Full opinion text
MEMORANDUM OPINION AND ORDER PIERSOL, Chief Judge. This matter came before the Court for trial on August 14, 2002. At the trial, both parties presented evidence and argument regarding the eminent domain issues initially decided by the Court in entering the preliminary injunction. Both parties have now filed post-trial briefs as requested by the Court. The following opinion resolves the claims of the Plaintiff with respect to those issues regarding eminent domain. Still pending before the Court, however, is the Plaintiffs 4-R Act claim in which the Plaintiff alleges that the Defendant violated federal law in discriminating against railroads with respect to tax credits and assessments. The parties are in the process of conducting discovery with regard to the 4-R Act claim, and that claim will be dealt with in a subsequent opinion of the Court. BACKGROUND The Plaintiff, Dakota, Minnesota & Eastern Railroad Corp. (DM & E) filed an action against the State of South Dakota, Governor William Janklow, in his official capacity, and the Transportation Commission of the South Dakota Department of Transportation seeking declaratory and in-junctive relief. DM & E’s main claims are that the State’s modifications of its eminent domain statutes regarding railroads are unconstitutional and preempted by federal law. DM & E moved for a preliminary injunction enjoining the State from enforcing its eminent domain statutes pending the outcome of this litigation. The Court entered a preliminary injunction enjoining enforcement of S.D.C.L. 49-16A-75.3(1),(2), & (4) and denied the preliminary injunction with respect to the remainder of the challenged statutes. DM & E is a railroad operating in interstate and intrastate commerce as a common carrier. In 1986 a group of investors created DM & E and purchased the Chicago & North Western Railroad Company. At the time of the purchase, the railroad was, and still is, in dire need of repair and improvement. In an effort to raise the revenue necessary to complete the repairs, DM & E decided to expand into new markets. In 1998, DM & E began the process of extending its track into an area of Wyoming known as the “Powder River Basin” in order to access significant markets for low sulfur coal mined in the basin. As part of this new project, referred to as the PRB project, DM & E plans to construct new track in the Powder River Basin as well as improve and reconstruct DM & E’s existing lines. In order to acquire the approval necessary to construct the PRB project, DM & E filed an application with the Surface Transportation Board (STB), a federal agency, seeking authority under 49 U.S.C. § 10901 to construct and operate new rail lines in South Dakota, Wyoming and Minnesota, and to rebuild much of its existing mainline track. The application was filed on February 20, 1998. The STB conducted an extensive review of the proposed project including analysis of the environmental implications of the project, the degree of environmental mitigation required, the financial fitness of the project, the effect of the project on public transportation, and whether bypasses should be constructed around certain areas. After comprehensive review, the STB issued its decision on January 28, 2002 authorizing the PRB project. The STB decision details the mitigation required, finds that DM & E has demonstrated financial fitness to carry the project through to completion and specifically rejects all bypass alternatives posed, primarily on environmental grounds. Although the STB conducted an extensive review of the project, the Board did not address the issue of eminent domain. In the Final Environmental Impact Statement, the STB stated the following: Eminent domain proceedings are regulated by state law and not administered by the Board. In rail construction cases before the Board, the Board determines whether the construction is inconsistent with the public convenience and necessity under 49 U.S.C. 10901 but the applicant is responsible for the acquisition of land necessary for execution of the proposed project. The Board has encouraged DM & E to negotiate with affected communities and individuals if the construction is approved to develop private agreements regarding the acquisition and use of land. DM & E has worked with the Landowner Advisory Board to develop a Land Use Mitigation Policy and Plan that addressed project impacts on private lands. In the event that the proposed project is approved and DM & E cannot reach agreements with landowners, eminent domain proceedings may be pursued as an avenue of last resort. See Supplemental Affidavit of Dana L. Nelson, Doc. 37, Final Environmental Impact Statement, page 33. In 1999, while DM & E was awaiting approval of the STB, the State of South Dakota enacted changes in its state eminent domain laws with respect to railroads. Prior to 1999, S.D.C.L. 49-16A-75 reads as follows: “A railroad may exercise the right of eminent domain in acquiring right-of-way as provided by statute.” This prior law was a clear delegation of the State’s eminent domain power to railroads with only the restriction that the railroad comply with the procedures outlined for the exercise of eminent domain contained in S.D.C.L. 21-35. The 1999 amendments significantly changed the law and added three new statutes. South Dakota eminent domain law as it regards railroads is now controlled by S.D.C.L. 49-16A-75 through 49-16A-75.3 which read in total as follows: Powers — Eminent domain — Authorization by Governor or commission. A railroad may exercise the right of eminent domain in acquiring right-of-way as provided by statute, but only upon obtaining authority from the Governor or if directed by the Governor, or the commission, based upon a determination by the Governor or the commission that the railroad’s exercise of the right of eminent domain would be for a public use consistent with public necessity. The Governor or the commission shall consider the requirements of §§ 49-16A-75.1 to 49-16A-75.3, inclusive, when granting or denying an application for authority to use eminent domain. The decision to grant or deny an application shall be made after reasonable notice and opportunity to be heard, pursuant to chapter 1-26. Any appeal, pursuant to chapter 1-26, taken from a decision of the Governor or the commission shall be handled as an expedited appeal by the courts of this state. S.D.C.L. 49-16A-75. Commission to promulgate rules for railroad seeking to exercise eminent domain. The commission shall in accordance with chapter 1-26, promulgate rules: (1) Establishing a form upon which a railroad may apply for authority to exercise the right of eminent domain; (2) Specifying the information to be submitted by an applicant; and (3) Administering applications for authority to exercise the right of eminent domain. S.D.C.L. 49-16A-75.1 Railroad carries burden of proof to show public necessity. The applicant has the burden of proving by a preponderance of the evidence that the exercise of the right of eminent domain is a public use consistent with public necessity- S.D.C.L. 49-16A-75.2 Criteria for eminent domain as a public use consistent with public necessity. A railroad’s exercise of the right of eminent domain is a public use consistent with public necessity only if the use of eminent domain: (1) Has as its purpose providing railroad