OTTER.docx

HAND DELIVERED
July 10, 1998
The Honorable C. L. “Butch” Otter
Lieutenant Governor
Statehouse
Boise, ID 83720
RE:Your Inquiry Regarding Cessation of Railroad Service
Dear Lieutenant Governor:
The Attorney General has asked me to respond to your letter of July 8, 1998 regarding the termination of railroad service.  In particular, you suggested that when railroads cease to serve Idaho customers, their real property “should revert to the state or to the contiguous property owners. . . .”  You observed that this was your logical conclusion but not necessarily “a legal one.”  In may what be a rare instance, your “logical conclusion” is in fact what the law generally compels.
Since railroads entered Idaho at the beginning of this century, they have acquired right-of-way property in one of three ways.  First, they acquired land from “grants” provided by the federal or state government.  Second, railroads obtained real property by obtaining “easements” from federal, state, or private property owners.  Finally, railroads simply purchased property “in fee” simple.  The first two acquisition methods are generally referred to as “reversionary lands,” while the purchased or “in fee” property is referred to as “non-reversionary.”  
Historically, railroads were able to acquire right-of-way property by the grant or easement method in rural parts of this state.  Conversely, railroads were forced to purchase property where their lines ran through or near established communities.  The reason for this was that property surrounding Idaho’s early communities was the first to be placed into private ownership.  Consequently, the railroads were forced to purchase land or easements (and occasionally condemn land) to construct lines through towns.  For example, Union Pacific owns most of the right-of-way through the city of Nampa.  When a line is abandoned, we find typically that 80% of the right-of-way is reversionary.
The cessation or abandonment railroad line service is governed by federal law.  Before railroads can abandon service on a rail line, it must obtain permission from the Surface Transportation Board (STB).  49 U.S.C. § 10903.  The STB (formerly the Interstate Commerce Commission) is now a separate operating unit of the U.S. Department of Transportation.  Railroads intending to abandon or discontinue service of a railroad line must file an application with the STB as well as notify the Governor, large rail shippers, and the general public.  47 U.S.C. § 10903(a) and (a)(3).  Only if the STB finds that the “public convenience and necessity” does not require continued rail service, will it authorize abandonment.  The STB must also “consider whether the abandonment or discontinuance will have a serious, adverse impact on rural and community development.”  49 U.S.C. § 10903(d).  Our experience is that the STB rarely denies an abandonment application.
The Idaho PUC is required under state law to conduct a hearing and to represent the State before the STB if the Commission  determines that the abandonment would adversely impact Idaho communities.   Idaho Code § 62-424.  More specifically, if the Commission finds that (1) the abandonment would adversely affect the area being served, (2) impair market access for Idaho goods and services, and (3) the line has a potential for profitability, then the Commission may oppose the abandonment. Over the past 10 years the Commission has fought several abandonments and, in at least two instances, to the U.S. Court of Appeals.  Idaho v. Interstate Commerce Commission, 35 F.3d 585 (D.C. Cir. 1994); Idaho PUC v. Interstate Commerce Commission, 939 F.2d 784 (9th Cir. 1991).
Returning to your basic question, if the STB grants the railroad permission to abandon a right-of-way, then the “reversionary” lands revert back to the underlying or adjacent property owner.  For example, if an individual owns contiguous land on either side of the railroad right-of-way, then the railroad land reverts to him.  If different individuals own contiguous property on either side of the railroad right-of-way, then their common property boundary is relocated to the center of the former right-of-way.  Conversely, the railroad will continue to own its “non-reversionary” property and, as in the case with any private property owner, may sell or keep the land as it sees fit.
Once the STB authorizes abandonment, the reversionary lands do not immediately revert to underlying or adjacent property owners.  The railroad is allowed to remove its property and to salvage railroad materials such as ties, switches, and rails.  When salvage operations are complete, the reversionary lands revert.
There are only two exceptions to the property reverting.  First, federal law does allow another railroad to acquire the line if it intends to continue rail operations.  49 U.S.C. § 10904.  Second, if the STB finds that the property of the proposed abandonment is appropriate for other “public uses”, then it may allow these other uses to intercede.  49 U.S.C. § 10905.  Other public uses include highways, other forms of mass transportation, conservation, energy production or transmission, and recreation.  Over the objections of reversionary property owners, the United States Supreme Court has upheld this practice.  Preseault v. Interstate Commerce Commission, 494 U.S. 1 (1990).  Rails-to-trails usage is encompassed within this latter exception.  The policy behind allowing these other public uses is that they in essence preserve the right-of-way in the event that the rail line were ever to be reconstructed. 16 U.S.C. §§ 1241 et seq.; Union Pacific—Abandonment, Canyon and Ada Counties (Stoddard Branch); ICC Docket No. AB-33, Sub-No. 79 (Feb. 2, 1995).
I hope you find this information helpful.  If I can answer further questions, please do not hesitate to contact me at 334-0312.
Sincerely,
Donald L. Howell, II
Deputy Attorney General
cc: Terry Coffin, OAG
Susan Rowe, Governor’s Office
Dennis Hansen, PUC
bls/L:otter.dh