SPEAKERS CONTENTS INSERTS
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80–320 PDF
2002
LITIGATION AND ITS EFFECT ON THE
RAILS-TO-TRAILS PROGRAM
HEARING
BEFORE THE
SUBCOMMITTEE ON
COMMERCIAL AND ADMINISTRATIVE LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
JUNE 20, 2002
Serial No. 90
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Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://www.house.gov/judiciary
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, JR., WISCONSIN, Chairman
HENRY J. HYDE, Illinois
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
LINDSEY O. GRAHAM, South Carolina
SPENCER BACHUS, Alabama
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL E. ISSA, California
MELISSA A. HART, Pennsylvania
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
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J. RANDY FORBES, Virginia
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
PHILIP G. KIKO, Chief of Staff-General Counsel
PERRY H. APELBAUM, Minority Chief Counsel
Subcommittee on Commercial and Administrative Law
BOB BARR, Georgia, Chairman
JEFF FLAKE, Arizona, Vice Chair
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GEORGE W. GEKAS, Pennsylvania
MARK GREEN, Wisconsin
DARRELL E. ISSA, California
STEVE CHABOT, Ohio
MIKE PENCE, Indiana
MELVIN L. WATT, North Carolina
JERROLD NADLER, New York
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
MAXINE WATERS, California
RAYMOND V. SMIETANKA, Chief Counsel
SUSAN JENSEN-CONKLIN, Counsel
DIANE TAYLOR, Counsel
PATRICIA DEMARCO, Full Committee Counsel
STEPHANIE MOORE, Minority Counsel
C O N T E N T S
JUNE 20, 2002
OPENING STATEMENT
The Honorable Bob Barr, a Representative in Congress From the State of Georgia, and Chairman, Subcommittee on Commercial and Administrative Law
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The Honorable Melvin L. Watt, a Representative in Congress From the State of North Carolina, and Ranking Member, Subcommittee on Commercial and Administrative Law
The Honorable George W. Gekas, a Representative in Congress From the State of Pennsylvania
WITNESSES
Mr. Thomas L. Sansonetti, Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice
Oral Testimony
Prepared Statement
Mr. Nels Ackerson, Chairman, The Ackerson Group, Chartered
Oral Testimony
Prepared Statement
Ms. Andrea Ferster, General Counsel, Rails-To-Trails Conservancy
Oral Testimony
Prepared Statement
Mr. Tom Murphy, Mayor, Pittsburgh, PA
Oral Testimony
Prepared Statement
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LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of Professor Danaya C. Wright
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of Linda J. Morgan, Chairman, Surface Transportation Board
Letter from Richard Welsh, Executive Director, The National Assoc. of Reversionary Property Owners
LITIGATION AND ITS EFFECT ON THE
RAILS-TO-TRAILS PROGRAM
THURSDAY, JUNE 20, 2002
House of Representatives,
Subcommittee on Commercial
and Administrative Law,
Committee on the Judiciary,
Washington, DC.
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The Subcommittee met, pursuant to notice, at 10:25 a.m., in Room 2141, Rayburn House Office Building, Hon. Bob Barr [Chairman of the Subcommittee] presiding.
Mr. BARR. I'd like to call this hearing of the Subcommittee on Commercial and Administrative Law to order.
I apologize to our witnesses and to the audience and to the Members for our late start. Unfortunately, floor votes interfered. ''Murphy's Law'' apparently is operative today. We'll try to get around it as much as we can, but of course everybody knows you can't get around ''Murphy's Law.''
But nonetheless, we'll do our best to move through the hearing with appropriate recognition of our witnesses' very, very busy schedules, so that we can get what we need to on the record; give full opportunity for questions to be asked and answered; and make sure that we have a complete record—and again, to be very mindful of the time constraints on our very distinguished panel today.
In 1983, section 8(d) of the National Trail System Act of 1960 was amended by the Congress, and signed into law by then-President Ronald Reagan, creating what is commonly known today as the ''Rails-to-Trails Program.'' This Federal statute provides a mechanism for conversion of land from abandoned rail tracks previously conveyed for railroad purposes, into recreational trails which are now commonly used in communities across the country for activities such as walking, hiking, and bicycle riding.
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For instance, in my home State of Georgia there are a number of railbank trails, including one that runs from the Altamaha River to Vidalia, Georgia; and the second one is the Chikasawhatchee Railroad project, which runs from Albany to Sasser.
While this program has obvious environmental and recreational benefits, the legislative history of this act indicates another important consideration by the Congress was to preserve the commercial viability of the railroad lines, including preservation of our rail corridors which have important implications for our national defense.
At one time, this country depended greatly on rail transportation. However, as technology has expanded and rail transportation became somewhat outdated, a national problem emerged. And that is, how to use, but preserve, thousands of miles of abandoned railroad tracks.
Through the statutory process referred to as ''rail banking,'' a railroad wishing to cease operating along a particular route can negotiate with a State, municipality, or private group that is prepared to assume financial and managerial responsibility for the right-of-way, but which also agrees to transfer ownership of the corridor back to the railroad.
Under the Rails-to-Trails Act, the conversion to a trail is completed on a temporary or interim basis, because the law potentially provides for two-way conversions: first, conversion to a trail; and second, the possible reactivation of rail service at an undetermined time in the future. The railroad, in essence, banks its ownership of the railway with the trail operator.
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Currently, there are 190 railbank corridors in 30 States, representing approximately 4,000 miles of trails. There are a number of communities today considering rail reactivation, and also acquisition of railbanked rail corridors for future use as light rail, commuter rail, and transit lines.
In 1990, the U.S. Supreme Court unanimously upheld the railbanking law as a valid exercise of congressional power under the Commerce Clause of the U.S. Constitution, in the case of Preseault versus Interstate Commerce Commission, stating Congress apparently believed that every line is potentially a valuable national asset that merits preservation, even if no future rail line is currently foreseeable.
However, the Court did not address the question of whether the statute constitutes a ''taking'' under the Fifth Amendment; but directed plaintiffs to seek recovery for a taking against the Federal Government under the Tucker Act.
The Subcommittee today will hear testimony on how implementation of this statute has affected property owners with land abutting these rails and trails, who may have an ownership interest in the former rail line property. At first glance, it may appear Congress did not consider the fact that if the railroad land was not transferred in fee simple it may belong to the property owner, and not the railroad. However, Congress intended the railbanking aspect of this Federal law would preempt State law and hold the land essentially in perpetuity, until possible rail reactivation.
In the 1996 en banc decision in Preseault v. United States, involving the same plaintiffs as in the Supreme Court case I just mentioned, the U.S. Court of Appeals for the Federal Circuit held that railroad abandonment constituted a per se taking, and therefore would require payment of just compensation to the affected land owners, under the Fifth Amendment.
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The Subcommittee will also hear testimony regarding the rather complex litigation being handled by the Environment and Natural Resources Division of the Department of Justice, involving nearly 5,000 pending actions by plaintiff land owners seeking just compensation for the taking of their land.
The Assistant Attorney General in charge of this division within the Department of Justice will discuss the four cases settled, and the potential for a significant increase in these compensation cases against the Federal Government.
It is important for this Subcommittee to consider that all of the funds expended by the Department of Justice to litigate these cases are paid out of the Judgment Fund, providing Congress no real opportunity for budget or appropriations review each year. In addition, the original Congressional Budget Office estimate of Federal costs was zero. This has obviously not been the case in practice.
This complex and resource-intensive litigation is the unintended, unanticipated consequence of enactment of this Federal program. Clearly, there will be significant Federal budgetary concerns to contend with in the next decade, as the number of cases will significantly increase as railbanking continues.
This Subcommittee must examine how the Department of Justice has litigated these cases to date, and if a possible resolution to litigation exists or can be developed. After consideration of all factors, this Subcommittee may recommend Congress act legislatively, or suggest an administrative remedy for the compensation of affected land owners in advance of a potential crisis.
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At this time, I'd like to recognize the distinguished Ranking Member, the gentleman from North Carolina, Mr. Watt.
Mr. WATT. Thank you, Mr. Chairman. I thank the Chairman for convening the hearing. I was here at ten, and already expressed to each of the witnesses individually my own personal dilemma. As the Ranking Member of this Subcommittee, I need to be here; but as a Member of the Financial Services Committee, where we are actually marking up a bill—which is distinguished from just having a hearing about a subject matter—I need to be there, also. So as soon as I make a comment or two, I'm afraid I'm going to have to leave. And I will reassure the witnesses that I either have or will read their testimony.
I particularly thank Mayor Murphy for being here. Since we seem to be dealing with ''Murphy's Law'' today, I'm sure he'll bring some order to that chaos.
This strikes me as kind of an interesting hearing, because it has several ironies to it that are quite interesting to me. First of all, it's quite obvious that some of my colleagues don't like this program. And there is some irony to that, since I, for one, never being a big, big Ronald Reagan fan—It's ironic that this program was signed into law during his presidency. I just note that, just as one of the ironies.
Substantively, it is ironic because it kind of seems to me to bring two conflicting positions that many of my colleagues have taken—or two positions that they have taken independently of each other—into conflict with each other. And so it's kind of like the irresistible force meeting the immovable object.
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One of those principles is, a number of my colleagues don't like what they characterize as frivolous lawsuits. They abhor them. And they define them typically as anything that raises innovative legal issues, or questionable legal issues. Or if you cut through the surface and get down to the real nitty-gritty of what their concern is, it's anything that somebody raises in the legal context that seeks a result that they don't want to achieve.
And property owners along these lines have raised some pretty innovative positions in their litigation. I wouldn't characterize them as frivolous. But it is ironic that many of the people who have been so dead-set against frivolous and innovative lawsuits and class action lawsuits are now springing to the defense of people who, if they were raising some other legal claim, would surely be accused of filing frivolous lawsuits.
The third irony substantively is that those same people have been very strong advocates of the rights of property owners; tried to advance a constitutional amendment, or certainly more aggressive statutory provisions, in the area of takings. And we've had some interesting debates about those things.
So here we are with a real-life context, where all of these kinds of competing principles come into play and actually kind of start to point up some of the conflicts and inconsistencies that exist in the congressional legislative context that actually make our job very, very interesting. That's what makes this place tick. It's kind of like a law school. You can write an exam about some of these interesting legal issues that arise under the jurisdiction of the Judiciary Committee.
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And so I'll be interested. It's especially interesting to me to observe these kinds of intramural skirmishes where some of my colleagues' principles seem to be meeting each other head-on, and see how they work through them; particularly when I don't have a special dog in the fight. I mean, I obviously support the railbanking process. I think it was a very innovative thing. Which kind of puts me in an ironic situation, too, because I'm endorsing something that President Reagan signed into law. And I acknowledge that there are ironies on all of our parts.
