Schnader Team Helped Obtain Landmark Victory for Group of Railroad Companies

Schnader helped obtain a landmark victory on August 6, 2013, for a group of railroad companies in the New Jersey Supreme Court. The Court held that railroads are vested with broad condemnation powers, and need not demonstrate an immediate need for new land in order to condemn it for new railroad operations. Given the historically-recognized public benefits of railroads, as well as the necessity for long-term planning in the railroad industry, it is enough for railroads to show that proposed takings are reasonably necessary to meet future business demands. Further, the Court held that railroads need not prove that their proposed uses for condemned land actually are better for the public interest than the private landowner’s proposed use. A private landowner cannot invoke the “prior public use doctrine” and attempt to show that its proposed for-profit use has public benefits, in order to block reasonable railroad condemnations.

This case is the state’s first significant railroad condemnation case in about 40 years. Plaintiff Norfolk Southern Railway Company sought to expand its railroad operations at Croxton Yard, a large intermodal freight facility in Secaucus, New Jersey. After unsuccessfully attempting to purchase necessary land from Intermodal Properties, LLC, Norfolk Southern initiated condemnation proceedings. Intermodal challenged these proceedings on the grounds that Norfolk Southern’s proposed taking did not meet the statutory standard of being “not incompatible with the public interest,” and was beyond the statutory standard of what “the exigencies of business may demand.” After prevailing in the lower courts, Norfolk Southern again secured a victory in the New Jersey Supreme Court. The Court’s decision rested on the historical interpretation of the statutory terms at issue, as well as on a common-sense view of the realities of the railroad industry.

Schnader represented amici the American Short Line & Regional Railroad Association, the Association of American Railroads, Consolidated Rail Corporation, CSX Transportation Inc., and the New Jersey Short Line Railroad Association. The amici described the significant public benefits of railroad facilities in general, and of the proposed Croxton Yard expansion in particular. The amici traced the long history of railroad condemnation powers and the rationale behind them, and carefully explained why railroads need to have sufficient “lead time” in their condemnations in order to plan and build railroad facilities. The Supreme Court’s decision highlighted many of the points raised in the amicus brief, demonstrating that, at least in certain industries, educating the court about an industry with which it may not be familiar can have a significant impact. Nancy Winkelman and Sara Aliabadi represented the railroad amici group in the New Jersey Supreme Court.