court my name is scott ballenger and here for the appellate the union pacific railroad we have a lot of rather technical issues to discuss if i may i'd like to start a little bit with the practical big picture i was interested  this case is about the statutes that authorize the construction of the original transcontinental railroads and its commercial development along the lines of these railroads was in large measure the whole point of th to that end very early on the supreme court held that the pretty eight hundred seventy one statutes granted these rights of way to the railroads in feeling subject only to a possibility of rebirth in the united states and then reliance on those holdings the railroads ha always least portions of these rights of way to private commercial enterprises like i try to pay attention mike hopefully a good judge would think you know a little bit about this but you come down to whether or not there's a real purpose to be served here and whether the whether really focus one way or the other purpose because i don't know how many of these pipelines can be for eight days before i came after eighty seventy five but it seems to me that there's a dichotomy between cre and post eight hundred seventy same as the eight hundred seventy five act in requiring a real purpose in the pipeline serves some railroad purpose you know i think it would be a grave mistake to make that assumption the supreme court has held the opposite for one hundred fifty years and it really really matters maybe not so much for this case but for for all of the next hundred cases that are going to be presented the pre eight hundred seventy one statutes granted this land in fiji and in reliance on that holding by the supreme court the railroads have leased this property for all kinds of uses for one hundred  practical standpoint because there there was a collateral estoppel question briefed and raise below and as i read the district court's order on e r twelve the district court order said in a subsequent order the court will discuss whether union parallel arizona litigation where judge campbell joined issue with that and held conclusively that union pacific is not bound by collateral estoppel on these issues that question is not before this court it has not been resolved in this case it hasn't been addressed in the certified water and this court has held several times that the letter and the spirit of twelve ninety to be do not permit the court of appeals and the twelve ninety to be appealed to reach beyond the certified questions and here we have to certify questions and i'm not ducking your honest your honor we have to deal with the real repurpose if you don't have to but you'd like us to because you'd like a ruling contrary to what the california court of appeal held absolutely your honor because the california court of appeal ruling is incorrect and it's causing enormous mischief now can i kind of address the practical issue here that pre date hundred seventy one statutes granted for four hundred foot rights of way there broader than a football field and the railroad in most instances only had to fence out to fifty feet because that's what they needed for safety thousands of miles along these pre one rights of way are leased to farmers and ranchers so that they can graze their their cows and plant their crops right up to the fence and so that the railroad doesn't have to worry about adverse possession and that  five i don't know what my colleagues will say but i tend to agree with you one is a fee the other was an easement understand the mineral issue and all of that but i just think that i don't know how much of the pipeline predates eight hundred seventy five post dates it it seems like you're looking for something that's worth theoretical than real maybe yes maybe no i have no clue but if it is a well a railroad purpose and you seem to shy away from that you're not comfortable with that argument apparently when it's really comfortable with that argument you are we think held very clearly that he was not dismissing on any kind of pleading failure his view was that even after we allege that this pipeline transports millions of gallons a year of fuel to dedicated railroad terminals for use in locomotives saving the railroad millions of dollars a year that that still wasn't good enough and obviously that's at least plausibly good enough to establish a railroad purpose your honor this is the exact equivalent of the water pipelines that railroads built in the one nine hundred century to bring water from streams and lakes to water stations along the railroad so that but steam locomotives would have a source of water in order to drive their pistons and now the railroad runs on diesel fuel this pipeline was built by an affiliate of the railroad in the one nine hundred fifty s and  transports millions of gallons a year of fuel that is used by the railroad and the only argument how do we know that because that is the allegation in union pacifics proposed amended complaint which we were denied we have to  counter claim complaint asking for a declaration that we were allowed to operate this pipeline or authorize this pipeline and they came back what was the theory under the incidental use doctrine originally when you when you contemplate a draft th counterclaim well your honor under the present for the present hundred seventy one stretches of this pipeline it's that we on the land in fee for all of the property that we have bought in fee it's that we own the land in fee for any stretch that is governed by the eight hundred seventy five act yes the the original