that materially affects the agency’s earlier decisions in this proceeding, nor have they shown material error. Further, concerns for administrative finality, repose, and detrimental reliance strongly counsel against reopening. See Railroad Ventures, Inc.—Abandonment Exemption Between Youngstown, OH and Darlington, PA in Mahoning and Columbiana Counties, OH and Beaver County, PA, STB Docket No. AB-556 (Sub-No. 2X), slip op. at 5 (STB served Dec. 13, 2004); CSX Transportation, Inc.—Abandonment Between Bloomingdale and Montezuma in Parke County, IN, Docket No. AB-55 (Sub-No. 486), slip op. at 8 n.10 (STB served Sept. 13, 2002), aff’d sub nom. Montezuma Grain Co., LLP v. STB, 339 F.3d 535 (7th Cir. 2003). The OFA sale at issue was consummated nearly 5 years ago, and both UP and D&RGHF have relied on the prior Board determination. D&RGHF made a substantial investment as part of its reliance, and UP may have forgone other opportunities to sell the line. Petitioners here thus face a substantial burden in seeking to reopen the proceeding and reverse the outcome at this late date. Concerned Citizens’ petition, which is largely repetitive of, and seeks to relitigate, matters already considered and disposed of in prior decisions, fails to meet that burden. For these reasons, the petition to reopen will be denied.
Continued Rail Service
Concerned Citizens argue that we should reopen this proceeding because the Board, in the 2004 Decision and earlier Board decisions, erred in finding that D&RGHF met its burden to demonstrate that it can reestablish and conduct freight operations on the line for 2 years. In support of their position, petitioners cite Conrail Abandonment of a Portion of the West 30th Street Secondary Track in New York, NY, In the Matter of an Offer of Financial Assistance,
Docket No. AB-167 (Sub-No. 493N) (ICC served Jan. 13, 1987) (High Line); Roaring Fork—Exem.—in Garfield, Eagle, and Pitkin Counties, CO, 4 S.T.B. 116 (1999), aff’d sub nom. Kulmer and Schumacher v. STB, 236 F.3d 1255, 1257 (10th Cir. 2001) (Roaring Fork); and The Burlington Northern and Santa Fe Railway Company—Abandonment Exemption—In King County, WA, STB Docket No. AB-6 (Sub-No. 380X) (STB served Aug. 5, 1998) (King County). Concerned Citizens also argue that the 2004 Decision materially erred in finding any real shipper interest in revived freight service. Further, petitioners contend that D&RGHF’s stated intent is, and always has been, to operate a tourist passenger service and not a freight railroad. Petitioners misapprehend the allocation of burdens in OFA proceedings. As the Board indicated in the 2004 Decision, when challenged, a buyer must be able to demonstrate that its OFA is for continued rail service, including freight rail service. Roaring Fork; see also Columbia v. STB, 342 F.3d 222 (3d Cir. 2003) (Columbia). But, as the agency also noted, challengers of an OFA also bear a burden—to demonstrate that the offer is for some other purpose that is incompatible with continued rail service. See Land Conservancy of Seattle and King County—Acquisition and Operation Exemption—Burlington Northern and Santa Fe Railway Company, STB Finance Docket No. 33389 et al. (STB served May 13, 1998) (Land Conservancy), aff’d sub nom. Redmond-Issaquah R.R. Pres. Ass’n v. STB, 223 F.3d 1057 (9th Cir. 2000).
Concerned Citizens have not shown that the Board erred in rejecting claims that D&RGHF’s OFA was not for continued rail service in the prior decisions. Concerned Citizens again question D&RGHF’s commitment to use the line for freight and argue that demand for freight service on the Creede Branch is too speculative to sustain an OFA. But there is no minimum traffic requirement necessary to sustain an OFA. Exemp. of Rail Abandonment—
Offers of Finan. Assist., 4 I.C.C.2d 164, 167 (1988); Illinois Central R.R. Co.—Abandonment Exemption—in Perry County, IL, Docket No. AB-43 (Sub-No. 164X) (ICC served Oct. 18, 1994). As noted in the 2004 Decision, the agency has never required an offeror to prove in advance that its efforts to revive a failing line will, without question, succeed. 1411 Corp— Abandonment Exemption—Lancaster County, PA, Docket No. AB-581X, slip op. at 5 n.9 (STB served Sept. 6, 2001), aff’d sub nom. Columbia. Rather, when challenged, the Board considers whether the plan taken as a whole is intended to result in continuing or resumed freight rail service—a test that has been met here. See id. As the Board explained in Trinidad Railway, Inc.—Abandonment Exemption—in Las Animas County, CO, STB Docket No. AB-573X (STB served Aug. 13, 2001), in determining whether there are sufficient traffic prospects to sustain freight rail operations, the Board considers all potential income resulting from the operation of the rail line. Here, as the Board explained in the 2004 decision (at 7-10), the record supports the conclusion that D&RGHF intended from the outset to rehabilitate the Creede Branch and that its plan taken as a whole was intended to result in rail freight service. Moreover, the record shows that D&RGHF has made continued efforts to rehabilitate the line. As the Board found in the 2004 Decision, D&RGHF has cleared the line of vegetation and debris and has shored up the roadbed adjacent to a river. D&RGHF has also installed hundreds of cross-ties, rail lengths, angle bars, tie plates, and spikes, and has replaced and added new crossings. And the majority of the line has been brought back into gauge. There would be little incentive for D&RGHF to have taken those steps if it did not intend to operate the line. Furthermore, D&RGHF has provided the Board with letters from three area proponents of rail service. As we indicated in the 2004 Decision at 7, while these
