Memmer v. United States

In the United States Court of Federal Claims

No. 14-135L

(Filed: November 2, 2020)

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JEFFREY MEMMER, GILBERT *

EFFINGER, LARRY GOEBEL AND *

SUSAN GOEBEL, OWEN HALPENY, * Trial Decision; Rails-to-Trails; Fifth

MATTHEW HOSTETTLER, JOSEPH * Amendment Taking; Indiana Law; Vacatur

JENKINS, MICHAEL MARTIN AND RITA * and Remand From Federal Circuit Before

MARTIN, McDONALD FAMILY FARMS * Addressing Merits of Cross-Appeals to

OF EVANSVILLE, INC., REIBEL FARMS, * Make a Record for Applying a Multifactor

INC., JAMES SCHMIDT AND ROBIN * Test (as directed in Caquelin); Effect of

SCHMIDT, * Vacatur; Cognizable Property Interests;

* Liability for a Taking When No Trail Use

Plaintiffs, * Agreement Executed, NITU Expires, and

* Abandonment Not Consummated; Arkansas

v. * Game & Fish; Causation; Extent of Taking;

* Damages for a Temporary Taking

THE UNITED STATES, *

*

Defendant. *

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Thomas S. Stewart and Elizabeth Gepford McCulley, Kansas City, MO, for plaintiffs.

David L. Weigert, Edward C. Thomas, James R. MacAyeal, and Daniel Pinkston, United States

Department of Justice, Washington, DC, and Denver, CO, for defendant.

OPINION AND ORDER

SWEENEY, Senior Judge

In this Rails-to-Trails case, plaintiffs own real property adjacent to railroad lines in

southwestern Indiana. They contend that the United States violated the Just Compensation

Clause of the Fifth Amendment to the United States Constitution by authorizing the conversion

of the railroad lines into recreational trails pursuant to the National Trail Systems Act (“Trails

Act”), thus acquiring their property by inverse condemnation. This case presents an issue of first

impression: whether there is a compensable taking in the situation in which the issuance of a

Notice of Interim Trail Use or Abandonment (“NITU”) did not lead to a trail-use agreement, the

NITU expired, and the railroad company did not file a notice of consummation of abandonment

despite having no intention to use its line.

The court initially determined liability upon the parties’ cross-motions for summary

judgment. Thereafter, the parties reached a settlement on the proper amount of damages and the

court entered judgment. Both plaintiffs and defendant appealed and then, shortly thereafter,

jointly requested that the United States Court of Appeals for the Federal Circuit (“Federal

Circuit”) vacate the court’s summary judgment decision and judgment to enable further

proceedings consistent with the Federal Circuit’s decision in Caquelin v. United States

(“Caquelin I”), 697 F. App’x 1016 (Fed. Cir. 2017) (per curiam). The Federal Circuit granted

the parties’ request and vacated the court’s judgment in its entirety. Consequently, none of the

court’s rulings and orders that provided the basis for that judgment survives, requiring the court

to approach this case with a blank slate.

In accordance with the Federal Circuit’s mandate, the court on remand allowed additional

discovery and then conducted a trial on liability and damages. As explained in more detail

below, the court awards damages to plaintiffs in an amount to be determined in accordance with

its findings and conclusions.

TABLE OF CONTENTS

I. BACKGROUND ........................................................................................................................ 3

A. Statutory and Regulatory Context ......................................................................................... 3

B. Fifth Amendment Takings and the Trails Act....................................................................... 6

C. Procedural History................................................................................................................. 7

II. LIABILITY: PROPERTY INTEREST .................................................................................. 11

A. Legal Standards ................................................................................................................... 11

1. Deed Construction ........................................................................................................... 12

2. Scope of Easements ......................................................................................................... 14

B. Findings of Fact................................................................................................................... 14

C. Conclusions of Law............................................................................................................. 18

1. Property Interests Acquired by Indiana Southwestern’s Predecessors ............................ 18

a. The Type A Deeds ....................................................................................................... 18

b. The Type A-1 Deeds .................................................................................................... 19

c. The Smith Deed............................................................................................................ 19

d. The Davis Deed............................................................................................................ 20

e. The Side Track Deed .................................................................................................... 20

2. Scope of the Easements Acquired by Indiana Southwestern’s Predecessors .................. 21

3. Existence of the Easements at the Time of the Alleged Taking ...................................... 22

III. LIABILITY: FIFTH AMENDMENT TAKING .................................................................. 22

A. Legal Standards ................................................................................................................... 22

1. Nature of a Taking ........................................................................................................... 23

2. Causation.......................................................................................................................... 24

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3. Abandonment Under Indiana Law ................................................................................... 25

B. Findings of Fact................................................................................................................... 28

1. Proceedings Before the Board ......................................................................................... 28

2. Actions of Indiana Southwestern During the Proceedings Before the Board and

Thereafter .............................................................................................................................. 31

3. The Character and Use of Plaintiffs’ Properties .............................................................. 33

a. The Effinger Property .................................................................................................. 33

b. The Goebel Property .................................................................................................... 34

c. The Halpeny Property .................................................................................................. 36

d. The Jenkins Property.................................................................................................... 37

e. The Martin Property ..................................................................................................... 38

f. The McDonald Family Farms Property ........................................................................ 39

g. The Memmer Property ................................................................................................. 40

h. The Reibel Farms, Inc. Property .................................................................................. 41

i. The Schmidt Property ................................................................................................... 42

C. Conclusions of Law............................................................................................................. 43

1. The Nature of the Alleged Taking ................................................................................... 43

2. Causation.......................................................................................................................... 48

IV. DAMAGES: EXTENT OF THE CATEGORICAL TAKING ............................................ 51

A. Legal Standard .................................................................................................................... 51

B. Findings of Fact................................................................................................................... 52

C. Conclusions of Law............................................................................................................. 52

V. DAMAGES: PRINCIPAL AMOUNT OF JUST COMPENSATION .................................. 54

A. Legal Standard .................................................................................................................... 54

B. Findings of Fact................................................................................................................... 55

C. Conclusions of Law............................................................................................................. 61

VI. DAMAGES: INTEREST AND COSTS .............................................................................. 63

VII. CONCLUSION .................................................................................................................... 64

I. BACKGROUND

A. Statutory and Regulatory Context

During the last century, the United States began to experience a sharp reduction in rail

trackage. Preseault v. Interstate Com. Comm’n (“Preseault I”), 494 U.S. 1, 5 (1990). To remedy

this problem, Congress enacted a number of statutes, including the Trails Act, 16 U.S.C.

§§ 1241-1251 (2006). The Trails Act, as amended, provides for the preservation of “established

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railroad rights-of-way for future reactivation of rail service” by authorizing the interim use of

such rights-of-way as recreational and historical trails. Id. § 1247(d). This process is referred to

as “railbanking,” and is overseen by the Surface Transportation Board (“Board”), id., the federal

agency with the “exclusive” jurisdiction to regulate “the construction, acquisition, operation,

abandonment, or discontinuance” of most railroad lines in the United States, 49 U.S.C.

§ 10501(b) (2006); accord Chi. & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311,

320-21 (1981) (declaring that the authority of the Interstate Commerce Commission––the

Board’s predecessor, see 49 U.S.C. § 1302––over abandonments was both exclusive and

plenary).

Before railbanking can occur, the railroad company must seek to abandon its line, either

by initiating abandonment proceedings with the Board pursuant to 49 U.S.C. § 10903, or by

seeking an exemption from such proceedings pursuant to 49 U.S.C. § 10502. 1 A railroad

company that initiates abandonment proceedings may only abandon its line “if the Board finds

that the present or future public convenience and necessity require or permit the abandonment

. . . .” 49 U.S.C. § 10903(d); accord id. § 10903(e) (providing that the Board “shall” approve

applications for abandonment if it “finds public convenience and necessity”). In addition, there

is a class exemption from abandonment proceedings for railroad companies that “certif[y] that no

local traffic has moved over the line for at least 2 years” and satisfy other specified criteria. 49

C.F.R. § 1152.50(a)-(b), (d)(1); see also id. § 1152.50(c) (finding, in accordance with 49 U.S.C.

§ 10502, that when the stated criteria are satisfied, abandonment proceedings are unnecessary to

implement rail transportation policy or “to protect shippers from abuse of market power”). To

invoke this class exemption, a railroad company must file a notice of exemption with the Board,

id. § 1152.50(d)(2), and if the notice of exemption is complete, the Board must publish a notice

in the Federal Register noting the submission within twenty days of filing, id. § 1152.50(d)(3).

In conjunction with the railroad company’s abandonment application or notice of

exemption, the Board will entertain protests and comments from interested third parties. Id.

§§ 1152.25, .28(a), .29(a). Of particular relevance in this case, interested third parties may

submit a request for the interim use of the railroad line as a trail pursuant to 16 U.S.C. § 1247(d),

seek a public-use condition pursuant to 49 U.S.C. § 10905, and make an offer of financial

assistance (“OFA”) pursuant to 49 U.S.C. § 10904. Id.

If an interested third party submits a trail-use request to the Board that satisfies the

requirements of 16 U.S.C. § 1247(d), the Board makes the necessary findings pursuant to 49

U.S.C. § 10502(a) or 49 U.S.C. § 10903(d), and the railroad company agrees to negotiate a trail-

use agreement, the Board will issue one of two documents: if the railroad company initiated

abandonment proceedings, the Board will issue a Certificate of Interim Trail Use or

Abandonment (“CITU”), and if the railroad company is exempt from abandonment proceedings,

the Board will issue a NITU. Id. § 1152.29(b)-(d). The effect of both documents is the same: to

“permit the railroad to discontinue service, cancel any applicable tariffs, and salvage track and

materials, consistent with interim trail use and rail banking . . . ; and permit the railroad to fully

1

A railroad company may petition for an individual or class exemption, 49 U.S.C.

§ 10502(a)-(b), or, as relevant in this case, invoke a previously created class exemption, 49

C.F.R. § 1152.50 (2010).

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abandon the line if no agreement is reached 180 days after it is issued, subject to appropriate

conditions . . . .” Id. § 1152.29(d)(1); accord id. § 1152.29(c)(1). The Board will entertain

requests to extend the 180-day deadline to enable further negotiations. If the railroad company

and the interested third party execute a trail-use agreement, then abandonment of the railroad line

is stayed for the duration of the agreement. Id. § 1152.29(c)-(d); 16 U.S.C. § 1247(d). If no

trail-use agreement is executed, the railroad company is permitted to fully abandon the line. 49

C.F.R. § 1152.29(c)-(d).

Similarly, if an interested third party believes that it would be appropriate for the railroad

line to be put to public use, “including highways, other forms of mass transportation,

conservation, energy production or transmission, or recreation,” 49 U.S.C. § 10905, it can seek

the imposition of a public-use condition, 49 C.F.R. § 1152.28(a)(2). If the Board finds that the

line is “appropriate for use for other public purposes,” the railroad company may dispose of the

line “only under the conditions” imposed by the Board, which “may include a prohibition against

the disposal of the rail assets for a period of not more than 180 days from the effective date of the

decision authorizing the abandonment or discontinuance, unless the properties have first been

offered, on reasonable terms, for sale for public purposes.” Id. § 1152.28(b); accord 49 U.S.C.

§ 10905.

Abandonment of a railroad line may also be postponed if an interested third party makes

an OFA to subsidize or purchase the railroad line to continue rail service. 49 U.S.C. § 10904; 49

C.F.R. § 1152.27. If a railroad company filed an application for abandonment or a petition for an

individual exemption, the OFA must be made and filed with the Board within four months of the

railroad company’s application/petition or ten days of the Board’s decision granting the

application/petition, whichever is earlier. 49 U.S.C. § 10904(c); 49 C.F.R. § 1152.27(b)(1),

(2)(i). If a railroad company invoked a class exemption, the OFA must be made and filed with

the Board within thirty days of the Board publishing notice of the exemption in the Federal

Register. 49 C.F.R. § 1152.27(b)(2)(ii). “The Board will review each offer submitted to

determine if a financially responsible person has offered assistance. If that criterion is met, the

Board will issue a decision postponing the effective date of” its abandonment authorization,

decision allowing an individual exemption, or notice of exemption, as appropriate. 49 C.F.R.

§ 1152.27(e)(1)-(2); accord 49 U.S.C. § 10904(d)(1). Abandonment is postponed until the

railroad company and “a financially responsible person have reached an agreement on a

transaction for subsidy or sale of the line” or, if an agreement is not reached, the Board

establishes the conditions and amount of compensation for the transaction. 49 U.S.C.

§ 10904(d)(2). If an agreement is reached, abandonment of the line will not proceed. 49 C.F.R.

§ 1152.27(f). If no agreement is reached, the Board will vacate its decision postponing the

effective date of its abandonment authorization, exemption decision, or notice of exemption, id.

§ 1152.27(g)(2), (h)(7), allowing the railroad company to abandon the line.

To exercise its abandonment authority, a railroad company must “file a notice of

consummation with the Board to signify that it has . . . fully abandoned the line” either within

one year of “the service date of the decision permitting the abandonment (assuming that the

railroad intends to consummate the abandonment)” or, if a “legal or regulatory barrier to

consummation exists at the end of the 1-year time period, . . . not later than 60 days after the

satisfaction, expiration or removal of the legal or regulatory barrier.” Id. § 1152.29(e)(2). Upon

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the filing of a notice of consummation, the Board is divested of jurisdiction over the abandoned

railroad line and “state law reversionary property interests, if any, take effect.” Caldwell v.

United States, 391 F.3d 1226, 1228-29 (Fed. Cir. 2004); see also 49 U.S.C. § 10904(g) (“Upon

abandonment of a railroad line . . . , the obligation of the rail carrier abandoning the line to

provide transportation on that line . . . is extinguished.”). In the absence of a timely filed notice

of consummation, the railroad company’s authority to abandon the line “automatically

expire[s].” 49 C.F.R. § 1152.29(e)(2).

B. Fifth Amendment Takings and the Trails Act

As described in more detail below, plaintiffs claim that the issuance of a NITU prevented

them from obtaining fee simple ownership in the land underlying the railroad lines subject to the

NITU and that, consequently, they are owed just compensation under the Fifth Amendment. The

Fifth Amendment prohibits the federal government from taking private property for public use

without paying just compensation. U.S. Const. amend. V. The United States Court of Federal

Claims (“Court of Federal Claims”) possesses jurisdiction to entertain Fifth Amendment takings

claims against the United States, 28 U.S.C. § 1491(a)(1) (2012); Morris v. United States, 392

F.3d 1372, 1375 (Fed. Cir. 2004), such as claims premised upon the conversion of a railroad line

into a recreational trail pursuant to the Trails Act, Preseault I, 494 U.S. at 12-13.

To establish a taking, a plaintiff must first “identif[y] a cognizable Fifth Amendment

property interest that is asserted to be the subject of the taking.” Casitas Mun. Water Dist. v.

United States, 708 F.3d 1340, 1348 (Fed. Cir. 2013); accord Klamath Irrigation Dist. v. United

States, 635 F.3d 505, 520 n.12 (Fed. Cir. 2011) (“It is plaintiffs’ burden to establish cognizable

property interests for purposes of their takings . . . claims.”). To demonstrate a cognizable

property interest in a Trails Act case, a plaintiff must establish ownership in land adjacent to the

railroad line described in the NITU and that ownership in that land can be traced to the railroad

company’s acquisition. Brooks v. United States, 138 Fed. Cl. 371, 377 (2018). A plaintiff must

also establish that the railroad company acquired an easement for railroad purposes that

continued to exist at the time of the alleged taking. Ellamae Phillips Co. v. United States, 564

F.3d 1367, 1373 (Fed. Cir. 2009); Preseault v. United States (“Preseault II”), 100 F.3d 1525,

1533 (Fed. Cir. 1996) (en banc). With respect to this latter requirement, a court considers:

(1) who owned the strips of land involved, specifically did the Railroad . . .

acquire only easements, or did it obtain fee simple estates; (2) if the Railroad

acquired only easements, were the terms of the easements limited to use for

railroad purposes, or did they include future use as public recreational trails; and

(3) even if the grants of the Railroad’s easements were broad enough to

encompass recreational trails, had these easements terminated prior to the alleged

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taking so that the property owners at that time held fee simples unencumbered by

the easements. 2

Preseault II, 100 F.3d at 1533 (footnote added); accord Ellamae Phillips Co., 564 F.3d at 1373.