So I'll be interested to see how this plays out. And I'm sure the witnesses will have their particular perspectives and informational background that will inform whatever decisions we make going forward, and help us to make them better.
Again, I want to apologize to the witnesses for having to leave, but I've got some amendments that I've got to offer on an important housing bill.
Mr. Chairman, if I can do this out of order, I would like to ask unanimous consent to submit for the record the testimony or written statement of Professor Danaya C. Wright. She was a witness that we had initially talked about trying to get to come and testify, and then we couldn't reach her. And then we committed to invite Mr. Murphy. And then she showed up and said, ''Yes, I can come,'' but there wasn't a slot for her. So I wanted to make sure that we got her testimony into the record, so that it will inform us. And so I ask unanimous consent to submit that for the record.
Mr. BARR. Without objection, so ordered.
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[The prepared statement of Ms. Wright follows:]
PREPARED STATEMENT OF DANAYA C. WRIGHT
I have been invited to submit testimony regarding the subcommittee's hearings on the effects of recent litigation on the rails-to-trails program. After briefly outlining my qualifications to speak in this area, I will explain the principal issues being litigated in the class-action challenges to the railbanking law. Then I will analyze the legal and economic impact of those cases and offer my own opinion on the statute in question.
Qualifications:
I am currently an Associate Professor of Law at the University of Florida's Levin College of Law (2001-present). Prior to that, I was an Assistant Professor of Law at the University of Florida Levin College of Law (1998–2001). Before to that, I was an Adjunct Professor of Law at Indiana University College of Law at Indianapolis (1996–1998). And prior to that, I was a Visiting Professor of Law at Arizona State University College of Law (1993–1994). I hold an A.B. and J.D. from Cornell University and a Ph.D. in political science from Johns Hopkins University.
I have written and lectured extensively on the topic of state and federal property law applicable to the ownership of railroad rights-of-way and their conversion to recreational trails. My publications include: ''Does The Government's Left Hand Know What Its Right Hand Is Doing?: The Intersection Of Federal Railroad Land Grants And Railbanking Policies,'' article in progress; ''Eminent Domain, Exactions, and Railbanking: Can Recreational Trails Survive the Court's Fifth Amendment Takings Jurisprudence?'' 26 Columbia Journal of Environmental Law, 399–481,(Spring 2001); ''The 'Anti-Boomer Effect:' Property Rights, Regulatory Takings, and a Welfare Model of Land Ownership'' 6 Australia Journal of Legal History 1–28 (Summer, 2000); ''Pipes, Wires, and Bicycles: Rails-to-Trails, Utility Licenses, and the Shifting Scope of Railroad Easements from the Nineteenth to the Twenty-First Centuries,'' (co-authored with Jeffrey M. Hester), 27 Ecology Law Quarterly (May, 2000); ''Trains, Trails and Property Law: Indiana Law and the Rails-to-Trails Controversy,'' 31 Indiana Law Review 753–780 (1998); ''Private Rights and Public Ways: Property Disputes and Rails-to-Trails in Indiana,'' 30 Indiana Law Review 723–761 (1997).
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After publishing many of these articles, I was contacted by the Department of Justice to serve as an expert witness and consultant in their rail-trail cases. I have also served in a very limited capacity as an expert witness in 5 private lawsuits dealing with railroad property rights acquired in the nineteenth century. My participation in those lawsuits is primarily to read nineteenth-century deeds and render an opinion on the property rights acquired by the railroad. Because doing so requires a thorough knowledge of the property law governing railroad lands applicable in each state, I have researched the law of railroad property in many states and understand the subtle variations that have contributed to much of the litigation at issue here. I also teach property and estates and trusts, a course on the federal Constitutional takings and due process clauses, and a variety of legal history courses.
The Legal Questions Raised by the Litigation:
As you well know, 16 U.S.C. §1247(d) provides that rail corridors, in the process of being abandoned, may be railbanked for future reactivation. During the banked period, interim trail uses are allowed and all the while federal jurisdiction remains over the corridor. Because federal jurisdiction continues, all state-created property rights remain suspended while the legal status quo continues. The legal dispute at the heart of these cases is whether the suspension of these rights constitutes a taking of property for which compensation is required. To be clear, however, the state-created property rights are not present fee simple or possessory rights to use or occupy the land. The rights that are allegedly taken are the rights to have control of the land shift back to the underlying fee owner, or adjacent land owner, upon abandonment of the railroad's interests. Because abandonment is not occurring when the corridor is railbanked, the contingent future interests in the corridor land do not vest and become possessory. The federal statute halts the shifting of property rights that might occur under state law, but it is hard to see how it ''takes'' anything. A little history should help clarify the issue.
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Most rail corridors were acquired in the 19th century through a complex process whereby the railroad's land agents went out and acquired deeds for parcels along a corridor mapped out by the railroad's surveyors. The property rights acquired by the railroad vary from fee simple absolute, to defeasible fee simple, to perpetual easements, limited easements, licenses, profits, and certain future interests. After a century of litigation, however, most property disputes settle into a binary structure in which the question becomes whether the railroad acquired fee simple or a mere railroad easement in the land under its tracks. If the railroad is found, by review of the 19th-century deeds, to have acquired fee simple absolute title to the land in its corridor, it may sell that land, bank it under the federal railbanking program, grant easements for telecom purposes, or do anything any other fee simple title owner may do. However, if the railroad acquired only an easement, limited for railroad purposes, that easement may terminate when the railroad use ceases. If the railroad abandons its corridor land, takes up tracks and ties, and generally evinces an intent not to retain that easement, the burden is removed and the underlying fee owner may retake possession. Until the easement has been abandoned, however, the fee owner is not entitled to enter the land burdened by the railroad easement, may not in any way interfere with the railroad's use of the land, and may not authorize others to enter, such as telecom or utility companies.
Because each state defines railroad easements a little bit differently, and because each has a different standard for determining what constitutes the intent to abandon a railroad easement, the railroad may have an easement terminated in one state where the same actions would not cause termination in another state. This divergence among states, as well as the complex variety of property rights that might exist along a single corridor, makes it impossible to speak of the railbanking statute as having a unitary effect on all land everywhere. Parcels comprising each corridor may differ, the railroad's actions with regard to each parcel may differ, state law governing the property rights a railroad can acquire may differ, federal jurisdiction under the Interstate Commerce Commission Act may have different effects on property rights, and subsequent actions by landowners and the railroads may lead to even more variability. But insofar as the allegation in these cases is that the railbanking statute ''takes'' property, the first question to be addressed is whether or not the petitioners have any property rights in these corridors.
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The federal railbanking statute, passed in 1983, provides that all railroad easements will remain intact during the period in which the corridor is banked, thus protecting the corridor from disintegration so it will be available for future reactivation should transportation needs so dictate. Thus, even if the railroad's actions would constitute abandonment in one state, so that the easement would terminate and the burden be removed, the railbanking statute prevents that termination so the railroad easement remains alive.
Litigation over these rail corridors generally takes one of three forms. A number of plaintiff's attorneys have filed class-action suits in many states arguing that under that state's law, for a particular rail corridor, all the land acquired by the railroad was an easement, that the railroad has abandoned those easements, and that the land should ''revert'' back to the adjacent landowners. These cases are primarily litigated in state courts and depend on a close reading of the 19th-century deeds in light of railroad statutes of the time, and current cases on whether it is permissible, under that state's laws, to shift the use of a railroad easement from rails to highways, canals, trails, or other public uses. They also analyze the state's rules on abandonment to determine if a shift from a railroad use to a trail use itself works an abandonment of the railroad's property rights. And the states are split in the way they have resolved these cases, some stating that the shift in use from railroad to trails is not an abandonment of the railroad easement, while others have held that the shift is an abandonment. The outcome of these cases is important to the outcome of the federal litigation, because whether or not a taking is found to have occurred depends on whether there are recognizable state property rights in these abandoned rail corridors.
The second set of class-action cases are against the telecom and cable companies alleging that the railroads did not have the legal authority to allow utility access on functioning and abandoned railroad corridors. These cases are essentially about how each state defines a railroad easement, and whether that definition permits the apportionment of the easement for non-railroad public uses. Again, however, the first question is necessarily determining what parcels of corridor land the railroad owns in fee, and therefore may apportion, and those which it owns only in easement, and may not be able to apportion to other users. These cases are also relevant to the federal cases because some of the railbanked corridors may have utility easements running along the trail.
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The third set of cases focus exclusively on the railbanking statute and allege that the statute is an unconstitutional exercise of Congressional power and that its effects work a taking of the fee owner's property interests. The Supreme Court answered the first question in Preseault v. U.S., 494 U.S. 1 (1990), holding that the statute was a legitimate exercise of federal authority under the Commerce Clause. But the Court remanded the question of whether the statute worked a taking in that particular instance to the Court of Claims for review under the Tucker Act. After lengthy litigation and appeals, the Court of Appeals for the Federal Circuit ruled that the U.S. had ''taken'' the Preseault's land for a trail when it railbanked the old corridor. Preseault v. U.S., 100 F.3d 1525 (Fed. Cir. 1996). Judge Plager's ill-reasoned decision, however, held that the railroad easement had been abandoned under state law BEFORE ICC abandonment was sought, federal jurisdiction was lifted, and the corridor was railbanked. Thus, he held that a new property right was taken, a recreational trail easement, which required compensation.
In the midst of the Preseault case, a spate of class-action suits were filed against particular railbanked corridors in a number of states. Each, however, depends ultimately on the state property rights that were acquired by the railroad and the state's law on the abandonment of railroad easements. If a state holds that railroad easements can be freely transferred to other public uses, then no property right is taken when the federal statute permits the shift in use from rails to trails. If a state holds, however, that ceasing railroad use constitutes abandonment, then the federal statute's efforts to continue the easements intact might be an interference with a landowner's property rights. In all of the cases, however, many of the actual parcels at issue have been removed from the federal class because the railroad actually acquired fee simple, and not an easement. Also, the federal district courts has certified some questions of state property law to the state's Supreme Courts for clarification of certain issues. A few states have refused to certify the class action, noting that class actions are not the proper procedure to follow where, as here, each individual parcel of property is unique and cannot be analyzed in a class action format. But most of the states have certified the classes.
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Why The Cases are Improper:
As a property professor, I am concerned with the rules of property law that are being misconstrued, ignored, or misused in these cases. There are only two situations in which the railbanking statute might work a taking. The first is where the landowner conveyed a defeasible fee simple interest to the railroad and retained a reverter interest that would cause a forfeiture if the railroad ever ceased using the land for railroad purposes. The second is where the landowner conveyed only an easement to the railroad for purposes of running trains and retained the underlying fee ownership of the corridor land. Because my experience reading thousands of railroad deeds shows that the vast majority of the land acquired by the railroads was in fact acquired in fee simple absolute (anywhere from 60–95% on most corridors), these cases tie up the fee land for the railroad for the duration of the lawsuit and may in fact ''take'' the railroad's land for the temporary period of inaction imposed by the litigation. Moreover, the percentage of land held as defeasible fee or as easements is greatly whittled down when we consider that in most states the adjacent landowners have no interest in the railroad corridor under state law. Either they do not have title to the corridor land or their state's laws permit the shift in use from rails to trails without triggering an abandonment. Thus, what sounds at first glance like a lawsuit covering hundreds and thousands of miles of land, when closely analyzed may actually only implicate 1–2% of the land originally tied up.
