Tech. Coll. of Low Country v. United States

• Decision Date: 30 September 2019
• Docket Number: No. 15-488L,15-488L
• Parties: TECHNICAL COLLEGE OF THE LOW COUNTRY, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

TECHNICAL COLLEGE OF THE LOW COUNTRY, Plaintiff, v. THE UNITED STATES, Defendant.

No. 15-488L

United States Court of Federal Claims

September 30, 2019

Rails-to-Trails; Trial; Liability; Valid Property Interest; Standing; Waiver; Scope of Easement; Just Compensation; Larger Parcel Determination; Contiguity; Highest and Best Use; Unit Rule; Deed Restriction; Access; Comparable Sales; Adjustments; Delay Damages; Attorney Fees and Costs

Thomas S. Stewart and Elizabeth McCulley, Stewart Wald & McCulley LLC, Kansas City, MO, for plaintiff.

Jessica M. Held and Davene D. Walker, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Chief Judge

In this Rails-to-Trails action, plaintiff Technical College of the Lowcountry ("Technical College") asserts that it owns real property adjacent to a former rail corridor in Beaufort County, South Carolina.¹ Technical College asserts that until 2009, the South Carolina State Ports Authority ("Ports Authority") and its predecessors held easements for railroad purposes that abutted its land. According to Technical College, defendant United States then authorized the conversion of the railroad rights-of-way into recreational trails pursuant to the National Trail Systems Act ("Trails Act"), conduct that resulted in a taking in violation of the Just Compensation Clause of the Fifth Amendment to the United States Constitution. As explained below, the court concludes that defendant is liable for a taking and thus Technical College is owed just compensation of $755,165 in principal plus delay damages and attorney fees and costs in amounts yet to be determined.

I. BACKGROUND ........................................................................................................................ 3

A. Statutory and Regulatory Context .................................................................................... 3

B. Formation of Technical College ....................................................................................... 4

C. Initial Acquisition of the Land in Question ...................................................................... 6

1. The Rail Corridor ..................................................................................................... 6

2. The Technical College Campus ............................................................................... 6

D. Size of the Rail Corridor ................................................................................................ 11

E. Proceedings Before the Surface Transportation Board .................................................. 12

F. Procedural History .......................................................................................................... 13

II. LIABILITY ............................................................................................................................. 13

A. Legal Standards .............................................................................................................. 13

B. Ownership of Adjoining Land ........................................................................................ 15

1. Technical College Owned Adjacent Land as of the NITU's Issuance .................. 15

2. Defendant Waived Its Argument Regarding the Ports Authority .......................... 17

C. Scope of Easement ......................................................................................................... 20

D. A Taking Occurred Upon Issuance of the NITU ........................................................... 21

III. JUST COMPENSATION ...................................................................................................... 21

A. Standards for Decision ................................................................................................... 21

1. Legal Standards ...................................................................................................... 21

2. Appraisal Standards ............................................................................................... 22

B. The Larger Parcel ........................................................................................................... 24

1. Contiguity .............................................................................................................. 24

2. Unity of Ownership ................................................................................................ 25

3. Highest and Best Use ............................................................................................. 25

a. Physically Possible ........................................................................................ 27

b. Legally Permissible ....................................................................................... 27

c. Financially Feasible ...................................................................................... 27

d. Profitability ................................................................................................... 28

4. Analysis .................................................................................................................. 28

C. The Deed Restriction ...................................................................................................... 30

D. Access to the Island Parcel ............................................................................................. 33

1. Pedestrian Access ................................................................................................... 33

2. Vehicular Access ................................................................................................... 34

E. Comparable Sales Analysis ............................................................................................ 36

1. Description of the Sales Comparison Approach .................................................... 37

2. Mr. Batson's Comparable Sales ............................................................................. 38

3. Mr. Matthews's Comparable Sales ........................................................................ 39

F. Principal Amount of Just Compensation ........................................................................ 41

G. Delay Damages .............................................................................................................. 42

H. Attorney Fees and Costs ................................................................................................ 43

IV. CONCLUSION ...................................................................................................................... 44

I. BACKGROUND

A. Statutory and Regulatory Context

During the last century, the United States began to experience a sharp reduction in rail trackage.² Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 5 (1990) ("Preseault I"). Congress was thus "[c]onfronted with the Hobson's choice of forfeiting a national rail system through piecemeal abandonment of lines, or forcing railroads to maintain tracks on which they [could not] turn a profit . . . ." Birt v. Surface Transp. Bd., 90 F.3d 580, 582 (D.C. Cir. 1996). To remedy this problem, Congress enacted several statutes, including the Trails Act. See generally Pub. L. No. 90-543, 82 Stat. 919 (1968) (codified as amended at 16 U.S.C. §§ 1241-1251 (2018)). 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 historic trails. 16 U.S.C. § 1247(d). This process is referred to as railbanking, and is overseen by the United States Surface Transportation Board ("Surface Transportation Board"), id., the federal agency with 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 Surface Transportation Board pursuant to 49 U.S.C. § 10903, or by requesting that the Surface Transportation Board exempt it from such proceedings pursuant to 49 U.S.C. § 10502.³ When considering the railroad company's abandonment application or exemption request, the Surface Transportation Board will entertain protests and comments from interested third parties. 49 C.F.R. §§ 1152.25(a), 1152.29(a) (2009). These third parties may submit requests for the interim use of the rail line as a recreational trail pursuant to 16 U.S.C. § 1247(d) and make offers of financial assistance pursuant to 49 U.S.C. § 10904. Id.

If an interested third party submits a trail use request to the Surface Transportation Board that satisfies the requirements of 16 U.S.C. § 1247(d), the Surface Transportation Board must then make the necessary findings pursuant to 49 U.S.C. § 10502(a) or 49 U.S.C. § 10903(d), as applicable. Once the railroad company agrees to negotiate a trail use agreement with a potential trail operator, the Surface Transportation Board will issue one of two documents: if the railroad company initiated abandonment proceedings, the Surface Transportation Board will issue a Certificate of Interim Trail Use or Abandonment ("CITU"); if the railroad company sought an exemption, the Surface Transportation 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 "[p]ermit 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 the [CITU or NITU] is issued, subject to appropriate conditions . . . ." Id. § 1152.29(d)(1); accord id. § 1152.29(c)(1). When necessary, the Surface Transportation Board will entertain requests to...