Capreal Inc v. U.S.

CAPREAL, INC., et al., Plaintiffs, v. THE UNITED STATES, Defendant.

No. 09-186L

United States Court of Federal Claims

Filed: May 6, 2011

National Trails System Act, 16 U.S.C. § 1241 et seq. (2006); Fifth Amendment Takings Claim; Scope of Easement; Federal Board's Notice of Interim Trail Use Blocked Reversion to Fee Simple Landowners Under Massachusetts Law; Railbanking; Abandonment.

Steven M. Wald, with whom were Brent W. Baldwin, J. Robert Sears, Thomas S. Stewart, and Elizabeth G. McCulley, Baker Sterchi Cowden & Rice, LLC, St. Louis and Kansas City, Missouri, for Plaintiffs.

Kristine S. Tardiff, with whom were Ignacia S. Moreno, Assistant Attorney General, and Emily M. Meeker, Environmental & Natural Resources Division, Natural Resources Section, United States Department of Justice, Washington, D.C., Evelyn Kitay, Surface Transportation Board, Of Counsel, for Defendant.

OPINION AND ORDER

WHEELER, Judge.

Plaintiffs in this Fifth Amendment takings case are landowners who claim fee simple interests in real property formerly subject to railroad easements. The railroad right-of-way is located in southern Massachusetts, and is known locally as the Southbridge Secondary Track. The right-of-way has been acquired by the Commonwealth of Massachusetts for a recreational trail pursuant to a Notice of Interim Trail Use or Abandonment (NITU) issued by the federal Surface Transportation Board (STB). Plaintiffs claim that, if not for the issuance of the NITU, they would have held a fee simple interest free of any easement. They seek compensation from the United States for preventing the easement from extinguishing and thereby taking their property.

Three motions for summary judgment have been filed: (1) Defendant's motion for summary judgment based on title issues; (2) Plaintiffs' motion for partial summary judgment on liability; and (3) Defendant's cross-motion for summary judgment on liability. The Court has jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a)(1) (2006).

For the reasons explained below, the Court concludes that the Government has taken Plaintiffs' property through issuance of the NITU and Plaintiffs are entitled to compensation. Initially, the predecessors to the Providence & Worcester Railroad Company (P&W) obtained easements to use the right-of-way for railroad purposes. Under Massachusetts law, if the railroad abandoned the right-of-way, Plaintiffs would have held a fee simple interest free of the easement. The U.S. Government, through the issuance of the NITU, blocked the extinguishment of the easement and imposed a use of the right-of-way that was not within the scope of the original easement. The issuance of the NITU is a taking under the Fifth Amendment for which Plaintiffs are entitled to recover.

Defendant makes two arguments to show why under Massachusetts law it should not be liable for the conversion of the right-of-way to trail use. First, it argues that Plaintiffs' property interest is subject to the reserved right of the Commonwealth to acquire the land for any public purpose. Second, it argues that a recreational trail use is within the scope of the original easement. The Court finds neither of these arguments to be persuasive. Accordingly, Defendant's motion for summary judgment on title and cross-motion for summary judgment on liability are DENIED. Plaintiffs' motion for partial summary judgment on liability is GRANTED.

Background¹

The Southbridge Secondary Track is a right-of-way located in Worcester County, Massachusetts and Windham County, Connecticut. At issue in this case is the section of the trail located in Massachusetts, from milepost 0.18 in Webster to milepost 1.4 in Dudley, and from milepost 4.8 in Dudley to milepost 10.98 in Southbridge, a distance of approximately 7.4 miles. Pursuant to an agreement between P&W and the Commonwealth of Massachusetts, the land currently is owned by the Commonwealth, subject to P&W's right to reactivate rail service over the right-of-way in the future.

