Rhutasel v. United States

105 Fed. Cl. 220, 2012 U.S. Claims LEXIS 660, 2012 WL 2373253
CourtUnited States Court of Federal Claims
DecidedJune 22, 2012
DocketNo. 09-121L
StatusPublished
Cited by9 cases

This text of 105 Fed. Cl. 220 (Rhutasel 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
Rhutasel v. United States, 105 Fed. Cl. 220, 2012 U.S. Claims LEXIS 660, 2012 WL 2373253 (uscfc 2012).

Opinion

OPINION and ORDER

SMITH, Senior Judge:

Pending before the Court are the Parties’ Cross-Motions for Summary Judgment in a “rails-to-trails” case. Plaintiffs include eight (8) Iowa property owners1, who collectively own eleven (11) parcels of land, and allege a Fifth Amendment taking of their properties, which were subject to a railroad right-of-way in Franklin County, Iowa. Plaintiffs argue that they are entitled to Summary Judgment based on two propositions. First, Plaintiffs argue that that they owned fee simple title to properties adjacent to the Railroad corridor and the Railroad merely acquired an easement. Second, Plaintiffs argue that the Railroad’s easement was limited to railroad purposes and the issuance of a Notice of Interim Trail Use (“NITU”) which authorizes the conversion of railroad lines to recreational trails is beyond the scope of the easement. Consequently, Plaintiffs argue they are entitled to just compensation. The Government, however, argues that some Plaintiffs do not have standing because their properties do not adjoin the Railroad corridor. Furthermore, the Government asserts that the relevant easements were not limited to railroad purposes.

After full briefing, oral argument and careful consideration, and for the reasons stated below, the Court finds that the conversion of the railroad right-of-way to a recreational trail amounted to a taking of seven (7) of the Plaintiffs’ property which under the Fifth Amendment requires just compensation.

THE TRAILS ACT

Stemming from the Interstate Commerce Act of 1887, as revised and amended by the Transportation Act of 1920 (41 Stat. 477-78), the Surface Transportation Board (“STB”) is charged with regulating the construction, operation, and abandonment of railroad lines in the United States. Chic. & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 311-12, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981); Caldwell v. United States, 391 F.3d 1226, 1228 (Fed.Cir.2004). Therefore, if a railroad wishes to abandon or discontinue a railroad corridor, it is the STB that grants the railroad’s approval to take such action. Nat’l Ass’n of Reversionary Prop. Owners (“NARPO”) v. STB, 158 F.3d 135, 137 (D.C.Cir.1998). In order to preserve the unused railroad right-of-ways, The Trails Act was implemented. The Trails Act is designed to preserve unused railroad right-of-ways by converting them into recreational trails. Barclay v. United States, 443 F.3d 1368, 1371 (Fed.Cir.2006).

In the event a railroad wishes to terminate its active rail service, a railroad may do so in one of three ways. First, a railroad [223]*223may apply to discontinue service. Preseault v. ICC, 494 U.S. 1, 5-6 n. 3, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990). Second, a railroad may seek to abandon the right-of-way. Hayfield N. R.R. v. Chi & N.W. Transp. Co., 467 U.S. 622, 633, 104 S.Ct. 2610, 81 L.Ed.2d 527 (1984). The third option for terminating railroad service is “railbanking,” which has occurred here. While railbanking is a form of discontinuance, 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). Unlike standard discontinuance, railbanking allows a third party to accept full responsibility of the railroad corridor and allows interim trail use until active rail service is restored. However, a plaintiff can assert a Fifth Amendment takings claim “when government action destroys state-defined property rights by converting a railway easement to a recreational trail, if the trail use is outside the scope of the original railway easement.” Ladd v. United States, 630 F.3d 1015, 1019 (Fed.Cir.2010).

In order for a railroad to abandon its line, the railroad must first file an Application or a Notice of Exemption. After the Application or Notice of Exemption is filed, a state, municipality, or private group can submit a proposal for converting the railroad into a trail. Barclay v. United States, 443 F.3d at 1376. If the railroad and the prospective railroad operator agree to negotiate a trail use agreement, the STB “stays the abandonment pi’ocess and issues a notice allowing the railroad right-of-way to be ‘railbanked.’” Caldwell, 391 F.3d at 1229; Citizens Against Rails-To-Trails v. STB, 267 F.3d 1144, 1150-53 (D.C.Cir.2001). If a railbanking and interim trail use agreement is reached, the Notice of Interim Trail Use (“NITU”) automatically authorizes the trail use, and “the STB retains jurisdiction for possible future railroad use.” Caldwell, 391 F.3d 1226, 1230. If a trail use agreement is not reached, the NITU expires 180 days after its issuance. 49 C.F.R. § 1152.29(d)(1).

FACTUAL BACKGROUND

In the 1870s, the Central Railroad of Iowa (“Iowa Central”) obtained a right-of-way from Plaintiffs’ predecessors-in-interest through a combination of fee deeds, right-of-way deeds, and condemnation of rights-of-way. Iowa Central used a standard form right-of-way deed. Thereafter, Union Pacific Railroad Company (“UP”) became the successor-in-interest to Iowa Central.

On March 4, 2003, Union Pacific filed with the STB a petition for exemption from formal abandonment proceedings seeking to abandon the railroad line known as the Sheffield Industrial Lead. The railroad line is located between milepost 179.8 near Chapin, Iowa to milepost 173.9 near Sheffield, Iowa, a distance of 5.9 miles. After the proposed abandonment, 1.8 miles of the line were re-classified. As a result, the trail use agreement only applies to 4.1 miles.

On June 9, 2003, the Iowa Trails Council filed a Request for Issuance of a Public Use Condition and NITU. Shortly thereafter, UP began negotiations with the Iowa Trails Council concerning the acquisition of the rail line. In late 2006, the parties reached a Trail Use Agreement, which led to the sale of the 4.1 miles of the railroad corridor. UP ultimately relinquished all interest in the railroad corridor and transferred its interest in the right-of-way to the Iowa Natural Heritage Foundation for the use as a public recreational trail. The 1.8 miles of the reclassified portion of the rail line is currently being used as an industrial track for the benefit of a grain elevator.

THE PARTIES, PROPERTIES, STIPULATIONS AND DISPUTE

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Cite This Page — Counsel Stack

Bluebook (online)
105 Fed. Cl. 220, 2012 U.S. Claims LEXIS 660, 2012 WL 2373253, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rhutasel-v-united-states-uscfc-2012.