Montgomery County v. DRPT

PRESENT: Kinser, C.J., Lemons, Millette, McClanahan, and Powell,
JJ., and Russell and Lacy, S.JJ.

MONTGOMERY COUNTY, ET AL.
OPINION BY
v. Record No. 100350 JUSTICE ELIZABETH A. McCLANAHAN
November 4, 2011
VIRGINIA DEPARTMENT OF RAIL AND
PUBLIC TRANSPORTATION, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge

The Virginia Department of Rail and Public Transportation

(DRPT) entered into an agreement, pursuant to the Rail

Enhancement Fund created by Code § 33.1-221.1:1.1, to grant

funds to Norfolk Southern Railway Company (Norfolk Southern) for

the development of an "intermodal" terminal in Montgomery

County. The terminal would serve as a transition point for

shifting the transportation of freight by road to shipment by

rail, and vice versa.

Opposing the agreement between DRPT and Norfolk Southern,

appellants, Montgomery County and the Board of Supervisors for

Montgomery County (collectively, the County), instituted the

instant action against DRPT, DRPT’s Director, and the

Commonwealth Transportation Board (CTB). Norfolk Southern

subsequently intervened as a defendant. In its complaint, the

County claimed that Code § 33.1-221.1:1.1 and the agreement were

unconstitutional under Article X, Section 10 of the Constitution

of Virginia, and sought to enjoin their administration.
Specifically, the County asserted that the statute and the

agreement violated the prohibitions set forth in two of the

clauses in Article X, Section 10, commonly referred to as the

"internal improvements clause" and the "credit clause." Under

the internal improvements clause, the Commonwealth is prohibited

from certain involvement in "any work of internal improvement"

with the express exception of public roads and public parks.

Va. Const. art. X, § 10. Under the credit clause, the

Commonwealth is prohibited from lending its credit to any

person, association or corporation. Id.

The parties submitted documentary evidence to the circuit

court, and based upon those submissions filed cross-motions for

summary judgment on the County's constitutional challenge.

Ruling in favor of the three government defendants and Norfolk

Southern (the appellees in this appeal), the circuit court

concluded in its letter opinion that the agreement between DRPT

and Norfolk Southern had been "properly effectuated pursuant to

constitutionally valid legislation of the Virginia General

Assembly animating public purposes, [and] governmental ones,

aimed at providing for the common welfare of its citizenry to

improve efficiencies of public roads."

On appeal, the County challenges the constitutionality of

Code § 33.1-221.1:1.1, as applied, in authorizing funding to

Norfolk Southern for the facility's development under the terms

2
of the agreement. The issue we decide is whether this

application of the statute violates either the internal

improvements clause or the credit clause of Article X, Section

10 of the Constitution of Virginia.

Concluding that Code § 33.1-221.1:1.1, as applied in this

case, does not violate the subject provisions of Article X,

Section 10, we will affirm the judgment of the circuit court

awarding summary judgment in favor of appellees.

I. BACKGROUND

A. Legislative Intent for Shifting
Highway Truck Traffic to Rail

More than a decade ago, the General Assembly expressed its

concern over the growing congestion of heavy truck traffic on

the highways in Virginia. In House Joint Resolution No. 704

from the 1999 legislative session, the General Assembly

indicated that, through utilization of the Virginia Port

Authority's Inland Port at Front Royal, the Port Authority

collected truck-hauled containerized freight "in sufficient

quantities to transport it in unit trains directly to the Ports

of Hampton Roads." H. J. Res. 704, Va. Gen. Assem. (Reg. Sess.

1999). This mechanism, according to the General Assembly,

resulted in "not only holding down costs paid by the shipper,

but also eliminating a substantial number of trucks from the

overcrowded long-haul highways of eastern Virginia." Id.

3
 Pointing to this example, the General Assembly declared, "a

network of intermodal transfer facilities might be established

that could prove useful in reducing heavy truck traffic on other

long-haul highways in the Commonwealth, particularly Interstate

Route 81." 1 Id. In addition, some of the intermodal facilities

"might employ a variety of 'piggy-back' container, trailer, or

semitrailer configurations." Id.

Accordingly, the General Assembly tasked Virginia's

Secretary of Transportation, in conjunction with the Virginia

Department of Transportation and DRPT, "to study the

desirability and feasibility of establishing additional

intermodal transfer facilities"; and to submit findings and

recommendations from the study to the Governor and the 2001

Session of the General Assembly. Id.

The following year, in Senate Joint Resolution No. 55 from

the 2000 legislative session, the General Assembly again

addressed the traffic problem on Virginia's interstates. S. J.

