Barahona v. Union Pac. R.R. Co.

• Decision Date: 06 February 2018
• Docket Number: No. 16-56562,16-56562
• Citation: 881 F.3d 1122
• Parties: Maria J. BARAHONA; Coachella Self Storage, LLC ; Mary Cruz; Monica Rodriguez Elpidio; Kenneth R. Hansen ; Alan Willsmore, as Trustee for the Wilmore Trust; Shelley Willsmore, as Trustee for the Wilmore Trust; Enrique Molina; James Pilcher ; Susan Pilcher; Richard Bagdasarian, Inc.; Everardo Rivera; Lidia Rivera ; Connie Sanchez; David Sanchez; Charles Serrano; Barbara Sloan; Ravinder S. Thiara; Sureena Thiara, Plaintiffs, and Martin Wells, as Trustee of the Martin & Susan Wells Revocable Trust; Susan Wells, as Trustee of the Martin & Susan Wells Revocable Trust; Sandra L. Hinshaw, Plaintiffs–Appellees, v. UNION PACIFIC RAILROAD COMPANY, Successor to Southern Pacific Transportation Company, Defendant–Appellant, and SFPP, L.P.; Kinder Morgan Operating L.P. "D"; Kinder Morgan G.P., Inc., Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

881 F.3d 1122

Maria J. BARAHONA; Coachella Self Storage, LLC ; Mary Cruz; Monica Rodriguez Elpidio; Kenneth R. Hansen ; Alan Willsmore, as Trustee for the Wilmore Trust; Shelley Willsmore, as Trustee for the Wilmore Trust; Enrique Molina; James Pilcher ; Susan Pilcher; Richard Bagdasarian, Inc.; Everardo Rivera; Lidia Rivera ; Connie Sanchez; David Sanchez; Charles Serrano; Barbara Sloan; Ravinder S. Thiara; Sureena Thiara, Plaintiffs,andMartin Wells, as Trustee of the Martin & Susan Wells Revocable Trust; Susan Wells, as Trustee of the Martin & Susan Wells Revocable Trust; Sandra L. Hinshaw, Plaintiffs–Appellees,

v. UNION PACIFIC RAILROAD COMPANY, Successor to Southern Pacific Transportation Company, Defendant–Appellant,andSFPP, L.P.; Kinder Morgan Operating L.P. "D"; Kinder Morgan G.P., Inc., Defendants.

No. 16-56562

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 7, 2017 Pasadena, California

Filed February 6, 2018

J. Scott Ballenger (argued), Melissa Arbus Sherry, and Alexandra P. Shechtel, Latham & Watkins LLP, Washington, D.C.; Joseph Rebein, Shook Hardy & Bacon LLP, Kansas City, Missouri; Tammy B. Webb and John K. Sherk III, Shook Hardy & Bacon LLP, San Francisco, California; for Defendant–Appellant.

Barrett J. Vahle (argued) and Norman E. Siegel, Stueve Siegel Hanson LLP, Kansas City, Missouri; Thomas S. Stewart, Stewart Wald & McCulley LLC, Kansas City, Missouri; for Plaintiffs–Appellees.

Katherine J. Barton and Matthew Littleton, Attorneys; Jeffrey H. Wood, Acting Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; for Amicus Curiae United States.

Eric S. Boorstin and Jeremy B. Rosen, Horvitz & Levy LLP, Burbank, California; Sheldon Gilbert and Kate Comerford Todd, U.S. Chamber Litigation Center Inc., Washington, D.C.; for Amicus Curiae Chamber of Commerce.

Before: Stephen Reinhardt and Jacqueline H. Nguyen, Circuit Judges, and Frederic Block, District Judge.^*

BLOCK, District Judge:

For more than half a century, the Union Pacific Railroad ("Union Pacific") has leased land under 1,800 miles of its right of way to Santa Fe Pacific Pipelines, L.P. ("SFPP"), which uses the land for a petroleum pipeline. In a suit by landowners challenging Union Pacific's ability to lease the land, the district court held that (1) the acts of Congress conferring the right of way authorized Union Pacific to use the right of way only for a "railroad purpose," and (2) the pipeline did not serve such a purpose. It then certified those issues for interlocutory review pursuant to 28 U.S.C. § 1292(b). We granted permission to appeal and, for the following reasons, disagree with the district court's conclusions.

I

A. Historical Background

In the mid–19th century, the vast expanse of territory west of the Mississippi River "remained a largely untapped resource," Leo Sheep Co. v. United States , 440 U.S. 668, 670, 99 S.Ct. 1403, 59 L.Ed.2d 677 (1979), in part because the nation's long-distance transportation network could not keep pace with its expanding frontier. The railroads bridged that gap.

Enthusiasm for a transcontinental railroad was initially offset by fierce sectional debate over which route the railroad should take. The deadlock was finally broken in the early 1860s, when seceding states stopped sending representatives and senators to Congress. Thus, development of a transcontinental railroad began in earnest against the backdrop of the Civil War. See id. at 674, 99 S.Ct. 1403 ("Senators and Representatives from those States which seceded from the Union were no longer present in Congress, and therefore the sectional overtones of the dispute as to routes largely disappeared.").

