By: Cameron W. MacLeod, Esq.

Under New Jersey law, public utilities are afforded the ability to exercise eminent domain by statute. Railroads are included in the general class of public utilities, and also have their own separate statute by which to exercise eminent domain when doing is part of the “exigencies of business.” Recently, in Norfolk Southern Railway Company v. Intermodal Properties, LLC, the New Jersey Supreme Court affirmed the Appellate Division in permitting the exercise of eminent domain by Norfolk Southern in taking neighboring property, but did so in a way that highlights the Court’s approach to statutory interpretation.

Norfolk Southern operates a railyard in Secaucus, and needed to expand. When Intermodal did not accept Norfolk Southern’s offers, Norfolk Southern began condemnation proceedings through the New Jersey Department of Transportation. The assigned administrative law judge (ALJ) precluded Intermodal from asserting that it intended to use the property as a parking structure for the nearby Secaucus passenger rail station, finding that the property was not being used for a public purpose, and therefore, Intermodal’s assertion of a prior public use was without merit. Intermodal further challenged the exercise of eminent domain on the grounds that Norfolk Southern must demonstrate that its taking is required “as exigencies of business may demand,” which Intermodal asserted meant there must be some urgency demonstrated by Norfolk Southern. While disagreeing with this interpretation of “exigencies of business,” the ALJ found that there must be some business demand for the condemnation. Given Norfolk Southern’s evidence of rapid growth over the next ten years, the ALJ found that Norfolk Southern had satisfied this requirement. The Appellate Division affirmed the reasoning and the interpretation of the ALJ, finding that something more than mere convenience was necessary to permit the condemnation.

The Supreme Court granted certification for two issues: whether Intermodal could rely on the prior public use doctrine to combat Norfolk Southern’s justification for the taking, and whether the power courts’ interpretation of “exigencies of business” was appropriate. As Intermodal is neither a public entity nor was its property used in the public interest prior to the time of the taking, the Court quickly dispatched with Intermodal’s argument, affirming the Appellate Division and the ALJ in that regard. On the question of what constitutes the “exigencies of business,” the Court found that the plain language of the statute may lead to absurd results given its current definition, and turned to a thorough examination of the context in which the phrase was originally drafted and signed into law. The modern interpretation of the phrase, as influenced by criminal jurisprudence, would require railroads to demonstrate some emergent necessity for the taking, which would run counter to the long-term planning necessary for sustainable train transport. Instead, looking at both contemporaneous statutes and case law interpreting this phrase, the Court found that the “exigencies of business” means the ordinary course of business. Thus, the powers of eminent domain for the railroad is limited only to those circumstances in which a railroad can demonstrate the ordinary course of business requires the exercise of these powers.

By focusing on the statutory context in which the phrase “exigencies of business” was originally enacted, the Court’s interpretation of the eminent domain statute reflects a strong commitment to the original intentions of the legislature in enacting a particular provision, all the while preserving the rights of public entities to exercise eminent domain when the ordinary course of business requires it.