transportation to shippers in South Dakota for commodities produced, manufactured, mined, grown, used, or consumed in South Dakota; (2) Is proposed by an applicant with the financial resources necessary to complete the proposed construction or reconstruction along with any related facilities, construction, or mitigation which are necessary to protect against harm to the public safety, convenience, or other adverse socioeconomic or environmental impact, as evidenced by a financing commitment from a lender or an investor or a combination of each with adequate capitalization and resources to fulfill its commitment to build and complete the project; (3) Is proposed by an applicant who has negotiated in good faith to privately acquire sufficient property without the use of eminent domain; (4) Is proposed by an applicant who has filed a plat, as required by § 49-16A-64, and that plat sets forth the route of the road to be constructed or reconstructed, identifies each affected landowner, and specifies the location, along with construction methods and engineering specifications for all main lines, sidings, yards, bridges, crossings, safety devices, switches, signals, and maintenance facilities; and (5) Provides that electric utilities, public utilities, telecommunication companies, and rural water systems have the right to use the right-of-way for the placement of underground facilities, without fee, subject to reasonable regulation as to location and placement. S.D.C.L. 49-16A-75.3 Kevin Schieffer, the president and chief executor officer of DM & E, testified extensively at the preliminary injunction hearing held in this matter regarding the obstacles that these statutes pose to the PRB project. As CEO of DM & E, Schieffer has been involved in several financing endeavors undertaken by the railroad in the past. He testified that he participated in significant financing projects in 1993 and 1995 and was also active in DM & E’s acquisition of two other rail lines. With respect to subparagraph (1) of S.D.C.L. 49-16A-75.3 requiring that the project have the purpose of providing railroad transportation to South Dakota shippers, Sehieffer testified that the PRB project has no such purpose. Rather, the primary purpose of the PRB project is to provide railroad transportation for coal mined in the Powder River Basin in Wyoming. There would also be an incidental benefit of bettering rail lines in South Dakota for South Dakota shippers. According to Sehieffer’s testimony at the preliminary injunction hearing, S.D.C.L. 49-16A-75.3(2)’s requirement of securing a financing commitment prior to applying for eminent domain presents an insurmountable barrier to the PRB project ever going forward. Sehieffer testified that the PRB project will cost approximately $2 billion to complete and that no investor will give the project serious consideration if the railroad’s authority to use eminent domain is uncertain. Sehieffer testified that the financial community needs a level of stability and certainty that the railroad will be able to exercise eminent domain power if necessary before financiers will even consider becoming involved in the project. Sehieffer indicated that for an investor or lender to engage in the due diligence required to provide a financing commitment for a project of this size would take countless hours and millions of dollars. Although he admitted that he had not spoken to any potential investors regarding financing for the PRB project, Sehieffer stated that investors would not commit that sort of time and financial resources to a project with this level of uncertainty. Even though Sehieffer believes that it is unlikely that DM & E will ever need to resort to eminent domain, without authority to do so, DM & E cannot obtain financial backing for the project. As DM & E’s counsel pointed out, the issue presents the classic “chicken and the egg dilemma”: DM & E cannot satisfy South Dakota’s statutory requirements for the exercise of eminent domain because it cannot obtain financing, and DM & E cannot obtain financing because it cannot satisfy the requirements of South Dakota’s statute. Sehieffer reiterated the same concerns when he testified at trial. Although he admitted that he was not an expert on financing or investment banking, he stated that he did not believe that it would be prudent for DM & E to seek financing under the circumstances. He testified that, in his view, no railroad project of significant magnitude could be built with the current statutory scheme in effect. Much of Schieffer’s testimony was supported by the testimony of Kurt Feaster, the Chief Financial Officer and Vice President of DM & E. Feaster holds a Masters of Business Administration Degree from the University of Illinois and has worked in the railroad industry for 22]é years. Feaster testified that it would be extremely difficult, but not necessarily impossible, to get a lender invest in the project given the risk that the project may not be completed if eminent domain authority is denied. He stated that this inherent risk makes staged financing not a possibility. He testified that a lender would need assurance that the entire project could be completed before lending any money. Although he recognized that financing commitments are often issued subject to standard conditions, he stated that a condition requiring the acquisition of eminent domain authority is not typical. He testified that such a commitment would be unlike anything he has ever seen. He believed that it would be highly unlikely that the PRB project could advance to the stage of obtaining a commitment letter given the uncertainty created by the statutes and the financial community’s lack of tolerance for such a level of uncertainty. Feaster contended that bankers and investors desire to have projects organized in a tight time schedule and prefer to get involved in transactions where things have happened in a similar fashion in the past. Feaster testified that subdivision (2) of S.D.C.L. 49-16A-75.3 presents such an unknown that it prevents DM & E from starting the project, and he claimed that it would not be prudent for DM & E to engage in the due diligence necessary to meet the requirements of the subdivision. Feaster stated that DM & E would be required to shoulder the expense of performing the due diligence necessary to prepare a proposal to obtain financing. He explained that DM & E would engage the services of a financial advisor to assist in this process. Such advisors only get compensated for their time if in fact financing is secured for the project. Feast-er claimed that the uncertainty created by the South Dakota eminent domain statutes make it less likely that a financing commitment will be obtained thereby increasing the risk of non-payment for the financial advisor. He believed that such a scenario would make it significantly more difficult for DM & E to engage the services of one of the top financial advisors. Matthew Taylor, a Board member of DM & E and the managing director of Lombard Investments, also testified regarding the burden imposed by S.D.C.L. 49-16A-75.3(2). Taylor has a Masters of Business Administration Degree in finance from the University of San Francisco and has attended the Chartered Analyst Program. He holds a CFA Charter, which is the financing world’s equivalent to a CPA. He has been