The town of Cicero can’t derail a lawsuit brought by BNSF, one of the country’s largest railroads, accusing Cicero of illegally attempting to tax and interfere with rail service, when the town attempted to slap a targeted $1 million per year sewer rate increase on BNSF’s railyard and allegedly force the railroad to help the town close a shortfall in its water and sewer operations.
On March 21, U.S. District Judge Steven C. Seeger rejected Cicero’s motion to dismiss BNSF’s legal action.
Cicero’s ordinance enacting the targeted rate increase “does not simply impact railroads – it effectively holds them hostage,” Seeger wrote in his decision.
“The Town told BNSF that it could pay the rate, or Cicero would shut off water, dig up pipes, and evict the railroad. Cicero sent BNSF an unmistakable message: Pay up, or get run out of town. … It’s at least plausible that the 1,000% spike in sewer rates interferes with rail service and prevents BNSF from carrying out its business.”
BNSF had taken Cicero to federal court in June 2021, after Cicero refused to relent from an ordinance the town enacted, rewriting its sewer rate schedule exclusively for railroads.
The new ordinance would have required railroads “to pay an exorbitant $350 per acre charge for monthly use,” BNSF argued in its complaint. Previously, BNSF, which operates a huge railyard in Cicero, had been billed $27.42 per acre for sewer services by the town.
Cicero ordinances require BNSF to connect its railyard to the town’s sewage system. And because the rate is assessed by the acre, and not by actual sewage use, BNSF said the town has given it no way to reduce its monthly bills.
The railroad noted it also cannot simply relocate its rail yard to escape the alleged cash grab.
According to the complaint, Cicero had threatened to force BNSF to close the rail yard unless it paid a sewer bill of more than $350,000.
In response, BNSF filed suit, asserting the new sewer rates amounted to illegal discrimination against railroads, in violation of federal laws that forbid local governments from interfering with railroad transportation, or placing special local taxes on them.
Cicero initially attempted to argue the rate increases were needed to help offset costs of flooding allegedly generated from stormwater runoff from BNSF’s railyard. The town also attempted to file suit in Cook County Circuit Court over those alleged flooding issues.
That lawsuit, however, was rolled into the action pending in federal court, and hooked up to the initial case.
In November, Judge Seeger slapped a temporary restraining order on Cicero’s efforts to enforce its new sewer rates, saying he believed Cicero’s arguments would likely ultimately be shown to not hold water, and BNSF would likely ultimately prevail in the dispute.
The judge appeared to move closer to those conclusions in refusing Cicero’s bid to flush BNSF’s lawsuit.
In his decision, Seeger said he believed BNSF to this point had established its case that Cicero’s actions plausibly could be seen as an illegal discriminatory tax targeting railroads, in violation of federal law. He further noted the $1 million annual sewer bill Cicero hopes to make BNSF pay would go a long way toward helping Cicero close a $1.2 million hole in its water and sewer budget, without raising rates on residential customers and other commercial users.
Further, the judge also ruled BNSF could continue with its claims that Cicero had improperly moved to restrict interstate commerce, violating the U.S. Constitution’s commerce clause, which gives that authority solely to Congress.
Cicero attempted to argue it and BNSF are merely “market participants” engaged in a commercial transaction, as Cicero charges a fee for a service and those fees should not be seen as preventing BNSF from conducting business and from shipping products across the country using its rail lines.
Not so, said Seeger.
The judge described Cicero’s argument as “pollyannish,” noting the town attempted to muscle BNSF using powers not afforded to any private company.
“Cicero’s role was not merely providing a service for a fee,” the judge said. “It used its police and regulatory powers to force BNSF to purchase that service – at a price dictated by Cicero – or else.”
Cicero is represented in the actions by attorneys Cynthia S. Grandfield, Timothy A.M. Woerner and Michael A. Albert, of the Del Galdo Law Group, of Berwyn.
BNSF has been represented by attorneys Renato Marriotti, Holly H. Campbell and Sara L. Chamberlain, of the firm of Thompson Coburn LLP, of Chicago and St. Louis, as well as attorneys with the firm of Munger Tolles & Olson, of San Francisco.