A federal appeals court has lowered the crossing gate in front of a Virginia law intended to speed broadband deployment across railways.
The Fourth U.S. Circuit Court of Appeals, in an opinion released Friday, ruled that a railroad industry group has the right to challenge whether a federal statute preempts the state law in question. The industry group cannot, however, challenge whether the law violates the constitutional right to just compensation for private property taken for public use, the appeals court ruled.
Virginia’s General Assembly in 2023 passed the law regarding fiber-optic broadband lines crossing railroads. It passed both the state Senate and House of Delegates unanimously, in response to complaints from internet service providers that railroads were charging them high fees to cross their lines and causing long delays to completion.
The money and time factors were keeping fiber-optic broadband from rural customers, legislators said at the time.
The Association of American Railroads, which represents Norfolk Southern and CSX among others, soon filed suit in Virginia’s Eastern District federal court. The suit contended that federal law on the subject renders the recent state law “void and unenforceable,” and that the state law violates the U.S. Constitution’s “takings clause” by failing to provide the railroads with just compensation based on market value.
The Virginia attorney general’s office responded on behalf of leaders of the State Corporation Commission — which would settle disputes under the law — and the Department of Transportation. The office moved to dismiss the case, claiming in part that the association did not have standing to file without its members’ participation. Neither Norfolk Southern nor CSX, which run most of the commonwealth’s rail lines, was party to the action.
U.S. District Judge David Novak ruled in April 2024 that the association did not have standing without its members’ participation and dismissed the case. The association appealed.
After hearing arguments in November 2024 and January 2025, the court released its opinion on Friday, sending part of the case back to Novak. The Richmond-based jurist will hear arguments centered on the federal Interstate Commerce Commission Termination Act.
With that law, called ICCTA for short, “Congress made clear its intent to preempt state regulation of rail transportation,” which includes “a law or action ‘that may reasonably be said to have the effect of ‘managing’ or ‘governing’ rail transportation,’” Judge Pamela Harris wrote in the court’s opinion.
The appeals court didn’t take a stand on whether ICCTA precluded Virginia’s law, only on whether the Association of American Railroads needed its members signed on as parties to the suit in order to make its arguments. A court could find facts without information specific to each railroad that might be affected, it ruled.
Where the Constitution’s Fifth Amendment “takings” clause is concerned, however, the railroads would have had to join the case, which requires “particularized proofs” that would require their direct participation.
The Virginia Supreme Court in May ruled against Cox Communications in two cases, saying that the cable giant and internet service provider cannot use the 2023 law to impose eminent domain on railways’ property while trying to reach the commonwealth’s more remote areas.
That decision ended another pair of federal cases, in which Norfolk Southern and CSX each had sued Cox over its attempts to use the law to place fiber optic cable through some Eastern Virginia crossings. The state and federal suits were all related to the same actions, and all parties had agreed to dismissal in Novak’s court by early June.
The Supreme Court ruled that a private company cannot use eminent domain.
These legal results leave the law in need of some repair, with the possibility that a future decision in Novak’s court will require its complete overhaul. Sen. Bill Stanley, R-Franklin County, who carried the bill as it moved from the legislature to the governor’s desk, said after the Supreme Court ruling that the General Assembly will revisit it.
Though it had passed unanimously in both chambers, there was a note of warning.
Sen. Mark Obenshain, R-Rockingham County, during deliberations over the bill, said he appreciated Stanley’s assertion that he “has considered everything” about it, “except perhaps Article 1 Section 11 of the Constitution of Virginia.”
That statement elicited some moans and jeers, a YouTube video shows.
The section states, in part, that “the General Assembly shall pass no law whereby private property, the right to which is fundamental, shall be damaged or taken except for public use.”
Obsenshain added: “These are commercial enterprises, on each side.”
