Condemnation - an alternative means for railroad line acquisitions.

Within recent years there has been a resurgence of interest in using existing railroad lines and railroad rights-of-way for local commuter train operations. Salt Lake City, Houston, and Seattle are among the communities which are in the process of doing so, and Los Angeles, Miami, and Washington

are among the metropolitan areas which lately have begun local commuter train operations over existing railroad lines or within existing railroad rights-of-way. Purchasing such railroad lines or railroad rights-of-way or simply gaining access to them at times have proved to be arduous and costly undertakings for the communities involved. The railroads have been accused at times of having exaggerated the need for their lines or inflated the values of their rights-of-way when negotiating for their sale or lease. The communities' frustration suggests the desirability of considering condemnation as an alternative means for procuring needed railroad lines or railroad rights-of-way for local commuter train operations. The purpose of this paper is to explore the legal restraints which may limit the availability of condemnation and the precedents that may encourage the use of condemnation powers to facilitate railroad lines or rights-of-way acquisitions.

ICC's Regulatory Jurisdiction

From a regulatory standpoint, in almost every instance the owners and operators of existing railroad lines and railroad rights-of-way are the railroads which are subject to the jurisdiction of the Interstate Commerce Commission, pursuant to Chapter 105 of Title 49 of the United States Code. As such, they are foreclosed from discontinuing service upon, or abandoning, their lines absent the authorization of the ICC, under 49 U.S.C. 10903(a). That the ICC's jurisdiction is exclusive and plenary, preempting any state intrusion in this area, was enunciated by the Supreme Court in Chicago & N.W. Tr. Co. v. Kalo Brick & Tile, 450 U.S. 311 (1981), an action for damages stemming from the cessation of services following an abandonment of a railroad line approved by the ICC. In holding that the damage action was preempted by the federal regulatory scheme, the Supreme Court, 450 U.S. At 321, said:

The exclusive and plenary nature of the Commission's authority to rule on carriers' decisions to abandon lines is critical to the congressional scheme, which contemplates comprehensive administrative regulation of interstate commerce. In deciding whether to permit an abandonment, the Commission must balance "the interests of those now served by the present line on the one hand, and the interests of the carrier on the other." Purcell v. United States, 315 U.S. 381, 384 (1942). Once the Commission has struck that balance, its conclusion is entitled to considerable deference. "The weight to be given to cost of a relocated line as against the adverse effects upon those served by the abandoned line is a matter which the experience of the Commission qualifies it to decide. And under the statute, it is not a matter for judicial redecision." Id. at 385.

The Supreme Court's 1981 decision was consistent with its earlier rulings in Thompson v. Texas Mexican Ry. Co., 328 U.S. 134 (1946), in which it held that the host railroad could not evict the grantee railroad, as provided by the trackage rights agreement, absent the ICC's abandonment authorization, and Smith v. Hoboken R.R. Warehouse & S.S. Connect. Co., 328 U.S. 123 (1946), in which it held that the Bankruptcy Court could not approve the termination of a lease of a railroad line, without the ICC's having approved the debtor's abandonment of operations on it.

The sweeping language of the Supreme Court's opinion in the Kalo case was foreshadowed by earlier lower court decisions deferring to the exclusive and plenary jurisdiction of the ICC to approve railroad abandonments and overruling local authorities in their efforts to enact restraints upon the railroad's use of their lines or rights-of-way. In City of Des Moines v. Chicago & N.W. Ry. Co., 264 F.2d 454, 457 (8th Cir. 1959), the court denied the city's request for injunctive relief to compel the railroad to remove its tracks from the city's streets as directed by a resolution of the City Council, saying:

|r~egardless...of whether a valid forfeiture would have existed under the ordinance |originally according the railroad access to the City's streets~, a court could still not decree an ouster of the Railway from the street, so long as this might mean an abandonment or discontinuance of a portion of the Railway's line or operation in the interstate field, until the Interstate Commerce Commission gave its permission to such abandonment or discontinuance being made |citations omitted~.