involved in several significant financing projects undertaken by DM & E. Taylor testified that it would not be prudent for DM & E to seek financing for the PRB project at this time. He stated that DM & E does not have the financial resources to perform the due diligence. He echoed the concern of Schieffer and Feaster that South Dakota’s eminent domain statutes create ambiguity and uncertainty making it difficult, if not impossible, to obtain a financing commitment for the project. He testified that the financial community needs reasonable, although not absolute, certainty that DM & E can obtain eminent domain power if necessary to complete the railroad. He testified regarding the unique nature of railroad projects in that if a single foot of property cannot be obtained, then the entire railroad project cannot be completed. The entirety of the right-of-way is essential in order to build the railroad. In Taylor’s opinion, with the South Dakota statutes in place, DM & E will not be able to secure financing for the PRB project. Schieffer also testified at the preliminary injunction hearing regarding DM & E’s decision not to attempt to secure a financing commitment as required by S.D.C.L. 49-16A-75.3(2). Schieffer indicated that to approach potential investors with this level of uncertainty would severely damage DM & E’s reputation in the financial community. Schieffer stated that making an attempt to secure financing with the current statutes in place would lead investors to question DM & E’s judgment and would in effect poison the well. Schieffer indicated that there are few financial investors willing to get involved in a project of this magnitude and those that are so inclined would not give DM & E another chance to propose the project if DM & E approached them seeking financing under the current circumstances. Much of the testimony of Schieffer, Feaster and Taylor was contradicted by the testimony of the State’s financial expert, Warren Matha. Matha is a finance consultant specializing in structured finance. His central focus is in the area of real estate finance, and he has experience in the acquisition of substantial property and rights-of-way but has no experience in the specific field of railroads. Matha testified that it is commonplace in the financial community for commitment letters to issue subject to certain conditions, and in his opinion, DM & E could likely obtain a financing commitment to build the PRB project conditioned upon DM & E’s acquiring of the right to exercise eminent domain under state law. He recognized, however, that it would be difficult for DM & E to obtain a financing commitment without this condition attached. He also acknowledged that if DM & E were forced to obtain specific authority to condemn each individual parcel of land that it needed to take by eminent domain, such a system would be impractical. He believed that DM & E would need some sort of blanket grant of authority for the project to go forward from a financial perspective. Matha agreed with the testimony of Schieffer regarding the substantial sum of money required to perform the due diligence necessary to prepare the project. Matha stated, however, that the reason for the high cost was because of the size of the PRB project, not the existence of the South Dakota eminent domain statutes. Matha stated that in order to fund the preparatory work for the project, DM & E would have to look to its traditional sources of capital and that such a loan would be granted based upon the financial fitness of DM & E as a company rather than the fitness of the PRB project. Ma-tha indicated that if DM & E could not secure the funding to perform the due diligence, then the project should not go forward. Matha admitted that he had not reviewed the finances of DM & E and did not know whether they could fund the preparatory work or secure a loan to do so. Matha also disagreed with Schieffer’s testimony regarding DM & E’s view that it is imprudent to seek financing under the current conditions. Matha testified that if DM & E were to go out into the market and seek financing, it would not poison the well. Matha stated that investors know that statutes and regulations are part of doing business in the financial world and that they are willing to work around such obstacles and often do. Unlike the other witnesses that were concerned with the uncertainty created by South Dakota’s eminent domain statutes, Matha testified that the fact that the statutes were new and untested would not preclude investors from getting involved in the project. Ma-tha believed that investors would be interested in the PRB project because it is a billion dollar project and there are not many financial opportunities of that magnitude. Such a project represents a potentially high return for investors and thus they would be willing to get involved. Ma-tha stated that projects get “shopped around” a lot and if DM & E is rejected by one lender, it can simply move on and present the project to another. There was also testimony presented from both sides regarding S.D.C.L. 49-16A-75.3(3)’s requirement that the railroad demonstrate that it negotiated in good faith to privately acquire sufficient property without the use of eminent domain. DM & E introduced evidence through the testimony of Dana Nelson, an assistant to Governor William Janklow, that South Dakota already had statutes in place giving the railroad an incentive to negotiate in good faith with a landowner before pursuing eminent domain. Pursuant to S.D.C.L. 21-35-23, if a railroad fails to negotiate in good faith prior to seeking eminent domain and the judgment awarded at trial is 20% greater than the railroad’s final offer, then the railroad is liable to the landowner for costs, attorneys’ fees and expert witness expenses.' Schieffer testified that S.D.C.L. 49-16A-75.3(3) does not pose a significant problem for DM & E, and he claims that DM & E has an exemplary reputation in dealing with landowners. In fact, DM & E hired a consultant team to work with the landowners on the project. Elizabeth Hollmann, one of the consultants, stated that she was proud to be part of DM & E’s landowner negotiations. DM & E also established an advisory committee of landowner volunteers to develop a boilerplate offer proposal that addressed the issues raised by landowners. Schieffer did, however, state that S.D.C.L. 49-16A-75.3(3) places an additional burden upon DM & E and the landowner by adding another level of procedure and thereby adding time and expense for both parties. Under the present system, either the landowner or the railroad has the right to an expedited appeal to the state courts from the decision of the Commission or the Governor. See S.D.C.L. 49-16A-75. Under the prior law, if the parties could not reach an agreement regarding the land, then they went directly to court to have the issue decided. Schief-fer contends that S.D.C.L. 49-16A-75.3(3) is burdensome to both landowners and the railroad by forcing both parties to go through an administrative process in addition to a likely judicial process upon appeal of the administrative decision. To support its contention that it treated landowners fairly and negotiated in good faith, DM & E called Robert Hayes to testify. Hayes is a landowner in Wall, South Dakota whose land is affected by the PRB project. Hayes testified