CHICAGO COATING COMPANY, LLC, IGNACIO MARTINEZ, BENJAMIN MARTINEZ, Plaintiffs-Appellants
UNITED STATES, Defendant-Appellee
from the United States Court of Federal Claims in No.
1:14-cv-00625-TCW, Judge Thomas C. Wheeler.
Michael James Smith, Stewart, Wald & McCulley, LLC, St.
Louis, MO, argued for plaintiffs-appellants. Also represented
by Steven Wald.
Carlos Thomas, Environment and Natural Resources Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellee. Also represented by Jeffrey H. Wood,
Reyna, Clevenger, and Wallach, Circuit Judges.
CLEVENGER, CIRCUIT JUDGE.
"rails-to-trails" case, Chicago Coating Company and
Ignacio and Benjamin Martinez (collectively
"Appellants") seek just compensation for an alleged
Fifth Amendment taking of their reversionary interest in land
within a dormant rail corridor. When faced with cross motions
for summary judgment, the United States Court of Federal
Claims ("the trial court") determined that the
deeds between Appellants' predecessors-in-interest and
the original railroad conveyed the property to the railroad
in fee simple. Appellants, however, contend that the deeds
conveyed only an easement, which terminated when the land was
no longer used for railroad purposes. Thus, the
Government's proposal to allow the corridor to be
converted into a recreational trail allegedly constituted a
taking of their reversionary interest in the easement. We
disagree, and affirm the decision of the trial court.
granted the United States Surface and Transportation Board
("STB") regulatory authority over rail carriers
who intend to discontinue or abandon any part of their
railroad line. 49 U.S.C. §§ 10501(b), 10903 (2015).
A discontinuance allows a rail carrier to "cease
operating a line for an indefinite period while preserving
the rail corridor for possible reactivation of service,
" while abandonment removes the line from the national
rail system and terminates the railroad's common carrier
obligation for the line. Preseault v. Interstate Commerce
Comm'n, 494 U.S. 1, 5 n.3 (1990) (Preseault
I). Originally, if a railroad requested to
abandon a line, the STB could either consummate the
abandonment within one year of the request, 49 C.F.R. §
1152.29(e)(2) (2016), or exempt the line from formal
abandonment proceedings under 49 U.S.C. § 10903, and
provide an expedited review process, 49 U.S.C. §
10502(a) (2015); 49 C.F.R. § 1152.50 (2016).
1983, Congress enacted Amendments to the National Trails
System Act of 1968, which created an alternative process to
abandonment, called "railbanking." 16 U.S.C. §
1241 et seq. (2006) ("Trails Act").
Railbanking maintains the STB's jurisdiction over the
dormant corridor, but allows a third party to assume the
financial and managerial responsibilities of the
right-of-way, preserve the right-of-way for future rail use,
and, in the interim, convert the corridor into a recreational
trail. Preseault I, 494 U.S. at 6-7.
order to railbank a corridor, the railroad must first
initiate abandonment proceedings before the STB. 49 C.F.R.
§§ 1152.29, 1152.50. The party interested in
acquiring the corridor must then request that the STB issue a
Certificate of Interim Trail Use ("CITU") or a
Notice of Interim Trail Use ("NITU"),
C.F.R. § 1152.29(c)-(d), which will issue if the
railroad is willing to negotiate an agreement, Preseault
I, 494 U.S. at 7 n.5. If an agreement is reached, the
STB suspends the abandonment proceedings, which "shall
not be treated, for purposes of any law or rule of law, as an
abandonment of the use of such rights-of-way for railroad
purposes." 16 U.S.C. § 1247(d) (2014). Railbanking
thus prevents any state law reversionary interests in the
corridor from vesting. If an agreement is not reached, the
abandonment proceedings may continue. 49 C.F.R. §
the enactment of the amended Trails Act, property owners who
believed they had a reversionary interest in property lying
in dormant rail corridors began claiming that railbanking
constituted a taking of their property. In Preseault
I, the Supreme Court recognized that the process of
railbanking could constitute a taking, 494 U.S. at 12-17, and
this court subsequently held that the establishment of a
recreational trail to preclude the reversion of an easement
may also be a taking, Preseault v. United States,
100 F.3d 1525, 1550 (Fed. Cir. 1996) (en banc) (Preseault
II). Thus, in these rails-to-trails takings cases, the
threshold question is whether the claimant has a compensable
property interest in the land allegedly taken, which is often
answered by analyzing the original deeds that conveyed the
property to the railroad. Preseault I, 494 U.S. at
16; Preseault II, 100 F.3d at 1533.
