Preseault v. ICC - Oral Argument

Argument of Michael M. Berger

Chief Justice Rehnquist: We'll hear argument next this morning in No. 88-1076, J. Paul Preseault v. Interstate Commerce Commission.

Mr. Berger, you may proceed.

Mr. Berger: Mr. Chief Justice and may it please the Court, this case involves a congressional intent to preempt state real property law throughout the country and in so doing transform private property into public recreational hiking and biking trails.

This morning I would like to address key elements of the two fundamental issues in this case.

First, the invalidity of this statute under the Fifth Amendment, examining both the Second Circuit's broad holding that under no set of facts could this statute ever be a taking of property, and then discussing the inability of the claims court to provide compensation for any taking which might occur because of the strict congressional prohibition on the expenditure of funds which were not appropriated for the purpose of this statute.

Second, I would like to discuss the invalidity of this statute as a commerce clause regulatory measure in light of the fact that the Interstate Commerce Commission cannot approve the conversion of an abandoned railroad right of way to a recreational hiking or biking trail until after it first determines that there is no future railroad need for the particular right of way in question.

I would like to turn first, then, to the Fifth Amendment problems in this case.

First, what the statute does is clearly to override and change settled state law.

The reason, in fact, why this statute was enacted in 1983 as an amendment to the National Trails Act was that trail groups had tried to transform abandoned railroad rights of way into recreational trails before that and found themselves confronted by state courts which would not permit it.

The reason that the state courts would not permit it is that what the railroads acquired, usually in the 1800s, was an easement for railroad right of way purposes.

And under settled state law in virtually every stated in this nation, once the railroad stopped using the right of way for railroad purposes, for running trains, the easement would vanish and the underlying fee title owner would be entitled to full use, enjoyment, and possession of the property.

So that state courts were not, based on that body of law, permitting the transformation of abandoned rights of way into some other use because the railroad in a very classic sense owned nothing and therefore could transfer nothing.

Unknown Speaker: Mr. Nance... excuse me... Mr. Berger, is it possible that the state law that applies to define the property interest of your clients would take into account the federal determinations of public purpose or railway use?

Mr. Berger: The major--

Unknown Speaker: Is it possible that the state law determination would look back at the federal position?

Mr. Berger: --I believe it does work into the calculus, Justice O'Connor.

The way that it works in is that it's been consistently held both by this Court and by the Vermont Supreme Court that until the Interstate Commerce Commission declares an abandonment of a railroad right of way there is no room for the state law to come into effect.

State law, until that point, is preempted by the supremacy clause.

And my clients have no quarrel with that state of affairs where the Interstate Commerce Commission, exercising its expertise on the need for rail transportation and the need for particular rights of way, determines whether the abandonment of a right of way is appropriate in a particular case.

Once there is an abandonment, however, this Court's opinions are likewise clear that state law then takes over and controls and the ICC and the federal determinations are out of the picture and--

Unknown Speaker: Well, here, of course, they may take the position that there still has been no abandonment because of the ultimate reserved potential use.

Mr. Berger: --The way that that works, Justice O'Connor, is that before the ICC considers whether to approve the negotiations between a railroad and either a state and local agency or a recognized trail organization to transform this right of way into a recreational right of way from a full-blown transportation right of way, the ICC first has to determine that it is appropriate for the railroad to abandon railroad usage of this right of way and that there is neither present nor future public railroad need for the right of way.

That's in Section 10903, 49 USC, and the statute is very clear.

The ICC is also very clear on that.

They said earlier this year that in every trails case before they reach the trail question they will already have decided that the public use does not require continued railroad usage and permits the railroad to fully abandon the railroad usage.

Unknown Speaker: Even if you are correct so far, I suppose it's arguable that you still have a Tucker Act remedy for your clients to get compensation.

Mr. Berger: That is certainly the other question in this case, and I'd be happy to address that since Your Honor is interested in it.

The Tucker Act, of course... and I must confess I find it strange standing here arguing that there is no right on behalf of my clients to recover compensation and find the Solicitor General arguing, oh, yes, they should be getting money for this.

The... analyzing the Tucker Act question gets us into the issue of what action Congress authorized the federal government to take.

And it may get a little bit technical, but this Court in Ruckelshaus v. Monsanto, in the Regional Rail Reorganization Act cases most recently, concluded that the Tucker Act and a suit for compensation in the claims court is available for authorized governmental activity and only for authorized governmental activity.

If it's not authorized, then this Court and the claims court treat it as a tort and that's not available for recompense under the Tucker Act.

So, we have to examine the statute in this case to determine what is it that Congress authorized anybody to do under this statute.

And what we find is that Congress authorized the conversion of abandoned railroad rights of way into recreational hiking and biking trails if that could be done without the expenditure of federal money unless Congress had specifically appropriated money for this program in advance of the acquisition.

That's in Section 101 of this statute, and it is as clear an expression of congressional attempt to control expense as I've ever seen.

Unknown Speaker: Where will we find Section 101 of the statute?

Do you... do you have handy a ready citation to the appendix or somewhere?

Mr. Berger: It--

Unknown Speaker: If you don't--

Mr. Berger: --It's on page 18 of the Solicitor General's brief, Your Honor.

Unknown Speaker: --Thank you.

Mr. Berger: What the statute says, and I'll be happy to read it for the record and for the Court, is

"Notwithstanding any other provision of this act, authority to enter into contracts and to make payments under this act shall be effective only to such extent or in such amounts as are provided in advance in appropriations acts. "

What the intent of Congress was in doing this was to create essentially a voluntary program that would result in no liability to the federal government if voluntary agreements could be worked out among the parties that they thought were involved in these proceedings.

The problem is that the way that the statute is set up, the way that the ICC administers it, the people who own the underlying fee interest in these rights of way are not even consulted, let alone brought into the picture.

Unknown Speaker: Well, the Solicitor General in his brief right after having set forth that section says that this is not sufficient to withdraw the Tucker Act remedy.