letters are not contracts, they represent a reasonable level of commitment to use a rail line that is not yet fully rehabilitated.
Finally, the evidence presented in this case supports the conclusion that D&RGHF intends to subsidize any available freight traffic by running a tourist passenger excursion service on the line. Such passenger service is not incompatible with freight service and, indeed, can serve to make feasible a level of freight service that might not otherwise justify the cost of owning, rehabilitating, and maintaining the line. See 2004 Decision at 8.
The cases cited by petitioners do not support reopening here. Rather, those cases demonstrate situations where OFAs that were challenged before they became administratively final did not present the best chance for continued or revived rail service. In Roaring Fork, the Board dismissed an OFA. As the Board stated, that case presented “the anomalous situation in which any future reinstitution of rail freight service (as an adjunct to passenger service) appear[ed] more likely under [the abandoning carrier’s] own plans for the future of the right-of-way than through the OFA process.” Roaring Fork, 4 S.T.B. at 121 n.19. That case was anomalous because: (1) the OFA offeror acknowledged that it would put the line to the same use as the one planned by the abandoning carrier—a use that the abandoning carrier could pursue with $40 million from the federal government and (2) the abandoning carrier sought dismissal of the OFA, asserting that the OFA offeror was associated with a salvage company that was in the business of acquiring lines that had been abandoned or were in the process of being abandoned and selling the rail for scrap. Roaring Fork, 4 S.T.B. at 117 n.2. This case is not such an anomalous situation. Granting Concerned Citizens the relief they seek would eliminate the
prospect of resumed rail service on the line that D&RGHF provides. In High Line, the ICC rejected an OFA because it found that the offeror was not financially responsible. A financial responsibility finding relates to both whether the offeror possesses the resources necessary to pay the line’s fair market value and to operate the line for the statutorily mandated 2-year period. In that case, however, the ICC required the offeror to
make a more specific showing because the ICC had already found that reinstituting service on that particular line in New York City was infeasible. In requiring that showing, the ICC specifically noted that it was unique to that matter and not normally required. See Chelsea Property Owners—Abandonment—Portion of the Consolidated Rail Corporation’s West 30th Street Secondary Track in New York, NY; In the Matter of an Offer of Financial Assistance, Docket No. AB-167 (Sub-No. 1094), slip op. at 7-8 (ICC served July 15, 1993). Accordingly, Concerned Citizens’ attempt to interpret High Line to stand for the proposition that D&RGHF had an affirmative duty here to demonstrate with its original offer, or in response to subsequent challenges on other grounds, that it would successfully provide rail service for 2 years following its purchase, is erroneous. Moreover, the time for a challenge on the grounds that D&RGHF was not financially responsible was 5 years ago, while the OFA was being considered, and it is not clear on the present record that such a challenge would have succeeded at that time.
Petitioners also contend that an OFA must show a real need for service, citing King County. That decision was part of a series of decisions in a group of proceedings regarding the disposition of a 12.45-mile rail line in King County, WA. In one of those decisions—Land Conservancy—Acq. & Oper.—Burlington Northern, 2 S.T.B. 673 (1997)—the Board used its revocation power to disallow the sale of an active (albeit embargoed) line to a purchaser that had, immediately after the purchase, sought to abandon the line and to be exempted from the OFA process in order to create a trail. The agency acted there to preserve the integrity of its processes
when an acquiring noncarrier initiated an abandonment proceeding within days of purchasing the line. The line was reconveyed to The Burlington Northern and Santa Fe Railway Company (now BNSF Railway Company), which subsequently filed for authority to abandon the line. That case raised concerns about the potential for further misuse or abuse of its processes, and thus the Board indicated its intentions to closely scrutinize any OFAs that might be filed (as well as any challenges thereto) in that particular case. Land Conservancy, slip op. at 14. Thus, the requirement in King County that the offeror demonstrate sufficient need for rail service grew out of a unique set of events surrounding a particular case in which abuse was evident. Here, in contrast, D&RGHF has presented evidence of area interest in renewed rail freight service, when challenged after the sale, and indicated that its planned tourist excursion service could subsidize rail freight operations. In our prior decisions, we found no evidence that undercuts the assertion that D&RGHF’s OFA proposal, considered as a whole, could result in restoring service to the line. Concerned Citizens have not demonstrated that this was material error.