“[I]f the court concludes that a cognizable property interest exists, it then determines

whether the government’s action amounted to a compensable taking of that interest.” Casitas

Mun. Water Dist., 708 F.3d at 1348. In Trails Act cases, a taking occurs when “government

action destroys state-defined property rights,” either “by converting a railway easement to a

recreational trail, if trail use is outside the scope of the original railway easement,” Ladd v.

United States, 630 F.3d 1015, 1019 (Fed. Cir. 2010), or by compelling the continuation of a

railroad-purposes easement to accommodate negotiations for a trail-use agreement, even if the

negotiations are ultimately unsuccessful, see id. at 1025; Caquelin v. United States (“Caquelin

III”), 959 F.3d 1360, 1364, 1367 (Fed. Cir. 2020). It is well settled that the Board’s issuance of a

NITU, which forestalls the full abandonment of the railroad line, “is the government action that

prevents the landowners from possession of their property unencumbered by the easement.”

Ladd, 630 F.3d at 1023; accord Caquelin III, 959 F.3d at 1367 (“The NITU . . . was a

government action that compelled continuation of an easement for a time; it did so intentionally

and with specific identification of the land at issue; and it did so solely for the purpose of seeking

to arrange, without the landowner’s consent, to continue the easement for still longer, indeed

indefinitely, by an actual trail conversion.”); Barclay v. United States, 443 F.3d 1368, 1374 (Fed.

Cir. 2006) (“The barrier to reversion is the NITU, not physical ouster from possession.”);

Caldwell, 391 F.3d at 1233-34 (“The issuance of the NITU is the only government action in the

railbanking process that operates to prevent abandonment of the corridor and to preclude the

vesting of state law reversionary interests in the right-of-way.”); cf. Marvin M. Brandt Revocable

Tr. v. United States, 572 U.S. 93, 104-05 (2014) (explaining that an easement is terminated when

it is abandoned, leaving the owner of the servient estate with an “unencumbered interest in the

land”).

C. Procedural History

On February 18, 2014, Jeffrey Memmer filed a complaint seeking just compensation

under the Fifth Amendment for himself and as representative of a class of similarly situated

individuals. In a subsequently filed amended complaint, Mr. Memmer was joined by additional

plaintiffs: Gilbert Effinger; Larry and Susan Goebel (“the Goebels”); Owen Halpeny; Matthew

Hostettler; Joseph Jenkins; Michael and Rita Martin (“the Martins”); McDonald Family Farms of

Evansville, Inc. (“McDonald Family Farms”); Reibel Farms, Inc.; and James and Robin Schmidt

2

The “alleged taking” in Preseault II was not a CITU or NITU, but was instead the

conversion of the railroad-purposes easements to trails, because the agreement to allow the

easements to be used as trails predated the Interstate Commerce Commission’s order allowing

the discontinuation of railroad service. 100 F.3d at 1549-52; see also id. at 1552 (“Whether, at

the time a railroad applies to abandon its use of an easement limited to railroad purposes, a

taking occurs under an [Interstate Commerce Commission] order to ‘railbank’ the easement for

possible future railroad use, and allowing in the interim for use of the easement for trail

purposes, is a question not now before us. We offer no opinion at this time on that question.”).

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(“the Schmidts”). In support of their claim for just compensation, plaintiffs allege that they own

their property in fee simple; that prior to the Board’s issuance of the NITU, Indiana

Southwestern Railway Company (“Indiana Southwestern”) owned an easement across each of

their properties; that their properties would no longer be burdened by that easement if the

easement was abandoned or authorized for use beyond its scope; and that but for the issuance of

the NITU, they “would have the exclusive right to physical ownership, possession, and use of

their property free of any easement for recreational trail use or future railroad use.” 3 In its

answer to the amended complaint, defendant admits only one allegation: the existence of the

NITU. Defendant also asserts five affirmative defenses: (1) plaintiffs fail to state a claim upon

which relief can be granted; (2) plaintiffs without an interest in the property allegedly taken lack

standing; (3) plaintiffs who have had their interest in the subject property adjudicated in another

action are estopped from adjudicating those interests in this case; (4) the claims of plaintiffs who

have received compensation for their interest in the subject property are “extinguished by accord

and satisfaction, payment, and/or release”; and (5) the claims that have been waived are barred.

After engaging in discovery regarding liability, the parties filed cross-motions for partial

summary judgment. The parties generally contested two issues in those motions: (1) whether

Indiana Southwestern’s predecessors in interest acquired easements to construct and operate their

railroads and (2) whether the issuance of the NITU could effect a taking under the circumstances

presented in the case (in other words, when a trail-use agreement is not executed, the NITU

expires on its own terms, and the railroad company fails to consummate the abandonment of its

line). The court rendered its liability decision in a July 10, 2015 Opinion and Order. See

generally Memmer v. United States, 122 Fed. Cl. 350 (2015).

First, after acknowledging the undisputed facts that the plaintiffs owned property adjacent

to Indiana Southwestern’s railroad lines and that Indiana Southwestern’s predecessors acquired a

portion of those lines––adjacent to property owned by Reibel Farms, Inc.––via a prescriptive

easement, id. at 354 & n.1, the court analyzed sixteen deeds through which Indiana

Southwestern’s predecessors acquired the other relevant portions of the lines and determined that

three of those deeds conveyed fee simple estates, id. at 358-64. Consequently, it dismissed the

claims that derived from those deeds: Mr. Hostettler’s claim, part of the claim of Reibel Farms,

Inc., and part of the Martins’ claim. Id. at 361-62, 364. Then, with respect to the claims derived

from the thirteen deeds that conveyed an easement and the claim derived from the acquisition of

a prescriptive easement, the court concluded that the scope of those easements did not

encompass recreational trail use. Id. at 364. Finally, the court determined that binding

precedent, including the Federal Circuit’s decision in Ladd, compelled the conclusions that the

issuance of the NITU effected a taking and that “the taking is temporary, spanning from May 23,

2011, the effective date of the NITU, to November 8, 2013, the date the NITU expired.” Id. at

365-66.

After the court issued its liability decision, the parties engaged in discovery on the issue

of damages and ultimately reached a settlement of the amount due for the claims that survived

summary judgment. On April 11, 2017, the court, “[p]ursuant to [its] Opinion and Order, filed

July 10, 2015, and Order, filed April 10, 2017, granting the parties’ request to enter judgment in

3

The amended complaint does not contain class allegations.

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accordance with the Stipulation, filed April 7, 2017,” entered judgment pursuant to Rule 54(b) of

the Rules of the United States Court of Federal Claims (“RCFC”). 4

On June 9, 2017, defendant filed a notice of appeal indicating that it was appealing from

the court’s summary judgment decision and the RCFC 54(b) judgment. Plaintiffs similarly

cross-appealed the summary judgment decision and RCFC 54(b) judgment on June 21, 2017. In

the docketing statement it filed with the Federal Circuit, defendant provided a “[b]rief statement

of the issues to be raised on appeal”: “Whether the United States is liable for a taking of

plaintiffs’ property where no trail use agreement was reached and the railroad ultimately elected

not to abandon its line.” Docketing Statement of Appellant 2, Memmer v. United States, No. 17-

2150 (Fed. Cir. July 13, 2017). In their docketing statement, plaintiffs identified the following

issue for appeal: “Whether the lower court correctly ruled that the railroad owned fee simple in

certain segments of the railroad corridor.” Docketing Statement of Cross-Appellant 2, Memmer

v. United States, No. 17-2150 (Fed. Cir. July 13, 2017).

On the same day that plaintiffs filed their cross-appeal, the Federal Circuit issued its

decision in Caquelin I. In that case, several months after the NITU expired on its own terms

without the execution of a trail-use agreement, the railroad company consummated the

abandonment of its line. Caquelin I, 687 F. App’x at 1018. On appeal, the government

advanced an argument in tension with the Federal Circuit’s controlling precedent: that the

“blocking of [the state law] reversion” that occurred for the 180 days between the issuance of the

NITU and the expiration of the NITU “was not a categorical taking but instead calls for a multi-

factor takings analysis.” Id. at 1019; see also id. (remarking that the government invoked the

regulatory takings framework set forth in Penn Central Transportation Co. v. City of New York,

438 U.S. 104, 124 (1978), and the temporary takings analysis set forth in Arkansas Game & Fish

Commission v. United States, 568 U.S. 23, 38-40 (2012)). Although it recognized that its

controlling precedent dictated the result reached by the trial court, the Federal Circuit vacated the

trial court’s judgment and remanded the case to the trial court to create “a fully developed record

applying the multi-factor analysis the government urges” to enable the Federal Circuit to have “a

concrete basis for comparison of the competing legal standards as applied.” Id. at 1020.

Specifically, the Federal Circuit instructed the Caquelin trial court:

On remand, the Court of Federal Claims should conduct such proceedings—pre-

trial, trial, and post-trial—as are necessary for an adjudication of how the

government-advanced multi-factor analysis applies in this case, on the assumption

that such an analysis is the governing standard. An opinion containing findings of

fact and conclusions of law under such a standard—and also discussing what facts

invoke which of the Supreme Court’s standards—would sharpen the focus of

appellate consideration of the issues raised by the government in this case.

Id.

4

The only outstanding issue was the payment of costs pursuant to the Uniform

Relocation Assistance and Real Property Acquisition Policies Act of 1970, which was deferred

until any appeals were resolved.

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Because the issue on appeal in Caquelin I was also present in this case, the parties, before

filing their opening appellate briefs, jointly moved the Federal Circuit to vacate this court’s

judgment and remand the case for proceedings “consistent with” the ruling in Caquelin I.

Corrected Joint Mot. to Vacate and Remand to the Ct. of Federal Claims 1, Memmer v. United

States, Nos. 17-2150, 17-2230 (Fed. Cir. Oct. 12, 2017). Specifically, they asserted:

[P]rinciples of judicial economy are best served by vacating the Court of Federal

Claims’ decision in this case and remanding for further proceedings like those

ordered by this Court in Caquelin. Such a remand would allow development of a

record that would further prime the case for this Court’s review.

Id. at 5. The Federal Circuit granted the joint motion. In its order, it noted that in Caquelin I,

“the Court of Federal Claims was asked to create a record applying the multi-factor analysis the

government urged, so that this court could have a basis for comparison of the competing legal

standards.” Memmer v. United States, Nos. 17-2150, 17-2230, 2017 WL 6345843, at *1 (Fed.

Cir. Nov. 16, 2017). It therefore ordered that “[t]he Claims Court’s judgment is vacated and this

case is remanded for further proceedings consistent with this order.” 5 Id.

On remand, the parties engaged in additional discovery related to the multifactor analysis

and then filed pretrial briefs. The court conducted a pretrial conference in Washington, DC on

November 27, 2018. It then held a trial from April 29 to May 2, 2019, in Evansville, Indiana,

and on May 7, 2019, in Peoria, Illinois. The parties filed posttrial briefs, after which the court

heard closing arguments on October 28, 2020.

The remainder of this opinion sets forth the court’s findings of fact and conclusions of

law, as required by RCFC 52(a)(1), 6 with respect to both liability and damages. 7

5

On May 29, 2020, the Federal Circuit issued its decision in Caquelin III, rejecting the

multifactor analysis urged by the government and affirming the trial court’s conclusion that the

standard set forth in Ladd “remains governing precedent.” 959 F.3d at 1366-70. Nevertheless,

because the Federal Circuit’s mandate requires the court to engage in a multifactor analysis, it

will do so.

6

The court derives the facts from the parties’ Joint Stipulations of Fact for Trial (“Jt.

Stip.”), the transcript of testimony elicited during trial (“Tr.”), and the exhibits admitted into

evidence as part of the trial record (“PX,” “DX,” or “JX”). Citations to the trial transcript will be

to the page number of the transcript and the last name of the testifying witness.

7

As reflected in the procedural history, this case is back before the court after the

Federal Circuit granted the parties’ joint motion to (1) vacate the court’s summary judgment

decision and RCFC 54(b) judgment and (2) remand the case for proceedings similar to those

ordered in Caquelin I. As a consequence of the Federal Circuit’s vacatur, during trial, plaintiffs

were required to establish all elements of a taking––possession of cognizable property interests,

that the government’s action constituted a compensable taking, and the amount of damages––

after which the burden of persuasion shifted to defendant to rebut plaintiffs’ evidence. See, e.g.,

Falcon v. Gen. Tel. Co., 815 F.2d 317, 320 (5th Cir. 1987) (“When the Supreme Court vacated

[the trial court’s] decision, it swept away all that was tied to that judgment.”); In re Joy Glob.,

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II. LIABILITY: PROPERTY INTEREST

The court begins its analysis, as it must, by determining whether plaintiffs have

cognizable property interests that were the subject of the alleged taking. Casitas Mun. Water

Dist., 708 F.3d at 1348.

A. Legal Standards

In general, state law governs the determination of the property interest acquired by a

railroad company. See Preseault II, 100 F.3d at 1534 (“The question of what estates in property

were created by these turn-of-the-century transfers to the Railroad requires a close examination

of the conveying instruments, read in light of the common law and statutes of [the state] then in

effect.”). Moreover, the acquisition of property rights is governed by the law in effect at the time

the rights were acquired. See id.; Hash v. United States, 403 F.3d 1308, 1315 (Fed. Cir. 2005);

accord Clark v. CSX Transp., 737 N.E.2d 752, 758 (Ind. Ct. App. 2000) (remarking that, “in

construing a deed,” courts in Indiana “consider[] the instrument relative to the statutes in effect at

the time of the conveyance”).

Inc., 381 B.R. 603, 612 (D. Del. 2007) (holding that when a grant of summary judgment had

been vacated, “the situation is as if there were no prior proceedings” on summary judgment); see

also Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1332 (Fed. Cir. 2003) (holding that when a

judgment is vacated, the “vacated judgment ‘has no preclusive force either as a matter of

collateral or direct estoppel or as a matter of the law of the case,’” and therefore the tribunal

whose judgment was vacated is “free to come to different factual conclusions the second time

around without revisiting its decision in the earlier vacated decision” (quoting U.S. Philips Corp.

v. Sears Roebuck & Co., 55 F.3d 592, 598 (Fed. Cir. 1995))); Exxon Corp. v. United States, 931

F.2d 874, 877 (Fed. Cir. 1991) (“Law of the case . . . merely requires a trial court to follow the

rulings of an appellate court. It does not constrain the trial court with respect to issues not

actually considered by an appellate court, and thus has long been held not to require the trial

court to adhere to its own previous rulings if they have not been adopted, explicitly or implicitly,

by the appellate court’s judgment.” (footnote and citation omitted)); McGowan v. Sec’y of HHS,

31 Fed. Cl. 734, 737 (1994) (“The law of the case doctrine does not affect the power of a court to

reconsider its interlocutory decisions. The court may change any interlocutory decision up until

the entry of final [judgment].” (citing Jamesbury Corp. v. Litton Indus. Prods., Inc., 839 F.2d

1544, 1551 (Fed. Cir. 1988), overruled on other grounds by A.C. Aukerman Co. v. R.L. Chaides

Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc))). This is not to say that the court would

reach different conclusions on the title issues that were in dispute during the summary judgment

stage and to which the parties did not stipulate for purposes of trial, namely, the interpretation of

the deeds through which Indiana Southwestern’s predecessors acquired their property interests in

the railroad lines. But absent that analysis, there would be no grounds to consider whether the

Board’s issuance of the NITU constituted a taking and the amount of damages to which plaintiffs

might be entitled.

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1. Deed Construction

At the time the deeds were executed, Indiana law provided:

Any conveyance of lands worded in substance as follows: “A.B. conveys and

warrants to C.D.” [here describe the premises] “for the sum of” [here insert the

consideration] the said conveyance being dated and duly signed, sealed and

acknowledged by the grantor, shall be deemed and held to be a conveyance in fee

simple to the grantee, his heirs and assigns . . . .

