Dana R. Hodges Trust v. United States

101 Fed. Cl. 549, 2011 U.S. Claims LEXIS 2062, 2011 WL 5042383
CourtUnited States Court of Federal Claims
DecidedOctober 25, 2011
DocketNo. 09-289 L
StatusPublished
Cited by14 cases

This text of 101 Fed. Cl. 549 (Dana R. Hodges Trust v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dana R. Hodges Trust v. United States, 101 Fed. Cl. 549, 2011 U.S. Claims LEXIS 2062, 2011 WL 5042383 (uscfc 2011).

Opinion

OPINION

DAMICH, Judge:

Pending before the court are the parties’ cross-motions for summary judgment in this “rails-to-trails” case. Plaintiffs allege a Fifth Amendment taking of their properties which were subject to a railroad right-of-way along two segments of a corridor running from Lowell, Michigan, to Greenville, Michigan, in Kent, Ionia, and Montcalm counties.

Pursuant to a Petition for Exemption submitted by Mid-Michigan Railroad, Inc. (“Mid-Michigan,” “MMRR,” or “the railroad”) to abandon its rail line between Lowell, at milepost 103.20, and Greenville, at milepost 78.50, the Surface Transportation Board (“STB”) granted the railroad the authority to negotiate with a prospective trail use operator, cease rail operations, and convert the right-of-way into a recreational trail. The railroad did in fact reach such an agreement with a trail operator and the railroad right-of-way was converted to a recreational trail under the authority of the National Trails System Act, 16 U.S.C. § 1241 et seq. (2006) (“the Trails Act”).

For the reasons stated below, the court finds that the conversion of the right-of-way to recreational trail usage constituted a taking of property rights under the Fifth Amendment, for which Plaintiffs are entitled to just compensation. Accordingly, Plaintiffs’ motions1 are granted and the Government’s cross-motions are denied.

I. Background

A. The Trails Act

“[T]he purpose of the Trails Act was to preserve unused railroad rights-of-way by [551]*551converting them into recreational trails.” Barclay v. United States, 443 F.3d 1368, 1371 (Fed.Cir.2006). It is settled law, however, that “a Fifth Amendment taking occurs in Rails-to-Trails cases when government action destroys state-defined property rights by converting a railway easement to a recreational trail, if trail use is outside the scope of the original railway easement.” Ladd v. United States, 630 F.3d 1015, 1019 (Fed.Cir.2010).

Railroads must seek the approval of the STB to officially discontinue or abandon use of a railroad corridor. Nat’l Ass’n of Reversionary Prop. Owners (“NARPO”) v. STB, 158 F.3d 135, 137 (D.C.Cir.1998). The Trails Act provides for a process called “railbanking” as an alternative to discontinuance or abandonment. Caldwell v. United States, 391 F.3d 1226, 1229 (Fed.Cir.2004). The right-of-way is said to be “‘banked’ until such time as railroad service is restored.” Caldwell v. United States, 57 Fed.Cl. 193, 194 (2003), aff'd 391 F.3d 1226 (Fed.Cir.2004).

The process of abandonment begins with either an Application or what is called a “Notice of Exemption,” which is a less involved process. After the Application or Notice of Exemption is filed, a proposed trail operator, such as a state, municipality, or private group, can submit a proposal for converting the railway to a trail. The proposal “must include a statement of willingness to manage the corridor, assume liability, and pay taxes.” NARPO, 158 F.3d at 138. If the railroad and the proposed trail operator indicate a willingness to negotiate a trail use agreement, “the STB stays the abandonment process and issues a notice allowing the railroad right-of-way to be ‘railbanked.’ ” Caldwell, 391 F.3d at 1229.2 The determination of the railroad whether to engage in such negotiations is voluntary. Nat’l Wildlife Fed’n v. Interstate Commerce Comm’n, 850 F.2d 694, 702 (D.C.Cir.1988). If the railroad agrees to negotiate a Trails Act agreement, however, the STB is required to issue a “NITU” (“Notice of Interim Trail Use or Abandonment”), in exemption proceedings, or a “CITU” (“Certificate of Interim Trail Use or Abandonment”), in abandonment application proceedings. Barclay, 443 F.3d at 1376; Capreal v. United States, 99 Fed.Cl. 133, 136 (2011). If a trail use agreement is not reached, the NITU expires 180 days after its issuance.

This ease involves a NITU, which “permits the railroad to discontinue service, cancel tariffs, and salvage track and other equipment, ‘consistent with interim trail use and rail banking” without consummating an abandonment.” Caldwell, 391 F.3d at 1230. If an agreement is reached between the railroad and the trail operator, “the NITU extends indefinitely to permit interim3 trail use.” Id. The STB’s issuance of the NITU suspends exemption proceedings for 180 days to allow for negotiation of an agreement. Barclay, 443 F.3d at 1371; 49 C.F.R. § 1152.29(b)(2) and (d). “If no trail use agreement is reached, the NITU converts into an effective notice of abandonment, allowing the railroad to ‘abandon the line entirely and liquidate its interest.’ ” Barclay, 443 F.3d at 1371 (quoting Preseault v. I.C.C., 494 U.S. 1, 7, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990) (“Preseault /”)); see also Ladd, 630 F.3d at 1023 (“Alternatively, negotiations may fail, and the NITU would then convert into a notice of abandonment.”).

If an agreement is reached, “the STB retains jurisdiction for possible future i’ailroad use, and state law reversionary interests that would normally vest upon abandonment are blocked.” Caldwell, 391 F.3d at 1230. As the Federal Circuit has held: “The taking, if any, when a railroad right-of-way is converted to interim trail use under the Trails Act occurs when state law reversionary property interests that would otherwise vest in the adjacent landowners are blocked from so [552]*552vesting.” Id. at 1233. It has further held that successfully “entering into a trail use agreement and converting the railway to a recreational trail” are not necessary elements of a takings claim. “Hence, it is irrelevant that no trail use agreement has been reached and that no recreational trail has been established.” Ladd, 630 F.3d at 1024. Because “the issuance of the NITU is the only government action in the railbanking process that operates to prevent abandonment of the corridor and to preclude the vesting of state law reversionary interests,” id., “the appropriate triggering event for any takings claim under the Trails Act occurs when the NITU is issued.” Caldwell, 391 F.3d at 1235.

B. Factual Background

On February 20, 2008, MMRR filed a petition with the STB seeking authority to abandon the 24.7-mile stretch of its rail line between Lowell and Greenville. Pis.’ PFUF, Exh. 177. MMRR had acquired the line from CSX Transportation, Inc., and began operating in 1987. Id. at 34. One portion of that overall corridor, from Greenville to Belding, Michigan, was opened in 1871 by the Detroit, Lansing & Lake Michigan Railroad Company. Id. The Belding to Lowell portion was opened by Grand Rapids, Belding and Saginaw Railroad Company in 1899. Id. Both portions became part of the Pere Marquette Railroad Company in 1900. Id.

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Bluebook (online)
101 Fed. Cl. 549, 2011 U.S. Claims LEXIS 2062, 2011 WL 5042383, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dana-r-hodges-trust-v-united-states-uscfc-2011.