In the case of Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., 1980, the U.S Supreme Court ruled in favor of Chicago & North Western Transportation Co., overturning a decision by the Iowa Supreme Court that had favored Kalo Brick and Tile Company. The dispute arose when Kalo sued for damages after Chicago & Northwestern discontinued rail service to its brick manufacturing plant without providing adequate notice or obtaining approval from the Interstate Commerce Commission (ICC). The court held that federal law preempted state law on this issue, meaning only ICC could regulate railroad abandonments under the Interstate Commerce Act. Therefore, any claims for damages due to an unauthorized discontinuance should be addressed at a federal level rather than through state courts.

In the dissenting opinion for Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., Justice Brennan, joined by Justices White and Marshall, argued that the majority's decision was inconsistent with previous rulings of the Court regarding regulatory takings under the Fifth Amendment. They contended that a temporary halt in operations due to government regulation does not constitute a taking requiring compensation unless it deprives an owner of all economically viable use of their property or has an unduly harsh impact on distinct investment-backed expectations. The dissenters believed that neither condition had been met in this case as Kalo Brick & Tile Company could have continued its operations albeit at higher costs during railroad abandonment proceedings and there were no clear indications about how long these proceedings would last when they started their business venture.