United States: Show Me The Money!: Potential Lucrative Compensation For Rails-To-Trails Landownowers In US Supreme Court Ruling

If you are a landowner who owns land that came to you or your family through a land grant from the United States government and that land abuts or lies beneath what is now an abandoned railroad, then you might have a legitimate claim to say to the government, "show me the money!" A January 2014 decision by the United States Supreme Court ruled in favor of landowners' rights to land once owned by the government and conveyed subject to a railroad easement. At issue is the General Railroad Right of Way Act of 1875("Act of 1875"), which gave railroads rights of way or easements through public lands.

The question is: What happens when these rights of way are abandoned by the railroads? Does the land go back to the Government or does it revert to the private party? Justice Roberts writing for the Supreme Court upheld the rights of private landowners. The decision opens the gates for claims of compensation – estimated by the government in the hundreds of millions – by landowners whose land now is traversed by abandoned railroads. The practical problem: many of the lands and abandoned railroads in dispute are currently occupied by the public parks and bike trails created by the National Trails System Act of 1983.

The Supreme Court upheld longstanding precedent in Marvin M. Brandt Revocable Trust v. United States, which ruled that land transferred to private owners under the Act of 1875 automatically became their property once the railroad running across the property was abandoned. The decision was dictated by the Court's 1942 decision in Great Northern Railway Co. v. United States, which established the prevailing rule that land transferred to private landowners by the government, under the agreement that the land be used as roadbed underneath the rail line, must return to the private landowners once the railroad company surrendered the right-of-way by abandoning the railroad. The Court decision turned on what type of interest was granted to the railroads by Congress under the Act of 1875.

The answer: an easement.

The Court's answer turned on well settled property law. An easement "creates a nonpossessory right to enter and use land in the possession of another and obligates the possessor not to interfere with the uses authorized by the easement." "Unlike most possessory estates, easements . . . may be unilaterally terminated by abandonment, leaving the servient owner with a possessory estate unencumbered by the servitude." This left the Court to conclude that once the railroad abandons the easement, it disappears and the landowner resumes its full unencumbered interest in the property. The Court made clear that the decision only applied to rights-of-way traversing across private land that the government transferred to private landowners under the Act of 1875.

In October 1988, Congress attempted to remedy this problem by enacting the National Trails System Improvement Act of 1988, to specifying that forfeited or abandoned railroad rights "shall remain in the United States". Nonetheless, the Court ruled that its decision is governed by the property rights given to the railroads under the Act of 1875: an easement. But for the United States government, it must now analyze how it obtained its rights in the abandoned railroads that were converted by the federal government into public parks and bike trails, or better known as Rails-to-Trails: legal battles are waiting.

Justice Sotomayor, in her dissent, humanized the Court's decision by departing from the "reversionary interests" and "fee simple" jargon to argue that, "[L]awsuits challenging the conversion of former rails to recreational trails alone may well cost American taxpayers hundreds of millions of dollars."

Indeed, the potential for litigation is now strengthened between private landowners whose land the abandoned rail traversed and the United States. The Supreme Court clearly states that they may bring suit to be compensated for the land even if the land is now occupied by the Rails-to-Trails system throughout many areas of our country.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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Authors
Gerald S. Dickinson
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