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CSX Transportation Inc. v. City of Sebree

United States District Court, W.D. Kentucky, Owensboro Division

May 24, 2018

CSX TRANSPORATION, INC., PLAINTIFF
v.
CITY OF SEBREE, KENTUCKY, DEFENDANT

          MEMORANDUM OPINION AND ORDER

          JOSEPH H. MCKINLEY, JR., CHIEF JUDGE.

         This matter came before the Court on Plaintiff's Motion for Preliminary Injunction [DN 3]. Pursuant to Fed.R.Civ.P. 65(a)(2), the trial on the merits was advanced and consolidated with the hearing on the injunction motion. The hearing took place on March 1, 2018. The parties have filed post-trial briefs and the matter is ripe for decision

         I. Background

         The Plaintiff CSX Transportation (“CSXT”) operates a rail line that runs through the City of Sebree, Kentucky (the “City”). The rail line crosses six city streets. The grade of these crossings has been an issue with the City for some time.

         In May 1966, the City passed an ordinance (the “1966 Ordinance”) prohibiting the Louisville and Nashville Railroad (CSXT's predecessor, “L&N”) from altering the grade of the railroad tracks at any street crossing in the City without first obtaining approval from the City Council. Then, in 1979, when the City denied permission to L&N to conduct track maintenance which would raise the height of the crossings, L&N filed a lawsuit against the City in Webster Circuit Court. The Webster Circuit Court enjoined L&N from performing any work that would result in raising the grade of the crossings in violation of the 1966 Ordinance. Ultimately, L&N and the City entered into an Agreed Order (the “1979 Agreed Order”) in which L&N promised it would not raise the level of the tracks at Dixon Street and that it would only raise the tracks at Main Street no more than 0.4 feet.

         More recently, in 2013, CSXT sought to perform track maintenance that would require raising the elevation of the tracks at certain street crossings. Because CSXT did not first seek and obtain approval from the Sebree City Council, City officials stopped the work. After a dispute involving both railroad police and City police officers, CSXT chose “to undertake alternative minimal maintenance that did not require raising the tracks.” (Mot. for Prelim. Inj. [DN 3] at 3.)

         The current dispute arose in August 2017, when CSXT gave notice to the City of its intent to conduct track maintenance that would result in raising the height of the tracks at four street crossings within the City. On October 2, 2017, the City Council denied CSXT's request. Shortly after, on October 11, 2017, CSXT filed this lawsuit. In its Complaint, CSXT seeks a “permanent injunction requiring that the City refrain from any enforcement of the 1966 Ordinance or the 1979 Agreed Order or the undertaking of any other municipal or state law action which would seek to prevent CSXT from raising the tracks on the Railroad Property or otherwise interfere with CSXT railroad operations.” (Compl. [DN 1] at 10.) That same day, CSXT filed a Motion for Preliminary Injunction which asked the Court to “immediately prohibit the City from taking any action to enforce either the 1966 Ordinance or the 1979 Agreed Order or otherwise interfere with CSXT's railroad operations.” (Mot. for Prelim. Inj. at 11.)

         The matter was tried on March 1, 2018, and testimony was heard. Afterwards, both parties briefed their positions on factual and legal issues.

         II. Discussion

         The City of Sebree argues that both the 1966 Ordinance and the 1979 Agreed Order prohibit the railroad from raising the height of the railroad tracks without express authority from the City to do so. CSXT argues that both the 1966 Ordinance and the 1979 Agreed Order are preempted by two different federal statutes: the Interstate Commerce Commission Termination Act and the Federal Railroad Safety Act.

         1. 1966 Ordinance

         In 1966, the City of Sebree passed a local ordinance that required pre-approval by the City of any change in grade made by the L&N Railroad at any of the street crossings in the City. Violators are subject to a fine of not less than $50.00 per day until the unapproved change is corrected.

         CSXT is the successor to L&N in the operation of the rail line which passes through Sebree. CSXT argues that this 1966 Ordinance is preempted by federal law. In 1995, Congress passed the Interstate Commerce Commission Termination Act (“ICCTA”) in an effort to deregulate the railroad industry. Within the provisions of the ICCTA, a preemption section states, “Except as provided otherwise 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). Other courts have noted that “it is difficult to imagine a broader statement of Congress' intent to preempt state regulatory authority over railroad operations.” CSX Transp. Inc. v. City of Plymouth, 92 F.Supp.2d 643, 658 (E.D. Mich. 2000) (quoting Soo Line R.R. Co. v. Minneapolis, 38 F.Supp.2d 1096, 1099 (D. Minn. 1998)).[1]

         In Texas Central Business Lines Corporation v. City of Midlothian, the Fifth Circuit reviewed a municipal statute much like the 1966 Ordinance. 669 F.3d 525 (5th Cir. 2012). A Texas town passed a grading ordinance setting a maximum slope for rail embankments and roads. Id. at 529. The Fifth Circuit found that this grading ordinance was preempted because it had the “effect of managing the economic decisions” of the railroad company in the context of transportation covered under the ICCTA. Id. at 534. “[S]tate and local law cannot govern a railroad's ...


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