The shifting sands of property rights, federal railroad grants, and economic history: Hash v. United States and the threat to rail-trail conversions.

• Author: Wright, Danaya C.

1. INTRODUCTION II. FEDERAL RAILROAD LAND-GRANT POLICIES III. THE SHIFTING SANDS OF FGROW PROPERTY RIGHTS IV. ABANDONMENT, RAILBANKING, AND JUST COMPENSATION V. HASH V. UNITED STATES VI. HOMESTEAD PRECEDENTS HOLDING THAT PATENTEES HAVE NO RIGHTS IN FGROW ABSENT EXPLICIT LANGUAGE IN THEIR PATENTS VII. CONGRESS'S SHIFTING RESPONSES TO RAILROAD FORFEITURES AND ABANDONMENTS VIII. ABANDONMENT PURSUANT TO 43 U.S.C. [section] 912 IX. SCOPE OF THE FGROW EASEMENT X. HASH PROGENY XI. CAN HASH BE LIMITED? XII. CONCLUSION I. INTRODUCTION

   Rarely does a single case, especially out of a circuit court, threaten to undermine an entire area of well-established (and correct) case law interpreting numerous federal statutes. But that is precisely the situation arising in the context of the conversion of federally-granted railroad rights-of-way (FGROW) (1) to recreational trails under the railbanking statute. (2) In 2005, the Federal Circuit, in Hash v. United States, (3) decided the question of whether the federal government retained any underlying interest in FGROW when it made subsequent land patents of the adjoining land. In holding that the government's servient fee interest (4) in FGROW passed to patentees at the time of original homestead patents, the court went against decades of precedents finding that the federal interest in railroad land grants was excluded from subsequent patents. (5) More worrisome, however, is that later courts have interpreted dicta in Hash to compel a finding that any preservation of FGROW for rail-trail conversion constitutes a taking requiring compensation. (6) This decision, in conjunction with a handful of lower court rulings, threatens to seriously undermine this country's commitment to railbanking (the preservation of unused rail corridors for future reactivation) (7) and its support of rail-trail conversions, and creates a windfall for private landowners at the expense of the public lands. And this is not just about hard cases making bad law; (8) these cases misuse history, distort legal principles, and upset well-established precedents in a way that profoundly undermines our commitment to the rule of law.

   Since the 1830s, the federal government has granted to railroads a right-of-way across public lands for the location of their roads. (9) Between 1852 and 1862 this right-of-way was granted pursuant to a general statute giving charter railroads a right-of-way 100-feet wide, plus timber, gravel, and the right to build suitable drains. (10) Between 1862 and 1871 the government granted 100-foot or 200-foot rights-of-way to the transcontinental railroads via individual acts of Congress, in addition to alternating sections of land on either side of the roadway for sale to raise construction funds. (11) This lavish land grant policy, combined with grants to the states which were to be transferred to the railroads, resulted in the transfer to private railroads of over 130 million acres of public land. (12) After 1871, dissatisfaction with the railroads and their delays in bringing this public land to market led Congress to discontinue the checkerboard grants, and to pass another general right-of-way act in 1875 to grant to any railroad a 200-foot right-of-way through the public lands but no additional lands for sale (1875 Act). (13) The 1875 Act has remained unchanged as 43 U.S.C. [section][section] 934-39, even though there are no modern railroads engaged in new construction. (14)

   In 1916, railroad mileage in this country reached its peak of 270,000 miles, only to dwindle to half that amount by the present day. (15) Competition from trucking and airlines, in addition to consolidations and mergers, has caused the majority of these railroad miles to disappear, primarily to the adjacent landowner who absorbs the abandoned corridor land under a variety of statutory and common law mechanisms. (16) Pursuant to a 1922 statute, the federal interest in abandoned FGROWs would pass to either a municipality, be transferred for a public highway, or pass to adjacent landowners. (17) In 1983, however, a growing environmental and alternative transportation movement successfully urged passage of amendments to the National Trails System Act (NTSA) (18) to save these railroad corridors for future reactivation and interim trail use. (19) If the proper federal process is followed, a railroad can "railbank" its corridor for future use while transferring its ownership (and liabilities) to a trail sponsor for linear trail and greenway use. (20) In 1988 Congress realized that its policy of disposing of abandoned FGROW was inconsistent with the railbanking policy, and thus it enacted further amendments to the NTSA providing that the federal interest in FGROW would be retained and railbanked, rather than given away to adjoining landowners. (21) These 1988 amendments harmonized the government's dual policies of promoting railroad corridor preservation and recreational trail use. (22)