theory has always been that this would be authorized by the incidence of use doctrine and again under this court's precedents we were plainly entitled to leave to amend if there was any deficiency in that initial complaint and the district court didn't say otherwise the district court said i'm not deciding on the basis of any pleading deficiency by union pacific purely on the basis that those proposed amended allegations would still be futile if you go back you want to have a seventy five are you talking about if somehow we were unable to establish a railroad purpose then for those portions of the line that turned out to be eight hundred seventy five that lines then we'll have to figure out what that means and  thousands of miles of the pretty eight hundred seventy one lights of way the feel rights of way and that issue is incredibly important the santa fe pacific pipelines case got it wrong and it threatens the viability of not just thousands of of leases to individual farmers and ranchers but lots of commercial enterprises that ok didn't these rights of way utility facilities public streets and highways are located in the outer reaches of these rights of way that  if the the i said you given the age of this some of these lines i suppose that might be one practical reason for us to reach the question as to the eight hundred seventy one the pre eight hundred seventy one acts because if we went back and you couldn't prove a railroad purpose then you'd want to at least rescue as much of the tracks as you can under the pre eight hundred seventy one well  i think that it would be unwise to try and prejudge all of the cases that you know may arise there will be a lot of different factors but i think it's a tell this court something that you have briefs not just from the chamber of commerce but from the united states of but one more thing your honor the only reason that the district court doubted that this pipeline served a railroad purpose i believe is that the district court made the same state as the state court made of thinking that a pipeline that also serves other commercial customers automatically can't have a railroad purposes and matter of law and this court should say that's wrong if for example in the one nine hundred to be in court or said that i believe as well that's not correct yeah absolutely and  the grand trunk case and many others in the one nine hundred century if the railroad built a a water line to bring water to the to the railroad line and then had surplus water and wanted to to sell it to local communities or local farmers congress would have matters i think that that issue is not going to be remotely presented in this case we are going to prove millions of gallons a year of fuel transported that we purchased from distant refineries and paid up to transport over this pipeline to use and are about come out if there's nothing in such a motion well i hope that this court will say that the proposed amended complaint that we submitted is sufficient to get past twelve b and then we'll fight on summary judgment and a trial about and i would like to reserve the remainder of my will give you four minute good morning your honour's may please the court barrett volley for the plaintiff's appellate landowners i'd like to jump right into the pre eight hundred seventy one land grant acts third issue here it's the first issue that was certified for appeal from judge selma's order mr belcher suggested that it's it's clear law that the railroad has a few interests and can do whatever it wants from the earth to the sky with those right away under predating seventy one ok that came up it was in the tenth circuit it came up through the district court and the court of appeals and the argument was do we have to show they were a purpose what is the nature of the right away every argument i'm making today was an argument that the united states of america made in that case and they won the first ruling if you look at edge justice douglas's opinion of the court the first issue he addresses is the issue that's here it's not about mineral that's true it's the first one and he doesn't make it tentative he rules that it requires a rubber purpose so let's assume that it requires that we have a purpose physicians that though we have a purpose to be served by these pipelines commercial petroleum pipeline they do not a legit even in the amendment that they put it there that they placed it for purposes of servicing the railroad they do not allege that it's necessary to service the railroad have been litigating union pacific has been litigating with tkinter morgan the pipeline company for decades over the rent payments so this pipeline is a cash cow i understand that that is you know yet telling me this is not the incidental used often doesn't apply at all i think it's fair to look at the instead only use cases now in this context i think you must first look at the statutes and that's the opening of the union pacific case look at section it it says look at section two of the statute and it says we're granting a right of way we're not granting a few we're granting a right away for purposes of a railroad and telegraph line ok so you you have to look at that but it's pretty clear from various cases that the incident to use doctrine doesn't apply so you can build along the train tracks train depots and gas stations communication lines so what's the difference between that and building a pipeline in order to bring the fuel that's necessary to run the trains so to a couple of those specific examples the pose the ground  necessary ground for depots turn that