Court Opinion

ID: 3188917
Source: CourtListenerOpinion
Date Created: 2016-03-25 15:01:08.539323+00
Date Added: 2024-06-11T14:08:19.261952
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 15-1766
                         ___________________________

                           Dorothy Ellen Trevarton, et al.

                       lllllllllllllllllllll Plaintiffs - Appellants

                                            v.

           State of South Dakota; South Dakota Game, Fish, and Parks

                      lllllllllllllllllllll Defendants - Appellees

                            Rails to Trails Conservancy

                   lllllllllllllllllllllAmicus on Behalf of Appellees
                                        ____________

                     Appeal from United States District Court
                   for the District of South Dakota - Rapid City
                                   ____________

                            Submitted: October 21, 2015
                               Filed: March 25, 2016
                                   ____________

Before LOKEN, MURPHY, and COLLOTON, Circuit Judges.
                           ____________

LOKEN, Circuit Judge.

       Plaintiffs are ranchers in Fall River County, South Dakota, who own properties
underlying and surrounding a railway right-of-way easement granted by the United
States to Grand Island and Wyoming Central Railroad Company in 1897. Burlington
Northern Railroad Company (“BN”) subsequently acquired the easement but ceased
railroad operations on the line in 1986. In 1987, BN applied to the Interstate
Commerce Commission, now the Surface Transportation Board (“STB”),1 for an
exemption permitting expeditious abandonment of the line. See 49 U.S.C. § 10903
(requirements to abandon a rail line); 49 C.F.R. § 1152.50. The STB granted but then
revoked an exemption prior to completion of the abandonment and instead authorized
BN to enter into an “interim trail use/rail banking agreement” in accordance with the
National Trails System Act (“Trails Act”), 16 U.S.C. § 1247(d), as implemented by
the STB in 49 C.F.R. § 1152.29. In December 1989, BN quit-claimed its interest in
the right-of-way to the State of South Dakota, through its Department of Game, Fish
& Parks, for interim trail use. In 1998, South Dakota converted the right-of-way to
a non-motorized public recreational trail, part of the 109-mile George S. Mickelson
Trail from Edgemont to Deadwood, South Dakota (“the Trail”).

        In April 2014, Plaintiffs commenced two separate actions in state court against
the State and the Department of Game, Fish, and Parks, seeking a declaration quieting
title to the right-of-way in Plaintiffs because the easement terminated by operation of
law when BN ceased railroad operations. Defendants removed to federal court and
moved to dismiss. Plaintiffs filed Amended Complaints seeking declarations (i) that
the STB erred in ruling that the right-of-way was not abandoned before BN sold its
interest to Defendants; and alternatively (ii) “that Defendants stand in the shoes of
their railroad predecessors-in-interest concerning easement rights.” Defendants filed
renewed motions to dismiss for lack of jurisdiction and for failure to state a claim.
See Fed. R. Civ. P. 12(b)(1), 12(b)(6). The district court consolidated the two cases,
concluded that both of Plaintiffs’ claims fall within the exclusive jurisdiction of the
STB, and granted Rule 12(b)(1) dismissals for lack of subject matter jurisdiction.

      1
      The STB assumed the relevant functions of the Interstate Commerce
Commission in January 1996. See 49 U.S.C. §§ 1301-02 (previously 49 U.S.C.
§§ 701-02). For simplicity, this opinion will refer to both agencies as the STB.

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Plaintiffs appeal, challenging only the dismissal of their alternative claims regarding
the scope of Defendants’ easement. Concluding that these claims are not within the
STB’s exclusive jurisdiction, but that the Amended Complaints failed to state a claim
upon which relief can be granted, we modify this part of the district court’s judgment
to be a Rule 12(b)(6) dismissal and otherwise affirm.

       1. BN’s easement was initially granted under the General Railroad Right-of-
Way Act of 1875 (“1875 Act”), now codified at 43 U.S.C. § 934. See generally
Marvin M. Brandt Revocable Trust v. United States, 134 S. Ct. 1257 (2014).
Plaintiffs allege that prior to 1998, railroads that held this easement over the years
used the right-of-way only for railroad operations, while Plaintiffs “continuously used
the railroad easement for purposes of grazing cattle, hauling cattle, feed, and water,
and traveling from one portion of their property to the other.” Now, they allege,
South Dakota allows countless Trail users to trespass on Plaintiffs’ lands, harassing
cattle and littering. South Dakota also forbids Plaintiffs from operating motor
vehicles on the Trail and has successfully prosecuted two Plaintiffs and a ranch hand
for using the Trail as part of their ranch operations.