Having petitioned to void the OFA authorization, Concerned Citizens, not D&RGHF, have the primary burden of proof. See 5 U.S.C. 556(d). But Concerned Citizens have not demonstrated that the Board erred in finding that, consistent with the objectives of 49 U.S.C. 10904, D&RGHF’s OFA presented the best available plan for restoring freight rail service over this line. See Illinois Central Railroad—Abandonment Exemption—In Perry County, IL, Docket No. AB-43 (Sub-No. 164X) (ICC served Nov. 8, 1994), recons. denied and terms set (ICC served Jan. 12, 1995). Moreover, the need for administrative finality and repose more than 5 years after the sale of the line weigh heavily against granting Concerned Citizens’ petition to go back in time to revisit the original OFA, particularly when a more appropriate vehicle (the adverse abandonment procedure discussed below) is available to address their concerns.
Financial Responsibility
Concerned Citizens assert that new evidence demonstrates that the Board committed material error in finding that D&RGHF satisfied the financial responsibility requirement of 49 U.S.C. 10904. But much of their evidence—for example, D&RGHF’s articles of incorporation, old tax returns, evidence regarding the condition of the rail line, and the cost of rehabilitation— was available and could have been submitted years ago, rather than 5 years after the OFA sale was consummated. Petitioners have not explained why they failed to come forward with this evidence when the Board was considering three earlier challenges to this OFA. Thus, none of this information can be considered new evidence that might provide a basis for reopening at this late date. See Friends of Sierra R.R. v. ICC, 881 F.2d 663, 667 (9th Cir. 1989). Other evidence submitted by petitioners relates to post-consummation events—such as D&RGHF’s alleged failure to pay all of its tax liabilities and its apparent failure thus far to obtain sufficient funds to complete the rehabilitation of the line. Such evidence is intended to
demonstrate that D&RGHF’s venture may not turn out to be financially viable in the end. Given the difficulty of making progress in the face of constant legal challenges, it would be premature to assume that rail service will not be instituted on the line within a reasonable time. And even if the project were to ultimately fail, that would not show that the Board erred in finding that D&RGHF intended to revive service on the line. As we have stated previously in this proceeding, the Board must determine, based on a limited record and in a limited time, whether an offeror has the financial resources to make good on its offer to buy and operate the line under
49 U.S.C. 10904(d). This is a case-by-case determination. An OFA will always involve a somewhat risky venture, given the nature of the lines typically subject to the OFA provisions. The sort of guarantees that petitioners advocate are unlikely to be available in the context of an OFA sale. And such requirements would undermine the underlying purpose of the OFA provisions—to provide a last chance to preserve or revive service on an otherwise failing rail line.
Status of the Creede Branch
Concerned Citizens also repeat the claim, made and rejected in earlier challenges to this OFA, that the Creede Branch was somehow “de facto” abandoned many years ago. While it is true that the line has not been in service for a number of years, the legal status of the line and the common carrier obligation to provide rail service upon request has not changed. The Board has exclusive and plenary power over rail abandonments. Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 319-21 (1981); Phillips Co. v. Denver & Rio Grande Western R. Co., 97 F.3d 1375, 1376-78 (10th Cir. 1996), cert. denied, 521 U.S. 1104 (1997). UP did not seek abandonment authority until 1998 and, although the line was initially approved for abandonment (by an exemption from 49 U.S.C. 10903), D&RGHF’s OFA precluded that authority from taking effect. Now, although D&RGHF has not yet returned the line to active service, it is working toward that objective. Thus, as we stated in the 2004 decision, the status of the Creede Branch remains that of an active rail line with all of the rights and obligations attendant to that designation.
Adverse Abandonment. The petition to reopen makes it clear that residents in Creede and Mineral County are concerned about the effects that D&RGHF’s plan to reactivate the line and reinstate rail service could have in their communities. However, repeated challenges to the OFA process are not the appropriate administrative remedy to address such concerns. Rather, as noted at pp. 8-9 of the 2004 Decision, parties who wish to demonstrate that the public interest permits an active rail line like this one to be abandoned, may file an application with the Board for adverse abandonment authority under 49 U.S.C. 10903. Should such a party succeed in demonstrating that the public convenience and necessity permit abandonment, the Board would withdraw the shield of its primary jurisdiction over the rail property. Modern Handcraft, Inc.—Abandonment, 363 I.C.C. 969, 971 (1981).
This decision will not significantly affect either the quality of the human environment or the conservation of energy resources.
It is ordered:
1. The request for oral hearing is denied.
2. Concerned Citizens’ motion for leave to file a reply to a reply is denied.
3. Concerned Citizens’ petition to reopen is denied.
4. This decision is effective on the date of service.