that initially he was opposed to the PRB project until he discovered that he would be treated fairly by the railroad. DM & E worked with him regarding his primary concern of access to land for his cattle. Because of the railroad crossing his land, his cattle would not be able to pass from one part of the pasture to the other. In response to Hayes’s concern, DM & E built a bridge on his land so that the cattle would have access to more of his land. DM & E also called David Lewis, another affected landowner. Like Hayes, Lewis was initially opposed to the project. Lewis sought a position on the landowner advisory board in order to look out for his interests. After working with DM & E, Lewis was very pleased. He stated that DM & E addressed all of his issues and that he could not have gotten a better deal. The State offered witnesses who cast a different light on DM & E’s landowner negotiation tactics. Paul Jensen, a rancher near Wasta, South Dakota, testified that although he was not opposed to the railroad and actually rather in favor of it, he was concerned that DM & E intended to build the railroad on hillside shale. Jensen did not believe that the shale was strong enough to support the weight of the railroad and its heavy cargo. DM & E gave Jensen an appraisal for his land but never negotiated the price contained in the appraisal. He believed the appraisal was a take-it-or-leave-it offer and stated that DM & E made it clear that a landowner would get a better price for his land if he supported the project. Deposition testimony of Keith Anderson was also received into evidence. Anderson is a rancher who lives near Edgemont, South Dakota. Anderson testified that the initial maps provided by DM & E were extremely poor in quality and contained errors making it difficult for the landowner to assess the impact of the project on his land. He requested better quality information from DM & E, which was not provided to him. Eventually, DM & E sent Anderson an appraisal for his land, and Anderson felt that the figure was too low considering that the right-of-way would cut through the center of his ranch creating access problems and also would pass through a spring that he depended upon to water his cattle. When he tried to discuss these concerns with Schieffer, rather than address Anderson’s issues, Schieffer continually inquired whether Anderson was a supporter of the project or opposed to it. From these conversations, Anderson got the distinct impression that the ultimate amount of compensation he would receive was dependent upon whether he supported the project. A few months later, Anderson received an offer from DM & E, but the offer failed to address his concerns and he did not respond to the offer. Anderson testified that he did not feel that DM & E had made a good-faith attempt to negotiate with him because DM & E did not address the issues he had raised. Ray Gigear, the project engineer for the PRB project, testified at the trial regarding the requirements of S.D.C.L. 49-16A-75.3(4). Gigear has a Bachelor of Science Degree in civil engineering and over 25 years of experience working as a design and construction engineer in the railroad industry. He testified that the PRB is a design-build project and that it will take another nine to eleven months to advance the design to the point where DM & E can begin the design-build procedure. In such a project, Gigear indicated that 20-30% of the project is designed prior to starting construction and that with respect to the PRB project approximately 5-15% of the design is completed at this point. As a result of employing the design-build procedure, Gigear testified that DM & E will not know the identity of all of the affected land-owners at the time it begins construction. As quoted above S.D.C.L. 49-16A-75.3(4) requires that the project be outlined in great detail from where the switches will be located to the construction methods and engineering specifications for virtually every detail of the entire project. Gigear stated that he has done the preliminary engineering work for the project and has produced several volumes of information. He testified, however, that the information DM & E has generated to this point does not meet the requirements of the statute. He indicated that DM & E has not set the construction method for the project nor have the engineering specifications be completed. He does not know the exact location of where the main lines, yards, bridges, crossings, safety devices, switches, signals and maintenance facilities will be located although DM & E does have plans specifying the placement of all of these components. All of the information DM & E has generated is preliminary and subject to change. Gigear testified that based upon the current information he could not verify the truth and accuracy of the application for eminent domain as is required by the regulation implementing the statute. See S.D. Admin. R. 70:08:01:02. Gigear testified that in order to satisfy the statute’s requirements, the project would have to be designed 100% prior to construction rather than a design-build project as it is currently planned. According to Gigear, total design to meet the statute’s specifications would cost DM & E $30 million or more and would take one and half to two years to complete. He further testified that building a project of this magnitude by totally designing the project first would not be economical because many of the design plans will need to be altered as construction takes place. Dana Nelson, an assistant to Governor William Janklow, testified regarding the impetus behind S.D.C.L. 49-16A-75.3(5) that requires a railroad that exercises state eminent domain authority provide a free easement over the railroad to public utilities. He testified that rural utility companies were having difficulty acquiring easements over railroad property and were often charged high fees to obtain the easements, a cost that was ultimately passed on to the consumer. DM & E was not specifically charged with demanding these exorbitant rates. Nelson testified that Burlington Northern had charged several thousands of dollars for easements across its railroad. Nelson stated that the State charges a fee for granting an easement across its railroad property, and the fees charged by DM & E fell in between those of Burlington Northern and the State. Schieffer testified at trial that DM & E has had no problems in the past with respect to easements on its 700 miles of existing track in South Dakota. He stated that he was concerned that S.D.C.L. 49-16A-75.3(5) could lead to substantial financial expense for DM & E in maintaining records for these free easements. He also indicated reservations about whether the easement holder would be able to utilize the easement in a manner that would interfere with railroad operations. Although the statute does state that the easements are subject to reasonable regulation as to location and placement, it does not specifically state that the easement cannot interfere with the railroad. Schieffer also claimed that the statute creates problems with respect to obtaining financing for the project because the lender will be concerned about the uncertainty generated by this free-for-all system and whether future railroad operations may be affected by the easements and thus less likely to fund the project. DISCUSSION “The standard for granting a permanent injunction is essentially the same as for a preliminary injunction, except that to obtain a permanent injunction the movant must attain success on the merits.” Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir.1999)(citing Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n. 12, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987)). Therefore, the Court is to consider the threat of irreparable harm to the movant, the balance between this harm and the harm to the other party if the injunction is granted, the public interest, and the merits of the case. See Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981). The Eighth Circuit has held, however, in cases such as this where the plaintiff is alleging that certain provisions of state law are preempted by federal law and the plaintiff has established that it will suffer irreparable injury if the State is not enjoined from enforcing those provisions, the Court need not weigh the harm to State resulting from granting the injunction nor the public interest involved. See Bank One, 190 F.3d at 847-48. In such a situation, the plaintiff will be entitled to a permanent injunction “no matter what the harm to the State, and the public interest will perforce be served by enjoining the enforcement of the invalid provisions of state law.” Id. at 848. A. Federal Preemption The federal preemption doctrine is grounded in the Supremacy Clause of the United States Constitution which provides that the “Constitution, and the Laws of the United States which shall be made in Pursuant thereof ... shall be the supreme Law of the Land.” U.S. Const. Art. VI, cl.2. Under the Supremacy clause, any state law that contradicts or interferes with an Act of Congress is invalid. See Cipollone v. Liggett Group, Inc. 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). In determining whether state law is preempted by federal law, this Court must look to Congressional intent. See id. Three categories of preemption are well-established. First, Congress can expressly preempt state law by passing a statute explicitly stating its intent to do so. See English v. General Elec. Co., 496 U.S. 72, 79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). This is known as express preemption. See id. Secondly, Congress may implement a scheme of regulation that so pervasively dominates the field that an intent to occupy the entire field can be inferred and thus no room remains for state regulation. Id. Implied or field preemption is the label given to such Congressional action. Id. Preemption can also result from a conflict between state and federal law. Id. DM & E argues that the South Dakota statutes at issue are preempted by federal law. The State counters by contending that federal preemption in the area of railroads does not extend into the arena of eminent domain and that a finding of preemption in this context would violate the Tenth Amendment. The Court will address each of the categories of preemption in turn. 1. Express Preemption In support of its express preemption argument, DM & E relies upon two federal statutes: the Interstate Commerce Commission Termination Act of 1995 (the “ICCTA”) and the Federal Railroad Safety Act of 1970 (“FRSA”). In the context of express preemption, the focal point for analysis is the wording of the preemption clause itself. See Time Warner Cable v. Doyle, 66 F.3d 867, 875 (7th Cir.1995). Therefore the Court will examine the preemption clause of each of the relied upon statutes. The ICCTA explicitly grants the Surface Transportation Board exclusive authority 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[.] 49 U.S.C. § 10501(b). The section then goes on to read: “[ejxcept as otherwise provided in this part, the remedies provided under this part with respect to the regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.” Id. “Transportation” is broadly defined in the ICCTA to include: (A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both by rail, regardless of ownership or agreement concerning use; and (B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange or passengers and property. 49 U.S.C. § 10102(9). Courts that have construed the ICCTA’s preemption clause have interpreted it to be a broad in scope. See City of Auburn v. United States Government, 154 F.3d 1025, 1030 (9th Cir.1998); Wisconsin Central Ltd. v. The City of Marshfield, 160 F.Supp.2d 1009, 1013 (W.D.Wis.2000)(“It is clear that the ICC-TA has preempted all state efforts to regulate rail transportation.”); CSX Transportation, Inc. v. Georgia Pub. Serv. Comm’n, 944 F.Supp. 1573, 1581 (N.D.Ga.1996). This Court agrees with that conclusion and finds that the ICCTA has preempted all state efforts to regulate railroads. Thus the question then becomes whether South Dakota’s eminent domain statutes regulate the DM & E railroad. In Wisconsin Central Ltd., a Wisconsin district court wrestled with the issue of whether condemnation under state eminent domain statutes constituted regulation. See 160 F.Supp.2d at 1013. The dispute in Wisconsin Central Ltd. involved the City of Marshfield’s attempt to condemn and remove a portion of a railroad passing track in order to realign a state highway. See id. at 1011. The court acknowledged that the ICCTA did not define the term “regulation” and relied upon Black’s Law Dictionary for the plain meaning of the term as “the act or process of controlling by rule or restriction.” Id. at 1013. The court went on to reason that condemnation of a passing track certainly exerted control over the railroad, in fact the most extreme type of control, and thus amounted to regulation. Id. The court found that the condemnation action brought by the city was preempted by the ICCTA as an attempted regulation of the railroad. Id. The statutes at issue in the instant case do not involve South Dakota’s attempt to exercise its eminent domain power over railroad property but rather new statutory requirements that a railroad must meet before it may exercise eminent domain power delegated by the State of South Dakota. Although this distinction is not lost on the Court, the distinction makes little difference in the context of two of the requirements at issue here. S.D.C.L. 49-16A-75.3(2) poses an insurmountable barrier to the PRB project. Based upon the testimony of Schieffer, Feaster and Taylor, DM & E will not be able to obtain a financing commitment as required under S.D.C.L. 49-16A-75.3(2) with the current eminent domain statutes in place. The State’s financial expert Matha contended that DM & E could obtain a commitment conditioned upon later acquiring the right of eminent domain. Feaster testified that such a condition is highly unusual, and Taylor flat out stated that with these statutes in place, DM & E cannot obtain a financing commitment, nor would it be prudent to seek one. Given the fact that Schieffer, Taylor and Feaster have significant combined experience in the railroad industry and financing such project and that Matha has no experience in financing railroad projects, the Court finds the testimony of Schieffer, Feaster and Talyor more persuasive on this point. Even if the Court were to find Matha’s testimony regarding the ability to obtain a conditional commitment persuasive, it is not clear that such a commitment would satisfy the