NORDHUS et al v. USA

Filing 87

PUBLISHED OPINION (Status Report due by 8/20/2012) granting 73 Motion for Partial Summary Judgment; granting 75 Motion for Partial Summary Judgment. Signed by Judge Thomas C. Wheeler. (em) Copy to parties.

In the United States Court of Federal Claims
No. 09-042L
(Filed: July 20, 2012)
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ANNA F. NORDHUS FAMILY TRUST, *
et al.,
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Plaintiffs,
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v.
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THE UNITED STATES,
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Defendant.
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National Trails System Act, 16
U.S.C. § 1241 et seq. (2006);
Fifth
Amendment
Takings
Claim; Appropriate Measure of
Just Compensation; Fencing
Costs.

R. Deryl Edwards, Jr., Law Offices of R. Deryl Edwards, Jr., Joplin, Missouri, for
Plaintiffs.
Mark S. Barron, with whom was Ignacia S. Moreno, Assistant Attorney General, Natural
Resources Section, Environmental & Natural Resources Division, U.S. Department of
Justice, Washington, DC, for Defendant.
OPINION AND ORDER
WHEELER, Judge.
Plaintiffs are Kansas real property owners, who joined their Fifth Amendment
takings claims in one action for resolution of common issues of federal and Kansas law.
In an April 12, 2011 opinion, this Court granted Plaintiffs’ motion for partial summary
judgment on liability, determining that the Government was liable for a Fifth Amendment
taking of Plaintiffs’ reversionary interests in a railroad easement by virtue of the National
Trails System Act Amendments of 1983, 16 U.S.C. § 1241 et seq. (2006) (the
“Amendments”). Nordhus Family Trust v. United States, 98 Fed. Cl. 331 (2011)
(liability decision). Left to be addressed, however, is the issue of just compensation.
Following the Court’s liability decision, the parties exchanged appraisal reports
for the purpose of determining the just compensation due to Plaintiffs under the Fifth

Amendment. See Order, July 8, 2011. While the parties reached a tentative agreement
on the per acreage value of Plaintiffs’ land, they were unable to reach agreement on the
method for calculating just compensation in this case. See Order, Mar. 19, 2012. On
May 18, 2012, the parties filed cross-motions for partial summary judgment, proposing
different methods for determining the just compensation owed to Plaintiffs. See Pl.’s
Mem. (May 18, 2012), Dkt. No. 75; Def.’s Mem. (May 18, 2012), Dkt. No. 71. On June
21, 2012, the Court heard oral argument on the parties’ cross-motions at the National
Courts Building in Washington, DC.
Plaintiffs claim that they are owed “‘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.’” Pl.’s
Mem. 24 (quoting Raulerson v. United States, 99 Fed. Cl. 9, 12 (2011)). In addition,
Plaintiffs claim that they are entitled to compensation for the cost of fencing, allegedly
needed to restrain livestock and protect both Plaintiffs’ property and the public. Id. By
contrast, the Government submits that the appropriate measure of just compensation is
“the difference between Plaintiffs’ land encumbered by a railroad easement and that land
encumbered by a trail easement and subject to possible reactivation as a railroad
easement.” Def.’s Mem. 15. For the reasons set forth below, the Court finds that
Plaintiffs’ proposed method is the proper one for determining just compensation in this
case.
I.

Background1
A. The Amendments to the Trails Act

In 1983, Congress enacted the Amendments to the Trails Act to preserve railroad
right-of-ways no longer in service and to allow interim use of the land as recreational
trails. Preseault v. Interstate Commerce Commission (“Preseault I”), 494 U.S. 1, 6
(2006). To this end, Section 8(d) allows a railroad wishing to cease operations along a
particular route to negotiate an agreement with a State, municipality, or private
organization to assume financial and managerial responsibility for the right-of-way. Id.
at 6-7. To do so, a railroad must apply to the Surface Transportation Board (“STB”) for a
Notice of Interim Trail Use or Abandonment (“NITU”), which “provides a 180-day
period during which the railroad may discontinue service, cancel tariffs, and salvage track
and other equipment, and also negotiate a voluntary agreement for interim trail use with a
qualified trail operator.” Id. at 7 n.5. If the parties reach agreement, the land may be
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This Opinion and Order includes only those facts necessary for determining the appropriate
measurement of just compensation owed to Plaintiffs. For additional background information on the
Trails Act, as well as the facts of this case, see the Court’s April 12, 2011 Opinion and Order. Nordhus
Family Trust v. United States, 98 Fed. Cl. 331 (2011) (liability decision).

