By Hakeem Onafowokan
In 2016, the state Legislature adopted a new law that benefits cities by limiting the fees and charges railroads may impose on utilities that cross railroad rights of way.
Public right-of-way management, administration, and regulation is an important part of local government. Public rights of way have long been used to locate public utilities. Sewer, water, and storm sewer pipes are located in the right of way along with private utilities such as gas, electric, and telecommunication lines.
Over time, many changes have occurred regarding public rights of way. As a result, cities have to ensure effective and careful management of these areas. To protect the public interest and public safety, local governments are charged with managing increasingly complex issues involving rights of way.
Many complex issues involve the location of rights of way. Public rights of way may be located in various areas, including near railroad crossings. Generally, cities enter into agreements with railroad companies to construct utilities over, under, or across a railroad right of way. The 2016 law (Minnesota Statutes, section 237.045) may impact these agreements with railroad companies.
One-time standard fee
The statute establishes a one-time standard fee of $1,250 to a railroad for utility facilities crossing over, under, or across the railroad’s right of way. This fee is paid instead of any license, permit, application, or processing fee that would reimburse the railroad for the crossing. The fee does adjust annually based on the percentage change in the annual producer price index.
Under the law, the railroad company may not impose any other fees or charges on the utility for the crossing. However, the utility must reimburse the railroad company for necessary and reasonable flagging expenses associated with a crossing, based on the railroad traffic at the crossing.
Flagging expenses are costs associated with protecting workers, equipment, and the public when construction is being conducted in the right of way. In addition, the statute establishes that no fee is required to be paid to a railroad when a proposed crossing is within a public right of way.
To be eligible to use the standard fee for crossing a railroad right of way, utility facilities may transport electricity, water, sewage, natural gas, oil, communications, fiber optics, cable television, or hazardous liquids. The type of utility facilities permitted include lines, wires, pipes, sewers, conduits, cables, valves, manholes, and attachments.
Utility facilities eligible to use the standard fee for crossing a railroad right of way include municipal utilities, municipalities, municipal power agencies, joint action agencies, cooperative electric associations, public utilities, pipeline companies, rural water systems, and telephone, telegraph, telecommunications, cable, and fiber optic carriers. Contractors or agents of utilities are also included.
The statute applies to any crossings that started after July 1, 2016. The statute also applies to any crossing previously in existence where the agreement has expired or been terminated. If the amount equaling or exceeding the standard fee has been paid to the railroad company during the existence of the crossing, no further payments are required.
The statute does not prevent a municipal utility and a railroad company from continuing under an existing agreement if they so choose, or allowing a utility to use the eminent domain process to secure an easement for a railroad crossing.
If your utility has a crossing agreement in place for which you are still paying annual fees, you may want to consider reviewing the termination conditions in the agreement with your city attorney. If the city has cumulatively paid more than $1,250 in fees for that crossing, you may want to consider terminating the agreement, if the contract allows.
The Minnesota Municipal Utilities Association (MMUA) has template letters to help with terminating an agreement. To request a template and guide, contact MMUA at (763) 551-1230 or the League of Minnesota Cities Research Department at (651) 281-1200 or firstname.lastname@example.org.
Termination of existing crossing agreements with annual fees can be a complex process. Some railroad crossing contracts may have clauses that require the removal of the facility if the agreement is terminated. Because these agreements can be complex, it’s important to review the statute, current crossing agreements, and any railroad correspondence with your city attorney.
Hakeem Onafowokan is a research attorney with the League of Minnesota Cities. Contact: email@example.com or (651) 281-1225.
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