Broadband installation statute unconstitutional

A Virginia statute that allowed internet providers to run fiber optic cables across railroad property without showing the installation was for public use is unconstitutional, because it permits a taking of private property, the Supreme Court of Virginia has ruled.

Va. Code § 56-16.3 was enacted in 2023. Subsequently, Cox Communications Hampton Roads sought to install fiber optic cables across Norfolk Southern‘s railroad tracks.

Norfolk Southern challenged the constitutionality of the statute, arguing that it violated Article I, Section 11 of the state constitution.

The State Corporation Commission disagreed and allowed Cox to proceed with the installation. Norfolk Southern appealed to the state’s high court.

In an opinion authored by Justice Teresa M. Chafin, the Supreme Court of Virginia held that allowing Cox to install fiber optic cable under the train tracks meant the cables “would occupy a defined space for an indefinite period of time [and such] a physical occupation is a taking.”

Further, Chafin continued, “the taking at issue … is not for a public use. Cox is a private, for-profit broadband service provider. It is not a government entity, public service corporation or public service company. Therefore, Cox cannot exercise the power of eminent domain for a ‘public use,’ under either Article I, Section 11 of the Constitution of Virginia or Code § 1-219.1.”

The 11-page decision is Norfolk Southern Railway Company v. State Corporation Commission (VLW 025-6-015).

Slowing down broadband?

Rachel Yates, a Glen Allen-based attorney who specializes in appellate litigation, said that there will likely be arguments that the decision might slow down broadband service project timelines and may increase the costs.

But, she said, “this decision is based on Virginia’s Constitution and Code Section 1-219.1. The court was arguably simply applying the law that Virginia voters bargained for.”

John Byrum and Elaine McCafferty, attorneys for Norfolk Southern, did not respond to a request for comment. Virginia’s Office of the Attorney General, which represented the SCC, declined to comment.

A Cox spokesperson said in a statement that the company “remains committed to connecting all Virginia residents to high-speed internet and will continue to work with the railroads to ensure that we can access customers on all sides of railroad crossings.”

Underground cables

In early 2024, Cox Communications filed three applications to install fiber optic cables across Norfolk Southern tracks in New Kent County. Cox planned to install the cables in underground conduits beneath the railroad tracks.

Initially, Norfolk Southern did not object to the proposed crossings. It forwarded a draft licensing agreement to Cox that requested licensing fees exceeding the maximum allowed under statute.

Cox declined to accept the agreement, asserting that the proposed crossings were governed by Va. Code § 56-16.3. Cox said it would proceed with the project without the licensing agreement.

Norfolk Southern petitioned the SCC for relief.  In addition to asserting that Va. Code § 56-16.3 violated the state constitution, the railroad also argued that the statute eliminated a condemnor’s burden to establish a public use undergirding the proposed taking of property. The railroad further noted that Cox was a private, for-profit company.

The SCC rejected the railroad company’s argument, declining to hold a hearing on the matter. It concluded that the allegations in Norfolk Southern’s petition were insufficient to establish an “undue hardship.”

Norfolk Southern appealed.

Not a ‘public use’

Before the state supreme court, Norfolk Southern contended that Code § 56-16.3 permitted Cox to take its property for a nonpublic use and eliminated Cox’s constitutionally imposed burden to establish the public use underlying the proposed taking.

The court agreed.

“By essentially ignoring the public use requirement set forth in Article I, Section 11 of the Constitution of Virginia and Code § 1-219.1, Code § 56-16.3 permits Cox to take Norfolk Southern’s property for a private purpose,” Chafin wrote.

“Pursuant to the plain terms of Article I, Section 11 of the Constitution of Virginia, ‘[t]he condemnor bears the burden of proving that the use is public, without a presumption that it is.’ Despite this clear constitutional directive, Code § 56-16.3 does not even reference the term ‘public use,’” the court said.

The statute permits a broadband service provider to install fiber optic cables across railroad property after it files an application with the affected railroad company, the court said, and that application is not required to address the public use underlying the proposal. And although a railroad company may petition for relief based on three specific grounds, none of those grounds address the public use.

Therefore, the court held, “[i]n the present case, the application of Code § 56-16.3 effectuates a taking of Norfolk Southern’s property.”

Further, because Cox is a private company, not a government entity or public service company, it “cannot exercise the power of eminent domain for a ‘public use,’ under either Article I, Section 11 of the Constitution of Virginia or Code § 1-219.1.”

The court’s decision noted that the General Assembly enacted Va. § 56-16.3 to promote the expansion of broadband services.

“[W]e acknowledge that the expansion of an existing broadband network may benefit the members of the public who would be served by the expansion,” Chafin wrote. “Nevertheless, a taking for a ‘public benefit’ is not necessarily a taking for a ‘public use.’”

The court reversed the State Corporation Commission’s decision and remanded the case for judgment in favor of Norfolk Southern.

VLW 025-6-015

Virginia Lawyers Weekly