FARMERS COOPERATIVE COMPANY v. USA
Filing
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ORDER denying 44 Plaintiffs' Motion for Reconsideration. Signed by Judge Edward J. Damich. (jsb) Copy to parties.
In the United States Court of Federal Claims
No. 09-741 L
(Filed: September 20, 2011)
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FARMERS COOPERATIVE CO., 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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Rails-to-Trails;
Reconsideration; Temporary
Taking; Continuing STB
Jurisdiction; Railroad‟s Failure
to File Notice of Consummation
of Abandonment
ORDER
In this “rails-to-trails” case, Plaintiffs have filed a motion for reconsideration and/or
clarification of the court‟s June 24, 2011, opinion (“Pls.‟ Mot.”) finding Defendant liable for a
taking of Plaintiffs‟ property but only for the periods beginning with the issuance of the first
NITU through the expiration of a series of NITUs regarding either of the two rail corridors at
issue. Plaintiffs‟ motion also asks leave of the court for authorization to take discovery
depositions of officials of the Surface Transportation Board (“STB”) and of K&O Railroad
(“K&O”) and thereupon to supplement the record before the court in its determination of the
duration of the Government‟s taking.
For the reasons stated below, Plaintiffs‟ motion is DENIED.
I.
Background
Plaintiffs apparently find themselves in an unusual and confused situation. They own
property under or adjacent to either of two K&O rail line segments in Kansas, one running
through Comanche, Kiowa, and Pratt counties in Kansas (the “CKP corridor”) and the other
running through Hodgeman county (the “Hodgeman corridor”).1 K&O held a right-of-way in the
two corridors for railroad purposes.
In August 2003, K&O filed a Notice of Exemption with the STB proposing to abandon
the two segments. In its notice, it advised that “[t]he property underlying the rights-of-way is
reversionary, which would affect the transfer of the property for other than rail or rail-banking
purposes.” In November 2003, pursuant to the National Trails System Act, 16 U.S.C. § 1241 et
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For a more complete statement of facts, see Farmers Coop. Co. v. United States, 98 Fed. Cl. 797 (2011).
seq. (2006) (“the Trails Act”), the American Trails Association (“ATA”) requested that a Notice
of Interim Trail Use or Abandonment (“NITU”) be issued to allow for the possibility of
railbanking of the two rights-of-way. K&O advised the STB of its willingness to negotiate with
ATA for trail usage. On November 25, 2003, the STB issued a NITU for both the CKP and
Hodgeman corridors.
In April 2004, K&O conveyed its interest in the two corridors to ATA via a quitclaim
deed. The grant conveyed “all of Grantor‟s interests, in land and premises, right of way, bridges,
culverts, easements, buildings, supporting structures, and other fixtures, improvements and
appurtenances” in Comanche, Kiowa, Pratt, and Hodgeman counties. Subsequent to the issuance
of the November 2003 NITU but before the conveyance of K&O‟s interests via the quitclaim
deed, K&O had removed the tracks, ties, and other components of the rail along the corridors.
The court found that K&O did in fact reach an agreement with ATA on interim trail
usage. By virtue of that agreement, the NITU “extend[ed] indefinitely.” See Caldwell v. United
States, 391 F.3d 1226, 1230 (Fed. Cir. 2004). Under trail agreements, the trail operator manages
the corridor, assumes liability, and is responsible for taxes, freeing the railroad from those
obligations.
Despite the quitclaim deed in favor of ATA and the de facto trail agreement between it
and K&O, ATA never began usage of either corridor as a recreational trail, even though railroad
usage had completely ceased and the rail tracks had been removed. In October 2007, ATA filed
with the STB a “Notice of Intent to Terminate Trail Use,” asking to be relieved of its obligations
over the two corridors. The STB granted the request in November 2007, vacated the original
NITU, and authorized K&O to fully abandon the line segments. ATA even executed a
“Disclaimer and Release” in January 2008 (recorded with the Pratt County Register of Deeds in
February 2008), disclaiming any rights, title, or interest in the Pratt County portion of the CKP
corridor. The record does not reflect any similar action in the other counties of that corridor or in
Hodgeman County.