Res. 55, Va. Gen. Assem. (Reg. Sess. 2000). The General

Assembly declared that "many of the Commonwealth's interstate

highways are experiencing an erosion of safety as a result of

1
"Intermodal" transportation can be defined as "the
shipment of cargo and the movement of people involving more than
one mode of transportation during a single, seamless journey."
W. Brad Jones, C. Richard Cassady & Royce O. Bowden, Jr.,
Developing a Standard Definition of Intermodal Transportation,
27 Transp. L.J. 345, 349 (2000).
4
staggering increases in traffic." Id. An "acute example" of

this problem, the General Assembly explained, was Interstate 81,

which was designed "to carry no more than 15 percent of its

total traffic volume as truck traffic, but whose current traffic

is made up of as much as 40 percent trucks." Id.

The General Assembly further declared that widening

Interstate 81 alone was estimated to cost in excess of three

billion dollars and take at least ten years to complete, and

that similar improvements to Virginia’s other interstates would

have comparable costs and completion times. In an effort to

provide an alternative measure that would "alleviate the

excessive volumes of traffic" on Interstate 81 and Virginia's

other interstate highways, the General Assembly determined that

it may be "both desirable and feasible" to "shift traffic on our

highways to trains on our railroads." Id.

The General Assembly thus requested that the Secretary of

Transportation expand her study regarding the establishment of

additional intermodal transfer facilities, pursuant to 1999

House Joint Resolution No. 704, "to include the potential for

shifting Virginia's highway traffic to railroads." Id.

In 2001, the Secretary of Transportation issued a report to

the Governor and the General Assembly presenting the results of

the study commissioned by the General Assembly pursuant to the

two resolutions described above. See Commonwealth of Va., Sec'y

5
of Transp., The Potential for Shifting Virginia's Highway

Traffic to Railroads, S. Doc. No. 30 (2001). The Secretary

explained in the report that a variety of data was collected on

truck movements, Interstate 81 improvement plans, and railroad

plans. Analyses were then conducted to determine "the

reasonableness of both highway and railroad plans and cost

estimates, the amount of highway traffic which might be diverted

to rail, and the extent to which those diversions might impact

I-81." Id. at 5. Based on the study, the Secretary ultimately

recommended in her report, among other things, that the

Commonwealth "fully consider proposals advanced to divert

highway traffic to rail transportation" in light of "the

potential for significant public benefits." Id. at 36.

In 2005, through House Joint Resolution No. 789, the

General Assembly declared its support for such a proposal in the

form of a major multi-state initiative between Virginia, West

Virginia and Ohio, called the Heartland Corridor. H. J. Res.

789, Va. Gen. Assem. (Reg. Sess. 2005). As described in the

resolution: "the Heartland Corridor proposes the development of

a seamless, efficient rail intermodal route from an Atlantic

Ocean gateway, opening up a significant portion of western

Virginia and West Virginia currently excluded from international

intermodal markets, . . . and connecting to a center of existing

domestic and international distribution in the Midwest, thereby

6
strengthening the economic vitality and improving the efficiency

and capacity of Virginia's and the nation's transportation

network." Id.

According to the General Assembly, this newly designated

railway corridor would allow intermodal containerized traffic to

"move directly across the heartland" from the ports in Hampton

Roads to the Midwest. Id. Further, these containers could be

double-stacked on trains – a key feature of the corridor – as a

result of the construction of new clearance levels along the

corridor. Id.

The Roanoke Valley would be among the locations gaining

direct connection, via rail, to both the Virginia ports and the

Midwest, the legislature further declared. This would be

accomplished by the provision of an "intermodal ramp" in the

Roanoke Valley region. Id. As explained in the resolution,

rail intermodal transportation requires such "ramp facilities

for the seamless transfer of rail-to-truck and the reverse"; and

such facilities "must be well situated relative to other

infrastructure, most critically, roadway connectors." Id.

Upon completion, the General Assembly also declared, the

Heartland Corridor would divert freight away from highways and

onto trains in the double-stacked intermodal containers. Id.

In doing so, the corridor would not only benefit the

Commonwealth by way of economic development, it would also

7
"benefit the traveling public and address congestion by growing

freight opportunities via rail instead of road (alleviating the

magnitude of higher highway maintenance costs)." Id. In short,

the corridor, according to the General Assembly, "will play an

important role in diverting highway traffic" to rail. Id.

The General Assembly concluded this resolution by declaring

support for the Heartland Corridor project upon the recognition

that it would "require a public-private partnership to bring

[the project] to fruition." Id. The General Assembly further

indicated that this partnership should include, among others,

the Commonwealth and Norfolk Southern. Id.

