Ellamae Phillips Co. v. United States

United States Court of Appeals for the Federal Circuit
2008-5042

ELLAMAE PHILLIPS CO.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant.

George M. Allen, of Telluride, Colorado, argued for plaintiff-appellee.

Katherine J. Barton, Attorney, Environment & Natural Resources Division, Appellate
Section, United States Department of Justice, of Washington, DC, argued for defendant-
appellant. With her on the brief were Ronald J. Tenpas, Assistant Attorney General, and
Kathryn E. Kovacs, Attorney. Of counsel on the brief was William Shapiro, Attorney, of
Sacramento, California.

Richard A. Allen, Zuckert, Scoutt & Rasenberger, L.L.P., of Washington, DC, for
amicus curiae Rails-to-Trails Conservancy. Of counsel on the brief was Andrea Ferster,
General Counsel, Rails-to-Trails Conservancy, of Washington, DC.

Cecilia Fex, Ackerson Kauffman Fex, PC, of Washington, DC, for amici curiae
Gerlene Hash, et al.

Appealed from: United States Court of Federal Claims

Judge Lawrence M. Baskir
 United States Court of Appeals for the Federal Circuit
2008-5042

ELLAMAE PHILLIPS CO.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant.

Appeal from the United States Court of Federal Claims in 04-CV-1544,
Judge Lawrence M. Baskir.
____________________________

DECIDED: May 5, 2009
____________________________

Before MAYER, LOURIE, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

The government appeals from the judgment of the United States Court of Federal

Claims granting summary judgment, holding that the conversion of land to a public trail

was a taking. See Ellamae Phillips Co. v. United States, 77 Fed. Cl. 387 (2007)

(“Summary Judgment Opinion”). The court certified its opinion for interlocutory appeal,

and we granted the government’s petition for permission to appeal. See Ellamae

Phillips Co. v. United States, No. 04-1544L (Fed. Cl. Dec. 21, 2007) (“Certifying Order”);

Ellamae Phillips Co. v. United States, 267 F. App’x 943 (Fed. Cir. 2008) (“Order

Granting Petition”). Because our prior decision in Hash v. United States, 403 F.3d 1308

(Fed. Cir. 2005) (“Hash II”), upon which the Court of Federal Claims relied in its

judgment that a taking had occurred in this case, did not determine the scope of the
easement granted or whether any residual easement has been abandoned in this case,

we vacate and remand.

BACKGROUND

Ellamae Phillips Co. (“Phillips”) owns a tract of land in Aspen, Colorado,

traversed by a railroad corridor. The whole tract was originally public land. In 1886, the

corridor was granted to a railroad company, pursuant to 43 U.S.C. §§ 934-939 (“the

1875 Act”). The 1875 Act states, in pertinent part, as follows:

§ 934. Right of way through public lands granted to railroads

The right of way through the public lands of the United States is granted to
any railroad company duly organized under the laws of any State or
Territory, except the District of Columbia, or by the Congress of the United
States, which shall have filed with the Secretary of the Interior a copy of its
articles of incorporation, and due proofs of its organization under the
same, to the extent of one hundred feet on each side of the central line of
said road; also the right to take, from the public lands adjacent to the line
of said road, material, earth, stone, and timber necessary for the
construction of said railroad; also ground adjacent to such right of way for
station buildings, depots, machine shops, side tracks, turnouts, and water
stations, not to exceed in amount twenty acres for each station, to the
extent of one station for each ten miles of its road.

....

§ 937. Filing profile of road; forfeiture of rights

Any railroad company desiring to secure the benefits of sections 934 to
939 of this title shall, within twelve months after the location of any section
of twenty miles of its road, if the same be upon surveyed lands, and, if
upon unsurveyed lands, within twelve months after the survey thereof by
the United States, file with the officer, as the Secretary of the Interior may
designate, of the land office for the district where such land is located a
profile of its road; and upon approval thereof by the Secretary of the
Interior the same shall be noted upon the plats in said office; and
thereafter all such lands over which such right of way shall pass shall be
disposed of subject to such right of way: Provided, That if any section of
said road shall not be completed within five years after the location of said
section, the rights herein granted shall be forfeited as to any such
uncompleted section of said road.

