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MONTANA GRAIN ELEVATOR ASSN. v. RILEY

August 31, 1984

MONTANA GRAIN ELEVATOR ASSOCIATION, et al., Plaintiffs,
v.
John H. RILEY, et al., Defendants



The opinion of the court was delivered by: PARKER

 BARRINGTON D. PARKER, District Judge:

 This proceeding, brought by the Montana Grain Elevator Association ("Montana Grain") and the co-plaintiff, Broadwater Grain and Supply, Inc. ("Broadwater Grain"), seeks a review of action taken by the Federal Railroad Administration ("FRA"), through its Administrator, in providing federal funds for the construction of a grain transloading facility. In 1978, the Congress enacted the Local Rail Service Assistance Act ("LRSA"), Pub.L. 95-607, which amended 49 U.S.C. § 1654(f). That section of the statute authorized the Secretary of Transportation to provide financial assistance to states for rail freight assistance programs, including the cost of constructing rail or rail-related facilities for the purpose of improving the quality and efficiency of rail freight service. The Secretary's authority was delegated to the FRA and to its Administrator.

 The plaintiffs request the Court to set aside the FRA's approval of applications by the State of Montana to use federal local rail service assistance funds for the construction of a grain transloading facility to be located near Butte, Montana. They also seek to enjoin any further disbursement of federal funds for the construction and operation of the "non-rail" facility at Butte, Montana.

 The parties agree that there are no disputed material facts, and thus the matter is presented for resolution on the merits. Cross motions for summary judgment have been filed. The various legal memoranda and affidavits filed by the parties have been considered, together with the oral arguments advanced at the hearing on the summary judgment motions.

 The Court concludes that the plaintiffs' application for relief and motion for summary judgment should be denied, and that the Federal Railroad Administration and its Administrator acted within the scope of their delegated statutory authority. The reasons for that determination are set out below.

 BACKGROUND

 Plaintiff Montana Grain is an unincorporated trade association domiciled in the State of Montana. Its members are engaged in the operation of grain storage elevators and the buying and selling of grain and grain products in Montana. Broadwater Grain, a member, is a Montana corporation engaged in the storage and marketing of grain, feed and farm supplies. The defendants are the Federal Railroad Administration, the Administrator of that federal agency in his official capacity; the State of Montana and the Port of Montana, a nonprofit corporation of the State of Montana.

 Section 1654(f)(4) of Title 49 authorizes the Secretary of Transportation to provide financial assistance to states for rail freight assistance programs designed to cover the cost of constructing rail or rail related facilities for the purpose of improving the quality and efficiency of rail freight service. In carrying out the mandate of section 1654, the Secretary's responsibilities have been delegated to the Federal Railroad Administrator. 49 C.F.R. § 1.49(t). The agency's regulations governing projects seeking federal financial assistance are codified at 49 C.F.R. Part 266.

 The facility which is the center of dispute is a grain subterminal. Following extensive study, the State of Montana, through its Department of Commerce, determined that the proposed grain subterminal would enhance the agricultural economy of the entire state by providing grain producers expanded access to new markets through direct single-line rail service to the West Coast. The project was specifically designed for the purpose of enhancing the underutilized rail capacities of the lines serving the affected areas. It was anticipated that the proposed terminal would draw grain by truck from a 16 county area in the southwest and south central portions of Montana for transloading and shipment on rail car unit trains. It was further expected that the facility's ability to generate unit train traffic would significantly improve the quality and efficiency of rail freight service in Montana. (Affidavit of Joanne McGowan, p. 3, paragraph 6; filed May 23, 1984.) *fn1"

 The project is located near Butte and Silver Bow, Montana, near the intersection of two interstate highways and the intersection of the Union Pacific and Burlington Northern Railroads. The facility would accommodate 500,000 bushels of grain and is designed to accept and convey grain for transloading from truck to the terminal and from the terminal to rail car. It would include 7,000 feet of rail trackage, a rail car mover, load out spout, grain distributor, receiving pit, conveyor systems, scales and storage bins. (McGowan Affidavit, p. 2, paragraph 3, supra.)

 The proposed facility would receive grain by truck from local farmers. The grain would be stored at the terminal for subsequent shipment by rail to markets on the West Coast. The project is designed to facilitate the transfer of cargo from motor carrier transportation to rail transportation. It would be served by the Union Pacific Railroad. Access to the Burlington Northern Railroad would also be physically possible and facilitated. (Affidavit of John Craig, p. 5, paragraph 13; filed June 1, 1984.) *fn2" Pursuant to 49 U.S.C. § 1654(k)(2), the Union Pacific certified to the FRA that the railroad carried less than 3 million gross tons per mile over the relevant line segment during the 12 month period ending November 1983. (Craig Affidavit, p. 6, and Attachment F, supra.)

 The Port of Montana would construct and own the subterminal. In turn, the Port would lease it to an independent grain company to conduct actual operations at the terminal. Numerous operators were solicited by the Port to operate the terminal, including members of Montana Grain, but no interest was expressed. In late 1983, the Scoular Grain Company accepted the Port's offer to lease and operate the facility. (Craig Affidavit, pp. 2-3, supra.)

 The subterminal rail assistance project was identified and qualified for federal assistance following an extensive feasibility analysis, publication of a 1983 Montana Rail Plan Supplement, and an open public involvement program. The State of Montana submitted its application for federal financial assistance to the FRA in 1983, in accordance with applicable statutory and regulatory requirements. (Craig Affidavit, p. 2, supra.) The application requested FRA approval to use approximately $1.1 million of previously granted federal funds for construction of the grain subterminal facility. That application was approved on December 14, 1983. Subsequently, on January 23, 1984, the State requested $649,473 in additional ...


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