SHARON RAULERSON, et al., For Themselves and as Representatives of a Class of Similarly Situated Persons, et al., v. THE UNITED STATES OF AMERICA
No. 10-193C
In the United States Court of Federal Claims
(Filed July 7, 2011)
MARGOLIS, Senior Judge.
Takings; the Trails Act; appropriate measure of just compensation
Peter C. Whitfield, Trial Attorney, Environmental & Natural Resources Division, United States Department of Justice, Washington, DC, with whom was Ignacia S. Moreno, Assistant Attorney General, for defendant.
OPINION
MARGOLIS, Senior Judge.
This matter comes before the Court on the parties’ cross-motions for partial summary judgment for a determination of just compensation for the taking of plaintiffs’ reversionary interests in a railroad easement. A hearing was held in Court on June 9, 2011. Plaintiffs’ motion for partial summary judgment is granted, and defendant’s motion is denied.
I. BACKGROUND
A. The Trails Act
The National Trails System Act Amendments of 1983 (“the Trails Act”),
B. The Port Royal Railroad Line
Since 1985, the Port Royal Railroad Line, a 25-mile corridor connecting Yemassee, South Carolina to Port Royal, South Carolina, has been owned and operated by various instrumentalities of the State of South Carolina, including the South Carolina State Ports Authority, the South Carolina Public Railways Commission, Beaufort Railroad Company, and Tangent Transportation Company (collectively and variously, “South Carolina”). On or around May 30, 2008, however, South Carolina agreed to enter into an interim trail use agreement, commonly referred to as a “railbanking” agreement, with the Beaufort-Jasper Water and Sewer Authority (“BJWSA”). In order to effectuate the railbanking agreement, South Carolina and the BJWSA applied for an NITU, which the STB issued on May 20, 2009. Plaintiffs are members of an opt-in class consisting of persons who on May 20, 2009 owned an interest in lands constituting a certain part of the Port Royal Railroad Line. After issuance of the NITU, plaintiffs filed a complaint seeking just compensation under the Fifth Amendment to the United States Constitution. According to plaintiffs, the issuance of the NITU effected a taking by imposing a new trail use easement and preventing reversion of the railroad easement.
II. SUMMARY JUDGMENT STANDARD
A motion for summary judgment should be granted if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.
III. ANALYSIS
The parties assume for purposes of summary judgment that the interim trail use authorized by the NITU imposes an additional burden on plaintiffs’ property, resulting in a taking under the Fifth Amendment. The parties disagree, however, on how just compensation should be measured for that taking. According to plaintiffs, the appropriate measure of just compensation is the difference between the value of plaintiffs’ land unencumbered by a railroad easement and the value of plaintiffs’ land encumbered by a perpetual trail use easement subject
Section 8(d) of the Trails Act provides that interim trail use “shall not be treated, for any purposes of any law or rule of law, as an abandonment of the use of such rights-of-way for railroad purposes.”
“The question, then, … in the context of [a Trails Act] proceeding, [is] when are state law reversion interests forestalled by operation of section 8(d) of the Trails Act?” Caldwell, 391 F.3d at 1233. Under South Carolina law, a railroad easement is extinguished where there is “both the intention to abandon and the external act by which such intention is carried into effect.” Eldridge v. City of Greenwood, 388 S.E.2d 247, 251 (S.C. Ct. App. 1989). In order for there to be an abandonment, “[t]here must be a concurrence of the intention with the actual relinquishment of the property,” as well as “acts and conduct, positive, unequivocal and inconsistent with the claims of title.” Id. “[A]n intent to abandon has been found in a railroad conveying its right-of-way to another for purposes other than a railroad.” Id.