The language now is saying that any other provision of this act is a common provision in appropriation bills and is not the clear withdrawal of the Tucker Act remedy that we've required.

Mr. Berger: Your Honor, I recognize the Solicitor General has argued that position.

It seems to me that what we need to do is to look at what this Court has done with similar provisions in the past and with congressional restrictions on expenditures.

The classic case is the case which is cited in the briefs, called Hooe v. United States, a case this Court decided sometime in the '20s, I believe, but was relied on this by Court in the Regional Rail Reorganization Act cases a decade ago to describe and illustrate what this Court meant by authorized congressional action.

What happened in Hooe was that the Congress had created the Civil Service Commission, authorized it to both exist and rent quarters.

And then it appropriated a sum of money for it to rent those quarters.

The Commission went out and rented quarters but instead of renting $4,000 worth or space like Congress had told it to do, the Commission had a $6,000 appetite.

When the landlord accepted the rent from the Commission, didn't complain about it, never sued over the next couple of years to throw the Commission out of the space that wasn't being paid for, the landlord sued in the claims court and thought that he had either an implied contract from the government to pay for this extra space which was being occupied or he had a constitutional claim for a taking of his property without payment of compensation.

What this Court said was, analyzing it under the Tucker Act, when Congress said you could have $4,000 to rent space, that's what Congress meant.

And Congress did not authorize the occupancy of any space beyond what $4,000 would buy.

Therefore, the occupation of additional space by an agency of the federal government was unauthorized governmental activity and at best was a tort that was not compensate... compensable in the claims court either as an implied contract or as a constitutional remedy for a taking of property by the government.

This was not authorized governmental conduct.

And, as I said, when this Court decided the Regional Rail Reorganization Act cases a decade or so ago and examined some of the early precursors to this reorganization of the transportation statutes, it quoted from the Hooe case with approval on just what is authorized governmental action and what is not.

Unknown Speaker: Well, then, if I own some land with a stream flowing through it and the Corps of Engineers goes on that land and builds a dam and diverts the water, I don't have a Tucker... an inverse condemnation action if it turns out that action of the Corps of Engineers was not authorized by Congress?

Mr. Berger: Your Honor, that's what this Court has said.

Candidly, I'm not all comfortable with some of those opinions but I think that they are there.

And as I say, as recently as the Regional Rail cases this Court quotes that line of authority... with approval... saying that in effect has carved out a branch of actions which the Court says are not actions of the government but are actions by government officials unauthorized by Congress, and the remedy for those actions is not in the claims court.

Unknown Speaker: Well, in this case the prohibition against expenditures of the money may have referred to expenditures other than expenditures for takings, i.e., staff to negotiate these easements and so forth.

I don't think you necessarily can construe this statute as applying only to payments for takings.

Mr. Berger: Justice Kennedy, I don't construe it only as applying to that.

I construe it as applying across the board to takings as well as to all of the other--

Unknown Speaker: But my point is--

Mr. Berger: --and other needs by--

Unknown Speaker: --the language, it seems to me, can be given some effect and still allow a Tucker Act claim.

Mr. Berger: --Certainly it could be given some effect.

I can't quarrel with that.

But it seems to me that the statute, as written, doesn't lend itself to that sort of an interpretation.

It's a broadly written statute which, it seems to me, is a clear indication of what the slim legislative history in this case reflects.

And that is that what Congress wanted to do was to create these trails if it could do so without spending money.

If it had to spend money, I don't think Congress was interested in this--

Unknown Speaker: Well, what if we agree with the Solicitor General and think you do have a Tucker Act remedy?

What do we do in this case?

Affirm the judgment on a different ground?

Mr. Berger: --Well, Justice O'Connor, I certainly think it would have to be with a very different approach than the one that the Second Circuit took because what the Second Circuit said was that under no circumstances do we have a taking here which anybody could remedy.

So that if the Court were to agree that there is a Tucker Act remedy available here, there would certainly have to be some dealing with that issue and a clear expression from the Court that that in fact is what the underlying fee property owners in these trail conversions are supposed to be doing and--

Unknown Speaker: Well, we also don't know what the Vermont law is as yet, do we?

Mr. Berger: --Well, it's been cited to the Court but there certainly has been no determination--

Unknown Speaker: Right.

Mr. Berger: --in this case.

Both the ICC and the Second Circuit simply assumed that Mr. and Mrs. Preseault had the interest that they claimed, that there would be an interference with it, but that it did not present a Fifth Amendment problem.

Unknown Speaker: Suppose... suppose there is a property with a railroad easement on it and a reversion, the reversion to take effect when the easement is no longer used for railroad purposes, and the ICC says, we're pretty sure that this route will be used in 25 years and therefore we do not allow an abandonment.

Is that a taking of the property?

Mr. Berger: No, Your Honor.

That's an entirely different situation.

What we would have there, Justice Kennedy, is an application of the existing regulatory scheme as it is intended to operate and as the fee owners underlying these rail easements understand it to operate.

And that is that the ICC determines whether in a particular case abandonment of the right of way is appropriate.

Please recall that what we have in this case, however, is something which is wholly different.

If the ICC decided there would be no abandonment, then the tracks, the ties, the bridges, the trestles, they all remain in place, and the railroad is responsible for maintaining them if it wants to hold on to that possibility of reactivating the rail line in 25 years.

What we have in a Trails Act conversion is that the abandonment is in fact approved.

What the ICC says is we don't need this property for railroad use anymore, you may go forth, tear up the tracks--

Unknown Speaker: Including future railroad use, based on what you've told us earlier that the statute requires?

Mr. Berger: --The statute is very clear that the ICC in authorizing abandonment must consider whether there is any future railroad need for this property, and if it finds that there is, it must deny the abandonment.

In this case, of course--

Unknown Speaker: Do railroads ever remove tracks and trestles and ties but keep the right of way because of the possibility of future use, i.e., that they'd then lay down new, more modern tracks and so forth?