Similarly, In New Orleans Terminal Company v. Spencer, 366 F.2d 160 (5th Cir. 1966), cert denied, 386 U.S. 942 (1967), the court set aside the city's ordinances requiring the removal from the city's streets of the railroad's tracks. The court, 366 F.2d at 166, said, "|The railroad's lines~ cannot be abandoned, nor can their abandonment be required by Jefferson Parish unless a certificate of abandonment be issued by the Interstate Commerce Commission."

State courts, no less than the federal courts, have recognized the exclusive and plenary jurisdiction of the ICC to authorize the abandonment of railroad lines and have held preempted any intrusive state or local enactments. For example, in Anne Arundel Cty. v. Baltimore & Annapolis R. Co., 416 A.2d 777 (Md. App. 1980), the court, while deeming proper a declaratory order proceeding to determine the county's property interest in railroad right-of-way, refused to order ejectment of the railroad, even if the county were found to have title to the fee. The court, 416 A.2d at 784, declared that such ejectment "would serve to effect a line abandonment without regard to or compliance with the I.C.C. conditions, and it would therefore be in derogation of the prevailing jurisdiction of that Federal agency."

Sovereign's Condemnation Power

It may well be that the courts have been more concerned with form than substance, but, notwithstanding the deference which has been paid to the federal regulatory scheme and the exclusive and plenary jurisdiction it confers upon the ICC to authorize railroad abandonments, reflected in the foregoing decisions, the courts have been no less emphatic in recognizing the primacy of the sovereign's exercise of the right of eminent domain, even when it comes to railroad lines and railroad rights-of-way. It is that recognition which gives encouragement to the possible use of condemnation as an alternative means for obtaining access to railroad lines or railroad rights-of-way for local commuter train operations. While railroad lines or railroad rights-of-way heretofore have not been condemned to be used for local commuter train operations, the precedent cases upholding the sovereign's exercise of the right of eminent domain to take railroad properties for public purposes would seem to suggest that such takings may be affected.

To be sure, the recent growth of local commuter train service may be said to belie the need for the exercise of condemnation powers. The communities which have introduced local commuter train operations have been able to come to terms with the railroads to gain access to their lines or right-of-way, even without the threat of condemnation. Nevertheless, communities may have a stronger position at the bargaining table if they and the railroads understood that condemnation were available as an alternative means of procuring railroad lines or railroad rights-of-way if their negotiations failed.

The federal regulatory scheme relating to railroads and their properties hereto has been held not to foreclose the sovereign's exercise of its inherent powers of eminent domain, and neither the United States nor a state has been deemed unable to condemn railroad properties for public purposes. The leading Supreme Court decision probably is United States v. Gettysburg Electric Ry. Co., 160 U.S. 668 (1896), in which the Supreme Court sustained the right of the federal government to condemn property already dedicated to a public use. There the land sought to be taken was a railroad right-of-way, and the land to be taken was to be added to the Gettysburg Memorial Battlefield and Park. In upholding the paramount right of the United States to condemn this property, the Supreme Court, 160 U.S. at 685, said, "The power of Congress to take land devoted to one public use for another and a different public use, upon making just compensation, cannot be disputed." United States Jotham Bixby Co., 55 F.2d 317, 318 (N.D. Cal. 1932), was a lower court decision to the same effect.

In Adirondack R. Co. v. New York, 176 U.S. 335 (1900), the Supreme Court again upheld a taking of railroad properties, this time by the State of New York of lands that previously had been dedicated for the construction of a railroad line. The Supreme Court, 176 U.S. at 346-47, noted that:

Counsel |correctly~ concedes that the sovereign power of eminent domain is inherent in government as such, requiring no constitutional recognition, and is as indestructible as the state itself; and "that all private property, tangible and intangible, is held subject to the exercise of the right by the sovereign power, even that which may already be devoted to a public use."