For the 1–2% of the land, however, we must analyze the property rights that might be interfered with by the railbanking statute. In the instance of defeasible fees, the reverter interest in the landowner is a future interest, an interest much like a lottery ticket. If a certain condition occurs, the ticket holder may acquire ownership. But if the condition does not occur, the lottery ticket ends up where most lottery tickets end up, in the trash can. Because these future interests can cause great disruption when they vest, they are treated harshly by American property law. The common-law rule against perpetuities will terminate some of them in about a generation. Most states also have laws on the non-transferability of these reverter interests, preventing the original landowner from conveying them to subsequent owners. They thus remain in the landowner's estate and pass to his or her heirs, who are most likely impossible to locate. Many states also have rules that cause these interests to expire naturally, when their purpose no longer carries great weight. Other states have enacted statutes to terminate these interests, either specifically terminating them after a certain number of years, or terminating them through marketable title acts if they are not periodically re-recorded to put the current landowners on notice of their existence. To a large extent, therefore, the termination of these future interests, or their postponement through railbanking, is not a taking because the law has probably already terminated these contingent future interests before they vest. Few states, however, have definitely determined whether reverter interests in railroad corridors withstand this multitude of state laws designed to terminate them.
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In the second instance, the case of easements, the landowner has retained fee ownership and the railroad only has an easement. These are more difficult to analyze because the law on termination of easements is quite varied and complex. Where the railroad only holds an easement, nearly all states agree that termination of that easement through abandonment occurs only when the railroad forms an intent to give up its property rights in the corridor AND consummates that intent through actions manifesting that intent or actions that are inconsistent with retaining the easement. Thus, a railroad that decides to abandon a corridor and then sells a big chunk of land in the middle of the line, may be held to have abandoned the pieces on each end because those pieces alone may not be sufficient to allow them to continue to offer rail services. However, under different circumstances they might abandon a big chunk in the middle, but retain pieces on each end which connect a principal shipper with a main trunk line so they can abandon the middle piece but still retain some services over each end of the line. In that case, they would not be held to have abandoned the end pieces, especially if they connect up with other rail lines.
If only the rule were as easy to apply as it is to state. Although this common-law rule on abandonment of railroad easements is the same in all states, a few states have enacted statutes changing the rules, like Indiana's, which omits the intent element and holds that obtaining an ICC abandonment certificate plus removing tracks and ties constitutes abandonment. Other states have enacted rules that certain actions are deemed conclusive proof of intent, like removal of tracks and ties for a certain period of time. Other states, retain the common-law rule, but interpret it strictly so that relatively slight indications of nonuse by the railroad will be deemed to be intent to abandon. Others, however, will protect the railroad's property rights even through long periods of non-use, inaction, bankruptcy, sale, and consolidation that might lead to significant restructuring of the tracks, sidings, and other facilities. Thus, although the rule is virtually the same, the outcome may differ across state lines.
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But despite the variation among state rules on abandonment, the vast majority of states will hold that evidence of intent not to abandon will retain the railroad's easements intact. Thus, payment of taxes, controlling grade crossings, leaving ballast and embankments, and other acts of dominion constitute evidence not to abandon. This is the key to the question of whether the railbanking statute works a taking. Because every railbanking agreement includes a provision by which the railroads retain a right to re-enter, repurchase, or some sort of pre-emptive right to reclaim the corridor for future rail purposes, the railroad is clearly intending that the property rights remain alive. The presence of these provisions, which are a property right retained by the railroad, would not make sense if they intended to abandon the corridor completely and allow an extinction of all their rights. In other words, the railroads would not explicitly write an agreement in which they clearly retain a property right in their corridor land if they had formed the intent to relinquish all their property rights ab initio.
Only those states that have removed the intent element altogether and replaced it with some set of extrinsic physical criteria might hold that abandonment occurred despite the railroad's attempt to retain some property rights through their contractual rights to re-enter. But the key here goes back to the idea of vesting. Until a property right has vested, a property owner has no vested rights in a particular property regime. Thus, zoning laws, for instance, can be changed without implicating a duty to compensate so long as a landowner has not obtained a vested right in the prior zoning scheme. That can be accomplished only through the obtaining of building permits and substantial investment in reliance on the prior scheme. Without that reliance, the statutory scheme may be changed, contingent rights may be destroyed, and lottery tickets may become valueless. Because the vast majority of petitioners in these cases can show no reliance and no vested right in the state's laws on abandonment of railroad easements, no property right is being taken; the government is simply postponing a benefit that the landowners had no vested right to obtain. The railbanking statute provides, in fact, a clear, unequivocal procedure for manifesting an intent not to abandon. And one can hardly complain when a neighbor decides not to give you something that he owns.
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These cases, when analyzed properly, show that great effort has to be taken to determine the property rights of each owner along a railroad corridor, the intent and actions of the railroad in abandoning the corridor, and the effects of a wide variety of state laws on each individual parcel. Not surprisingly, all states have a very competent procedure for undertaking this analysis: a quiet title action. The attorneys for these petitioners, however, hope to sidestep this procedure which is costly for its relatively small reward, and pursue class actions which permit aggregating the damages for each landowner. The problems with such a procedure are too numerous to catalogue here. But the principal ones are that the procedure ties up an entire corridor for what may turn out to be only a handful of parcels that are affected. In one class-action suit in Indiana, all of the CSX rail corridors in that state were frozen for the decade of the suit, even though the vast majority of the railroad's land was held in fee simple and was not ultimately at issue in the case. Because it takes years and even decades to do the title work necessary to determine who has a property right in the corridor that might be affected by the railroad's actions, an awful lot of effort is spent determining what everyone knew all along, which is that the railroad owned the land. Furthermore, every piece has to be analyzed under a class action when the return on that analysis is so slight: 1–2% of property actually implicated. The better procedure is to have petitioners who believe they have rights that are affected by the railroad's actions pursue an individual quiet title action and determine their rights in a quick, straightforward manner. The recovery to the landowner will be the same under either process; but the recovery to the attorneys will be far less under the quiet title action. Judge Posner warned that class-action suits should be carefully scrutinized because they tend to be filed solely for the benefit of the attorneys, not the purported petitioners. Penn Central Transp. Co. v. U.S. Railroad Vest, 955 F.2d 1158 (7th Cir. 1992). These cases are clear examples of that phenomenon.
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Despite predictions by lawyers for these petitioners, I believe, from my own experience and research looking at thousands of railroad deeds and hundreds of state statutes and cases, that when all is said and done, very few landowners will have had their property rights ''taken'' by operation of the railbanking statute. The law simply does not support their claims, and to the extent they have had any success so far, it is because they have assiduously avoided actually looking at the deeds that originally granted the property rights. They have talked around the issues and argued in the hypothetical in order to get their classes certified, but they have had very little success when courts have actually gotten to the merits.
The Effect of the Litigation:
The fact that the cases have little merit, however, does not mean they have had little effect. I know personally of instances in which trail groups had obtained federal funding for land acquisition which was thwarted because the land they wanted to buy and the railroads wanted to sell was tied up in a class-action suit that did not even involve, directly, that corridor. When the case was finally settled, it was determined that the railroad owned the vast majority of the corridor in fee simple but it had been prevented from selling those fee parcels by the class action litigation. Perhaps the most significant effect of this litigation is the chilling effect it has had on communities seeking to prevent rail corridor destruction. Threats of multi-million-dollar lawsuits and recall elections have stifled many city and county commissioners from taking advantage of the opportunity to railbank corridors and use them for interim trails. I have been contacted countless times by elected officials and parks department employees who are poised to convert an old rail corridor to a trail and were just threatened with a lawsuit which was predicted would bankrupt the whole municipality. I have made presentations at trail conferences in which I could only advise people that lawsuits would likely be filed, they would be costly to litigate, but that in the end the trail group would most likely win. And I believe that has been a fairly accurate prediction. I have been asked by state legislators to comment on their state railbanking statutes and make suggestions for amendments, and my recommendations are consistently aimed at making their statutes promote the goals of the federal railbanking policy.
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Because my contact with these cases usually occurs somewhere in the middle of the litigation when I am asked to come in and address just the property issues, I rarely see the final outcomes. But through anecdotal evidence I have gathered at trail conferences, legislative hearings, and personal contacts, I am struck by the perceptions people have of great threat from these lawsuits. In the end, however, little seems to have come of those threats. The lawyers are getting richer but the landowner rarely gets a dime. If Congress wanted to eliminate these cases altogether, it should establish a procedure for handling these claims that would allow any landowner who believes her property rights are taken to submit a claim, with documentation of her purported rights in the rail corridor, including her deeds, and a summary determination could be made as to whether she has any property rights in the first place. Then a judicial determination could be made as to whether the railbanking process took those rights and, if so, what compensation is due. But these class action suits are most likely counter to the landowner's interests. And they are certainly counter to the public's interests in preserving rail corridors that were assembled with huge public grants. These hearings are vitally important in recognizing that these disputes are not solely issues of private property rights, but also involve the public's rights to protect assets it helped build, its rights to preserve those assets for future transportation needs, and its rights to use public property for the public good. The railroads are quasi-public entities with eminent domain powers; their property is therefore infused with a public purpose that requires public oversight and accountability. These lawsuits assume they are private entities with deep pockets and no fiduciary obligations.
Besides having little merit, I believe the Supreme Court's recent shift in the past year away from protections for private property at all costs reflects a move back to a more balanced position in takings doctrine that ultimately supports my view of these cases. Under the newly-invigorated takings rule originally articulated in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), which requires a balancing of the economic impact of the regulation on the landowner, an analysis of the character of the government's actions, and evidence of the landowner's reasonable investment-backed expectations, the landowners in these rail-trail cases have little likelihood of success. The economic impact of not being able to incorporate rail corridor land into their backyards most likely does not lower their property values; it simply does not give them a windfall. Moreover, the property values of most land adjacent to a rail-trail increases in value. The character of the government's actions is essentially the destruction of contingent future interests, which have been a vital function of the common-law since the sixteenth century. The destruction of a future expectancy has never carried the same weight as the taking of a present interest in property. Finally, it is hard to imagine that any of these petitioners will be able to show any reasonable investment-backed expectations in the lottery ticket that comprises the abandoned rail corridor adjacent to their land. Most people acquired their land after the railroad's burden was imposed, and they bought their land with full knowledge that a rail servitude existed in the railroad corridor. I can discover no takings theory under which these petitioners would be granted compensation.
