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Monday, March 31, 2014

March 19, 2014
In what is commonly known as a rails-to-trails case, the U.S. Supreme Court held on March 10, 2014, in an 8-1 decision, that certain railroad rights of way revert to private property owners following the railroad’s abandonment of its easement.

The case, Marvin M. Brandt Revocable Trust v. United States, resolves a lower court split by answering a narrow question in favor of private property owners: What happens when a railroad abandons a right of way that was granted under the General Railroad Right-of-Way Act of 1875? In answering this question, the court has potentially opened the door to a significant amount of Fifth Amendment rails-to-trails takings cases.

Brandt concerns a quiet title action filed by the federal government involving a 10-acre strip of land in Wyoming over which decades of failed railways operated. In 1908, pursuant to an 1875 law intended to promote railroad growth, the federal government conveyed to a now-defunct railroad a 66-mile right of way that crosses through Wyoming.

In 1976, the government patented — i.e., granted — to Marvin and Lulu Brandt a plot of land in fee simple. Brandt’s plot included a portion of, and was subject to, the 1908 right of way. Several decades and multiple successor railroads later, the Wyoming and Colorado Railroad abandoned the right of way. By 2004, the railroad had completed track removal, and in 2006, the government sought a declaration to quiet title in its favor along the entire 66-mile right of way.

The quiet title action was resolved prior to trial with 30 of the 31 landowners whose properties were affected by the right of way. The 31st landowner, Brandt, argued that in 1908 the federal government conveyed to the railroad an easement in which the government retained no reversionary interest if and when the railroad abandoned its right of way. The district court granted summary judgment for the government, and the Tenth Circuit Court of Appeals affirmed, holding that the federal government retained an “implied reversionary interest” in the right of way following the railroad’s abandonment. The Supreme Court then granted certiorari.

Writing for himself and seven other justices, Chief Justice John Roberts reversed the Tenth Circuit by explaining that the court had largely settled the issue underlying Brandt in 1942. According to the court, a seven-decade-old decision, Great Northern Railway Co. v. United States, held that, under the 1875 law pursuant to which the government conveyed the right of way affecting the property at issue in the case, the government conveyed to the railroad only an easement and not a fee simple — that is, the railroad’s interest was only its ability to run a train over the land and not full possession of the land itself.

By applying “basic common law principles” to its holding in Great Northern, the Supreme Court held that once the railroad abandoned its easement in 2004, Brandt obtained full title to the underlying land free of the railroad’s easement. Thus,“[t]he United States did not reserve to itself any interest in the [railroad’s abandoned] right of way.”

In so holding, the court rejected the government’s arguments distinguishing Great Northern. The court first rejected the government’s argument that pre-1875 right of way statutes had any significance for the court’s holding, discussing at length the history of 19th-century right of way statutes, and Congress’ major policy shift on the matter in 1871.

The court then rejected the government’s arguments that other precedent controlled, noting that the various cases cited by the government settled only competing claims to an interest in land, but did not define the scope of that interest.

Finally, the court rejected the government’s argument that various 20th-century statutes showed that Congress in 1875 intended to retain a reversionary interest in rights of way granted by the federal government. Thus, the government, according to the court, “loses [its] argument today, in large part because it won when it argued the opposite before this court more than 70 years ago” in Great Northern.

On its face, Brandt is a straightforward case with a narrow holding: It holds that the General Railroad Right-of-Way Act of 1875 conveyed to railroads only an easement and that, therefore, when a railroad abandons its easement, the right of way is extinguished and does not revert to the government.

Indeed, emphasizing the narrow scope of its opinion, the court noted that conveyances made pursuant to pre-1871 statutes might turn out differently and that a series of 20th-century statutes purporting to answer the issue in Brandt “do not define (or redefine) the nature of the interest conveyed” under the 1875 Act.

Despite the case’s limited application, Brandt is significant for Fifth Amendment rails-to-trails takings jurisprudence. With the court holding that the government does not have a right to thousands of miles of now-abandoned rights of way — many of which are now in public use — the federal government, according to the U.S. Justice Department, may now be subject to hundreds of millions of dollars of potential Fifth Amendment takings claims.

As Justice Sonia Sotomayor noted in her dissent, “the court undermines the legality of thousands of miles of former rights of way that the public now enjoys as means of recreation and transportation.”

The decision’s reach, however, is unclear; at oral argument, members of the court repeatedly pressed the government to estimate how many landowners might be in situations similar to Brandt’s. The government’s attorney could not provide an exact number, but he conceded that “there were at least a significant number of 1875 Act rights of way.” Thus, the size of takings litigation that could flow from Brandt could be sizable.

In a fiscal 2014 report issued before the court’s decision in Brandt, the Justice Department noted that it is currently “defend[ing] more than 90 [similar] suits, involving 10,000 properties in over 30 states.” By upsetting the status quo and holding that the government retains no interest in thousands of miles of abandoned railroad easements, the Supreme Court likely guaranteed that the Justice Department’s current litigation efforts will be dwarfed by new rails-to-trails takings claims.

—By Lewis S. Wiener, Victor P. Haley, Thomas C. Herman and Charles Kruly, Sutherland Asbill & Brennan LLP

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