By the Board, Chairman Nober, Vice Chairman Buttrey, and Commissioner Mulvey.
Vernon A. Williams
Secretary

Full use of right-of-way ruling....

35239     SERVICE DATE – LATE RELEASE MAY 3, 2005
EB
SURFACE TRANSPORTATION BOARD DECISION
STB Finance Docket No. 34376
CITY OF CREEDE, CO–PETITION FOR DECLARATORY ORDER
Decided: May 3, 2005

This decision responds to a petition for declaratory order filed by the City of Creede, CO (City), pursuant to an order of the U.S. District Court for the District of Colorado (U.S. District Court) referring to the Board three questions related to the issue of federal preemption of the City’s zoning laws as applied to the outer portions of the railroad right-of-way (ROW) for a line of the Denver & Rio Grande Railway Historical Foundation (D&RGHF), a Class III railroad.

 BACKGROUND
In Union Pacific Railroad Company–Abandonment Exemption–in Rio Grande and Mineral Counties, CO, STB Docket No. AB-33 (Sub-No. 132X) (STB served May 11, 1999) (May 1999 Decision), the sale of a 21.6- mile rail line known as the Creede Branch (the line) from Union Pacific Railroad Company (UP) to D&RGHF was approved pursuant to the offer of financial assistance (OFA) procedures of 49 U.S.C. 10904 and 49 CFR 1152.27. The line, located in Rio Grande and Mineral Counties, CO, extends from milepost 299.3 near Derrick to the end of the line at milepost 320.9 at Creede. It historically served local mines, but had not been operated for many years prior to the sale. The portion of the line’s ROW that runs through the City of Creede is 100 feet wide. D&RGHF’s existing track is located on the 25- foot wide strip in the center of the ROW, which court documents refer to as the “clear space.” This “clear space” accommodates the tracks and side clearance on both sides of the tracks. The remainder of the ROW consists of strips on both sides of the clear space, each 37.5 feet wide.
In a decision served on May 24, 2000, the Board denied a petition to reopen the May 1999 Decision filed by the City, finding that it had not made the showing required by 49 U.S.C. 722(c) and 49 CFR 1115.4 to reopen an administratively final proceeding. The sale of the line was also consummated on May 24, 2000.
On November 2, 2000, the City filed an action against D&RGHF in state court, seeking a declaration that a City residential zoning ordinance applied to the ROW, except for the “clear space.” City of Creede v. Denver & Rio Grande Railway Historical Foundation, Dist. Ct., Mineral County, Colo., No. 00-CV-4. The case was removed to the U.S. District Court. In City of Creede v. Denver & Rio Grande Railway Historical Foundation, No. 01-RB-318 (CBS) (D. Colo. May 9, 2003), the U.S. District Court, under the doctrine of primary jurisdiction, referred the following questions to the Board: STB Finance Docket No. 34376
“A) Is the land in the outer portions of [D&RGHF’s] 100 feet wide railroad [ROW] in South Creede, Colorado, each of which is 37.5 feet wide, necessary for the safe and convenient use of the central portion of the [ROW], which is 25 feet wide and which accommodates the tracks and side clearance on both sides of the tracks?
B) If the answer to question A is negative, are the City of Creede’s zoning ordinances, which restrict the use of land in South Creede to residential purposes, applicable to the outer portions of [D&RGHF’s] 100 feet wide railroad [ROW], each of which is 37.5 feet wide, or are these ordinances: i) federally preeempted by 49 U.S.C. §10501(b); and/or ii) invalidated because they conflict with the Commerce Clause of the United States Constitution?
C) If the answer to question A is affirmative, are the City of Creede’s zoning ordinances, which restrict the use of land in South Creede to residential purposes, applicable to the outer portions of [D&RGHF’s] 100 feet wide railroad [ROW], each of which is 37.5 feet wide, or are these ordinances: i) federally preeempted by 49 U.S.C. §10501(b); and/or ii) invalidated because they conflict with the Commerce Clause of the United States Constitution?”

On July 2, 2003, the City filed a petition for declaratory order with the Board pursuant to the U.S. District Court’s order referring the preemption issue to the Board. As part of its referral order, the U.S. District Court ordered the parties to submit to the Board, within 80 days, all portions of the court record relevant to the preemption issues that were referred. Pursuant to this order, on October 14, 2003, the City submitted to the Board over 400 pages of materials (largely unrelated to the preemption issues), along with a request that the Board reopen the abandonment exemption proceeding in STB Docket No. AB-33 (Sub-No. 132X), to revoke the “OFA rights” obtained by D&RGHF. The Board treated the request as another petition to reopen the May 1999 Decision, and in a decision in STB Docket No. AB-33 (Sub-No. 132X), served on June 22, 2004 (June 2004 Decision), denied the petition. On November 5, 2004, the Concerned Citizens of Creede and Mineral County, CO, filed another petition to reopen prior decisions in the OFA proceeding. A decision on that petition is being issued today in STB Docket No. AB-33 (Sub-No. 132X).
By a decision also served on June 22, 2004, the Board instituted the instant declaratory order proceeding on the preemption issues and set a procedural schedule, which was modified in a decision served on August 19, 2004. The City filed its opening statement on August 11, 2004, D&RGHF filed its reply on September 13, 2004, and the City filed its rebuttal on October 4,2004.