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Although petitioners might argue that the railbanking statute imposes a physical invasion on their land, they are incorrect. The land had a pre-existing servitude that prevented them from excluding others which, as Justice Scalia has acknowledged, moves them out of the physical invasion line of cases. Scalia stated: ''Where 'permanent physical occupation' of land is concerned, we have refused to allow the government to decree it anew (without compensation), no matter how weighty the asserted 'public interests' involved, . . . though we assuredly would permit the government to assert a permanent easement that was a pre-existing limitation upon the landowner's title.'' Lucas v. S. Carolina Coastal Council, 505 U.S. 1003, 1028 (1992). These cases are about the windfalls the petitioners expected to receive from the abandonment of railroad easements, windfalls that were interfered with when the regulatory regime changed. Because landowners have no vested rights in a particular regulatory regime, their mere expectancies can be extinguished without liability and the pre-existing limitation continued.
Conclusion:
Although the foregoing discussion may appear technical and verbose, the issues raised by these cases can be even more complicated. In attempting to distill the issues, I have necessarily eliminated many of the nuances. And I can certainly understand any unwillingness to have complex litigation dragged out indefinitely. But the problem is not with the railbanking statue itself. The statute is a brilliant way to encourage railroads to bank their corridors, retain a future right to re-enter, remove themselves from liability for the corridor in the short-term, and provide a public amenity out of land that was acquired with public funds and eminent domain powers. Landowners adjacent to abandoned rail corridors are understandably frustrated that they have no control over whether a rail corridor is going to become a recreational trail, a canal, or a highway, or will be abandoned and made available for private use and absorption into their private land holdings. But the key to this analysis is the public nature of these railroad corridors. I would be quite delighted if my neighbor announced to me that he is abandoning his land and that I can have it if I want it. But my neighbor cannot abandon land that is infused with a public trust; try as he might, the city will not look kindly on his attempt to abandon the public street in front of my house. If the city chooses to abandon the street, I might be entitled to absorb the land into my front yard. But if it chooses, instead, to convert the road into a public park, a canal, or a public tennis court I cannot complain because the land is not mine to begin with. While I might be first in line if the land is abandoned, I cannot complain when public land is not abandoned. I believe there is little difference between public streets and railroad corridors when viewed from the perspective of the adjacent landowner; her expectancy rights are the same.
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While all litigation has some effect on the programs and policies the government enacts, only meritorious litigation should be heeded. It is my opinion that these cases are meritless. And to the extent one or two people may find their property rights were interfered with by the railbanking statute, adequate remedies exist. Class action suits are inappropriate mechanisms for protecting those property rights. I believe the government should and will prevail in these cases. Moreover, I believe the railbanking program is terribly important, especially after the devastating September 11th attacks. Protecting railroad corridors and the possibility of alternative transportation needs is a public priority. Given the weak legal claims, the high public purpose, and the incredible popularity of the rails-to-trails program, it would truly be a shame if the program were jeopardized.
Thank you for your consideration of my comments and I would gladly be available to speak further with any of you about the legal issues raised by these cases. I have spent many years researching and writing about the rails-to-trails program and I believe my assessment of the legal issues is a correct, objective reading of the relevant law. I welcome any opportunity to help clarify these matters even more.
Mr. WATT. And I'll yield back the balance of my time. I apologize again to the witnesses, and assure them that I'll review their testimony. Thank you.
Mr. BARR. I thank the distinguished Ranking Member.
The gentleman from Pennsylvania, the Commonwealth of Pennsylvania, Mr. Gekas, is recognized for any opening statement he might care to make.
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Mr. GEKAS. Thank you, Mr. Chairman. I do not have a lengthy opening statement, except to ponder what is the alternative dispute resolution bank of efforts on the part of this Committee in the past and what part it plays, they play, in the whole stimulated scheme of things having to do with the subject matter here. That's one point of interest, as a historical feature that I'm eager to study and to learn about.
And secondly, to elucidate further if we can on the constitutional play in these issues; particularly takings and condemnation, the Fifth Amendment, etcetera. So I'm prepared to hear from these witnesses, who seem at first glance to be a bank of experts.
Now, one time when I was in the Pennsylvania legislature somebody told me that an expert was going to testify. And my Ranking Member to my left, or right—probably, to my left—said, ''An expert? That's somebody from out of town.'' I hope that you are experts, but not qualified only because you're from out of town.
I yield back the balance of my non-time.
Mr. BARR. I thank the distinguished gentleman from the commonwealth.
I'd like to introduce the distinguished panel that we do have today. The entire panel will be introduced at the beginning, and then we will turn to each member of the panel for their individual presentations. And then we will have questions from Members.
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As the gentleman from North Carolina mentioned, he does have a very important mark-up on some fundamentally important housing legislation, so he will be in and out. There may be other Members that come and go. This is sort of a normally busy day up in the Capitol here, and we have a number of other hearings and mark-ups in addition to floor votes. So we'll probably have Members come and go during the course of the hearing today.
Each member of the panel, each witness, will be given 5 minutes for their oral presentation. However, their full comments and any additional and supplementing material that they wish to have made a part of the record will be received and submitted. And the record will be kept open for 7 days for that purpose, in addition.
The first witness from whom we'll hear today is the Honorable Tom Sansonetti, who currently serves as the Assistant Attorney General in charge of the Environment and Natural Resources Division of the United States Department of Justice.
Prior to arriving at the Environment and Natural Resources Division, Mr. Sansonetti specialized in environmental law, and was a partner in the Cheyenne, Wyoming office of Holland and Hart. Mr. Sansonetti served as the Solicitor for the Department of the Interior from 1990 through 1993. During his tenure as Solicitor, Mr. Sansonetti served as one of six Federal negotiators in the Exxon Valdez oil spill settlement. President George W. Bush has also appointed Mr. Sansonetti chair of the Presidential Advisory Commission on Western Water Resources.
Mr. Sansonetti is a graduate of the University of Virginia, where he also received his MBA. He received his juris doctor from Washington and Lee University. We welcome Mr. Sansonetti and his considerable expertise to the Subcommittee this morning.
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Our second witness will be Mr. Nels Ackerson, chairman of the Ackerson Group, Chartered. This internationally recognized Washington, D.C. law firm represents governments and government agencies, agricultural organizations, financial institutions, and several Fortune 500 companies.
Over Mr. Ackerson's 30-year career, he has served as lead counsel in a billion-dollar nationwide class action litigation against the nation's largest telecommunications companies and railroads. Most notably, he was lead trial counsel for Paul Preseault, the plaintiff in the first compensation case against the U.S. Government for a Fifth Amendment taking of property for a trail.
His career includes founding and managing a Middle East office of a major American law firm, and serving as chief counsel to the Senate Subcommittee on the Constitution. He received his undergraduate degree in economics from Purdue University, with distinction; holds a master's degree in public policy from Harvard, where he also earned his juris doctor and graduated cum laude.
Mr. Ackerson, we're very privileged to have you with us today.
Our next witness is Ms. Andrea Ferster, who currently serves as general counsel for the Rails-to-Trails Conservancy. She is a sole practitioner, concentrating in land use, historic preservation, transportation policy, and tax-exempt organizations.
She has testified on a number of occasions before Congress on the Rails-to-Trails issue. She is also an accomplished speaker, and has made presentations at both the fourth and fifth national Rails-to-Trails conferences, the 13th National Trails Symposium, and the Lincoln Land Institute, on issues relating to the development and management of trails. She holds a BA from Sarah Lawrence College, and a law degree from George Washington University.
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Ms. Ferster, it's an honor having you with us here today.
Our final witness today will be introduced by the gentlelady from Pennsylvania—who has not yet arrived, so that honor falls to me.
Mayor Murphy, the Honorable Thomas Murphy, who is serving his third term as Mayor of Pittsburgh, is with us today. And I know that when the gentlelady from Pennsylvania, Ms. Hart, arrives, she'll want to offer her personal words of welcome.
During his 9 years as mayor, Mayor Murphy has directed $4 billion of new investments into his city. Mayor Murphy has helped Pittsburgh become a new center of technology, and has worked to redevelop former industrial sites to create commercial and recreational opportunities along Pittsburgh's waterfronts.
The Mayor has reduced the city's budget, while improving city services. He refurbished neighborhoods by adherence to enforcement of anti-littering laws and establishing the Pittsburgh Clean Neighborhood Collaborative.
Prior to his election as mayor, he served as a member of Pennsylvania's General Assembly; and earned a graduate degree in urban studies from Hunter College in New York.
Mayor Murphy, we very much appreciate your taking time from your very, very time-consuming work as mayor to be with us here today to share your experiences and recommendations.
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I would like to again extend a welcome, on behalf of this Subcommittee and the full Judiciary Committee, to each of the witnesses today, and now turn to Mr. Sansonetti for 5 minutes, for your opening statement.
STATEMENT OF THOMAS L. SANSONETTI, ASSISTANT ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION, U.S. DEPARTMENT OF JUSTICE
Mr. SANSONETTI. Very good. Chairman Barr and Members of the Subcommittee, I am pleased to be here today to discuss the Environment and Natural Resources Division's litigation involving the Rails-to-Trails program. It's a program that has been a success in many respects. In my testimony, I will discuss the legislation that gave shape to the program, the litigation that the program has generated, and some ways in which we have responded to the challenges that we are facing in defending that litigation.
As the Chairman noted, at its peak in 1920, our nation's railway system had 272,000 miles of track in service. Today, less than half that number of miles is in use. Concerned about the continuing loss of railroad corridors, in 1976 Congress indeed enacted the legislation aimed at preserving the remaining corridors, by converting rights-of-way to recreational trails.
Because the 1976 legislation failed to produce a significant increase in the miles of rights-of-way converted to other uses, Congress enacted amendments to the National Trails Systems Act in 1983. Those 1983 amendments provide the basis of the Rails-to-Trails program.
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Now, the program has been a success in many respects. According to the Rails-to-Trails Conservancy, over 100 million Americans use rails-to-trails, of which there are more than 1,100 nationwide, for a total of more than 11,000 miles of trails.
However, the 1983 law that created the railbanking program has also had some unforeseen circumstances. Among those consequences, in particular, it has engendered considerable litigation against the United States. The litigation arises out of the fact that many railroads do not own their rights-of-way outright; but instead, hold them under easements or other property interests. When the railroad acquired only easements that were limited to railroad purposes, those easements would be extinguished, under State law, when the railroad abandoned the property; thus unburdening the underlying fee title, that would typically be owned by the abutting land owners.
