Eaton_dh.doc

September 30, 1999

VIA E-MAIL

Mr. Phillip Eaton

Re: Railroad Easements & Leases

Dear Mr. Eaton:

Your second e-mail message confirmed my suspicions that your questions concerned the lease of Burlington Northern-Santa Fe (BN-SF) Railroad property in Sandpoint. Although the laws and statutes governing the Office of the Attorney General prohibit me from offering legal advice to private individuals, I can provide the following general information.

As you probably already know, the Northern Pacific Railroad is the forerunner for BN-SF. In the late 1980s, Burlington Northern divided itself into two separate companies. The Railroad continued to operate as one division and the other division (Burlington Resources, Inc.) included the Glacier Park Company. Glacier Park was the reality arm of the Great Northern Railroad.

The starting point for evaluating your question is to determine the exact nature of the Railroad’s interest in the underlying property. Traditionally, railroads obtained property in one of three ways. First, railroads were able to obtain federal land grants or patents to land. Second, railroads were able to obtain rights-of-way across private property through easements or other legal instruments. Finally, railroads simply purchased the underlying property. In the first two instances the property reverts to the underlying or adjacent property owners when the railroad ceases to use the property for railroad operations. If the railroad owns the property, then it has the right like any other property owner to dispose of its property in a manner it sees fit unless the lease agreement restricts the disposition of the property. It is not unusual for the railroad to own property in communities because it usually had to purchase the property. Consequently, I suspect that the railroad owns or owned this property in fee.

Over the past few years, the railroads have significantly increased the annual rates for leases. However, the Idaho Public Utilities Commission does not have jurisdiction over railroad leases. Further complicating your situation is the question of who actually owns the property. Your message indicated that SandIda purchased the property at auction but BN-SF is paying the property taxes.

Given the legal issues involved, I suggest that you consult with an attorney regarding your rights, if any, under the lease agreement. Although I cannot recommend an attorney, you might contact the Idaho Bar Association at [phone] for a referral. I hope you find this information helpful. If I can provide additional information, please contact me.

Sincerely yours,

Donald L. Howell, II
Deputy Attorney General

DH:v

L:Eaton_dh
Phillip Eaton
September 30, 1999
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