B. Rail Enhancement Fund Created
by Code § 33.1-221.1:1.1

In the midst of declaring its support for intermodal

transportation initiatives that would divert highway traffic to

railroads, the General Assembly, in 2004, enacted Code § 33.1-

221.1:1.1. See 2004 Acts ch. 621. Under this statute, the

Railway Preservation and Development Fund, now called the Rail

Enhancement Fund (the "Fund"), was established. 2 This is the

statutory funding scheme that appellants challenge on appeal in

the limited context of DRPT's agreement (explained in section C

below) to fund a portion of Norfolk Southern's development of an

2
See 2005 Acts ch. 323 (changing name of the Fund from
"Railway Preservation and Development Fund" to "Rail Enhancement
Fund").
8
intermodal facility in Montgomery County as part of the

Heartland Corridor project.

In subsection A of Code § 33.1-221.1:1.1, the General

Assembly expressly "declares it to be in the public interest

that railway preservation and development of railway

transportation facilities are an important element of a balanced

transportation system of the Commonwealth for freight and

passengers and . . . that the retention, maintenance,

improvement and development of freight and passenger railways

are essential to the Commonwealth's continued economic growth,

vitality, and competiveness in national and world markets

. . . ." Code § 33.1-221.1:1.1(A).

As provided in subsection B, the Fund is supported by

proceeds from various dedications and appropriations, as

determined by the General Assembly from time to time, which are

"paid into the state treasury and credited to the Fund." Code

§ 33.1-221.1:1.1(B).

Pursuant to subsection C, the Fund is administered by the

Director of DRPT, subject to the approval of CTB for the

expenditures from the Fund. Code § 33.1-221.1:1.1(C).

Permitted expenditures include, inter alia, those for

"acquiring, leasing, and/or improving railways or railroad

equipment . . . or facilities, or assisting other appropriate

entities to acquire, lease, or improve railways or railroad

9
equipment . . . or facilities, for freight and/or passenger rail

transportation purposes whenever the Board shall have determined

that such acquisition, lease, and/or improvement is for the

common good of a region of the Commonwealth or the Commonwealth

as a whole." Id.

Finally, under subsection D, projects undertaken pursuant

to this statute are further limited to those that CTB has

determined "will result in public benefits to the Commonwealth

or to a region [thereof] that are equal to or greater than the

investment of funds under [the statute]." Code § 33.1-

221.1:1.1(D). Such public benefits must include "the impact of

the project on traffic congestion, environmental quality, and

whenever possible, give due consideration to passenger rail

capacity on corridors . . . that have existing or proposed

passenger rail service." Id. In addition, a private source,

which may include, among others, a railroad, must provide a

minimum of 30 percent cash or in-kind matching contribution

toward the cost of the project. Id.

C. Agreement Between DRPT and Norfolk Southern
Pursuant to Code § 33.1-221.1:1.1

In October 2005, after the General Assembly had passed the

joint resolution earlier in the year supporting the Heartland

Corridor project, Norfolk Southern applied to DRPT for a grant

from the Fund under Code § 33.1-221.1:1.1. The grant was to be

10
used for payment of capital costs incurred for components of the

Heartland Corridor project located in Virginia. Norfolk

Southern requested $22,350,000 (and pledged the statutorily

required 30% match) for (i) the construction of a "rail/highway

intermodal facility" in the Roanoke region, so as to provide

western Virginia access to "rail intermodal service" along the

corridor; and (ii) the enlargement of four tunnels, so as to

provide double-stack container clearance on the railroad

company's main line along the Virginia section of the corridor.

According to Norfolk Southern, this intermodal facility would

"serve both the east-west traffic flows of the Heartland

Corridor as well as future north-south flows . . . associated

with the I-81 corridor." Norfolk Southern represented to DRPT

that without this grant to "close the funding gap" it would not

undertake these improvements to the corridor.

In December 2005, CTB, based on a recommendation by DRPT,

voted to provide funding pursuant to Code § 33.1-221.1:1.1 for a

number of infrastructure projects, including the rail/highway

intermodal facility in the Roanoke Valley region. DRPT's

recommendation was based on the required statutory criteria that

the projects enhance the rail transportation network as well as

remove trucks from Virginia's highways. CTB concluded that

"these projects will result in public benefits to the

Commonwealth as well as various regions of the Commonwealth in

11
which these projects are located, and serves the public

purpose."

