Hayfield Northern R.R. Co., Inc. v. Chicago and North Western Transp. Co., 82-1880

• Citation: 693 F.2d 819
• Decision Date: 03 December 1982
• Docket Number: No. 82-1880,82-1880
• Parties: HAYFIELD NORTHERN RAILROAD COMPANY, INC., Plaintiff/Appellant, v. CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, Defendant/Appellee, State of Minnesota, Intervenor/Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 819

693 F.2d 819

HAYFIELD NORTHERN RAILROAD COMPANY, INC., Plaintiff/Appellant, v. CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, Defendant/Appellee State of Minnesota, Intervenor/Appellant.

No. 82-1880.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 16, 1982.

Decided Dec. 3, 1982.

Robert S. Abdalian, Ward, Gray & Oehler, Ltd., Rochester, Minn., for plaintiff/appellant.

Warren R. Spannaus, Atty. Gen., State of Minn., Gilbert S. Buffington, Sp. Asst. Atty. Gen., St. Paul, Minn., for State of Minnesota.

Thomas E. Glennon, Lindquist & Vennum, Minneapolis, Minn., James P. Daley, Stuart F. Gassner, Anne E. Keating, Chicago, Ill., for defendant/appellee Chicago and North Western Transp. Co.

Before HEANEY, BRIGHT and ARNOLD, Circuit Judges.

ARNOLD, Circuit Judge.

In this case we must decide whether 49 U.S.C. Sec. 10905 (Supp. IV 1980) preempts Minnesota condemnation law when a Minnesota railroad company attempts to condemn the track and right of way of a properly abandoned rail line in order to continue rail service on that line. We conclude that it does.

I.

On January 30, 1981, Chicago and North Western Transportation Company (CNW) filed an application for a certificate of abandonment for its railroad line between Oelwein, Iowa, and Randolph, Minnesota. Several shippers from southern Minnesota (Shippers Group) opposed the abandonment of a 19.2-mile segment of the line between Dodge Center and Sargeant, Minnesota, and between Hayfield and Waltham, Minnesota. After an Administrative Law Judge (ALJ) found that the public convenience and necessity permitted abandonment of the entire line, the Shippers Group, pursuant to 49 U.S.C. Sec. 10905, made an offer to subsidize operation of the 19.2-mile segment. When the parties could not agree on terms, the Interstate Commerce Commission found that the net liquidation value of the segment was $1,791,354. ¹ Shortly thereafter, the Shippers Group withdrew their offer, and, on November 17, 1981, the certificate of abandonment issued.

Soon after making the subsidy offer, the Shippers Group filed an administrative appeal of the ALJ's decision authorizing abandonment. The Commission denied the appeal, and the Shippers Group filed a petition for review in this Court. In early January 1982, after unsuccessfully seeking a stay of the order permitting abandonment, the Shippers Group withdrew their appeal of the substantive decision.

Meanwhile, CNW made contracts with the State of Iowa and some Iowa shippers which involved improving certain trackage in Iowa. CNW planned to salvage and use the rail from the 19.2-mile segment for this purpose.

On March 31, 1982, members of the Shippers Group formed the Hayfield Northern Railroad Company, Incorporated, which, under Minnesota law, ² had the power to condemn abandoned rail lines. On the same day, Hayfield Northern filed suit in the Dodge County, Minnesota, District Court, alleging that it wanted to condemn the track, appurtenances, and right of way on the 19.2-mile segment and requesting a temporary restraining order to prevent CNW from removing the property. The state court granted the restraining order.

CNW then removed the suit to the United States District Court for the District of Minnesota, ³ and the State of Minnesota intervened to defend the constitutionality of its condemnation law as applied. The District Court ⁴ entered summary judgment in favor of CNW, dissolved the restraining order, and dismissed Hayfield Northern's complaint with prejudice, holding that, on the facts presented, 49 U.S.C. Sec. 10905 preempts state condemnation procedures.

Hayfield Northern appealed and moved for a stay pending appeal and for an expedited appeal. After argument, this Court granted the motions upon the posting of a $100,000 bond. We now affirm.

