MONTGOMERY COUNTY, ET AL. v. VIRGINIA DEPARTMENT OF RAIL AND PUBLIC TRANSPORTATION, ET AL.
Record No. 100350
Supreme Court of Virginia
November 4, 2011
MELVIN
PRESENT: Kinser, C.J., Lemons, Millette, McClanahan, and Powell, JJ., and Russell and Lacy, S.JJ.
OPINION BY JUSTICE ELIZABETH A. MCCLANAHAN
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
The Virginia Department of Rail and Public Transportation (DRPT) entered into an agreement, pursuant to the Rail Enhancement Fund created by
Opposing the agreement between DRPT and Norfolk Southern, appellants, Montgomery County and the Board of Supervisors for Montgomery County (collectively, the County), instituted the instant action against DRPT, DRPT‘s Director, and the Commonwealth Transportation Board (CTB). Norfolk Southern subsequently intervened as a defendant. In its complaint, the County claimed that
Specifically, the County asserted that the statute and the agreement violated the prohibitions set forth in two of the clauses in
The parties submitted documentary evidence to the circuit court, and based upon thosе submissions filed cross-motions for summary judgment on the County‘s constitutional challenge. Ruling in favor of the three government defendants and Norfolk Southern (the appellees in this appeal), the circuit court concluded in its letter opinion that the agreement between DRPT and Norfolk Southern had been “properly effectuated pursuant to constitutionally valid legislation of the Virginia General Assembly animating public purposes, [and] governmental ones, aimed at providing for the common welfare of its citizenry to improve efficiencies of public roads.”
On appeal, the County challenges the constitutionality of
Concluding that
I. BACKGROUND
A. Legislative Intent for Shifting Highway Truck Traffic to Rail
More than a decade ago, the General Assembly expressed its concern over the growing congestion of heavy truck traffic on the highways in Virginia. In House Joint Resolution No. 704 from the 1999 legislative session, the General Assembly indicated that, through utilization of the Virginia Port Authority‘s Inland Port at Front Royal, the Port Authority collected truck-hauled containerized freight “in sufficient quantities to transport it in unit trains directly to the Ports of Hampton Roаds.” H. J. Res. 704, Va. Gen. Assem. (Reg. Sess. 1999). This mechanism, according to the General Assembly, resulted in “not only holding down costs paid by the shipper, but also eliminating a substantial number of trucks from the overcrowded long-haul highways of eastern Virginia.” Id.
Pointing to this example, the General Assembly declared, “a network of intermodal transfer facilities might be established that could prove useful in reducing heavy truck traffic on other long-haul highways in the Commonwealth, particularly Interstate Route 81.”1 Id. In addition, some of the intermodal facilities “might employ a variety of ‘piggy-back’ container, trailer, or semitrailer configurations.” Id.
Accordingly, the General Assembly tasked Virginia‘s Secretary of Transportation, in conjunction with the Virginia Department of Transpоrtation and DRPT, “to study the desirability and feasibility of establishing additional intermodal transfer facilities“; and to submit findings and recommendations from the study to the Governor and the 2001 Session of the General Assembly. Id.
The following year, in Senate Joint Resolution No. 55 from the 2000 legislative session, the General Assembly again addressed the traffic problem on Virginia‘s interstates. S. J. Res. 55, Va. Gen. Assem. (Reg. Sess. 2000). The General Assembly declared that “many of the Commonwealth‘s interstate highways are experiencing an erosion of safety as a result of staggering increases in traffic.” Id. An “acute example” of this problem, the General Assembly explained, was Interstate 81, which was designed “to carry no more than 15 percent of its total traffic volume as truck traffic, but whose current traffic is made up of as much as 40 percent trucks.” Id.
The General Assembly further declared that widening Interstate 81 alone was estimated to cost in excess of three billion dollars and take at least ten years to complete, and that similar improvements to Virginia‘s other interstates would have comparable costs and completion times. In an effort to provide an alternative measure that would “alleviate the excessive volumes of traffic” on Interstate 81 and Virginia‘s other interstate highways, the General Assembly determined that it may be “both desirable and feasible” to “shift traffic on our highways to trains on our railroads.” Id.
The General Assembly thus requested that the Secretary of Transportation expand her study regarding the establishment of additional intermodal transfer facilities, pursuant to 1999 House Joint Resolution No. 704, “to include the potential for shifting Virginia‘s highway traffic to railroads.” Id.