In May 2006, following approval of Norfolk Southern's grant

application by DRPT and CTB, DRPT and Norfolk Southern entered

into an agreement pursuant to Code § 33.1-221.1:1.1 (the

"Agreement"). Under the Agreement, DRPT granted $22,350,000

from the Fund to Norfolk Southern for the proposed Heartland

Corridor project. A subsequent amendment in 2009 provided for

an additional $4,410,000 paid by DRPT to Norfolk Southern from

the Fund.

Norfolk Southern certified in the Agreement that it owns or

will own or control the property on which the project

improvements – the "Roanoke region intermodal facility" and the

enlarged tunnels on the main line – will be constructed; and

that it will protect DRPT's interest in the project. 3 The

Agreement provided that DRPT "has an interest in ensuring that

[these] improvements created by the [p]roject continue to be

operated for their intended purpose for the duration of the

[p]erformance [p]eriod" (15 years, starting from the project

completion date).

If the project does not result in at least 150,000

additional containers a year moving through the Heartland

3
A site in Montgomery County near Interstate 81 was
selected for the location of the development of the rail/highway
intermodal facility pursuant to the terms of the Agreement.
12
Corridor after the fifth year following completion of the

improvements, the Agreement provided that Norfolk Southern must

reimburse DRPT a prorated amount according to a formula

specified in the Agreement. In addition, if Norfolk Southern

abandons or ceases to operate the improvements within the

performance period, DRPT "shall be reimbursed the value of its

interest in the portion of the [p]roject abandoned or

discontinued." Also, in the event of a sale of one or more of

the improvements purchased using funds provided to Norfolk

Southern under the Agreement, DRPT shall be "repaid a share of

the sale proceeds proportionate to its share of the original

purchase price" unless the property continues in operation by

another entity consistent with the agreement.

II. ANALYSIS

A. County's Assignments of Error

On appeal, the County does not make a facial challenge to

Code § 33.1-221.1:1.1, as it did below. It does not argue "that

no set of circumstances exists under which the [statute] would

be valid, i.e., that the law is unconstitutional in all of its

applications." Washington State Grange v. Washington State

Republican Party, 552 U.S. 442, 449 (2008) (citation and

internal quotation marks omitted); see Jaynes v. Commonwealth,

276 Va. 443, 453, 666 S.E.2d 303, 308 (2008). Rather, the

County confines its challenge under Article X, Section 10 of the

13
Constitution of Virginia to the constitutionality of the

statute’s application to the facts of this case. See Volkswagen

of Am., Inc. v. Smit, 279 Va. 327, 336, 689 S.E.2d 679, 684

(2010) (addressing "as-applied" constitutional challenges).

The County here argues that the circuit court erred by

upholding the constitutionality of Code § 33.1-221.1:1.1 in

authorizing DRPT to grant funds to Norfolk Southern for the

development of the Montgomery County rail/highway intermodal

facility under the terms of the Agreement. According to the

County, the Commonwealth was expressly prohibited from entering

into such an agreement under the restrictions of both the

internal improvements clause and the credit clause contained in

Article X, Section 10.

The County asserts the circuit court erred because: (i)

under the Agreement, DRPT will be a party to and have an

interest in a privately owned and operated railroad terminal in

violation of the internal improvements clause; (ii) development

of the terminal is not a governmental function excepting it from

the internal improvements clause; and (iii) under the Agreement,

the Commonwealth will grant its credit to a private railroad

company for the development of the terminal in violation of the

credit clause. 4

4
Though funding for Norfolk Southern's costs associated
with enlarging four tunnels, as part of the Heartland Corridor
14
 B. Standard of Review

The County's constitutional arguments are questions of law

that we review de novo. Copeland v. Todd, 282 Va. 183, 193, ___

S.E.2d ___, ___ (2011); Covel v. Town of Vienna, 280 Va. 151,

163, 694 S.E.2d 609, 617 (2010). In conducting this review, we

are guided by settled principles of statutory construction.

"[W]hen, as here, the constitutionality of a statute is

challenged, our determination of legislative intent is guided by

the recognition that all actions of the General Assembly are

presumed to be constitutional." Copeland, 282 Va. at 193, ___

S.E.2d at ___ (citations and internal quotation marks omitted).

There is, indeed, no stronger presumption known to the law. FFW

Enters. v. Fairfax County, 280 Va. 583, 590, 701 S.E.2d 795,

799-800 (2010); Reynolds v. Milk Comm'n of Va., 163 Va. 957,

966, 179 S.E. 507, 510 (1935); Whitlock v. Hawkins, 105 Va. 242,

248, 53 S.E. 401, 403 (1906)).

