LEBANON — The Albany & Eastern Railroad filed suit Tuesday against the state of Oregon, charging that a state statute barring the company from receiving grants from the Connect Oregon program is unconstitutional.
The suit, which claims the statute caused the railroad to be considered a “class of one,” was filed in the U.S. District Court, Eugene Division. It asks that ORS 824.237 be deemed unconstitutional and no longer enforced.
The lawsuit contends the statute was “specifically intended to target and punish the Albany & Eastern Railroad” because it charge an annual crossing fee to adjoining property owners.
Legislation to develop the statute was sponsored by Sen. Frank Girod of Stayton in 2013 in response to the railroad’s business policy of charging its neighbors an annual $126 for railroad crossing permits. The funds were used to help pay for crossing maintenance.
Recently, the Oregon Department of Transportation eliminated Lebanon as a possible site for a $25 million intermodal transportation facility, because the Albany & Eastern Railroad would provide rail service to the proposed site in north Lebanon.
In past years, the Albany & Eastern Railroad had received matching Connect Oregon grants — which are funded by the Oregon Lottery — to improve the rail line.
Albany & Eastern Railroad owner Rick Franklin said Girod’s legislation was “clearly unconstitutional and discriminatory” and also targeted a singular “major business, employer and taxpayer” in the district.
“We could not know at that time how detrimental Senator Girod’s law would be to the city of Lebanon, its businesses and its citizens,” Franklin said. “An intermodal facility could have been an economic boon to the Lebanon area. On behalf of the AERC and the city of Lebanon, I feel compelled to remove this discriminatory law so that it cannot cause any more damage.”
The Albany & Eastern Railroad is represented by Martin E. Hansen, a railroad attorney based in Bend.
The lawsuit contends the statue violates both the U.S. and Oregon Constitutions. The railroad argues:
• The Connect Oregon Fund was established in 2005 with a purpose of using State Lottery money to enhance rail, marine and aviation projects.
• Railroads across the country commonly charge neighboring land owners who cross railroad tracks annual easement fees to help pay for maintenance.
• In 2012, the Albany & Eastern Railroad purchased a section of tracks with a number of private crossings and for which neighboring property owners had not been assessed maintenance permit fees. Some of those property owners filed a lawsuit against the railroad, which drew considerable media attention. In January 2016, Circuit Court Judge David Delsman ruled that although property owners would not have to pay the annual fee, they would have to pay for a share of the crossings’ annual maintenance fees.
• In 2013, Senator Girod sponsored ORS 824.237, which called for prohibiting providing any Connect Oregon funds to a railroad that operates solely in Linn and Benton counties, and “since January 1, 2013, has charged landowners for an easement across a railroad to access that landowners for an easement across a railroad to access that landowner’s property.”
The only railroad with the state that meets that criteria is the Albany & Eastern Railroad.
The lawsuit contends that ORS 824.237 “interferes with instate commerce” and that the railroad has “been placed on a competitive disadvantage with all railroads within the state” because it singles out the Albany & Eastern as the only railroad that will not quality for Connect Oregon monies.
The railroad also argues that the statute is in violation of the Interstate Commerce Commission Termination Act. The Albany & Eastern contends it is regulated only by the federal Surface Transportation Board.
Senator Girod said Wednesday afternoon that he had not yet seen the lawsuit.