Opinions / Panel Activity

Last week, the Federal Circuit issued its opinion in Memmer v. United States, a case we have been following because it attracted an amicus brief. In this case, Memmer appealed a decision by the Court of Federal Claims concerning a Notice of Interim Trail Use issued by the Surface Transportation Board. In the appeal, Memmer challenged the lower court’s decision that “the duration of the taking lasted as long as the railroad’s abandonment authority existed.” The United States cross-appealed to argue that the lower court “erred in holding that Appellants’ property was taken,” and in the alternative to argue that the takings concluded when the Notice of Interim Trail expired, resulting in a shorter period of time than the lower court found. In an opinion authored by Judge Schall and joined by Judges Lourie and Reyna, the Federal Circuit vacated-in-part and remanded-in-part the lower court’s decision. This is our opinion summary.

Judge Schall presented the facts of the case:

A rail carrier that intends to abandon or discontinue a rail line must either file an application with, or seek exemption from, the Surface Transportation Board (“STB” or “Board”).

On October 25, 2010, Indiana Southwestern submitted a notice of exemption from abandonment proceedings, stating that it would consummate abandonment of its rail lines on or after January 15, 2011. Memmer I, 150 Fed. Cl. at 748; J.A. 253–54, 1253–57, 1358–61. In response, on November 12, 2010, the STB published a notice stating that, absent third party intervention, the exemption would be effective, and thus, Indiana Southwestern could abandon the lines, on December 14, 2010.4 75 Fed. Reg. 69,520 (Nov. 12, 2010). The STB’s notice indicated that the deadline for railbanking requests and OFAs was November 22, 2010. Id. Pursuant to 49 C.F.R. § 1152.29(e)(2), Indiana Southwestern was given one year from the STB’s notice, until November 12, 2011, to file a notice of consummation of abandonment, if it chose to do so.

The NITU deadline lapsed, and the NITU therefore expired, without the Trails Fund and Indiana Southwestern executing a trail-use agreement. Because the NITU extensions had lasted more than one year, under 49 C.F.R. § 1152.29(e)(2), Indiana Southwestern then had 60 days—through January 7, 2014—to file a notice of consummation of abandonment of the rail line. It chose not to do so, however. See J.A. 1077, 1214, 1229.

Eventually, Indiana Southwestern submitted a new notice of exemption. In response, the STB published a notice in July of 2021, shortly after this appeal was filed. 86 Fed. Reg. 37,782 (July 16, 2021). The STB’s notice stated that, absent third party intervention by July 26, 2021, the exemption would be effective, and thus Indiana Southwestern could abandon the line, on August 15, 2021. No potential trail sponsors came forward, and no NITU issued. Indiana Southwestern then filed a notice of consummation with the Board on August 31, 2021, meaning that the rail line was officially abandoned. As a result, Indiana Southwestern’s easements terminated, and the landowners’ fee simple interests became unencumbered by any easements.

On January 9, 2015, the landowners filed their amended complaint, asserting that the issuance of the
NITU on April 8, 2011, effected a permanent Fifth Amendment taking of their property. The landowners alleged that they each owned their property in fee simple; that Indiana Southwestern owned an easement across each of their properties; that their properties would no longer be burdened by that easement if the easement was abandoned or authorized for use beyond its scope; and that, but for the
issuance of the NITU, they would own their land unencumbered by any easements. Memmer I, 150 Fed. Cl. at 716–17.

In its decision, the Court of Federal Claims determined that the landowners had established that Indiana Southwestern would have abandoned the rail lines in the absence of the NITU. Id. at 748. The court relied on the fact that Indiana Southwestern initiated the process for abandonment by filing a notice of exemption in which it represented that it had no local traffic move over its lines for at least the preceding two years and averred that it would consummate the abandonment of the lines “on or after January 15, 2011.” Id. (quoting J.A. 1254).

Following its decision, the court denied the landowners’ motion for reconsideration. Memmer v. United States, 153 Fed. Cl. 707 (May 20, 2021). After the parties then stipulated to damages and interest, the court entered final judgment on June 7, 2021. J.A. 77. Appellants timely appealed and the government timely cross-appealed.

In the Federal Circuit’s opinion, Judge Schall first addressed the government’s cross-appeal that challenged the lower court’s “conclusion that the issuance of the NITU in this case effected a taking.” He explained that the Federal Circuit cannot “conclude that the facts found by the [lower] court are insufficient support for the finding that ‘Indiana Southwestern had every intent to abandon the railroad lines during the period of time that the NITU was in effect, and was prevented from doing so by the existence of the NITU.'” Moreover, he explained that the government did not present evidence to indicate that the “Court of Federal Claims erred in finding the evidence that Indiana Southwestern would have relinquished its rights to its right-of-way during the NITU period outweighed the evidence to the contrary.”

Next, Judge Schall addressed the parties’ arguments about when the taking ended. Memmer argued that “the taking lasted until Indiana Southwestern consummated its abandonment on August 31, 2021.” According to Memmer, the taking lasted until that date because, while “the requirements for abandonment under Indiana law were satisfied upon the railroad’s removal of the rails, . . . Appellants’ reversionary rights were still blocked until the railroad filed a notice of consummation of abandonment.” The government, by contrast, argued that “the taking ended when the NITU expired on November 8, 2013, because after that date, the decision to fully abandon the rail line, and thus the continuation or non-continuation of the easement, was solely in the control of Indiana Southwestern.”

Judge Schall explained that the panel ultimately agreed with the government. The panel concluded that “the taking ended upon expiration of the NITU on November 8, 2013 . . . because it was on that date that the United States was no longer responsible for mandating the continuation of the easement because, from that point forward, the decision rested solely in the hands of Indiana Southwestern.”

In short, in this case the Federal Circuit held the “Federal Claims did not err in finding that Appellants suffered a temporary taking of their property” but did err “in finding that the taking lasted until January 7, 2014.” As a result of its analysis, the Federal Circuit affirmed “the Court of Federal Claims’ determination on liability, but . . . vacate[d] its ultimate judgment as to compensation and interest.” Thus, the case was remanded to the lower court for “a determination of the compensation and interest to which Appellants are entitled as a result of the taking of their property having ended on November 8, 2013, rather than on January 7, 2014.”