Home of Economy v. Burlington Northern

• Decision Date: 06 April 2005
• Docket Number: No. 20040267.,20040267.
• Citation: 2005 ND 74,694 N.W.2d 840
• Parties: HOME OF ECONOMY, a North Dakota Corporation, Plaintiff and Appellant, v. BURLINGTON NORTHERN SANTA FE RAILROAD, a National Railroad Corporation, Defendant and Appellee.
• Court: North Dakota Supreme Court

694 N.W.2d 840

2005 ND 74

HOME OF ECONOMY, a North Dakota Corporation, Plaintiff and Appellant, v. BURLINGTON NORTHERN SANTA FE RAILROAD, a National Railroad Corporation, Defendant and Appellee.

No. 20040267.

Supreme Court of North Dakota.

April 6, 2005.

Garry A. Pearson, Pearson Christensen, Grand Forks, ND, for plaintiff and appellant.

Daniel J. Crothers, Nilles, Ilvedson, Stroup, Plambeck & Selbo, Ltd., Fargo, ND, for defendant and appellee.

MARING, Justice.

[¶ 1] Home of Economy appealed from a judgment dismissing for lack of subject matter jurisdiction its action for damages and for an injunction to require Burlington Northern Santa Fe Railroad ("BNSF") to reopen a grade crossing in Grand Forks. We conclude the Interstate Commerce Commission Termination Act of 1995 ("ICCTA") does not preempt state jurisdiction over grade crossings. We reverse and remand.

I

[¶ 2] In 2003, BNSF closed a grade crossing on a spur line connecting BNSF's main line with the State Mill and Elevator in Grand Forks. The grade crossing provided access from State Mill Road across BNSF's spur line to property now owned by Home of Economy, and there was evidence BNSF ran forty to seventy cars per day on the spur line to the State Mill and Elevator. According to Cliff Olson, the previous owner of Home of Economy's property, the grade crossing had existed on BNSF's spur line since 1925. According to Olson, until the early 1950s, the grade crossing provided the only access from State Mill Road to his property, but in the early 1950s, Highway 81 was routed to also provide access to his property, and each access road had been used equally by his customers. According to Olson, there were no signs at the crossing when he owned the property, and BNSF placed a stop sign at the grade crossing after Home of Economy acquired the property from him in 1994. According to Wade Pearson, a vice president of Home of Economy, BNSF informed him in 1994 that it intended to close the grade crossing, but Pearson objected and BNSF placed a stop sign at the crossing.

[¶ 3] In June 2003, without notice to Home of Economy or any other entity, BNSF removed the wooden planks between the tracks, excavated the soil, and bulldozed a barrier on both sides of the spur line, making it impossible for vehicular traffic to cross the spur line from State Mill Road to Home of Economy's property. Home of Economy sued BNSF in a North Dakota state court for damages and to reopen the crossing, claiming an easement for access to its land had existed from the State Mill Road across the spur line since the 1920s. Home of Economy alleged an easement by prescription, easement by necessity, and easement by estoppel. The trial court dismissed Home of Economy's action, concluding the state court lacked subject matter jurisdiction, because the ICCTA vested jurisdiction over the regulation of railroad operations in the federal Surface Transportation Board. The court concluded the closing of the grade crossing constituted regulation of rail transportation under the ICCTA, because the grade crossing affected rail cars going from BNSF's rail yard to the State Mill and Elevator and could also affect liability for accidents at the crossing. The court concluded the ICCTA granted the Surface Transportation Board exclusive jurisdiction over the grade crossing and preempted state jurisdiction over Home of Economy's action.

