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Federal Circuit Reaffirms Application of Categorical-Taking Analysis for Temporary Fifth Amendment Takings Claims in Rails-to-Trails Cases

On May 29, 2020, the Federal Circuit issued its decision in Caquelin v. United States, reaffirming precedent governing the way courts evaluate the taking of private property in Rails-to-Trails litigation—specifically, that a categorical-taking analysis applies to the evaluation of whether a Notice of Intended Trail Use constitutes a taking because it blocks termination of the railroad’s easement.

A. Background

In the mid-late 1800’s and early 1900’s, railroads were a large focus of development in the United States, providing a national transportation system, revolutionizing the movement of goods, and fostering population expansion into the western United States. Development of a vibrant rail network was such an important public policy that railroads were frequently given the power of eminent domain to seize land if they were unable to negotiate the salve of a right of way. Often, these rail carriers obtained easements (specifically, a right of way) over private property for the purpose of running tracks and operating lines. More than a century later, railroads are no longer the predominant means of transportation. As a result, many rail carriers are abandoning low-traffic lines and the associated easements, creating what has evolved into a complex area of law.

Under the Transportation Act of 1920, a rail carrier must first apply to the federal Surface Transportation Board (STB) to initiate an abandonment of a rail line. The National Trails System Act Amendments of 1983 (the Trails Act) provides a mechanism to block the abandonment if a qualified entity is willing to convert the rail line to recreational trail use—thus, the colloquial “Rails-to-Trails” moniker that is now commonly used in these cases. But with the land no longer in the rail carrier’s control and instead subject to government agency action, a Fifth Amendment compensable taking occurs when the terms of the original easement granted to the rail carrier are not broad enough to encompass trail use. Preseault v. United States, 100 F.3d 1525, 1552 (Fed. Cir. 1996); Ladd v. United States, 630 F.3d 1015, 1019 (Fed. Cir. 2010) (“It is settled law that a Fifth Amendment taking occurs in Rails-to-Trails cases when government action destroys state-defined property rights by converting a railway easement to a recreational trail if trail use is outside the scope of the original railway easement.”).

B. The Present Dispute

Norma Caquelin owned farmland in Iowa subject to a rail carrier’s right of way. The rail carrier applied to the STB for permission to abandon its line, meaning that the land would ordinarily revert to Ms. Caquelin under state law. The abandonment was blocked when the process for converting the rail line to a trail was invoked through the issuance of a Notice of Interim Trail Use (NITU) that effectively froze the abandonment. A NITU provides the rail carrier with 180 days to negotiate the transfer of a right of way to a qualified entity for trail use. Here, no agreement ever materialized, the NITU expired after the 180 days passed, and the rail carrier completed its abandonment a few months later.

In 2014, Caquelin sued the federal government in the Court of Federal Claims, arguing that the 180-day period which temporarily blocked the rail carrier’s abandonment constituted a Fifth Amendment taking for which she was entitled to compensation. Her argument was simple: because the federal government prevented the land from coming back under her control, it had taken her property. Ms. Caquelin relied upon precedent providing “that the Fifth Amendment taking, if any, under the Trails Act is accomplished when a NITU is issued and state law reversionary interests that would otherwise take effect pursuant to normal abandonment proceedings are forestalled.” Caldwell v. United States, 391 F.3d 1226, 1236 (Fed. Cir. 2004).

After a trial, the Court of Federal Claims ruled in Ms. Caquelin’s favor and awarded her $900 for the temporary taking of the ten-mile long right of way. The government appealed the $900 award and argued that the existing precedents should be overturned. Specifically, the government argued that a NITU, when not followed by a trail use agreement, should be subject to a regulatory-taking analysis or a multi-factor approach instead of being treated as a categorical taking. Rather than evaluate the merits of these arguments, the Federal Circuit remanded the matter to the trial court for additional evidence and to consider whether a multi-factor approach would also result in a finding that Ms. Caquelin’s land had been taken. On remand, the trial court again held that a taking had occurred and again awarded Ms. Caquelin $900.

In the second appeal, the government argued that the Federal Circuit should abandon its prior precedents because “the Supreme Court’s decision in Tahoe-Sierra [1] requires that the general regulatory-takings analysis of Penn Central [2] be applied to assess whether a NITU is a taking when no trail-use agreement has been reached before it expires and that such a NITU should not be treated as a categorical taking.” Caquelin v. United States, No. 19-1385, slip op. at 10 (Fed. Cir. May 29, 2020). The government alternatively argued that the multi-factor approach used in Arkansas Game [3] should replace the categorical approach.

The Federal Circuit rejected these arguments in its May 29, 2020 decision, and affirmed Ladd as governing precedent. The court characterized the nature of the government action, explaining that the NITU provided “a right of occupation by someone other than the landowner” and “barr[ed] the landowner from using the ground burdened by the easement.” Id. at 12. Although temporary, this action constitutes a categorical taking “relevantly the same in character as the longer-duration coerced continuation of an easement that a NITU effects when a trail conversion takes place.” Id. Thus, the court reinforced the principle that “physical takings are compensable, even when temporary.” Ladd, 630 F.3d at 1025.

The Federal Circuit explained that such treatment was not inconsistent with Tahoe Sierra, which did not involve a coerced easement allowing physical occupation by someone other than the landowner and which analysis only applied to regulatory takings. The Federal Circuit also explained that Arkansas Game did not “impl[y] that a non-categorical approach to finding a taking applies to the NITU situation at issue here” as it did not involve a government action that limited the landowner’s interest in his land or the right to exclude persons other than the landowner. Caquelin v. United States, No. 19-1385, slip op. at 15 (Fed. Cir. May 29, 2020 ).

C. Takeaways

The Federal Court’s holding in Caquelin is significant for several reasons. First, it acknowledges the importance of safeguarding and following precedent. Second, it confirms that temporary government takings are still subject to a categorical-taking analysis. Third, it reminds the government that it does not have an unbridled right to interfere with private property interests and take land without just compensation. The Caquelin case itself is also a reminder that the government does not litigate like a private litigant — it has doggedly defended against this $900 claim through at least two trials and two appeals, and it may not yet be finished because the government has signaled, as of this writing, that it may seek further review in Caquelin.

[1] In Tahoe-Sierra, the Supreme Court held that a 32-month moratoria on development, during which time the environmental planning agency was developing a strategy for economically-sound growth, was not a per se taking. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 122 S. Ct. 1465, 152 L. Ed. 2d 517 (2002).

[2] In Penn Central, the Supreme Court held that restrictions preventing Penn Central from constructing a multi-story office building on top of the terminal did not constitute a taking because the restrictions did not sufficiently interfere with Penn Central’s reasonable investment-backed expectations. Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1978).

[3] In Arkansas Game, the Supreme Court applied a multifactor analysis in concluding that a temporary taking caused by government-induced flooding was compensable. The analysis considered 1) time; 2) “the degree to which the invasion is intended or is the foreseeable result of authorized government action”; 3) “the character of the land at issue and the owner’s reasonable investment-backed expectations regarding the land’s use” and 4) the “severity of the interference.” Arkansas Game & Fish Comm’n v. United States, 568 U.S. 23, 133 S. Ct. 511, 514, 184 L. Ed. 2d 417 (2012).

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