March 10, 2014 2:18PM

Supreme Court to Government: Stop Railroading Property Owners

Today, in Marvin M. Brandt Revocable Trust v. United States, the Supreme Court rebuked another attempt by the Obama administration to adopt a novel and extreme litigating position that was contrary to well-established precedent. Eight justices agreed with Cato’s amicus brief, holding that the United States does not retain a property interest in former railroad lands that are no longer used by railroads. Although this may seem like an arcane issue for Cato to be involved in, the case actually resembles a typical takings case, but this time the government tried to define a property right out of existence rather than pay compensation to the owners.

To be fair to the Obama administration, this case began in 2006, and both Republican and Democratic administrations have been litigating similar cases for some time. Brandt is a best seen as an example of how governments of all stripes will find the path of least resistance to accomplish its goals, including defining a property right out of existence to avoid paying for it.

First, a little background on property law for those who haven’t been to law school. You may have heard the term “bundle of rights” or “bundle of sticks” applied to property. Those phrases merely describe the various rights that people can have in property. It is possible to own something, such as prescription drugs, that you’re not allowed to sell. Thus, you wouldn’t have the “right to sell” in your bundle of rights.

When it comes to real property (the term lawyers use for land) there are many rights in the bundle, and those rights can be split up both temporally and spatially. For example, mineral rights can be sold or leased, as can the airspace above land. Those rights can then be split up temporally, as in an agreement to transfer mineral rights to a neighbor in 10 years for a period of two years, at which point the rights would revert back to the original owner. At the time of the agreement, the neighbor would have a “future interest” in the mineral rights (he would take possession of it in 10 years) and the original owner would have a reversionary future interest (in 12 years the rights will revert back to her).

In Brandt, the question was whether the U.S. government retained a reversionary interest in the easements it gave to railroad companies in the 19th century. Easements are generally rights of way. They give the right to move across someone’s property, but they do not give the right to build on the land or live on it. Historically, in American and English common law, when an easement was “extinguished” the rights would merge back into the rights of the underlying property owner. The owner would then have his property back, unencumbered by the easement. In this case, however, the government argued that possession of lands with abandoned railroad easements should revert back to the government, not to the landowners.

This may seem like a small and unimportant question, but there are hundreds of thousands of miles of former railroad tracks in the country, and 3,000-4,000 miles of track are being abandoned every year. Much of that trackland crosses the land of private landowners, particularly ranchers in the West, and thus who owns the land when the easement expires--the government or the landowners--is an important question. There is even a National Association of Reversionary Property Owners that has assisted over 10,000 property owners in litigation against the government.

So why has the government so doggedly tried to take this land? There are many reasons, but one is the “rails to trails” program, which turns former railroad land into hiking and biking trails. If former railroad land is owned by the underlying property owners, then the government has to pay compensation to take it. If the government owns it, then of course no compensation is needed. Over the years, the government has litigated dozens of these cases, and they have increasingly used tenuous arguments that one court called “so thin as to border on the frivolous.”

Today, a near-unanimous Court clarified who owns the property: the private landowners. Most damaging to the government’s position was the fact that, 70 years ago, the United States argued that the railroads only owned a common easement to the trackland, and, as explained, a traditional easement reverts back to the underlying property owner when extinguished. As Chief Justice Roberts wrote, “The Govern­ment loses th[e] argument today, in large part because it won when it argued the opposite before this Court more than 70 years ago[.]”

Despite Brandt’s arcane subject matter, it is an important victory for property rights. Stable and predictable property rights are vital to a well-functioning and free society. Not only do they facilitate commerce, but they protect the rights of private owners against the grabby hands of government officials who believe that they can put that property to better use. Now, if the government wants to turn rails into trails, they can pay for the land, just like anyone else.