Mr. Berger: --I suppose they could do that, Your Honor, and I'm sure in some cases that in fact happens.

Whether it happens in cases where they owned only a right of way for railroad purposes, I sincerely doubt.

I think where you have that situation you would find it where the railroad had bought fee title to the right of way area and wanted to clear its tracks off.

When the ICC authorizes abandonment, it authorizes full abandonment.

When it authorizes a discontinuance in service, the tracks, ties, trestles, bridges all remain in place for reactivation.

What we have here in this situation is somewhat of a... a different angle because the railroad in question never asked anybody for permission to stop running along this route.

They simply stopped 14 years ago, tore up the ties and tracks and put them to other use, and when Mr. and Mrs. Preseault decided that they had had enough and they wanted to clear their title to the land and they went to the ICC to ask the ICC to declare a de facto abandonment here, the railroad stepped in and said, oh, yes, by the way, why don't you approve what we did ten years ago.

The situation is a little off the norm factually, but all of those facts are really sort of only in broad brush in the record here because no court has ever examined what the facts are in this case.

Unknown Speaker: Mr. Berger, do you have any idea how... how expensive a pig in the poke this statute would have been if... if indeed it's to be interpreted the way the government says as simply authorizing the taking of land and we'll pay the bill later when it's presented?

Do you have any idea how much--

Mr. Berger: Justice Scalia--

Unknown Speaker: --how much money you're talking about for all these rights of ways that--

Mr. Berger: --I honestly don't, Justice Scalia.

All I can tell you is that the... what the record does reflect is that approximately 3,000 miles of right of way are being abandoned every year and that that was one of the reasons why the trail organizations wanted to get Congress involved in this and why there was such a nationwide interest, because this is happening in many states around the country.

But at 3,000 miles a year, some of this land is quite valuable.

The case that's before the Court today involves a right of way that runs essentially along the lakefront in Burlington, Vermont.

It is quite expensive land.

The--

Unknown Speaker: --Do you know what percentage of those... well, I'm sure you don't... what percentage contain a reversionary interest?

Is that more common or more unusual?

Mr. Berger: --It is the more common, as I understand what has happened in these cases, Your Honor.

The railroads in many cases... in many states, rather, including Vermont, were essentially forbidden either by statute or by case law from acquiring anything other than an easement for right of way purposes.

And even where they weren't, they elected to acquire the lesser estate in the land or the property owners at the time elected to retain some interest in case railroad usage should cease at some future point.

That way they would be able to reclaim and reuse what was left.

But it is a substantial problem, if in fact there has to be payment, which gets us back into the skimpy legislative history of this program where the Congressional Budget Office examined the rails-to-trails program and the other amendments to the Trails Act in 1983 and concluded, with the concurrence of the House committee that examined it, that the funding required for all of these amendments would be, in their words, insignificant.

And I would suggest to you that almost any value you placed upon 3,000 miles of right of way every year is going to be something more than insignificant even in the context of determining the federal budget.

What we've got here is a program that could in fact result in substantial judgments.

We have a statute whereby Congress said it didn't want to spend money unless it approved the expenditure of that money in advance in order to keep some control over what those potential federal expenditures might be.

Unknown Speaker: I take it the act would have substantial effect if it were confined to the cases in which the railroad does own the fee.

Mr. Berger: The act, in fact, would have no application at all if it were confined to cases in which the railroad owns the fee, Justice Kennedy.

It was designed to operate and needed to operate only in those situations where the railroad owned an easement, subject to reversion.

The point being, and the ICC's reports bear this out, that where the railroad owns fee title, the railroad has always been free to transfer its interest to a state or local government or a trail organization for any use that it wanted to.

Unknown Speaker: Well, but doesn't this statute set forth a policy to encourage the ICC to work with the railroads to do that?

Mr. Berger: The statute says it encourages the ICC to do that.

In practice what happens is that the ICC simply holds its abandonment hearings.

If during the proceedings up... leading up to abandonment some state or local government agency or a recognized trail group files papers with the ICC indicating an interest in acquiring the property to operate a trail on, then the ICC grants the railroad and that organization 180 days after the determination that an abandonment is appropriate in order to see whether they can negotiate voluntarily any transfer of use to a recreational trail.

The ICC has clearly said that its function in this process is purely ministerial, to provide this brief time period for negotiations.

And if either of those parties to the negotiation, either the railroad or the trail proponents on the other hand, do not voluntarily wish for whatever reason to consummate an agreement, the ICC has no authority to compel an agreement or even if you listen to their words, to lean very hard on people to convince them that that's what they ought to be doing.

It's a purely ministerial ICC action to facilitate voluntary agreement between the railroads--

Unknown Speaker: Whereas for this type of land what?

What does the ICC do?

Mr. Berger: --That is the ICC's only role here, Your Honor.

Unknown Speaker: No.

In a reversionary situation.

Mr. Berger: Yes.

Unknown Speaker: What does the ICC--

Mr. Berger: In a reversionary situation, Justice Scalia, what the ICC does is to first rule that the railroad may abandon the right of way--

Unknown Speaker: --Right.

Mr. Berger: --and then if some agency has indicated interest in transforming the right of way into a recreational trail, the ICC issues one of two documents.

Either what it calls a Certificate of Interim Trail Use or Abandonment, or a Notice of Interim Trail Use or Abandonment.

It grants the parties 180 days to negotiate.

And if they reach agreement, then they reach agreement, and it's transformed into a recreational trail.

If they don't reach agreement, then that certificate automatically, without further ICC action, transforms into a complete Certificate of Abandonment and the railroad goes on its way.

Unknown Speaker: In the fee situation as opposed to the reversionary situation, does the Commission show any interest in the consideration that the railroad might receive in connection with the transaction?

I assume these must be fairly profitable for the railroads in the fee situation.