turn out stations things like that they were specifically granted in the statutes that in their water lines if you need a water line to power use a dedicated line so that to serve its trains of fuel that is not what we have here and that's why i judge some of the so what we have here is a commercial line but but the other it is primarily benefiting the railroad that's why it's there so those warehouses and the like they're made for freighting that's what they are for in in the grand trunk case the courts concern and that's the case it's been briefed by my opponents the courts concern and very intricate gives this example we do not want to cause a grain handler who has an elevator who handles grain on and off of the train so lose right to operate because he sells a load of grain to on the spot market and that's not what i'm arguing with the incident rights cases are fine so far as they go but we have to look at the for my position we cited the sparrow case the disproven case and in those cases it talks about the primary purpose the primary purpose is for real routing ok and the ancillary use an ancillary means something that is subservience if in addition to might be for something else ok those cases that those uses are about railroading this use is not and th they have not and they cannot allege that the primary purpose of this is for the railroad i think the where do you get the language that has to be a primary purpose what i think that's part of this exercise a struggling for the test well what do you want to climb elation of the test where did you get the limitation that it has to be primarily used to operate the trains in order to fit under the incidental use doct that the federal case law doesn't even it doesn't go this far to answer the question so the union pacific addresses this issue actually and the great northern states addresses this issue in great northern ok that is an eight hundred seventy five act case the railroad wanted to build three wells and this is not a mineral rights case that's not how this is decided the court in great northern was looking at three wells one was the solely for commercial use one was a mixed and to be refined for diesel fuel for locomotives one was to be used purely for locomotives and the court there said no you cannot do that because you did not need to extract oil for the purposes of the real that's that's not a railroad purpose let me ask you this question if it was that i was factor that the tie a pipeline was built exclusively to transport fuel food strange this serve the trees that were running along the tracks would you have any problem with that i think we would have to look at all the facts but in the abstract in fact in the abstract i think there would be a gre good argument that that was a real repurpose ok so now if half the tracks are used for that half the pipeline would that be different i think it would be a close call and we're nowhere near that right now quarter of it because it is that the standard we have to employ the percentage of the usage of the pipeline for vehicle purposes i think it's i think at some point on that gradient there is a jury question and we have to work out a jury charge on it but we're not there we're not even i don't know what lawyer use you use i to support that thesis it has to mean something it has to mean something and we have multiple supreme court decisions union pacific but at least at this point texas so you yuma up through southern california up to eugene oregon and it runs along the adjacent to the railroad tracks it's not always continuously but there are many areas in which there are an issue in this case in california that it's long are really saying that you have to decide section by section of the pipeline or would one decision be uniform for everything so one decision would be uniform says as could be the easy thing to establish factually a leads you can see that obviously some of that oil is being used to fuel the trades but as relates to the futility argument i think i have to as a matter of fact no i'm not willing to but the attempt at the attempt at the we have to say no that it's none of that is used for real purpose because otherwise it gets them past the pleading stage right i don't think so there has to be a tast plausibility has to be a test of something it can't be a sham will be i think take their representations that that is true that could be a big shock to you if this goes back to a factual inquiry that a considerable amount of that fuel is used for the trade and seems logical that it would be i'm actually excited to have that battle because i think it's going to strongly favor my side because how because this is a purely commercial i'm an instrument case thought i would be says it makes a difference with its commercial i simply disagree isn't there that it's not it's not there it's not the police it's not misleading and keep in mind this issue has been and i think it's appropriate to raise it here the government briefed here as an a government was arguing that it was a very narrow concept but it had it it had to be for the railroad they weren't really looking at ancillary rights and then they won those arguments there that that dealt with exploring the subsurface litera issue once again we understand that you can't dig in take out the resources from the earth that's not what this is all about this is a pipeline this is not really a you know way an operation to dig for minerals fair enough but i i i have a hard time seeing the distinction the way that justice douglas explained it because he was what he ruled was no this