In 1862, Congress passed, and President Lincoln signed, "[a]n Act to aid in the Construction of a Railroad and Telegraph Line from the Missouri River to the Pacific Ocean." Act of July 1, 1862, ch. 120, 12 Stat. 489 ("1862 Act"). The 1862 Act chartered Union Pacific's predecessor and authorized it to build a railroad from the Nebraska Territory to the western border of the Nevada Territory. See id. § 1, 12 Stat. at 490. It then authorized the existing Central Pacific Railroad Company of California to build a railroad east from either San Francisco or the Sacramento River and link up with Union Pacific's road on the eastern border of California. See id. § 9, 12 Stat. at 494.¹ Similar acts authorized construction of the Northern Pacific Railroad from the Great Lakes to Puget Sound, see Act of July 2, 1864, ch. 217, 13 Stat. 365; a branch from the Central Pacific's line to Portland, Oregon, see Act of July 25, 1866, ch. 242, 14 Stat. 239; the Atlantic and Pacific Railroad from Missouri to the Pacific Ocean, see Act of July 27, 1866, ch. 278, 14 Stat. 292; and the Texas Pacific Railroad from Texas to San Diego, see Act of Mar. 3, 1871, ch. 122, 16 Stat. 573.

To assuage scruples about its constitutional authority to directly subsidize internal improvements, Congress based these acts—which we refer to as the "pre–1871 Acts"—on its "Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." U.S. Const. art. IV, § 3. Congress used this power in two ways. First, it granted the relevant corporation "the right of way through the public lands ... for the construction of [a] railroad and telegraph line." 1862 Act, § 2. With one exception, the grant extended "two hundred feet in width on each side of [the] railroad where it may pass over the public lands," and included "all necessary grounds for stations, buildings, workshops, and depots, machine shops, switches, side tracks, turntables, and water stations." Id.²

In addition to granting these rights of way, "Congress embarked on a policy of subsidizing railroad construction by lavish grants from the public domain." Great N. Ry. v. United States , 315 U.S. 262, 273, 62 S.Ct. 529, 86 L.Ed. 836 (1942). In the 1862 Act, the grant amounted to five alternating sections of public land along every mile of track. See 1862 Act, § 3. The resulting checkerboard pattern extended out for ten miles on each side on the track. See id. When even that grant proved an insufficient enticement, Congress extended it to twenty miles in both directions. See Act of July 2, 1864, § 4, 13 Stat. at 358. There was, however, a proviso in the grant: "[A]ll mineral lands shall be excepted from the operation of this act." 1862 Act, § 3.

The checkerboard grants were controversial from the start and eventually fell out of favor. See James W. Ely, Jr., Railroads and American Law 58 (2001). Congress made no such grants after 1871, see id. , although it continued to grant rights of way over public lands for the tracks of new railroads. That practice was streamlined in the General Railroad Right-of-Way Act of 1875, ch. 152, 18 Stat. 482 ("1875 Act"):

[T]he right of way through the public lands of the United States is hereby granted to any railroad company ... to the extent of one hundred feet on each side of the central line of said road; also the right to take, from the public lands adjacent to the line of said road, material, earth, stone, and timber necessary for the construction of said railroad; also ground adjacent to such right of way for station buildings, depots, machine shops, side tracks, turnouts, and water stations, not to exceed in amount twenty acres for each station, to the extent of one station for each ten miles of its road.

Id. § 1, 18 Stat. at 482. To perfect its right of way, a company would file a map describing the path (or proposed path) of its railroad with the local land office; once the map was approved and recorded, any land over which the right of way passed was "subject to such right of way." Id. § 4, 18 Stat. at 483.

B. Legal Background

Inevitably, disputes arose over the nature of the rights acquired under both the pre–1871 Acts and the 1875 Act. In St. Joseph & Denver City Railroad v. Baldwin , 103 U.S. 426, 26 L.Ed. 578 (1880), the Supreme Court described the interest conveyed by an act materially identical to the pre–1871 Acts as "a present absolute grant, subject to no conditions except those necessarily implied, such as that the road shall be constructed and used for the purposes designed." Id. at 429–30. In Missouri, Kansas & Texas Railway v. Roberts , 152 U.S. 114, 14 S.Ct. 496, 38 L.Ed. 377 (1894), it described the interest as a fee: "The title to the land for the 200 feet in width thus granted vested in the company." Id. at 116, 14 S.Ct. 496. And in New Mexico v. U.S. Trust Co. , 172 U.S. 171, 19 S.Ct. 128, 43 L.Ed. 407 (1898), it held that the interest was more than a right of passage: "[I]f it may not be insisted that the fee was granted, surely more than an ordinary easement was granted,—one having the attributes of the fee, perpetuity and exclusive use and possession; also the remedies of the fee, and, like it, corporeal, not incorporeal, property." Id. at 183, 19 S.Ct. 128.

In Northern Pacific Railway v. Townsend , 190 U.S. 267, 23 S.Ct. 671, 47 L.Ed. 1044 (1903), the owner of land adjacent to a right of way granted by one of the pre–1871 Acts claimed adverse possession of a portion of the right of way under Minnesota law. Relying on Baldwin and U.S. Trust Co. , the Supreme Court held that "the fee passed by the grant," but further that the grant was conditional:

The substantial consideration inducing the grant was the perpetual use of the land for the legitimate purposes of the railroad, just as though the land had been conveyed in terms to have and to hold the same so long as it was used for the railroad right of way. In effect the grant was of a limited fee, made on an implied condition of reverter in the event that the company ceased to use or retain the land for the purpose for which it was granted.

190 U.S. at 271, 23 S.Ct. 671. That condition necessarily negated the railroad's ability to alienate the right of way, either voluntarily...