II.

Two recent Supreme Court cases, Fidelity Federal Savings & Loan Association v. de la Cuesta, --- U.S. ----, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982), and Edgar v. MITE Corp., --- U.S. ----, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982), guide our inquiry into whether Minnesota condemnation law is superseded by Sec. 10905. The preemption doctrine is derived from the Supremacy Clause, U.S. Const. art. VI, cl. 2, which reads:

This Constitution and the Laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land ..., any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

As we observed in National City Lines, Inc. v. LLC Corp., 687 F.2d 1122, 1128 (8th Cir.1982), the determination whether a state law is "contrary" to a federal statute, and thus preempted, is an inexact task; the answer depends on Congress's intent. Congress may have intended that its enactment foreclose all state legislation on the same subject, or it may have intended to leave the states free to enforce nonconflicting laws and regulations.

Congress's intent to foreclose all state law on the same subject, to "occupy the field," may be express, explicitly stated in the statute, or implied, implicitly contained in the statute's structure and purpose. Fidelity Federal Savings & Loan Association, supra, 102 S.Ct. at 3022.

Absent explicitly pre-emptive language, Congress' intent to supersede state law altogether may be inferred because "[t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it," because "the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject," or because "the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose."

Ibid. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947)).

Without regard to whether Congress intended to foreclose all state legislation on the same subject, "a state statute is void to the extent that it actually conflicts with a valid federal statute ...." MITE Corp., supra, 102 S.Ct. at 2635. An actual conflict may be found either

when "compliance with both federal and state regulations is a physical impossibility," Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963), or when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941).

Fidelity Federal Savings & Loan Association, supra, 102 S.Ct. at 3022.

Although "we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress," Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947)), we hold that the state law authorizing Hayfield Northern to condemn CNW's abandoned railroad line for continuing rail purposes "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Thus, the state law is preempted by Sec. 10905.

III.

By enacting Sec. 10905, Congress intended to "assist shippers who are sincerely interested in improving rail service, while at the same time protecting carriers from protracted legal proceedings which are calculated merely to tediously extend the abandonment process." H.R.Conf.Rep. No. 1430, 96th Cong., 2d Sess. 125, reprinted in 1980 U.S.Code Cong. & Ad.News 3978, 4110, 4157. The statute is carefully tailored to accomplish that purpose, and it makes provision for continued rail service an integral part of the federal abandonment process.

Congress prescribed very precise time limits in Sec. 10905. After the Commission decides to authorize abandonment, it must publish its findings in the Federal Register. Offers of financial assistance, either to subsidize or to purchase, must be made within ten days following publication. Sec. 10905(c). If the Commission determines within fifteen days of publication that the offeror is financially responsible and that the amount of the offer is adequate, issuance of the certificate of abandonment is postponed pending negotiations between the parties. Sec. 10905(d). If the parties fail to agree within thirty days after the offer is made, the certificate of abandonment is issued unless either party requests that the Commission establish the conditions and amount of compensation, Sec. 10905(e), including the price and terms of any proposed sale, Sec. 10905(f)(1)(C). If such a request is made, the Commission must comply within sixty days. Sec. 10905(f)(1)(A). The Commission's decision about compensation is binding on both parties, except that the offeror may withdraw its offer within ten days of the decision. Sec. 10905(f)(2). Thus, under Sec. 10905, any arrangements for continued rail service will be complete within 110 days.

Congress was also concerned with the orderly operation of the line after its transfer. Although a subsidizer may discontinue the subsidy on sixty days' notice, a purchaser may not transfer or discontinue service on the line for two years after the sale and may not transfer the line to anyone other than the transferor carrier for five years after the sale. Sec. 10905(f)(4), (5).

The elaborate procedural detail of this scheme indicates that not only has Congress granted the Commission exclusive and plenary authority to regulate abandonments, Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 320, 101 S.Ct. 1124, 1131, 67 L.Ed.2d 258 (1981), Congress has also granted the Commission exclusive and plenary authority to provide for continuation of rail service in connection with abandonments.

IV.

To allow Hayfield Northern to use...