Who Owns the Rights to Railroad Rights-of-Way?

Volume 86 Number 1 (2019)

By:

Journal of Transportation Law, Logistics and Policy

In the 19th century, interest in populating the West grew but there was not a sufficient transportation structure to do so. To facilitate the settlement and development of the West, Congress granted railroads various rights of way under the “pre-1871 Acts” and the General Railroad Right-of-Way Act of 1875. The Acts were intended to provide the railroads with the necessary land to construct rail lines and additional land to be sold to finance construction.

However, the language in both the pre-1871 Acts and the 1875 Act did not articulate the nature of the railroads’ right of way. There was also little recorded discussion of the exact nature of the legal interest being conveyed to the railroads. Subsequently, disputes arose between the railroads and the adjacent landowners regarding the nature of the railroads’ interests. That has led to a Circuit split after a recent decision by the U.S. Court of Appeals for the Ninth Circuit.

The Ninth Circuit recently reversed a United States District Court’s grant of summary judgment against Union Pacific Railroad (“UP”). The Ninth Circuit’s holding conflicts with holdings in the Eighth and Tenth Circuits. UP has been leasing land under 1,800 miles of its right of way to the Santa Fe Pacific Pipeline (“SFPP”) and was challenged by adjacent landowners on UP’s ability to lease under its right of way. The District Court held that both the pre-1871 Acts and the 1875 Act granting rights of way to railroads required a “railroad purpose” and that UP’s lease to SFPP served no such purpose. The Ninth Circuit reversed the order granting a motion to dismiss UP’s Counterclaims and held that UP has the right to lease the subsurface because the Court found that the use of any oil in the pipeline for the operation of the railroad deemed the pipeline a railroad use. This article discusses the Ninth Circuit decision, prior case history, the legislative history of the pre-1871 Acts and the General Railroad Right of Way Act of 1875 and some possible implications of the decision, if it remains unchallenged or unchanged.