The facts establish that, but for the operation of the Trails Act, South Carolina’s execution of the railbanking agreement would have effected an abandonment of the easement, resulting in a reversion to plaintiffs. In the railbanking agreement, South Carolina “agree[d] to sell… as is and by quit-claim ... all of such right, title and interest that SELLER may have in the [railroad easement]” to BJWSA for “interim trail use,” pursuant to the Trails Act. (Railbanking
Defendant argues that “any measure of just compensation … should reflect the difference in value of plaintiffs’ land at the time the NITU was issued (encumbered by a railroad easement) and after the issuance of the NITU encumbered by a trail easement subject to reactivation of a railroad easement.” (Def.’s Mot. for Partial Summ. J. at 10.) Contrary to defendant’s position, the extent of the taking depends not on plaintiffs’ property interests at the time of the NITU, but rather “upon the nature of the state-created property interest that petitioners would have enjoyed absent the federal action and upon the extent that the federal action burdened that interest.” Anna F. Nordhus Family Trust v. United States, No. 09-042L, 2011 WL 1467940, at *6 (Fed. Cl. Apr. 12, 2011) (quoting Preseault I, 494 U.S. at 24 (O’Connor, J., concurring)) (emphasis added). This view is consistent with well-settled Federal Circuit precedent that “[t]he 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 vesting.” Barclay, 443 F.3d at 1373 (quoting Caldwell, 391 F.3d at 1233) (emphasis added); see also Ladd, 630 F.3d at 1023. Because the easement would have reverted back to plaintiffs under state law, the fee simple value of plaintiffs’ properties is the appropriate starting point in a damages analysis for just compensation; the appropriate measure of damages is the difference between the value of plaintiffs’ land unencumbered by a railroad easement and the value of plaintiffs’ land encumbered by a perpetual trail use easement subject to possible reactivation as a railroad.
Defendant also argues that the railbanking agreement cannot be construed as a state-law abandonment because “the railroad expressly retained its right to reacquire the land from the trail sponsor and reactivate rail service at any time in the future.” (Def.’s Mot. for Partial Summ. J. at 15.) The Court does not agree; provisions in the railbanking agreement that provide for reactivation of the railroad “at some undefined time in the future are of course self-serving and not indicative of the facts and circumstances” at the time of the agreement. Preseault v. United States (“Preseault II”), 100 F.3d 1525, 1548 (Fed. Cir. 1996). Indeed, the possibility of South Carolina reactivating the railroad “exists purely in the realm of the hypothetical,” and the Government has offered “[n]o evidence … of a present intent to reinstate rail service in the future.” Glosemeyer v. United States, 45 Fed. Cl. 771, 780 (2000); see also Ellamae Phillips Co. v. United States, No. 04-1544L, Slip Op. at 5-7 (Fed. Cl. June 21, 2011); Biery v. United States, Nos. 07-693L, 07-675L, Slip Op. at 26-30 (Fed. Cl. June 9, 2011); Capreal, Inc. v. United States, No. 09-186L, Slip Op. at 18 (Fed. Cl. May 6, 2011); Toews v. United States, 53 Fed. Cl. 58, 63 (2002); Schmitt v. United States, No. 99-1852, 2003 WL 21057368, at *8 (S.D. Ind. March 5, 2003). The preservation of the right to reactivate the railroad would not have prevented abandonment under South Carolina law.2
But for the Trails Act, the railbanking agreement would have effected an abandonment under South Carolina law, which would have caused the easement to revert back to plaintiffs. Plaintiffs’ damages must therefore be determined by reference to the fee simple value of their properties, unencumbered by any railroad easement. Ultimately, the measure of damages for just compensation must be the difference between the value of plaintiffs’ land unencumbered by a railroad easement and the value of plaintiffs’ land encumbered by a perpetual trail use easement subject to possible reactivation as a railroad.
IV. CONCLUSION
For the reasons set forth above, plaintiffs’ motion for partial summary judgment is granted, and defendant’s motion for partial summary judgment is denied.
s/ Lawrence S. Margolis
LAWRENCE S. MARGOLIS
Senior Judge, U.S. Court of Federal Claims