When the abutting land owners see that the railroad is ceasing operations, they assume that the right-of-way has been abandoned by the railroad and that it will revert to them, under the terms of their easement.
But as noted above, Congress deemed interim trail use not to constitute abandonment in the 1983 amendments. So because the right-of-way will therefore not revert to them, plaintiffs maintain that their property has been taken under the Fifth Amendment to the Constitution, and that they are due just compensation.
The number of rails-to-trails cases that the Environment Division handles has increased dramatically in the last few years. In 1990, we had one case, with one claimant. Now we have 17 cases, scattered across the nation, with approximately 4,550 claimants. Approximately half of those cases are being litigated in the Court of Federal Claims, with the other half being litigated in the United States district courts.
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Now, in my written testimony, I have described some of the special challenges that we face in defending this litigation. And rather than repeat that testimony here, I frankly would just like to briefly discuss some of the ways that we're meeting those challenges.
First of all, I've made it a priority—even though I'm just really in my fifth month—to work with the courts on this. Most Fifth Amendment takings litigation against the United States is brought in the Court of Federal Claims. That court has long recognized that it is each land owner's burden to identify the specific property interest which is alleged to have been taken.
At the beginning of my tenure as the AAG in January, I wrote the chief judge of the Court of Federal Claims, suggesting that the court revise its rules so that it was clear right from the start that such information should be included in the complaint. I'm pleased to say that our suggestion was adopted in the court's new rules, effective May the 1st, 2002.
We believe that this change will help streamline the litigation process before the parties incur significant time and expense, and hope that the district courts will follow the Court of Federal Claims' lead.
Second, we are exploring innovative and creative ways to arrive at speedy resolution of the cases, and that can be very difficult. I mentioned in my written testimony that we have arrived at a settlement in a case called ''Marriott versus the United States,'' fairly early on in that case, compared to others. And we are using the alternative dispute resolution—shorthand is ''ADR''—in our more complex cases.
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And ADR is an important tool in our takings litigation, and we repeatedly examine our cases for opportunities to make use of it. Examples of cases in which ADR has been helpful include the Moore versus United States case, in which the court certified an opt-in class of approximately 300 land owners, along with so-called ''Katy Trail'' in Missouri.
Following a finding of liability by the Court of Federal Claims, the parties, with the assistance of the trial judge, agreed to a streamlined, cost-saving process for resolving just compensation, which involved selecting representative parcels for valuation purposes, and then trying the case with respect to those parcels.
Once the court determines the compensation for the representative parcels, we hope that a settlement of the remaining parcels can be achieved. We are following a similar process in the Illig versus United States case, which is another class action.
ADR is an important tool in the litigator's arsenal, and we support the use of ADR when it enhances our ability to efficiently and effectively resolve cases or streamline issues. But I must also caution that it is not a panacea. For ADR to be successful, both sides, you know, must want to make it work. And also, the parties must have sufficient information about the factual and legal merits of their claims to be able to appropriately evaluate them.
Both of these factors can be problems in the Rails-to-Trails context; in part because of the legally and factually specific nature of these cases, and the relative dearth of case law.
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So in conclusion, the Rails-to-Trails program is an important and valuable Federal initiative that has had unexpected consequences in the form of the litigation I have described. So I look forward to working with you on proposals to expedite and streamline the handling of these cases and, of course, will be happy to answer any of the questions you may have today.
[The prepared statement of Mr. Sansonetti follows:]
PREPARED STATEMENT OF THOMAS L. SANSONETTI
Chairman Barr and Members of the Subcommittee, I am pleased to be here today to discuss the Environment and Natural Resources Division's litigation involving the Rails-to-Trails Program, a program that has been a success in many respects. In my testimony, I will begin by discussing the genesis of, and the legislation that gave shape to, the program. I will then discuss the litigation that the program has generated, and the challenges that we face in defending that litigation.
OVERVIEW OF THE RAILS-TO-TRAILS PROGRAM
At its peak in 1920, our nation's railway system had 272,000 miles of track in service. That number has steadily diminished since then, and today, less than half that number of miles is in use. Concerned about the continuing loss of trackage, Congress in l976 enacted legislation aimed at preserving the remaining trackage by converting unused rights-of-way to recreational trails. The Railroad Revitalization and Regulatory Reform Act directed the Secretary of Transportation to prepare a report on alternative uses for abandoned railroad rights-of-way. The Act also encouraged conversion of abandoned rights-of-way to recreational and conservation uses through financial, educational, and technical assistance to local, state and federal agencies. Another provision authorized the Interstate Commerce Commission (ICC) to delay the disposition of rail property for up to 180 days after the effective date of an order permitting abandonment, unless the property had first been offered for sale on reasonable terms for public purposes.
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The 1976 legislation failed to produce a significant increase in the miles of unused rights-of-way converted to other uses, so in 1983 Congress enacted amendments to the National Trails Systems Act. The amendments allow a railroad that wants to cease operations along a particular route to reach an agreement with a state, local or private organization to assume financial and managerial responsibility as a trail operator for the right-of-way. The land may then be transferred to the trail operator for interim trail use, subject to the right to restore or reactivate rail use, including use as light rail for commuters, on the right-of-way. This is known as ''railbanking.'' (One example of a railbanked trail is the Capital Crescent trail here in the Washington area.) The amendments provided further that interim trail use of a railroad right-of-way, when the route itself remains capable of supporting potential future railroad uses, does not constitute an abandonment of the rights-of-way for railroad purposes. (It is our understanding that a few trails have reverted back to rail use.) The amendments were intended to protect railroad interests by allowing for future railroad use after service was discontinued while relieving them of responsibility in the interim, and to assist walkers, bikers, and recreational users by providing opportunities for trail use at least on an interim basis.
The 1983 amendments, along with the 1976 legislation, provide the basis of the Rails-to-Trails Program. This program has been a success in many respects. According to the Rails-to-Trails Conservancy, over 100 million Americans use rail-trails, of which there are more than 1000 nationwide for a total of more than 11,000 miles of trails. Further, it is our understanding, based on information that we have received from the Conservancy, that approximately another 1200 rail-trail projects are in the works.
Rail-trails have numerous benefits. The most obvious of these is that they provide transportation corridors, connecting urban, suburban and rural areas, giving thousands of Americans a safe and convenient means of commuting by foot or bike to work or traveling to shopping, schools, and other destinations, while preserving natural landscapes and plant and animal habitat. They also offer recreational opportunities for walkers, runners, inline skaters, cyclists, and cross-country skiers and allow disabled individuals to exercise in a safe environment. Rail trails also create economic opportunities for nearby businesses and transform abandoned urban rail corridors into greenways that revitalize cities. And of course, they also preserve these corridors for future transportation needs, particularly rail use—without preservation of these corridors, it is likely that the option of re-converting them to major transportation arteries would be lost.
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LITIGATION IN CONNECTION WITH THE RAILS-TO-TRAILS PROGRAM
However, the 1983 law that created the railbanking program—and with it, so many benefits for so many Americans—has also had some unforeseen consequences. In particular, it has engendered considerable litigation against the United States. This litigation arises out of the fact that many railroads do not own their rights-of-way outright, but instead hold them under easements or other property interests. When the railroad acquired only easements that were limited to railroad purposes, those easements would be extinguished under state law when the railroad abandoned the property, thus unburdening the underlying fee title that would typically be owned by the abutting landowners. When abutting landowners, such as the plaintiffs in our cases, see that a railroad is ceasing operations, they assume that the right-of-way has been abandoned by the railroad and that it will revert to them under the terms of their easement. But as noted above, Congress deemed interim trail use not to constitute abandonment in the 1983 amendments. Because the right-of-way will therefore not revert to them, plaintiffs maintain that their property has been taken under the Fifth Amendment to the Constitution and that they are due just compensation.
The number of rails-to-trails cases that the Environment Division handles has increased dramatically in the last few years. In 1990, we had one case with one claimant. Now, we have seventeen cases scattered across the nation with approximately 4,550 claimants. Approximately half are being litigated in the Court of Federal Claims, with the other half being litigated in the United States District Courts.
In the last three years, we have resolved four cases and remain generally open to settlement discussions where appropriate, but the settlements that we have arrived at so far have made only a small dent in our overall exposure. For example, in one such case, Marriott v. United States, we settled a case involving a single property in Illinois by paying the owner the appraised value of $6,000, paying an additional $12,750 in attorney's fees, and having the court enter an order sufficient to put future purchasers of the property on notice of the interim trail use and railbanking. This may be contrasted with our total potential monetary exposure from the rails-to-trails takings litigation, which we conservatively estimate to be $57 million, plus prejudgment interest.
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CHALLENGES IN RAILS-TO-TRAILS LITIGATION
One of the unusual features of the rails-to-trails takings cases is that 8 of our 17 pending cases have been certified as class actions, which range in size from approximately 100 to 2000 claimants. Prior to the recent rails-to-trails litigation, class actions in Fifth Amendment takings litigation were virtually unheard of. This is primarily because the Supreme Court has repeatedly recognized that takings analysis is highly fact-specific and ad hoc.
In our experience, this is equally true of the analysis in the rails-to-trails context, i.e., liability in rails-to-trails cases turns on the specific language of each individual deed conveyance, while damages analysis will depend on the specific physical characteristics of each individual property interest. Nevertheless, several federal district courts have certified ''opt-out'' rails-to-trails takings class actions. An ''opt-out'' class is one in which all landowners abutting a right-of-way are automatically included in the class, unless they affirmatively ''opt-out.'' In contrast to the ''opt-in'' classes allowed by the U.S. Court of Federal Claims (the court with exclusive jurisdiction over all takings claims in excess of $10,000), ''opt-out'' classes in the rail-to-trails takings context present special problems. They require that the takings claims be evaluated en masse and in the abstract, which is nearly impossible and creates significant added complications, cost and delay.
In addition to the challenges presented by defending ''opt-out'' class actions, there are other challenges presented by rails-to-trails litigation more generally. They include:
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the lack of a client federal agency that is authorized to maintain an inventory of corridors that have been railbanked, monitor trail development, or otherwise track deeds in connection with trail conversion;
uncertainty over who owns the railbanking and interim trail use easement and the United States' rights more generally in connection with these corridors;
reluctance by the claimants to present proof of ownership and related deeds at the beginning of the litigation; and
submission by claimants of appraisal reports that do not conform to standard appraisal procedures.
Each of these results in significant expenditures of time and resources, and complicates our ability to resolve cases and ensure that truly deserving landowners receive just compensation in as expeditious manner as possible.
The defense of the rails-to-trails cases poses special challenges for the Environment Division. Although the total potential monetary exposure from these cases is only about one per cent of the total potential monetary exposure of the entire takings litigation docket presently being handled by the Environment and Natural Resources Division, three of the nine attorneys assigned to our ''Takings Team'' devote the majority of their time to these cases, along with two others who devote a considerable portion of their time as well.