Ind. Rev. Stat. ch. 23, § 12 (1852) (recodified at Ind. Rev. Stat. ch. 18, § 2927 (1881)). Further,

“if it be the intention of the grantor to convey any lesser estate, it shall be so expressed in the

deed.” Id. § 14 (recodified at Ind. Rev. Stat. ch. 18, § 2929 (1881)). Of course, not all deeds

conform to the statutory language. With respect to such deeds:

There are several rules of construction to be used when construing the

meaning of a particular deed. The object of deed construction is to ascertain the

intent of the parties. In so doing, a deed is to be regarded in its entirety and the

parts are to be construed together so that no part is rejected. Where there is no

ambiguity in the deed, the intention of the parties must be determined from the

language of the deed alone. . . .

A deed that conveys a right generally conveys only an easement. The

general rule is that a conveyance to a railroad of a strip, piece, or parcel of land,

without additional language as to the use or purpose to which the land is to be put

or in other ways limiting the estate conveyed, is to be construed as passing an

estate in fee, but reference to a right-of-way in such a conveyance generally leads

to its construction as conveying only an easement.

Brown v. Penn Cent. Corp., 510 N.E.2d 641, 643-44 (Ind. 1987) (citations omitted); accord

Ross, Inc. v. Legler, 199 N.E.2d 346, 348 (Ind. 1964) (“A deed, when the interest conveyed is

defined or described as a ‘right of way,’ conveys only an easement in which title reverts to the

grantor, his heirs or assigns upon the abandonment of such right-of-way.”); Richard S. Brunt Tr.

v. Plantz, 458 N.E.2d 251, 256 (Ind. Ct. App. 1983) (considering a deed in which the grantors

“convey[ed] and quit claim[ed] . . . , for railroad purposes, the following real estate,” and holding

that “[r]eference to the intended use of the land indicate[d] that an easement was conveyed”

because “the grantors would have no reason to specify the use if conveying a fee simple”). But

see Poznic v. Porter Cnty. Dev. Corp., 779 N.E.2d 1185, 1190-92 (Ind. Ct. App. 2002) (holding

that a deed that conveyed to the railroad company “[f]orever, a strip of land for railroad

purposes” conveyed a fee simple and, in so holding, declined to treat the phrase “for railroad

purposes” as limiting language, noted that the deed did not include a statement indicating that the

deed would be void if the strip of land was not used for railroad purposes, and remarked that the

deed did not include the term “right-of-way”).

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“Deeds generally contain three important clauses: the granting clause, the habendum

clause, and the descriptive clause.” 8 Clark, 737 N.E.2d at 758. Reference to a “right-of-way”

may appear in any of them. See, e.g., Ross, Inc., 199 N.E.2d at 349 (rejecting, as “an

overrefinement of the rules of construction,” the contention that use of the term “right-of-way” in

the descriptive clause of a deed is meaningless when the term is not included in the deed’s

granting clause or habendum clause, and holding that “[t]he description clause of a deed may be

employed to describe the quality as well as the dimensions and quantity of the estate conveyed”);

CSX Transp., Inc. v. Rabold, 691 N.E.2d 1275, 1278 (Ind. Ct. App. 1998) (holding that when the

term “right-of-way” is used in the descriptive clause “in reference to the subject matter of the

deed,” and the deed does not contain the term “fee simple,” the deed conveys an easement); see

also Prior v. Quackenbush, 29 Ind. 475, 478 (1868) (“The office of the habendum is properly to

determine what estate or interest is granted by the deed, though this may be performed, and

sometimes is performed, by the premises, in which case the habendum may lessen, enlarge,

explain, or qualify, but not totally contradict or be repugnant to the estate granted in the

premises.” (internal quotation marks omitted)); Claridge v. Phelps, 11 N.E.2d 503, 504 (Ind.

App. 1937) (“[W]hen the granting clause of a deed is general or indefinite respecting the estate

in the lands conveyed, it may be defined, qualified, and controlled by the habendum.”). But see

Clark, 737 N.E.2d at 758 (remarking that when the term “right-of-way” appears “outside of the

granting clause, the term is of limited value because it has two meanings[:] 1) a right to cross

over the land of another, an easement, and 2) the strip of land upon which a railroad is

constructed”). Indeed, even if the granting clause “favors the construction of the deed as

conveying a fee simple absolute to the railroad company, such language is just a factor in

determining whether the parties intended to grant a fee or an easement”; courts will also examine

“other parts of the deed to see if the grantor expressed an intention to convey a lesser estate than

fee simple.” Tazian v. Cline, 686 N.E.2d 95, 98 (Ind. 1997).

In addition to language expressly defining or describing the interest conveyed, evidence

of the parties’ intent to convey an easement may appear in the title of the deed. See Clark, 737

N.E.2d at 758 (remarking that although “the cover and title of the instrument” are not considered

“where the granting language is clear and unambiguous[,] . . . the title may provide additional

evidence of intent where the language of the deed is unclear”). Such evidence may also include

the amount or type of consideration described in the deed. See Tazian, 686 N.E.2d at 99 (“When

attempting to ascertain the intent of the parties to a conveyance to a railroad, appellate courts of

this state look at the consideration paid to the grantee railroad.”); Richard S. Brunt Tr., 458

N.E.2d at 255 (“[W]here the consideration is nominal or where the only consideration is the

benefit to be derived by the grantor from the construction of the railroad rather than the full

market value for the interest acquired reflects the intent to create an easement.”). However,

neither the title of the deed nor the consideration described therein conclusively establishes the

conveyance of an easement. See Clark, 737 N.E.2d at 758 (“[T]he title . . . is not dispositive of

the nature of the conveyance.”), 759 (“[L]ack of consideration or nominal consideration alone is

8

The granting clause contains “[t]he words that transfer an interest in a deed or other

instrument,” Granting Clause, Black’s Law Dictionary 845 (11th ed. 2019); the habendum clause

is the part of a deed or other instrument “that defines the extent of the interest being granted and

any conditions affecting the grant,” Habendum Clause, id. at 854; and the descriptive clause

contains “the dimensions and quantity of the estate conveyed,” Ross, Inc., 199 N.E.2d at 349.

-13-

not sufficient cause for setting aside a deed. . . . [N]ominal monetary consideration, alone, does

not make the instrument ambiguous, nor does it create an easement.”); Richard S. Brunt Tr., 458

N.E.2d at 255 (“Although such consideration is not by itself persuasive that the parties intended

to convey an easement, it is just one more factor held to indicate an easement . . . .”).

Ultimately, in construing deeds purporting to convey property interests to a railroad

company, courts must be cognizant that:

Public policy does not favor the conveyance of strips of land by simple titles to

railroad companies for right-of-way purposes, either by deed or condemnation.

This policy is based upon the fact that the alienation of such strips or belts of land

from and across the primary or parent bodies of the land from which they are

severed, is obviously not necessary to the purpose for which such conveyances

are made after abandonment of the intended uses as expressed in the conveyance,

and that thereafter such severance generally operates adversely to the normal and

best use of all the property involved. Therefore, where there is ambiguity as to

the character of the interest or title conveyed such ambiguity will generally be

construed in favor of the original grantors, their heirs and assigns.

Ross, Inc., 199 N.E.2d at 348; see also Penn Cent. Corp. v. U.S. R.R. Vest Corp., 955 F.3d 1158,

1160 (7th Cir. 1992) (“The presumption is that a deed to a railroad . . . conveys a right of way,

that is, an easement, terminable when the acquirer’s use terminates, rather than a fee simple.”).

2. Scope of Easements

If the court concludes that Indiana Southwestern’s predecessors acquired easements to

construct and operate their railroads, it must then ascertain whether the scope of those easements

includes their use for recreational trails. “[S]tate law controls the basic issue of whether trail use

is beyond the scope of the right-of-way.” Barclay, 443 F.3d at 1374 n.4 (citing Toews v. United

States, 376 F.3d 1371, 1376-77 (Fed. Cir. 2004)). The Indiana Supreme Court has held that

recreational trails are not within the scope of easements created for railroad purposes. Howard v.

United States, 964 N.E.2d 779, 784 (Ind. 2012). Furthermore, under Indiana law, when a

railroad company acquires a right-of-way through adverse possession, it obtains a prescriptive

easement for railroad purposes. See Hoffman v. Zollman, 97 N.E. 1015, 1017 (Ind. App. 1912)

(“A prescriptive right, where there is no color of title, cannot be broader than the claims which

the user evidences. Ordinarily there is no user by a railroad company beyond a user for the

purposes of a right of way.”); accord Macy Elevator, Inc. v. United States, 97 Fed. Cl. 708, 734-

35 (2011) (“[U]nder Indiana law when a railroad acquires property by prescription or by

condemnation, a railroad generally obtains an easement for railroad purposes.”).

B. Findings of Fact

The following facts are relevant to determining whether plaintiffs have cognizable

property interests that were the subject of the alleged taking.

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The interconnecting railroad lines at issue in this case are located in Posey and

Vanderburgh Counties, Indiana, situated (1) between milepost 227.5 at Poseyville, Indiana and

milepost 240.2 near German Township, Indiana and (2) between milepost 277.5 at Cynthiana,

Indiana and milepost 282.0 at Poseyville, Indiana. JX 1 at 3-4. The railroad was constructed by

predecessors of the current owner of the lines, Indiana Southwestern, 9 Jt. Stip. ¶¶ 1-4, which is a

subsidiary of Pioneer Railcorp, id. ¶ 4.

Indiana Southwestern’s predecessors acquired the segments of the railroad lines relevant

in this case by one of two means. First, they acquired a 4.42-acre segment through adverse

possession; Reibel Farms, Inc. owns a parcel of land adjacent to this segment. JX 61; JX 62 at

11; JX 63 at 2; see also Jt. Stip. ¶ 26 (indicating that the parcel owned by Reibel Farms, Inc. is

adjacent to the railroad lines). Second, they acquired the remaining segments by deed. JX 63 at

2. All of the plaintiffs own parcels adjacent to these segments. Id. The deeds, all dated between

1880 and 1882, JX 39 to JX 54, can either be grouped into one of two categories or assessed

individually. 10

The first seven deeds (“Type A deeds”) contain language that is substantially similar to

the following:

Right of Way Deed

Know all men by these Presents that [grantor(s)] for and in consideration

of the construction of the [railroad] and for the further consideration of [amount],

do grant, warrant and convey to the said [predecessor railroad company] its

successors and assigns a strip of land [number] feet in width, being a strip

[number] feet wide on each side of the center line of said Railway as it now is

located through his land . . . described as follows to wit: [Description of land]. It

being distinctly understood that this grant is for the purpose of construction,

maintenance and operation of said Railway.

JX 39; accord JX 40 to JX 44; JX 45 (containing similar language, but with the last sentence

instead providing: “It being distinctly understood that the above described Real Estate is to be

used exclusively for Railroad purposes.”). The amounts of consideration set forth in these deeds

and the approximate land area conveyed are as follows:

9

The railroad lines were constructed by Evansville and Peoria Railroad, which

subsequently became the Peoria, Decatur & Evansville Railway. Jt. Stip. ¶ 1. The Peoria,

Decatur & Evansville Railway became part of the Illinois Central Railroad in 1900. Id. ¶ 2.

Thereafter, the lines were operated by a series of railroad companies. Id. ¶ 3. In March 2000,

Indiana Southwestern acquired the lines from Evansville Terminal Company, Inc. and AB Rail

Investments, Inc. Id. ¶¶ 3-4.

10

For convenience, the court uses certain category and deed names suggested by

plaintiffs in their motion for partial summary judgment.

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Grantor(s) Amount Area

Wm. Marquis $100.00 2.75 acres

N. Marquis et al. $100.24 Unspecified portion of 3.5 acres

A.H. Fretageot et al. $20.05 Unspecified portion of 3.5 acres

Jane Owens et al. $60.14 Unspecified portion of 3.5 acres

Moses Endecott $1000.00 8.24 acres

L. Williams et al. $1.00 1.44 acres

Leroy Williams & wife $250.00 0.97 acres

JX 62 at 6, 8-9, 12. Mr. Halpeny, Mr. Memmer, and Mr. Jenkins own parcels adjacent to the

land conveyed by the Type A deeds. JX 39 to JX 45; JX 63 at 2; see also Jt. Stip. ¶¶ 19, 22-23

(indicating that the parcels owned by these plaintiffs are adjacent to the railroad lines).

The next six deeds (“Type A-1 deeds”) contain language that is substantially similar to

the following:

Know all men by these Presents that [grantor(s)] for and in consideration

of the construction of the [railroad] and for the further consideration of [amount],

do grant, warrant and convey to the said [predecessor railroad company], its

successors and assigns, a strip of Land [number] feet in width, being a Strip

[number] feet wide on each side of the center line of said Railway as it now is

Located through his Land . . . , described a follows, to wit:

[Description of land].

It being distinctly understood that this grant is for the purpose of

construction, maintenance and operation of said Railway.

JX 46; accord JX 47 to JX 51. The amounts of consideration set forth in these deeds and the

approximate land area conveyed are as follows:

Grantor(s) Amount Area

H. Hillenbrand and wife $400.00 4.45 acres

H. Goebel and wife $75.00 2.04 acres

S. McDonald et al. $100.00 1.92 acres

A.N. Martin and wife $700.00 6.04 acres

H.L. Graff and wife $175.00 3.07 acres

A.R. Grimm $257.50 5.16 acres

JX 62 at 1-5. The Goebels, McDonald Family Farms, the Martins, Mr. Effinger, and the

Schmidts own parcels adjacent to the land conveyed by the Type A-1 deeds. JX 46 to JX 51; JX

63 at 2; see also Jt. Stip. ¶¶ 20-21, 25, 27 (indicating that the parcels owned by the Goebels,

McDonald Family Farms, Mr. Effinger, and the Schmidts are adjacent to the railroad lines); id.

¶ 24 (indicating that two of the parcels owned by the Martins are adjacent to the railroad lines).

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Finally, there are three deeds that do not belong to a group. The first such deed (“the

Smith deed”) provides:

Right of Way Deed

Know all men by these presents, that Elizabeth Smith for and in

consideration of the Benefits to be derived from the construction of the [railroad]

and for the further consideration of one hundred Dollars . . . do grant, warrant and

Convey to the said [predecessor railroad company] its successors and assigns a

Strip of land sixty six feet in width being a Strip thirty three feet wide on Each

Side of the center line of said Rail Road as it now is located through her land . . .

described as follows to wit: [Description of land] it is hereby understood that

Said Rail Road Company shall make one good farm crossing for the use and

benefit of Said Elizabeth Smith said crossing to be made at a point to be

designated by the Said Elizabeth Smith.

JX 52. With this deed, Ms. Smith conveyed approximately 1.22 acres, JX 62 at 11, and this

acreage is adjacent to a parcel owned by Mr. Hostettler, JX 52; JX 63 at 2.

The second individual deed (“the Davis deed”) provides:

Right of Way Deed

Know all men by these Presents, That Joseph Davis and Mary C. Davis

. . . for and [in] consideration of the benefits to be derived from the construction

of the [railroad], and for the further consideration of One Hundred and Seventy-

five Dollars . . . do grant, warrant and convey to the said [predecessor railroad

company], its successors and assigns, a strip of Land sixty-six feet in width, being

a strip thirty-three feet wide, in each side of the center line of said Railroad as it

now is located through his land . . . , described as follows to wit: [Description of

land] and it is hereby understood that the said Joseph Davis shall have the right to

a water canal along said line on the south side of said R.R. on said strip of land

[and] that said Joseph Davis reserves the timber on said right of way and that said

R.R. Co. shall make one good crossing for the use and benefit of said Davis

wherever he may designate.

JX 53. With this deed, the Davises conveyed approximately 2.4 acres, JX 62 at 11, and this

acreage is adjacent to a parcel owned by Reibel Farms, Inc., JX 53; JX 63 at 2.

The third individual deed (“the side track deed”) provides:

This Indenture Witnesseth That Abner N. Martin and Cynthia Martin . . .

Convey and Warrant to [predecessor railroad company] for the sum of One Dollar

the following Real Estate . . . to wit:

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Commencing at a point on the West boundary of their right of way of the

E.D.&E [sic] Road where said Railway crosses the Base Line on the South side of

the South East quarter of Section (31) . . . , thence running in a North Westerly

direction along the right of way of said [railroad] 900 feet, thence West 50 feet[,]

thence South Easterly 900 feet, thence 50 feet to place of beginning. The same to

be theirs and their own as long as said Side track and Depot are in use any failure

or removal will make this Deed none and void.

