Although the Supreme Court of the United States determined the constitutionality of the legislation, it did not determine whether or not its application created a liability for the United States to provide compensation. The Court recognized that not all rail-to-trail conversions would result in a taking of property rights, since the nature of the interest originally acquired by the railroad would be the determining factor. Railroad corridors were generally acquired in numerous parcels, so each parcel would have to be evaluated on its own merits and a claim for compensation pursued through the United States Court of Federal Claims.
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department ... (28 USC 1491(a)(1)).
Every claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues (28 USC 2501).
A claim for compensation had to be filed in a timely manner after the claim first accrued, but it would take some court examination before it could be determined exactly when a claim first accrues. The case of Caldwell v. United States was the first to consider at what point in the railbanking process it is appropriate to initiate a claim for compensation.
When a railroad decides to abandon any part of its railroad line, it files an application with the Surface Transportation Board (STB), formerly the Interstate Commerce Commission. Standard abandonment proceedings are governed by the provisions of 49 USC 10903 (49 CFR 1152). If there has been no local traffic over the railroad line for at least two years and any overhead traffic on the line can be rerouted over other lines, the railroad may apply for an exemption from the standard abandonment proceedings under the provisions of 49 USC 10502 (49 CFR 1152.50(b)).
If a state, political subdivision or qualified private organization is interested in using the railroad corridor for interim trail use in accordance with the amended National Trails System Act, it must make a filing to that effect with the Surface Transportation Board. Under standard abandonment proceedings the filing is in the form of a “comment” or “request.” For an exemption proceeding a “petition” is required (49 CFR 1152.29).
If the railroad agrees to negotiate an interim trail use/railbanking agreement with the trail sponsor, then the STB will issue a “Certificate of Interim Trail Use or Abandonment” (CITU), for standard abandonment proceedings, or a “Notice of Interim Trail Use or Abandonment” (NITU), for exemption proceedings. If a railroad is unwilling to enter into an interim trail use agreement, it cannot be forced to do so (National Wildlife Federation v ICC, 850 F.2d 694 (1988)).
The issuance of a CITU or a NITU allows the railroad to discontinue service, cancel any applicable tariffs and salvage track and material consistent with interim trail use and railbanking. The railroad and trail sponsor then have a set period of time to negotiate an interim trail use agreement. If agreement cannot be reached in this set amount of time, an extension may be requested. Once an agreement is reached, the STB is notified. The CITU or NITU remains in effect indefinitely as long as the trail sponsor maintains its obligations under the National Trails System Act. If negotiations fail and no interim trail use agreement results, the railroad is permitted to fully abandon its line.
The Railway Company in the Caldwell case filed a notice of exemption to abandon its line on July 5, 1994. A trail sponsor came forward and a Notice of Interim Trail Use or Abandonment (NITU) was issued by the Interstate Commerce Commission (ICC) on August 31, 1994. Several extensions were granted before an agreement was reached and a notice to the ICC was filed on July 5, 1996. The actual transfer was executed on October 9, 1996 and filed for record on October 11, 1996. Plaintiffs filed their claim for compensation in the United States Court of Federal Claims on October 7, 2002 (57 Fed. Cl. 193 (2003)). That court determined the claim to be barred as untimely, not having been filed within six years of the date of the Trail Use Agreement. Upon appeal, the United States Court of Appeals, Federal Circuit, affirmed the decision of the Court of Claims, but for a different reason (391 F.3d 1226 (2004)). The Appeals Court made the following statements:
The 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 ... We conclude that this occurs when the railroad and trail operator communicate to the STB their intention to negotiate a trail use agreement and the agency issues an NITU that operates to preclude abandonment under Section 8(d).
The issuance of the NITU is 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.
Thus, the NITU operates as a single trigger to several possible outcomes. It may, as in this case, trigger a process that results in a permanent taking in the event that a trail use agreement is reached and abandonment of the right-of-way is effectively blocked ... Alternatively, negotiations may fail, and the NITU would then convert into a notice of abandonment. In these circumstances, a temporary taking may have occurred. It is not unusual that the precise nature of the takings claim, whether permanent or temporary, will not be clear at the time it accrues.
This decision was challenged by Barclay v. United States, 443 F.3d 1368 (2006), but it was reaffirmed by the United States Court of Appeals, Federal Circuit.