Mr. Berger: Justice Stevens, the railroads I'm sure have thought this was a wonderful idea.

They are in the non-fee situation in the easement situation, selling something that they were willing to simply walk away from.

Unknown Speaker: In the non-fee reversionary situation is consideration paid to the railroad by the trail people or the transferees?

Mr. Berger: In some cases it is, Your Honor.

In this case, since what we have is two government agencies, I'm not sure whether there was consideration paid.

In the more standard situation where you have a private railroad negotiating, the records are clear that the railroads are in fact being paid for the transfer of this interest, whereas the underlying fee owners are receiving nothing.

Unknown Speaker: Thank you.

Mr. Berger: If the Court has further inquiry, I'd be happy to respond.

Otherwise, Mr. Chief Justice, I'd like to reserve my time.

Unknown Speaker: Thank you, Mr. Berger.

Mr. Martin, we'll hear now from you.

Argument of Brian J. Martin

Mr. Martin: Thank you, Mr. Chief Justice, and may it please the Court:

First, I would like to respond to Justice Kennedy's last question.

The statute does apply and has meaning in the fee simple situation and the railroad's incentive in that type of case would be to not abandon the railroad right of way because once it is abandoned, the ICC grants a Certificate of Abandonment.

If 20 years later the railroad wants to resume service, they would have to go through the initial application under 10903 of the Interstate Commerce Act for constructing a railroad and getting permission to run a railroad, which involves a more lengthy process.

Under this scheme, if they resume service in the future, even in the fee simple situation, all they would have to do is notify the Commission.

So, the statute applies to all railroad rights of way.

It has incentives to apply in every type of situation.

The Court could affirm the decision of the ICC, and this is an action for judicial review, on any of three grounds.

We urge the Court to affirm on the Tucker Act ground, that even if there is a taking, there is an available remedy for compensation, which is all the Constitution requires, and that remedy is the Tucker Act.

The two other possible grounds would be under Vermont law or, as the Second Circuit held, the statute may never result in a taking in either... in any case, in any conceivable case.

We think it would be inappropriate to resolve the case under Vermont law for essentially three reasons.

In the first place, the Commission did not look to Vermont law, did not resolve this case on the basis of Vermont law, and this is--

Unknown Speaker: But the court of appeals looked to Vermont law.

Mr. Martin: --No, it didn't.

It held that the statute may never result in the taking in any case.

Unknown Speaker: Well, it said until the ICC issues a Certificate of Abandonment, the railway property remains subject to the ICC's jurisdiction, and state law may not cause a reverter of the property.

And it said the Vermont Supreme Court recognized this.

Mr. Martin: Right.

The Vermont Supreme Court would not issue an opinion on the title as long as the ICC retained jurisdiction over the right of way if it had not issued--

Unknown Speaker: Well, there is no reverter until there is an abandonment.

That's what it seems to me the court of appeals said.

Mr. Martin: --Well, if it held... if it gave its views of Vermont law, if... if that's an interpretation of Vermont law, so be it.

But the ICC did not rest its decision on Vermont law.

Unknown Speaker: Well, I know, but we're reviewing the court of appeals.

Mr. Martin: You're also reviewing a decision of an agency.

This is an action for judicial review.

And under SEC against Chenery, the court generally confines its review to the explanation given by the agency for its decision.

And the agency does not want to get into the business of deciding title questions under state law.

The agency believes that the Tucker Act is available if there is a plausible or compensable--

Unknown Speaker: Well, that may be so, but doesn't the... doesn't the court of appeals have power to review whether or not the ICC has the authority to refuse to issue a Certificate of Abandonment?

Mr. Martin: --Certainly.

Unknown Speaker: And... so how do you go about that?

Why did it have the authority to refuse to--

Mr. Martin: Well,--

Unknown Speaker: --issue the Certificate of Abandonment?

Mr. Martin: --I don't think there's any dispute in this case that the ICC acted in accordance with its authority under Section 8(d) of the Trails Act.

Under that statute, the ICC--

Unknown Speaker: But it refused to consider the constitutionality of it, I suppose?

Mr. Martin: --It did... the ICC has expressed its opinion that it's constitutional because there is an available remedy, the Tucker Act, for compensation.

It did not express an opinion on whether or not there is a taking in this particular case, a taking of property.

Whether or not there is, it's still constitutional because the government of the United States will pay if you file and prove your case under the Tucker Act.

Unknown Speaker: Under the Tucker Act, Mr. Martin, and whether it's available, how do you deal with the Hooe case that is relied on by Mr. Berger?

Mr. Martin: The Hooe stands for the proposition that the government's action must be authorized.

Well, the ICC's decision is authorized.

It's explicitly authorized by Section 8(d) of the Trails Act.

Therefore, the... question comes down to is the Tucker Act available?

If it is, then the United States will pay for the ICC's action.

So it's another way to rephrase the central question, is the Tucker Act available.

Unknown Speaker: Well, but the argument they make is that the amendments to the appropriations act withdraw that authority--

Mr. Martin: Exactly.

Unknown Speaker: --when there are no funds.

How do you deal with that?

Mr. Martin: Well, that's clearly... their main argument is that Section 101 of the 1983 amendments is an unambiguous withdrawal of the Tucker Act remedy.

And that's the test, the test under the regional rail cases in Monsanto is that it must be an unambiguous withdrawal of the Tucker Act remedy.

Unknown Speaker: Excuse me.

You say the 1983 amendments?

Mr. Martin: Yes.

Unknown Speaker: Amendments to the Trails Act?

Mr. Martin: To the Trails Act.

The Trails Act was passed in 1968.

In 1983 they amended it with trails purposes and railroad purposes.

So we're talking about Section 8(d) of the Trails Act which was added by the 1983 amendments.

Unknown Speaker: Yeah, but the whole program we're talking about here is a 1983 program.

Isn't that right?

Mr. Martin: The rails-to-trails program is a 1983 program.