JX 54. With this deed, the grantors conveyed either 1.03 acres, id., or 0.65 acres, JX 62 at 4-5,

and this acreage is adjacent to a parcel owned by the Martins, JX 54; JX 63 at 2. As of March

1993, no side track or depot existed on or near the acreage. JX 64.

C. Conclusions of Law

1. Property Interests Acquired by Indiana Southwestern’s Predecessors

As noted above, plaintiffs have established that they own land adjacent to the railroad

lines and that their property interests trace back to the land acquired by Indiana Southwestern’s

predecessors for the construction of a railroad. Thus, the court turns to the first factor described

in Preseault II and Ellamae Phillips Co.: whether Indiana Southwestern’s predecessors acquired

easements or fee simple estates.

Determining the property interest acquired by Indiana Southwestern’s predecessors

through adverse possession is straightforward: As previously noted, such an acquisition results

in a prescriptive easement for railroad purposes. However, ascertaining the nature of the

property interests conveyed by the sixteen deeds at issue requires a more searching analysis.

a. The Type A Deeds

The seven Type A deeds share the following characteristics: (1) they bear the title “Right

of Way Deed”; (2) they “grant, warrant and convey . . . a strip of land”; and (3) they indicate

either that the “grant is for the purpose of construction, maintenance and operation” of a railroad

or that the “Real Estate is to be used exclusively for Railroad purposes.” The granting clauses in

the deeds conveyed strips of land to Indiana Southwestern’s predecessors for varying amounts of

consideration. If the deeds contained nothing more than the granting clauses, then they would

have conveyed fee simple interests in the strips of land. See Ind. Rev. Stat. ch. 23, § 12 (1852).

However, the deeds also included habendum clauses indicating that the strips of land were to be

used for railroad purposes. The habendum clauses qualify, without contradicting, the estates

conveyed in the granting clauses. See Prior, 29 Ind. at 478; Claridge, 11 N.E.2d at 504. Indeed,

had the parties intended to convey fee simple interests in the strips of land, they would have had

no reason to specify the use of the land in the habendum clauses. See Richard S. Brunt Tr., 458

N.E.2d at 256. Because deeds should be construed so that no part is superfluous, Brown, 510

N.E.2d at 643, the court concludes that the parties intended to convey easements, and not fee

simple interests, in the strips of land. This conclusion is buttressed by the fact that these deeds

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were recorded with the title “Right of Way Deed.” 11 See Clark, 737 N.E.2d at 758. Moreover,

to the extent that the “railroad purposes” language in the habendum clause renders the deed

ambiguous, public policy favors construing the deeds as conveying easements. See Ross, Inc.,

199 N.E.2d at 348.

The Indiana Supreme Court’s decision in Tazian does not compel a different result. In

Tazian, the deed’s granting clause provided: “[The grantors] do grant and convey and warrant

. . . a strip of land . . . .” 686 N.E.2d at 96. The habendum clause provided that the railroad

company was “to have and to hold all and singular the said premises in and by these presents

released and conveyed unto the [railroad company] forever for the uses and purposes therein

expressed.” Id. As the Indiana Supreme Court explained, the phrase “for the uses and purposes

therein expressed” referred to the uses and purposes described in the granting clause, and the

granting clause contained no limitation on the uses and purposes of the strip of land. Id. at 101;

accord id. (“[T]his deed does not describe the interest conveyed as a railroad right of way nor

does the language limit the conveyance as for railroad purposes or railroad uses.”). In contrast,

the habendum clauses in the seven Type A deeds specified the uses and purposes of the strips of

land that were the subjects of the granting clauses. The court in Tazian found further support for

its conclusion that the deed conveyed a fee simple interest to the railroad company in the use of

the word “forever” in the habendum clause. Id. The Type A deeds do not specify that the grants

to Indiana Southwestern’s predecessors were to be in perpetuity. In sum, the decision in Tazian

does not control the outcome in this case. The Type A deeds conveyed easements.

b. The Type A-1 Deeds

The six Type A-1 deeds share the following characteristics: (1) they “grant, warrant and

convey . . . a strip of Land” and (2) they indicate that the “grant is for the purpose of

construction, maintenance and operation” of a railroad. But for the lack of titles identifying them

as right-of-way deeds, the Type A-1 deeds are substantially the same as the Type A deeds

previously described. Consequently, the court concludes that the parties to the Type A-1 deeds

intended to convey easements, and not fee simple interests, in the strips of land.

c. The Smith Deed

The Smith deed possesses the following characteristics: (1) it is titled “Right of Way

Deed”; (2) it reflects that the grantor did “grant, warrant and Convey . . . a Strip of land”; and

(3) it does not indicate that the strip of land would be used for railroad purposes. The body of

the deed––the granting clause, the habendum clause, and the descriptive clause––does not

include any language that describes the strip of land being conveyed as a right-of-way or limits

11

The monetary consideration paid by Indiana Southwestern’s predecessors for the

rights-of-way described in the Type A deeds (and, in fact, in all of the deeds at issue) ranged

from $1 to $1000. Although the payment of a nominal amount of consideration can suggest the

conveyance of an easement, Tazian, 686 N.E.2d at 99; Richard S. Brunt Tr., 458 N.E.2d at 255,

the court is unable to determine whether the consideration paid was nominal (aside from the two

deeds indicating the payment of $1) because the record lacks any evidence regarding the value of

land in southwestern Indiana in the late 1800s.

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the use of the strip of land to railroad purposes. In such circumstances, the deed conveys a fee

simple estate. See Brown, 510 N.E.2d at 644; accord Ind. Rev. Stat. ch. 23, §§ 12, 14 (1852).

The fact that the deed is titled “Right of Way Deed” does not alter the unambiguous nature of the

conveyance. See Clark, 737 N.E.2d at 758. Nor can public policy override an unambiguous

grant. See Ross, Inc., 199 N.E.2d at 348. In short, the Smith deed conveys a fee simple estate in

the described strip of land. And because Indiana Southwestern owns the strip of land in fee

simple, the issuance of the NITU could not have disturbed the property rights of the adjacent

property owner––Mr. Hostettler. Defendant is therefore entitled to judgment in its favor with

respect to Mr. Hostettler’s claim.

d. The Davis Deed

The Davis deed possesses the following characteristics: (1) it is titled “Right of Way

Deed”; (2) it reflects that the grantors did “grant, warrant and Convey . . . a Strip of land”; (3) it

indicates in the habendum clause that the grantors had “the right to a water canal along said line

on the south side of said R.R. on said strip of land” and “reserve[d] the timber on said right of

way”; and (4) it does not indicate that the strip of land would be used for railroad purposes. In

contrast to the Smith deed, the Davis deed refers to the strip of land as a right-of-way in the

habendum clause. The presence of the term “right-of-way” in the body of a deed can signal that

the deed conveys an easement. See id. at 348-49; Brown, 510 N.E.2d at 644; CSX Transp., Inc.,

691 N.E.2d at 1278. However, the term “right-of-way” has two meanings; it can refer to both

the right to cross land and the land itself. Clark, 737 N.E.2d at 758; CSX Transp., Inc., 691

N.E.2d at 1278. In the Davis deed, the habendum clause indicates that the grantors reserved the

right to a water canal on the south side of the railroad “on said strip of land,” and the right to the

timber “on said right of way.” Thus, a plain reading of the habendum clause reveals that “right

of way” is being used as a synonym for “strip of land,” and therefore refers to the land itself, and

not the right to cross it.

Because the body of the deed does not include any language that describes the strip of

land being conveyed as a right-of-way (in the easement sense of the phrase) or limits the use of

the strip of land to railroad purposes, the deed conveys a fee simple estate. See Brown, 510

N.E.2d at 644; accord Ind. Rev. Stat. ch. 23, §§ 12, 14 (1852). As with the Smith deed, the fact

that the Davis deed is titled “Right of Way Deed” does not alter the unambiguous nature of the

conveyance. See Clark, 737 N.E.2d at 758. Nor can public policy override an unambiguous

grant. See Ross, Inc., 199 N.E.2d at 348. In short, the Davis deed conveys a fee simple estate in

the described strip of land. And because Indiana Southwestern owns the strip of land in fee

simple, the issuance of the NITU could not have disturbed the property rights of the adjacent

property owner––Reibel Farms, Inc. Defendant is therefore entitled to judgment in its favor with

respect to the portion of the claim of Reibel Farms, Inc. that derives from the Davis deed.

e. The Side Track Deed

The side track deed reflects that (1) the grantors did “Convey and Warrant . . . Real

Estate” to the railroad company, (2) the consideration paid by the railroad company was one

dollar, (3) the real estate would remain with the railroad company “as long as said Side track and

Depot are in use,” and (4) “any failure or removal will make this Deed none and void.” Unlike

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the easement-conveying deeds in Macy Elevator, Inc., which provided that “[w]hen said land

herein released Shall cease to be used for Rail Road purposes, it shall revert back to the original

tract” and “Said land 66 feet wide to be held and enjoyed by Said RailRoad Company So long as

it shall be used for a Rail Road & no longer,” 97 Fed. Cl. at 716, the side track deed lacks any of

the typical language suggesting that it conveys an easement rather than a fee simple; the term

“right-of-way” is not used, there is no statement that the “Real Estate” being conveyed is to be

used for “railroad purposes,” and the existence of nominal consideration, on its own, does not

create an easement. See Brown, 510 N.E.2d at 644; Clark, 737 N.E.2d at 759; Richard S. Brunt

Tr., 458 N.E.2d at 255. Rather, the form of the side track deed follows the contemporaneous

statutory language deemed to convey a fee simple estate. See Ind. Rev. Stat. ch. 23, §§ 12, 14

(1852). Because the deed did not convey an easement to the railroad company, the current

owners of the adjacent parcel––the Martins––could not have any property rights that would have

been affected by the issuance of the NITU.

But even if the side track deed conveyed an easement to the railroad company, the

Martins would not prevail because the deed included a contingency that (1) rendered the

easement determinable and (2) would have led to the termination of the easement before the

Board issued the NITU. A determinable easement, like a determinable fee, “terminate[s] upon

the happening of the event upon which its existence is conditioned without any action by the

grantor of the estate or his successors in interest.” Erie-Haven, Inc. v. First Church of Christ,

292 N.E.2d 837, 841 (Ind. Ct. App. 1973); see also Lindsay v. Wigal, 250 N.E.2d 755, 756 (Ind.

App. 1969) (“[T]he words[] ‘as long as’ create a determinable fee which reverts ipso facto on the

happening of the stated event.”). The evidence in the trial record reflects that at some point in

time prior to March 1993, one of Indiana Southwestern’s predecessors removed the side track

and depot from or near the parcel conveyed by the side track deed. This removal terminated the

interest held by the railroad company––whether it was an easement or fee simple estate––leaving

Indiana Southwestern with no interest in the parcel at the time the Board issued the NITU. 12

Thus, the issuance of the NITU would have had no effect on the property rights of the adjacent

property owners, such as the Martins. Defendant is therefore entitled to judgment in its favor

with respect to the portion of the Martins’ claim that derives from the side track deed.

2. Scope of the Easements Acquired by Indiana Southwestern’s Predecessors

Having concluded that Indiana Southwestern’s predecessors obtained easements through

adverse possession and the Type A and Type A-1 deeds, the court proceeds to the next inquiry

set forth in Preseault II and Ellamae Phillips Co.: what is the scope of those easements?

Specifically, are the easements limited to use for railroad purposes, or are they broad enough to

encompass use for recreational trails? All thirteen of the deeds reflect that the conveyances were

for the purposes of constructing, maintaining, and operating a railroad, and under Indiana law,

12

Relatedly, the trial record lacks evidence that the Martins are the heirs of Abner N.

Martin and Cynthia Martin, such that they would be the beneficiaries of the reversion. See also

JX 26 (reflecting that the Martins purchased their parcels in October 2008 from Eugene W.

Kuehn, Charlotte A. Kuehn, Jerry W. Schmidt, and Shirley A. Schmidt); Tr. 268-69 (Martin)

(stating that the Martins purchased their parcels in a private sale from a mentee of Mr. Martin’s

father).

-21-

recreational trails are not within the scope of such easements. Moreover, a railroad company

obtains a railroad purposes easement when it acquires property to construct and operate its

railroad by prescription. Accordingly, the easements possessed by Indiana Southwestern at issue

in this case are limited to use for railroad purposes.

3. Existence of the Easements at the Time of the Alleged Taking

The final inquiry under Preseault II and Ellamae Phillips Co. is whether Indiana

Southwestern’s easements terminated before the alleged taking. Plaintiffs contend that the

taking occurred when the Board issued the NITU, and further contend that thereafter, Indiana

Southwestern took actions that, under state law, constituted the abandonment of the railroad

lines. The trial record lacks any evidence that Indiana Southwestern or its predecessors

abandoned the easements, or that the easements were otherwise terminated, prior to the issuance

of the NITU. Thus, the court concludes that at the time of the alleged taking, the parcels held in

fee simple by adjacent landowners were encumbered by the easements. Accordingly, those

plaintiffs who own parcels adjacent to the easements conveyed by the Type A and Type A-1

deeds––Mr. Halpeny, Mr. Memmer, Mr. Jenkins, the Goebels, McDonald Family Farms, the

Martins, Mr. Effinger, and the Schmidts––and obtained through adverse possession––Reibel

Farms, Inc.––have cognizable Fifth Amendment property interests. 13

III. LIABILITY: FIFTH AMENDMENT TAKING

Having determined the existence of cognizable property interests at the time of the

alleged taking, the next inquiry is whether those interests were, in fact, taken. Casitas Mun.

Water Dist., 708 F.3d at 1348. In its vacated summary judgment decision, the court, relying on

the Federal Circuit’s decision in Ladd, treated the Board’s issuance of the NITU as a categorical

physical taking. However, the Federal Circuit’s remand order in this case and the Federal

Circuit’s decision in Caquelin III require the court to revisit its holding.

A. Legal Standards

The court must address two overarching issues to determine whether the government is

liable for a taking in the circumstances presented in this case: (1) the nature of the alleged taking

and (2) whether the government’s action––the NITU––caused a taking. The resolution of the

13

By deed, Mr. Halpeny’s parcel extends to the centerline of the adjacent railroad line,

JX 20 (deed), and the parcel owned by McDonald Family Farms encompasses the entire relevant

segment of the adjacent railroad line, JX 17 (deed); JX 19 (map). The remaining named

plaintiffs did not acquire the land underlying the adjacent railroad line when they acquired their

parcels. JX 11 (Memmer deed); JX 14 (Goebel deed); JX 23 (Reibel Farms, Inc. deed); JX 26

(Martin deed); JX 29 (Effinger deed); JX 32 (Jenkins deed); JX 34 (Jenkins map); JX 35

(Schmidt deed). Under Indiana law, their parcels extend to the centerline of the adjacent railroad

lines. See Macy Elevator, Inc., 97 Fed. Cl. at 719-20 (noting that it is well settled in Indiana that

when deeds do not include the railroad right-of-way, the adjoining fee owners own to the

centerline of the right-of-way, subject to the easement).

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first issue is dictated by the Federal Circuit’s decisions in Ladd and Caquelin III, but must be

addressed due to the Federal Circuit’s mandate.

1. Nature of a Taking

“When the government physically takes possession of an interest in property for some

public purpose, it has a categorical duty to compensate the former owner, regardless of whether

the interest that is taken constitutes an entire parcel or merely a part thereof.” Tahoe-Sierra

Preservation Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322 (2002). Takings

in Trails Act cases constitute such categorical physical takings. See Caquelin III, 959 F.3d at

1367-70; Ladd, 630 F.3d at 1025. Depending on the circumstances, these takings can be

permanent or temporary. Caquelin III, 959 F.3d at 1367; Ladd, 630 F.3d at 1025; Barclay, 443

F.3d at 1378; Caldwell, 391 F.3d at 1234.