The STB subsequently issued three further NITUs regarding the CKP or Hodgeman
corridors. In each of these instances, after the respective proposed trail operators indicated their
interests in the corridors, K&O informed the STB that it had not “consummated” the
abandonment of the lines and was willing to negotiate. Because no trail use agreement was
reached in any of these three negotiations, however, all three of these NITUs expired 180 days
after their issuance.
Inexplicably, despite having removed the track and having quitclaimed its interest in the
corridors to ATA, which in turn never initiated any trail usage and then subsequently sought and
obtained from the STB the termination of its obligations, K&O has apparently failed to file any
notice of consummation of abandonment of the lines. Such notice is a necessary step under
federal regulations to complete the process of abandonment and end STB jurisdiction over the
lines.
Hence Plaintiffs‟ quandary:
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Here, the K&O has long since transferred all of its interest in the
right-of-way to the vacated trail operator and it has cut-off its‟ [sic]
legal and tax liabilities – gaining all the benefits of railbanking.
Yet, for the lack of K&O‟s action in filing the Notice, the
landowners‟ right-of-way remains in STB jurisdiction by operation
of law to their material prejudice.
Pls.‟ Mot. at 18.
Plaintiffs argue, therefore, that without K&O action to consummate abandonment, the
ongoing STB jurisdiction constitutes a permanent taking, rather than a temporary one.
II.
Standard of Review
Plaintiffs move for reconsideration pursuant to Rules 54(b) and 59(a)(1) of the Rules of
the Court of Federal Claims (“RCFC”). These rules articulate the understanding that courts
possess inherent authority to modify interlocutory orders prior to the entering of final judgment
in a case. See Wolfchild v. United States, 68 Fed. Cl. 779, 784-85 (2005). The grounds for a
court‟s exercise of its authority to reconsider, in departing from the law of the case, include the
discovery of new or different material evidence not presented in the earlier decision, an
intervening change in controlling legal authority, or when a prior decision is clearly incorrect and
would work a manifest injustice. Id. at 785 (citing Intergraph Corp. v. Intel Corp., 253 F.3d
695, 698 (Fed. Cir. 2001)).
The standards for reconsideration of an interlocutory order under RCFC 54(b) and
59(a)(1) have been described as less rigorous than those, for example, applicable to final
judgments under RCFC 59(e). Id. at 784. The standard under RCFC 54(b) has also been
described even more flexibly as available “as justice requires.” See L-3 Communs. Integrated
Sys., L.P. v. United States, 98 Fed. Cl. 45, 48 (2011) (citing Cobell v. Norton, 224 F.R.D. 266,
272 (D.D.C. 2004). While the threshold for reconsideration under RCFC 54(b) is imprecise, it
certainly “leaves within [its] ambit . . . a good deal of space for the Court‟s discretion.” Cobell,
224 F.R.D. at 272. The district court in Cobell explained that “asking „what justice requires‟
amounts to determining, within the Court‟s discretion, whether reconsideration is necessary
under the relevant circumstances.” Id.
Despite the flexible standards governing reconsideration herein and the discretion
afforded the trial court, see Alpha 1, L.P. ex rel. Sands v. United States, 86 Fed. Cl. 568, 571
(2009), reconsideration is “not intended, however, to give an „unhappy litigant an additional
chance to sway‟ the court.” Matthews v. United States, 73 Fed. Cl. 524, 525 (2006) (quoting
Froudi v. United States, 22 Cl. Ct. 290, 300 (1991)). Nor is it availing, under the guise of
reconsideration, to raise an issue for the first time that was available to be litigated earlier in the
case. Id. at 526; Gelco Builders and Burjay Const. Corp. v. United States, 177 Ct. Cl. 1025,
1036-37 n. 7 (1966) (“Litigants should not, on a motion for reconsideration, be permitted to
attempt an extensive re-trial based on evidence which was manifestly available at the time of the
hearing.”).
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III.