PRELIMINARY MATTER
By petition filed on September 13, 2004, the Association of American Railroads (AAR) requests leave to intervene as amicus curiae. In support of its request, AAR states that it has an interest in the outcome of this proceeding and that the Board’s acceptance of AAR’s amicus curiae brief will not disrupt the schedule of filings or unduly broaden the issues. According to AAR, both the City and D&RGHF have consented to AAR’s filing. Because AAR has shown STB Finance Docket No. 34376 good cause for its intervention as amicus curiae and apparently neither party objects, AAR’s petition will be granted and its amicus curiae brief will be accepted for filing.

POSITIONS OF THE PARTIES
The City, which contends that no traffic has moved over the City of Creede portion of the line since 1972 and the entire line since 1985, argues that D&RGHF has neither the capability nor the plans for providing rail service on this line. Accordingly, the City argues that the rail line in question is not an active rail line and, therefore, that it should not be protected by federal preemption. The City further alleges that D&RGHF plans to establish commercial enterprises on the ROW (including a restaurant and hotel facilities) that would be unrelated to any railroad use. (This claim was also made by the City in its original complaint before the Colorado state court, although those assertions were denied by D&RGHF in its answer.)
In its reply, D&RGHF contends that, as a matter of law, a railroad is entitled to exclusive possession of its ROW, and that, as a matter of fact, D&RGHF intends to use the full width of its ROW for rail activities. Specifically, D&RGHF states that it needs the full width of the ROW to rehabilitate the rail yard (consisting of four tracks) and a depot that currently lie within the ROW. According to D&RGHF, it plans to use this rail yard and depot for “spotting empty freight cars; delivering loaded freight cars; loading and unloading of freight shipments; storage of freight and passenger railcars; switching and staging of freight and passenger train movements; and for general railroad purposes.”1 D&RGHF also notes that it needs the 37.5- foot strips on both sides of the track for access to the track by maintenance vehicles and personnel, as well as for the storage and marshaling of track materials used in maintenance. Finally, D&RGHF states that it is exploring the possibility of adding sidetrack facilities for the transloading of commodities from truck to rail. Based on these intended transportation uses, D&RGHF argues that local zoning laws are preempted by 49 U.S.C. 10501(b), which gives the Board exclusive jurisdiction over not only railroad operations, but also the facilities, structures, property, equipment, and services needed in conjunction with those operations. See 49 U.S.C. 10102(9).
AAR also argues that the City’s zoning regulations should be found to be preempted, as a rail carrier is presumptively entitled to full use of its ROW. AAR supports D&RGHF’s position that it needs the outer portions of its ROW for rail- related activities. In addition, AAR notes that railroads often need substantial width “to maintain the track, to repair equipment, to store materials, to build access roads, to minimize property damage and personal injury from derailments, to act as a buffer against trespassers and noise, and to maintain sight lines for safe operation.”21 D&RGHF’s Reply at 5 and 11. 2 AAR’s Amicus Curiae Brief at 3 and 13-14. STB Finance Docket No. 34376

DISCUSSION AND CONCLUSIONS
Before turning to the specific questions referred by the U.S. District Court, we will address the scope of the ICC Termination Act (ICCTA) preemption, in order to assist the court.
The Scope of the ICCTA Preemption.
The Commerce Clause of the Constitution (Art. 1, sec. 8, cl. 3) gives Congress plenary authority to legislate with regard to activities that affect interstate commerce. Gibbons v. Ogden, 9 Wheat 1, 196 (1824). One of the areas in which Congress has done so is with respect to railroads, in the Interstate Commerce Act (ICA), now codified in pertinent part at 49 U.S.C. 701-727 (general provisions) and 10101-11908 (rail provisions). The ICA is “among the most pervasive and comprehensive of federal regulatory schemes.” Chicago & N.W. Transp. Co. v.Kalo Brick & Tile Co., 450 U.S. 311, 318 (1981); accord Deford v. Soo Line R.R., 867 F.2d 1080, 1088-91 (8th Cir. 1989) (ICA so pervasively occupies the field of railroad governance that it completely preempts state law claims).
Although the ICA has long included a preemption clause, Congress further broadened the Act’s express preemption in 1995. Section 10501(b) now expressly provides that “the jurisdiction of the Board over transportation by rail carriers” over any track that is part of the interstate rail network is “exclusive.” And the term “transportation” is defined expansively in the ICA to embrace “a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of . . .property . . . by rail” as well as “services relating to that movement.” 49 U.S.C. 10102(9). Section 10501(b) also expressly provides that “the remedies provided [in 49 U.S.C. 10101-11908] with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers” are “exclusive and preempt the remedies provided under Federal or State law.” Thus, section 10501(b) does not leave room for state and local regulation of activities related to rail transportation.
As we recently noted in CSX Transportation, Inc.—Petition for Declaratory Order, STB Finance Docket No. 34662 (STB served Mar. 14, 2005) (CSXT), in summarizing the court and Board precedent, the courts have observed that “[i]t is difficult to imagine a broader statement of Congress’ intent to preempt state regulatory authority over railroad operations” than that contained in section 10501(b). CSX Transp., Inc. v. Georgia Pub. Serv. Comm’n, 944 F. Supp. 1573, 1581-84 (N.D. Ga. 1996). Every court that has examined the statutory language has concluded that the preemptive effect of section 10501(b) is broad and sweeping. And, as particularly pertinent here, the courts have made it clear that state or local permitting or preclearance requirements of any kind that would affect rail operations (including building permits, zoning ordinances, and environmental and land use permitting requirements) are categorically preempted. City of Auburn v. United States, 154 F.3d 1025, 1029-31 (9th Cir. 1998) (City of Auburn) (state and local environmental and land use regulation preempted); Green Mountain R.R. v. State of Vermont, No. 04-0366 (2d Cir. April 14, 2005) (Green Mountain) (preconstruction permitting of railroad transload facility necessarily preempted); Norfolk S. Ry. v. City of Austell, No. 1:97-cv-1018-RLV, 1997 U.S. Dist. LEXIS 17236 (N.D. Ga. 1997) (Austell) (local zoning and land use regulations preempted); Soo Line R.R. v. City of  Minneapolis, 38 F. Supp.2d 1096 (D. Minn. 1998) (local permitting regulation regarding the demolition of railroad buildings preempted). Accord Borough of Riverdale—Petition for Declaratory Order—The New York Susquehanna & Western Railway Corporation, STB Finance Docket No. 33466 (STB served Sept. 10, 1999) (local zoning and land use constraints on the railroad’s maintenance, use, or upgrading of its lines preempted).

