The Albany & Eastern Railroad Co. has prevailed in a federal lawsuit against the state of Oregon and the Oregon Department of Transportation.

A judgment in the case, filed Monday, overturns state legislation that prevented the Albany & Eastern from receiving Connect Oregon lottery funds earmarked for creating and improving alternative transportation, including rail.

The Lebanon-based company was the only organization that could have been impacted by the state law.

Judge Jolie A. Russo, from the Eugene division of U.S. District Court, issued the judgment in Albany & Eastern’s favor on Monday, saying that ORS 824.237 was unconstitutional and prohibiting the state of Oregon from enforcing it.  

On July 20, the Oregon Attorney General had conceded that the state law violated the U.S. Constitution in a stipulation of the parties.

Albany & Eastern filed the lawsuit in mid-April.

Legislation to develop the statute was sponsored by Sen. Frank Girod of Stayton in 2013 in response to the railroad’s business policy of charging its neighbors an annual $126 fee for railroad crossing permits. The funds were used to help pay for crossing maintenance.

Crossing permit fees are standard in the railroad industry, Albany & Eastern say.

The Oregon Department of Transportation recently eliminated Lebanon as a possible site for an intermodal transportation facility because Albany & Eastern would have provided service to the proposed location in north Lebanon. The site, if chosen, would have received $25 million in Connect Oregon funds.

Albany & Eastern owner Rick Franklin said in a previous interview that ORS 824.237 prevented Lebanon from securing the site, which would have been an economic boon for the community. That compelled him to file the federal lawsuit.

A telephone message for Franklin was not returned on Wednesday.

In previous years, Albany & Eastern had received matching Connect Oregon grants to improve its rail line.

Though it prevailed in the lawsuit against the state, Albany & Eastern will be responsible for its own attorney’s fees, according to the judgment in the case.

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