Unknown Speaker: So effectively this provision is contained in the act that we have before us.

It's not--

Mr. Martin: That's right.

Unknown Speaker: --This provision is just not an amendment to that Act that was adopted later.

It's--

Mr. Martin: No.

It's--

Unknown Speaker: --part and parcel of the whole package.

Mr. Martin: --It's an uncodified provision of the 1983 amendments, and the 1983 amendments is the rails-to-trails scheme.

Unknown Speaker: Okay.

Mr. Martin: It is not an unambiguous switch to the Tucker Act remedy, however, for two reasons.

The provision says that any payment under the 1983 amendments must be made in accordance with an appropriations law.

We think, in the first place, that a payment under the Fifth Amendment for a takings claim could not be a payment under the 1983 amendments.

The 1983 amendments have--

Unknown Speaker: Well, but it says authority to enter contracts shall be effective only to the extent or in such amounts as are provided in advance by appropriation.

Mr. Martin: --The ICC has entered into no contract in this case.

So the... provision they're relying on is the authority to make payment.

They're saying that the government has no authority to make a payment under the Tucker Act.

We think that 101 has nothing to do with the Tucker Act.

It has to do with payments made under the 1983 amendments.

And those amendments did a lot of things.

They designated new scenic trails, authorized expenditures for markers for trails and acquisition of other lands.

That's what 101 deals with.

Also, 101 restates the constitutional command found in Article I, Section 9.

No payments may be made without an appropriation of Congress.

Unknown Speaker: Suppose that we were to find that this act does effect a taking, if there is a reversionary interest--

Mr. Martin: Uh-huh.

Unknown Speaker: --and suppose that taking of reversionary interests amount to $20 million a year.

Mr. Martin: Uh-huh.

Unknown Speaker: Is it consistent with the congressional intent and with the purpose of this act for the government of the United States to argue that the claims court should dole out $20 million a year when the Congress thought it wouldn't cost a dime?

Mr. Martin: I think it is consistent, certainly under the principles for reconciling the Tucker Act and other statutes, as this Court's announced in Monsanto.

It's consistent for the following reasons.

When we first... finish answering Justice O'Connor's question which also applies to your question... Congress has appropriated money for takings.

There is a permanent standing appropriation, 31 USC 1304, to pay inverse condemnation claims, to pay Tucker Act claims.

We're informed maybe the United States pays perhaps $25 million a year for inverse condemnation claims under statutes such as the National Wild and Scenic Rivers Act and mining statutes, various statutes.

Water project acts, agricultural statutes.

In all those cases, Congress legislated against the background of the Tucker Act with the knowledge that takings claims would be resolved by the claims court.

I think in 1983 Congress did not focus on whether or not there would be a takings.

That's why there's nothing in the legislative history.

That's the same thing--

Unknown Speaker: Well, Congress also said in this act in Section 1247(d) that interim use... the rail-for-trail interim use... shall not be treated for any rule of law as an abandonment of the use of such right of way for railroad purposes.

Mr. Martin: --Uh-huh.

Unknown Speaker: Now, is that an attempt to foreclose any claim, even a Tucker Act claim?

Mr. Martin: No.

That is an attempt to override state law, which gives rise to plausible takings claims.

Without that provision, once the railroad ceased operating an active railroad and turned it into a bike path, under state law there might be--

Unknown Speaker: But it seems like a direct attempt to avoid exactly this situation of a potential Tucker Act claim for a taking.

Mr. Martin: --It was a direct attempt to make sure that there would be available bike paths.

It's not in reference to the Tucker Act or available compensation.

I don't think Congress thought about a taking, and I don't know how many takings there will be.

The statute has been in effect for six years; there's not been one claim filed under the Tucker Act in the claims court.

If there are... I mean, many of these railroad rights of way are held in fee; others are held by easements broad enough to cover another use.

And to answer your question of earlier on, many state laws have developed to the point to encourage this type of conversion themselves.

So there may be a state law taking.

I don't know.

But there would not be a federal law taking.

That's why we don't know how much the government would be liable in a claims court, but that's what the claims court is for and that's what the judgment to fund a permanent appropriation is for.

Unknown Speaker: Mr. Martin, would you tell me what you think this provision does mean if it doesn't coyer the situation of action taken under the act which... which must be compensated for?

What does the provision cover when it says,

"Notwithstanding any other provision authority to make payments under this act shall be effective only to the extent and in such amounts as are provided in advance in appropriations act? "

You mean to make payments that the act names in dollar amounts?

Are there payments that are named in the act?

Mr. Martin: Yes.

There are a number... the 1983 amendments covered a number of areas that designated new scenic trails, designated markers.

It authorized expenditures.

It gave money figures.

It authorized amounts but it was not an appropriations law.

Unknown Speaker: It gave money figures for other purposes?

Mr. Martin: For other purposes--

Unknown Speaker: But not for this.

Mr. Martin: --it gave money figures.

For acquiring certain trails as part of the national trails system.

Unknown Speaker: So you read under this act to mean to make payments in amounts specifically specified under this act, not to make payments required under this act?

I mean, you'll agree that if there is a taking, the payment is required by reason of this act, not by reason of the Tucker Act?

Mr. Martin: By reason of this act and by reason of the Fifth Amendment.

Unknown Speaker: Right.

Right.

Mr. Martin: I mean, it's probably more natural to say it's required by the Fifth Amendment than by this act.

That's the way the courts describe takings claims, as founded upon the Constitution.

But even if this 101 would apply to a takings claim, the requirement is an appropriations law.

Now, in many cases, many expenditures under the act, I don't know if the funds were appropriated to acquire all this land or to buy the scenic markers and the like.

That would... that requires a separate bill, of course.

But there is an appropriation to pay for takings claims.

So, the two statutes can be read consistently.

And the Court need not struggle too much.

And, of course, the test is is there an unambiguous withdrawal.

Unknown Speaker: That may be the general test.