The agency’s broad and exclusive jurisdiction over railroad operations and facilities also has been found to prevent application of state laws that would otherwise be available, including condemnation to take rail property for another use that would conflict with the rail use. Wisconsin Cent. Ltd. v. City of Marshfield, 160 F. Supp.2d 1009, 1014 (W.D. Wis. 2000) (attempt to use a state’s general eminent domain law to condemn an actively used railroad passing track preempted); Dakota, Minn. & E. R.R. v. State of South Dakota, 236 F. Supp.2d 989, 1005-08 (S.S.D. 2002), aff’d on other grounds, 362 F.3d 512 (8th Cir. 2004) (revisions to state’s eminent domain law preempted where revisions added new burdensome qualifying requirements to the railroad eminent domain power that would have the effect of state “regulation” of railroads); Cedar Rapids, Inc. v. Chicago, Cent. & Pac. R.R., 265 F. Supp.2d 1005, 1013-14 (N.D. Iowa 2003) (ICCTA preemption applies broadly to operations on both main line and auxiliary spur and industrial track); Village of Ridgefield Park v. New York, Susquehanna & W. Ry., 750 A.2d 57 (N.J. 2000) (complaints about rail operations under local nuisance law preempted). Accord Union Pacific Railroad Company—Petition for Declaratory Order, STB Finance Docket No. 34090 (STB served Nov. 9, 2001) (City cannot unilaterally prevent a railroad from reactivating and operating over a line that the Board has not authorized for abandonment). See also CSXT (state or local power to determine how a railroad’s hazardous materials traffic should be routed preempted under 49 U.S.C. 10501(b)); North San Diego County Transit Development Board—Petition for Declaratory Order, STB Finance Docket No. 34111 (STB served Aug. 21, 2002) (California Coastal Commission regulation of construction and operation of rail siding preempted).
While the section 10501(b) preemption is broad and far-reaching, there are, of course, limits. For example, section 10501(b) preemption does not apply to operations that are not part of the national rail network. Thus, application of city zoning and licensing ordinances to an aggregate distribution plant operated by a non-railroad entity has been found not to be preempted, despite the fact that the plant was located on railroad-owned property. Florida E. Coast Ry. v. City of W. Palm Beach, 266 F.3d 1324, 1336-37 (11th Cir. 2001) (Florida East Coast) (because the railroad’s involvement ended with delivery to the shipper’s plant, the plant itself was not part of “rail transportation” or a rail “facility”). See also Hi Tech Trans, LLC—Petition for Declaratory Order—Hudson County, NJ, STB Finance Docket No. 34192 (STB served Nov. 20, 2002) (Hi Tech Trans) (no preemption for activity that is not part of “rail transportation”). Additionally, the section 10501(b) preemption does not apply to state or local actions under their retained police powers so long as the y do not interfere with railroad operations or the Board’s regulatory programs. See CSXT at 9-10. STB Finance Docket No. 34376
 

