When South Dakota acquired the Milwaukee Road line from Rapid City to Mitchell in 1982 and took over the line's licensing agreements, can the state Division of Railroads charge a rural electric cooperative annual rent for utility line crossings, even though state law gives the co-op a right to cross publicly owned land?
Plain-English summary
In April 1981 the Chicago, Milwaukee, St. Paul and Pacific Railroad Company (the Milwaukee Road, then in bankruptcy) conveyed its line from Rapid City to Chamberlain to the South Dakota Railroad Authority. In July it conveyed Chamberlain to Mitchell. The Railroad Authority then transferred title to the State in May 1982. Along with the track and right-of-way came a stack of licensing and rental agreements covering everything from grain elevators to fence crossings to utility lines.
Under SDCL 1-44-28, the Department of Transportation's Division of Railroads took over management of the new state property and started billing under the assigned licenses. One of those billings went to a rural electric cooperative organized under SDCL chapter 47-21 for a license covering transmission and distribution line crossings of the railway.
The Director of the Division, Mr. Myers, asked AG Mark Meierhenry whether SDCL 47-21-66 (which says a co-op has the power to construct and maintain electric lines along, upon, under, and across publicly owned lands and public thoroughfares) prohibited the Division from licensing and charging rent.
Meierhenry said no. The two statutes can both be in force. SDCL 47-21-66 gives the co-op a right of access; the state cannot say "no, you can't cross." SDCL 1-44-28 gives the Division of Railroads the authority to grant licenses, set their terms, and collect reasonable rentals. SDCL 47-21-64 lets co-ops enter into licenses, which means a co-op is expected to be able to take a license. Read together, the co-op has to be granted a license (cannot be excluded) but it pays a reasonable fee for the license.
The only point at which the two would clash, Meierhenry noted, is if the rental became confiscatory: high enough to effectively price the co-op out of the crossings. That would in practice deny the co-op the access SDCL 47-21-66 protects. But reasonable rentals fall outside that concern.
As a backup, Meierhenry added that even if the statutes truly conflicted, SDCL 1-44-28 (1981, specific to state-owned railroad property) would control over SDCL 47-21-66 (general rural electric co-op provisions). The newer, more specific statute wins.
Currency note
This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. South Dakota's state-owned rail program has gone through subsequent reorganizations and sales. Federal preemption questions under the ICC Termination Act of 1995 and 49 U.S.C. § 10501 may now reach issues that did not exist in 1982. SDCL 1-44-28 and 47-21-66 have been amended in the decades since.
What the opinion meant at the time
For the South Dakota Department of Transportation Division of Railroads, the opinion confirmed that the state could keep the licensing program in place across the newly-acquired Milwaukee Road right-of-way. The Division could continue to bill rural electric co-ops, telephone co-ops, pipeline operators, and any other licensee whose installation crossed the railway. Revenue from those licenses went into the railroad management fund.
For rural electric co-ops with lines across the formerly-Milwaukee, now-state right-of-way, the opinion meant the bills the Division was sending were enforceable. The co-ops could not refuse to pay on the grounds that SDCL 47-21-66 entitled them to free crossings. Their right was access, not free access.
For other utilities and businesses with assigned-license obligations, the same analysis applied. The bills the Division was sending were lawful so long as they were reasonable in amount.
For state property managers more generally, the opinion is a useful example of harmonizing two statutes that look like they conflict. The interpretive principle is that you give effect to both statutes if you can; you only declare a conflict if there's no way to read them together; and when you do declare a conflict, the more recent and more specific statute controls.
Background and statutory framework
The 1981-82 transfer of Milwaukee Road track to South Dakota was one of the largest single property acquisitions in the state's history. The Milwaukee Road had gone through reorganization under the federal Railroad Reorganization Act. The State of South Dakota stepped in to preserve rail service on lines that the railroad would otherwise have abandoned. The South Dakota Railroad Authority was the conduit; the state took title in 1982.
SDCL 1-44-28, enacted in 1981, was the statutory architecture for managing the new state-owned property. It gave the Division of Railroads broad authority: manage all real and personal property acquired for railroad purposes, secure all available income, and negotiate any leases, licenses, easements, or other agreements necessary for use of property not directly used in rail operations.
SDCL chapter 47-21, the Rural Electric Cooperatives chapter, dated from earlier decades. It gave co-ops broad powers to construct lines and to contract for facilities. SDCL 47-21-66 was a specific protection: a co-op's right to cross publicly owned land cannot be defeated by the property-owning public entity. That was important in the early days of rural electrification because some municipalities had refused to let co-ops bring lines through municipal property. The statute kicked open the door.