requirements of the statute. As the Court is well aware, financing commitments of this magnitude, those in the billion dollar range, are going to be subject to certain conditions. Feaster testified that a typical condition contained in such commitment letters is that there be no material, adverse change of circumstances. The question is whether such conditional commitments satisfy the statute. As the statute is written the Court must conclude that they do not. The language of the statute requires a “financing commitment from a lender or an investor or combination of each with adequate capitalization and resources to fulfill its commitment to build and complete the project.” The statute makes no reference to a conditional financing commitment. Therefore, it is likely that any project of sufficient size to require outside financing would not be able to satisfy the requirement of S.D.C.L. 49-16A-75.3(2). Thus the statute not only blocks the PRB project from going forward, but likewise would likely prevent the construction of any other significant railroad project requiring outside financing given that such a project would only be able to obtain a conditional financing commitment. The Court concludes that since S.D.C.L. 49-16A-75.3(2) completely blocks the project, it exerts enormous control over the railroad which can only be characterized as regulation. The same can be said of S.D.C.L. 49-16A-75.3(4). That provision requiring a very detailed plat to be filed will likewise halt the PRB project. Gigear, the project engineer testified that in order to comply with the statute’s requirements, the project would have to be completely designed before construction can begin. DM & E was instead planning on employing a design-build procedure which Gigear testified is more flexible with respect to placement of the track and more economical because it allows for changes in the design as the construction process is begun. Gigear testified that in order to totally design the PRB project it would cost DM & E $30 million dollars or more and would take one and a half to two years to complete. Although the State attempted to demonstrate that DM & E has done significant engineering work and generated much of the information required by the statute, Gigear maintained that the materials DM & E has generated to date do not meet the requirements of S.D.C.L. 49-16A-75.3(4) and that he could not verify otherwise on an application to obtain eminent domain authority. The State offered no contrary testimony. Therefore, the Court accepts the testimony of Gigear that the only way to satisfy S.D.C.L. 49-16A-75.3(4)’s requirements is to completely design the project. The testimony at trial established that DM & E does not have the few million dollars necessary to perform the due diligence required to obtain financing for the project. Clearly DM & E does not have the $30 million that it would cost to completely design the PRB project nor can it wait the one and a half to two years to begin construction. Based upon the testimony regarding the difficulty of obtaining financing for the PRB project, the Court finds it unlikely that DM & E would be able or even willing to obtain financing to cover the cost of completely designing the project so that it could properly prepare its application for eminent domain. Thus, just as with subdivision (2) of S.D.C.L. 49-16A-75.3, subdivision (4) will wholly prevent the PRB project, and likely any railroad project of significant magnitude, from being built. This Court must conclude that interference to this magnitude by S.D.C.L. 49-16A-75.3(2) & (4) constitutes regulation and is expressly preempted by the ICCTA. Furthermore, examination of the requirements themselves demonstrates the regulatory nature of their effect on the railroad. S.D.C.L. 49-16A-75.3(2) requires that DM & E demonstrate sufficient financial resources to “complete the proposed construction or reconstruction along with any related facilities, construction, or mitigation which are necessary to protect against harm to the public safety, convenience, or other adverse socioeconomic or environmental impact” and provide the State with a “financing commitment letter from a lender or an investor or a combination of each with adequate capitalization and resources to fulfill its commitment to build and complete the project.” This requirement necessitates that the Governor consider economic, environmental, and public safety implications of the PRB project. Yet, state regulation of such areas in the context of railroads is preempted by federal law. See Burlington Northern Santa Fe Corp. v. Anderson, 959 F.Supp. 1288 (D.Mont.1997) (economic regulation); City of Auburn, 154 F.3d at 1031 (environmental regulation); Wisconsin Central Ltd., 160 F.Supp.2d at 1014 (public safety). The State of South Dakota cannot regulate indirectly through the use of its eminent domain power what it cannot regulate directly. To do so would be to allow the State of South Dakota to control a federally approved railroad project, a result that could not be reconciled with the Supremacy Clause. Similar to S.D.C.L. 49-16A-75.3(2), subparagraph (4) of S.D.C.L. 49-16A-75 is regulatory in effect. The provision requires the railroad to file a plat specifying the most minute detail of the project including the construction methods and engineering specifications for every conceivable part of the project. Requiring such a plat in and of itself forces the railroad to design this entire $2 billion dollar project prior to applying for eminent domain authority, and Gigear testified that the project is design build in nature. Thus the South Dakota law is regulating the manner in which the project will be designed. The State has no authority to impose such regulation upon the railroad. In addition to the ICCTA, DM & E also claims that South Dakota’s eminent domain statutes are expressly preempted by the Federal Railroad Safety Act of 1970 (“FRSA”). The purpose of the FRSA is to “promote safety in every area of railroad operations and reduce railroad-related accidents and incidents.” 49 U.S.C. § 20101. The preemption language of FRSA provides as follows: Laws, regulations, and orders related to railroad safety shall be nationally uniform to the extent practicable. A State may adopt or continue in force a law, regulation, or order related to railroad safety until the Secretary of Transportation prescribes a regulation or issues an order covering the subject matter of the State requirement. A State may adopt or continue in force an additional or more stringent law, regulation, or order related to railroad safety when the law, regulation or order— (1) is necessary to eliminate or reduce an essentially local safety hazard; (2) is not incompatible with a law, regulation, or order of the United States Government; and (3)does not unreasonably burden interstate commerce. 