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HAYFIELD NORTHERN RAILROAD CO. v. CHICAGO & NORTH WESTERN TRANSPORTATION CO.

decided: June 12, 1984.

HAYFIELD NORTHERN RAILROAD CO., INC., ET AL
v.
CHICAGO & NORTH WESTERN TRANSPORTATION CO.



APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT.

Marshall, J., delivered the opinion for a unanimous Court.

Author: Marshall

[ 467 U.S. Page 625]

 JUSTICE MARSHALL delivered the opinion of the Court.

The Staggers Rail Act of 1980, which amended the Interstate Commerce Act,*fn1 regulates the process by which rail carriers may abandon unprofitable lines and provides a mechanism for shippers to obtain continued service by purchasing lines or subsidizing their operation. This case poses the question whether the Interstate Commerce Act, as amended, pre-empts a Minnesota eminent domain statute*fn2 used to condemn rail property after it has been abandoned pursuant to the amendments. The Court of Appeals for the Eighth Circuit held that the Act, as amended, pre-empted the state statute. 693 F.2d 819 (1982). We disagree.

I

On January 30, 1981, appellee filed an application with the Interstate Commerce Commission (Commission) seeking permission to abandon a 44-mile rail line between Oelwein, Iowa, and Randolph, Minn. Appellee maintained that operation of the line imposed a serious financial strain on its resources. Several shippers in Minnesota (Shippers Group) opposed the abandonment of a 19.2-mile segment of the line that passed through Hayfield, Minn. (Hayfield segment). After an Administrative Law Judge ruled that appellee was entitled to abandon the entire 44-mile line, the Shippers Group, pursuant

[ 467 U.S. Page 626]

     to the Staggers Rail Act amendments, offered to subsidize operation of the Hayfield segment. See 49 U. S. C. § 10905(c).*fn3 When the parties could not agree on mutually acceptable terms, the Commission, at the request of the Shippers Group, determined the appropriate price for subsidizing continued operation of the line. See 49 U. S. C. § 10905(e). Dissatisfied with the Commission's determination, the Shippers Group withdrew its offer. See 49 U. S. C. § 10905(f)(2). Soon thereafter, the Commission granted a certificate of abandonment to appellee, ibid., thereby relieving appellee of its federal obligation to supply rail service.

During the period that the Shippers Group was attempting to prevent the issuance of a certificate of abandonment, appellee entered into contracts with the State of Iowa and various Iowa shippers. These contracts involved improvements of certain trackage in Iowa. Appellee intended to fulfill these contracts by using the track from the abandoned line.

On March 31, 1982, members of the Shippers Group formed appellant Hayfield Northern Railroad Co., Inc. (hereafter appellant). Appellant planned to use the eminent domain authority vested in it by Minn. Stat. § 227.27 (1982) to condemn the Hayfield segment that appellee had abandoned. Appellant filed suit in state court and obtained a temporary restraining order preventing appellee from removing track from the Hayfield segment. Appellee immediately removed the suit to Federal District Court and moved to dissolve the restraining order on the ground that the Act, as amended, pre-empted the Minnesota condemnation statute. At this point, the State of Minnesota intervened in order to defend appellant's application of its condemnation law.

[ 467 U.S. Page 627]

     The District Court awarded summary judgment to appellee and dissolved the restraining order. After granting a stay pending appeal, the Court of Appeals for the Eighth Circuit affirmed. 693 F.2d 819 (1982). The Court of Appeals held that the Minnesota condemnation statute was pre-empted because it constituted an obstacle to the accomplishment of the congressional purpose behind the federal abandonment procedure. The Court of Appeals also dissolved its stay and remanded the case to the District Court for calculation of the damages incurred by appellee because of the delay. Following denial of rehearing by the Court of Appeals, we denied appellant's motion to stay the issuance of the Court of Appeals' mandate, 460 U.S. 1018 (1983), and subsequently noted probable jurisdiction, 464 U.S. 812 (1983).

II

Pre-emption doctrine stems from the Supremacy Clause of the United States Constitution*fn4 and invalidates any state law that contradicts or interferes with an Act of Congress. Pre-emption arises in a wide array of contexts, from circumstances in which federal and state laws are plainly contradictory to those in which the incompatibility between state and federal laws is discernible only through inference.*fn5 This case presents no issue of express pre-emption; nothing on the face of the Staggers Rail Act amendments explicitly indicates

[ 467 U.S. Page 628]

     whether Congress intended to pre-empt state authority over rail property after the Commission has authorized its abandonment. Therefore, in order to determine whether pre-emption is otherwise indicated, we must inquire more deeply into the intention of Congress and the scope of the pertinent state ...


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