The Questions Referred by the U.S. District Court
I. Initial Question.
The first question posed by the U.S. District Court is whether the outer portions of D&RGHF’s ROW are “necessary for the safe and convenient use of the central portion of the ROW, which is 25 feet wide and which accommodates the tracks and side clearance on both sides of the tracks?”
Many railroad lines have a wider ROW than might appear to be used, but that does not mean that all of the property is not needed for rail operations. As noted by D&RGHF and AAR, extra width on the sides of the track allows room to maintain or upgrade the track, to provide access to the line, to serve as a safety buffer, and to ensure that sufficient space is left available for more tracks and other rail facilities to be added, as needed, as rail traffic changes and grows, among other uses. Thus, it cannot be said that property at the edge of a railroad’s ROW is “not needed for railroad transportation” just because tracks or facilities are not physically located there now. See Midland Valley R.R. v. Jarvis, 29 F.2d 539, 541 (8th Cir. 1928).
In City of Lincoln—Petition for Declaratory Order, STB Finance Docket No. 34425 (STB served Aug. 11, 2004),3 we recently rejected an attempt by the City of Lincoln, NE (Lincoln), to condemn a 20-foot-wide strip in the outer portion of a railroad’s 100-foot wide ROW for use as a recreational trail. In that decision, we held that, where, as here, the railroad opposes a plan to take part of a ROW and claims that the property is or will be needed for the conduct of rail operations, the burden is on the party seeking to take property away from the national transportation system to show that the entire ROW is not and will not be needed for rail purposes. Finding that Lincoln had not made that showing, we concluded that the proposed taking under state eminent domain law was federally preempted.
Similarly, in this case the City has not met its burden of showing that the full width of the ROW is not, and will not be, needed for rail use. In fact, the City has not even addressed the issue. Instead, the City argues that D&RGHF will never provide rail freight service on this line. This argument is essentially a restatement of the arguments from its petition to reopen in STB Docket No. AB-33 (Sub-No. 132X) that D&RGHF had no intention of providing rail freight service when it purchased the line and that D&RGHF lacks the finances necessary to restore the line to service. The Board, however, recently rejected those very claims in the June 2004 Decision in that proceeding. There, we found that “D&RGHF’s intent to operate the line has been demonstrated by its continued efforts to rehabilitate the line.”4 We observed that “[t]he City [had offered] nothing compelling to warrant a challenge to the . . . determination of D&RGHF’s financial responsibility . . . .” 5 We will not revisit those conclusions here. 3 Pending judicial review in City of Lincoln v. STB, No. 04-3453 (8th Cir. filed Oct. 8, 2004). 4 June 2004 Decision, slip op. at 7. 5 Id. at 6.STB Finance Docket No. 343767
We are mindful that, at the present time, D&RGHF is not using any of the ROW for rail service, as it is still in the process of rehabilitating the line. However, as the June 2004 Decision
explains, the legal status of the Creede Branch under the statute is that of an active rail line with all the rights and obligations attendant to that designation.  Moreover, D&RGHF recently has cleared the line of vegetation and debris and has shored up the roadbed adjacent to a river. D&RGHF has also installed hundreds of cross-ties, rail lengths, angle bars, tie plates, and spikes; has brought the majority of the line back into gauge; has replaced three road crossings; and has installed a new crossing.  There would be little incentive for D&RGHF to have taken these steps if it did not intend to operate the line.
D&RGHF has indicated that, once rehabilitation is complete, it will resume rail freight service, and that it intends to use the full width of the ROW for the conduct of rail operations. Inasmuch as the City has failed to show that this property is not now and will not likely be needed for rail uses, and the railroad has explained why it needs the full width of its ROW for current and future rail operations, we determine that the 37.5- foot wide outer portions of the ROW are necessary for railroad purposes.
II. The Remaining Preemption Question.
The U.S. District Court further asks that we determine if the outer portions of the ROW are subject to the City’s zoning ordinances, which restrict use of the land to residential purposes, or if these ordinances are preempted by 49 U.S.C. 10501(b) or invalidated by the Commerce Clause of the U.S. Constitution.
To come within the Board’s jurisdiction and the federal preemption provision, an activity must be both “transportation” and offered by a “rail carrier.” E.g., Florida East Coast; Town of Milford, MA–Petition for Declaratory Order, STB Finance Docket No. 34444, slip op. at 2 (STB served Aug. 12, 2004) (Town of Milford). The term “transportation” is defined broadly in the ICA to expressly include property and facilities related to the movement of passengers or property by rail. See 49 U.S.C. 10102(9)(A); Green Mountain. That term also includes all of the services related to that movement, including receipt, delivery, transfer and handling of property.
See 49 U.S.C. 10102(9)(B). As discussed above, zoning ordinances have been found to be preempted on their face to the extent they apply to “transportation” by rail carriers because by their nature they could be used to deny a railroad the right to conduct its operations. E.g., City of Auburn, 154 F.3d at 1030-31; Austell; Borough of Riverdale.
Conversely, state and local laws are not preempted where the activity is not “transportation” or is not offered by a “rail carrier.” For example, if the property were being used for a restaurant or hotel or some other non-transportation purposes, then there would be no preemption under section 10501(b) and the City’s zoning ordinance would apply. Similarly, even if the property is being used for transportation purposes, the activity must be performed by a duly authorized rail carrier. E.g., Florida East Coast; Hi Tech Trans; Town of Milford. The center of this dispute—whether an activity is “transportation” offered by a “rail carrier”—is often a fact-specific determination.
The City argues that preemption does not apply because D&RGHF has not engaged in railroad transportation and will not engage in railroad transportation because it has neither the intent nor the capability to provide rail service on this line. In its rebuttal, the City suggests that, because D&RGHF will not be providing rail service, “the Board has no basis to appropriately exercise its jurisdiction to make any determination relating to the questions referred to the Board by the [U.S.] District Court.” City’s Rebuttal, filed Oct. 4, 2004, at 5. The City also asserts in its petition for declaratory order that D&RGHF plans to establish commercial enterprises on the ROW. But the City has provided no evidence to support its claim that D&RGHF plans to use any portion of the ROW for such purposes. D&RGHF states that it plans to use the outer portions of the ROW to construct a rail yard, depot, and possibly additional sidetrack—all of which are transportation purposes—and the City has not shown that D&RGHF intends to use its property otherwise.
D&RGHF is a licensed railroad that holds itself out as a common carrier and that has not sought abandonment or discontinuance authority from the Board. Once rail operations have been authorized by the Board, the track remains a line of railroad subject to full agency regulation until the agency authorizes its abandonment. Atchison, Topeka & Santa Fe Ry. – Abandonment Exemption – in Lyon County, KS, Docket No. AB-52 (Sub-No. 71X), slip op. at 4 (ICC served June 17, 1991). And, as in City of Lincoln, the City has not met its burden of demonstrating that D&RGHF is engaging in activities that are not transportation; at this juncture, it has merely alleged that D&RGHF plans to establish commercial non-transportation enterprises along its ROW. However, regardless of whether the City has at this time shown that D&RGHF has current plans to use its ROW for non-transportation activities, the general rule articulated above will apply. Should D&RGHF engage in activities that are not considered transportation pursuant to 49 U.S.C. 10102(9), then the City’s ordinance would not be preempted as to those activities whenever they should arise. Based on this record, we find that D&RGHF’s planned activities on the entire ROW are part of rail transportation and, accordingly, that the City’s local zoning laws are federally preempted with respect to those activities.
Because we have found that the City’s zoning laws are preempted under 49 U.S.C. 10501(b), we need not further address the second part of the court’s question regarding preemption pursuant to the Constitution under the Commerce Clause. This action will not significantly affect either the quality of the human environment or the conservation of energy resources.
It is ordered:
1. AAR’s petition for leave to intervene as amicus curiae in this proceeding is granted.
2. This proceeding is concluded.
3. This decision is effective on its date of service.
4. A copy of this decision will be served on:
The Honorable Robert E. Blackburn
United States District Judge
United States Courthouse A741
909 19th Street
Denver, CO 80294