II

[¶ 4] Home of Economy argues the ICCTA does not preempt all state court jurisdiction over railroads, but grants exclusive federal jurisdiction to the Surface Transportation Board only in those cases involving substantial economic impact on a railroad's operations. Home of Economy argues the ICCTA does not preclude states from enforcing the public's right of passage across the spur line and claims that, by using the grade crossing for at least 78 years, the public has acquired an easement across the spur line. BNSF responds the ICCTA relegates the dispute over the crossing to the exclusive jurisdiction of the Surface Transportation Board, and a North Dakota state court does not have jurisdiction to grant Home of Economy's requested relief. BNSF alternatively argues it was entitled to summary judgment because Home of Economy's claim for an easement is precluded under North Dakota law.

[¶ 5] The issue in this case is whether the ICCTA preempts state law regarding grade crossings. The Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2, provides that "the laws of the United States ... shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding." Under the Supremacy Clause, state law that conflicts with federal law is "`without effect.'" Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (quoting Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981)). See Billey v. North Dakota Stockmen's Ass'n, 1998 ND 120, ¶¶ 28-29, 579 N.W.2d 171; NoDak Bancorporation v. Clarkson, 471 N.W.2d 140, 142 (N.D.1991); State v. Liberty Nat'l Bank and Trust Co., 427 N.W.2d 307, 309-10 (N.D.1988); Federal Land Bank v. Lillehaugen, 404 N.W.2d 452, 455 (N.D.1987). In English v. General Elec. Co., 496 U.S. 72, 78-79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990) (citations omitted), the United States Supreme Court described when federal law preempts state law under the Supremacy Clause:

First, Congress can define explicitly the extent to which its enactments pre-empt state law. Pre-emption fundamentally is a question of congressional intent, and when Congress has made its intent known through explicit statutory language, the courts' task is an easy one.

Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively. Such an intent may be inferred from a "scheme of federal regulation... so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it," or where an Act of Congress "touch[es] 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." Although this Court has not hesitated to draw an inference of field pre-emption where it is supported by the federal statutory and regulatory schemes, it has emphasized: "Where... the field which Congress is said to have pre-empted" includes areas that have "been traditionally occupied by the States," congressional intent to supersede state laws must be "`clear and manifest.'"

Finally, state law is pre-empted to the extent that it actually conflicts with federal law. Thus, the Court has found pre-emption where it is impossible for a private party to comply with both state and federal requirements, or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

[¶ 6] The United States Supreme Court's framework for analyzing preemption claims starts with the assumption that Congress does not intend to displace state law. Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996); New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995); Cipollone, 505 U.S. at 516,112 S.Ct. 2608. See Billey, 1998 ND 120, ¶ 28,579 N.W.2d 171; Lillehaugen, 404 N.W.2d at 455. The assumption that Congress did not intend to displace state law is not triggered when a state regulates in an area where there has been a history of significant federal presence. United States v. Locke, 529 U.S. 89, 108, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000) (state regulation of maritime commerce). However, where a state acts in a field that states have traditionally occupied, the assumption that the historic police powers of a state are not superseded by federal law applies, unless Congress clearly and manifestly indicates a contrary intent. Medtronic, at 485, 116 S.Ct. 2240. In Cipollone, at 517, 112 S.Ct. 2608 the United States Supreme Court explained that when Congress has considered the issue of preemption and has included in the enacted legislation a provision explicitly addressing preemption, matters beyond the reach of the statute are not preempted. See Medtronic, at 484, 116 S.Ct. 2240. Thus, when Congress has explicitly addressed the preemption issue, courts must identify the domain expressly preempted by the statute, and whether federal law preempts state law is largely a matter of statutory construction. Cipollone, at 517, 112 S.Ct. 2608; Medtronic, at 484-86, 116 S.Ct. 2240.

[¶ 7] The relevant part of the ICCTA, 49 U.S.C. § 10501(b), includes specific preemptive language, which provides:

(b) The jurisdiction of the [Surface Transportation] Board over —

(1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers; and

(2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State,

is exclusive. Except as otherwise provided in this part, the remedies provided under this part with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.

[¶ 8] The remedies in the ICCTA explicitly preempt state remedies "with respect to regulation of rail transportation." The ICCTA defines "transportation" to include "a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of...