A. Statutory and Regulatory Context During the last century, the United States began to experience a sharp reduction in rail trackage. Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 5 (1990). To remedy this problem, Congress enacted a number of statutes, including the Trails Act, 16 U.S.C. §§ 1241-1251 (2012). The Trails Act, as amended, provides for the preservation of "established railroad rights-of-way for future reactivation of rail service" by authorizing the interim use of such rights-of-way as recreational and historical trails. Id. § 1247(d). This process is referred to as "railbanking," and is overseen by the Surface Transportation Board ("Board"), id., the federal agency with the exclusive jurisdiction to regulate "the construction, acquisition, operation, abandonment, or discontinuance" of most railroad lines in the United States, 49 U.S.C. § 10501(b) (2012).
Before railbanking can occur, the railroad company must seek to abandon its line, either by initiating abandonment proceedings with the Board pursuant to 49 U.S.C. § 10903, or by requesting that the Board exempt it from such proceedings pursuant to 49 U.S.C. § 10502. While considering the railroad company's abandonment application or exemption request, the Board will entertain protests and comments from interested third parties. 49 C.F.R. §§ 1152.25, 1152.29(a) (2010). Of particular relevance in this case, interested third parties may submit requests for the interim use of the railroad line as a trail pursuant to 16 U.S.C. § 1247(d) and make offers of financial assistance ("OFA") pursuant to 49 U.S.C. § 10904. Id.
If an interested third party submits a trail use request to the Board that satisfies the requirements of 16 U.S.C. § 1247(d), the Board makes the necessary findings pursuant to 49 U.S.C. § 10502(a) or 49 U.S.C. §10903(d), and the railroad company agrees to negotiate a trail use agreement, the Board will issue one of two documents: if the railroad company initiated abandonment proceedings, the Board will issue a Certificate of Interim Trail Use or Abandonment, and if the railroad company sought an exemption, the Board will issue a Notice of Interim Trail Use or Abandonment ("NITU"). Id. § 1152.29(b)-(d). The effect of both documents is the same: to "permit the railroad to discontinue service, cancel any applicable tariffs, and salvage track and materials, consistent with interim trail use and rail banking . . . ; and permit the railroad to fully abandon the line if no agreement is reached 180 days after it is issued, subject to appropriate conditions . . . ." Id. § 1152.29(d)(1); accord id. § 1152.29(c)(1). The Board will entertain requests to extend the 180-day deadline to enable further negotiations. If the railroad company and the interested third party execute a trail use agreement, then abandonment of the railroad line is stayed for the duration of the agreement. Id. § 1152.29(c)-(d); 16 U.S.C. § 1247(d). If no trail use agreement is executed, the railroad company is permitted to fully abandon the line. 49 C.F.R. § 1152.29(c)-(d). To exercise its abandonment authority, the railroad company must "file a notice of consummation with the Board to signify that it has . . . fully abandoned the line" within one year of "the service date of the decision permitting theabandonment . . . ." Id. § 1152.29(e)(2). In the absence of a timely filed notice of consummation, the railroad company's authority to abandon the line automatically expires. Id.
Abandonment of a railroad line may also be postponed if an interested third party makes an OFA to subsidize or purchase the railroad line to continue rail service. Id. § 1152.27; 49 U.S.C. § 10904. OFAs must be made and filed with the Board within four months of the railroad company's application for abandonment or request for an exemption, or within ten days of the Board's decision granting the railroad company's application or request, whichever is sooner. 49 U.S.C. § 10904(c); 49 C.F.R. § 1152.27(b). "The Board will review each offer submitted to determine if a financially responsible person has offered assistance. If that criterion is met, the Board will issue a decision postponing the effective date of" its abandonment authorization or the decision granting an exemption, as appropriate. 49 C.F.R. § 1152.27(e)(1)-(2); accord 49 U.S.C. § 10904(d)(1). Abandonment is postponed until the railroad company and "a financially responsible person have reached an agreement on a transaction for subsidy or sale of the line" or, if an agreement is not reached, the Board establishes the conditions and amount of compensation for the transaction. 49 U.S.C. § 10904(d)(2). If an agreement is reached, abandonment of the line will not proceed. 49 C.F.R. § 1152.27(f). If no agreement is reached, the Board will vacate its decision postponing the effective date of its abandonment authorization or decision granting an exemption, id. § 1152.27(g)(2), (h)(7), allowing the railroad company to consummate the abandonment.
If efforts to execute a trail use agreement, purchase agreement, or subsidy agreement are unsuccessful, and the railroad company notifies the Board that it has fully abandoned the line, the Board is divested of jurisdiction over the abandoned railroad line and "state law reversionary property interests, if any, take effect." Caldwell v. United States, 391 F.3d 1226, 1228-29 (Fed. Cir. 2004).
B. The Initial Acquisition of the Railroad Rights-of-Way
Plaintiffs own real property adjacent to segments of railroad rights-of-way in Posey and Vanderburgh Counties, Indiana situated between (1) milepost 227.5 at Poseyville, Indiana and milepost 240.2 near German Township, Indiana and between (2) milepost 277.5 at Cynthiana, Indiana and milepost 282.0 at Poseyville, Indiana.1 The rights-of-way were acquired by the predecessors of the current owner of the railroad lines, Indiana Southwestern Railway Company ("Indiana Southwestern"). Those predecessor railroad companies acquired a 4.42-acre segment of the rights-of-way through prescription; plaintiff Reibel Farms, Inc. owns a parcel of land adjacent to this segment. The remaining segments at issue were acquired by deed. Plaintiffs group the deeds, all dated between 1880 and 1882, into four categories. The seven deeds in the first group ("Type A deeds") contain language that is substantially similar to the following:Right of Way Deed
Know all men by these Presents that [named landowner] for and in consideration of the construction of the [railroad] and for the further consideration of [amount], do grant, warrant and convey to the said [predecessor railroad company] its successors and assigns a strip of land [number] feet in width, being a strip [number] feet wide on each side of the center line of said Railway as it now is located through his land . . . described as follows to wit: [description of land]. It being distinctly understood that this grant is for the purpose of construction, maintenance and operation of said Railway.
Pls.' Ex. 15; accord Pls.' Exs. 16-20; Pls.' Ex. 21 (containing similar language, but with the last sentence instead providing: "It being distinctly understood that the above described Real Estate is to be used exclusively for Railroad purposes."). The amounts of consideration set forth in these deeds and the approximate land area conveyed are as follows:
| Unspecified portion of 3.5 acres |
| Unspecified portion of 3.5 acres |
| Unspecified portion of 3.5 acres |
Plaintiffs Owen Halpeny, Jeffrey Memmer, and Joseph Jenkins own parcels of land adjacent to the land conveyed by the Type A deeds.
The six deeds in the second group ("Type A-1 deeds") contain language that is substantially similar to the following:
Know all men by these Presents that [named landowners] for and in consideration of the construction of the [railroad] and for the further consideration of [amount], do grant, warrant and convey to the said [predecessor railroad company], its successors and assigns, a strip of Land [number] feet in width, being a Strip [number] feet wide on each side of the center line of said Railway as it now is Located through his Land . . . , described a follows, to wit:
[description of land]
It being distinctly understood that this grant is for the purpose of construction, maintenance and operation of said Railway.
Pls.' Ex. 22; accord Pls.' Exs. 23-27. The amounts...