Discussion
Plaintiffs first argue that the STB‟s jurisdiction over railroad abandonments was not fully
explored in the earlier briefing on summary judgment, particularly with respect to its
administrative regulations requiring a notice of consummation to be filed by the railroad in order
to complete the abandonment process. “Plaintiffs submit that the interpretation of this regulation
principally governs the issue of the duration of the taking in the case sub judice.” Pls.‟ Mot. at
13.
The pertinent regulations provide that the NITU permits the railroad to fully abandon the
line if no railbanking agreement is reached 180 days after the NITU is issued, 49 C.F.R. §
1152.29(d)(1); that a trail use request will be dismissed or denied if either abandonment has
already been consummated by the time the request is received or if the railroad refuses to
negotiate an agreement, 49 C.F.R. § 1152.29(e)(1); and that a railroad that has received authority
from the STB to abandon must file a notice of consummation of abandonment “to signify that it
has exercised the authority granted and fully abandoned the line (e.g., discontinued operations,
salvaged the track, canceled tariffs, and intends that the property be removed from the interstate
rail network).” 49 C.F.R. § 1152.29(e)(2). The latter regulation also provides that if a notice of
consummation has not been filed within one year of the service date of the decision allowing
abandonment, the authority to abandon automatically expires and a new proceeding would have
to be instituted for authority to abandon. Id.
Here, K&O was given the authority to abandon the lines, did in fact remove the tracks,
etc., but never filed the requisite notice of consummation of abandonment. Since more than one
year has passed since it obtained authority to abandon, it would need to begin a new proceeding
to obtain the necessary authority once again. It has not done so and on that basis STB
jurisdiction over the two railroad corridors continues. Plaintiffs note that “without K&O‟s timely
submission of the required Notice of Consummation to the STB, the agency‟s jurisdiction
remains intact. The regulation contemplates that the railroad simply may not „intend to
consummate the abandonment,‟ after expiration of the NITU” and ask rhetorically, “What then?”
Pls.‟ Mot. at 17.
Because of K&O‟s “inaction,” Plaintiffs note that STB jurisdiction continues indefinitely.
Plaintiffs equate the continuing STB jurisdiction with a permanent taking.
Correspondingly, Plaintiffs seek to depose the STB to develop more fully the agency‟s
position on the issue of its continuing jurisdiction, specifically “whether the STB retains
jurisdiction over a railbanked right-of-way which is vacated, but [where] the railroad does not
file the Notice of Consummation contemplated by the regulation.” Id. at 23. They seek to
explore the same issue in a corporate deposition of K&O.
Plaintiffs complain of this court‟s “apparently erroneous ruling that STB jurisdiction
terminated upon the expiration of the 180 day negotiating period in the last NITU issued on each
line.” Id. at 27. They seek clarification from the court “whether STB jurisdiction is in effect
currently” because “[m]onetary damages” here “are not nearly as important” as determining “the
status of the respective rights-of-way.” Id. at 36.
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In its decision, however, this court made no such ruling that STB jurisdiction terminated
upon the expiration of the 180-day negotiating period between K&O and any of the prospective
trail operators. To the contrary, the court observed that, “According to federal law, however, the
right-of-way may not have been abandoned, because the railroad had not filed a notice of
consummation of abandonment to finalize the process, as required under STB regulations, see 49
C.F.R. § 1152.29(e).” Farmers, 98 Fed. Cl. at 806 (emphasis added). The court also observed
that “the three steps under Kansas law that constitute abandonment – intent, acts, and state or
federal authorization to abandon – were all met.” Id. n.9.
Defendant argues against reconsideration on two grounds: first, that Plaintiffs‟ motion
raises no new facts or legal issues that were not before the court in the summary judgment
proceeding; and, second, that further evidence regarding STB regulatory jurisdiction over the rail
corridors is immaterial to the finding of the court on the duration of the taking. Defendant is
correct in both respects.
