The Virginia Supreme Court issued a ruling against Cox Communications that should trouble anybody building a fiber network that must cross railroad tracks. The case involves a dispute brought by the Norfolk Southern Railroad that challenged a new right-of-way law related to railroads.

The disputed law was unanimously passed in the General Assembly in 2023. The law requires that railroads respond and approve requests for fiber crossings across railroad tracks within 35 days or else file a dispute with the State Corporation Commission. The law sets the maximum fee for a right-of-way at $2,000 plus up to $5,000 to compensate a railroad for implementation costs.

Cox Communications invoked the new law in the spring of 2024 by requesting three underground railroad crossings in New Kent County. Norfolk Southern asked for a fee that exceeds the State’s cap and Cox refused to pay more than the amount established by law. Norfolk Southern appealed at the SCC, which declined to hear the case.

Norfolk Southern appealed to the Virginia Supreme Court. They claimed that the low rates established by the State equate to a taking of property for the benefit of Cox Communications, a for-profit corporation.

The Supreme Court agreed with Norfolk Southern. The Court said that the law violated the application of Code § 56-16.3 and violated Article I, Section 11 of the Constitution of Virginia. This part of the Constitution provides that property can only be taken for ‘public use’ and the party asking to take the property must prove the public use. The Court said that economic development and Cox’s private benefit do not justify a taking.

An article in the Cardinal News quotes Senator Bill Stanley, the lead proponent of the bill in the Senate, who called the decision wrong and disappointing. He says the State gave the land to railroads for the public benefit, but that railroads now seek to protect it as their own property against public benefit.

For those not familiar with legal language, the real dispute is about the fee. The railroad was ready to grant Cox a right-of-way for a fee higher than $7,000, and the railroad says it is a ‘taking’ for it to be required to the lower fee determined by the legislature.

This is an issue that plays out daily across the country where railroads charge high fees to allow fiber or other utilities to cross a railroad right-of-way. The Virginia law was trying to put a dollar limit on the cost of such rights-of-way and also trying to speed up the process. The Virginia court ruling made it clear that the legislature doesn’t have the right to put a cap on railroad fees.

Hopefully, this doesn’t make the entire law invalid and the 35-day response time will stay in place. If not, the legislature ought to act to close that gap.

The other issue that is not mentioned in the dispute is that Cox wants to place a buried conduit under the railroad tracks. From a practical perspective it’s impossible to believe that a conduit can in any way diminish the railroad’s property or operations. I can better understand why a fiber owner needs an easement to bury conduit on private land because the landowner might someday want to build something on that location. But railroad rights-of-ways are almost entirely for the purpose of laying track, and a buried conduit doesn’t stop that purpose. I know every lawyer reading this will give me several reasons why property laws are structured this way, but I also know that every fiber network owner is as perplexed by this as I am.