Rails-To-Trails & the U.S. Supreme Court
All over the country abandoned railroad corridors are being converted into recreational trails, much to the delight of exercise enthusiasts including bikers, hikers and joggers, as well as anyone who is looking for a quiet place to take their dog for a walk. The cost of the trail construction can be significant, depending on the composition of the trail surface and whether bridges are necessary. But construction cost is not whole story.
Landowners are making claims against the federal government, claiming that the conversion of the rail lines into recreational trails represents a new use of their property, entitling them to compensation from the government under the Fifth Amendment for the taking. According to a recent story in the National Law Journal, during the past year alone, the federal government has paid out $49 million to landowners abutting the trails. And the Justice Department says 8,000 claims by property owners remain pending, many of which are being asserted in class action lawsuits. To make matters worse, at the end of the day the U.S. doesn’t even get a deed, the landowners apparently still get to keep the property. So how did this all happen?
It started when Congress passed the General Railroad Right-of-Way Act of 1875, permitting railroads to obtain a 200-foot federal right of way across public lands. Railroads also obtained rights of way by private purchase or through the exercise of their eminent domain powers, but many thousands of miles of tracks were laid across federal land in right-of-way granted by the 1875 act. Much of that federal land was subsequently sold to private landowners.
At its peak in the early 1900’s, there were more than 250,000 miles of railroad tracks in the US according to Interstate Commerce Commission Statistics. However, by the 1970’s, with Penn Central and several other lines declaring bankruptcy, and the federal government deregulating the industry, over 100,000 miles of tracks had been abandoned. The federal government, wanting to preserve the rail corridors for potential future transportation uses, passed the National Trails System Act, which uses “rail banking” to lease or donate abandoned right-of-way to trail sponsors while retaining the right to reclaim the right-of-way for future rail use if needed. The thousands of miles of right-of-way acquired pursuant to the General Railroad Right-of-Way Act of 1875 are the property interests at issue in Marvin M. Brandt Revocable Trust v. United States, No.12-1173.
The United States Supreme Court will decide whether the federal government retained an “implied reversionary interest” when it issued railroad patents, or whether these grants were subject only to a railroad easement. Easements can be extinguished, but reversionary interests cannot. In this case, after the railroad abandoned its use, the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to the property owner. The Tenth Circuit agreed with the government, a holding that conflicts with decisions from both the Seventh Circuit and Federal Circuit. Thus, according to the Tenth Circuit’s decision, there was no taking when the railroad abandoned its right-of-way and it was turned into a recreational trail.
Oral argument is scheduled for January 14, 2014.