2008-5042 2
Id. §§ 934, 937 (emphasis omitted). Thus, the 1875 Act provided for a 200-foot wide

passage through public land that would be superior to any private fee estates later

created in the same land.

In 1920, Congress enacted an additional statute, codified at 43 U.S.C. § 913,

declaring that federally granted rights-of-way could be used for non-railroad

transportation purposes:

§ 913. Conveyance by land grant railroads of portions of rights of way to
State, county, or municipality

All railroad companies to which grants for rights of way through the public
lands have been made by Congress, or their successors in interest or
assigns, are authorized to convey to any State, county, or municipality any
portion of such right of way to be used as a public highway or street:
Provided, That no such conveyance shall have the effect to diminish the
right of way of such railroad company to a less width than 50 feet on each
side of the center of the main track of the railroad as now established and
maintained.

Id. (emphasis omitted).

The tract that is now owned by Phillips, already traversed by the railroad corridor,

was conveyed by patent deed to a private party in 1923 pursuant to the Act of June 11,

1906 (Pub. L. No. 59-220, 34 Stat. 233), which allowed the Secretary of the Interior to

examine and declare certain lands fit for agricultural use and for settlement. The

Phillips family acquired the land later in the 1920s. Summary Judgment Opinion, 77

Fed. Cl. at 389. Rail operations ceased in the corridor in the 1980s. Id. at 390. In

1998, the Roaring Fork Railroad Holding Authority (“RFRHA”) operated the right-of-way

and converted the corridor to a bike path pursuant to the Rails-to-Trails Act, codified at

16 U.S.C. §§ 1241-1251.

The Rails-to-Trails Act authorizes the Interstate Commerce Commission (“ICC”)

to preserve unused railway rights-of-way for future use, or to “railbank” them, and use

2008-5042 3
them as recreational trails. See Preseault v. Interstate Commerce Comm’n, 494 U.S. 1,

5-8 (1990) (“Preseault I”). If a state, municipality, or private group is willing to assume

financial and managerial responsibility for the right-of-way, the railroad must transfer the

right-of-way to it for trail use, rather than abandon the right-of-way. 16 U.S.C.

§ 1247(d). Congress provided in the Rails-to-Trails Act that conversions to trail use that

were subject to reactivation of rail service on the route did not constitute abandonment.

Id. (“[I]n the case of interim use . . . if such interim use is subject to restoration or

reconstruction for railroad purposes, such interim use shall not be treated, for purposes

of any law or rule of law, as an abandonment of the use of such rights-of-way for

railroad purposes.”). Of course, the railroad might have already abandoned its right-of-

way before the conversion to a trail, irrespective of the Act.

In October 2004, Phillips sued the United States, alleging that the conversion of

the railroad right-of-way to a recreational trail constituted a taking of its property for

which compensation was owed under the Fifth Amendment. The parties filed cross-

motions for summary judgment, and the Court of Federal Claims granted Phillips’

motion, holding that the conversion to a recreational trail had effected a taking. The

court relied on Hash II. In Hash II, the plaintiffs, landowners in Idaho, had sued the

United States for a Fifth Amendment taking arising from the conversion to a recreational

trail of a railroad right-of-way traversing their lands. 403 F.3d at 1310. Certain plaintiffs

in Hash II, known as “Category 1” plaintiffs, were landowners whose land was initially

public. A railroad acquired a right-of-way through that land pursuant to the 1875 Act,

and the private landowners then obtained the land pursuant to the Homestead Act of

1862, 12 Stat. 392 (codified as 43 U.S.C. § 161 (enacted 1891)) (repealed Pub. L. No.