Although the Gettysburg and Adirondack cases predated the enactment of the Transportation Act of 1920 and the authority it conferred upon the ICC to approve railroad abandonments, another Supreme Court case, State of Georgia v. City of Chattanooga, 264 U.S. 472 (1924), was decided afterwards and was no less emphatic in upholding the right of a state, and, when delegated, a city, to exercise its powers of eminent domain to condemn railroad properties -- in that instance, a railroad yard to be used for the extension of a city street. The Supreme Court, 264 U.S. at 480, said:

The power of eminent domain is an attribute of sovereignty, and inheres in every independent state. The taking of private property for public use upon just compensation is so often necessary for the proper performance of governmental functions that the power is deemed to be essential to the life of the state. It cannot be surrendered, and, if attempted to be contracted away, it may be resumed at will, and extends to all property within the jurisdiction of the state--to land already devoted to railway use, as well as to other lands within the state |citations omitted~.

The pronouncements by the Supreme Court, as unequivocal as they have been, have not been followed by widespread condemnations of railroad lines or railroad rights-of-way. To the contrary, the condemnation power has been sparingly used and, evidently, not at all in aid of local commuter train operations. The United States, on numerous occasions, has taken railroad properties for flood-control purposes: United States v. Chicago. B. & O.R. Co., 90 F.2d 161 (7th Cir. 1961); United States v. Chicago B. & O.R. Co., 82 F.2d 131 (8th Cir. 1936); United States v. Certain Tracts of Land etc., 225 F. Supp. 549 (1964); United States v. 27.7 Acres of Land etc., 178 F. Supp. 712 (W.D. Ark. 1959). Indeed, in one of the cases, United States v. Certain Tracts of Land etc., supra, 225 F. Supp. at 551-52, the court dismissed the notion that such a taking resulted in an abandonment. Section 1(18) of the Interstate Commerce Act, predecessor to 49 U.S.C. 10903, said the court

is clearly directed to an intentional and voluntary act of abandonment on the part of the railroad. The taking of the Union Pacific's property by the exercise of the sovereign power of eminent domain is an act entirely beyond the railroad's control and is forced upon it against its will by the |United States~ herein |citation omitted~.

States, no less than the United States, have taken railroad properties for flood control purposes. In Chicago R.I.G. Ry. Co. v. Tarrant County W.C. & L. Dist., 76 S.W. 2d 147, 148 (C.C.A. Tex. 1934), the court rejected the railroad's argument that its land could not be taken until a Certificate of Abandonment had been secured from the ICC and noted, "|T~he right of the state to exercise its power of eminent domain has not been surrendered to the Federal government, even though interstate commerce may be indirectly or incidentally involved."

A question that frequently arises is whether there had been a sufficiently clear delegation of the sovereign's powers of eminent domain to permit the condemnor's taking of properties already committed to a public use for yet another public use. That issue is well illustrated by two California decisions. In State Board of Public Works v. City of Los Angeles, 64 Cal. Rptr. 476, 256 Cal. App. 2d 930 (2d Dist. 1968), the court upheld the taking of the city's park land to be used for a parking lot for the California Museum of Science and Industry, the court having concluded that California's inherent power of eminent domain was paramount. On the other hand, in San Bernardino County Flood Control District v. East San Bernardino County Water District, 75 Cal. Rptr. 24, 269 Cal. App. 2d 514 (4th Dist. 1969), the water district was found not to have been delegated powers of eminent domain overriding the public use to which the flood control district had committed the beds and banks of certain watercourses. Having concluded that the water district's proposed use was inconsistent with that of the flood control district, the court held that the water district was not authorized to maintain its action in eminent domain.

In Elberton Southern Railway Company v. State Highway Department, 89 S.E. 2d 645, 211 Ga. 838 (Ga. 1955), the court upheld the condemnation of a three-mile strip of the railroad's right-of-way for the construction of a public road, finding, 89 S.E. at 649, that the highway department had been vested with "the power and authority to condemn the property already devoted to a public use and appropriate it to another and different public use, by paying just compensation therefor." It continued:

|T~he fact that the taking of the property sought to be condemned may put the railway company to additional expense in maintaining that part of its property which remains, and interfere with its use of mechanical equipment in the maintenance of its track and roadbed, are questions which relate to the value of the property taken, and the consequential damages to the remaining property, and not to the right to condemn.

