Railroad Legal Issues and Resources (2015)

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68 F. Railroad’s Right to Exclude Others from Its Right-of-Way 429 In Western Union Tel. Co. v. Pennsylvania R. Co.,298 the Supreme Court held that the Act of 1866299 did not permit a telegraph company to enter private property and erect structures without the consent of the owner of the property. Articles 430 G. Railroad’s Authority to Grant Easements to Utility Companies 430 or Repurpose Land for Another Use An article in the Ecology Law Quarterly discusses how an abandonment of railroad property or a rail line affects utility companies that have a license from a railroad company to lay pipes, cables, or wires on railroad property and discusses a number of class actions in which property owners sought damages for a taking because of the utilities’ use of an abandoned right- of-way.300 H. Compensation for Use of Railroad Rights-of-Way by 432 Telecommunication Companies for Line or Cables An article in the Drake Journal of Agricultural Law discusses several class action suits in which landowners received compensation because of telecommunication companies’ claims that they had permission from the railroads holding the rights-of-way to enter onto the land to lay cables.301 XVIII. EMINENT DOMAIN AND RAILROADS 435 A. Introduction 435 Many states have extended the right to take private lands for public use to certain private companies, including railroads, because the states consider the use of such property to be fundamentally public. Section B discusses condemnation of property by railroads, whereas Section C discusses condemnation of property owned by railroads. Section D addresses the nature of the property interest taken in eminent domain actions. Section E discusses the difference between eminent domain and zoning. Section F summarizes cases and an article on 298 195 U.S. 540, 562, 25 S. Ct. 133, 138, 49 L. Ed. 312, 320 (1904). 299 The Act of July 24, 1866, 14 Stat. 211. C. 230 (repealed 1947). 300 Danaya C. Wright & Jeffery M. Hester, Pipes, Wires, and Bicycles: Rails-to-Trails, Utility Licenses, and the Shifting Scope of Railroad Easements from the Nineteenth to the Twenty-First Centuries, 27 ECOLOGY L.Q. 352, 360 (2000). 301 Nels Ackerson, Right-of-Way Rights, Wrongs and Remedies Status Report, Emerging Issues, and Opportunities, 8 DRAKE J. AGRIC. L. 177, 184–85 (2003).

69 the valuation of property and the determination of just compensation in eminent domain cases. B. Condemnation of Property by Railroads 435 Constitutional Provisions and Statutes 435 1. Requirement of Just Compensation for Property Taken or 435 Taken or Damaged Most state constitutions and statutes include provisions requiring just compensation for property taken, or taken or damaged, by the state or by local governments for public use. 2. State Limitations on the Use of Eminent Domain 437 Some states have enacted laws that limit the use of eminent domain in the taking of homes or sacred locations. Cases 437 3. Satisfaction of the Public Use Requirement 437 In Buck v. District Court for Kiowa County,302 the Supreme Court of Colorado held that the construction of dust levees along the side of railroad tracks enhanced the operational efficiency of the railroad and thus was for a public use and benefit. 4. Acquiring Land for Railroad Business 437 In Hairston v. Danville & W. R. Co.,303 the U.S. Supreme Court held that a railroad could validly exercise the right of eminent domain to obtain property for the purpose of handling railroad business with nearby industrial or similar plants. 302 199 Colo. 344, 348, 608 P.2d 350, 351–52 (1908). 303 208 U.S. 598, 608–09, 28 S. Ct. 331, 52 L. Ed. 637 (1908). See also Kelo v. City of New London, 545 U.S. 469, 482, 125 S. Ct. 2655, 162 L. Ed. 2d 439 (2005); United States ex rel. Tennessee Valley Authority v. Welch, 327 U.S. 546, 552, 66 S. Ct. 715, 90 L. Ed. 843 (1946); Alton R. Co. v. Illinois Commerce Com., 305 U.S. 548, 553, 59 S. Ct. 340, 83 L. Ed. 344 (1939) (all citing Hairston).