In the case of Ladd v. United States, 90 Fed. Cl. 221 (2009), a NITU had been issued, but negotiations failed and a trail use agreement was not reached. Plaintiffs filed a taking claim after the NITU was issued in accordance with the Caldwell decision, claiming they had been prevented from enjoying the unencumbered use of their property. The United States Court of Federal Claims dismissed the case, stating that no taking had occurred, since no interim use resulted. On appeal, the United States Court of Appeals, Federal Circuit, affirmed its former decisions in Caldwell and Barclay, stating that “where no trail use agreement is reached, the taking may be temporary ... However, physical takings are compensable, even when temporary” (630 F.3d 1015 (2010)). The decision of the Court of Claims was reversed and sent back for a determination of compensation.
The Katy Trail was realized when the Missouri-Kansas-Texas Railroad Company chose to abandon part of its corridor in Missouri in 1986. The Missouri Department of Natural Resources requested an interim use under the National Trails System Act as amended in 1983 and the Interstate Commerce Commission issued a Certificate of Interim Trail Use or Abandonment in April 1987. An interim trail use agreement was negotiated and the property was transferred later in 1987. Claims for compensation would follow as landowners adjoining the corridor were outraged at being denied the recovery of property occupied by the railroad.
Landowners opposing the Katy Trail took their argument to the United States District Court of Missouri, Eastern District, and were denied (Glosemeyer v. Missouri-Kansas-Texas R.R., 685 F. Supp. 1108 (E. D. Mo. 1988)). Appealing that decision, they took their argument to the United States Court of Appeals, Eighth Circuit, and again were denied (Glosemeyer v. Missouri-Kansas-Texas Railroad, 879 F.2d 316 (1989)). They then recognized that the Katy Trail was not going away and the only option left was a claim for compensation in the United States Court of Federal Claims. Interested landowners were advised that Mountain States Legal Foundation would file a class action suit on their behalf. A few days before the six-year time limit expired, however, Mountain States informed landowners that it would not be able to file the suit as a class action.
Mountain States Legal Foundation did represent Maurice and Delores Glosemeyer, but the remaining landowners were left to scramble for other options. On the day that the six-year limit would expire in 1993, these remaining landowners were able to file a motion for certification of their case as a class action in the United States Court of Federal Claims (Moore v. United States, 41 Fed. Cl. 394, Action No. 93-134L (1998)). They asserted that there were over two thousand (2000) potential class members owning property along the Katy Trail. Action on this case was delayed pending a decision by the United States Court of Appeals, Federal Circuit, in Preseault v. United States, 100 F.3d 1525 (1996), being an appeal of a decision of the United States Court of Federal Claims.
When the Court resumed its consideration of whether or not to certify the case as a class action, it identified the following eight criteria:
(1) whether the potential litigants constitute a large but manageable class;
(2) a common question of law is present;
(3) that [a] common issue predominates over any separate factual issues affecting individual members;
(4) the claims of the present plaintiffs must be typical of the claims of the class;
(5) the government must have acted on grounds generally applicable to the whole class;
(6) the claims of the class must be so small that it is doubtful they would be otherwise pursued;
(7) the current plaintiffs will adequately protect the interests of the class; and
(8) there is risk of inconsistent adjudications if individual actions were maintained separately, some in district court and some in this court.
More generally, class actions are appropriate only where they serve the interests of justice. [at page 397]
The Court decided that the case was well-suited for class action treatment. It, therefore, certified the action on July 2, 1998 as a class action on an “opt-in” basis. The class was to “consist of landowners whose property is burdened by the Katy Trail.” Potential class members were to be notified and those interested in joining were required to file a “Notice of Appearance.”
