Congratulations - if you understood this post's headline, you are officially a rails-to-trails nerd. A super-nerd.
But even if not, you shouldn't need a rails-to-trails nerd's level of knowledge to understand and appreciate the Federal Circuit's ruling in Caquelin v. United States, No. 19-1385 (May 29, 2020). It's a case worth reading for all of us -- nonnerds included -- because it nicely gets into the weeds of takings doctrine.
One observation before we begin. There are takings of a fee simple interest. Takings of less-than-a-fee interest, such as the taking of an easement. Partial takings where less than all of the owner's property is taken, and there's a remainder property. Temporal takings where the seizure is not forever (temporary takings vs permanent takings). Regulatory takings, inverse condemnations, per se (categorical) takings, physical takings and ad hoc (Penn Central) takings. And myriad combinations fo the above. Takings theory comes in a lot of flavors. We note this only because in reading the court's opinion, those distinctions need to be kept in mind, or else you may find yourself losing the script.
Caquelin started off as your somewhat typical rails-to-trails case. Unused railroad on an easement through Caquelin's land. Railroad asked the Surface Transportation Board for its OK to abandon the line, subject to the fictional assertion that the abandonment isn't forever, just until such time as the need for rail service kicks back in. In the interim, we're OK with using the easement for non-railroady things like a recreational trail. If a trail sponsor steps forward, the STB issues a Notice of Interim Trail Use, which gives the parties 6 months to figure out if they can make it work. If the parties agree, then the former railbed becomes a recreational trail, with the STB retaining jurisdiction. Critically, reversion of the rail's right of way under state law is thwarted. Normally, when an easement owner stops the use, the easement reverts to the owner of the servient estate. Federal law preventing that from happening is a permanent taking of the reversionary interest.
So far so good. In these cases, the taking occurs (and the statute of limitations begins running) when the STB issues the NITU, which is the operative act interfering with the owner's reversion under state property law. But what if the rail and the trail sponsor never reach an agreement to operate a trail? In that case, the taking is merely temporary, not "permanent." That's what happened in Caquelin. The CFC, consistent with existing Federal Circuit precedent (Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010)), held that this was a temporary categorical taking. In other words, a total wipeout of the entire reversionary interest for a limited period of time. The CFC entered summary judgment on liability for the landowner. Compensation? Everyone agreed: $900.
In response -- and backed up against its own goal line -- the federal government went for the end zone. It argued that Ladd and two other long-standing takings precedents -- Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2004), and Barclay v. United States, 443 F.3d 1368 (Fed. Cir. 2006) -- should be overruled. All over $900. These kind of temporary suspension of the reversionary interest should not be treated as a total wipout for a limited time, but rather as an ad hoc loss-of-use-and-other-factors Penn Central taking, or maybe under the Arkansas Game temporary takings multifactor analysis. On remand after an appeal to the Federal Circuit, the CFC applied the Arkansas Game factors, but still concluded it was a total, but temporary, wipeout of the reversionary interest.
The federal government presented two main arguments on appeal:
The government accepts that the trial court’s judgment is supported by Ladd I, but it renews its two arguments that this court should no longer adhere to Ladd I. First, it contends, the Supreme Court’s decision in Tahoe-Sierra requires that the general regulatory-takings analysis of Penn Central be applied to assess whether a NITU is a taking when no trail-use agreement has been reached before it expires, and that such a NITU should not be treated as a categorical taking. Second, it contends, at a minimum we should replace the categorical approach with the multi-factor approach of Arkansas Game—which shares certain features of the Penn Central analysis.
Slip op. at 10. The Federal Circuit rejected both contentions.
First, it held that Ladd was not inconsistent with Arkansas Game. A NITU allows a physical invasion of the property. Slip op. at 11 ("The government seems to accept, and in any event has not meaningfully contradicted, the foregoing characterization of the NITU as allowing occupation by someone other than the landowner.") (footnote omitted). That's an "easement," after all. Wiping out -- even temporarily -- my right occupy my land is a taking of my right to exclude. All of it. And that is Ladd and Caldwell and Barclay. This isn't some case where a regulation temporarily restricts the use of property as in Tahoe-Sierra, but a physical (categorical) taking where the "character of the government action" (to use Penn Central's terminology) is categorically a taking. Slip op. at 14 ("Neither in Tahoe-Sierra nor any other case cited by the government did the Court treat as a “regulation” subject to the Penn Central standard a government action aimed only at securing a coerced easement for others to use the landowner’s land.").
Second, Arkansas Game, the Federal Circuit concluded, rejected "categorical exemptions from Takings Clause liability[.]" Slip op. at 15 (emphasis original). This case involves " mandated continuation of an easement," and not merely regulating the owner's use of land. In other words, the Federal Circuit viewed the NITU as allowing a physical occupation, and under the same analysis where a physical invasion is of such an invasive character under Penn Central that it is a taking without examination of the economic harm or the owner's expectations, here too. Slip op. at 15-16. Besides, the CFC here did walk through the Arkansas Game factors, which the Federal Circuit held, are pretty much baked into the Ladd analysis.
All right. Lots of jargon there, but you get the drift: Ladd is still good, a NITU is a categorical taking of either a temporary or permanent duration.
Finally, the court warmed to the government's argument that there's no taking if the railroad would not have abandoned the rail line:
It suggests that a taking should not be found to have occurred during the period a NITU is in effect if, even in the absence of the NITU, the railroad would not have abandoned its rail line during that period.
Slip op. at 17. In other words, the owner would have lost the property anyway, even in the absence of government action. You know, "causation." The court concluded that neither Ladd, Caldwell, nor Barclay addressed that question directly, but that the usual rules of causation in takings still applies. Slip op. at 21 ("We conclude, therefore, that there is no taking until the time as of which, had there been no NITU, the railroad would have abandoned the rail line, causing termination of the easement that the NITU continued by law."). Applying that principle, the court held that to government had not shown that the railroad would on its own delayed abandonment.
Check the opinion out. It is worth reading, even if you are not a super-takings-rails-to-trails nerd.
Caquelin v. United States, No. 19-1385 (Fed. Cir. May 29, 2020)