70 5. Takings by Railroad Companies of Property Adjoining a 438 Railroad for Ancillary Uses or Spur Tracks States have permitted railroad companies to take adjoining property through eminent domain for ancillary uses or for spur tracks.304 6. Tracks Connecting the Railroad with a Private Business 438 In Hughes v. Consol-Pennsylvania Coal Co.,305 the Third Circuit held that a railroad company had the right to condemn land for the purpose of connecting a private coal mine with its railway but remanded case on the property owners’ claims of fraudulent misrepresentation, conspiracy, and racketeering. 7. Spur Tracks for Private Railroads 439 In McCarthy v. Bloedel Donovan Lumber Mills,306 involving a private railroad’s taking to add a spur between its existing logging railroad and timberland that the railroad owned, the Ninth Circuit held that the taking was an appropriate exercise of the power of eminent domain. C. Condemnation of Railroad Property 440 Statutes 440 1. Interstate Commerce Commission Termination Act 440 The ICCTA307 did not intend to preempt all state and local takings of railroad property by eminent domain actions; rather, preemption is determined on an “as applied” basis rather than “categorically.”308 2. State Limitations on Condemnation of Property Owned or 442 Operated by Railroads Many states have statutes that govern the exercise of eminent domain with respect to 304 See, e.g., Union Lime Co. v. Chicago & Northwestern R. Co., 233 U.S. 211, 34 S. Ct. 522, 58 L. Ed. 924 (1914); Hairston v. Danville & W. R. Co., 208 U.S. 598, 28 S. Ct. 331, 52 L. Ed. 637 (1908); Hughes v. Consol-Pennsylvania Coal Co., 945 F.2d 594 (3d Cir. 1991); McCarthy v. Bloedel Donovan Lumber Mills, 39 F.2d 34 (9th Cir. 1930). 305 945 F.2d 594, 613 (3d Cir. 1991). 306 39 F.2d 34, 36-37 (9th Cir. 1930). 307 See 49 U.S.C. § 10501 (2014). 308 Union Pac. R.R. v. Chicago Transit Auth., 647 F.3d 675, 680 (7th Cir. 2011).

71 railroad property, but the states may permit the state or public utility companies to condemn land owned or operated by railroads for use in establishing telephone lines or other public utilities.309 3. Statutory Provisions in Oregon 442 Oregon is an example of a state with statutory provisions pursuant to which the state may “locate, relocate, or construct” a highway on a railroad’s right-of-way when necessary.310 Case 443 4. Condemnation Preempted that Would Interfere with 443 Railroad Operations In Union Pacific Railroad v. Chicago Transit Authority,311 when the Chicago Transit Authority attempted to condemn railroad property to acquire a perpetual easement, the Seventh Circuit held that the condemnation was preempted because the condemnation would interfere unreasonably with Union Pacific’s operations. Cases 445 D. Nature of Property Interest Taken in Eminent Domain 445 1. Narrow Interpretation of a Property Interest Obtained by 445 Eminent Domain State law determines the nature of a property interest that is acquired in eminent domain cases.312 2. Whether Government Retained Reversionary Interest in Public 445 Land It Condemned and Granted to a Railroad In Samuel C. Johnson 1988 Trust v. Bayfield County,313 in determining whether Bayfield County retained a reversionary interest, the court held that the land itself, not an easement, was acquired outright by the railroad through eminent domain, leaving no reversionary interest. 309 See, e.g., CAL. PUB. UTIL. §§ 7557, et seq. (2014) and 90402 (2014). 310 OR. REV. STAT. § 366.335(1) (2014). See also OR. REV. STAT. § 368.116 (2014). 311 647 F.3d 675, 676, 682 (7th Cir. 2011). 312 Howard v. United States, 106 Fed. Cl. 343, 367 (2012). 313 649 F.3d 799, 808 (7th Cir. 2011).

72 E. Difference Between Eminent Domain and 446 Zoning Regulations 1. Eminent Domain as an Inalienable Right of Sovereignty 446 In Forth Worth & D.C. Railway Co. v. Ammons,314 the court stated that the power of eminent domain derives from the states’ right to appropriate private property, “one of the inalienable rights of sovereignty,” while the power to zone property is based on the states’ police powers and is subject to more restrictions.315 Article 447 2. Interaction of Local Land Use Regulations and Eminent Domain 447 A law review article entitled “Eminent Domain and the Sanctity of the Home” argues that in cases involving railroads and local land use regulation and eminent domain, the use of eminent domain is most consistent with promoting the general welfare because utility companies and railroads have obligations that encompass a larger geographic area than local governments, which serve the needs of their communities.316 Cases 448 F. Valuation of Property and Just Compensation for Takings 448 1. Market Value 448 In First English Evangelical Lutheran Church v. Los Angeles County317 the Supreme Court held that when a condemnor takes property by eminent domain, just compensation equals the market value of the property determined as of the date of the taking. 2. Special Value Not Compensable 448 In Palazzolo v. Rhode Island,318 the Supreme Court held that any special value that a property has to the condemnor is not to be considered when determining market value. 314 215 S.W.2d 407 (Tex. Civ. App. 1948). See Michael B. Kent, Jr., Public Utilities, Eminent Domain, and Local Land Use Regulations: Has Texas Found the Proper Balance?, 16 TEX. WESLEYAN L. REV. 29, 31 (2009) (summarizing the Ammons decision). 315 Id. at 409–10. 316 Kent, Jr., supra note 314, at 29. 317 482 U.S. 304, 107 S. Ct. 2378, 96 L. Ed. 2d 250 (1987). 318 533 U.S. 606, 121 S. Ct. 2448, 150 L. Ed. 2d 592 (2001).