Who’s on First
Matthew R. Hansen
Graham & Dunn PC
Richard D. Schreiber
Richard D. Schreiber, PC
The Crux of the Problem
“On one mile of track, you might have 20 different
landowners and 10 different decisions on rights.”
General Facts
 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
Notable Players
 The Surface Transportation Board (STB)
• Formerly the Interstate Commerce Commission (ICC)
 Railroad companies
 Adjacent landowners
Railroad Revitalization and Regulatory
Reform Act of 1976
 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
National Trail System Act Amendments of 1983
 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
Key Terms
 Abandonment
• STB Authorization of Abandonment
• Actual Physical Abandonment
 Railbanking
 Reversionary Interest
Types of Ownership
 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
Fee Simple
 An absolute ownership interest in property that is
transferable without any limitation, restriction or
condition
Easement
 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.
2.
3.
General
Limited
Destruction
 Roughly 85% of railroad rights-of-way are acquired by
easement
 Extinguishment occurs when use for an easement is
abandoned
Fee Simple v. Easement – Factors
 Construction of the deed/title
 Intention of the parties
 Charter of the railroad corporation
 Local statutory provisions
 Judicial dicta
Methods of Acquiring Ownership
 Private grant
 Condemnation proceedings
 Federal grant
 By prescription (adverse possession)
Being Railroaded
 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
Rails-to-Trails Process: Procedure
 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: Issues
 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
Railroads’ Rights of Ownership
 Usually determined by state law precedents on deed
interpretation
 Depends on the language in the individual deed of
each parcel
Right of Reverter
 “…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.”
Rail Corridors: How to Determine Ownership
 Track map
 Tax map
 Deed/title document
 Land Records Division
 Litigation
Blood on the Tracks
Legal History: Preseault I
 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 II
 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
Taking Claims (Fifth Amendment):
Typical Claims Asserted
 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: Typical Defenses Raised
 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
Threshold Issues: Applicable Law
 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: Claim Accrual
 Notice of Interim Trail Use
 If no trail use agreement is
reached, any taking may only
be temporary
Threshold Issues: Class Actions
 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
The Good, the Bad and the Ugly
 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
Questions?
Matthew R. Hansen
Graham & Dunn PC
mhansen@grahamdunn.com | 206.340.9627
Richard D. Schreiber, PC
rids@swbell.net | 314.849.5828