But, you know, the thing that puzzles me about this case is you'd have to wonder if Congress would have enacted this particular statute if they would have thought they were incurring a very--

Mr. Martin: Exactly.

Unknown Speaker: --substantial liability.

Mr. Martin: We wondered about that too.

And Congress has a history of paying for this type of thing.

The--

Unknown Speaker: The statute seems to be structured in a way with this concept of railroad banking which is somewhat artificial--

Mr. Martin: --Uh-huh.

Unknown Speaker: --I would think because I guess most of these right of ways are not going to be used for future railroad... it looks like it was a devise to avoid financial responsibility.

Mr. Martin: And it may work if state--

[Laughter]

Unknown Speaker: But I would think it would be--

Mr. Martin: --if state law... state law may have developed to the point where they defer to the ICC's abandonment authority, whatever that is.

Unknown Speaker: --Yeah.

They might buy the Second Circuit's rationale.

Mr. Martin: Right.

Right.

Unknown Speaker: But it would seem to me that it would be the United States' interest to know as promptly as possible whether this would be considered a taking.

And I understand that the interest--

Mr. Martin: This particular case would be considered--

Unknown Speaker: --Pardon me?

Whether... assuming there is a reversionary interest... and we don't really know that yet--

Mr. Martin: --Right.

Unknown Speaker: --because I understood the Second Circuit to say we don't reach that question.

But... but if there were one... and this is kind of a test case for a whole lot of other cases... I... I understand your arguing the law, but I would think that the United States would have a great interest knowing as soon as possible whether they have this financial obligation or not.

Mr. Martin: Well, there are so many different hypothetical cases that... that resolving one particular case under Vermont law and under a particular right of way would not help the United States that much.

A holding under the Tucker Act would.

That would mean the ICC will continue its business and we would litigate takings claims in the claims court where we always do.

There we would examine the interests, we'd examine state law, we would examine the federal overlay and the like.

So that's the interests of the United States.

I wish we could know... resolve them all in one case but we don't think that we can.

The Commerce Clause argument I think is just a variation of the Fifth Amendment.

Unknown Speaker: Well, you do agree that state law ultimately will determine the extent and nature of the Petitioners' interest?

Mr. Martin: I think in this case that's true.

There are some rights of ways which are granted under federal statutes, so federal law would have something to say with it.

And there is also possible argument that any interests acquired since 1983 would have been taken subject to the federal statute we're talking about today.

Unknown Speaker: But in this case you would--

Mr. Martin: I think that's right.

Unknown Speaker: --say Vermont law should determine?

Mr. Martin: That's right.

Thank you.

Unknown Speaker: Thank you, Mr. Martin.

Mr. Dunleavy, we'll hear now from you.

Argument of John K. Dunleavy

Mr. Dunleavy: Mr. Chief Justice, and may it please the Court, on behalf of my client, the State of Vermont, and its fellows respondents, the City of Burlington and Vermont Railway, I urge this Court in the event it finds petitioner's taking claim right for review to hold that the Petitioners are not deprived of any property interest by Section 1247(d).

In essence, we submit to the Court that Section 1247(d) takes nothing and changes nothing.

Unknown Speaker: So you agree with the court of appeals?

Mr. Dunleavy: We do, Your Honor.

It leaves the Petitioners just where they would be if the ICC had ordered the railroad to keep running.

Unknown Speaker: Well, but that's like saying if my aunt were a man, she'd be my uncle.

[Laughter]

The ICC didn't order the railroad to keep running.

Saying the railroad could have continued using it for rail purposes so you really haven't lost anything.

In fact, they didn't, but they might have.

Even though you have a deed that says if we stop using it for rail purposes it's yours, you say, well, you haven't lost anything because, yeah, they have stopped using it for rail purposes.

But they might not have.

Mr. Dunleavy: Well, we think that--

Unknown Speaker: Now, that's not very appealing to me.

Mr. Dunleavy: --We think, Your Honor, that the rail banking is itself a legitimate railroad regulatory function.

I think one of the basic differences between our view and that taken by the Petitioners in this case, they characterize the transactions by which these rights of ways were assembled as just a series of private transactions.

That is really at odds with the history of how the railroads were built.

They were built and operated in an atmosphere... atmosphere of pervasive government regulation.

The rights of way were assembled by public service corporations that had the power of eminent domain, certainly one of the most far-reaching powers that the government can delegate to a private corporation.

The railroads, from the very beginning, it was understood that they would be regulated by governmental authority, either the states or, as has indeed in more recent years become predominant, the federal government.

Unknown Speaker: We're talking as much about the relationship between the railroad and the people from whom they bought the rights of way, as we are between the railroads and the government, aren't we?

The railroads did have to go out and condemn this property.

And I guess some of them got fee interest and I guess some of them got only easement.

Mr. Dunleavy: Well, Your Honor, I think this goes to the point that, as was held by the Vermont Supreme Court in the Fitzgerald case in 1980 and by this Court in Louisville and Nashville v. Mottley in 1911, that when parties enter into transactions with a railroad corporation which is subject to regulation by Congress under the Commerce Clause those parties are chargeable with knowledge that that regulation can have an effect on the behavior of the railroad in the future.

Unknown Speaker: Well, that might be the law of the State of Vermont, in which case I suppose there would be no taking here.

But certainly we can't speak for the law of 50 states on this subject.

Mr. Dunleavy: Well, we would submit, Your Honor, that the Commerce Clause has always been there.

Congress may not... it didn't establish the Interstate Commerce Commission until 1888.

It didn't start to regulate abandonments until 1920.

But when it did start to regulate abandonments in 1920, there were no grandfather clauses for railroads that were constructed prior to that time.

Unknown Speaker: Yeah, but suppose that under a given state law... forget Vermont for a minute... under a given state law the state would recognize a reversionary interest despite the fact that the ICC had said we're going to put this under rails for trails.