Accordingly, this Court must resolve "any reasonable doubt

regarding a statute's constitutionality in favor of its

validity." Supinger v. Stakes, 255 Va. 198, 202, 495 S.E.2d

project, was included in the Agreement, no issue regarding that
part of the Agreement is before us on appeal. The only issue in
this appeal is the constitutionality of Code § 33.1-221.1:1.1’s
authorization of funding for the Montgomery County rail/highway
intermodal facility under the terms of the Agreement. Thus, all
discussion in this opinion regarding the constitutionality of
the statute’s application is to be understood as limited to the
context of the Agreement’s grant of funds to Norfolk Southern
for the development of the intermodal facility.
15
813, 815 (1998) (citing Blue Cross of Va. v. Commonwealth, 221

Va. 349, 358, 269 S.E.2d 827, 832 (1980); see FFW Enters., 280

Va. at 590, 701 S.E.2d at 800. Further, "[a]ny 'judgment as to

the wisdom and propriety of a statute is within the legislative

prerogative,' and this Court 'will declare the legislative

judgment null and void only when the statute is plainly

repugnant to some provision of the state or federal

constitution.' " Supinger, 255 Va. at 202, 495 S.E.2d at 815

(quoting Blue Cross of Va., 221 Va. at 358, 269 S.E.2d at 832);

see City of Newport News v. Elizabeth City County, 189 Va. 825,

831, 55 S.E.2d 56, 60 (1949)); Shenandoah Lime Co. v. Governor

of Va., 115 Va. 865, 867-68, 80 S.E. 753, 753 (1914).

C. Internal Improvements Clause

We turn first to the County's argument that the development

of the rail/highway intermodal facility under the terms of the

Agreement is not a governmental function excepted from the

internal improvements clause, and thus violates this

constitutional provision.

The internal improvements clause, set forth in Article X,

Section 10 of the Constitution of Virginia, 5 provides: "nor shall

5
Article X, Section 10 of the Constitution of Virginia
states in its entirety:
§ 10. Lending of credit, stock
subscriptions, and works of internal improvement.
Neither the credit of the Commonwealth nor
of any county, city, town, or regional government
16
the Commonwealth become a party to or become interested in any

work of internal improvement, except public roads and public

parks, or engage in carrying on any such work."

This prohibition, along with the one set forth in the

credit clause, dates back to the 1869 Constitution. See Va.

Const. art. X, §§ 12, 15 (1869). It was a response to

substantial financial losses the Commonwealth had sustained in

previous years from its general investments in entities such as

canal, turnpike and railroad companies, engaged in various large

scale projects in Virginia, i.e., "works of internal

improvement." Almond v. Day, 197 Va. 782, 787, 91 S.E.2d 660,

664 (1956) (Almond I). Faced with those losses, the

Constitutional Convention for the 1869 Constitution "resolved

shall be directly or indirectly, under any device
or pretense whatsoever, granted to or in aid of
any person, association, or corporation; nor
shall the Commonwealth or any such unit of
government subscribe to or become interested in
the stock or obligations of any company,
association, or corporation for the purpose of
aiding in the construction or maintenance of its
work; nor shall the Commonwealth become a party
to or become interested in any work of internal
improvement, except public roads and public
parks, or engage in carrying on any such work;
nor shall the Commonwealth assume any
indebtedness of any county, city, town, or
regional government, nor lend its credit to the
same. This section shall not be construed to
prohibit the General Assembly from establishing
an authority with power to insure and guarantee
loans to finance industrial development and
industrial expansion and from making
appropriations to such authority.
17
that the State should no longer lend its support to such

undertakings but should leave them to private enterprise,"

including the construction of public roads. Almond v. Day, 199

Va. 1, 7, 97 S.E.2d 824, 829 (1957) (Almond II).

In the 1902 Constitution, however, the internal

improvements clause was revised to expressly "except public

roads" from its restrictions on the Commonwealth. Va. Const.

art. XIII, § 185 (1902). The public roads exception was then

retained when the current version of the Constitution was

adopted in 1971. 6

By removing the prohibition on the Commonwealth from again

"becoming interested in public roads," the 1902 Constitution

"restore[d] full control of that governmental power to the

legislature," Almond v. Gilmer, 188 Va. 822, 837, 51 S.E.2d 272,

277 (1949); and that authority continues under our current

Constitution. Indeed, we have made clear that "[t]he

construction, maintenance and operation of a highway system is a

governmental function. Unless abridged by the Constitution,

that inherent power exists in the State by virtue of its

6
With the addition of a "public parks" exception to the
1902 Constitution by amendment in 1928, the internal
improvements clause in the current version of the Constitution
of Virginia is the same as it appeared in the amended 1902
Constitution. See Va. Const. art. XIII, § 185 (1902) (amended
as provided in 1928 Acts ch. 205, ratified by election held June
19, 1928).