These cases require a deed-by-deed liability analysis and a parcel-by-parcel valuation analysis. Therefore, while a class action of 1,000 individuals may technically constitute just one case, they in reality must be defended as if they were 1,000 separate cases.
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These cases also impose disproportionate expert witness costs. In order to determine just compensation for these cases, we must retain land appraisers who must separately analyze each parcel of land and provide an opinion of value for the property interest taken. The costs of these appraisals, can, and frequently do, exceed the value of the land being appraised. Thus, we increasingly are being called upon to spend more to defend these cases than we might pay out in just compensation. Nor could this money be saved by settling the cases, as we would still need some sound justification for any settlement amount. As our existing cases progress toward the damages phase, we expect this problem to continue. Therefore, we must make careful use of our resources to avoid exhausting our division's expert witness budget.
CONCLUSION
The Rails-to-Trails Program is an important and valuable federal initiative. The law that created it, however, has led to time-consuming and resource-intensive litigation. We anticipate that the number of cases will continue to rise, and we look forward to working with you on proposals to expedite and streamline the handling of these cases.
Thank you for the opportunity to raise these issues with you. I would be happy to answer questions you might have.
Mr. BARR. Thank you very much,
Mr. Sansonetti.
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Mr. Ackerson, you are recognized for 5 minutes, please.
STATEMENT OF NELS ACKERSON, CHAIRMAN, THE ACKERSON GROUP, CHARTERED
Mr. ACKERSON. Thank you, Chairman Barr and Members of the Committee. As a lawyer representing home owners, ranchers, farmers, and other land owners across the United States in claims for compensation for their property, I'm pleased to offer my observation on an area of extravagantly wasteful litigation.
Both taxpayers and land owners are paying far too great a price for lawsuits when land has been taken by the Federal Government for trails. One of the Justice Department's own attorneys has written that in this area of the Fifth Amendment, it appears to protect only wealthy land owners. The process cries out for justice and common sense.
The Department of Justice, having the benefit of very little guidance from Congress, has adopted practices that I consider to be unrestrained litigation, uncontrolled expenditures, and unending disputes with land owners whose property has been taken for trails. Congress has established no procedures to rein in this inefficient process that is unfair to land owners and taxpayers alike.
Unlike other areas of Government takings, when land is taken for a trail, there is no established system for compensation to the land owners; no process for the Government to make a good-faith offer; no established appraisal or valuation system; no grievance process; and no remedy for the land owner, other than full-scale litigation under the Tucker Act.
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The Department of Justice has compounded the cost and inefficiency of this poorly conceived process by aggressively litigating every issue with every land owner, sometimes over and over again, and sometimes the same issue several times in the same litigation. Since the Government ultimately must pay the land owners' attorneys' fees, as well as the Justice Department's own fees and costs, everybody loses by this prolonged litigation.
An example of this wasteful process is the litigation involving Paul and Patricia Preseault of Burlington, Vermont. The Preseaults own what they believe—and I agree—is one of the most beautiful urban spots in Vermont: a heavily-wooded property near the heart of Burlington, overlooking Lake Champlain.
What has been little noted is that in the early 1980's the Preseaults offered to give the land for an 8-foot trail to the City of Burlington, but the city refused because it wanted something wider than 8 feet. Eight feet is what the city now has, as a result of the taking by the Federal Government on February 5th, 1986. At that time, the Government authorized the taking of that strip, that is approximately one-fourth mile in length, through their property.
On May 22nd of 2002, about a month ago—some 16 years after that original take, and after prolonged litigation—the Court of Federal Claims ordered the Government to pay the Preseaults $234,000, plus interest, from 1986, for a total of approximately $552,000, for the value of the land taken. And in addition, the Government must reimburse Mr. and Mrs. Preseault's reasonable attorneys' fees of $894,855.60. The United States will write a check for more than $1,446,000.
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In addition, the Government's lawyers have expended time and costs that appear to be nearly the same amount as the Preseaults' attorneys' fees. So the total cost to the Government may be more than $2,500,000, for the quarter-mile trail.
As bad as that bill is for the taxpayers, the taxpayers are not getting as bad a deal as the Preseaults. They have had to spend huge amounts of money—their own money advanced—devote thousands of hours of their own time to the process, and disrupt their lives. After all that, the attorneys' fees that the Federal Court of Claims ordered to be paid are 20 percent less than what the Preseaults have paid, or are obligated to pay. As of today, the time of the filing of the notice of appeal has not expired. And if the Government appeals, more years of litigation may lie ahead for the Preseaults before they receive any reimbursement of their attorneys' fees or payment for their land.
Why did the Preseaults' litigation take so long and cost so much? Some of my written testimony contains some examples of that. Other examples, however, can be found in class actions. My firm also represents many land owners in both individual and class actions for compensation for trails takings under the Little Tucker Act.
The Little Tucker Act permits land owners to file claims for no more than $10,000 apiece in the Federal courts where their land is located, rather than in the Court of Federal Claims in Washington, D.C. The advantage of filing small claims as a class action, rather than in individual lawsuits, is obvious in this situation. With only $10,000 or less at stake, what land owners could afford to hire specialized counsel at their own expense to litigate claims in Washington, D.C.?
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From the Government's perspective, class action should afford an efficient way to resolve thousands, or hundreds of thousands, of claims on trail-wide or State-wide bases, in a single proceeding; thus reducing litigation costs for everyone. However, the Department of Justice has not seen class actions as a benefit, but as a threat, because it makes remedies more readily available to land owners with legitimate claims.
It is disturbing that we have a legal void in which the taxpayers' and the citizens' own Justice Department considers its necessary objective to be to frustrate the compensation of just claims by opposing an efficient system of recovery. Class actions in which my firm has represented land owners have been certified in Federal courts in Idaho, Indiana, Iowa, Nebraska, and Texas. In my written testimony, there's a summary of some of the procedural road blocks—including repetitive litigation of the same issues—that have characterized too much of that litigation.
The vigorous defenses and arguments raised in each case exemplify the Department of Justice practice of aggressively opposing, or raising in some cases every conceivable legal and procedural issue; thereby driving up the cost of these takings cases. A Justice Department attorney explained in a ''Law Review'' article that he wrote as a student that owners who bring a takings claim under the Tucker Act usually wait at least 2 years before their cases are heard, and few property owners can afford the protracted court battle that can take over a decade.
I think my time has expired, but the point that needs to be made in both the class action litigation and in individual litigation on behalf of land owners is, there should be incentives to settle or to find a basis for a reasonable compensation for the land owners early in the process, so that it can be achieved speedily without great cost either to the Government or to the land owners.
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My clients, and the tens of thousands of others who have been similarly affected, do not want years of lawyers' fees and litigation. They want only simple justice, and a fair and sensible way to obtain just compensation for their land. Their Government should want exactly the same thing.
[The prepared statement of Mr. Ackerson follows:]
PREPARED STATEMENT OF NELS ACKERSON
Mr. Chairman and Members of the Committee, I am pleased to offer my observations on an area of extravagantly wasteful litigation. Both taxpayers and landowners are paying far too great a price for lawsuits when land has been taken by the Federal Government for trails. This area cries out for common sense.
The Department of Justice has adopted a process of unrestrained litigation, uncontrolled expenditures, and unending disputes with landowners whose property has been taken for this purpose. The Congress has established no procedures to rein in this inefficient process that is unfair to landowners and taxpayers alike.
Astonishingly, unlike other areas of government takings, when land is taken for a trail, there is no established system for compensation to the landowners, no process for the Government to make a good faith offer, no established appraisal or valuation system, no mediation or grievance process, and no remedy for the landowner other than full-scale litigation under the Tucker Act. The Department of Justice has compounded the cost and inefficiency of this poorly conceived process by aggressively litigating every issue with every landowner over and over again. Since the Government ultimately must pay the landowners' attorneys fees as well as the Justice Department's own fees and costs, everybody loses.
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I have the privilege of representing many homeowners, families, farmers, ranchers, retirees, businesses, both rural and urban, and even units of government, all across the nation who have had their land taken for trails.
An example of this wasteful and unfair process is the litigation involving Paul and Patricia Preseault of Burlington, Vermont. The Preseaults own what they believe—and I agree—is some of the most beautiful property in Vermont, a heavily wooded urban property near the heart of Vermont overlooking Lake Champlain. On February 5, 1986, the Government authorized the taking of a strip of land about one fourth of one mile in length and approximately eight feet in width for a trail through that property. On May 22, 2002, some sixteen years later, after prolonged litigation, the Court of Federal Claims ordered the Government to pay the Preseaults $234,000 plus interest from 1986, for a total of approximately $552,000, and in addition the Government must reimburse Mr. and Mrs. Preseaults' reasonable attorneys' fees of $894,855.60. The United States will write a check for more than $1,446,000.
In addition, of course, the Government's own lawyers have expended time and costs that appear to be nearly the same amount as the Preseaults' attorneys' fees. If that amount is added, the estimated cost to the Government may be $890,000 more for a total cost of more than $2,500,000
As bad as that bill is to the taxpayers, theirs is not as bad a deal as the Preseaults'. For more than a decade they had to spend huge amounts of money, devote thousands of hours of their time to this process, and disrupt their lives. After all that, the attorneys' fees that the Court of Federal Claims ordered to be paid are twenty percent less than the Preseaults' have paid or are obligated to pay. As of today, despite the Court's order, Mr. and Mrs. Preseault have not been paid anything for their land or their expenses. The time for filing notice of an appeal has not expired, and if the Government appeals, more years of litigation may lie ahead before any payment is received. What a price the Preseaults have paid to exercise their constitutional right to just compensation for the land their Government took from them.
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Why did the Preseaults' litigation take so long and cost so much. Following is a case study that shows some of the reasons.
Acker1.eps
DEPARTMENT OF JUSTICE (''DOJ'') LITIGATION STRATEGY
The DOJ argued and lost a ''railbanking'' issue four separate times: In 1996 the Federal Circuit ruled that the subject right of way was merely eight feet wide and was not ''railbanked'' for railroad purposes. The DOJ did not appeal that ruling. In the summer of 2000, winter of 2001, and May of 2001, the DOJ again advanced theories of the case based on the premise that the trail was railbanked. Each time the Court rejected the DOJ's argument. Estimated Plaintiffs' fees and expenses on this issue alone not including first round of arguments: $40,000. Estimated DOJ fees and expenses: $80,000.
The DOJ litigated damages to judgment where primary experts for each party were at a mean value of $222,000 and court ultimately found damages to be $234,000: In the final months before trial, the DOJ presented its primary appraiser's opinion that damages for the taking were approximately $115,000. Plaintiffs' primary appraiser opined that the value was $325,000. The DOJ made no effort to settle the difference and litigated the matter to trial. The court awarded $234,000 in damages plus compound interest from 1986 (for a total value in excess of $500,000). Estimated Plaintiffs' fees and expenses for five months of trial preparation and trial: $400,000. Estimated DOJ fees and expenses: $400,000.