       2. In the district court, Plaintiffs’ primarily focused on their claims that, when
BN ceased railroad operations, the railway easement died and their fee interests
became unburdened by the right-of-way that formerly passed through their properties.
The Supreme Court’s decision in Brandt clarified property law principles underlying
this argument. The Court explained that “the 1875 Act clearly grant[ed a railroad
such as BN] only an easement, and not a fee.” 134 S. Ct. at 1267, quoting Great N.
Ry. v. United States, 315 U.S. 262, 271 (1942). “Unlike most possessory estates,
easements . . . may be unilaterally terminated by abandonment, leaving the servient
owner with a possessory estate unencumbered by the servitude.” Id. at 1265, quoting
Restatement (Third) of Property: Servitudes § 1.2 cmt. d (1998). In Great Northern,
the Court held that an 1875 Act right-of-way granted the railroad only an easement,
and therefore the United States as owner of fee title to the right-of-way retained the

                                          -3-
underlying oil and minerals. 315 U.S. at 279-80. In Brandt, the Court adhered to its
decision in Great Northern and held that, when railroad operations were abandoned,
an 1875 Act right-of-way easement was extinguished; it did not revert to the United
States, owner of the land when the easement was first granted. 134 S. Ct. at 1268.

       The problem with Plaintiffs’ claims that the easement acquired by Defendants
had been extinguished by abandonment was the STB decision in 1989 revoking BN’s
exemption before abandonment of the right-of-way was completed, and authorizing
BN to enter into an interim trail use agreement. Plaintiffs argued to the district court
that the STB erred in ruling the right-of-way was not abandoned. The district court
held, quite properly, that it lacked jurisdiction to consider this collateral attack on the
STB’s exclusive jurisdiction to determine whether a rail line has been abandoned, a
decision that was subject to judicial review only by a petition to this court.
See Grantwood Village v. Mo. Pac. R.R., 95 F.3d 654, 657-58 (8th Cir. 1996), cert.
denied, 519 U.S. 1149 (1997). Plaintiffs do not challenge this jurisdictional ruling
on appeal.

       3. The district court extended its jurisdictional ruling to Plaintiffs’ second
claim, seeking a declaration that South Dakota “stand[s] in the shoes of [its] railroad
predecessors-in-interest concerning easement rights,” and therefore Defendants’ non-
possessory easement requires only that Plaintiffs as servient landowners not interfere
with the railroad uses the right-of-way easement authorized. Defendants argued, and
the district court agreed, that the court “does not have jurisdiction to determine the
relative rights of the parties over the use of the easement” because the STB “retains
‘exclusive and plenary jurisdiction’ over the right-of-way.” We disagree.

       This is not a claim that the easement was abandoned, as in Grantwood. Here,
after the STB determined the railroad easement was not abandoned, the easement was
conveyed to Defendants pursuant to an interim trail use agreement. The issue
Plaintiffs raise is whether Defendants, in managing the Trail, have violated Plaintiffs’

                                           -4-
property rights as servient landowners. Without question, the STB retains jurisdiction
over an unabandoned right-of-way. See Neb. Trails Council v. STB, 120 F.3d 901,
904 (8th Cir. 1997). Consistent with 16 U.S.C. § 1247(d), the STB’s regulations
provide that a prospective trail sponsor must provide the STB with “[a] statement
indicating the trail sponsor’s willingness to assume full responsibility for . . .
[m]anaging the right-of-way.” 49 C.F.R. § 1152.29(a)(2)(i). But was that a grant of
exclusive jurisdiction?