18
sovereignty." Id. at 836, 51 S.E.2d at 277. See generally 2

A. E. Dick Howard, Commentaries on the Constitution of Virginia

1126-35 (1974).

Thus, the County's challenge to Code § 33.1-221.1:1.1's

authorization of funding for the development of the rail/highway

intermodal facility under the Agreement, based on an alleged

violation of the internal improvements clause, must be rejected

if the development can be reasonably deemed an exercise of the

Commonwealth's governmental function of constructing,

maintaining and operating its highway system. As such, the

development would fall within the public roads exception to the

internal improvements clause. See, e.g., Almond II, 199 Va. at

5-10, 97 S.E.2d at 827-31 (holding that statutory authorization

to State Highway Commission to provide bus service through or

over bridge-tunnel project was a governmental function linked to

State highway operations and, therefore, statute was not in

violation of internal improvements clause).

The declarations of the General Assembly in the resolutions

described above supporting intermodal transportation

initiatives, the policy statement to similar effect in Code

§ 33.1-221.1:1.1, and the statute's authorization for funding

facilities like the Montgomery County intermodal facility, all

combine to evince the General Assembly's judgment and intent

underlying the statute in its provision of funds for such

19
facilities. The General Assembly has made a policy

determination that intermodal facilities such as the one

proposed for Montgomery County should be developed and

integrated with Virginia's highway system as "roadway

connectors" – with the goal of establishing an intermodal

transportation system in Virginia that provides for "the

seamless transfer of rail-to-truck and the reverse." H. J. Res.

789, Va. Gen. Assem. (Reg. Sess. 2005). Under this system,

Virginia's highways and railroads would become inextricably

interconnected in the shipment of freight between road and rail,

with the intermodal facility serving as the point of transition.

The General Assembly's clearest statement of support for such a

system was set forth in House Joint Resolution No. 789, in 2005,

where it endorsed the multi-state Heartland Corridor initiative;

and that resolution was, in fact, passed shortly before Norfolk

Southern submitted its application to DRPT for the funding of

the Heartland Corridor projects in Virginia, which included the

development of the Montgomery County intermodal facility.

Furthermore, when the General Assembly declared its support for

the Heartland Corridor, it specifically identified the Roanoke

Valley region as the location for an intermodal facility.

The General Assembly also made clear that it supports the

development of intermodal facilities as a means of relieving

Virginia's highways of congestion from excessive truck traffic,

20
and particularly Interstate 81. Indeed, if the rail/highway

intermodal facility in Montgomery County were utilized for the

diversion of truck traffic from road to rail on the level

intended by the General Assembly, it would mean that, through

its support for the development of this facility, the

Commonwealth would have effectively purchased a significant

amount of additional capacity for traffic on Interstate 81.

This diversion of truck traffic from road to rail, according to

the General Assembly, would also "alleviat[e] the magnitude of

higher highway maintenance costs." H. J. Res. 789, Va. Gen.

Assem. (Reg. Sess. 2005). In furtherance of these legislative

objectives, Code § 33.1-221.1:1.1, in fact, requires, inter

alia, that the projects funded pursuant to the statute must

benefit the public by their "impact . . . on traffic

congestion." Code § 33.1-221.1:1.1(D).

Pursuant to Code § 33.1-221.1:1.1, these legislative

objectives were incorporated into the terms of the Agreement.

First, the Agreement provided for the development of a

rail/highway intermodal facility in Montgomery County through a

DRPT grant funding a substantial portion of Norfolk Southern's

capital costs for that development. Second, the Agreement also

imposed performance objectives upon Norfolk Southern to operate

the facility in such a way as to effectuate a large scale

diversion of truck traffic from Interstate 81 to rail under a

21
specific time frame. If the performance objectives are not met,

Norfolk Southern would be required to reimburse DRPT a prorated

amount of the funding it received from DRPT according to a

formula specified in the Agreement.

Giving Code § 33.1-221.1:1.1 its requisite presumption of

constitutionality under our governing standard of review, we

thus conclude that the funding for the facility under the

Agreement was authorized pursuant to legislation intended to be

directly related to the construction, maintenance and operation

of Virginia's highways. Therefore, we hold that the statute's

application in this case did not violate the internal

improvements clause because it comes within the public roads

exception.

