A short one from the Federal Circuit, Rasmuson v. United States, No. 14-5089 (Oct. 5, 2015), that comes out of a rails-to-trails case, but has wider applicability.
The case involved the usual: plaintiffs owned lands over which the railroad had rights of way, and when the railroad ceased operating and the Surface Transportation Board issued a Notice of Interim Trail Use, the owners' takings claim ripened because but for the issuance of the NITU, under Iowa law the land otherwise would have reverted back to the owners. So far, so good.
In the valuation trial, the Court of Federal Claims applied the "before and after" method, and concluded that the "before" condition of the land was as it existed before the trails easements, but that the appraisers should "ignore any physical remnants of the railway's use, which would have remained if the railway easement had been permitted to lapse. Slip op. at 4. The Government appealed.
It argued that the appraisers should have considered the land in its before condition (as the railway left it, with the railroad's junk left behind), and not under the "counterfactual assumption" that the land would revert to the owners with all that stuff gone. The CFC concluded that in the absence of the NITU, the railroad "did not have an obligation to remove the physical railroad construction features" and that the owners would be stuck with it if the land wasn't going to be used for a trail.
The Federal Circuit concluded that "[a] proper appraisal methodology has to account for those physical conditions." Slip op. at 6. "Thus," according to the court, "a 'before' calculation that does not take into account the costs of removing the physical remnants of the railway will result in an artificially inflated value and yield a windfall to the landowner." Slip op. at 7.
And we can't have that now, can we? Vacated and remanded.
Rasmuson v. United States, No. 14-5089 (Fed. Cir. Oct. 5, 2015).1