2008-5042 4
94-579, 90 Stat. 2787 (1976)). Hash II, 403 F.3d at 1312-13. We held that, for the

Category 1 landowners, the ownership of the underlying land passed to the landowners,

and did not remain with the United States. Id. at 1313-18. Thus, we held that the

United States did not own a fee interest in the right-of-way, but instead that the

Category 1 landowners owned the land subject to a right-of-way easement. Id. at 1318.

We then stated the following:

We conclude that the land of Category 1 is owned in fee by the
landowners, subject to the railway easement. The district court’s contrary
decision is reversed. On the railway’s abandonment of its right-of-way
these owners were disencumbered of the railway easement, and upon
conversion of this land to a public trail, these owners’ property interests
were taken for public use, in accordance with the principles set forth in the
Preseault cases. On remand the district court shall determine just
compensation on the conditions that apply to these landowners.

Id.

In holding that the conversion of the right-of-way traversing Phillips’ land had

effected a taking, the Court of Federal Claims reasoned that it was bound by Hash II, in

which we held both that the United States’ interest in the railroad corridor was an

easement, and that the easement had been abandoned. Summary Judgment Opinion,

77 Fed. Cl. at 394. The court first addressed the government’s argument that the

finding of liability in Hash II was contingent upon a future finding of abandonment, rather

than Hash II actually holding that the easement had been abandoned. The court

reasoned that our conclusion was neither contingent nor hypothetical, as we found

takings liability and instructed the district court in that case to compute damages.

Summary Judgment Opinion, 77 Fed. Cl. at 393. The court also reasoned that the

Court of Federal Claims had similarly treated the Hash II conclusion as binding on the

2008-5042 5
questions of the scope of the easement and abandonment in Blendu v. United States,

75 Fed. Cl. 543 (2007). Summary Judgment Opinion, 77 Fed. Cl. at 393-94.

The court next addressed whether Hash II should be limited to the facts of that

case and determined that the holding was not so limited. The court reasoned that

Phillips was similarly situated to the Category 1 plaintiffs regarding the facts that we had

deemed important:

The only facts recited by the Federal Circuit [in Hash II] are that the
railroad acquired the right-of-way across public land pursuant to the 1875
Act, that the land was later transferred to homesteaders subject to the
railroad right-of-way, and that the right-of-way was converted to interim
trail use under the Rails-to-Trails Act. The operative facts of this case are
no different from those recited by the Federal Circuit in Hash II or those
present in Blendu. The inescapable conclusion is that, under Hash II,
conversion of 1875 Act rights-of-way to trail use constitutes abandonment
as a matter of law.

Summary Judgment Opinion, 77 Fed. Cl. at 394. The court found that “[t]he absence of

any predicate to the Federal Circuit’s conclusory statement regarding abandonment is

troublesome for both the litigants in Hash and for courts attempting to apply correctly

precedent in other 1875 Act conversions.” Id. at 395. However, the court found that

“[t]he discussion of Category 1 and the concluding paragraph in Hash II must be read as

a determination that conversions of 1875 Act easements to trail use constitute

abandonment and give rise to takings liability. Therefore, we must hold the Government

liable for a taking of [Phillips’] property.” Id. at 396.

The government then moved to have the Court of Federal Claims certify its

opinion for interlocutory appeal to this court. The trial court granted the motion, stating

that the government had “met all three statutory requirements for certification set forth in

28 U.S.C. § 1292(d)(2).” Certifying Order, No. 04-1544-L, slip op. at 3. The court found

that there was substantial ground for disagreement about a controlling question of law

2008-5042 6
because “the Federal Circuit’s statement in Hash II regarding the Government’s takings

liability is subject to different interpretations than the one applied by [the trial court].” Id.,

slip op. at 6. For example, the court stated that “Hash II may not be conclusive of the

Government’s liability in this case at all.” Id. The government petitioned this court for

permission to appeal, and we granted the government’s petition. Order Granting

Petition, 267 F. App’x 943. We have jurisdiction pursuant to 28 U.S.C. § 1292(d)(2).

