Argument Recap / Panel Activity

Last week, the Federal Circuit heard oral argument in Memmer v. United States, a takings case we have been following because it attracted an amicus brief. In this case, Memmer appeals a decision by the Court of Federal Claims concerning a Notice of Interim Trail Use issued by the Surface Transportation Board. In particular, Memmer challenges the lower court’s analysis of causation as well as its decision that “the duration of the taking lasted as long as the railroad’s abandonment authority existed.” The United States cross-appeals to argue that the lower court “erred in holding that Indiana Southwestern would have abandoned [its right to use the property in question] if the NITU had not issued.” One amicus brief was filed in support of Memmer. This is our argument recap.

Thomas S. Stewart argued for Memmer. He began his argument by focusing on the Federal Circuit’s precedent that created the causation standard used in takings cases. He indicated that that precedent has been mischaracterized, and that these mischaracterizations have led to chaos and confusion. He argued that the application of the causation standard must focus on the railroad’s intent to abandon use of the relevant property at the time the NITU was issued.

Judge Schall asked why the government’s control of the relevant property did not end when the NITU expired. Stewart answered that a constitutional taking starts when a NITU is issued, but it does not end when the NITU expires because “all of the events that took place, including the finding of state law abandonment . . . occurred during pendency of the NITU.” As a result, he argued, the Surface Transportation Board “retained jurisdiction at the expense of these landowners.”

Judge Schall then asked about the importance of the duration of the taking in this case. Stewart answered that the duration is not that significant because the taking is a temporary taking, but what is more important is that the governmental act blocked the plaintiff’s reversionary interest in the land. He asserted that the NITU was the only legal block to putting the land to productive use. He claimed that the NITU caused the ultimate blocking of reversionary rights because permission to abandon was already granted to the railroad prior to the NITU. Stewart argued that the government here is trying to limit takings law to two possibilities after a NITU is issued: execution of a trail use agreement or the consummation of abandonment.

Judge Reyna asked why the state’s interest does not expire when the NITU expires. In response, Stewart claimed the effect on the plaintiff does not stop when the NITU expires because reversionary interests are still blocked. Judge Reyna then asked why the block on reversionary interest continues. Stewart answered that the case law supports the idea that all takings are permanent until they become temporary.

Judge Lourie then went back to the question of causation. He said that under the court’s precedent, a NITU does not constitute a taking if the railroad would not have abandoned its line during the pending of the NITU, because there is no causation. In response, Stewart claimed here the railroad intended to abandon its line during the pendency of the NITU.

Daniel Halainen argued for the United States. He began with the issue raised by the cross-appeal, whether the railroad’s decision not to abandon its line could result in the physical taking by the government requiring compensation. He answered no, asking the court to reverse the lower court’s decision and find that no taking occurred.

Judge Lourie asked if the issue is one of fact that the lower court already decided. Halainen answered that there is a “purely legal issue of whether a NITU that does not result in either a trail use agreement or a delay in the termination of easements could be a taking.” He asserted that a physical taking requires an intrusion by the government.

Halainen argued that, where a railroad “ultimately chooses not to abandon, there simply can never be causation or a physical taking.” When asked by Judge Schall to distinguish this case from past cases, Halainen claimed that the NITU did not compel continuation of the easement just because the railroad ultimately chose not to abandon its rights.

Halainen confirmed Judge Schall’s assumption that if the court concludes there was a taking, his backup argument on behalf of the government is that the duration of the taking should be adjusted. Judge Schall followed up, asking why the taking would not end with the conclusion of the first NITU period, pointing out that all extensions after the first six-month period were at the railroad’s discretion. In response, Halainen claimed the entire NITU process was voluntary, but the railroad’s agreement to the first extension concluded any taking, if a taking existed at all.

Halainen concluded his argument by arguing that the causation standard does not hinge on the intent of the railroad and pointing out that the railroad chose not to exercise its authority to abandon.

In rebuttal, Stewart claimed the government’s arguments in takings cases have shifted over time to suit its interests. He also claimed Halainen ignores the “intent to abandon” aspect of the law. Stewart asserted the government’s argument aims to overrule precedent. And Stewart argued that the blocking of reversionary rights is a taking, not a consummation of abandonment.

Judge Lourie asked where “intent” is listed as a requirement or as relevant to the analysis of causation. Stewart pointed to a previous case where the court noted that the railroad “would have” abandoned. Stewart framed this language as equivalent to intent. He argued that consummation of abandonment is immaterial to liability if abandonment “would have occurred” during the pendency of the NITU.

Judge Reyna countered that “what would have occurred” is based on the judgment of facts, not “imputation of intent” as a matter of law. In response, Stewart argued “what would have occurred” is a question of law and fact.

Halainen, in his rebuttal, asserted that the government’s position in its cross-appeal is not inconsistent with prior decisions and only sought to apply the proper precedent.

We’ll continue to monitor the case and report on any developments.