is not a fee this this is not a fee and that's exactly what the eighth circuit has rule about dealing with that that's a no no but that's different than a pipeline that's laid of course which is the thing to do with the subsurface extraction a bit what all the supreme court cases say if you if you look at them is that this you look at the statute first it says for railroad or pipeline and that this is a unique bundle of rights that we're talking about mr balancer wants to say we're arguing it's only an easement i'm not we have never and are just have a hard time because you had earlier indicated that  transporting water is ok so i'm looking at the proposed amend the counterclaim paragraph sixteen where it says the pipeline serves a real purpose because union pacific uses capacity on the pipeline to transport millions of gallons of fuel a year purchased directly from third party refineries be a dedicated facilities the private terminals on the railroad line that union pacific owns and it goes on to talk about how it reduces their core railroad operating cost millions of dollars a year i have hard times distinguishing that from transporting water cases talk about lines that were installed to provide water system stations miles of pipeline so your contention is that it is not you use any of that and that is not my contention and that's that is not the proposed then but there has to be a test and what i was just getting to the the new it was that was filed thanks a september first two thousand seventeen m opinion from the new solicitor what union pacific and the reason they never tried to plead this as a r purpose was because they don't want that test for anything they want to be able to do anything they can from the earth to the sky and all of the right away whether it's pretty eight hundred seventy one or eight hundred seventy five the government has vacillated in this position act allow companies to lease portions of their easements to third parties without permit or grant from the a whim here's the test provided that such leases are limited to the surface broadly defined and when they say that they mean everything excluding metals and do not interfere with the continued use of the great road the aso railroad can do anything it wants on any right away so long as it's tin can still seven the one we just read that completely out of this that you know not at all not at all there are differences the branch case pointed out that there are differences one of them one of them is that create hundred seventy five extinguishes upon abandonment so in that sense ok it's not a property right but on all roads means on all of these statutes there's something special they're not just bound by common law they're not just bound by common law it's a bundle of rights needed to run a railroad and there are still a even appreciating seventy one there is a survey in a state and someone owns that it's either a private landowner or it might be the railroad or it might be the government and that's exactly what the and i urge the court to read them closely in the eighth circuit and the tenth circuit they directly control here and they rely on the union pacific decision from one nine hundred fifty six and really just as frank first dissent i will say a careful read of the opinion of the court and union pacific does not allow twenty five times we'll see how that comes out of the well ok that sounds good your honor i appreciate that if i could was served its judgment that the district court reserved its judgment our view is that that is the same issue right it would be it would be an imposition of the bar on the same issue that was litigated between kinner morgan the pipeline company and union pacific for two hundred fifty trial days and multiple rounds of appeal to a final decision in california judge campbell i have a great amount of respect for judge campbell in arizona he found that it was not finally it was not fully litigated that's why he denied collateral stop i respectfully disagree with him there is a case out of the ninth circuit called ready link that i think it's fairly apt and is to follow a case the exact issue remember this was on the same pipeline it's not a different pipeline somewhere else it's the same pipeline they litigate this issue they lost its final and that can be imposed as a bar against them under california law in preclu the issue preclusion issue because if it is judge sonia had reached it yet but it is a legal issue and it is within the four corners of anybody issue even if we decided that it was wrong for the decided we still bound by principles of collateral estoppel that's your thesis right i would look at it the other way around is that you need not address all the issues in this case you can rule on collateral stoppel that's really  at this point the the collateral estoppel issue i don't know that we have just fiction to decide that question i think i think you do i could not find a knight circuit case but the the hearing case from the ninth circuit says affirm on any basis in the record including not reached by the district court so that's one point an application in the context of twelve ninety two b is a  circuit case and i would have i would have to find the the citation but it's in it's in the brief on collateral stoppel reaching to it a related issue in a twelve ninety two even though it wasn't expressly presented in the in the order that most optional to us for us correct i think it's optional and i think the line of cases from you pacific railroad to the present is firmly shows that that our position is correct the judge