Another type of taking relevant to this case (due to the Federal Circuit’s remand order) is

temporary noncategorical physical takings. In Arkansas Game & Fish, the United States

Supreme Court (“Supreme Court”) held that “government-induced flooding temporary in

duration gains no automatic exemption from Takings Clause inspection” and that “[w]hen

regulation or temporary physical invasion by government interferes with private property,” a

number of factors are relevant to determining whether a “compensable taking” has occurred:

(1) the duration of the interference; (2) “the degree to which the invasion is intended or is the

foreseeable result of authorized government action,” (3) “the character of the land at issue,”

(4) “the owner’s ‘reasonable investment-backed expectations’ regarding the land’s use,” and

(5) the “[s]everity of the interference . . . .” 568 U.S. at 38-39; see also Ark. Game & Fish

Comm’n v. United States, 736 F.3d 1364, 1370 (Fed. Cir. 2013) (“[T]o determine whether a

taking has occurred, a court must consider whether the injury was caused by authorized

government action, whether the injury was the foreseeable result of that action, and whether the

injury constituted a sufficiently severe invasion that interfered with the landowner’s reasonable

expectations as to the use of the land.”). Although the Federal Circuit held in Caquelin III that

the multifactor test set forth in Arkansas Game & Fish did not apply to a Trails Act taking

triggered by a NITU, the court must assume that it may apply in such a situation to execute the

Federal Circuit’s mandate. 14

14

In Caquelin, the government argued in the alternative that in a Trails Act case in which

the NITU expired without the execution of a trail-use agreement, the alleged taking should be

analyzed as a noncategorical regulatory taking. Caquelin III, 959 F.3d at 1362; see also Penn

Central, 438 U.S. at 124 (identifying the relevant factors as “[t]he economic impact of the

regulation on the claimant . . . , the extent to which the regulation has interfered with distinct

investment-backed expectations,” and “the character of the governmental action”). However, as

the Federal Circuit reaffirmed in Caquelin III, a taking under the Trails Act is a physical, not a

regulatory, taking. 959 F.3d at 1368; accord Ladd, 630 F.3d at 1025. Thus, although the Federal

Circuit’s remand instructions require the court to “create a record applying the multi-factor

analysis the government urged” in Caquelin, the court, like the trial court in Caquelin, will limit

its analysis to the factors described in Arkansas Game & Fish. Indeed, there is no need to

separately address the Penn Central factors since they are, in large part, incorporated into the

Arkansas Game & Fish factors. See Caquelin v. United States (“Caquelin II”), 140 Fed. Cl. 567,

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2. Causation

In addition to determining the nature of the alleged taking, a court must ascertain whether

the government action caused the injury alleged by the plaintiff. As noted above, a taking occurs

in a Trails Act case when the government prevents the vesting of a state-law reversionary interest

by converting a railroad-purposes easement into a recreational trail or by compelling the

continuation of a railroad-purposes easement to accommodate negotiations for a trail-use

agreement. Caquelin III, 959 F.3d at 1364, 1367; Ladd, 630 F.3d at 1019; Barclay, 443 F.3d at

1374; Caldwell, 391 F.3d at 1233. The NITU is the government action that prevents the

reversionary interest from vesting. Caquelin III, 959 F.3d at 1367; Ladd, 630 F.3d at 1023;

Barclay, 443 F.3d at 1374; Caldwell, 391 F.3d at 1233-34.

However, in Caquelin III, the Federal Circuit observed that a NITU is a necessary, but

not a sufficient, requirement to establish a taking. It explained:

It is a fundamental principle of takings law that a government action is not

a taking of property if, even in the absence of the challenged government action,

the plaintiff would not have possessed the allegedly taken property interest. St.

Bernard Parish Gov’t v. United States, 887 F.3d 1354, 1359-60, 1362 (Fed. Cir.

2018); see United States v. Archer, 241 U.S. 119, 132 (1916). That causation

principle focuses on comparing the plaintiff’s property interest in the presence of

the challenged government action and the property interest the plaintiff would

have had in its absence. See Preseault I, 494 U.S. at 24 (O’Connor, J.,

concurring) (endorsing the proposition, acknowledged by the government, that

“the existence of a taking will rest upon the nature of the state-created property

interest that [the landowners] would have enjoyed absent the federal action and

upon the extent that the federal action burdened that interest”). It reflects a

causation principle hardly unique to takings law. See, e.g., Babb v. Wilkie, 140 S.

Ct. 1168, 1178 (2020) (explaining general but-for rule governing damages and

certain other result-altering relief).

Caquelin III, 959 F.3d at 1371. The Federal Circuit then applied this “causation principle” to the

situation presented in the case before it––in which the railroad company fully abandoned its line

by filing a notice of consummation after the NITU expired without the execution of a trail-use

agreement: 15

581-82 (2018), aff’d, 959 F.3d at 1360 (observing that two of the Arkansas Game & Fish factors

are similar to or derived from the Penn Central factors); Def.’s Posttrial Br. 56-62 (merging, in

the legal contentions, the “economic impact” factor of Penn Central and the “severity” factor of

Arkansas Game & Fish).

15

The issuance of a NITU can result in three general outcomes. First, the railroad

company and potential trail operator could reach a trail-use agreement, leading to the conversion

of the railroad-purposes easement into a trail. See, e.g., Barclay, 443 F.3d at 1372; Caldwell,

391 F.3d at 1231-32, 1234 n.7. Second, the railroad company and potential trail operator could

allow the NITU to expire without reaching a trail-use agreement and, thereafter, the railroad

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The challenged government action is the legally mandated maintenance of the

easement through denying abandonment authority to the railroad. It is undisputed

that, without abandonment by the railroad, the easement would remain. It follows

that the NITU would not have altered the continuation of the easement during the

NITU period—i.e., would not have caused the only alleged taking of property—if

the railroad would not have abandoned the rail line during that period even in the

absence of the NITU.

Id. It therefore held “that there is no taking until the time as of which, had there been no NITU,

the railroad would have abandoned the rail line, causing termination of the easement that the

NITU continued by law.” 16 Id. at 1372; see also id. at 1370 (“The precise timing [of

abandonment] is immaterial to liability if abandonment would have occurred during the NITU

period . . . .”).

3. Abandonment Under Indiana Law

Plaintiffs, in addressing causation, argue that Indiana Southwestern abandoned the

railroad lines under state law. “Property law in Indiana provides that, upon abandonment by the

railroad, a railroad easement terminates and the fee simple interest in the land reverts to the

grantor, or the grantor’s heirs, assigns or devisees.” Consol. Rail Corp. v. Lewellen, 682 N.E.2d

779, 782 (Ind. 1997). By statute, “a right-of-way is considered abandoned if”:

company exercises its abandonment authority and fully abandons the railroad line by filing a

notice of consummation. See, e.g., Caquelin III, 959 F.3d at 1362. Third, as in this case, the

railroad company and potential trail operator could allow the NITU to expire without reaching a

trail-use agreement and, thereafter, the railroad company does not exercise its abandonment

authority and fully abandon the line by filing a notice of consummation.

16

The Federal Circuit explained that its holding was consistent with its analyses and

conclusions in Caldwell, Barclay, and Ladd. Caquelin III, 959 F.3d at 1371-72 (observing that

the holdings in all three prior cases “incorporate[d] the causation inquiry” it described).

Specifically, it noted that “nothing in those opinions suggests that a party in those cases argued

to this court that, even in the absence of the NITU, the railroad would not have abandoned the

rail line until some date that would make a difference to the outcome of the issue on appeal—

whether timeliness, in Caldwell and Barclay, or liability for a taking, in Ladd . . . .” Id. at 1372.

It is clear that the Federal Circuit intended its “clarification of [its] case law on the timing of a

NITU-based taking” to be binding on the Court of Federal Claims, see id. at 1371-72, and this

court intends to treat it as binding. However, it is worth noting that the Federal Circuit’s holding

appears to be inconsistent with its prior holding in Ladd that a plaintiff has a complete cause of

action when a NITU is issued (in other words, the plaintiff’s claim accrued) and subsequent

events “cannot be necessary elements of the claim,” 630 F.3d at 1024, suggesting that the

holding in Ladd remains binding, see Barclay, 443 F.3d at 1373 (“Panels of this court are bound

by previous precedential decisions until overturned by the Supreme Court or this court en

banc.”).

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(2) After February 27, 1920, both of the following occur:

(A) The Interstate Commerce Commission or the United States Surface

Transportation Board issues a certificate of public convenience and necessity

relieving the railroad of the railroad’s common carrier obligation on the right-

of-way.

(B) The earlier of the following occurs:

(i) Rails, switches, ties, and other facilities are removed from the right-of-

way, making the right-of-way unusable for continued rail traffic.

(ii) At least ten (10) years have passed from the date on which the

Interstate Commerce Commission or the United States Surface

Transportation Board issued a certificate of public convenience and

necessity relieving the railroad of its common carrier obligation on the

right-of-way.

Ind. Code § 32-23-11-6(a) (2011); see also Lewellen, 682 N.E.2d at 783 (noting that “the

common law on whether abandonment has occurred was superseded by” statute in 1987).

However, “[a] right-of-way is not considered abandoned if the Interstate Commerce Commission

or the United States Surface Transportation Board imposes on the right-of-way a trail use

condition under 16 U.S.C. 1247(d).” 17 Ind. Code § 32-23-11-7; see also 16 U.S.C. § 1247(d)

(2006) (“[I]f such interim use [as a trail] is subject to restoration or reconstruction for railroad

purposes, such interim use shall not be treated, for purposes of any law or rule of law, as an

abandonment of the use of such rights-of-way for railroad purposes. If [an entity] is prepared to

assume full responsibility for the management of such rights-of-way . . . , then the Board shall

impose such terms and conditions as a requirement of any transfer or conveyance for interim use

. . . and shall not permit abandonment . . . inconsistent or disruptive of such use.”).

At the time that the original version of Indiana Code section 32-23-11-6 was enacted, 18

federal law provided that “rail carrier[s]” could abandon their railroad lines through formal

abandonment proceedings if the Interstate Commerce Commission found “that the present or

future public convenience and necessity require[d] or permit[ted] the abandonment” and

“issue[d] to the rail carrier a certificate describing the abandonment,” 49 U.S.C. § 10903 (1982),

or upon the Interstate Commerce Commission recognizing that the rail carrier was exempt from

17

This provision was added to the Indiana Code as section 32-5-12-7 in 1995, see 1995

Ind. Acts 2100, 2124-25 (section 4 of Public Law 40-1995), and recodified as section 32-23-11-7

in 2002, see 2002 Ind. Acts 187, 280, 295 (section 8 of Public Law 2-2002).

18

The original version of the statute provided that abandonment occurred when “the

Interstate Commerce Commission issues a certificate of public convenience and necessity” and

the railroad company removes the “rails, switches, ties, and other facilities . . . from the right-of-

way.” Lewellen, 682 N.E.2d at 783 & n.7; see also id. at 783, 784 n.9 (reflecting that these two

requirements were included in the subsequent version of the statute enacted in 1995).

-26-

formal abandonment proceedings, id. § 10505; 49 C.F.R. § 1152.50(d)(3) (1986). These

actions––issuance of a certificate of public convenience and necessity (also referred to as a

certificate of abandonment) and the recognition of an exemption––constituted authorization for

the rail carrier to abandon its line. See 49 C.F.R. §§ 1152.26(a)(1), .50(d)(2)-(3) (1986); see also

id. § 1152.29(c)(1), (d)(1) (providing that a CITU and a NITU authorized abandonment 180 days

after issuance); Preseault I, 494 U.S. at 7 n.5 (observing that if a trail-use agreement is not

reached within 180 days of the issuance of a CITU or NITU, the CITU or NITU “automatically

converts into an effective certificate or notice of abandonment”). That authorization relieved the

rail carrier “of its obligation to furnish rail service.” Hayfield N. R.R. Co. v. Chi. & N.W.

Transp. Co., 467 U.S. 622, 635 (1984). It was then up to the rail carrier to take the steps

necessary to fully abandon its line. See Black v. Interstate Com. Comm’n, 762 F.2d 106, 112-13

(D.C. Cir. 1985) (discussing what a rail carrier was required to do to fully abandon its line after

receiving a certificate of public convenience and necessity, 19 as well as the “more searching and

functional inquiry about the actual intent” of the rail carrier employed by many federal courts to

determine whether a line had been abandoned). Once a rail carrier fully abandoned its line, the

Interstate Commerce Commission no longer possessed jurisdiction over the line. Preseault I, 494

U.S. at 6 n.3 (citing Hayfield N. R.R. Co., 467 U.S. at 633; Rail Abandonments, 54 Fed. Reg.

8011, 8012 (Feb. 24, 1989)). 20

The requirement that a certificate be issued at the conclusion of formal abandonment

proceedings was removed from federal law effective January 1, 1996. 21 See ICC Termination

19

To fully abandon its line, a rail carrier was required to cease operations and cancel

tariffs. See Black, 762 F.2d at 112. A prior requirement that the rail carrier file a letter with the

Interstate Commerce Commission indicating that the abandonment was consummated was

eliminated in 1984. See, e.g., Consol. Rail Corp. v. Surface Transp. Bd., 93 F.3d 793, 798 (D.C.

Cir. 1996); Abandonment and Discontinuance of Rail Lines and Rail Transportation Under 49

U.S.C. 10903, 61 Fed. Reg. 67,876, 67,879 n.10 (Dec. 24, 1996) (to be codified at 49 C.F.R. pts.

1105, 1152).

20

In Hayfield N. R.R. Co., the Supreme Court stated that the Interstate Commerce

Commission’s “authorization of an abandonment” in a nonconditional certificate of

abandonment brought the Commission’s “regulatory mission to an end” and that “issuing a

certificate of abandonment terminate[d] the Commission’s jurisdiction . . . .” 467 U.S. at 633.

However, in so stating, it relied on Interstate Commerce Commission precedent reflecting that it

was the “exercise” of the authority granted in the certificate of abandonment (or the full

abandonment of the railroad line after a certificate was issued) that terminated the Commission’s

jurisdiction. Id. at 634. Indeed, in Preseault I, decided six years later, the Supreme Court relied

on the entirety of the discussion in Hayfield N. R.R. Co. for its conclusion that “[o]nce a carrier

‘abandons’ a rail line pursuant to authority granted by the Interstate Commerce Commission, the

line is no longer part of the national rail system, and . . . as a general proposition [Interstate

Commerce Commission] jurisdiction terminates.” 494 U.S. at 6 n.3; accord 54 Fed. Reg. at 8012

(“[O]nce a carrier exercises the authority granted in a regular abandonment certificate the line is

no longer part of the national transportation system.”).

21

No such certificate had been required at the conclusion of exemption proceedings. See

49 C.F.R. § 1152.50 (1986); Modification of Procedure for Handling Exemptions Filed Under 49

-27-

Act of 1995, Pub. L. No. 104-88, §§ 2, 102(a), 109 Stat. 803, 804, 823-25. Therefore, the Board

“dispense[d] with the issuance of certificates and instead simply issue[d] ‘decisions granting’ an

application.” 61 Fed. Reg. at 67,880. However, the Board decided that it would “continue to

refer to ‘Certificates of Interim Trail Use or Abandonment’ in the trail use context in part to

distinguish an application proceeding from an exemption proceeding.” Id. In other words, when

ruling on an abandonment application, the Board will issue either a decision (when not imposing

a trail-use condition) or a CITU (when imposing a trail-use condition). Although the Indiana

legislature recodified section 32-23-11-6 in 2002, it did not amend the statute’s language to

reflect this change in federal law. Compare Ind. Code § 32-23-11-6 (2003), with Ind. Code § 32-

5-12-6 (2001).

B. Findings of Fact

The following facts are relevant to determining the nature of the alleged taking and

whether the NITU caused a compensable taking.

1. Proceedings Before the Board

Indiana Southwestern determined that it no longer needed the railroad lines at issue in

this case for rail service. Tr. 955 (LaKemper); accord id. at 958 (“We did not want to maintain

the line in place.”). It therefore began to discuss removing the track from the lines. See DX 108

at 531 (addressing, on July 28, 2010, “the section of track we are going to pull up”), 558

(reflecting an offer, dated July 27, 2010, to “pay Pioneer Railcorp $1,040,000 for all rail, plates,

joint bars, turnouts and miscellaneous scrap steel [and other track material] from said line,”

leaving behind the ties, signal appurtenances, and bridges); see also Tr. 912 (Cullen) (stating an

assumption that the discussions began in the July 2010 time frame), 956 (agreeing that the intent

to salvage the track materials was formed during the spring or summer of 2010).