Mr. Dunleavy: Then I think, Your Honor, that that particular--

Unknown Speaker: Why isn't that a taking then?

Mr. Dunleavy: --I think that particular state's policy would have to yield to the supremacy clause.

Unknown Speaker: But the Commerce--

--Well, I mean, why doesn't the policy have to yield to the Fifth Amendment takings clause?

I just don't understand.

Mr. Dunleavy: The--

Unknown Speaker: If under state law a reversionary interest would be recognized and the federal government has somehow legislated and acted so as to take that reversionary interest, why isn't compensation required?

Mr. Dunleavy: --The action of the federal government, although it could not obviously have been specifically predicted, is occurring in an atmosphere where the possibility of government regulation under the Commerce Clause has always existed.

Unknown Speaker: Do you take the position that by acting under the Commerce Clause the federal government can avoid always having any takings problem?

Mr. Dunleavy: Not always, Your Honor.

Unknown Speaker: It can put somebody in physical possession of the reversionary interest--

--Not always.

--and there's no taking because it's under the Commerce Clause.

Mr. Dunleavy: Not always, Your Honor.

However, in a situation where we are talking about a railroad that was of indisputably interstate character from its very inception--

Unknown Speaker: It can do it for railroads?

Mr. Dunleavy: --I think clearly they can.

Unknown Speaker: That's an amazing argument.

What's your closest authority for this amazing argument in this Court?

Mr. Dunleavy: I think, Your Honor, probably the whole series of cases.

First, Colorado v. United States in 1926, which recognized... its a seminal case on the ICC's abandonment authority.

More recently Chicago and Northwestern v. Kalo in 1981.

The fact that ICC--

Unknown Speaker: Well, but those didn't really deal with the takings problem, did they?

Those dealt with the authority of Congress to regulate the railroads, were they not?

Mr. Dunleavy: --They go to the issue of... congressional authority under the Commerce Clause.

I think some of the... Colorado v. U.S. I think was addressed to--

Unknown Speaker: How about some of the navigational servitude cases?

Mr. Dunleavy: --Well, we would suggest to the Court that that situation is strongly analogous.

Unknown Speaker: There... in there they do deal with the question of taking.

They say that under some circumstances what you had was not something that was really a property right so there was no taking.

Mr. Dunleavy: Yes, Your Honor.

And I think the rationale used there is that although the state of title or the condition of title may vary from state to state, and in fact may be unknown, what is clear is that the property interest of reparian owners were subject to a dominant public servitude from the beginning.

And as long as the action of Congress takes place pursuant to that servitude, it does not result in a taking.

And I might... this is not a rare situation.

It's something that we encounter in a daily basis on Vermont... in Vermont.

One of our principal state highways is U.S. Route 7 which was... sections of it were laid out in the 1790s, early 1800s.

Obviously, the property owners involved in a condemnation in 1795 did not anticipate the presence of 80,000 pound motor trucks, power lines, fiber optic lines, sewers, guard rails, but they did understand that their land was being appropriated to a dominant public servitude and that the exact use of that would vary depending with changing public needs and also with actions of future governmental authority in regulating the use of that--

Unknown Speaker: So even though you say for railroad purposes, it doesn't mean for... it means for any purposes.

That's equivalent to giving a highway easement?

Do you think your state could... could use those highway easements for amusement parks in the future?

Mr. Dunleavy: --Well, this--

Unknown Speaker: I mean, I don't care whether it's... you know, it's a cart or a truck, it's still a highway.

But how is that comparable to saying that when a property owner gives a... gives an easement saying so long as it is used for railroad purposes.

What... what does it mean if it doesn't mean so long as it's used for railroad purposes--

Mr. Dunleavy: --Well,--

Unknown Speaker: --and not for a bike trail or a hiking path?

Mr. Dunleavy: --Justice Scalia--

Unknown Speaker: Or an amusement park?

Mr. Dunleavy: --I think there are two different issues there.

One is, of course, the issue or Vermont law which was not reached by the Second Circuit.

It is, incidentally, our position that Vermont law in effect equates highways with railroads and permits a variety of public uses.

But I think the point that is immediately presented in this case is the Commerce Clause regulation of railroads.

And I don't think one needs to--

Unknown Speaker: Well, I don't doubt that when the person gives an easement he knows that the federal government is going to determine the nature of that railroad, whether it can run, whether it can't run, whether the easement has to be abandoned.

And I'll even be willing to concede, if you like, that he knows that the federal government might pass an act like this that says in the future that is going to be used for a bike path.

But he doesn't know that in the future the ICC is going to be able to override the Fifth Amendment by saying in the future that's going to be used for a bike path even though we have no right to do it and we're not going to pay you.

The issue here, it seems to me, is not whether the ICC has authority.

Does anybody contest that the ICC has authority to do this if it wants to with payment?

The only issue is whether it overrides the Fifth Amendment.

And what case do you have that shows that the ICC can displace the Fifth Amendment?

Mr. Dunleavy: --Well, I think the... we don't argue that the Commerce Clause displaces the Fifth Amendment.

I think the Court's decisions on that are clear.

However, as in the navigational servitude cases, if the governmental action that is being reviewed is occurring pursuant to a servitude to which the property has always been subject, there is no additional taking even though the exact use of it may not have been specifically foreseen.

Unknown Speaker: Well, I thought this property... the easement was acquired many years ago for the purpose of putting on the railroad, that it required acquisition of the easement.

Is that right?

Mr. Dunleavy: The property was acquired in 1899 under condemnation powers of--

Unknown Speaker: Right.

Mr. Dunleavy: --the Vermont legislature delegated to the railroad.

Unknown Speaker: Exactly.

Mr. Dunleavy: But, Justice O'Connor, the record in this case is illustrative.

The statute provided that it was for a public use.

The legislature reserved the right to pass amendatory legislation and the general statutes in effect at that time even provided that the state could acquire the right of way for public ownership.

So the idea of the rigid static approach just--

Unknown Speaker: Could acquire it for free?