By the Board, Chairman Nober, Vice Chairman Buttrey, and Commissioner Mulvey.
Vernon A. Williams
Secretary

On June 22nd 2004 the STB made its ruling on all except one point.  All points were totally in favor of the Foundations Purchase and its right to own and operate the line as both a passenger and freight line.  All negative points against the Foundation and its President Don Shank were rejected.  The last point to be ruled on is about whether The City of Creede Zoning applies to utilization of the rail lines land beyond a 25 foot width along the rail line .  This will be decided within the next couple months. We expect this will be again totally in our favor.

In short Creede's law suit was rejected...  We won the judgment but because of the past Mayors personal views, the rail line rebuild is 3 years behind schedule and we are short a large amount of the needed funds to rebuild.

We will press on and the rebuild will progress with a new found strength.

The STB ruling is as follows:

It is ordered:

 1.  A declaratory order proceeding is instituted.  This proceeding will be handled under the modified procedure rules, on the basis of written statements submitted by the parties.  All parties must comply with the Rules of Practice at 49 CFR subchapter B, including parts 1112 and 1114. 

 2.  The procedural schedule for this proceeding is as follows:

  July 22, 2004                                        The City’s opening statement is due.

  August 23, 2004                                    D&RGHF’s reply statement is due.

  September 13, 2004                               The City’s rebuttal is due.

 3.  This decision is effective on the date of service. 

 4.  A copy of this decision will be served on:

 The Hon. Robert E. Blackburn, United States District Judge, United States Courthouse A741, 909 19th Street, Denver, CO  80294 

 By the Board, David M. Konschnik, Director, Office of Proceedings.

With the new year past us and the problem with the suit resolved, the updates to the web site will proceed as it was done in the past 

Thanks for your understanding

Web Site E-Mail Address is Wagon-Wheel-Gap@hotmail.com

Also see our History of San Luis Valley & it's Railroads web site:

Wagon-Wheel-Gap.freehomepage.com

It's still under construction but you may find it interesting.

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It is a private informational site by Richard Cutter who is solely responsible for content and

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Last updated: July 03, 2005

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