So, too, in Florida East Coast Ry. Co. v. City of Miami, 372 So. 2d 152 (Fl. App. 1979), the court upheld the city's condemnation of a railroad marine terminal for park purposes pursuant to legislation specifically conferring such eminent domain jurisdiction. The court, 372 So. 2d at 157-58, said:

It is...clear beyond any hope of successful contradiction that this special act |of the legislature~ expressly authorizes the condemnation of railroad property by the City of Miami within the City's municipal limits regardless of whether the railroad is using or occupying the property. Under the law, the defense that the subject property was necessary for the successful operation of the railroad was, therefore, not available as a defense to the taking herein.

In contrast, in Kansas City v. Ashley, 406 S.W. 2d 584 (Mo. 1966), the city was held to be without jurisdiction or power, either expressly or impliedly, to condemn an operating railroad's right-of-way lengthwise for a public highway. The court, 406 S.W. 2d at 589, said:

The general rule is stated in 29A C.J.S. Eminent Domain 74, page 326: "...property already devoted to a public use and not be taken for another public use which will totally destroy or materially impair or interfere with the former use, unless the intention of the legislature that it should be so taken has been manifested in express terms or by necessary implication, mere general authority to exercise the power of eminent domain being in such case insufficient."

Compatible Public Uses

The foregoing cases would seem to indicate that a state or, by express delegation, a municipality would be able to condemn railroad lines or railroad rights-of-way for local commuter train operations. Certainly, a state or municipality would be able to declare that it is in the public interest that local commuter train operations undeniably are a means of alleviating the highway congestion and reducing the air pollution that driving to and from work occasions. That being the situation, there would appear to be no reason why railroad properties cannot be condemned for local commuter train operations, conditioned, of course, upon the railroad's being compensated for the taking.

What makes exploring the use of condemnation powers all the more intriguing, however, is that local commuter train operations in many instances can be conducted without disturbing a railroad's freight train operations. New York, Chicago, and Boston are among the cities enjoying an abundance of local commuter train service performed on the tracks of railroads that continue to conduct freight train operations upon them. In other words, commuter train operations often can be conducted consistently with a railroad's freight train operations. Nevertheless, as the experience of San Diego, Long Beach, and Washington attests, a railroad may be no more ready to afford access to its tracks for the operation of local commuter trains than it is prepared to sell its railroad lines or railroad rights-of-way altogether. An easement sufficient for the operation of local commuter trains, however, may be condemned far more easily than the railroad lines or railroad rights-of-way themselves, for such a taking may be found to be consistent with the railroad's use of its tracks for the conduct of its freight train operations.

A further question that frequently arises in condemnation cases is whether the proposed public use is compatible with the prior public use, whether the exercise of the eminent domain powers to obtain the second public use will not impair materially the exercise of the first public use. The rule that obtains is set out in 1 Nichols on Eminent Domain 2.2|8~, as follows:

A particular public easement may be imposed upon land already subject to a different public easement without express legislative authority if the exercise of the second easement will not interfere with the exercise of the first, or if the amount of land taken is not enough to impair the use of the remainder for the original purpose. This rule has been extended so as to justify the imposition of an easement without express legislative authority upon land already devoted to a different public use, even to the detriment of the prior use, when such detriment is trivial and the two easements can be exercised at the same time without serious conflict, and the expense of laying out the second work over private land would be wholly disproportionate to the injury to the earlier undertaking from the encroachment upon its location.

Similarly, the rule is stated in 26 Am. Jur. 2d 99 Eminent Domain, p. 756, as follows:

The rule is settled that under a general law permitting cities to care for their internal affairs, a municipality may condemn railroad property for municipal purposes, provided the use for which the railroad property is employed is not thereby materially injured or destroyed and provided the railroad use and the municipal purpose for which the property is condemned may coexist without impairment of the former.