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conveyed to the trail operator for interim trail use; if not, the NITU “automatically
converts” into a notice of abandonment. Id.
B. The Union Pacific Railroad Line
The Union Pacific Railway Company (“UP”) operated a railroad between mile
post 133.13 near Marysville, Kansas through and including mile post 125.00 near
Marietta, Kansas. On October 29, 2003, UP submitted a Notice of Exemption to the STB
stating that it intended to abandon this railroad corridor. See Union Pacific Notice of
Exemption, Oct. 29, 2003 (“There appears to be no reasonable alternative to the
abandonment.”). In its Notice of Exemption, UP noted that “[t]he title to all of the
operating right-of-way is reversionary in nature.” Id.
By letter dated December 4, 2003, UP indicated its willingness to negotiate with
the Nebraska Trails Foundation for interim trail use. On December 15, 2003, the STB
issued a decision granting a previous request by the Nebraska Trails Foundation for
issuance of a NITU and a public use condition. Nearly two years later, on December 6,
2005, UP and the Nebraska Trails Foundation executed a quit claim deed, whereby UP
conveyed its entire interest in the railroad corridor to the Nebraska Trails Foundation.
Union Pacific Quit Claim Deed, Marshall County, Kansas Recorder of Deeds Office,
Book 433, pages 649-52 (Dec. 6, 2005). On December 12, 2005, UP posted a letter to
the STB advising that UP, as of December 6, 2005, had “discontinued service . . .
between Milepost 133.3 to Milepost 125 . . . pursuant to the National Trails System Act.”
II.

Standard of Review

Summary judgment is appropriate where the moving party shows that there is no
genuine dispute as to any material fact and that it is entitled to judgment as a matter of
law. RCFC 56(a). In examining the factual record, the Court must draw all reasonable
inferences in favor of the non-moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Summary judgment will not be granted if “the evidence is such that a reasonable
[trier of fact] could return a verdict for the nonmoving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). In the case of cross-motions for summary
judgment, the Court will deny both motions if, upon the required analysis, a genuine
issue of material fact exists. TVA v. United States, 60 Fed. Cl. 665, 670 (2004) (internal
citation omitted).
III.

Analysis
A. The Appropriate Measure of Just Compensation

In its liability opinion, the Court determined that UP had abandoned its right-ofway as a matter of Kansas law. Nordhus, 98 Fed. Cl. at 338. Specifically, the Court
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found that UP’s “regulatory filings with the STB unequivocally expressed an intent to
renounce the railroad’s interest in the right-of-way” and that UP “actually rid itself by
conveyance of its entire legal interest in the[] easements.” Id. Thus, had the STB not
issued the NITU on December 15, 2003, UP’s easement would have reverted to Plaintiffs
in fee simple following the abandonment. Id. By blocking the reversion of the easement,
the STB’s issuance of the NITU constituted a taking of Plaintiffs’ property interests
requiring just compensation. Id.
As noted above, the parties propose different methods for determining just
compensation in this case. The parties agree that the proper measurement of just
compensation in a Fifth Amendment case is the difference in market value of Plaintiffs’
property before and after the Government action constituting the taking, i.e., before and
after the STB’s issuance of the NITU. See Def.’s Mem. 13; Pl.’s Mem. 15-16. The
parties disagree, however, as to the nature of the property interest that Plaintiffs
possessed before the STB issued the NITU.
The Government contends that “the Court’s just compensation award must reflect
the property interest Plaintiffs actually possessed at the time of the alleged taking.”
Def.’s Mem. 7. Looking to Kansas law, specifically Kan. Stat. Ann. § 66-525(a)(1), the
Government asserts that UP did not abandon its state law property interest until after the
STB issued the NITU on December 15, 2003. Id. at 9-11. On that premise, the
Government posits that “[i]f at the time the NITU was issued, Union Pacific had not
abandoned that easement under Kansas law, then Plaintiffs’ property remained subject to
a railroad easement at that time.” Id. at 14. Accordingly, the Government maintains that
just compensation in this case “is the difference between Plaintiffs’ land encumbered by a
railroad easement and that land encumbered by a trail easement and subject to possible
reactivation as a railroad easement.” Id. at 15.
Contrary to the Government’s position, the measure of just compensation does not
depend on the nature of Plaintiffs’ property interests at the time of the NITU “but rather
‘upon the nature of the state-created property interest that [Plaintiffs] would have enjoyed
absent the federal action and upon the extent that the federal action burdened that
interest.’” Nordhus, 98 Fed. Cl. at 336 (quoting Preseault I, 494 U.S. at 24) (O’Connor,
J., concurring). It is well established that when a railroad right-of-way is converted to
interim trail use under the Trails Act, a taking occurs, if at all, “when state law
reversionary property interests that would otherwise vest in the adjacent landowners are
blocked from so vesting.” Barclay v. United States, 443 F.3d 1368, 1373 (Fed. Cir.
2006) (quoting Caldwell v. United States, 391 F.3d 1226, 1233 (Fed. Cir. 2004)). As set
forth in this Court’s liability opinion, UP’s easement would have reverted back to
Plaintiffs in fee simple under Kansas law if not for the STB’s issuance of the NITU.
Nordhus, 98 Fed. Cl. at 337-38. Thus, the fee simple value of Plaintiffs’ properties is the
appropriate “before” value to calculate just compensation.
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The Government’s argument—that Plaintiffs must show that abandonment
occurred before issuance of the NITU—runs contrary to the operation of the Trails Act.
One of the principal purposes of the Amendments to the Trails Act is to ensure that
abandonment, when contemplated by a railroad, does not in fact occur. See Caldwell,
391 F.3d at 1229. Instead, the Trails Act “provides an alternative to abandoning a
railroad right-of-way” by allowing a railroad to negotiate a trail use agreement with a
prospective trail operator. Id. (internal citations omitted). As the Federal Circuit
explained in Caldwell:
If the railroad and the trail operator indicate willingness to
negotiate a trail use agreement, the STB stays the abandonment
process and issues a notice allowing the railroad right-of-way to
be ‘railbanked.’ The effect of the notice, if the railroad and
prospective trail operator reach an agreement, is that the STB
retains jurisdiction for possible future railroad use and the
abandonment of the corridor is blocked ‘even though the
conditions for abandonment are otherwise met.’ Specifically,
section 8(d) provides that ‘such interim use [for trails] 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.’ Thus, section 8(d) . . . prevents the operation of state
laws that would otherwise come into effect upon abandonmentproperty laws that would ‘result in extinguishment of easements
for railroad purposes and reversion of rights of way to abutting
landowners.’
Id. (internal citations omitted) (emphasis added).
Here, by means of the NITU, the Trails Act blocked abandonment of the railroad
easement and the consequent reversion of the property to Plaintiffs in fee simple under
state law. Accordingly, the property interest taken from Plaintiffs was a fee simple
unencumbered by any easement, and the proper measure of just compensation “is the
difference between the value of [P]laintiffs’ land unencumbered by a railroad easement
and the value of [P]laintiffs’ land encumbered by a perpetual trail use easement subject to
possible reactivation as a railroad.” Raulerson, 99 Fed. Cl. at 12 (internal citations
omitted).2
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While the Court finds that UP eventually abandoned the railroad corridor and thus, that Plaintiffs would
have enjoyed a fee simple interest unencumbered by any easement if not for issuance of the NITU, case
law from this Court and the Federal Circuit suggests that it is possible the Court need not address the
abandonment issue at all. In its liability decision, this Court concluded that under Kansas law, trail use
and railbanking do not “constitute a railroad purpose within the scope of the easement.” Nordhus, 98 Fed.
Cl. at 338. Courts in this Circuit have indicated that, if trail use exceeds the scope of the railroad
easement, there is no need to address the issue of abandonment. Ellamae Phillips Co. v. United States, 99