A. Legal and Statutory Framework

Although the predecessors in interest to P&W acquired the railroad right-of-way pursuant to Massachusetts law, beginning with the Transportation Act of 1920, ch. 91, § 402, 41 Stat. 456, 477-78, the U.S. Government assumed a central role in the governing of railroads. Nat'l Ass'n of Reversionary Prop. Owners (NARPO) v. Surface Transp. Bd., 158 F.3d 135, 137 (D.C. Cir. 1998). The STB has authority over the construction, operation, and abandonment of most railroad lines in the United States. Caldwell v. United States, 391 F.3d 1226, 1228 (Fed. Cir. 2004). A railroad cannot abandon or discontinue use of its rail line without STB approval. NARPO, 158 F.3d at 137. A railroad seeking to abandon its right-of-way must file either a standard abandonment application pursuant to 49 U.S.C. § 10903, or seek an exemption under 49 U.S.C. § 10502. Caldwell, 391 F.3d at 1228. If the railroad requests abandonment under the standard abandonment procedure of § 10903, the STB will grant the abandonment if it finds that "the present or future public convenience and necessity require or permit the abandonment or discontinuance." 49 U.S.C. § 10903 (2006). Under the exemption procedure, the railroad must submit certain certifications and the STB will publish a notice of the exemption in the Federal Register. 49 C.F.R. § 1152.50(b), (d). Abandonment is authorized within thirty days after publication unless stayed. 49 C.F.R. § 1152.50(d). Rail carriers must file a notice with the STB that they have consummated abandonment. 49 C.F.R. § 1152.50(e). When a railroad abandons a line through one of these procedures, federal regulatory jurisdiction ends and state property law then controls the disposition of the right-of-way. NARPO, 158 F.3d at 137.

Through passage of the National Trails System Act Amendments of 1983 (the Trails Act), Congress authorized a process by which the railroad's right-of-way can be preserved for future railroad use, and during the interim period, used as a recreational trail. 16 U.S.C. § 1247(d) (2006). Under this process, after a railroad files an application to abandon the right-of-way, a state, political subdivision, or private organization may file a request to acquire the right-of-way for interim trail use. 49 C.F.R. § 1152.29(a). If the railroad voluntarily agrees to negotiate an interim trail use, the STB will issue a Certificate of Interim Trail Use or Abandonment (CITU) (for abandonment proceedings), or a NITU (for exemption proceedings). 49 C.F.R. § 1152.29(c)-(d). The STB's issuance of a CITU or NITU gives the railroad and the interim trail user 180 days to negotiate an agreement. If no agreement is reached within 180 days after the issuance of the CITU or NITU, the railroad can abandon the right-of-way. Id. The notice also allows the railroad to discontinue service, cancel any applicable tariffs, and salvage track and related materials. Id. If the railroad and trail operator reach an agreement, the trail operator assumes full managerial and financial responsibility for the right-of-way subject to future restoration of rail service. 49 C.F.R. § 1152.29(a), (c), (d). The Trails Act provides that interim trail use "shall not be treated, for purposes of any law or rule of law, as an abandonment of the use of such rights-of-way for railroad purposes." 16 U.S.C. 1247(d).

The Trails Act process may constitute a Fifth Amendment taking because in many cases the railroad acquired the right-of-way as an easement and there are landowners abutting the right-of-way who own the land in fee simple. In such cases, the landowners "have interests under state property law that have traditionally been recognized and protected from governmental expropriation, and if, over their objection, the Government chooses to occupy or otherwise acquire those interests, the Fifth Amendment compels compensation." Preseault v. United States, 100 F.3d 1525, 1550 (Fed. Cir. 1996). Whether or not plaintiffs may have a claim for compensation depends upon the landowners' interest in the land. If the railroad obtained a fee simple interest over the land, the plaintiffs have no takings claim. Id. at 1533. If the railroad acquired only an easement, "the Trails Act prevents the operation of state laws that would otherwise come into effect upon abandonment-property laws that would result in extinguishment of easements for railroad purposes and reversion of rights of way to abutting landowners." Caldwell, 391 F.3d at 1229 (internal quotation omitted). A Fifth Amendment taking occurs if the original railroad easement is not broad enough to encompass a recreational trail. Id. Alternatively, a taking occurs if the easements were extinguished as a matter of state law prior to their conversion to trails. Preseault, 100 F.3d at 1545-46.

If there is a taking, the U.S. Government is responsible even if another public entity actually establishes the recreational trail, because the entity acquiring the trail is acting pursuant to U.S. Government authority. Id. at 1551. "[W]hen the Federal Government puts into play a series of events which result in a taking of private property, the fact that the Government acts through a state agent does not absolve it from the responsibility, and the consequences, of its actions." Id.

B. The History of the Southbridge Secondary Track

1. Acquisition of the Track

Beginning in the 1850s, the predecessors to P&W began acquiring the Southbridge Secondary Track by deed and condemnation. The parcels at issue in this case are those acquired by the railroad as easements. The parties agree on the identity of these parcels, which they have determined by reviewing the "Schedule of Lands Owned or Used for Purposes of a Common Carrier" for the subject right-of-way dated January 23, 1919, prepared by the New York, New Haven & Hartford Railroad Company and filed with the Interstate Commerce Commission ("the ICC Schedule"). There are three categories of parcels acquired as easements....