In 2001, the Secretary of Transportation issued a report to the Governor and the
In 2005, through House Joint Resolution No. 789, the General Assembly declared its support for such a proposal in the form of a major multi-state initiative between Virginia, West Virginia and Ohio, called the Heartland Corridor. H. J. Res. 789, Va. Gen. Assem. (Reg. Sess. 2005). As described in the resolution: “the Heartland Corridor proрoses the development of a seamless, efficient rail intermodal route from an Atlantic Ocean gateway, opening up a significant portion of western Virginia and West Virginia currently excluded from international intermodal markets, . . . and connecting to a center of existing domestic and international distribution in the Midwest, thereby strengthening the economic vitality and improving the efficiency and capacity of Virginia‘s and the nation‘s transportation network.” Id.
According to the General Assembly, this newly designated railway corridor would allow intermodal containerized traffic to “move directly across the heartland” from the ports in Hampton Roads to the Midwest. Id. Further, these containers could be double-stacked on trains — a key feature of the corridor — as a result of the construction of new clearance levels along the corridor. Id.
The Roanoke Valley would be among the locations gaining direct connection, via rail, to both the Virginia ports and the Midwest, the legislature further declared. This would be accomplished by the provision of an “intermodal ramp” in the Roanoke Valley region. Id. As explained in the resolution, rail intermodal transportation requires such “ramp facilities for the seamless transfer of rail-to-truck and the reverse“; and such facilities “must be well situated relative to other infrastructure, most critically, roadway connectors.” Id.
Upon completion, the General Assembly аlso declared, the Heartland Corridor would divert freight away from highways and onto trains in the double-stacked intermodal containers. Id. In doing so, the corridor would not only benefit the Commonwealth by way of economic development, it would also “benefit the traveling public and address congestion by growing freight opportunities via rail instead of road (alleviating the magnitude of higher highway maintenance costs).” Id. In short, the corridor, according to the General Assembly, “will play an important role in diverting highway traffic” to rail. Id.
The General Assembly concluded this resolution by declaring support for the Heartland Corridor project upon the recognition that it would “require a public-private partnership to bring [the projеct] to fruition.” Id. The General Assembly further indicated that this partnership should include, among others, the Commonwealth and Norfolk Southern. Id.
B. Rail Enhancement Fund Created by Code § 33.1-221.1:1.1
In the midst of declaring its support for intermodal transportation initiatives that would divert highway traffic to railroads, the General Assembly, in 2004, enacted
In subsection A of
As provided in subsection B, the Fund is supported by proceeds from various dedications and appropriations, as determined by the General Assembly from time to time, which are “paid into the state treasury and credited to the Fund.”
Pursuant tо subsection C, the Fund is administered by the Director of DRPT, subject to the approval of CTB for the expenditures from the Fund.
Finally, under subsection D, projects undertaken pursuant to this statute are further limited to those that CTB has determined “will result in public benefits to the Commonwealth or to a region [thereof] that are equal to or greater than the investment of funds under [the statute].”
C. Agreement Between DRPT and Norfolk Southern Pursuant to Code § 33.1-221.1:1.1
In October 2005, after the General Assembly had passed the joint resolution earlier in the year supporting the Heartland Corridor project, Norfolk Southern applied to DRPT for a grant from the Fund under
In December 2005, CTB, based on a recommendation by DRPT, voted to provide funding pursuant to
In May 2006, following approval of Norfolk Southern‘s grant application by DRPT and CTB, DRPT and Norfolk Southern entered into an agreement pursuant to
Norfolk Southern certified in the Agreement that it owns or will own or control the property on which the project improvements — the “Roanoke region intеrmodal facility” and the enlarged tunnels on the main line — will be constructed; and that it will protect DRPT‘s interest in the project.3 The Agreement provided that DRPT “has an interest in ensuring that [these] improvements created by the [p]roject continue to be operated for their intended purpose for the duration of the [p]erformance [p]eriod” (15 years, starting from the project completion date).
If the project does not result in at least 150,000 additional containers a year moving through the Heartland Corridor after the fifth year following completion of the improvements, the Agreement provided that Norfolk Southern must reimburse DRPT a prorated amount according to a formula specified in the Agreеment. In addition, if Norfolk Southern abandons or ceases to operate the improvements within the performance period, DRPT “shall be reimbursed the value of its interest in the portion of the [p]roject abandoned or discontinued.” Also, in the event of a sale of one or more of the improvements purchased using funds provided to Norfolk Southern under the Agreement, DRPT shall be “repaid a share of the sale proceeds proportionate to its share of the original purchase price” unless the property continues in operation by another entity consistent with the agreement.