case involves two segments of land that are part of a rail
corridor in Cook County, Illinois, now operated by Burlington
Northern Santa Fe Railway ("BNSF"). On December 21,
2012, BNSF initiated proceedings before the STB to abandon
the corridor. On January 29, 2013, the Chicago Department of
Transportation filed a petition with the STB indicating its
interest in negotiating a railbanking and interim trail use
agreement for the corridor. When BNSF did not object, the STB
issued an NITU on April 9, 2013. The STB gave BNSF until
April 9, 2014, to negotiate an agreement, after which the
corridor would be abandoned. However, after numerous
extensions, BNSF has neither reached a railbanking agreement
nor abandoned the corridor. The opportunity for negotiation
continues. Decision of the U.S. Surface Transp. Bd., Docket
No. AB-6-428-X (Mar. 6, 2018) (extending the STB's
decision and NITU until August 28, 2018).
18, 2014, Appellants filed a takings claim in the trial
court, alleging that they are the fee owners of certain
parcels of land within the corridor and that the STB's
issuance of the NITU constituted a Fifth Amendment taking of
their interest in that land. As evidence of ownership,
Appellant Chicago Coating Company, as the
successor-in-interest, provided a deed from Daniel and
Harriet Jones, dated April 22, 1878 ("the Jones
Deed"). The deed states, in part:
The Grantors . . . for and in consideration of Ten Dollars in
hand paid, convey and quit claim to [the Grantees] all
interest in the following described Real Estate to wit: The
right of way for rail road purposes over and across a strip
of land fifty (50) feet in width being twenty five (25) feet
on each side of the centre line of the track of the railroad
known as the "Chicago and Southern Railroad" as the
same is now located and built through over and across [the
described land] . . . .
. . .
But this grant is upon the express condition [that the
Grantee] shall cause such premises to be used by some
regularly incorporated Railroad Company [as part of a railway
operation] and whenever a breach of any or either of these
conditions shall appear . . . [the Grantor] shall have the
right to reenter said premises and to own, use, occupy and
enjoy the same as if the grant first above mentioned had
never been made. And the said Grantor hereby expressly
waive[s] and release[s] any and all rights under and by
virtue of any and all laws of said State of Illinois in
relation to the exemption of homestead.
Ignacio and Benjamin Martinez, as the successors-in-interest,
provided a deed from John and Marjory Edward Wilkins, dated
April 1, 1875 ("the Wilkins Deed"). The deed
states, in part:
[The Grantor] in consideration of the construction of a
railroad across the premises hereinafter described and of a
permanent railroad station . . . [the Grantor] hath granted
sold and conveyed and by these presents do grant bargain sell
convey and warrant to the [Grantee], that certain strip or
parcel of land situate in the city of Chicago in the County
of Cook and state of Illinois to wit: a strip of land running
forty feet in width and running diagonally across [the land]
so long as said party of the [Grantee] shall use the said
strip of land for the purpose of a railroad, and shall
maintain and use a station at the point of intersecting of
Kedzie Avenue and Swift streets and no longer.
. . .
It is also understood that if [the Grantee] shall ever
abandon or cease to use said strip of land for the purpose of
a railroad or omit to carry out any of the agreements or
perform any of the conditions here made and to be performed,
then and in such case his conveyance shall be null and void,
and the [Grantees] hereby agree thereupon to reconvey by ...