DISCUSSION

We review summary judgment determinations de novo. Arko Executive Servs.,

Inc. v. United States, 553 F.3d 1375, 1378 (Fed. Cir. 2009). “Summary judgment is

appropriate where there is no genuine dispute as to any material fact and the moving

party is entitled to judgment as a matter of law.” Id.

The government argues that the conclusory paragraph in Hash II, quoted supra,

cannot be determinative of its liability in this case. First, according to the government,

the question of liability was not briefed or argued in Hash v. United States, No. CV 99-

324-S-MHW, 2001 WL 35986188 (D. Idaho Nov. 27, 2001) (“Hash I”), or Hash II, so

Hash II cannot be read to have decided takings liability, but only that the property right

of the United States in that case was an easement. Second, and alternatively,

according to the government, even if Hash II did decide takings liability, the decision

rested on abandonment, not on the scope of the easement. Abandonment is, according

to the government, a state law question that is different in Idaho and Colorado and

depends on the specific facts of the case, so a determination of abandonment in Hash II

would not affect abandonment in this case. Furthermore, a determination of the scope

of the easement would have required an examination of multiple statutes and would

2008-5042 7
depend on when the land was conveyed and the law in effect at the time. According to

the government, the Supreme Court has recognized in Preseault I, 494 U.S. at 16, that

only some rail-to-trail conversions will amount to takings, and this court has recognized

in Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996) (en banc) (“Preseault II”)

that the questions of scope and abandonment of easements typically are complex.

Thus, the government argues, Hash II cannot be read to hold the United States liable

for a taking per se. Because the only issue on appeal is whether Hash II dictates a

finding of liability, the government argues that the merits of liability cannot be decided in

this appeal. However, the government asserts that, if we were to decide the merits of

liability, the 1875 Act is broad enough to encompass trail use, as recognized by

Congress’s subsequent enactment of 43 U.S.C. § 913, which occurred before the

property interest at issue in this case was conveyed to any private party.

Phillips responds that the issue of liability was decided in Hash II, and that

Hash II must have rested on the scope, not abandonment, of the easement, as the

taking of a reversionary interest in a right-of-way is compensable regardless whether

the right-of-way has been abandoned. Further, according to Phillips, the scope of the

easement granted under the 1875 Act was limited to railroad use. Finally, Phillips

argues that all cases arising under the 1875 Act involve the same or similar facts, so the

language in Preseault I concerning the need to examine each parcel separately to

determine compensation rights, if any, does not apply to 1875 Act claims.

As an initial matter, we agree with Phillips that, in Hash II, we determined that

there was liability for a taking, not simply that there was an easement. Not only did we

state that “these owners’ property interests were taken for public use,” but we then

2008-5042 8
directed the district court to “determine just compensation on the conditions that apply to

these landowners,” i.e., to determine damages based on our determination of liability.

Hash II, 403 F.3d at 1318. Our decision therefore unambiguously found takings liability.

What is left for us to determine here is the basis for our holding of liability in

Hash II, and whether it requires us to hold that conversion of a railroad to a public trail

under the 1875 Act is a taking per se. In Preseault I, the Supreme Court held that if a

conversion to a trail gives rise to a taking, compensation is available, satisfying the

requirements of the Fifth Amendment. 494 U.S. at 4-5. However, the Supreme Court

added that “under any view of takings law, only some rail-to-trail conversions will

amount to takings. . . . Others are held as easements that do not even as a matter of

state law revert upon interim use as nature trails.” Id. at 16 (internal citation and

footnote omitted). The Court declined to decide whether a taking had occurred. Id. at

17. Preseault then brought a claim in the Court of Federal Claims for a taking, and,

deciding the appeal en banc, we laid out a framework for deciding takings liability in

cases arising under the Rails-to-Trails Act. Preseault II, 100 F.3d 1525.