II. ANALYSIS
A. County‘s Assignments of Error
On appeal, the County does not make a facial challenge to
The County here argues that the circuit court erred by upholding the constitutionality of
The County asserts the circuit court erred because: (i) under the Agreement, DRPT will be a party to and have an interest in a privately owned and operated railroad terminal in violation of the internal improvements clause; (ii) development of the terminal is not a governmental function excepting it from the internal improvements clause; and (iii) under the Agreement, the Commonwealth will grant its credit to a private railroad company for the development of the terminal in violation of the credit clause.4
The County‘s constitutional arguments are questions of law that we review de novo. Copeland v. Todd, 282 Va. 183, 193, ___ S.E.2d ___ (2011); Covel v. Town of Vienna, 280 Va. 151, 163, 694 S.E.2d 609, 617 (2010). In conducting this review, we are guided by settled principles of statutory construction. “[W]hen, as here, the constitutionality of a statute is challenged, оur determination of legislative intent is guided by the recognition that all actions of the General Assembly are presumed to be constitutional.” Copeland, 282 Va. at 193, ___ S.E.2d at ___ (citations and internal quotation marks omitted). There is, indeed, no stronger presumption known to the law. FFW Enters. v. Fairfax County, 280 Va. 583, 590, 701 S.E.2d 795, 799-800 (2010); Reynolds v. Milk Comm‘n of Va., 163 Va. 957, 966, 179 S.E. 507, 510 (1935); Whitlock v. Hawkins, 105 Va. 242, 248, 53 S.E. 401, 403 (1906).
Accordingly, this Court must resolve “any reasonable doubt regarding a statute‘s constitutionality in favor of its validity.” Supinger v. Stakes, 255 Va. 198, 202, 495 S.E.2d 813, 815 (1998) (citing Blue Cross of Va. v. Commonwealth, 221 Va. 349, 358, 269 S.E.2d 827, 832 (1980); see FFW Enters., 280 Va. at 590, 701 S.E.2d at 800. Further, “[a]ny ‘judgment as to the wisdom and propriety of a statute is within the legislative prerogative, and this Court ‘will declare the legislative judgment null and void only when the statute is plainly repugnant to some provision of the state or federal constitution.’ ” Supinger, 255 Va. at 202, 495 S.E.2d at 815 (quoting Blue Cross of Va., 221 Va. at 358, 269 S.E.2d at 832); see City of Newport News v. Elizabeth City County, 189 Va. 825, 831, 55 S.E.2d 56, 60 (1949); Shenandoah Limе Co. v. Governor of Va., 115 Va. 865, 867-68, 80 S.E. 753, 753 (1914).
C. Internal Improvements Clause
We turn first to the County‘s argument that the development of the rail/highway intermodal facility under the terms of the Agreement is not a governmental function excepted from the internal improvements clause, and thus violates this constitutional provision.
The internal improvements clause, set forth in
This prohibition, along with the one set forth in the credit clause, dates back to the 1869 Constitution. See
In the 1902 Constitution, however, the internal improvements clause was revised to expressly “except public roads” from its restrictions on the Commonwealth.
By removing the prohibition on the Commonwealth from again “becoming interested in public rоads,” the 1902 Constitution “restore[d] full control of that governmental power to the legislature,” Almond v. Gilmer, 188 Va. 822, 837, 51 S.E.2d 272, 277 (1949); and that authority continues under our current Constitution. Indeed, we have made clear that “[t]he construction, maintenance and operation of a highway system is a governmental function. Unless abridged by the Constitution, that inherent power exists in the State by virtue of its sovereignty.” Id. at 836, 51 S.E.2d at 277. See generally 2 A. E. Dick Howard, Commentaries on the Constitution of Virginia 1126-35 (1974).
Thus, the County‘s challenge to
The declarations of the General Assembly in the resolutions described above supporting intermodal transportation initiatives, the policy statement to similar effect in
The General Assembly also made clear that it supports the development of intermodal facilities as a means of relieving Virginia‘s highways of congestion from excessive truck traffic, and particularly Interstate 81. Indeed, if the rail/highway intermodal facility in Montgomery County were utilized for the
Pursuant to
Giving
In so holding, we reject the County‘s further argument that the development of the Montgomery County intermodal facility cannot be a governmental function where the facility is to be owned and operated by Norfolk Southern.7
When
The General Assembly necessarily made the determination that a facility such as the rail/highway intermodal facility in Montgomery County could provide the desired public benefits with the railroad owning and operating the facility when it amended
The ratio decidendi of Harrison III is indeed supportive of our holding in this case. There, one of the issues was whether the Virginia State Ports Authоrity (Authority) was in violation of the internal improvements clause by leasing, pursuant to the Code, the Authority‘s port and harbor facilities in Hampton Roads to the Norfolk and Western Railway Company (Norfolk Western) for operation as general cargo port facilities. Id. at 968-71, 121 S.E.2d at 616-17. Having already decided in Harrison II that the Authority did not violate the internal improvements clause by acquiring and operating the port and harbor facilities on the basis that those undertakings were an exercise of a governmental function, this Court held in Harrison III that the leasing of the facilities to Norfolk Western also constituted no such violation. Id. at 972-73, 121 S.E.2d at 618-19. In reaching that decision, we reasoned: “That the enterprise is a governmental function and for a public purpose has been affirmed by this [C]ourt. If the public purpose can, in the judgment of the Authority, be better accomplished through [leasing the facilities] than through the operation of the enterprise by the Authority itself, there is no good reason and no constitutional obstacle against the exercise of this power to lease.” Id. at 972, 121 S.E.2d at 618-19. “It is not our function,” we concluded, “to decide whether it is a wise policy for the Authority to lease this facility rather than to operate it itself. Courts have nothing to do with the wisdom of legislation.” Id. at 972-73, 121 S.E.2d at 619.
