Who’s on First

Matthew R. HansenGraham & Dunn PC

Richard D. SchreiberRichard D. Schreiber, PC

“On one mile of track, you might have 20 different landowners and 10 different decisions on rights.”

The Crux of the Problem

Legal issues surrounding rights-of-way (easements, use limitations, extinguishment or abandonment) date back to the Roman Empire and were well developed in British common law

Issues adopted in the colonies• 1700 – 1800s: applied to plank roads, toll roads, and canals• Mid–1800s: extended to railroads

General Facts

1800s – Government land grants to railroads • Approximately 130 million acres (in checkerboard pattern until

1871 or in specific corridors) granted to states or railroads• Many contained right of reverter (eliminated after 1871)• Railroads received fee simple, broad easement, or narrow

easement for railroad purposes only

1920s – Railroad system peaked• 270,000 miles of active rail

1970s – Decline of national railway systems

General Facts

The Surface Transportation Board (STB) • Formerly the Interstate Commerce Commission (ICC)

Railroad companies

Adjacent landowners

Notable Players

Meant to promote the conversion of abandoned lines to trails

Delays abandonment of rail corridor by up to 180 days to allow for the sale for public purposes

Did not allow for preemption of state abandonment laws if transfer was voluntary

Railroad Revitalization and Regulatory Reform Act of 1976

Meant “‘to preserve established railroad rights-of-way for future reactivation of rail service, to protect rail transportation corridors, and to encourage energy efficient transportation use,’ as well as promote the development of recreational trails.”

Preempts state abandonment and reversion rights law

National Trail System Act Amendments of 1983

Abandonment• STB Authorization of Abandonment• Actual Physical Abandonment

Railbanking

Reversionary Interest

Key Terms

Six common types• Fee simple absolute• Fee simple determinable• Fee simple subject to condition subsequent• General easement• Limited easement• License

Fee simple absolute and easements (general or limited) are most common

Types of Ownership

An absolute ownership interest in property that is transferable without any limitation, restriction or condition

Fee Simple

The right to use land owned by another for a particular purpose, such as for a right-of-way

Interest acquired by the railroad as a right-of-way is typically interpreted as an easement

1. General2. Limited3. Destruction

Roughly 85% of railroad rights-of-way are acquired by easement

Extinguishment occurs when use for an easement is abandoned

Easement

Construction of the deed/title

Intention of the parties

Charter of the railroad corporation

Local statutory provisions

Judicial dicta

Fee Simple v. Easement – Factors

Private grant

Condemnation proceedings

Federal grant

By prescription (adverse possession)

Methods of Acquiring Ownership

The promise of great economic gains was a sufficient excuse for many railroads to ignore the real estate rights of landowners and simply build their railroads right through private land without any pretense of legal right and without any serious attempt to obtain consent

This process became known by those in the railroad’s path as being railroaded

Being Railroaded

Railbanking Request • 30 days: application• 10 days: “exempt abandonment”

Notice/Certificate of Interim Trail Use• 180 days to negotiate

Agreement and transfer or property or approval of abandonment application

STB authority ends at abandonment

No notification to adjacent landowners

Rails-to-Trails Process: Procedure

Preemption of state law and takings claims• State/local laws in conflict with STB’s authority to regulate

railroads are preempted and unenforceable.• State law reversionary rights NOT extinguished by railbanking.

They continue to exist and become possessory if railbanking is terminated and STB jurisdiction ends.

Reactivation of rail service

Rails-to-Trails Process: Issues

Usually determined by state law precedents on deed interpretation

Depends on the language in the individual deed of each parcel

Railroads’ Rights of Ownership

“…many railroads do not own their right-of-way outright, but rather hold them under easements or similar property interests.”

“While the terms of these easements and applicable state law vary, frequently the easements provide that the property reverts to the abutting landowner upon abandonment of rail operations.”

Right of Reverter

Track map

Tax map

Deed/title document

Land Records Division

Litigation

Rail Corridors: How to Determine Ownership

Blood on the Tracks

Preseault v. ICC (1990 – Preseault I)• Supreme Court ruled that the Trails Act was constitutional

under the Commerce Clause• The Trails Act declaration that interim trail use would never

be considered abandonment may create a taking under the Fifth Amendment depending on the nature of the railroad’s rights-of-way

Did not need to address the constitutional challenge under the Fifth Amendment

• If a takings occurred, compensation was available under the Tucker Act in the Federal Claims Court

Legal History: Preseault I

Preseault II (Fed. Cir. 1996)• “When state-defined property rights are destroyed by the

Federal Government’s preemptive power in circumstances such as those here before us, the owner of those rights is due just compensation.”

Considered a physical taking (per se taking), even though the governmental act was merely regulatory

Legal History: Preseault II

Railroad acquired only an easement

Railroad acquired an easement limited to “railroad purposes”

Even if the original easement acquired by the railroad was broad enough to allow for trail use, the railroad abandoned the easement under state law before the new use was issued

Taking Claims (Fifth Amendment): Typical Claims Asserted

Railroad owned a fee interest

Railroad did not abandon original easement before the new use was issued

Original easement is broad enough to encompass the new use

Taking Claims: Typical Defenses Raised

State Law• Usually determines nature of the property interest and issues

of abandonment

Federal Law• Determines nature of the property interest and issues of

abandonment when property is a federal land grant

Threshold Issues: Applicable Law

Notice of Interim Trail Use

If no trail use agreement is reached, any taking may only be temporary

Threshold Issues: Claim Accrual

Courts are receptive to class actions in this area of Fifth Amendment takings cases

Court of Federal Claims• Exclusively opt-in

District Courts• Exclusively opt-out class (limited to $10,000 each)

Mass Joinder• If class certification is not sought

Threshold Issues: Class Actions

Pleading Standards• “Must affirmatively demonstrate” and “rigorous analysis”

standards

Certification of Questions to State Courts• Several state Supreme Courts have determined they have

jurisdiction to accept certified questions of state law from the CFC

Threshold Issues: Class Actions

The Good• Hundreds of railroad corridors railbanked and preserved for

future use

The Bad• Trails Act spawned an explosion of Fifth Amendment takings

litigation

The Ugly• Number of new Fifth Amendment cases against the

government has skyrocketed with no end in sight

The Good, the Bad and the Ugly

Matthew R. HansenGraham & Dunn PC

mhansen@grahamdunn.com | 206.340.9627

Questions?

Richard D. Schreiber, PCrids@swbell.net | 314.849.5828