In so holding, we reject the County's further argument that

the development of the Montgomery County intermodal facility

cannot be a governmental function where the facility is to be

owned and operated by Norfolk Southern. 7

When Code § 33.1-221.1:1.1 was originally enacted in 2004,

it contained language, in what was then subsection E, requiring

that the tracks and facilities constructed, and the property and

7
Under the Agreement, the Commonwealth retains an interest
in the Montgomery County intermodal facility in the form of
remedies it may enforce by way of set formulas for prorated
repayment in the event (i) Norfolk Southern does not meet its
performance goals, (ii) the facility is abandoned, or (iii)the
facility is sold and its operation discontinued.
22
equipment purchased, pursuant to the statute had to be owned by

the Commonwealth for the life of the project. See 2004 Acts ch.

621. That language was deleted from the statute the following

year. See 2005 Acts ch. 323.

The General Assembly necessarily made the determination

that a facility such as the rail/highway intermodal facility in

Montgomery County could provide the desired public benefits with

the railroad owning and operating the facility when it amended

Code § 33.1-221.1:1.1 in 2005 by deleting the requirement that

the Commonwealth own the facilities funded under the statute.

See 2005 Acts ch. 323. That determination was within the

prerogative of the legislature, and is not one that we may

disturb, as we do not find it repugnant to the internal

improvements clause under our narrow standard of review.

"Whether an enactment is wise, and matters of policy, are

questions for the legislative branch of government, and not the

judicial branch." Horner v. Dep't of Mental Health, Mental

Retardation, & Substance Abuse Servs., 268 Va. 187, 193, 597

S.E.2d 202, 205 (2004); see Danville Warehouse Co. v. Tobacco

Growers' Co-op. Ass'n, 143 Va. 741, 761, 129 S.E. 739, 745

(1925) (explaining that the "wisdom, expediency [or] justice" of

23
a statute are questions to be determined by the legislature, not

by the courts (citation and internal quotation marks omitted)). 8

8
We note that this Court has not held in any of its
decisions addressing the public roads exception to the internal
improvements clause that private ownership of the particular
facility at issue was a dispositive factor in deciding whether a
violation of this constitutional provision had occurred. In the
cases cited by the County in support of its private ownership
argument, Gilmer (ferry facilities), Almond II (bus facilities),
Harrison v. Day (Harrison I), 200 Va. 750, 107 S.E.2d 585 (1959)
(local government produce markets), Harrison v. Day (Harrison
II), 200 Va. 764, 107 S.E.2d 594 (1959) (port and harbor
facilities), and Harrison v. Day (Harrison III), 202 Va. 967,
121 S.E.2d 615 (1961) (same), all of the facilities at issue
were already owned, or were to be owned, by the Commonwealth or
a political subdivision thereof. Thus, the issue of private
ownership, in the context of the internal improvements clause,
was not before this Court for review in any of those cases.

The ratio decidendi of Harrison III is indeed supportive of
our holding in this case. There, one of the issues was whether
the Virginia State Ports Authority (Authority) was in violation
of the internal improvements clause by leasing, pursuant to the
Code, the Authority's port and harbor facilities in Hampton
Roads to the Norfolk and Western Railway Company (Norfolk
Western) for operation as general cargo port facilities. Id. at
968-71, 121 S.E.2d at 616-17. Having already decided in
Harrison II that the Authority did not violate the internal
improvements clause by acquiring and operating the port and
harbor facilities on the basis that those undertakings were an
exercise of a governmental function, this Court held in Harrison
III that the leasing of the facilities to Norfolk Western also
constituted no such violation. Id. at 972-73, 121 S.E.2d at
618-19. In reaching that decision, we reasoned: "That the
enterprise is a governmental function and for a public purpose
has been affirmed by this [C]ourt. If the public purpose can,
in the judgment of the Authority, be better accomplished through
[leasing the facilities] than through the operation of the
enterprise by the Authority itself, there is no good reason and
no constitutional obstacle against the exercise of this power to
lease." Id. at 972, 121 S.E.2d at 618-19. "It is not our
function," we concluded, "to decide whether it is a wise policy
for the Authority to lease this facility rather than to operate
24
 D. Credit Clause

The County's alternative constitutional challenge to Code

§ 33.1-221.1:1.1's application in this case is the contention

that DRPT's grant of funds to Norfolk Southern for the

development of the Montgomery County intermodal facility

violated the credit clause under Article X, Section 10 of the

Constitution of Virginia. The credit clause provides that

"[n]either the credit of the Commonwealth nor of any county,

city, town, or regional government shall be directly or

indirectly, under any device or pretense whatsoever, granted to

or in aid of any person, association, or corporation." Va.