       In support of the district court’s ruling, Defendants and their amicus rely on 49
U.S.C. § 10501(b), which provides that the STB’s jurisdiction over transportation by
rail carriers “is exclusive.” Cf. City of Lincoln v. STB, 414 F.3d 858, 860-61 (8th
Cir. 2005) (upholding STB order that City’s acquisition of part of an operating
railroad’s right of way to use as a trail would impermissibly interfere with railway
operations). There are no current railroad operations on this right-of-way, and no
allegation that day-to-day management of the Trail would interfere with the STB’s
future authority to restore or reconstruct the right-of-way “for railroad operations.”
16 U.S.C. § 1247(d). If the grant of authority to require trail operators to manage
interim-use trails gives the STB exclusive jurisdiction over interim trail use, Congress
has precluded all state and federal courts and all other administrative agencies from
exercising any jurisdiction over trail activities, even activities that have no impact on
present or future rail operations. In our view, to confirm the logical inference that
Congress did not intend this minimal grant of regulatory authority to confer exclusive
jurisdiction, we need look no further than the intent of Congress as expressed in the
Trails Act.

      The Trails Act established a national trails system “to provide for the ever-
increasing outdoor recreation needs of an expanding population and . . . the
preservation of . . . outdoor areas and historic resources.” 16 U.S.C. § 1241(a).
Section 8(d) of the Act, 16 U.S.C. § 1247(d), furthered this purpose by permitting the
STB to issue a Notice of Interim Trail Use to halt a railroad abandonment proceeding

                                          -5-
if the railroad agrees to negotiate with a prospective trail operator. If the parties reach
agreement on interim use, the right-of-way is not abandoned. Rather, the railroad
conveys its interest to the trail operator, the right-of-way is “rail banked” indefinitely
for future railroad use, and the interim operator may use the right-of-way for trail
purposes. Section 8(d) of the Trails Act was “the culmination of congressional efforts
to preserve shrinking rail trackage by converting unused rights-of-way to recreational
trails.” Preseault v. ICC, 494 U.S. 1, 5 (1990). It reflected two distinct congressional
purposes, “to preserve established railroad rights-of-way for future reactivation of rail
service,” and “to assist recreation[al] users by providing opportunities for trail use on
an interim basis.” Id. at 17-18 (quotations omitted).

        Section 8(d) furthered the first purpose by directing the STB to impose terms
and conditions on interim use sufficient to preserve the right-of-way for reactivated
rail service, and not to permit its abandonment. See 49 C.F.R. § 1152.29(d), (f), (h).
But the STB may not compel the railroad and a trail operator to reach an interim-use
agreement, nor may the STB refuse to permit trail use if the parties do reach
agreement. “The role of the [STB] in conversion proceedings, then, is essentially
ministerial.” Goos v. ICC, 911 F.2d 1283, 1295 (8th Cir. 1990).

       The STB regulations contain no provisions regulating how the trail operator
will manage a trail. This is consistent with other Trails Act provisions. Section 8(e)
provides that interim-use trails “may be designated and suitably marked as parts of
the nationwide system of trails by the States . . . with the approval of the Secretary of
the Interior.” 16 U.S.C. § 1247(e). The power to regulate the national trails system
lies with the Secretary of the Interior, the Secretary of Agriculture, and “other Federal
agencies administering lands through which a . . . trail passes.” 16 U.S.C. § 1246(i).
In other words, Congress has specifically declared that the STB’s jurisdiction to
regulate or manage a former railroad right-of-way during its interim use as a trail is
shared with numerous other federal departments and agencies, and with the States to
the extent state regulation of trails is not federally preempted. See, e.g., Miami Cty.

                                           -6-
Bd. of Comm’rs v. Kanza Rail-Trails Conservancy, Inc., 255 P.3d 1186, 1198-99
(Kan. 2011).

      As the STB has itself recognized, its exclusive jurisdiction under 49 U.S.C.
§ 10501(b) “is limited to remedies with respect to rail regulation -- not state and
federal law generally.” Saratoga & N. Creek Ry., Docket No. FD 35631, 2012 WL
4840014, at *3 (S.T.B. Oct. 9, 2012), quoting PCS Phosphate Co. v. Norfolk S. Corp.,
559 F.3d 212, 219 (4th Cir. 2009). The district court erred in concluding the STB has
exclusive jurisdiction that it has never exercised. Cf. Hayfield N. R.R. v. Chi. &
N.W. Transp. Co., 467 U.S. 622, 631-36 (1984).