The same can be similarly said of the legislature‘s determination, expressed through
D. Credit Clause
The County‘s alternative constitutional challenge to
The credit clause provides that “[n]either the credit of the Commonwealth nor of any county, city, town, or regional government shall be directly or indirectly, under any device or pretense whatsoever, granted to or in aid of any person, association, or corporation.”
Given, again, our governing standard of review, we conclude that this alternative challenge must also fail. Simply put, DRPT‘s grant to Norfolk Southern for the development of the intermodal facility was only that, a grant, and not an extension of the Commonwealth‘s credit to Norfolk Southern. Indeed, it was effectively a purсhase by the Commonwealth of additional traffic capacity for Interstate 81.
Analyzing the credit clause in
“In the popular sense, lending or loaning money or credit is at once understood to mean a transaction creating the customary relation of borrower and lender, in which the money is borrowed for a fixed time, and the borrower promises to repay the amount borrowed at a stated time in the future, with interest at a fixed rate. And that is the sense, then, in which the language employed in those sections must be understоod, and so understood, no county, for example, shall lend or pledge its credit or faith directly or indirectly, or in any manner which would create the customary relation of borrower and lender.”
Almond I, 197 Va. at 790-91, 91 S.E.2d at 667 (quoting Bannock County v. Citizens’ Bank and Trust Co., 22 P.2d 674, 680 (Idaho 1933)).
Thus, in the absence of an extension of actual credit by the Commonwealth, the credit clause does not apply. See Reasor v. City of Norfolk, 606 F. Supp. 788, 795-97 (E.D. Va. 1984) (in deciding whether the challenged activities violated the credit clause, federal district court, relying on Almond I, explained that term “credit” under
Button v. Day, 208 Va. 494, 495-505, 158 S.E.2d 735, 736-42 (1968) is the only decision of this Court holding that a challenged funding scheme was in violation of the сredit clause. As the funding scheme at issue here under
Finally, we do not view the Commonwealth‘s remedial interests in the Montgomery County intermodal facility under the terms of the Agreement as in any way transforming the grant or purchase into an extension of credit.
III. CONCLUSION
For these reasons, we conclude that
Affirmed.
Notes
§ 10. Lending of credit, stock subscriptions, and works of internal improvement.
Neither the credit of the Commonwealth nor of any county, city, town, or regional government shall be directly or indirectly, under any device or pretense whatsoever, granted to or in aid of any person, association, or corporation; nor shall the Commonwealth or any such unit of government subscribe to or become interested in the stock or obligations of any company, association, or corporation for the purpose of aiding in the construction or maintenance of its work; nor shall the Commonwealth become a party to or become interested in any work of internal improvement, except public roads and public parks, or engage in carrying on any such work; nor shall the Commonwealth assume any indebtedness of any county, city, town, or regional government, nor lend its credit to the same. This section shall not be construed to prohibit the General Assembly from establishing an authority with power to insure and guarantee loans to finance industrial development and industrial expansion and from making appropriations to such authority.
We note that this Court has not held in any of its decisions addressing the public roads exception to the internal improvements clause that private ownership of the particular facility at issue was a dispositive factor in deciding whether a violation of this constitutional provision had occurred. In the cases cited by the County in support of its private ownership argument, Gilmer (ferry facilities), Almond II (bus facilities), Harrison v. Day (Harrison I), 200 Va. 750, 107 S.E.2d 585 (1959) (local government produce markets), Harrison v. Day (Harrison II), 200 Va. 764, 107 S.E.2d 594 (1959) (port and harbor facilities), and Harrison v. Day (Harrison III), 202 Va. 967, 121 S.E.2d 615 (1961) (same), all of the facilities at issue were already owned, or were to be owned, by the Commonwealth or a political subdivision thereof. Thus, the issue of private ownership, in the context of the internal improvements clause, was not before this Court for review in any of those cases.