On October 25, 2010, Indiana Southwestern submitted to the Board a notice of exemption

pertaining to the railroad lines in which it represented that it had satisfied all of the requirements

for seeking a class exemption from abandonment proceedings and declared that it would

consummate the abandonment of the lines “on or after January 15, 2011.” JX 1 at 3-6; see also

Tr. 962 (LaKemper) (“The purpose of the filing is to terminate [the] common carrier obligation

and abandon the line . . . .”). In particular, it certified “that no local traffic has moved over the

subject . . . lines . . . for at least two years” and “that there is no overhead traffic on the Lines that

has been, or would need to be, rerouted as a result of the proposed abandonment.” JX 1 at 8;

accord id. at 5 (remarking that “the Lines have been dormant for over two years,” that “no traffic

has moved over the Lines for some time,” and that “the Lines have not been used for local rail

shipments for over twenty-four (24) months”). Indeed, the last loaded revenue train ran on the

lines in 2004. Tr. 901 (Cullen); accord id. at 151 (Reeves), 196 (Memmer), 235 (Jenkins); see

also id. at 58 (Effinger) (stating that it had “been many years” since trains ran along the lines), 85

(McDonald) (stating that trains did not run “too often” as of ten years before trial), 123-24

(Goebel) (stating that a few trains had run on the lines since early 2000), 207-08 (Siebert)

U.S.C. 10505, 45 Fed. Reg. 85180 (Dec. 24, 1980) (setting forth the exemption procedure that

was later codified at 49 C.F.R. part 1121 in September 1991).

-28-

(stating that it had “been a long time” since trains ran on the lines and when they did, it was

usually only one per week), 255 (Schmidt) (stating that he remembered last seeing a train go by

in 2000 or 2002), 272 (Martin) (stating that it had “been a long time” since trains ran along the

lines). In subsequent correspondence with the Board, Indiana Southwestern noted that “there

was weekly (or less) train service over the line” over the prior two years that “was to move

empty rail cars over and onto the line for rail car storage purposes only.” DX 2.29; accord Tr.

893, 896-99 (Cullen) (stating that after 2004 and until 2009, there was storage traffic on the

lines, both empty cars and cars that were not empty, for which Indiana Southwestern received

payment). It asserted, and the Board later agreed, that such movements did not disqualify it from

invoking the class exemption. DX 2.8 at 1; DX 2.29.

On November 12, 2010, the Board published a notice in the Federal Register in which it

acknowledged Indiana Southwestern’s representations in its notice of exemption, indicated that

in the absence of an OFA the exemption would be effective on December 14, 2010, and noted

that the deadlines for making a trail-use/railbanking request and requesting a public-use

condition were November 22, 2010, and December 2, 2010, respectively. Indiana Southwestern

Railway Co.—Abandonment Exemption—in Posey and Vanderburgh Counties, IN, 75 Fed. Reg.

69,520, 69,520 (Nov. 12, 2010); accord JX 2 at 1-2; see also 49 C.F.R. § 1152.50(d)(3)

(describing the applicable submission deadlines). The Board further provided:

Pursuant to the provisions of 49 C.F.R. § 1152.29(e)(2), [Indiana Southwestern]

shall file a notice of consummation with the Board to signify that it has exercised

the authority granted and fully abandoned the line. If consummation has not been

effected by [Indiana Southwestern’s] filing of a notice of consummation by

November 12, 2011, and there are no legal or regulatory barriers to

consummation, the authority to abandon will automatically expire.

75 Fed. Reg. at 69,520; JX 2 at 3.

Two interested third parties sought to prevent abandonment. On November 17, 2010,

Indiana Trails Fund, Inc. filed a request for a public-use condition and the interim use of the

railroad lines for a trail. Jt. Stip. ¶ 7. The following day, the Town of Poseyville, Indiana

(“Poseyville”) submitted a notice of its intent to file an OFA. Id. ¶ 8. Indiana Southwestern

responded to both submissions. On November 18, 2010, it advised the Board that it was “willing

to negotiate interim trail use/rail banking with . . . Indiana Trails Fund, Inc.” JX 5. Not long

thereafter, it provided Poseyville with the information and documentation necessary for

Poseyville to prepare its OFA. DX 2.8 at 2.

With respect to the OFA, Indiana Southwestern supplied Poseyville with information

indicating that the value of the railroad lines was $3,812,580––$1,008,000 for the land and

$2,804,580 for the track materials. Id. at 3. To arrive at the latter amount, Shane Cullen, Vice

President of Mechanical Operations for Pioneer Railroad Services, Inc., a subsidiary of Pioneer

Railcorp, Tr. 836-37 (Cullen), calculated the retail value of the rails, ties, and ballast on the lines,

id. at 858, 861, 868; DX 108 at 607. He estimated that the value of the rails and related steel

material was $2,480,000, the value of the ties was $174,580, and the value of the ballast was

$150,000. DX 108 at 607; cf. id. at 607 (reflecting an estimated scrap value of the rails and

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related steel material of $1,040,000), 619 (reflecting that Indiana Southwestern received an offer

on November 18, 2010, to purchase the reusable ties for $45,000 or, in the alternative, to provide

for the disposal of all ties for $83,193). To estimate the value of the ties, Mr. Cullen made

certain assumptions regarding the quality of the ties and the number of ties of each quality that

existed on the lines, Tr. 868-69, 871 (Cullen), with those assumptions based on both his

experience and his knowledge that the ties would need to be of a particular quality to support

empty storage traffic on the lines, id. at 879-81; accord id. at 878 (stating that he did not inspect

the lines when making his assumptions). Poseyville filed its OFA on December 20, 2010,

seeking to purchase the lines for $376,600––$240,000 for the land and $136,600 for the net

salvage value of the track materials. DX 2.8 at 2-3.

The Board’s Director of the Office of Proceedings issued a decision regarding the OFA

on December 23, 2010. Id. at 1. The Director concluded that Poseyville was financially

responsible and therefore it postponed the effective date of the abandonment exemption. Id. at 3.

With respect to the trail-use and public-use-condition requests, the Director noted that because

Indiana Trails Fund, Inc. had satisfied the statutory requirements and that Indiana Southwestern

had agreed to negotiate a trail-use agreement, the imposition of a public-use condition and

issuance of a NITU “would be appropriate commencing with the effective date of the

exemption.” Id. at 5. “However,” the Director noted,

an OFA takes priority over a request for issuance of a NITU or for a public use

condition. Therefore, issuance and effectiveness of the NITU and the public use

condition will be delayed until the OFA process has been completed. If

agreement is reached on the sale of the line, the NITU and the public use

condition would be unnecessary and unavailable. If no agreement is reached on

the OFA, the appropriate decision will be issued.

Id.

Indiana Southwestern appealed the Director’s determination that Poseyville was a

financially responsible offeror. JX 6 at 1. In a decision bearing a service date of April 8, 2011,

the Board concluded that Poseyville was not financially responsible for the purpose of

proceeding with the OFA process. Id. The Board then declared that its decision would become

effective on May 23, 2011, and that it would “impose the trail use condition and make effective

the public use condition” on the decision’s effective date. Id. at 7. Specifically, the Board

ordered:

3. The abandonment exemption will become effective on May 23, 2011,

subject to . . . the condition that [Indiana Southwestern] shall keep intact the

right-of-way, including potential trail-related structures, . . . and shall refrain from

disposing of the corridor (other than the track, ties and signal equipment), for a

period of 180 days from May 23, 2011, until November 19, 2011, to enable any

state or local government agency, or other interested person, to negotiate the

acquisition of the lines for public use. . . .

....

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7. If an agreement for interim trail use/rail banking is reached by

November 19, 2011, and notice [sic], trail use may be implemented. If no

agreement is reached by that time, [Indiana Southwestern] may fully abandon the

line . . . .

Id. at 7-8. Thus, the Board’s decision––served on April 8, 2011, and made effective on May 23,

2011––constituted a NITU. Jt. Stip. ¶ 10; see also DX 2.15 (reflecting that the Board, in a

decision served on September 23, 2011, denied Poseyville’s request for reconsideration).

Indiana Trails Fund, Inc. sought and received four extensions of the initial 180-day

period to negotiate a trail-use agreement, culminating in a deadline of November 8, 2013. Jt.

Stip. ¶¶ 11-18; see also 49 C.F.R. § 1152.29(d) (reflecting that a NITU can be issued only with

the agreement of the railroad company); Tr. 814 (counsel for the parties) (stipulating that Indiana

Southwestern agreed to each of these extensions). It did not seek a further extension. Tr. 967

(LaKemper); see also id. (stating that it was Indiana Trails Fund, Inc.’s responsibility to seek an

extension). Consequently, the NITU expired on its own terms, and Indiana Southwestern had

sixty days––or until January 7, 2014––within which to file a notice of consummation to signify

that it fully abandoned the railroad lines. See 49 C.F.R. § 1152.29(e)(2). However, Indiana

Southwestern did not file a notice of consummation with the Board. 22 Tr. 816 (Kitay), 939, 953,

968 (LaKemper). Nevertheless, Indiana Southwestern’s intent remained to either finalize the

abandonment or execute a trail-use agreement. Id. at 967-68 (LaKemper); accord id. at 970

(agreeing that at the time of trial, Indiana Southwestern did not intend to reinstall the tracks that

had been removed).

2. Actions of Indiana Southwestern During the Proceedings Before the Board and

Thereafter

Indeed, Indiana Southwestern’s discussions with Indiana Trails Fund, Inc. to sell the

railroad lines continued after the expiration of the NITU, id. at 969; accord DX 117 at 1, but had

not been “reduced to offers or draft documents,” Tr. 942 (LaKemper). See also id. at 971

(stating that the discussions were temporarily “on hold” due to the “potential buyout” of Pioneer

Railcorp); cf. id. (stating that Indiana Southwestern also engaged in on-and-off discussions with

Poseyville to sell the lines that were never “reduced to offers or draft documents”). In addition,

22

In addition, as of the last day of trial, no one had filed an adverse abandonment

application to request that the Board deem the railroad lines abandoned notwithstanding Indiana

Southwestern’s decision not to file a notice of consummation to signify that it had fully

abandoned the lines. Tr. 816-17 (Kitay); see also id. at 786 (stating that the Board has a process

in which “a third party can come in and ask the Board to find that there’s no further need for the

line as part of the national rail transportation system,” and that if such a request is granted, “the

Board’s jurisdiction over the right-of-way ceases”). However, after trial, the Board rejected a

request by landowners in another case before the court to direct Indiana Southwestern to show

cause why these same lines should not be deemed abandoned, Pls’ Notice of Decision Ex. A,

ECF No. 166-1 (indicating that the request was made on September 11, 2019, and denied on

January 24, 2020).

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on April 4, 2019, plaintiffs’ counsel sent an electronic-mail message to Daniel A. LaKemper,

General Counsel for Pioneer Railroad Services, Inc., Tr. 935-36 (LaKemper), offering to

purchase what was characterized as the easement interest in the corridor for $100,000 and

seeking to reach a deal before the commencement of trial on April 29, 2019. Id. at 942-43; DX

117 at 2-3. Indiana Southwestern did not pursue the expression of interest, Tr. 943 (LaKemper),

because Pioneer Railcorp was “in discussions about a possible buyout and [its] buyer . . .

prohibited [it] from engaging in those kinds of transactions or discussions pending arriving at a

deal with them,” id. at 944. Accord DX 117 at 1-2; see also Tr. 944-45 (LaKemper) (stating that

the buyer intended to purchase Pioneer Railcorp and all of its subsidiaries, including Indiana

Southwestern).

In the meantime, as authorized by regulation and the NITU, Indiana Southwestern took

steps to dispose of the track and other materials on the railroad lines. On August 2, 2011,

Indiana Southwestern executed a Scrap Rail Sales Agreement with A&K Materials Inc.

(“A&K”) in which A&K agreed to pay Indiana Southwestern $1.2 million to purchase and

remove “the switches, rail and other metallic track materials” from the lines. DX 113 at 3-8;

accord Tr. 844-45 (Cullen) (stating that “materials” included “[a]ll the steel rail track material,

which is the rails, joint bars, plates, spikes and bolts and nuts”); cf. Tr. 913 (Cullen) (stating that

A&K had been one of three bidders for the project). A&K was to “leave all bridges, culverts,

signal systems, road crossings, and other structures, fixtures, and facilities intact and

undamaged.” DX 113 at 7; accord id. at 3; see also Tr. 888-89 (Cullen) (stating that there is

“additional cost” with removing a road crossing due to the need to close the road and then

replace the road surface). In addition, it could move the ties “away from the center of the right

of way” but not from the right-of-way itself, and was prohibited from allowing the ties or “other

materials . . . to obstruct, block, or alter the drainage of the right of way or any surrounding

property.” DX 113 at 7. Indeed, although Mr. Cullen estimated that there were approximately

48,160 ties on the lines with a total value of $174,580, 23 DX 108 at 607, he determined that “[i]t

was not economically viable to go back and pick them up,” Tr. 905 (Cullen); accord id. at 906-07

(agreeing that the condition of the ties left in the railroad corridor was “extremely deficient for

operating trains” and that the sole reason they were left behind was because they were not part of

the agreement with A&K), 982-83 (LaKemper) (“If [the ties] had had value to . . . A&K or some

other contractor, [Indiana Southwestern] probably would have sold the ties as well. . . . These

were old branch line ties and . . . it’s unlikely that after they’ve been removed from the rails there

would[] be much usable surface left.”). The deadline for the removal work was April 1, 2012.

DX 113 at 4.

A&K complied with the terms of the contract, removing all rails (except those in road

crossings) and moving the ties from the center of the railroad lines by the deadline. Tr. 849-54

(Cullen); accord id. at 920 (stating that the work was completed by early February 2012); DX

114 (reflecting a $1.2 million payment to Indiana Southwestern); cf. Tr. 976 (LaKemper) (stating

23

Based on his experience, Mr. Cullen assumed that half of the ties were junk and would

need to be sent to a landfill at a cost of $120,400, that a quarter of the ties were reusable on

railroad tracks (relay number one grade) and could be sold for $174,580, and that the remaining

quarter of the ties were reusable––but perhaps not in railroad tracks––and could be sold for

$120,400. Tr. 870-71, 873-75, 878-82 (Cullen).

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that Indiana Southwestern apparently sent a train to the lines in September 2011 to “assist in the

salvage of the rail”). Indeed, a number of the testifying plaintiffs (or plaintiffs’ representatives)

recalled that the tracks were removed in the 2010-2012 time period. See Tr. 85-86 (McDonald),

152, 162 (Reeves), 190 (Memmer), 208 (Siebert), 235 (Jenkins), 255 (Schmidt), 272 (Martin).

And all of them noted that the ties were left behind in piles or stacks. See id. at 58, 73

(Effinger), 85-86 (McDonald), 108-09, 128 (Goebel), 153, 162 (Reeves), 176, 190-91

(Memmer), 208 (Siebert), 235-36 (Jenkins), 255-56 (Schmidt), 273 (Martin). After A&K

completed its work, Indiana Southwestern performed no maintenance along the railroad lines,

such as spraying for weeds or removing vegetation. Id. at 916 (Cullen); accord id. at 58-59

(Effinger), 87 (McDonald), 105 (Goebel), 150 (Reeves), 174 (Memmer), 209 (Siebert), 256

(Schmidt), 271 (Martin); see also PX 1.D (photo of the railroad corridor adjacent to the Memmer

property); PX 2.D (photo of the railroad corridor adjacent to the Goebel property); PX 3.D

(photo of the railroad corridor adjacent to the McDonald Family Farms property); PX 4.D (photo

of the railroad corridor adjacent to the Halpeny property); PX 5.D (photo of the railroad corridor

adjacent to the Reibel Farms, Inc. property); PX 6.D (photo of the railroad corridor adjacent to

the Martins’ property); PX 7.D (photo of the railroad corridor adjacent to the Effinger property);

PX 8.D (photo of the railroad corridor adjacent to the Jenkins property); PX 9.D (photo of the

railroad corridor adjacent to the Schmidts’ property). Rather, many of the plaintiffs or their

lessees performed such maintenance. Tr. 82, 87 (McDonald), 105, 114, 131 (Goebel), 147, 149-

50, 154-55 (Reeves), 174 (Memmer), 207, 209 (Siebert), 236, 245 (Jenkins), 256 (Schmidt), 270-

71 (Martin).

