Today’s post is by our colleague Thor Hearne, who regularly represents property owners in the Court of Federal Claims, the Federal Circuit, and the Supreme Court. He recently joined us on the faculty of the ALI-ABA eminent domain program in San Diego, and spoke at the 2011 Brigham-Kanner Property Rights Conference in Beijing. He’s familiar to our readers who have followed his success in “rails to trails” cases in the CFC, and for his earlier guest posts on these issues. Thor reports on the latest developments.

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The Justice Department has now lost more than twenty consecutive Trails Act taking cases in the past year and one-half. Ingram v. United States, No. 10-463L (May 24, 2012), and Whispell Foreign Cars, Inc. v. United States, No. 09-315L (June 5, 2012) are the two latest defeats for the federal government. 

Years ago a railroad operated by the South Carolina port authority abandoned an 80-mile long railroad right-of-way easement in Beaufort County, South Carolina. This railroad easement had been established before the Civil War. Under South Carolina law and the terms of the easement, when the railroad stopped using the right-of-way, the easement terminated and the owners of the fee estate regained unencumbered title and possession of the land.  But, under auspices of the National Trail System Act, the STB issued an order establishing a new rail-trail corridor easement across the land. Almost twenty-five years ago the Supreme Court declared that such a “rail-to-trail” conversion was a taking of the owners’ property for which the Fifth Amendment required the federal government to pay “just compensation” to the owner. See Preseault v. ICC, 494 U.S. 1 (1990).

But, rather than acknowledge its constitutional obligation to compensate property owners in Trails Act taking cases, the Justice Department has chosen to dispute the government’s constitutional obligation to pay any compensation to the landowner. The Justice Department contends that because the federal Trails Act allows for a new railroad to be built across the land in the indefinite future (so-called “railbanking”), current public recreational use of the land is the same as operating a railroad and, therefore, such use of the land is within the scope of the original railroad easement. Every time the Justice Department has made this argument, it has lost, including before the Supreme Court which, literally, laughed the government’s argument out of court. Yet, the DOJ continues making this losing argument.  Not surprisingly, Judge Horn rejected the government’s argument in Ingram. Judge Horn wrote, “courts in this Circuit have declined to find railbanking a railroad purpose or even a relevant consideration for analysis of a claim for a Trails Act taking.”

Ingram v. United States is one of the most recent cases to reject the government’s argument. In Ingram, the government attempted a twist on its prior argument. It argued, in essence, “OK, so we took your land for a federal rail-trail corridor easement. But, since a railroad had once run across your land, we need only pay you for the nominal ‘incremental’ burden imposed by the public using this land for recreation.” The government made this same argument in Raulerson v. United States, 99 Fed. Cl. 9 (2011), Rogers  v. United States, 90 Fed. Cl. 432 (2011), and Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010) – and other cases. In all these earlier cases the government’s argument was rejected and the court emphatically declared the nature of a Trails Act taking was a taking of the landowners’ right to unencumbered title and exclusive possession of the land. And, yet, the Justice Department continues to make this same losing argument. 

Judge Horn followed this settled law and held, “but for issuance of the [STB’s order], upon transfer of the easements for other than railroad purposes, the easements would have reverted to the plaintiffs in fee simple and plaintiffs would have held their property interests unencumbered by any easements. The measure of just compensation to the plaintiffs for the takings of plaintiffs’ property should capture the value of the reversionary interests in their “before taken” condition, unencumbered by the easements.”

On June 5, 2012, Chief Judge Emily Hewitt of the Court of Federal Claims handed the Justice Department another defeat. Whispell Foreign Cars, Inc. v. United States involved a Trails Act taking of land in St. Petersburg, Florida next to the Tropicana Dome. The railroad right-of-way was originally established in the early 1900’s. A portion of the railroad ran across platted city streets. The city passed an ordinance in 1914 authorizing the railroad to construct the railroad line within city street easements, and the railroad was abandoned in 2004. The STB issued an order authorizing a rail-to-trail conversion of the abandoned railroad line and the landowner sought compensation. The court had earlier found the government liable for Fifth Amendment taking of this property, See Whispell, 100 Fed. Cl. at 541 concluding that the easement originally granted the railroad was “limited to constructing, maintaining, and operating railway tracks, and the government effected a taking of plaintiffs’ property by imposing a new easement for public recreational trail use on their property.”

But, the Justice Department still denied the government’s obligation to pay the landowner and argued the owner did not hold title to the land under the street and abandoned railway right-of-way. The DOJ refused to recognize the “Florida rule that, when a platted street is dedicated to the public, the abutting lot owner remains the owner of the land underlying the street to the center line.” This “centerline” presumption is a principle of property law recognized by almost every state. The Justice Department’s decision to contest this long-settled principle of law required significant additional briefing and delay. Judge Hewitt ruled, “[The landowner] was the owner in fee simple of the property to the centerline of the land underlying the railway easement at the time of the taking and is entitled to just compensation therfor.” The Justice Department is currently also contesting the “centerline presumption” in a Trails Act case where this issue was referred to the Colorado Supreme Court. 

As these two most recent decisions demonstrate, the Justice Department continues to pursue – and lose – a costly litigation strategy in Trails Act taking cases. Both taxpayers and the landowners whose property has been taken would be well-served if the Justice Department would reconsider its “scorched-earth” response to Trails Act takings litigation and work for a prompt, fail and cost-efficient resolution of these landowners’ constitutional right to be paid just compensation.
Continue Reading Guest Post: Two More Rails-To-Trails Property Owner Victories