Peterson sued the Port of Benton (Port) alleging that the
Port violated article VIII, section 7 and article I, section
12 of the Washington Constitution by allowing Burlington
Northern Santa Fe Railway Co. (BNSF) the free use of public
railroad tracks despite the wear and tear caused by
BNSF's use of those tracks. Peterson appeals the trial
court's order granting summary judgment and dismissing
his case. We affirm.
1947, the Atomic Energy Commission (AEC), and the
predecessors to BNSF and the Union Pacific Railroad (UP)
entered into a contract to establish rail service to the
Hanford Nuclear Reservation (Hanford). The 1947 contract
provided that the predecessors of BNSF and UP would each pay
one half of $100, 000 to AEC, which equaled the cost to
construct 5.4 miles of rail tracks between Hanford and the
north bank of the Yakima River. In return, BNSF and UP would
be entitled to use those tracks free of rental or any other
charge. The 1947 contract was terminable upon six months'
notice. The Interstate Commerce Commission (ICC) approved the
1947 contract and included in its report that "when full
payment has been made, [BNSF and UP] should thereafter be
permitted to operate over the tracks without further
1998, the Department of Energy (DOE) declared certain parts
of its Hanford property to be surplus, and transferred 767.13
acres of industrial property to the Port by indenture. The
conveyance was valued at $5.1 million. The conveyance
included the 5.4 miles of railroad tracks built under the
1947 contract. The indenture assigned DOE's rights under
the 1947 contract to the Port. As assignee, the Port agreed
to be bound by the obligations and considerations in the 1947
contract. The successor to the ICC, the Surface
Transportation Board (STB), approved the transfer.
same day that the indenture became effective, the Port
entered into a maintenance and operation agreement with
Livingston Rebuild Center, Inc. (LRC), where the Port paid
LRC to maintain the track. Peterson controlled LRC.
Subsequently, Peterson formed the Tri-City Railroad Co.
(TCRY) as a local, short-haul railroad company, and LRC
assigned its rights and obligations under the maintenance
agreement to TCRY.
2000, the Port entered an agreement with TCRY to interchange
railroad cars. Under the interchange agreement, TCRY charged
BNSF a per-car fee for exchanging cars for the benefit of
BNSF's customers. The interchange agreement
"specifically reserved BNSF's rights under the 1947
and 1961 Agreements."
2002, TCRY negotiated a lease agreement with the Port for the
right to operate the track and use certain real and personal
property. The lease obligated TCRY to "use the Property
for the operation and maintenance of railroad transportation
facilities." The lease was "subject to the
restrictions contained in the Indenture between the United
States of America and the Port, the amendments thereto, and
the Quit Claim Deed from the United States of America."
The lease also obligated TCRY's "use, operations,
and maintenance of the tracks [to] comply with the provisions
of the Quit Claim Deed and Indenture from the United States
of America through which the Port acquired title to the
property." Additionally, the lease indicated that TCRY
was provided with copies of the indenture.
lease indicated that TCRY, "at its sole cost and
expense, shall maintain the Property and all improvements and
fixtures then existing thereon in good condition and repair,
subject to reasonable wear and tear." Until 2009, BNSF
paid TCRY to interchange cars, on a per-car basis. The
interchange fees were used to maintain the tracks. BNSF
provided TCRY with a written termination notice because BNSF
realized it "could operate its own cars on the Richland
Trackage at a savings of around $100-150 per car" under
the 1947 contract.
BNSF ended its agreement with TCRY in 2009, TCRY did not
believe that BNSF had a right to operate directly on the
tracks and attempted to physically block BNSF's use of
the tracks. BNSF responded by filing a lawsuit in the United
States District Court seeking declaratory and injunctive
relief prohibiting TCRY from blocking BNSF's access to
the rail tracks. BNSF Ry. Co. v. Tri-City & Olympia
Ry. Co. LLC, 835 F.Supp.2d 1056, 1066 (E.D. Wash. 2011).
The District Court declared that "for all of the
historical complexity surrounding the Richland Trackage, the
relative rights of the parties are actually quite simple: The
United States granted BNSF and UP's predecessors in
interest full rights to operate on the Richland Trackage, and
TCRY took possession of the Richland Trackage subject to
these rights." BNSF Ry. Co., 835 F.Supp.2d at
1066-67. The District Court entered a permanent injunction
requiring TCRY to allow BNSF and UP to directly serve
customers on the tracks. BNSF Ry. Co., 835 F.Supp.2d
filed this action on August 15, 2016, alleging the Port and
the Washington Department of Revenue (DOR) violated their
statutory taxing duties, article VIII, section 7, and article
I, section 12 of the Washington Constitution. BNSF and UP
successfully moved to intervene. Port taxpayers, Peggi
Doggett, Jennifer Hartsfield, Jason Mount, Mandi Oukrop, and
James Summey then successfully moved to intervene, objecting
to the Port's gift of public funds and property to BNSF.
parties moved for summary judgment. The trial court granted
the Port's and BNSF's motions for summary judgment
and denied Peterson's motion for summary judgment.
argues first that by allowing BNSF to use its tracks rent
free, and without paying for the impact to the tracks from
wear and tear, the Port has made an unconstitutional gift of
public funds in violation of article VIII, section 7 of the
Washington Constitution. Peterson contends that the trial
court erred when it found that there was no issue of material
fact as to whether the Port was receiving a grossly
inadequate return. We disagree.
review summary judgment de novo and consider the facts in a
light most favorable to the nonmoving party. Young v. Key
Pharmaceuticals, Inc., 112 Wn.2d 216, 225, 770 P.2d 182
(1989). "[S]ummary judgment is appropriate where there
is 'no genuine issue as to any material fact and . . .
the moving party is entitled to judgment as a matter of
law.'" Elcon Const, Inc. v. E. Wash. Univ.,
174 Wn.2d 157, 164, 273 P.3d 965 (2012). "In a summary
judgment motion, the moving party bears the initial burden of
showing the absence of an issue of material fact."
Young, 112 Wn.2d at 225. If the moving party is the
defendant and meets this initial showing, "then the
inquiry shifts to the party with the burden of proof at
trial." Young, 112 Wn.2d at 225. Constitutional
issues are reviewed de novo. Dep't of Ecology v.
Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4
VIII, section 7 of the Washington ...