   Courts have been remarkably inconsistent in their treatment of FGROW, holding that some grants conveyed fee simple absolute to the railroads with no retained interest by the federal government, that others conveyed fee simple determinable with an implied possibility of reverter upon abandonment, and that others conveyed an easement. (23) Both the defeasible fee and easements entail a retained interest in the government which would be subject to disposal only upon the railroad's abandonment. In 1922, Congress adopted 43 U.S.C. [section] 912 (24) to dispose of its retained interest in FGROW held as defeasible fee, but it was unclear whether it would also apply to FGROW held as easements, especially since the courts did not adopt the easement interpretation until twenty years after section 912 was passed. (25) Despite the uncertainty in the terminology of the abandonment statute, however, courts have consistently applied it to all retained interests, whether possibilities of reverter or servient fee interests, on the assumption that whatever interests the government retained in these railroad grants should be disposed of consistently with Congress's clear mandate. (26) At no time, however, did Congress think that its retained interest in FGROW had transferred to homestead patentees, either before or after 1922, and was therefore not available for disposal under section 912. (27)

   The challenge made on behalf of successors to homestead patentees (28) is based on the argument that the government's interest in FGROW passed to patentees at the time of their original patent. (29) Under this theory, the only parties with interests in FGROW are the railroads and the adjacent landowners, and the government has no property sticks left in the public lands it has given away. Thus, the 1922 abandonment act and the 1988 NTSA amendments disposing of the federal interest in FGROW were a waste of Congress's time because there is no federal interest in FGROW where the adjoining land has been patented to a private individual. Congress cannot subsequently pass an act to dispose of or retain interests in land that it no longer possesses, and if it does it is guilty of a taking without just compensation. (30)

   When the federal circuit in Hash v. United States upheld the claims of the homesteaders, it profoundly altered decades of precedents, including United States Supreme Court precedents, holding that the federal government had a retained interest in FGROW that could be disposed of or retained pursuant to federal statute, principally 43 U.S.C. [section] 912. Furthermore, because no federal interest was deemed to have passed to anyone until at least one year after the railroad had abandoned its FGROW, which must be determined only by act of Congress or decision of a court of competent jurisdiction, Congress could amend its policies of disposal and choose to retain the federal interests in order to preserve railroad corridors for future rail or other transportation purposes. The Hash decision, however, found that the federal property interest was transferred out of federal ownership at the time homestead patents were issued and that later statutes dealing with those interests have no effect. (31)

   Since 2005 at least five other courts have followed the Hash decision on issues they believed followed from the finding that the government has no retained interest in FGROW, (32) even though these ancillary issues were not briefed nor argued before the court. They felt the Hash court had mandated certain findings in an offhand remark. (33) For many reasons, this decision is problematic, and this Article explains why. After first giving a history of federal/railroad land relations (Part II), federal court interpretations of FGROW interests (Part III), and the mechanics of abandonment, railbanking, and takings (Part IV), I briefly summarize the Hash case and its resolution (Part V). I then analyze the case from a number of different perspectives: the rights of homesteaders under federal patents (Part VI), Congress's statutory responses to forfeited and abandoned FGROW (Part VII), the applicability of section 912 to all types of FGROW (Part VIII), and the scope of FGROW held as easements (Part IX). I then give a brief examination of the numerous judges who have felt compelled to follow Hash, even though they have not done so without criticism (Part X) and conclude by offering one way to limit the effects of this ill-reasoned decision in order to protect important federal transportation interests (Part XI). I only hope that a more scholarly and thoughtful look at this issue may help limit the damage of the Hash case and/or justify its reversal.

2. FEDERAL RAILROAD LAND-GRANT POLICIES

   Throughout the nineteenth century, the federal government actively facilitated railroad construction. (34) In 1834, Congress began granting to individual railroads rights-of-way through public lands for a width of 60-100 feet for road construction to aid the fledgling railroads all along...