It is worth your time to check out the Pennsylvania Supreme Court (Middle District)'s decision in Wolfe v. Reading Blue Mountain & Northern RR Co. No. J-10A-2024 (Aug. 20, 2024).
The court invalidated an exercise of eminent domain by a railroad, concluding the taking was not for a public purpose because it was intended to keep open a road used to access a single business.
The conflict arose after the property owners exercised their right to close off the railroad's two easements on which rail siding track and a road crossing had been located. The owners' predecessor-in-title had obtained the property from the railroad's precedessor, and the grant contained express reservations of those two easements. The grant also contained a termination provision. which required the railroad to remove the siding within 90 days of the owners' demand.
The railroad had stopped using the siding and the road crossing in the 1980s or 1990s, and the siding was buried or destroyed. But flash forward two decades, and in 2021 the railroad sought to re-establish rail service over the road crossing. The PUC said ok, but when the owners caught wind of it, they exercised their rights under the termination provision, and instructed the railroad to remove the siding. When the railroad said no, the owners went to court and obtained an injunction prohibiting the railroad from entering the property.
Not to be denied, the railroad started eminent domain proceedings to take the property. Here's the public use/purpose the railroad stated in the resolution of taking:
“to promote the health, safety and general welfare of the Commonwealth of Pennsylvania by serving the public need to have goods transported via rail[,]” and that the condemnation would “further that purpose by connecting sidetrack to the crossing, as approved by the [PUC], pursuant to RBMN’s project plan to provide rail services to the business located on Route 61, Pottsville Pike, Reading, Pennsylvania as permitted in 15 Pa.C.S.A. §1511, 26 Pa.C.S.A. §204(b)(2), including (b)(2)(i) and (b)(2)(ii).”
Slip op. at 3.
As the Supreme Court noted, ""[t]he 'business' [the railroad] referred to in the declaration was Russell Standard, an asphalt company which is located to the immediate south of the Property." Id. The owners objected and the trial court took evidence. The owner testified that he thought the railroad's only purpose was to keep access for the asphalt company, and that access should be through the asphalt company's land and not his. The roofing business which leased the owners' property also testified that the "rail line would run though the driveway it uses to transport its vehicles and equipment." Slip op. at 4. Because of the disruption to its business, the roofing company renewed its lease only for a year.
The railroad introduced competing testimony, that there were not alternative routes that would work for the asphalt company, or those routes would require relocation of utility lines. But in the end, the trial court sustained the owners' objections on the grounds that the taking was "effectuated solely to benefit a single private commercial enterprise, Russell Standard[.]" Slip op. at 6. Relying on a 2014 Pennsylvania Supreme Court case, it held the taking would not benefit the public "in any way" because the only goods moved on the rail line would be Russell Standard's:
According to the court, RBMN’s refusal to consider placing the spurs on Russell Standard’s property indicated RBMN was “protecting Russell Standard’s interest not to clutter its property with tracks where the rail cars could sit indefinitely until the products are needed. Instead, it intends to clutter [the] Wolfes’ property.” Id. at 13. The court concluded “[t]o condemn land owned by the Wolfes, so Russell Standard can commercially profit from the land to the Wolfes’ detriment serves a purely private, and thus, unconstitutional interest.” Id. at 12. Alternatively, the court found even assuming arguendo that a railroad can “condemn any property it wishes,” RBMN’s condemnation is excessive. Id.
Slip op. at 7 (footnote omitted).
On appeal, the Commonwealth Court reversed because public use and benefit means something that will "contribute to the public welfare" in some way, even if "some selfish interest may have inspired the plan." Slip op. at 7-8. And this qualified. The court relied on cases where takings to extend rail service and to benefit a large retailer satisfied the public use/purpose requirement.
The unanimous Supreme Court reinstated the trial court's invalidation of the taking. The court first noted that incidental public benefits are not sufficient, even where the beneficiary of the taking has a massive influence on consumers and the public (the court noted an earlier case involving a railway transporting coal, and the retailer Sears, by way of examples). Those are different cases, because times have changed: Pennsylvania's economy and transportation infrastructure are no longer rail-heavy, and Sears...well, you know. Slip op. at 19 ("Unsurprisingly, then, the legal analysis in both opinions was undergirded by the belief that construction and maintenance of railroad branches and spurs automatically served a 'public use' because of the infrastructure it created, allowing for unparalleled expansion into areas undeveloped at the time, and often presenting the only available method to transport goods to citizens of the Commonwealth.").
These days, under the Lands of Stone decision, the public must be the "primary and paramount beneficiary" of the exercise of eminent domain. The lower appellate court "acknowledged this standard in its opinion but apparently did not apply it' (ouch). Slip op. at 21. First, the railroad didn't have to cross the owners' land in order to connect Russell Standard. Second, the evidence showed the taking was intended mostly to save Russell Standard time and money. Slip op. at 22.
The Wolfes introduced evidence that the only beneficiary of the taking would be a private business, Russell Standard. Mr. Wolfe’s unrefuted testimony also established Russell Standard already uses trucks and private haulers to transport the materials it seeks to import via rail, and thus, does not depend upon rail service to create or distribute its goods. See N.T. Preliminary Objections Hearing, 6/2/22 at 37. In addition, the Wolfes’ expert opined the RBMN expansion would likely render the existing business on the Property non-compliant with the municipality’s zoning requirements and therefore unable to continue operations. Relying on this evidence, the trial court found RBMN’s taking “was effectuated solely to benefit a single private commercial enterprise, Russell Standard[.]” Trial Court 1925(a) Opinion, 7/27/22 at 12. In response, RBMN did not introduce any evidence of any specific benefit to the public, relying instead on the inherent benefits purportedly created by railroads qua railroads, generally. Indeed, RBMN simply claimed the expansion would “serv[e] the public need to have goods transported via rail.” Amended Declaration of Taking, 4/27/22 ¶6.
Slip op. at 22-23.
So burdens of production and proof actually work!
This approach seems like the right one to us. A fact-centric, not "rational basis" deferential analysis, based on the evidence. And not simply what the condemnor says is its purpose. The question of public use or purpose isn't the condemnation stating it and then the court simply deferring (well-nigh conclusive, as Berman put it), but the court actually asking why and for whom.
Two Justices concurred separately, and we also suggest you read those as well.
Wolfe v. Reading Blue Mountain & Northern RR Co., No. J-10A-2024 (Pa. Aug. 20, 2024)