3. The Character and Use of Plaintiffs’ Properties

Finally, to comply with the Federal Circuit’s mandate to apply the multifactor test

described in Arkansas Game & Fish, the court finds the following facts regarding the parcels

involved in this case.

a. The Effinger Property

The property owned by Mr. Effinger is a 47.45-acre parcel, roughly rectangular in shape,

with the railroad line running along its western boundary. Id. at 57 (Effinger); JX 30; JX 31.

But see Tr. 52 (Effinger) (stating that the parcel includes 44 acres). The only structure on the

parcel is a cell phone tower. Tr. 55 (Effinger). The parcel is hilly and mostly wooded, but has

three areas of tillable land. Id. at 55, 67-68; see also JX 30 (reflecting that the parcel is classified

as agricultural land that includes 12 acres of tillable land and 35.45 acres of woodland). Mr.

Effinger does not farm the tillable areas himself; at the time of trial someone else farmed the

eastern tillable area, and up until two years prior to trial, his brother farmed the western tillable

area. Tr. 55, 69, 72 (Effinger). Due to ditches being washed out on the property at the time of

trial, the middle and western tillable areas could not be accessed for farming purposes, but a

neighbor kept the western tillable area mowed. Id. at 69-70, 72. Mr. Effinger uses the land

primarily for hunting deer, squirrels, rabbits, and turkeys; recreational activities such as hiking;

and obtaining firewood. Id. at 56-57, 72.

The parcel has been in Mr. Effinger’s family for over 100 years. Id. at 52. Mr. Effinger

was deeded the parcel from his father on January 31, 2006, for a small sum, id. at 53-54, 65-66;

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JX 29; the parcel had been part of a larger parcel that his father divided among his children, Tr.

66 (Effinger). The parcel has sentimental value for Mr. Effinger, and thus he does not intend to

sell it even though he has “had offers to sell half of that property . . . for a lot of money . . . .” Id.

at 53; accord id. at 74. Mr. Effinger has insurance in case someone gets injured on the parcel.

Id. at 60. Indeed, there have been trespassers, some of whom have dumped trash in the railroad

corridor. Id. at 59-60.

Mr. Effinger would like to get the railroad corridor back. Id. at 60. He would plant cover

crops so that the wildlife could have something to eat and also sees value in erecting a fence

along the centerline of the corridor to keep trespassers off of the parcel. Id. at 60-61; cf. id. at 59

(stating that there is a barbed-wire fence between the western boundary of the parcel and the

corridor). Prior to this lawsuit, Mr. Effinger had heard that there was a plan to put a trail in the

corridor, but he had never seen the NITU. Id. at 75. He understands that he may need to buy the

corridor from Indiana Southwestern to use it. Id. at 62.

b. The Goebel Property

The property owned by the Goebels consists of two nonadjacent parcels classified as

agricultural land: an irregularly shaped, 59.81-acre parcel and a triangular, 3-acre parcel. 24 JX

15; JX 16; see also JX 15 (reflecting that the larger parcel includes 60.42 acres of tillable land

and 1.66 acres of nontillable land, while the smaller parcel includes 3 acres of tillable land); JX

16 (reflecting that all but a small portion of the triangular parcel is farmed). The railroad line

runs diagonally through roughly the middle of the larger parcel, with an approximately 30-acre

portion to the west of the line and a 38-acre portion to the east of the line, and along the longest

side of the triangular parcel. JX 16; Tr. 101, 106, 116 (Goebel). The larger parcel is flat, Tr. 106

(Goebel), and the triangular parcel has a steep bank and a stream running through it, id. at 132,

136. The parcels are part of a 630-acre farm operated by Mr. Goebel and his son. Id. at 100,

104, 115 (Goebel). Mr. Goebel grows corn, wheat, soybeans, and pumpkins, with average yields

of 210 bushels of corn per acre, 55 bushels of soybeans per acre, and 4000 pumpkins per season.

Id. at 102-04; see also PX 11 at 5-6 (“Average yield is as follows: corn 225-250 bushels per

acre; soybeans 70-80 bushels per acre single crop and 50 bushels per acre double crop . . . ;

winter wheat 100 bushels per acre; and . . . 3,000-4,000 pumpkins per acre.”). The soil

“Productivity Index is 149 which is average to good for the area.” 25 PX 15 at 29.

24

The total acreage of each parcel is set forth in the tax assessor’s records as the “legal

acres” and the “parcel acreage.” JX 15. The totals are less than the “measured acreage” in the

same records. Id. In addition, the totals differ from those offered by Mr. Goebel during trial.

See Tr. 116-18 (Goebel) (stating that the larger parcel includes approximately 68 acres and the

triangular parcel includes “probably” 5 to 6 acres).

25

The “Productivity Index” is a measurement developed by the United States

Department of Agriculture; the scale “probably” goes up to “200.” Tr. 381 (Matthews).

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The two parcels, and the larger farm of which they are a part, 26 have been in Mr.

Goebel’s family for a long time. Tr. 110-11, 120 (Goebel). Mr. Goebel initially leased the

parcels from his cousin in 1979. Id. at 100, 121. At that time, he understood that the railroad

line could be abandoned at some time in the future. Id. at 123-25. Then, when he purchased the

parcels in February 2000, JX 14; accord Tr. 122 (Goebel), his understanding evolved to

believing that the line might be abandoned, based on the small number of trains being run. Tr.

123-25 (Goebel). He first learned that Indiana Southwestern was considering abandoning the

line approximately five or six years before his May 2018 deposition, when the tracks were being

removed. Id. at 127; accord id. at 109 (stating that the tracks were removed “probably” six years

before trial).

Mr. Goebel witnessed the removal of the tracks; the rails were taken from the railroad

corridor, the ties were piled up to the side of the line, and the ballast was left in place. Id. at 107-

09, 128, 130-31. Subsequently, someone took all of the “good” ties that remained, leaving the

bad ones and other “junk” behind. Id. at 108, 128.

An individual helping to remove the tracks told Mr. Goebel that no one was permitted on

the railroad corridor, and “no trespassing” signs were posted where the corridor intersects with

roads. Id. at 108-11, 129. Nevertheless, there is a problem with trespassers on the corridor that

has worsened since the tracks were removed: trespassers hunt, ride their four-wheelers along the

corridor and into the adjacent fields, and, during pumpkin season, pick the pumpkins and then

take them to throw at houses and off of trestles. Id. at 107, 112-13. In addition, Mr. Goebel

crosses the corridor at one location to access the two sides of the larger parcel. Id. at 133.

The existence of the railroad corridor has required Mr. Goebel to expend greater efforts

and incur greater expenses to farm his parcel. For example, he must use point rows to farm his

parcel, which “wastes fertilizer and . . . wastes seed[,] and it’s hard to harvest and hard to plant

. . . .” 27 Id. at 108.

Mr. Goebel has always understood that when trains stopped running along the railroad

line, he would get that land back. Id. at 111, 139. If he owned the railroad corridor, he would

also be able to exclude the trespassers. Id. at 114. In addition, he would level it where he could

and farm on it, which would increase his crop yields. Id. at 108-09, 111-12, 114; accord id. at

132 (stating that it would not be difficult to level the corridor on the large parcel, but that

leveling the triangular parcel would not be feasible due to a ditch along the line; nevertheless, he

could still farm up to the ditch). One of plaintiffs’ expert witnesses, David Matthews, 28 opined

that converting the corridor from nontillable land to tillable land would have cost approximately

26

Mr. Goebel’s 630-acre farm includes a farm previously owned by his great-

grandfather and a 140-acre farm previously owned by his cousin. Tr. 111, 115-16 (Goebel).

27

Point rows are created when planting an irregularly shaped field. See Tr. 93-94

(McDonald). Point rows will overlap with the end rows that surround a field, leading to double

planting on the overlap. Id.

28

The court qualified Mr. Matthews as an expert appraiser. Tr. 313 (court).

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$1750 on the date the NITU was issued: $33 to chisel plow the railroad bed and $1716 to cut

and fill the ditches alongside the railroad bed with a bulldozer. 29 Id. at 408 (Matthews); PX 15 at

33; see also PX 11 at 6 (indicating that “[s]ome ballast would need to be removed or buried”).

Further, plaintiffs’ other expert witness, James B. Kliebenstein, 30 opined that there would be a

return of approximately $13 to $17 for every dollar spent on converting the corridor. PX 11 at 8;

Tr. 623 (Kliebenstein). However, defendant’s expert on what a reasonable buyer of agricultural

land might consider, Charles McCarty, 31 opined that reclaiming a corridor is not quick or easy

due to (1) the need to remove ballast from the corridor, a costly process; (2) the severe

compacting caused by the operation of the railroad; (3) the length of time it takes for soil

productivity to improve; (4) drainage concerns; and (5) the potential need to coordinate with

owners of neighboring parcels. Tr. 752-59 (McCarty).

Mr. Goebel first heard that the railroad corridor might be converted to a trail around the

time the track was removed. Id. at 128 (Goebel). He was aware that Indiana Southwestern

wanted the adjacent landowners to buy back the corridor. Id. at 113.

c. The Halpeny Property

The property owned by Mr. Halpeny is a 34-acre parcel classified as agricultural land that

is split into two parts by a county road: a large acute-trapezoid-shaped area on the east side of

the road and a very small triangular-shaped area on the west side of the road. JX 21; JX 22; see

also JX 21 (reflecting that the parcel includes 33.6 acres of tillable land); JX 22 (reflecting that

the entire parcel is farmed); Tr. 202 (Siebert) (stating that the parcel includes 33 acres), 204-05

(stating that the triangular portion of the parcel is likely farmed by a neighbor). The railroad line

runs along the southern boundary of the parcel perpendicular to the county road. JX 22; Tr. 207

(Siebert). Corn and soybeans are grown on the parcel in rotation, with yields of “a little over

200” bushels of corn per acre and “from 60 to 70, maybe 75” bushels of soybeans “on a really,

really good year.” Tr. 205 (Siebert); accord PX 11 at 9 (“Average yield is as follows: corn 240

bushels per acre and soybeans 65 bushels per acre.”). The soil “Productivity Index is 148 which

is average for the area.” PX 17 at 31.

Mr. Halpeny acquired the parcel from his mother in September 1993, JX 20, and has

leased the parcel to Patrick Siebert since 2016, Tr. 213 (Siebert). Mr. Siebert’s family has

farmed the parcel as long as Mr. Siebert can remember; before Mr. Siebert, the parcel was

29

A chisel plow uses “deep tines that . . . dig up and fluff up the ground” that may have

been compacted by the operation of a railroad. Tr. 390 (Matthews). Using a chisel plow costs

$25 per acre, id. at 391, and using a bulldozer costs approximately $2 per cubic yard of earth

moved, id. at 388, 391.

30

The court qualified Dr. Kliebenstein as an expert in agricultural economics and farm

management. Tr. 594-95 (court).

31

The court allowed Mr. McCarty to testify only on the topic of what a reasonable

farmer would do with a railroad corridor. Tr. 743 (court); see also id. at 742-43 (government

counsel), 746-48 (colloquy between the court and government counsel).

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farmed by his father and brother, and before that, by his father’s uncle. Id. at 202-03; see also id.

at 203 (stating that Mr. Siebert’s father and brother leased the parcel on a crop-share basis with

Mr. Halpeny, retaining three-fifths of the proceeds). Mr. Siebert rents the parcel for $200 per

acre. Id. at 202; see also id. at 332 (Matthews) (suggesting that this rent “may be a sweetheart

deal”). In a good year, he realizes a profit of “maybe” $200 per acre. Id. at 206 (Siebert).

Mr. Siebert does not cross the corridor to access the parcel because access is possible

from the county road. Id. at 207, 209. However, there have been trespassers on the railroad

corridor––people on four-wheelers and hunters. Id. at 209, 211-12.

Mr. Siebert does not want a trail on the railroad corridor because it would create more

traffic and more trash. Id. at 209-10. In fact, he would like to get the corridor back. Id. If he

owned the corridor, he would also have better access to the parcel. Id. at 210. In addition, he

would dispose of the ties, dig out the gravel, cut down the trees and brush, and plant additional

crops. Id. at 210-11. Mr. Matthews opined that converting the corridor from nontillable land to

tillable land would have cost approximately $6500 on the date the NITU was issued: $25 to

chisel plow the railroad bed and $6481 to cut and fill the ditches alongside the railroad bed with

a bulldozer. Id. at 433 (Matthews); PX 17 at 25; see also PX 11 at 9 (indicating that “[s]ome

ballast would need to be removed or buried”). Further, Dr. Kliebenstein opined that there would

be a return of approximately $2 for every dollar spent on converting the corridor. PX 11 at 11;

Tr. 638 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties involved in

reclaiming the land), 762-63 (stating that a tenant might be reluctant to incur the expenses of

reclamation without assurances from the landowner that he or she could farm the land for long

enough to recover the expenses).

d. The Jenkins Property

The property owned by Mr. Jenkins is a 66-foot-by-165-foot residential lot with the

railroad line running along its eastern boundary. JX 33; JX 34; Tr. 233, 247 (Jenkins). Mr.

Jenkins purchased the lot on contract for $8000, fulfilling the contract around 1995 or 1996. Tr.

232, 240; see also JX 32 (reflecting that in October 2001, the lot was conveyed to Mr. Jenkins

pursuant to a dissolution decree). He finished building his house on the lot in 2006 and then

built a separate garage. Tr. 233-34, 247 (Jenkins). It cost Mr. Jenkins approximately $70,000 to

build the house. Id. at 247.

When Mr. Jenkins purchased the lot, there were trains running along the railroad line. Id.

at 241, 246. The presence of the line reduced the price that Mr. Jenkins paid for the lot, as did

the presence of a mobile home and two tin buildings on the lot. Id. at 241-43. Upon the removal

of the tracks, ballast or smaller rocks (now covered by grass) and some partial ties (subsequently

burned by Mr. Jenkins) were left behind. Id. at 235-36, 244-45. Trespassers are a concern for

Mr. Jenkins, especially with respect to the possible theft of property from his yard or his garage.

Id. at 237-38. Indeed, people on four-wheelers used to trespass on the corridor until “no

trespassing signs” were posted, and other people walk their dogs on the corridor. Id. at 236-37.

Although Mr. Jenkins did not purchase the lot with the understanding that he owned the

railroad corridor or the expectation that he would eventually obtain the corridor, id. at 243, 246,

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“over a period of time when [he] learned that they were going to give it up, [he] thought it would

be nice to have to extend [his] property out,” id. at 247-48. In fact, if the corridor was returned

to Mr. Jenkins, he has considered possibly drilling for oil on it. Id. at 238. If, on the other hand,

the corridor was converted into a trail, Mr. Jenkins would be concerned, but would not erect a

privacy fence because it would be too costly and would make it more difficult to mow his lawn.

Id. at 238, 246-47; cf. id. at 234 (stating that there used to be a chicken-wire fence separating the

corridor from his lot, but that the town removed it when it buried a sewer pipe along the railroad

line). Prior to his deposition, Mr. Jenkins had not seen the NITU. Id. at 248.

e. The Martin Property

The property owned by the Martins consists of two adjacent parcels: a rectangular,

64.35-acre parcel classified as agricultural land, and an irregularly shaped, 112.39-acre parcel

used as agricultural land (but classified as residential land). Id. at 268-69, 276-78 (Martin); JX

27; JX 28; see also JX 12 (reflecting that the smaller parcel includes 42.48 acres of tillable land

and 20.1 acres of woodland, and that the larger parcel, which is deemed to be “residential,”

includes 98.06 acres of tillable land); JX 28 (reflecting that all but the wooded area of the parcels

and the railroad corridor are farmed). But see Tr. 268 (Martin) (indicating that the parcels

include 197 acres), 277 (same). The railroad line runs diagonally through the parcels. JX 28; Tr.