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B. Whether Just Compensation Includes Fencing Costs
Plaintiffs also assert that the Government owes them just compensation for the
cost of building and maintaining fencing, gates, and cattleguards along the railbanked
right-of-way. Pl.’s Mem. 3. Plaintiffs characterize the property along the railbanked
right-of-way as primarily agricultural but insist that fencing is needed to “restrain
livestock,” in part “for public safety” and to shield the owners “from legal liability.” Id.
at 33. Plaintiffs also aver that the fencing is necessary to keep the public away from
Plaintiffs’ private property and “exposure to possibly dangerous agricultural activities.”
Id. at 33-34. Plaintiffs contend that “[h]istorically, the Union Pacific Railroad installed
and maintained fencing” along their properties, but that due to the 2003 NITU, “the UP
has abandoned its fencing obligations.” Id. at 34, 37.
The Court finds that Plaintiffs’ claim for just compensation for fencing costs raises
multiple fact issues that make it inappropriate to resolve the claim at this stage. It is not
clear from the parties’ filings whether the property owners maintained fencing on their
properties prior to UP doing so. Moreover, it is unclear whether all of the property
owners require fencing to restrain and protect livestock, or whether fencing is needed to
protect only agricultural lands. If animals ordinarily would roam within the vicinity of
Plaintiffs’ properties, the Court opines that fencing would be required regardless of the
existence of any railroad easement or trail use easement. Finally, the Court notes that
fencing may be more or less essential depending on how the trail is currently being used,
such as whether the trail is used only by walkers and bikers as opposed to motorized
vehicles. In light of the above, the Court finds it inappropriate to resolve the issue of
fencing costs without further factual development.
IV.

Conclusion

On the issue of the proper method for determining the just compensation owed to
Plaintiffs, Plaintiffs’ motion for partial summary judgment is GRANTED, and
Defendant’s motion for partial summary judgment is DENIED. The parties shall direct
their appraisers to measure the just compensation owed to Plaintiffs as the difference
between the fair market value of their properties held in fee simple and the fair market
value of the same properties burdened with the current Trails Act easement.
The Court requests counsel for the parties to file a joint status report within 30
days, on or before August 20, 2012, advising whether there are any outstanding issues
requiring resolution by the Court. If any such issues exist, counsel should propose
procedures and a schedule for addressing those issues. If no further issues exist, counsel
Fed. Cl. 483, 487 (2011) (“Since we have determined that trail use exceeds the scope of the easement, we
have no need to address the contingent issue of abandonment.”); Longnecker Prop. v. United States, 2012
U.S. Claims LEXIS 469 (Apr. 30, 2012) (“[I]f the scope issue is decided in favor of plaintiffs, it could be
determinative regarding the issue of abandonment.”) (internal citations omitted).

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should indicate whether the case may be dismissed through settlement or whether a final
judgment should be entered. A proposed description and amount of the final judgment
should be provided.
IT IS SO ORDERED.
s/Thomas C. Wheeler
THOMAS C. WHEELER
Judge

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