The issues of the STB‟s jurisdiction over railroad abandonment, the procedures for
issuance of the NITUs, the recognition that STB jurisdiction ceases once a rail line has been
abandoned, and the obligation of the railroad to consummate the abandonment were raised and
debated in the briefs and at oral argument. See Pls.‟ Mot. at 13. Compare Def.‟s Cross-Mot. and
Resp. to Mot. for Summ. J. at 3 (“If the STB grants the railroad authority to abandon, and the
railroad „consummates‟ the abandonment, the rail line is removed from the national
transportation system and the STB‟s jurisdiction generally comes to an end.”). Even the specific
matter of a railroad‟s need to file a notice of consummation was raised in the Government‟s reply
brief in support of its cross-motion for summary judgment, Def.‟s Reply to Resp. to Cross-Mot.
at 21 n.3, and at oral argument, Tr. 65:8-13, March 23, 2011. The requirement that the railroad
would need to initiate a new abandonment request if its prior authorization to abandon had
expired was also raised in oral argument by the Government. Tr. 66:13-22.
To that extent, Plaintiffs raise no new matters, much less mistakes, of fact or law or
otherwise demonstrate any manifest injustice warranting reconsideration.
Moreover, as Defendant points out, Plaintiffs‟ concerns are “premised on a
misunderstanding of the basis for the United States‟ potential liability in a rails-to-trails case.”
Def.‟s Resp. to Mot. for Recons. at 8. In its decision, this court observed, “Because the STB‟s
issuances of the NITUs were the „only government action in the railbanking process that operates
to prevent abandonment of the corridor and to preclude the vesting of state law reversionary
interests in the right-of-way,‟ Caldwell, 391 F.3d at 1233-34, that is the extent of the
Government‟s taking of Plaintiffs‟ property.” Farmers, 98 Fed. Cl. at 808. Plaintiffs had
conceded this point: “The railroad, in this case, the K&O, holds the key to completing the
regulatory abandonment process.” Pls.‟ Reply to Resp. to Mot. for Summ. J. at 16-17.
In a rails-to-trails takings case, the issue is not whether STB jurisdiction continues or
whether the railroad retains a property interest upon the expiration of a NITU, but whether the
Government has taken any action that forestalls the vesting of the underlying landowners‟
property rights. See Barclay v. United States, 443 F.3d 1368, 1373 (Fed. Cir. 2006) (“We
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explained in Caldwell that „[t]he taking, if any, when a railroad right-of-way is converted to
interim trail use under the Trails Act occurs when state law reversionary property interests that
would otherwise vest in the adjacent landowners are blocked from so vesting.‟”). With the
expiration of all of the NITUs applicable to the two rail corridors, there is no longer any action
by the United States to which Plaintiffs can point that impedes the realization of any property
interests they would otherwise obtain under state law.
The Federal Circuit has noted that, “where no trail use agreement is reached, the taking
may be temporary.” Ladd v. United States, 630 F.3d 1015, 1025 (Fed. Cir. 2010). Here, the
taking extended from the issuance of the first NITU in 2003 through the stewardship of the
corridors under the aegis of ATA and continued beyond the vacation of that trail use agreement
when the STB issued the various additional NITUs. Those NITUs, however, expired with no
trail use agreements having been reached. As Defendant argues, “[b]ecause the NITUs at issue
have all expired, there is no longer any government action on which Plaintiffs‟ cause of action
can be sustained . . . .” Def.‟s Resp. to Mot. for Recons. at 11.
It may be that Plaintiffs should undertake action in U.S. District Court under the
Administrative Procedures Act, as suggested by Defendant, or in state court for a declaration that
K&O has abandoned the corridors under state law, or otherwise convince K&O to take the
necessary steps before the STB once again for authorization to abandon and then to file its notice
of consummation officially. But, despite Plaintiffs‟ quandary, it is not this court‟s province to
answer Plaintiffs‟ question, “What then?,” or address how they might best extricate themselves
from the consequences of the railroad‟s failure to file the requisite notice of consummation, even
though its abandonment of the rights-of-way seems evident under state law.
This court determined that the United States is liable for a temporary taking of Plaintiffs‟
property. There are no valid grounds for reconsideration of that finding.
Plaintiffs‟ motion for reconsideration is denied.
s/ Edward J. Damich
EDWARD J. DAMICH
Judge
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