The Notice of Appearance shall have attached to it documentation that establishes (1) ownership of the parcel of land in question, (2) an affidavit that the parcel of land is presently burdened by the Katy Trail, and (3) proof of the property interest conveyed to the railroad. [footnote 4, page 401]
The government may contest the eligibility of any individual to join the class on the grounds that (1) the individual is not the fee owner of the burdened land, (2) the interest conveyed to the railroad contains no limitation and was in fee simple absolute, (3) the supporting documentation attached to the Notice of Appearance is inadequate, or (4) any other similar reason. [at page 401]
These preceding court actions had been specifically for those landowners adjoining the Katy Trail from Machens in Saint Charles County to Sedalia in Pettis County. There was, however, a separate abandonment proceeding in progress for the section of Missouri-Kansas-Texas Railroad corridor from Sedalia to Clinton in Henry County. The MKT had merged with Missouri Pacific Railroad Company in December 1989 and a Certificate of Interim Trail Use or Abandonment was issued in April 1991, so that Missouri Pacific could negotiate for an interim trail use agreement. An attempt was made to add landowners adjoining this second segment of corridor to the original class action suit, but the Court of Federal Claims denied this request, noting that it was both untimely and inappropriate (Moore v. United States, 42 Fed. Cl. 595 (1998)).
The Court of Federal Claims cases of Glosemeyer v. United States, Action No. 93-126L, Moore v. United States, Action No. 93-134L, and Grantwood Village v. United States, Action No. 98-176L, were consolidated for the purpose of resolving common issues of federal and Missouri law (45 Fed. Cl. 771 (2000)). The Court determined that interim trail use in accordance with the amended National Trails System Act did not constitute a railroad purpose under Missouri law where an easement had originally been acquired for railroad purposes only. Such an easement would have been extinguished whenever the use for railroad purposes ended. Therefore, delaying abandonment of the corridor and allowing interim use for recreation created a new easement for which compensation is required. The cases were then unconsolidated for further action.
For the class action suit of Moore v. United States, Action No. 93-134L, two hundred and ninety-eight (298) landowners opted into the class. The properties were grouped into categories and a representative parcel from each category was presented for examination by the Court with the intention that the decision on a representative parcel could be applied to the other parcels in the same category. A bench trial was conducted in Saint Louis, Missouri from November 12 through 22, 2002 on thirteen (13) representative parcels (54 Fed. Cl. 747 (2002)). The parties and the Court conducted a site visit of the representative parcels and then fact and expert witnesses were presented to show the competing views as to the value of the easement taken.
The Court described the procedure for determining the amount of compensation as follows:
It is settled that a landowner claiming a physical, partial taking of property is entitled to the difference in value before and after the taking. In this case, each landowner suffered a partial taking in two senses. First, the new easement is less than the fee estate. Second, the new easement potentially negatively impacts a larger piece of land than the right of way itself. This is known as severance damage and constitutes a pedigreed element of compensation, assuming it can be proved.
The calculation, therefore, involved “a determination of the fair market value of the entire affected parcel as if the easement did not exist and then another determination in light of the taking.”
Each parcel was appraised to determine a highest and best use and the acreage was determined. There was some disagreement about how the right-of-way parcels should be evaluated, but the Court decided “the right of way parcel should be diminished 100% in the “after” analysis because the landowners had no effective remaining use of the property ... Accordingly, the parties should value the land underlying the right of way in the “after” calculation at zero.” Where there was inconsistency in the values presented by each side, the court determined a compromise value, often by averaging the acreage calculations and taking the higher per unit land valuation. Compensation for the thirteen (13) representative parcels was fixed to facilitate settlement of the remaining claims.
Based on this representative determination, the parties agreed on the amount of compensation for a total of two hundred and eighty (280) claims out of the two hundred and ninety-eight (298). In a further proceeding of Moore v. United States, 58 Fed. Cl. 134 (2003), the Court of Federal Claims examined and dismissed seven (7) claims. The parties were able to resolve the amount of just compensation for eight (8) more claims. In a subsequent proceeding of Moore v. United States, 61 Fed. Cl. 73 (2004), compensation was established for the three (3) remaining claims.
After twelve years of litigation in the United States Court of Federal Claims (1993-2005), a final proceeding was held in January 2005 to approve a final settlement in the class action suit (Moore v. United States, 63 Fed. Cl. 781). Judgment against the United States was entered in the total amount of $5,065,820.62 (including $4,065,820.62 for principal and interest and $1 million for attorney fees, expert fees, and all other litigation expenses). The award was paid to the class action attorney for distribution to class members. Deductions from the award by the attorney of $356,745.33 for litigation expenses and $1.6 million for a contingency fee were approved by the Court. The remaining $3,109,075.29 was distributed to the two hundred ninety-one (291) class members for which compensation had been approved.
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original composition by Steven E. Weible