someone was correct on the predicting seventy one and i know i'm out of time but i would urge the court to either affirm the the finding on the of on the amended pleading or give us a test because we know their test is we when no these eight hundred seventy five act rights of way and the law just doesn't support that the fiberoptic cases that have been decided in recent years that the railroad was only using a small percentage of the five capacity there the department of interior says that as long as it furthers a customers but it was enough the supreme court says that it's served the interests of the railroad to have them there because it increased freight on the railroad now on the the pretty eight hundred seventy one issues the plaintiff urged you to look at the statute there's what there's an important point that didn't make it into our briefs and i think the briefs in this case on both sides are comprehensive and very good but nothing concentrates the mind like preparing for argument if you look carefully at the uni pacific case the core holding of that case is that section three of the one thousand nine hundred two act which reserves mineral glance to the united states has to apply to the right of way grant as well as to the checkerboard land grants that is a holding that the right of way is a fee because if it was an easement you wouldn't need to reserve mineral lands look at the eight hundred seventy five act nothing in the eight hundred seventy five act reserves mineral bans to the united states because congress knew it didn't have to if you're granting an easement there's no need for a reservation a reservation was necessary in the eight hundred sixty two act of mineral lands precisely because congress recognized that it was granting a fee the whole structure of the supreme court's decision in union pacific confirms that and the plaintiff's argument is based on really just a couple of sentences at the beginning of the union pacific decision which could be read to suggest that a railroad purpose is necessary but this isn't the usual case where you have to struggle with what's holding in a supreme court opinion by the end of the union pacific opinion the supreme court has told you very clearly what is holding that case it says we're not going to go back and reconsider or reexamine all of these cases holding that got a fee in those rights of way because it's not necessary to our decision the only issue necessary to resolve the case in front of us is that the none of those prior cases gave the railroads mineral rights that was the sole issue presented and only three years ago in the brandt trust case the supreme court said quote this court previously held that the pretty eight hundred seventy one statutes conveyed to the railroads a limited fee made on an implied condition of river that's just three years ago and it was absolutely crucial to the supreme court's holding in the brick trust case which was that the eight hundred seventy five that grants easements but only because the eight hundred seventy five act granted a fundamentally different interest in the right of way than the prior statutes did so it's very important for this court to answer the first question presented and clarify that the state court was wrong and that these pretty eight hundred seventy one statutes granted the fee  yes your honor the e t s i cases from the late one nine hundred seventy s and early one nine hundred eighty s were wrong when decided but there are even more clearly wrong now and the supreme court has told you that in in the brain trust case the whole premise of those decisions was that in of developments in the modern law of easements it's no longer necessary to draw all these formal distinctions that the courts used to draw between fees and easements and all of that it's really all basically the same and it's really all in the cement and the supreme court really had that issue three years ago in the brant truss case and it said no we indeed previously held that the pre eight hundred seventy one statutes granted the fee that's a quote and we are deciding that the eight hundred seventy five act grants granted an easement because the rights are fundamentally different it's hard to imagine a more clear repudiation of the basic premise of the t s i decisions than that and so with respect to the the eighth and the tenth circuit the supreme court has just passed them by on issue and and it's not just before the supreme court recent decision at the decades before the supreme court's decision in brant trust they were also before the supreme court's clarification and the retreat as case that lower courts are not allowed to intice a pate the overruling of supreme court precedent and basically what those e t s i decisions did was say look we can see whether this is going and it looks to us like these old limited another under the collateral estoppel issue that this court with respect doesn't have jurisdiction to reach that issue of course the court has power in an ordinary case to affirm on any ground disclosed by the record but in the twelve nineteen to be context specific lee this court has said several times that both the letter in the spirit of twelve ninety two be confined this court to the issues that were actually resolved in the order that was certified and here it's even more clear comprehensive survey of what actually happened in the state court litigation and made findings about what was going to get and what was not this court is not going to with no record and no findings to review you know conduct its own independent fact finding and conclude