Mr. Dunleavy: --Excuse me?

Unknown Speaker: Could acquire it for free?

Mr. Dunleavy: Acquire it from the railroad.

Unknown Speaker: Without paying the railroad the value of what was taken?

Mr. Dunleavy: No, they would have to pay the railroad, but they--

Unknown Speaker: The takings clause would require that?

Mr. Dunleavy: --Yes, it would require that.

Unknown Speaker: Yes.

Mr. Dunleavy: I think in conclusion I would urge the Court to hold that any ICC action under Section 1247(b) is not materially different from other types of ICC action affecting railroad abandonments.

The only thing that is different here is that the Section 1247(d) shifts the burden of rail corridor preservation from the carriers to the trail sponsor.

Congress could have taken the heavy-handed approach that said simply, we're going to preserve all rail corridors and we're going to make the rail carriers bear the expense of that.

But obviously they made this decision and this is, of course, quite consistent with the general tenor of deregulation over the past few years that they would not do that and that in effect this is a subsidy that transfers the expense to the trail sponsors.

It is, nonetheless, a railroad purpose.

And the fact that the burden--

Unknown Speaker: Are there any regulations or rules that tell the trail sponsor what kind of steps he must take to preserve it for rail purposes?

Supposing they start building walls up and down and change it totally?

There is nothing to prevent the rail sponsor from doing anything that would make it effective in the--

Mr. Dunleavy: --The statute requires them to maintain the right of way and to acknowledge that it's subject to resumption of railroad purposes.

I don't think there is anything... any specific regulation.

In this particular instance, the lease requires them to maintain it and the ICC acknowledged that fact in its decision.

Unknown Speaker: --I see.

Mr. Dunleavy: We submit that the rule urged by Petitioners is not only impractical but analytically unsound in that it ignores the role of federal regulation under the commerce clause as an integral part of the burden of railroading for which the Petitioners' predecessors in interest were fully compensated in 1899.

Thank you.

Unknown Speaker: It's a curious evolution of federalism that a state would be before us arguing that under the Commerce Clause the federal government can take property rights that a state could not itself take.

Mr. Dunleavy: Well, contrary, Your Honor, to the Petitioners' suggestion, I think the record is clear that they had heard of the Commerce Clause in Vermont in the 19th century.

Thank you.

Unknown Speaker: Thank you, Mr. Dunleavy.

Mr. Berger, do you have rebuttal?

You have three minutes remaining.

Rebuttal of Michael M. Berger

Mr. Berger: Thank you, Your Honor.

I would like to touch briefly on the question raised by the Solicitor General--

Unknown Speaker: What remedy is it you are seeking?

Mr. Berger: --We are seeking invalidation of the statute, Justice White.

That is our belief... that the statute, as written, cannot constitutionally stand.

Unknown Speaker: And therefore there is a... therefore the ICC's decision has to be turned aside?

Mr. Berger: Both the Second Circuit and the ICC need to be reversed because they were operating under the assumption that this was a valid statute which authorized this sort of a transmogrification of private property into public property without even consulting the property owners.

Unknown Speaker: But at some point you can't win unless and until you show that some property has been... that your client has a property interest.

Mr. Berger: Once that's done, Your Honor, that's correct.

We're going to have to go back to court.

My clients began this litigation, as the record shows, as a quiet title litigation in the Vermont state courts.

They were unable to reach the merits of that action because the Vermont Supreme Court said you first have to get the ICC to sign off on its jurisdiction.

So we came to the ICC to try to get the ICC to sign off and what they did was to convert the property into a bike trail for the City of Burlington.

If we can get the appropriate ruling from this Court which will free us of those constraints placed by both the Second Circuit and the ICC, then we'll be able to find out under Vermont law--

Unknown Speaker: Of course, if the--

Mr. Berger: --what we have.

Unknown Speaker: --we wouldn't be facing any... much of a problem here if it had been decided in Vermont that your client didn't have a property.

Mr. Berger: If they had reached that issue and made that decision, the case wouldn't be here.

I'd have been sort of startled had they done that, given what I know of Vermont law.

Unknown Speaker: So we don't have to... really have to decide whether your client has a property interest or not?

Mr. Berger: I think, Your Honor, that's correct.

Unknown Speaker: And so we don't really have to decide Vermont law at all.

We can just--

Mr. Berger: I don't believe that's here.

What both the--

Unknown Speaker: --For purposes of this case we assume that he has a property interest.

Mr. Berger: --That is my understanding, Justice Scalia, of the posture of this case.

That both the ICC and the Second Circuit made that assumption and based their rulings on the assumption.

Unknown Speaker: Of course, we might want to avoid dealing with some of these issues by certifying the question to the Vermont Supreme Court.

Mr. Berger: If the Court wished to take that action, of course, that--

Unknown Speaker: We could avoid all sorts of constitutional arguments.

[Laughter]

Mr. Berger: --Perhaps they would be delayed, Your Honor, rather than avoided, if that were done.

And the--

Unknown Speaker: Well, no.

Not if the Vermont court said there is no property interest here, the reversion doesn't ripen until there is an abandonment.

Mr. Berger: --Well, that's where we were before and that's why we need the ICC's--

Unknown Speaker: I know.

I know.

Mr. Berger: --ruling on whether there is an abandonment or not.

Unknown Speaker: I know.

But we still... if the Vermont Supreme Court said that no reversionary interest arises until there is... until the ICC has issued a Certificate of Abandonment--

Mr. Berger: The ICC has effectively done that, Your Honor, subject only to this Trails Act conversion which takes place after they decide that abandonment is appropriate.

As they say, in every Trails Act case they first decide that they don't need this property for railroad use.

Then they reach that issue.

So, the ICC has reached that question--

Unknown Speaker: --Thank you, Mr. Berger.

Mr. Berger: --Thank you.

Chief Justice Rehnquist: The case is submitted.