49 U.S.C. § 20106. DM & E argues that since the intent of the statutes at issue is to limit railroad eminent domain to control railroad operations and safety, the legislation is expressly preempted. Yet DM & E did not introduce any evidence to that effect at the preliminary injunction hearing or the trial. The State argued that the intent of the statutes was to protect landowners, not to control railroad operations and provide for public safety. It is true that one of the criteria for the Governor to examine under S.D.C.L. 49-16A-75.3(2) is the harm to public safety, but based upon this lone reference to public safety, the Court cannot conclude that the statutes at issue are expressly preempted by the FRSA. 2. Implied (Field) Preemption As stated above, implied or field preemption exists in those cases in which Congress has enacted a regulatory scheme so pervasive so as to imply that Congress intended to occupy the entire field and leave no room for state regulation. See English, 496 U.S. at 79, 110 S.Ct. 2270. The ICCTA presents just such a comprehensive regulatory scheme. See Soo Line Railroad Co. v. City of Minneapolis, 38 F.Supp.2d 1096, 1100 (D.Minn.1998)(ICC-TA pervasively dominates the field of public health, safety, environment, and historic preservation with respect to railroads). When the ICCTA was enacted, Congress removed provisions in the former law giving the state a role in regulation of railroads. The Staggers Act, the precursor to the ICCTA, provided for a federal certification procedure for states that wanted to regulate intrastate railways. See Southern Pacific Transp. v. Public Utilities Comm'n, 716 F.2d 1285, 1287 (9th Cir.1983). The ICCTA repealed these sections in addition to withdrawing the state’s jurisdiction over wholly intrastate tracks. Congress also chose to delete a policy statement concerning regulatory cooperation between state and federal authorities and another policy statement providing for joint state-federal regulatory bodies. See S.Rep. No. 176, 104th Cong., 1st Sess. 44 (1995). The clear message of the ICCTA is that there is no longer a place for states in the area of railroad regulation. Although it is clear that the area of railroad regulation is now off limits to the state, the area of eminent domain presents a more complex question. As the state properly pointed out, the STB’s own position with respect to DM & E’s eminent domain authority is that the question presents an issue of state law. The STB has acknowledged that it does not have a role to play in eminent domain proceedings and that DM & E is responsible for the acquisition of the land necessary to complete the project. Thus STB approval of the PRB project does not carry with it any federal power to take land to complete the project. For such authority, DM & E is wholly dependent upon the State of South Dakota. Therefore, the Court finds that Congress did not intend to preempt the field of eminent domain in enacting the ICCTA. This finding, however, does not conclude the inquiry of whether the particular statutes at issue are preempted. As the Court stated above, two of the provisions of S.D.C.L. 49-16A-75.3 are regulatory in nature. The Court finds that S.D.C.L. 49-16A-75.3(2) & (4) have only a tenuous connection to a delegation of eminent domain power and instead attempt to regulate railroads. The State claims that S.D.C.L. 49-16A-75.3(2) is a proper condition on eminent domain authority because in requiring that the railroad produce a financing commitment evidencing that it can complete the project, the State ensures that the railroad has the necessary resources to compensate the landowner for the taking and also that the taking will not be for naught because the project can be completed. These are proper concerns of the State, but the State reaches too far into areas regulated by federal law to address these issues. As stated earlier, the State does not have a place in regulating economic and environmental aspects of railroads, nor does it have authority to regulate public safety with respect to railroads. Congress has preempted these fields. By requiring the Governor to examine these aspects of the project in the context of determining financial feasibility, the State is implying that the Governor has authority to require additional safety measures or environmental mitigation on top of that required by the STB. Such power amounts to regulation of the railroads and is prohibited. A similar analysis applies with respect to S.D.C.L. 49-16A-75.3(4). In subparagraph (4) of S.D.C.L. 49-16A-75.3, the State claims that it is examining the details of the construction project to ensure that no more land than is necessary to complete the project is taken. The State further claims that it needs to know the specifics of the methods of construction because different methods impose different burdens upon the land taken as well as on the land adjacent to the property taken. Again, these are issues in the context of eminent domain that the State has a legitimate interest in, but the state attempts to accommodate that interest by burdening the railroad with a very heavy regulatory requirement. In forcing DM & E to design the entire project prior to applying for eminent domain authority, the State is exerting control over the railroad that can only be referred to as significant regulation. In addition, the record is clear on the point that such detailed advanced plans would have to be altered in the course of construction. Further regulatory approval would apparently have to be obtained from the State for each of the changes to the pre-approved construction plans. By indirectly regulating the railroad via its eminent domain power, the State of South Dakota has entered a field exclusively occupied by Congress in passing S.D.C.L. 49-16A-75.3(2) & (4). See Wisconsin Central Ltd., 160 F.Supp.2d at 1014 (state condemnation law cannot be used to condemn railroad because Congress preempted the field). Furthermore, many of the specific areas addressed in those two provisions mirror the areas examined by the Surface Transportation Board in its investigation of the project, such as financial viability of the project, environmental consequences, and the location of the track. Regulation of these are areas belongs solely to the federal government. DM & E also contends that S.D.C.L. 49-16A-75.3(5) requiring the railroad to provide a free easement to utility companies is preempted by federal law. DM & E argues that the State cannot regulate the location and placement of utility easements within a railroad right-of-way because such regulation violates the preemption clause of the ICCTA. See 49 U.S.C. § 10501(b). DM & E asserts that the forced placement of utilities on railroad property will inevitably result in conflict between the railroad and such utilities. In its post-trial brief, the State has not responded to this argument of DM & E. To support its contention that S.D.C.L. 49-16A-75.3(5) is preempted by federal law, DM & E relies on two cases. In Mellon v. Southern Pacific Transport Co., 750 F.Supp. 226 (W.D.Tex.1990), the landowner of a servient estate crossed by a railroad challenged the railroad’s granting of an easement for installation of cable beneath the railroad’s right-of-way without compensating the servient owner. The landowner argued that Texas law, which is more restrictive than federal law on the rights of railroads and telecommunications companies, should apply to his claims. Id. at 232. The court recognized that Congress had passed a statute specifically authorizing “railroads to enter into contracts with telephone, telegraph and cable companies to exchange services.” Id. (citing 49 U.S.C. § 10749). The court, however, also noted that the Congressional statute failed to directly address the issue of railroad rights-of-way. Id. at 