Check out the latest brief filed in the Federal Circuit by our colleague Thor Hearne. Readers know Thor as our semi-regular updater of the latest from the Court of Federal Claims in "rails-to-trails" takings cases, and this appeal is from a CFC case on that subject.
In Ladd v. United States, the CFC dismissed the property owners' Fifth Amendment takings claim stemming from a rail conversion in Arizona. The court held that the claim was filed past the six-year Tucker Act statute of limitations. A Trails Act case begins when the Surface Transportation Board issues an order (a NITU) that converts an otherwise abandoned railroad easement into a new federal rail-trail easement. The new easement can be used by the public for recreation and the STB retains jurisdiction to "railbank" the corridor, potentially allowing some railroad in the future to build a new railway line across the land.
In a series of cases since 1990, the Supreme Court and the Federal Circuit have concluded this is a taking of the landowner’s right to unencumbered title and possession of their land, and that the Fifth Amendment requires the federal government to pay just compensation. But, as Thor has pointed out in several guest posts (see the above link, and this one), the fJustice Department has been trying one argument after another in an effort to claim the government can avoid its constitutional obligation to pay landowners for these takings. The Ladd case has been though that, and the CFC's dismissal is the latest.
Ladd II is the second round in the battle of landowners v. federal government. In 2006 the STB issued an order that "railbanked" an 80 mile-long abandoned railroad easement and authorized the railroad to sell the easement to a non-railroad for use as a recreational trail. Shortly thereafter, the railroad removed the railroad tracks and the corridor began to be heavily-use by illegal immigrants and drug smugglers entering the United States from Mexico. The Arizona ranchers wanted to fence the corridor and – but for the federal Trails Act – they could have done so. However, under the Trails Act, their Arizona law right to unencumbered title and possession of their land was taken while the land was "railbanked" and the railroad negotiated a possible public recreational trail across their land. That was more than six years ago, yet the Arizona landowners still do not have possession of their land which remains perpetually subject to the STB’s jurisdiction.
In early 2007, after learning of the STB’s order, the Arizona ranchers filed claims in the CFC seeking to be paid compensation for that land which the federal government had taken. The government argued they did not need to pay the landowners because the STB’s order (which authorized the conversion of the owners land to public recreational use and prevented the owners from using their property) was "only" a "temporary regulatory taking" for which the owner was owed no compensation. The CFC accepted the government’s argument and dismissed their case. The Arizona landowners appealed, but the Federal Circuit reversed.
The court unanimously reversed and remanded the case for "a determination of the compensation" the government was constitutionally obligated to pay. On remand, however, the Justice Department raised a new argument, claiming that the takings claims should be dismissed because the government had found an earlier order of the STB authorizing a taking of the land in 1998. On the basis of this earlier order the Justice Department argued the CFC should dismiss these landowners’ claims as time-barred under the six-year statute of limitations in Tucker Act cases.
However, no one – not even the government itself - knew about this 1998 NITU that supposedly started the statute of limitations clock ticking. The Trails Act does not require the STB – or anyone else – to ever tell a landowner when the government takes their property. The order taking the landowner’s property is issued by the STB as part of a railroad abandonment proceeding of which landowners have no notice and are not a party. In this case, even the Director of the STB and the Justice Department lawyers did not know the 1998 NITU existed until 2011 when, on remand, someone in the bowels of the federal government found this 1998 order.
Apparently, they had "top men working on it right now." (Hence the video clip at the top of this post.)
This is not necessarily an isolated case. The STB has repeatedly refused to notify owners when it issues an order taking their property for public recreational use, Most landowners never learn their land has been subject to a federal Trails Act taking until years after the government issues its order taking their land. Many do not learn of the NITU until more than six-years after the NITU is issued. Since the mid-1990's, property owners have been asking Congress and the STB to provide notice to landowners when the STB issues an order that takes land pursuant to the Trails Act, yet neither have acted to correct this gotcha: no one -- not even the Director of the STB or the DOJ -- knew of the STB’s order, yet, when on remand to determine compensation the government "found" a 1998 NITU in some file cabinet, which results in a dismissal because the property owners failed to timely bring a lawsuit for a claim no one knew about.
In essence this argument boils down to this: "we didn't know, but the property owner should have."
Thus, it seems to us that this appeal to the Federal Circuit – a court of national jurisdiction in all taking claims against the federal government – raises one of the more fundamental issues underlying the Fifth Amendment: can the federal government take an owner’s property without providing any notice to the landowner and then avoid its constitutional obligation to pay the owner because the statute of limitations began to run when the government issued the order, not when the landowner had notice of the government’s order taking their property? We think not. We'll be following this case as it progresses.
Brief for Plaintiffs-Appellants, Ladd v. United States, No. 2012-5086 -5087 (filed July 20, 2012)