       4. Plaintiffs seek a declaration that Defendants acquired only a non-possessory
easement that was limited to BN’s use of the right-of-way for railroad purposes.
“[S]tate law creates and defines the scope of the reversionary or other real property
interests affected by the [STB’s] actions pursuant to [§ 8(d)].” Preseault, 494 U.S.
at 20 (O’Connor, J., concurring). When the issue does not affect present or future
railroad operations, state and federal courts have jurisdiction to determine the nature
and extent of the real property interests held by interim trail users and adjacent
landowners such as Plaintiffs. Cf. Allegheny Valley R.R., Docket No. FD 35388,
2011 WL 1546589, at *3 (S.T.B. Apr. 21, 2011) (“[T]he size and extent of a railroad
easement is a matter of state property law and best addressed by state courts.”);
Allegheny Valley R.R., Docket No. FD 35239, 2010 WL 2388142, at *7 (S.T.B. June
11, 2010) (“This is a question of property law, and it should be handled by a tribunal
that frequently addresses such matters.”).

       Plaintiffs claim for declaratory relief turns on their allegation that South Dakota
“stand[s] in the shoes of [its] railroad predecessors-in-interest concerning easement
rights.” In Preseault, the Supreme Court held that, to further the dual purposes of the
Trails Act, Congress authorized the STB to prevent abandonment of a right-of-way
by approving conveyance of the right-of-way for interim use to a trail operator, and

                                           -7-
that such actions may give rise to a takings claim by the fee owner. 494 U.S. at 11-
17. In subsequent decisions, the Federal Circuit and the Court of Federal Claims held
that “[a] Fifth Amendment taking occurs if the original easement granted to the
railroad under state property law is not broad enough to encompass a recreational
trail.” Caldwell v. United States, 391 F.3d 1226, 1229 (Fed. Cir. 2004), cert. denied,
546 U.S. 826 (2005); accord Toews v. United States, 376 F.3d 1371,1375-76 (Fed.
Cir. 2004); Preseault v. United States, 100 F.3d 1525, 1550 (Fed. Cir. 1996) (en banc)
(“a new easement for the new use”); Dana R. Hodges Tr. v. United States, 111 Fed.
Cl. 452, 453 (2013); Illig v. United States, 58 Fed. Cl. 619, 631 (2003) (“a new
easement”).

       In our view, these decisions properly reflect the plain meaning of § 8(d) and
establish that Plaintiffs’ second claim fails to state a claim upon which relief can be
granted. Congress in the Trails Act intended to convey to the interim trail user a
property interest that includes the right to use the acquired right-of-way for
recreational trail purposes. Though the conveyance here took the form of a quit claim
deed from BN to Defendants, as a matter of federal law it granted “a new easement
for the new use.” Plaintiffs contend that Defendants acquired from BN “only an
easement for railroad purposes,” as the 1875 Act was construed in Brandt. 134 S. Ct.
at 1265 (quotation omitted). But even if that accurately describes what Defendants
acquired directly from BN, it does not describe the “new easement” they acquired
under the Trails Act, an interest which authorized Defendants to use the Trail for
Trails Act purposes. Thus, Plaintiffs claim that Defendants “stand in the shoes” of
the BN, and therefore Defendants cannot impose non-railroad restrictions on
Plaintiffs’ rights as servient landowners, fails as a matter of federal law.

      Though this result may seem harsh, it is essential to note that the conveyance
to Defendants under the Trails Act did not leave Plaintiffs without a remedy as
property owners. Indeed, it left them with a variety of possible remedies -- for
example, a takings action seeking compensation because Defendants’ new easement

                                         -8-
diminished the property rights Plaintiffs enjoyed when the right-of-way was limited
to railroad uses; or a court action claiming that Defendants are unlawfully managing
the Trail as a matter of federal or state law; or a petition to the STB claiming that
Defendants’ management of the Trail impairs restoration of the right-of-way to
railroad use. And of course Plaintiffs can negotiate with state officials to allow
Plaintiffs reasonable access and use of the right-of-way for their ranch operations, as
they presumably negotiated with railroad operators in the past.

        For the foregoing reasons, we remand to the district court for modification of
its Order and Judgment to reflect that Plaintiffs’ alternative claim for a declaratory
judgment defining the parties’ rights to use of the easement is dismissed for failure
to state a claim upon which relief can be granted. In all other respects, the judgment
is affirmed.
                        ______________________________

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