232. Thus, the court found that it was dealing with a field preemption scenario and went on to hold that federal law occupies the entire field of railroad right-of-ways as to preclude application of state law. Id. at 232-233. The second case relied upon by DM & E presents a very different circumstance. Railroad Ventures, Inc. v. Surface Transportation Board, 299 F.3d 523 (6th Cir.2002), concerns an appeal from a decision of the Surface Transportation Board invalidating an agreement entered into between a township and the owner of the railroad. After filing an abandonment petition with the STB seeking permission to abandon the line, the owner of the railroad entered into an agreement with a township providing that the railroad or its successor in interest would construct an overpass or underpass at a crossing between the railway and the highway as a precondition to the restoration of rail service. Id. at 538. The party attempting to purchase the railroad in order to keep it operational argued that enforcement of the agreement would likely cause it to forgo the acquisition of the rail line because the estimated cost of constructing an overpass or underpass would exceed the net liquidation value of the entire line. Id. at 540. The STB agreed and found that the agreement unreasonably interfered with common carrier operations and the statutory provisions providing for offers of financial assistance to avoid abandonment of rail lines. Id. The Sixth Circuit upheld the decision of the STB citing three separate grounds for its decision. First, the court found that the seller had no right to transfer any property interest associated with the rail line after it had filed its abandonment petition with the STB. Id. at 561. The court also held that public policy supported the STB’s decision because the agreement entered into between the seller and the township impeded the restoration of rail service along the line in question. Id. And finally, the court upheld the decision on grounds of federal preemption. The seller and the township had argued that they entered into the agreement in order to comply with Ohio laws regarding health and safety. The court found that these Ohio state laws had been preempted by the ICCTA to the extent that the Ohio laws “intrude upon the jurisdiction of the STB with regard to the regulation of rail transportation under § 10501(b).” Id. at 561. The court fails to make clear in its opinion precisely which portion of § 10501(b) the Ohio laws intrude upon, but presumably it is that portion of the statute vesting the STB with exclusive jurisdiction over the abandonment of railroads. Unlike in the two cases cited by DM & E in which the railroad voluntarily gave the easement and then was challenged for doing so, here the statute at issue requires DM & E to provide the easement free of charge to certain entities subject to reasonable regulation from the state as to location and placement. The issue for the Court to determine is whether such a requirement as a condition on the right to obtain state eminent domain authority is preempted by federal law. The Court finds that it is not. It is clear that the authority of the STB does not extend into the area of eminent domain, although it clearly has exclusive jurisdiction over the construction of railroads. See 49 U.S.C. § 10501(b)(2). Requiring an easement over a portion of a railroad and regulating its location and placement clearly impacts the railroad, but the State is not dictating the manner of construction of the railroad. The statute only deals with the placement of the easement, not the railroad itself. The instant case does not concern a contract entered into between the railroad and the easement holder and thus does not fall under the provisions of 49 U.S.C. § 10749 like Mellon. Furthermore, unlike in Railroad Ventures, Inc., there is no evidence that requiring the easement will make the PRB project financially unfeasible and thus halt construction. In requiring the right-of-way, the State has not delved into an area preempted by the ICCTA. 3. Conflict Preemption Conflict preemption exists 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.” English, 496 U.S. at 79, 110 S.Ct. 2270. The ICCTA was passed to deregulate the railroad industry and foster competition in the industry. See CSX Transportation, Inc., 944 F.Supp. at 1583 (citing S.Rep. No. 176, 104th Cong., 1st Sess. 3 (1995) and 49 U.S.C. § 10101). Although it may be theoretically possible for DM & E to comply with the ICCTA and the accompanying regulations of the Surface Transportation Board as well as S.D.C.L. 49-16A-75.3(2) & (4), such a burden on DM & E would clearly undercut Congress’s intent to relieve the railroad industry from heavy regulatory burdens. S.D.C.L. 49-16A-75.3(4) requires that DM & E file a “plat that sets forth the route of the road to be constructed or reconstructed, identifies each affected landowner, and specifies the location, along with construction methods and engineering specifications for all main lines, sidings, yards, bridges, crossings, safety devices, switches, signals, and maintenance facilities.” Requiring such minute detail for the construction of a two billion dollar design-built project is a virtual impossibility and insurmountable regulatory burden. Likewise, the requirement of a financing commitment found in S.D.C.L. 49-16A-75.3(2) imposes a significant burden on DM & E and conflicts with Congress’s desire to deregulate railroads, especially in light of the fact that the Surface Transportation Board has already found the PRB to be a financially viable project. Therefore, these two provisions of S.D.C.L. 49-16A-75.3 also run afoul of the principal of conflict preemption. In an attempt to dispose of the remainder of S.D.C.L. 49-16A-75.3’s requirements, DM & E argues that South Dakota’s conditioning the railroad’s exercise of eminent domain upon a finding a public use consistent with public necessity conflicts with the ICCTA’s requirement that the STB make a finding of public convenience and necessity prior to issuing a certificate of authorization. DM & E argues that S.D.C.L. 49-16A-75.3’s entire purpose of defining public use consistent with public necessity is thus preempted and the entire statute is void. The Court cannot agree. DM & E is correct in that 49 U.S.C. § 10901(b) requires that the STB “issue a certificate authorizing activities for which such authority is requested in an application filed ... unless the Board finds that such activities are inconsistent with the public convenience and necessity.” This language, however, does not lead to the conclusion that any South Dakota eminent domain law requiring a showing of public use and necessity is contradictory. The Court’s analysis must be guided by the basic premise that the touchstone of preemption analysis is an examination of Congressional intent. See Cipollone, 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). Thus, the question becomes whether Congress intended to preempt a state’s right to condition an exercise of state eminent domain power upon a finding by the state of public use and necessity. The answer to that question is no. The ICCTA does not speak of eminent domain. A finding by the STB of public convenience and necessity does not vest the railroad with any power to use that specific route so approved because the