Under Preseault II, the determinative issues for takings liability are (1) who owns

the strip of land involved, specifically, whether the railroad acquired only an easement

or obtained a fee simple estate; (2) if the railroad acquired only an easement, were the

terms of the easement limited to use for railroad purposes, or did they include future use

as a public recreational trail (scope of the easement); and (3) even if the grant of the

railroad’s easement was broad enough to encompass a recreational trail, had this

easement terminated prior to the alleged taking so that the property owner at the time

2008-5042 9
held a fee simple unencumbered by the easement (abandonment of the easement).

100 F.3d at 1533.

We conclude that Hash II does not preclude the trial court from deciding either

the scope of the easement granted under the 1875 Act or, if the scope was broader

than railroad use, whether in this case the easement was abandoned. Regarding the

ownership of the underlying estate, neither party disputes that in this case, in which the

railroad acquired the right-of-way under the 1875 Act, the railroad acquired only an

easement under the Hash II analysis, leaving the residual estate in the hands of Phillips

and only the scope and abandonment issues in question. Moreover, we agree with the

government that Hash II was decided as a question of abandonment. As we stated in

Hash II, “[o]n the railway’s abandonment of its right-of-way these owners were

disencumbered of the railway easement, and upon conversion of this land to a public

trail, these owners’ property interests were taken for public use, in accordance with the

principles set forth in the Preseault cases.” 403 F.3d at 1318 (emphasis added).

Therefore, our holding in Hash II that the conversion to a trail was a taking rested on the

prior conclusion that the railway abandoned the right-of-way. The taking occurred

separately, presumably upon issuance of a Notice of Interim Trail Use or Abandonment

under the Rails-to-Trails Act. See Barclay v. United States, 443 F.3d 1368, 1374.

In Preseault II, we also held that abandonment was a question of “fact, and the

fact that the question relates to a right of way taken by a railroad company does not

make it one of law.” 100 F.3d at 1546 (internal citation and quotation marks omitted);

Thus, the question whether the railroad has abandoned its right-of-way in this case

cannot be governed by Hash II, which occurred with an inherently different set of facts.

2008-5042 10
For example, we do not know in Hash II how long the railroad corridor had gone

unused. Accordingly, Hash II cannot have held that conversion of an 1875 Act right-of-

way into a trail is, per se, abandonment.

Hash II decided that the railroad had abandoned its right-of-way under the facts

of that case, but the question remains whether Hash II also decided that the scope of

the easement provided by the 1875 Act excluded trail use. In Preseault II, we decided

that issue, viz., the scope of an easement, based on a government admission that the

scope of the original easement in that case was limited to railroad purposes, 100 F.3d at

1541-44, but here the government argues that the easement provided by the 1875 Act

is not limited to railroad purposes, making no such admission as in Preseault II.

Because the parties did not argue scope in Hash II, there was no such admission

limiting the scope of the 1875 Act easements to railroad purposes in Hash II either.

Because Hash II states that its holding followed “the principles set forth in the Preseault

cases,” and the Preseault cases addressed only a situation in which the government

conceded that the original easement was limited to railroad purposes, it cannot be

correct that the holding of Hash II precludes examination of the issue of scope here.

The question of the scope of the easement provided by the 1875 Act therefore has not

been addressed in this court and needs to be first decided by the Court of Federal

Claims.

Although it may be, as Phillips argues, that the scope of the easement provided

by the 1875 Act does not encompass trail use, irrespective of when the land was

conveyed to a private party, neither party has extensively briefed the question, and the

Court of Federal Claims did not address it; instead, the court’s opinion and the briefing

2008-5042 11
before this court focused on whether Hash II dictates liability in this case. Because we

hold that Hash II did not decide the scope of the easement granted under the 1875 Act,

and the abandonment determination was limited to the facts of that case, we vacate the

court’s judgment and remand for further consideration of the dual questions whether the

easement in this case covers trail use and, if so, whether the railroad terminated its

right-of-way by abandonment.

CONCLUSION

Accordingly, the judgment of the Court of Federal Claims is vacated and the case

is remanded for further action consistent with this opinion.

VACATED and REMANDED

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