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The DOJ demands greater level of proof and expenses—sometimes for items in the hundreds of dollars—than is typically required as a business practice in the legal community. Establishing that proof often requires thousands of dollars worth of fees that are fully compensable under the law: Rather than arriving at compromises or merely conceding items such as copying or travel expenses, the DOJ demands itemized proof for all items. Case law shows that this level of proof is not required, and the work involved in the demands for proof drives up the costs of litigation for both parties.
The DOJ criticizes counsel for billing in quarter-hour increments, although review of DOJ gross time records shows that in most cases, if not all, the DOJ appears to be billing in quarter-hour increments; if DOJ raises objections to court, Plaintiffs' counsel must take time to research law and defend practice.
The DOJ position is that fees and expenses should never be 100% reimbursable despite law that landowners are to be made whole in reimbursement for fees and expenses for the taking of property.
The DOJ defense of this single takings claim for property worth $234,000 will cost in excess of $2,800,000? excluding the value of the taking: If the claim had been settled shortly after it was brought in 1990, there would have been savings of approximately $230,000 in interest, $1,300,000 in Plaintiffs' fees and expenses, over $130,000 in DOJ expenses for experts alone, and an estimated $925,500 in DOJ fees. 4
To date, sixteen years after the taking and six years after liability was established, the Plaintiffs have not received a dime.
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CLASS ACTION EXPERIENCE
My firm represents landowners in both individual and class action cases for compensation for trails takings under the Little Tucker Act. The Little Tucker Act permits landowners to file claims for no more than $10,000 apiece in the federal courts where their land is located, rather than in the Court of Federal Claims in Washington, DC. The advantage of filing small claims as a class action rather than in individual lawsuits is obvious. With only $10,000 or less at stake, what landowners could afford to hire specialized counsel at their own expense to litigate claims in Washington, DC? Only by aggregating claims in a single class action is it likely that any landowner will find a lawyer willing to take their case on a contingency basis.
From the Government's perspective, class actions should afford an efficient way to resolve hundreds or thousands of claims on a trail-wide or a statewide basis in a single proceeding, thus reducing litigation costs for everyone. However, the Department of Justice has not seen class actions as a benefit but as a threat because it may make remedies more readily available to landowners with legitimate claims. It is disturbing that the taxpayers' own Justice Department considers its objective to be to frustrate the compensation of just claims by opposing efficient systems of recovery.
Class actions in which my firm represents landowners under the Little Tucker Act have been certified in federal courts in Idaho, Indiana, Iowa, Nebraska, and Texas. Following is a summary of the procedural roadblocks, including repetitive litigation of the same issues, that have characterized that class action litigation.
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Acker2.eps
No material difference between each class action; the DOJ opposed class certification in each case (see attached copies of certification orders).
Although Hash was the first of five cases brought by the same counsel, the DOJ knew of the certification of other materially identical classes in trails-taking cases before the Court of Federal Claims, where the standard for class certification is more stringent. Moore v. United States, 41 Fed. Cl. 394 (1998); Illig v. United States, 1:98cv00934 (Ct. Fed. Cl., Feb. 14, 2000). In addition, by July 2000, there was a great deal of precedent for certifying class actions brought by landowners based on railroad right-of-way abandonments.
The general policy of vigorously opposing class certification failed to appreciate the enormous benefits of resolving takings issues on a trail-wide or state-wide basis. Significant efficiencies are achieved by avoiding the Preseault-model of separately litigating damages, expenses, and fees for each individual claim along a right-of-way taking.
The vigorous defenses and arguments raised in each case exemplify the general Department of Justice policy of aggressively opposing or raising every conceivable legal and procedural issue, thereby driving up the costs of these takings cases.
But for the availability of counsel willing to shoulder takings cases on a contingency basis, most landowners would have no remedy as a practical matter due to the staggering costs of bringing a claim. As noted by a former law student who is now counsel for the Department of Justice on some of these cases:
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The Congressional Budget Office states that owners who bring [a takings claim under the Tucker Act] usually wait at least two years before their cases are heard, and few property owners can afford the protracted court battle that can take over a decade. . . . The complexity of these cases and the length of time that even victorious plaintiffs must wait to receive their compensation creates the impression that the Fifth Amendment effectively protects only wealthy landowners. In fact, cases are usually brought only for claims over $100,000. One rationale for enacting takings legislation is to remove this functional bar and give ''small landowners who cannot afford a trip to the Supreme Court a chance to get their civil rights.'' David Spohr, Note, Florida's Takings Law: A Bark Worse Than Its Bite, Va. Envtl. L.J. 313, 322 (1997).
Both governmental and private interests would be served by a less litigious Department of Justice strategy, and Congress should devise a system that makes a claims process available to any injured party, not just those who can afford expensive, protracted battles with the Department of Justice. Rather than fostering litigation, the Department should be developing settlement strategies that will fairly and efficiently place values on properties and offer prompt and efficient recoveries to landowners who accept Government offers. Where the Government has undertaken a program to take property for public use, the Department of Justice need not feel compelled to defend against the legitimate claims of every landowner who lawfully seeks the just compensation that the Constitution requires.
Not all of the blame can be placed on the Department of Justice, however. Although the Department of Justice could be and should be offering settlement alternatives to litigation once a Tucker Act case has been filed, the fact is that under present law the Government cannot make such an offer before litigation is commenced. It can only wait to be sued and then either settle or litigate.
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Unlike other areas of organized federal takings, there is no condemnation procedure when land is taken for trails. Therefore there is no statutory framework to notify and explain rights or procedures to these landowners. There is no procedure to offer fair market value as is required in a typical condemnation case. Instead, the landowners are required as the first and essential step to engage their own government in protracted and expensive litigation. Compensation procedures are required for virtually every federal land acquisition, such as construction of facilities for national defense and security, government buildings, urban renewal, highways, schools, hospitals, parks and even relocation of railroads. The same can be done and should be done for trails conversions.
My clients and the tens of thousands of others that have been similarly affected do not want years of lawyers' fees and litigation. They want only simple justice and a fair and sensible way to obtain just compensation for their land. Their Government should want exactly the same thing, but that is what their Government denies them.
END NOTES
1. In addition, pre-Court of Federal Claims litigation lasted nine years—from 1981 through 1990.
2. This amount excludes expenses and fees settled earlier in litigation with one of plaintiffs' previous counsel. Plaintiffs dismissed counsel requesting those fees. Subsequently, when that counsel submitted a request for those fees and expenses, his submission was criticized by the court and the Government as being grossly excessive. The settlement for those fees was for $46,000.
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3. The calculations are based on comparing total hours spent by all plaintiffs' attorneys and total hours spent by the DOJ during the same time period—February 1990 through June 2001—but exclude the hours billed by both parties during the period of work performed by counsel identified in footnote 2.
4. This figure is based on 3,085 hours invested as of June 2001 by the DOJ, multiplied by an average hourly rate of $300 per hour. In addition, litigation is ongoing and both parties continue to accumulate fees.
Mr. BARR. Thank you very much, Mr. Ackerson.
Ms. Ferster, you are recognized for 5 minutes, please.
STATEMENT OF ANDREA FERSTER, GENERAL COUNSEL, RAILS TO TRAILS CONSERVANCY
Ms. FERSTER. Mr. Chairman, Members of the Subcommittee, thank you for inviting the Rails-to-Trails Conservancy to testify at today's oversight hearing. My name is Andrea Ferster. I'm General Counsel to the Conservancy. The Conservancy is a national, non-profit organization, whose mission is to create a nation-wide network of public trails from former rail lines and connecting corridors.
There have been a number of oversight hearings on the Rails-to-Trails program over the years, and a common message sounded in each hearing is the value that rail-trails bring to America's communities and countrysides. Rail-trails provide a safe and convenient place for families to build walking, jogging, or bicycling into their daily lives. And they are specifically referenced in the President's new initiative just announced today to combat the major public health epidemic associated with the increase in obesity among Americans.
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The Rails-to-Trails program was initiated more than 20 years ago, when Congress realized that our nation's built rail infrastructure was at risk of being irreparably destroyed as railroads began to abandon corridors at alarming rates. Like ''Humpty-Dumpty,'' it's nearly impossible to put a railroad corridor together again, once it is abandoned; sold; fragmented; and bridges, tunnels, and other costly structures destroyed.
Our national policy favoring rail corridor preservation appropriately recognizes that our national rail system—which was painstakingly created over several generations, using State or Federal land grants, loan guarantees, and powers of eminent domain—represents a substantial public investment that must be preserved for continued transportation use.
The curtailment of national air travel following September 11th tragically demonstrated the importance of rail corridor preservation efforts as a way to achieve needed redundancy in our national transportation network. The centerpiece of this national policy is section 8(d) of the National Trails System Act, referred to as the ''Railbanking Law,'' which was passed by Congress and signed into law by President Reagan in 1983.
The Railbanking Law requires the Surface Transportation Board, which is the successor to the former Interstate Commerce Commission, to maintain jurisdiction over rail corridors where there is a voluntary trail management agreement between the railroad and a qualified trail sponsor who then maintains the corridor as a trail until such time as the corridor is once again needed for active rail service. Any conflicting ownership claims to the use of these rights-of-way are preempted, so long as these corridors remain in this national rail bank.
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Our written testimony addresses in detail the issue of litigation in the Rails-to-Trails program, which is the subject to today's hearing. Much of the pending litigation involves claims brought by persons seeking compensation from the Federal Government based on a perception—which is often unsubstantiated—that the rail corridor would have reverted to them upon the cessation of active rail service.
The door to the filing of these claims was opened in 1996, when the U.S. Court of Appeals for the Federal Circuit, sitting en banc, decided on its own initiative to vacate a decision of a three-judge panel, in Preseault versus the United States, which had found that the Railbanking Law did not affect the taking of an adjacent land owner's right to a Burlington, Vermont rail-trail.
Because the decision was not adopted by a majority of the Federal Circuit, the decision has no precedential value. But ultimately, the Federal Circuit did decide that a taking had occurred. The Rails-to-Trails Conservancy strongly disagrees that the reasoning of that decision should be extended beyond the unique facts of the Preseault case. And we would certainly urge that the Justice Department seek further review of this reasoning at the next earliest opportunity.
Despite the result in the Preseault case, there's still no indication that other compensation cases involving rail-trails will pose an undue burden on the Federal Treasury. Apart from the Preseault case itself, which involves a factually anomalous set of circumstances that likely affected the outcome and is unlikely to occur again, and cases involving claims that are too small to litigate, there is no certainty that compensation will be awarded in any of the other pending cases; particularly if all avenues for judicial review of initial decisions are pursued.
