Who’s on First

1. Who’s on First

2. “On one mile of track, you might have 20 different landowners and 10 different decisions on rights.” • The Crux of the Problem

3. 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

4. 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

5. The Surface Transportation Board (STB) • Formerly the Interstate Commerce Commission (ICC) • Railroad companies • Adjacent landowners • Notable Players

6. 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

7. 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

8. Abandonment • STB Authorization of Abandonment • Actual Physical Abandonment • Railbanking • Reversionary Interest • Key Terms

9. Six common types • Fee simple absolute • Fee simple determinable • Fee simple subject to condition subsequent • General easement • Limited easement • License • Feesimple absolute and easements (general or limited) are most common • Types of Ownership

10. An absolute ownership interest in property that is transferable without any limitation, restriction or condition • Fee Simple

11. 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 • General • Limited • Destruction • Roughly 85% of railroad rights-of-way are acquired by easement • Extinguishment occurs when use for an easement is abandoned • Easement

12. Construction of the deed/title • Intention of the parties • Charter of the railroad corporation • Local statutory provisions • Judicial dicta • Fee Simple v. Easement – Factors

13. Private grant • Condemnation proceedings • Federal grant • By prescription (adverse possession) • Methods of Acquiring Ownership

14. 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

15. 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

16. 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

17. Usually determined by state law precedents on deed interpretation • Depends on the language in the individual deed of each parcel • Railroads’ Rights of Ownership

18. “…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

19. Track map • Tax map • Deed/title document • Land Records Division • Litigation • Rail Corridors: How to Determine Ownership

20. Blood on the Tracks

21. 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

22. 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

23. 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

24. 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

25. 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

26. Notice of Interim Trail Use • If no trail use agreement is reached, any taking may only be temporary • Threshold Issues: Claim Accrual

27. 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

28. 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

29. 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

30. Matthew R. Hansen Graham & Dunn PC mhansen@grahamdunn.com | 206.340.9627 Questions? Richard D. Schreiber, PC rids@swbell.net | 314.849.5828