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What is Rails-to-Trails Litigation?

Here is the short story why landowners often have a claim for compensation from the federal government when a former railroad corridor is converted to a recreational trail: 

When a railroad stops using its railroad corridor, the landowners on either side of the corridor are often supposed to be able to gain possession and control of that land in the former railroad corridor.  But the federal government passed a law that prevents that from happening and instead authorizes the land to be used for a recreational trail that the landowners did not authorize.  Federal courts unanimously say this is a taking of land and that private landowners can obtain compensation from the federal government.  That is “Rails-to-Trails” litigation.

Here is the longer story why landowners can often get compensation from the government when a former railroad corridor is converted to a recreational trail: 

Most railroad corridors were formed in the 1800's or early 1900's, which of course was also when the resulting railroad conveyances were made.  Often a railroad corridor is initially created when a railroad company receives an easement (a right-of-way across and over a landowner’s property) from a landowner or receives an easement by condemning a strip of land through the landowner’s property.  (If the railroad company instead purchased actual fee simple ownership of the land for its railroad corridor – that is, the railroad actually buys the land itself rather than a right to cross it – then there is no case to pursue.)  If the railroad company ever abandons its corridor, then the railroad purpose easement is extinguished, and the person owning the land next to the railroad corridor is deemed to own to the centerline of that easement.  The landowner is said to be exercising his or her “reversionary rights” in that case.  A railroad purpose easement can also be extinguished if the land is used for a non-railroad purpose, which would also trigger the adjoining landowner’s reversionary right to reclaim the land within the railroad corridor to the centerline of the former railroad corridor.  The above rules are based on state law.

Two events occurred involving the federal government that led to Rails-to-Trails litigation. 

First, in the early 1900s, railroad companies were forced to submit to federal regulation.  Part of the regulation was that if railroad companies ever wanted to abandon their corridors, they had to ask permission from the federal government.  Today the federal agency that regulates railroads is called the United States Surface Transportation Board (“STB”).  If the STB grants authority to abandon, then the corridor goes out of federal jurisdiction, any existing railroad purpose easement is extinguished, and the adjoining landowner can exercise his or her reversionary rights to reclaim the property to the centerline of the former railroad corridor. 

Second, in 1983, Congress passed the federal Trails Act.  The reason for passage of the Trails Act was to preserve railroad corridors, which were being abandoned at a high rate following the creation of the interstate highway system.  Many were concerned that the nation’s infrastructure would be damaged as a result, particularly because once these railroad corridors are disassembled they are difficult to reassemble.  In order to preserve railroad corridors, the Trails Act inserted itself into the STB abandonment process described in the above paragraph. In particular, when a railroad company seeks authority from the STB to abandon a corridor, the Trails Act allows third parties (state, county, or local governments, or private entities) to interrupt the abandonment process by stepping forward and asking the STB through what is called a Trail Use Request to instead halt the abandonment process and give the third-party permission to convert the railroad corridor to a recreational trail.  If the railroad agrees, then the STB must give its authorization to convert the former railroad corridor to a recreational trail.  The STB’s authorization is given in an order called a Notice of Interim Trail Use (“NITU”).  The use of the Trails Act that results in the NITU, which preserves the former railroad corridor, is often called “railbanking” because this process halts destruction of the corridor and instead puts the corridor in the so-called bank, or “railbank.” 

The reason a case comes into existence is because federal courts conclude that when the STB issues a NITU, that blocks the railroad abandonment that otherwise would have occurred, which in turn blocks the adjoining landowners’ reversionary property rights in the corridor from vesting so long as the railroad company held a mere easement in the corridor. 

So, if the railroad company held an easement, the landowner has a claim, and such claim is brought in federal court against the United States government because it was the United States government that passed the Trails Act, which is what is responsible for the blocking of adjoining landowners’ reversionary interest in the land.

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