Federal Circuit Court of Appeals Finds Fifth Amendment Taking in Rails-toTrails Case

By Ryan Ellard1

This article highlights a recent federal court decision finding landowners adjacent to a converted trail entitled to compensation for taking due to change in the scope of the easement as governed by applicable state law statutes.

On February 13, 2023, the U.S. Court of Appeals for the Federal Circuit issued an opinion holding that conversion of an abandoned railroad corridor into a walking trail constituted a Fifth Amendment taking of the adjacent landowners’ property rights. Behrens v. United States, No. 2022-1277, 2023 WL 1944933 (Fed. Cir. Feb. 13, 2023). The Court’s opinion turned on the language of the underlying easements in conjunction with state law.

In the early twentieth century, Chicago Railroad Company acquired easements over a 144.3-mile corridor of land through a mix of easements and condemnations. Over the years, the easements were passed on to different railroad companies who operated freight lines. Most recently, the easements were conveyed to the Missouri Central Railroad and Central Midway Railroad, which wished to discontinue service and abandon the railway. Pursuant to 16 U.S.C. § 1247, the Missouri Department of Natural Resources filed a request to intervene in the abandonment proceedings and utilize the corridor for interim trail use. Federal statutes and regulations create a framework under which an intervenor may “railbank” the abandoned corridor, i.e., assume financial and managerial responsibility for the corridor while preserving it for “future railroad use.” 16 U.S.C. § 1247(d); 49 C.F.R. §§ 1152.29(a).

Shortly thereafter, owners of land adjacent to the corridor filed a takings claim in the Federal Claims Court arguing that the proposed rails-to-trails use exceeded the scope of the underlying easements. The Claims Court found that the easement allowed for interim trail use and entered summary judgment for the government. The property owners appealed to the Federal Circuit.

On appeal, the Court explained the two-step analysis required in rails-to-trails takings cases. First, it must be determined whether the railroad had obtained easements or fee simple estates. Here, there was no dispute that the railroad secured easements2 over the segments of corridor in question. The second step involves determining the scope of the easements. The Court observed that eighteen of the nineteen easements included no language limiting the grant to specified purposes. Nevertheless, the Court held that a Missouri statute only empowers the railroads:

[t]o take and hold such voluntary grants of real estate and other property as shall be made to it to aid in the construction, maintenance and accommodation of its railroads; but the real estate received by voluntary grant shall be held and used for the purpose of such grant only ....

Mo. Rev. Stat. § 1035 (1899), now § 388.210(2) (emphasis added). The Court acknowledged that the state’s Supreme Court has construed the clause “to aid in the construction, maintenance and accommodation of its railroads” to limit the scope of such grants to “all railroad purposes.” Brown v. Weare, 348 Mo. 135, 152 S.W.2d 649, 653 (1941). Accordingly, the court framed the issue as follows: “We must then determine whether trail use and railbanking are within the scope of the easements, i.e., whether (1) trail use and (2) railbanking are railroad purposes.” Behrens, 2023 WL 1944933, at *5.

Relying on Missouri Court of Appeals precedent and a provision of the state Constitution, the Court quickly disposed of the first question, holding that trail use simply does not qualify as a “railroad purpose” under state law. Boyles v. Mo. Friends of Wabash Trace Nature Trail, Inc., 981 S.W.2d 644, 649 (Mo. Ct. App. 1998); Mo. Const. art. I, § 26. Turning to the second question, the Court noted that the Trails Act3 requires that the proposed trails be “subject to restoration or reconstruction for railroad purposes.” 16 U.S.C. § 1247(d). The Court reasoned that:

Thus, in Missouri, trail use with the purported but speculative purpose of preserving the right-of-way for future railroad use does not fall within the scope of an easement granted for railroad purposes. Here, there is no evidence that future rail use is realistic. The railroad ceased running trains over the Corridor decades ago, and rails and ties have been removed. There is no evidence of a plan for future railroad use. The mere preservation of a tract of land for possible future rail use under Boyles is not a railroad purpose.

Behrens, 2023 WL 1944933, at *6.4 To that end, the Court held that railbanking under these circumstances could not constitute a “railroad purpose.”5

While the Court went to great lengths to stress that its opinion is based upon Missouri law, the sequence of its analysis and tone of the Opinion may be instructive for practitioners handling Rails-to-Trails matters.

Endnotes

1. Mr. Ellard is an attorney in Womble Bond Dickinson (US) LLP’s Charleston, South Carolina office. His practice includes handling a variety of real property matters. Mr. Ellard graduated from the University of Connecticut School of Law and is a Fellow in the American Bar Association’s Real Property, Trusts and Estates Section

2. The Court cited Missouri law for the principle that “Voluntary grants to railroads are easements even if they are formally worded as grants of fee simple estates.” Behrens v. United States, No. 2022-1277, 2023 WL 1944933, at *4 (Fed. Cir. Feb. 13, 2023) citing Brown v. Weare, 348 Mo. 135, 152 S.W.2d 649, 653–54 (1941).

3. 16 U.S.C. § 1247(d).

4. The Court recognized that under Missouri law, establishing a nature trail for the purpose of keeping the corridor intact for future rail service is not considered a railroad purpose if there is no evidence that future use is realistic. Boyles, 981 S.W.2d at 649-50.

5. The Court also rejected the government’s argument that the word “accommodation” in Mo. Rev. Stat § 388.210(2) should be defined as a “benefit.” The Court found that the state Supreme Court has suggested that the term “accommodation” means “operation.” Brown, 152 S.W.2d at 653.