Accord, 29A C J.S. 80 Eminent Domain, p. 340.

Examples of the condemnation of easements across railroad properties for public uses which were found to be compatible with the railroads' operations have included the laying of natural gas pipelines beneath their tracks, Kansas City South, RY. Co. v. Arkansas Louisiana Gas Co., 476 F.2d 829, 832 (10th Cir. 1973); the stringing of electric transmission lines above such tracks, White Mountain Power Co. v. Maine Central R. Co., 213 A. 2d 805 (N.H. 1965); and the appropriation of air space above the railroad properties to accommodate an airplane approach pattern, Florida East Coast Ry. Co. v. Broward County, 421 So. 2d 681 (Fla. App. 1982).

The most frequent exercise of delegated eminent domain powers for the taking of railroad properties is in connection with the construction of city streets. In Chicago & North Western Ry. Co. v. City of Rochester, 331 F. Supp. 47 (D. Minn. 1971), a portion of the railroads right-of-way was condemned for the installation of a street crossing. The court, 331 F. Supp. at 51, although conceding, as the railroad maintained, that the railroad might need to move its tracks and contend with greater congestion as a result of the installation of the street crossing, nevertheless found the taking to have been proper, noting:

it is undisputed that the property in question is already dedicated to a public use. Clearly the general rule is that land already devoted to such a use may not be taken where the effect of this taking would be to extinguish or materially injure the prior use. But the burden is upon the railroad to prove that the subsequent dedication for the street would restrict the use of the right-of-way and deprive the company of its beneficial use and enjoyment of this right-of-way |citations omitted~.

Similarly, in Georgia Southern and Florida Ry. Co. v. State Road Department, 176 So. 2d 111 (Fl. App. 1965), the court upheld the condemnation of a strip of land along the railroad's right-of-way to be used for drainage in connection with a widened public road. The court, 176 So. 2d at 113, noted, "|T~he taking would not materially impair or interfere with the public use |railroad~ to which the parcels are now being devoted; and so the general powers of eminent domain are adequate for the purposes of this suit."

It is likely that a condemnation court would find that a community's taking of excess land with a railroad's right-of-way to enable it to lay tracks and to build station platforms to be used exclusively in its operation of local commuter trains would not interfere with the railroad's freight train operations. To be sure, the railroad would need to be compensated for the taking, including indemnifying it for any losses it may incur as a result of the operation of local commuter trains within the railroad right-of-way, but the taking for local commuter train operations very well may be found compatible with the public use to which the railroad would put the remainder of the right-of-way in the conduct of its freight train operations.

Similarly, a condemnation court may be likely to find a community's taking of an easement over a railroad's tracks sufficient to enable it to conduct local commuter train operations to be consistent with the railroad's continued operation of its freight trains. The public interest to be served by having the community operate local commuter trains may well be found to be compatible with the railroad's public use of the railroad line for freight train operations. Indeed, it may well be that the exercise of eminent domain powers to permit the operation of local commuter trains would not materially impinge upon the railroad's freight train operations and, accordingly, not constitute either a discontinuance of railroad service or an abandonment of a railroad line, within the meaning of the federal regulatory scheme.

In sum, the foregoing authorities suggest that, if a municipality has been vested with express authority to exercise eminent domain powers to condemn properties committed to a public use for other public uses, it would be able to exercise such authority to acquire a railroad's line or its right-of-way for the operation of local commuter trains, regardless of the effect upon the railroad. If, however, the municipality has only general powers of eminent domain, it, nevertheless, would be able to condemn excess land within a railroad's right-of-way or an easement over the railroad's line consistent with the railroad's proper use of its properties, enabling the railroad to operate its freight trains and otherwise to fulfill its common carrier obligations.

Mr. Kahn is partner, Klein & Bagileo, Washington, DC 20007.