Const. art. X, § 10.

Given, again, our governing standard of review, we conclude

that this alternative challenge must also fail. Simply put,

DRPT's grant to Norfolk Southern for the development of the

it itself. Courts have nothing to do with the wisdom of
legislation." Id. at 972-73, 121 S.E.2d at 619.
The same can be similarly said of the legislature's
determination, expressed through Code § 33.1-221.1:1.1, to
provide funding for the development of the Montgomery County
intermodal facility while leaving its ownership and operation to
Norfolk Southern. We have concluded that DRPT's undertakings to
effect the development of the facility were an exercise of the
Commonwealth's governmental function, and for the public
purpose, of constructing, maintaining and operating its highway
system in an efficient and effective manner. Like our view of
the leasing of the ports and harbor facilities to Norfolk
Western in Harrison III, we see no constitutional obstacle
against the Commonwealth in allowing the governmental function
and public purpose implicated here to be accomplished with
Norfolk Southern owning and operating the intermodal facility
pursuant to the terms and restrictions of the Agreement.
25
intermodal facility was only that, a grant, and not an extension

of the Commonwealth's credit to Norfolk Southern. Indeed, it

was effectively a purchase by the Commonwealth of additional

traffic capacity for Interstate 81.

Analyzing the credit clause in Article X, Section 10, this

Court in Almond I quoted with approval the following definition

to be applied to the credit clause, which the Idaho Supreme

Court used for its construction of a similar phrase " 'lend or

pledge the credit' " under the Idaho Constitution:

"In the popular sense, lending or loaning money
or credit is at once understood to mean a
transaction creating the customary relation of
borrower and lender, in which the money is
borrowed for a fixed time, and the borrower
promises to repay the amount borrowed at a stated
time in the future, with interest at a fixed
rate. And that is the sense, then, in which the
language employed in those sections must be
understood, and so understood, no county, for
example, shall lend or pledge its credit or faith
directly or indirectly, or in any manner which
would create the customary relation of borrower
and lender."

Almond I, 197 Va. at 790-91, 91 S.E.2d at 667 (quoting Bannock

County v. Citizens' Bank and Trust Co., 22 P.2d 674, 680 (Idaho

1933)).

Thus, in the absence of an extension of actual credit by

the Commonwealth, the credit clause does not apply. See Reasor

v. City of Norfolk, 606 F. Supp. 788, 795-97 (E.D. Va. 1984) (in

deciding whether the challenged activities violated the credit

26
clause, federal district court, relying on Almond I, explained

that term "credit" under Article X, Section 10 "refers to the

relation of borrower and lender, in which money is borrowed to

be repaid at a later date").

Button v. Day, 208 Va. 494, 495-505, 158 S.E.2d 735, 736-42

(1968) is the only decision of this Court holding that a

challenged funding scheme was in violation of the credit clause.

As the funding scheme at issue here under Code § 33.1-221.1:1.1

does not extend any credit to Norfolk Southern, nor guarantee

any default on the part of the railroad, it does not resemble

the funding scheme in Button. 9

Finally, we do not view the Commonwealth's remedial

interests in the Montgomery County intermodal facility under the

terms of the Agreement as in any way transforming the grant or

purchase into an extension of credit.

9
We held in Button that the General Assembly's
appropriation of funds to a guaranty fund, and the Virginia
Industrial Building Authority's guaranty of loans for industrial
projects based upon the strength of that fund, violated the
credit clause. Id. at 495-505, 158 S.E.2d at 736-42. This
statutory funding scheme was constitutionally prohibited because
it provided for State funds to be reserved "for the sole purpose
of guaranteeing future payment of defaulted loans of private
debtors." Id. at 504, 158 S.E.2d at 741. This particular
funding scheme was then, in fact, made constitutional three
years later under our current Constitution, in Article X,
Section 10, by expressly permitting the General Assembly to
"establish[] an authority with power to insure and guarantee
loans to finance industrial development and industrial expansion
and [to] mak[e] appropriations to such authority." Va. Const.
art. X, § 10.
27
 III. CONCLUSION

For these reasons, we conclude that Code § 33.1-221.1:1.1,

as applied in this case, does not violate either the internal

improvements clause or the credit clause of Article X, Section

10 of the Constitution of Virginia. Accordingly, we will affirm

the judgment of the circuit court denying summary judgment to

the County and awarding summary judgment in favor of appellees,

DRPT, the Director of DRPT, CTB, and Norfolk Southern.

Affirmed.

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