The federal government has paid $49 million in claims in the past year alone.

Rails-to-trails projects — old railroad corridors re-purposed for hiking and biking — have exploded in popularity in recent years. Many of the 1,800 rail-trails that now exist across the United States run through remote areas, but there are lots that go through cities, too. The Elliot Bay Trail reaches downtown Seattle; the Katy Trail winds through cities in Texas, Oklahoma, and Missouri; and a whole bunch of rail-trails pepper the D.C. Beltway (via TrailLink):

Lately, these projects have come under heavy assault from adjacent landowners. Jenna Greene of the National Law Journal recently reported that the federal government has paid $49 million to property owners who filed just compensation claims against rail-trails this year alone. With 8,000 claims pending, according to Greene, the ultimate taxpayer liability could top half a billion dollars.

What went wrong? The answer goes back to a 1983 law that made it easier to convert old rail corridors into recreational trails. Before that time, potential trail managers often backed out of projects for fear of being drawn into a legal morass of land-ownership disputes.

The 1983 law tried to eliminate these problems through a provision called "railbanking." In simple terms, the railbanking process loans a corridor to trail managers with the caveat that active rail service can resume at any time if necessary. The provision effectively gives trail managers the same immunity from landowner lawsuits that railroads themselves enjoy. "These rights of way are treated as if they were still active rail lines, because they're railbanked for future rail service," says Andrea Ferster, general counsel for the Rails-to-Trails Conservancy.

What the railbanking provision can't do is stop landowners from suing the United States directly — claiming that the trails represent a new use of their old land, which therefore entitles them to just compensation. That legal route became easier in 1996, when the U.S. Court of Appeals for the Federal Circuit ruled in favor of a property claim against a rail-trail in Vermont. Since then, the federal government has been under assault with similar "takings" suits; Greene reports that one such case existed in 1990, compared with 80 on the books today.

The legalese can be confusing. Suffice it to say, the following scenario has now become all too common: a trail manager railbanks a former railroad corridor for recreational use, nearby landowners ask the federal government to compensate them (for land they wouldn't have been compensated for if a railroad still ran), and the federal circuit tells the Treasury Department to cut a check. Oh, and for its troubles, the United States doesn't even get the property deed under discussion.

"That is, in effect, insult to injury," says Ferster.

There's little hope of resolving the situation anytime soon. Even if the federal Surface Transportation Board stopped issuing new railbanking orders today, the thousands of existing claims would still work their way through the legal system. Congress held a hearing on the problem in 2002, but only the court system can really do anything about it.

To that end, Ferster blames the Federal Circuit for the "illogical and indefensible" reasoning, which she says contradicts Supreme Court precedent as well as some of the circuit's own rulings on takings claims outside the railbanking domain. She believes the only way out is for the Supreme Court to issue a new opinion. (The country's highest court is hearing a rail-trail case, as it happens, but not one that involves railbanking.)

"The United States of America shouldn't be paying any compensation to adjacent landowners for interests that were not taken from them," says Ferster. "These compensation cases will continue until the U.S. Supreme Court is asked to review them and puts a stop to it."

Top image: An old train station on the Katy Trail. Image courtesy of Flickr user MoBikeFed.

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