But SDCL 47-21-66 has never been read as a free-pass statute. The co-op still has to coordinate with the underlying property owner, comply with reasonable regulations, and (per this opinion) pay reasonable rent.
Citations
- SDCL 1-44-28 (Division of Railroads management authority)
- SDCL 47-21-64 (co-op contracting power)
- SDCL 47-21-66 (co-op right to cross public lands)
- SDCL chapter 47-21 (Rural Electric Cooperatives generally)
Source
Original opinion text
Division of Railroad's Power to Charge Rent on Licenses Issued to Rural Electric Co-Operatives
Dear Mr. Myers:
You have requested an official opinion based upon the following factual situation:
FACTS:
On April 21, 1981, the Chicago, Milwaukee, St. Paul and Pacific Railroad Company conveyed its track stretching from Rapid City to Chamberlain, South Dakota, to the South Dakota Railroad Authority. On July 30, 1981, the Railroad Company conveyed track running from Chamberlain to Mitchell to the Authority. The South Dakota Railroad Authority then conveyed title to the State on May 20, 1982. In connection with these transactions, the Chicago, Milwaukee, St. Paul and Pacific Railroad Company also assigned to the State the various licensing and rental agreements it had with individuals involving the newly acquired state land and track.
In accordance with SDCL 1-44-28, the Department of Transportation subsequently assumed the obligation of managing the newly-acquired railroad property and its various leasing rental and license agreements. In the course of its duties, the Department has billed various individuals and businesses including at least one rural electric co-operative organized under SDCL 47-21 for rentals arising out of an assigned licensing agreement concerning railway rights-of-way involving transmission or distribution line crossings.
Based upon the above factual situation, you have asked the following question:
QUESTION:
Does SDCL 47-21-66 granting an electrical cooperative the power to construct, maintain and operate electric transmission and distribution lines along, upon, under and across publicly owned lands and public thoroughfares prohibit the Director of Division of Railroads of the Department of Transportation from entering into or maintaining licensing agreements and collecting rent therefrom pursuant to SDCL 1-44-28.
It is my opinion that the South Dakota Department of Transportation, Division of Railroads has the power, pursuant to SDCL 1-44-28 to enter into and continue licensing agreements with rural electric co-operatives concerning transmission line crossing and collect reasonable rentals therefrom.
SDCL 47-21-66 states:
A co-operative shall have the power to construct, maintain and operate electric transmission and distribution lines along, upon, under and across publicly owned lands and public thoroughfares, including all roads, highways, streets, alleys, bridges and causeways.
This statutory provision clearly indicates that no public entity can prevent a rural electric cooperative from crossing publicly owned lands or thoroughfares. There is nothing in this statute or in the other statutory provisions of SDCL 47-21, however, which prevent a public entity from determining the legal method under which a rural electric cooperative may cross its land or prevent that public entity from charging a reasonable rent therefrom. SDCL 47-21-64 empowers a co-operative to enter into various legal agreements including licenses.
Next, the South Dakota Legislature in 1981 passed SDCL 1-44-28 which states:
The division of railroads shall manage all real and personal property acquired by the state for railroad purposes and shall secure all income available from those properties. The director of the division may negotiate, enter into, execute and issue leases, licenses, easements or other agreements as may be necessary to provide for the use of any property or facility not used directly in rail operations.
This statutory provision clearly gives the Division of Railroads the power to enter into and continue licensing agreements concerning all railroad rights-of-way including crossings by electrical utilities. It is also clear from this statutory provision that the Division of Railroads is authorized to charge a reasonable rental for these agreements.
As a general rule of statutory construction, in construing more than one related statutory provision, all statutes must be considered and construed so as to give maximum effect to all provisions where possible. When SDCL 1-44-28 is read in conjunction with SDCL 47-21-66 and harmonized, the following results are reached: the South Dakota Department of Transportation, Division of Railroads cannot prohibit rural electric cooperatives from constructing, maintaining or operating electric transmission or distribution lines across the state-owned railway land. The Division of Railroads, however, is clearly authorized to enter into and maintain any license agreements with rural electric co-operatives for the establishment of electric transmission and distribution line rights-of-way. The director is also empowered where appropriate to charge rural electric cooperatives reasonable annual rentals for the privilege of having the right-of-way license. Only when the rentals charged by the Division of Railroads would become confiscatory and economically prohibit a cooperative from maintaining lines could a possible conflict arise.
Finally, even if an alleged conflict in the statutes did exist, SDCL 1-44-28, being the most recent and specific promulgation concerning state-owned railway rights-of-way, would be controlling. In this case, the same results discussed above would take place.
Respectfully submitted,
Mark V. Meierhenry
Attorney General