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Also, the pace of railroad abandonments has significantly slowed, and the statute of limitations has run for many railbanking orders. As a result, with each passing year, there is a shrinking pool of railbank corridors that can be the subject of a compensation case.
While predictions can be risky, it appears that the annual financial liability of the Federal Government will continue to be de minimis. As the Justice Department's written testimony indicates, the total potential monetary exposure of these cases is about 1 percent of the entire takings litigation docket of the Environment and Natural Resources Division. And the actual pay-out has been, to date, much less.
While we are sympathetic to, and very appreciative of, this significant effort that Justice Department attorneys have devoted to the defense of this program, we think that this internalized cost is more than justified by the important goals achieved by this program. And we also believe that these internalized costs will become less, as the litigation becomes more efficient.
In short, we do not feel that there is any cause at this point to make any changes to this important and highly effective law. Thank you.
[The prepared statement of Ms. Ferster follows:]
PREPARED STATEMENT OF ANDREA FERSTER
INTRODUCTION
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Thank you for allowing Rails-to-Trails Conservancy (RTC) the opportunity to testify at the oversight hearing on ''Litigation and its Effect on the Rails-to-Trails Program.'' Rails-to-Trails Conservancy is a national nonprofit conservation organization founded in 1985. The mission of Rails-to-Trails Conservancy is to enrich America's communities and countrysides by creating a nationwide network of public trails from former rail lines and connecting corridors. Specifically, RTC identifies rail corridors that are not currently needed for rail transportation and facilitates their preservation and continued public use through conversion into public trails and non-motorized transportation corridors. We have more than 100,000 members nationwide, and field offices in California, Florida, Michigan, New England, Ohio, and Pennsylvania.
LEGISLATIVE BACKGROUND OF FEDERAL RAILBANKING PROGRAM
In 1976, Congress recognized the need to create a ''national rail bank'' of railroad corridors as a way of ensuring that our nation's built rail corridor infrastructure, which was frequently assembled at great public cost through state or federal land grants or loan guarantees and powers of eminent domain, remained dedicated for transportation purposes, although these corridors were not needed for present or foreseeable future railroad operations. The Railroad Revitalization and Regulatory Reform Act of 1976 (4–R Act)(see footnote 1) provided for mandatory transfers of corridors proposed for abandonment to other carriers, and directed the Interstate Commerce Commission (ICC), which regulates railroad abandonments, to impose conditions barring the disposition of railroad rights of way for 180 days in order to allow for possible transfers for public use, including for trails.(see footnote 2)
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Notwithstanding these regulatory tools, the declining fortunes of the rail industry began to result in an increasing loss of railroad corridor through abandonment. Then in 1980, Congress passed the Staggers Rail Act,(see footnote 3) which required the ICC to exempt most rail abandonments from regulation. As a result, the rate of rail abandonments by major carriers accelerated to between 4,000 to 8,000 miles per year.(see footnote 4) This alarming rate of rail abandonments made corridor preservation a critical issue of national policy.
Once the ICC granted abandonment authorization, the railroad was free to remove the tracks and ties, sell the right of way piecemeal to private owners, or simply allow the right of way to be claimed by adjacent landowners. Our nation's rail corridor system, ''painstakingly created over several generations,'' was at risk of becoming irreparably fragmented due to the present high cost of land and the difficulties of assembling right-of-way in our increasingly populous nation.(see footnote 5) Today, it would be virtually impossible to recreate this system once the right of way is fragmented, and bridges, tunnels and other costly structures destroyed.
Alarmed by the potential loss of this valuable national resource, Congress began to look for ways to facilitate the preservation of these corridors for alternative public transportation uses, without interfering with the ability of the financially-beleaguered railroad industry to shed duplicative or unprofitable lines. The possibility of transferring these surplus rights of way to third parties for use as trails began to emerge as an efficient method of preserving these corridors.
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However, efforts by potential trail managers to purchase corridors that had received ICC abandonment authorization for public use as trails faced a number of difficulties. The biggest difficulty was the faulty perception by many adjacent landowners that an ICC order authorizing a railroad to abandon its common carrier obligations also meant that the railroad had abandoned its property interest in the right of way itself under state law. With state law ill-equipped to address this new animal called a ''rail-trail,'' trail opponents began to institute legal actions against the railroad and the new trail manager to determine the ownership of the right of way. Defending against this litigation proved costly and time consuming, and was a significant disincentive to rails-to-trails conversions.
SECTION 8(D) OF THE NATIONAL TRAILS SYSTEMS ACT
Section 8(d) of the National Trails System Act is the legislative centerpiece of the federal ''Rails to Trails Program.'' This law was enacted by Congress and signed into law by President Ronald Reagan in 1983 to provide an effective mechanism for preserving railroad rights-of-way for future rail service and for energy efficient alternative transportation use, without imposing additional burdens on rail carriers. The law allows railroads to transfer inactive railroad corridors to qualified trail managers for interim use as trails, until such time as these rights-of-way are needed for future rail service on the condition that trail managers assume all carrying costs (liability, maintenance, and taxes) of the rights of way. By pairing railbanking with interim trail use, Congress created a mechanism that allows for the preservation of our nation's built rail corridor infrastructure for future railroad purposes without burdening the railroads with unwanted property or the communities through which these corridors run with vacant and derelict land. This process is known as ''railbanking.''
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Section 8(d) (the Railbanking Law) facilitated rails-to-trails conversions by preserving the jurisdiction of the ICC (now called the Surface Transportation Board, or STB) over inactive railroad corridors that were dedicated to interim trail use and subject to future reactivation of rail service. At the same time, the Railbanking Law created an incentive for railroads to enter into interim trail use/railbanking negotiations by allowing the railroad to liquidate its entire interest in the rail line where a qualified governmental or private organization agreed ''to assume full responsibility for management of such rights-of-way and for any legal liability arising out of such transfer or use, and for the payment of any and all taxes that may be levied or assessed against such rights-of-way.''(see footnote 6)
A key feature of the Railbanking Law is its continuation of the STB's pre-emptive jurisdiction of conflicting state law during the ''railbanking'' period during which the right of way is managed as an interim trail. Normally, the STB's preemptive authority is terminated once the railroad petitions to ''abandon'' its common carrier obligation and the STB finds that abandonment does not interfere with the ''public convenience and necessity.'' Once such abandonment authorization is consummated by the railroad, state law principles may apply to divest the railroad of any ability to transfer the corridor for uses other than active railroad service. As the legislative history of the federal railbanking law explains, ''The concept of attempting to establish trails only after the formal abandonment of a railroad right of way is self-defeating; once a right-of-way is abandoned for railroad purposes there may be nothing left for trail use.'' The federal railbanking law solves this problem by continuing the STB's pre-emptive jurisdiction over the corridor where a voluntary agreement between the railroad and a trail manager in which the trail manager agrees to assume all legal and financial responsibility for maintaining the corridor.
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The ICC issued rules interpreting the Railbanking Law in 1986.(see footnote 7) Under these rules, an interested trail manager could request a railbanking order from the STB within 30 days after the railroad files an application for an abandonment (or, in the case of ''exempt abandonments,'' within 10 days of publication of a Notice of Exemption in the Federal Register).(see footnote 8) If the request is filed by a qualified entity who is willing to assume all legal and financial responsibility for the corridor, and the railroad agrees to enter into negotiations for an interim trail use/railbanking agreement with the entity, the STB issues a Certificate of Interim Trail Use (''CITU'') or, in the case of ''exempt abandonments,'' a Notice of Interim Trail Use (''NITU'').(see footnote 9) Issuance of a NITU or CITU allows the railroad to discontinue service, cancel tariffs, and salvage track and material consistent with interim trail use and railbanking.(see footnote 10) If an interim trail use/railbanking agreement is not reached within 180 days, or any extensions thereof, the railroad is permitted (but not obligated) to fully abandon the corridor.
The Railbanking Law has, in fact, been serving its intended function of preserving inactive railroad corridors intact for public use. Since the program's inception in 1983, the ICC/STB has issued 398 railbanking orders, resulting in the acquisition of 180 railbanked corridors in 30 states representing 3,983 miles. Some 1,552 miles of railbanked corridors are presently open trails, with an additional 1,834 miles of trail under development on railbanked corridors.(see footnote 11) However, the availability of railbanking as a mechanism for corridor preservation depends on historic timing, railroad cooperation, and other factors. As a result, the majority of the 11,600 miles of rail-trails are not part of the national railbank, and have been privately acquired by state and local governments or park districts without the issuance of a railbanking order by the STB. These trail managers are under no obligation to preserve these corridors for future rail service, and are vulnerable to ''quiet title'' lawsuits challenging the ownership of these corridors.
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The Railbanking Law has in fact assisted in preserving railroad corridors for active rail use. For example, in 1993, ICC approved the reactivation of a corridor in Ohio that had been railbanked in 1990.(see footnote 12) Moreover, many more jurisdictions throughout the country have acquired and railbanked rail corridors for future use as light rail, commuter rail, and transit lines. Examples include the Placerville Branch outside of Sacramento, Montgomery County, Maryland, and Madison County, Illinois. Without the Railbanking Law, these corridors would likely have been lost for future rail transportation use.
RAILBANKING IN THE COURTS
Litigation has played an important role in clarifying and interpreting the authority of the ICC/STB to implement the federal Railbanking Law. The ICC's rules and implementation of the Railbanking Law were the subject of early litigation by both proponents and opponents of railbanking. In response to challenges filed by trails groups, who asserted that railbanking was mandatory when a trail group agreed to assume all carrying costs, the courts upheld the ICC's interpretation of the Railbanking Law as authorizing only voluntary transactions between railroads and trails groups as a reasonable interpretation of the statute.(see footnote 13) In 1990, the U.S. Supreme Court unanimously upheld the Railbanking Law as a valid exercise of Congress' power under the Commerce Clause of the U.S. Constitution in Preseault v. ICC, stating ''Congress apparently believed that every line is a potentially valuable national asset that merits preservation even if no future rail use for it is currently foreseeable.''(see footnote 14)
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The treatment of railbanking as a voluntary program has limited the number of rail corridors that are preserved for future use. For example, railroads were extremely reluctant to participate in the program until 1990, when the U.S. Supreme Court upheld the constitutionality of the program, resulting in the loss of between 25,000 and 50,000 miles of rail corridor. While railroad participation has significantly improved since 1990, many corridors continue to be lost due to railroads' refusal to participate in the program. Railroads have intentionally broken up corridors to ensure that future, potentially profitable lines are not available for rail service reactivation by future competitors. A few unscrupulous railroads have even used the voluntary nature of the program as a way of creating a bidding war between the proposed interim trail manager and adjacent property owners.
Trail opponents have also filed a n