271 (Martin). The parcels are a portion of the little more than 1000 acres farmed (and roughly

300 acres owned) by Mr. Martin. Tr. 267 (Martin). Mr. Martin grows corn, soybeans, and wheat

on the parcels. Id. at 270. The quality of the soil is good. Id. at 269; accord PX 19 at 29 (noting

that the soil “Productivity Index is 150 which is average to good for the area”). Consequently,

Mr. Martin can achieve yields of 200 bushels of corn per acre, 55 to 70 bushels of soybeans per

acre, and 80 to 100 bushels of wheat per acre. Tr. 269-70 (Martin); accord PX 11 at 12

(“Average yield is as follows: corn 200 bushels per acre[]; double crop soybeans 62-65 bushels

per acre; winter wheat 80-90 bushels per acre.”).

Mr. Martin began leasing the parcels around 2004 on a crop-share basis, retaining two-

thirds of the proceeds. Tr. 280-81 (Martin). Then, in October 2008, the Martins purchased the

parcels in a private sale. Id. at 268-69; JX 26. They paid $5500 per acre, for a total of $1.1

million––probably one half of the parcels’ value if sold at auction. Tr. 269 (Martin). They then

sold the portion of the larger parcel north of the railroad line––88 acres of farm land––for

$10,000 per acre, but retained the right to the railroad corridor. Id. at 278-80, 288. The

existence of the railroad line running through the parcels did not affect the price the Martins paid

for them, id. at 281, but does increase the costs involved in farming the land because of the

additional seeds and fertilizer Mr. Martin needs due to the point rows, id. at 271-72; cf. id. at

284-85 (stating that a stream on the larger parcel also requires the use of point rows).

Mr. Martin had seen trespassers on the railroad corridor “for a couple of years,” but not

since trees starting growing on the corridor. Id. at 273. Mr. Martin himself crosses the corridor

using one of three legal crossings. Id. at 281-82.

Mr. Martin would like to get the railroad corridor back and join his parcels. Id. at 272. If

he owned the corridor, he would be able to plant his fields with longer and straighter rows,

increasing his productivity. Id. at 272, 274. But see id. at 283-84 (stating that he had not thought

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about how he would plant his fields in the absence of the corridor). To accomplish this result, he

would need to remove the rock and any structure lying underneath, and then use a bulldozer to

level the area (which is pretty flat). Id. at 273-74. Mr. Matthews opined that converting the

corridor from nontillable land to tillable land would have cost approximately $16,300 on the date

the NITU was issued: $3960 to remove small and medium trees, $118 to chisel plow the railroad

bed, and $12,243 to cut and fill the ditches alongside the railroad bed with a bulldozer. Id. at 416

(Matthews); PX 19 at 33; see also PX 11 at 12 (indicating that “[s]ome ballast would need to be

removed or buried”). Further, Dr. Kliebenstein opined that there would be a return of

approximately $2.50 to $3 for every dollar spent on converting the corridor. PX 11 at 14; Tr.

628 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties involved in reclaiming

the land). Prior to his deposition, Mr. Martin had not seen the NITU. Tr. 284 (Martin).

f. The McDonald Family Farms Property

The property owned by McDonald Family Farms is a square, 38-acre parcel classified as

agricultural land. Id. at 91 (McDonald); JX 18; JX 19; see also JX 18 (reflecting that the parcel

includes 24.1 acres of tillable land and 13.9 acres of woodland); JX 19 (reflecting that all but a

small portion of the parcel is farmed); Tr. 93 (McDonald) (agreeing that there are woods on a

small portion of the parcel). The railroad line runs diagonally across the southwest portion of

parcel, splitting the parcel into a 31-acre portion north of the line and a triangular, 7-acre portion

south of the line. JX 19; Tr. 91-92 (McDonald). The parcel is part of a 160-acre farm owned by

McDonald Family Farms, which in turn is owned by David McDonald and his three children in

equal shares. Tr. 78, 83, 92, 95 (McDonald). Mr. McDonald currently grows corn and soybeans

in rotation, and has previously planted wheat and alfalfa on the parcel. Id. at 80. The soil quality

is “very good.” Id. at 81-82; accord PX 16 at 29 (noting that the soil “Productivity Index is 149

which is average to good for the area”). Consequently, Mr. McDonald has obtained good yields

for his crops: 242 bushels of corn per acre and 71 to 72 bushels of soybeans per acre. Tr. 82

(McDonald); see also PX 11 at 15 (“Average yield is as follows: corn 180-200 bushels per acre

and soybeans 60-70 bushels per acre.”).

The parcel has been in Mr. McDonald’s family since 1829, when Andrew Jackson

deeded it to one of Mr. McDonald’s ancestors. Tr. 78 (McDonald). In fact, Mr. McDonald’s

great-great-grandfather conveyed the easement to a predecessor of Indiana Southwestern. Id. at

97. Mr. McDonald’s father inherited the parcel from his mother in 1968, and then deeded the

parcel to McDonald Family Farms in 1981 for nominal consideration. Id. at 79, 96; JX 17.

McDonald Family Farms did not acquire the parcel because it believed that it ultimately would

get back the railroad corridor. Tr. 97-98 (McDonald).

After the tracks were removed, Mr. McDonald eventually burned the ties that were left

behind upon discovering that trespassers has used them to construct hunting blinds on his parcel.

Id. at 86-87. Trespassers––people on four-wheelers, dirt bikes, and horses––have become more

prevalent since the tracks were removed. Id. at 87.

The presence of the railroad corridor has required Mr. McDonald to expend greater

efforts and incur greater expenses to farm his parcel. For example, Mr. McDonald created two

crossings over the corridor to access the smaller portion of the parcel, one before the tracks were

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removed and one thereafter. Id. at 83, 90-91. In addition, he must use point rows to farm his

parcel, which requires him to overplant and overfertilize. Id. at 84. Consequently, it costs him

fifteen percent more to farm the parcel with the corridor than it would without the corridor. Id. at

84-85.

Mr. McDonald would like to get the railroad corridor back. Id. at 88. His father told him

that when the trains stopped running along the railroad line, the corridor would revert back to the

owner of the parcel. Id. If he owned the corridor, he would dispose of the ballast by burying it

in a ditch alongside the corridor, level the railroad bed, and farm the land. Id. Doing so would

alleviate the need to use point rows. Id. Mr. Matthews opined that converting the corridor from

nontillable land to tillable land would have cost approximately $1750 on the date the NITU was

issued: $23 to chisel plow the railroad bed and $1877 to cut and fill the ditches alongside the

railroad bed with a bulldozer. Id. at 391-93 (Matthews); PX 16 at 33; see also PX 11 at 15

(indicating that “[s]ome ballast would need to be removed or buried”). Further, Dr. Kliebenstein

opined that there would be a return of approximately $7 for every dollar spent on converting the

corridor. PX 11 at 17; Tr. 633 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the

difficulties involved in reclaiming the land).

g. The Memmer Property

The property owned by Mr. Memmer consists of two adjacent parcels classified as

agricultural land: a right-trapezoid-shaped, 78.75-acre parcel and a right-trapezoid-shaped, 1-

acre parcel. JX 12; JX 13; see also JX 12 (reflecting that the two parcels include 76.9929 acres

of tillable land); JX 13 (reflecting that almost the entirety of the two parcels is farmed). But see

Tr. 184 (Memmer) (estimating that the larger parcel includes 87 acres). The railroad line runs

along the entire northern boundary of the parcels, and Water Tank Road runs parallel to a portion

of the other side of the line. Id. at 175, 181; JX 13. The parcels are part of a 170.3-acre farm

that Mr. Memmer leases to Pathway Family Farms. DX 11 at 7; Tr. 173 (Memmer). For the ten

years preceding trial, the sole crop grown on the parcels was corn. Tr. 173 (Memmer). The soil

quality is “[v]ery good.” Id. at 174; accord PX 14 at 31 (noting that the soil “Productivity Index

is 170 which is average to good for the area”). In 2018, the farm obtained a yield of up to 300

bushels of corn per acre. Tr. 174 (Memmer); see also PX 11 at 18 (“Average corn yield is 240

bushels per acre.”).

The farm has been in Mr. Memmer’s family for four generations. Tr. 170 (Memmer);

accord id. at 170 (stating that Mr. Memmer’s great-grandfather purchased the farm), 185 (same).

Mr. Memmer’s maternal grandparents sold the farm to Mr. Memmer’s parents for $300 per acre.

Id. at 185. Mr. Memmer began working for his parents on the farm in 1973. Id. at 170-71, 186.

He inherited a one-half interest in the farm in 1999 when his father died, id. at 185, and

continued to farm the land until 2006, id. at 171, 173, 187. Thereafter, the farm was leased to

Harold Bender Farms. Id. at 173, 187. In the meantime, in November 2007, his mother

conveyed the remaining one-half interest in the farm to him, reserving for herself a life estate.

JX 11. Mr. Memmer obtained full ownership of the farm when his mother died in 2010. Id.; Tr.

171 (Memmer); accord Tr. 186 (Memmer) (stating that his mother’s estate settled in 2011). He

began leasing the farm to Pathway Family Farms in 2013. Tr. 173 (Memmer); see also id. at 187

(stating that the last year of the lease to Harold Bender Farms was 2012). For the 2018 crop

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year, the rent was $450 per tillable acre, id. at 189; DX 11 at 7; the rent for 2013 through 2016

was similar, Tr. 189 (Memmer); see also id. at 175-76 (stating that the rent has been “about $425

an acre per year”), 332 (Matthews) (stating that this rent is “really high”). Mr. Memmer has not

attempted, and has no plans, to sell the farm. Id. at 190 (Memmer).

Mr. Memmer would like to get the railroad corridor back, but was not sure that he would

be able to do so when the trains stopped running. Id. at 175. If he owned the corridor, he would

be able to access his parcels from Water Tank Road and exclude people from the parcels. Id. at

175-77; see also id. at 176 (stating that trespassers––mostly just people on four-wheelers––have

accessed the corridor and entered his land). In addition, he would remove the dirt and

overburden––a task that could take a couple or a few years, id. at 177, 194, 196––and then plant

crops on it, increasing the farm’s productivity. Id. at 177; see also id. at 177 (indicating that he

would reuse or give away the dirt and overburden), 194 (stating that he would give away the

overburden). Mr. Matthews opined that converting the corridor from nontillable land to tillable

land would have cost approximately $1300 on the date the NITU was issued: $34 to chisel plow

the railroad bed and $1300 to cut and fill the ditches alongside the railroad bed with a bulldozer.

Id. at 444 (Matthews); PX 14 at 33; see also PX 11 at 18 (indicating that “[s]ome ballast would

need to be removed or buried”). Further, Dr. Kliebenstein opined that there would be a return of

approximately $11 for every dollar spent on converting the corridor. PX 11 at 20. But cf. Tr.

752-59 (McCarty) (stating the difficulties involved in reclaiming the land).

h. The Reibel Farms, Inc. Property

The property owned by Reibel Farms, Inc. is an irregularly shaped (roughly, a right

trapezoid), 79.159-acre parcel classified as agricultural land. JX 24; JX 25; see also JX 24

(reflecting that the parcel includes 78.1849 acres of tillable land); JX 25 (reflecting that the entire

parcel is farmed). But see Tr. 160 (Reeves) (estimating that the parcel includes “probably 95”

acres, “give or take”). The railroad line runs along the entire northern boundary of the parcel. 32

JX 25; Tr. 149 (Reeves). The parcel is part of a 119-acre farm leased to Reeves Grain Farm

LLC, which is owned by Chris Reeves and his wife. Tr. 142, 144, 159 (Reeves). Mr. Reeves

currently grows corn and soybeans in rotation. Id. at 147-48. The soil is high quality. Id. at

149; accord PX 18 at 31 (noting that the soil “Productivity Index is 164 which is average to

good”). Consequently, Mr. Reeves has obtained, on average, 240 bushels per acre of corn. Tr.

148-49 (Reeves); accord PX 11 at 20-21 (“Average yield is as follows: corn 230-240 bushels per

acre; soybeans 68 bushels per acre.”).

The parcel has been in Mr. Reeves’s wife’s family since 1910. Tr. 144, 163 (Reeves).

Mr. Reeves’s in-laws purchased the parcel from his father-in-law’s parents in 1960, id. at 163,

and in October 1993, transferred the parcel to Reibel Farms, Inc., JX 23. Reibel Farms, Inc. is

owned by Mr. Reeves’s mother-in-law, Treva Reibel. Tr. 142, 163-64 (Reeves). Mr. Reeves

32

Indiana Southwestern holds roughly one-half of the railroad line bordering the parcel

as an easement and owns the remainder of the line bordering the parcel in fee simple. See supra

Section II.C.1; see also PX 18 at 30 (depicting the locations of the two parts of the line); JX 60 to

JX 61 (containing valuation maps that depict the two parcels acquired by Indiana Southwestern’s

predecessors and describe how those parcels were acquired).

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began farming the parcel in 2005, paying a minimum of $250 per acre, but usually more, to lease

the land. 33 Id. at 144, 149-50. Due to its proximity to Poseyville, people have wanted to

purchase the parcel, but it is not for sale so long as Mr. Reeves is farming it or owns it. Id. at

151.

After the tracks were taken up, the good ties were eventually removed, id. at 152, and Mr.

Reeves burned the remaining ties, which were rotten, id. at 153. Trespassers––mostly just

people drinking beer, but occasionally people on all-terrain vehicles––have accessed the railroad

corridor. Id. at 147, 154-55; see also id. at 154 (stating that there used to be rabbit hunters on the

corridor, but that he had not seen one in at least five years), 155-56 (expressing concern that

trespassers could get injured on the parcel or steal from his machinery shed). In addition, Mr.

Reeves was exploring hiring someone to fill in the ditch along the bottom of the railroad bed

because water drains from his parcel to the ditch and the ditch stays wet, promoting unwanted

tree and weed growth. Id. at 147, 151.

Mr. Reeves does not want a trail on the railroad corridor and would like to get the

corridor back. Id. at 156. His father-in-law told him that when the trains stopped running along

the railroad line, the corridor would revert back to the owner of the parcel. Id. at 164. If he

owned the corridor, he would remove the rocks and dirt (the railroad bed is raised approximately

four to five feet above the parcel, id. at 151), and farm it. Id. at 156-57. Mr. Matthews opined

that converting the corridor from nontillable land to tillable land would have cost approximately

$2000 on the date the NITU was issued: $26 to chisel plow the railroad bed and $1950 to cut

and fill the ditches alongside the railroad bed with a bulldozer. Id. at 427 (Matthews); PX 18 at

25; accord Tr. 156 (Reeves) (stating his estimate that it would cost less than the $13,000 to

$15,000 per acre that the land is worth to reclaim the corridor); see also PX 11 at 6 (indicating

that “[s]ome ballast would need to be removed or buried”). Further, Dr. Kliebenstein opined that

there would be a return of approximately $5 for every dollar spent on converting the corridor.

PX 11 at 23; Tr. 646 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties

involved in reclaiming the land), 762-63 (stating that a tenant might be reluctant to incur the

expenses of reclamation without assurances from the landowner that he or she could farm the

land for long enough to recover the expenses). Mr. Reeves was not aware that Indiana

Southwestern wanted landowners to purchase the corridor to reclaim it. Id. at 58 (Reeves).

i. The Schmidt Property

The property owned by the Schmidts is an irregularly shaped, 20-acre residential lot with

the railroad line running in a gradual curve along the lot’s eastern boundary. Id. at 255, 260

(Schmidt); JX 36; JX 37. But see Tr. 259 (Schmidt) (stating that the lot contains 21.7 acres), 264

(same). The Schmidts purchased the lot in 1998 for $155,000 with the intent of building a house

on it. Tr. 252, 258-59, 264 (Schmidt); accord JX 35. They ultimately did not build a house

because they were able to buy a nearly new house from some friends instead. Tr. 252, 262

(Schmidt). However, they do not plan to sell the lot because they would like to see it preserved

in its natural state. Id. at 262-63.

33

The evidence in the trial record does not indicate when Reibel Farms, Inc. began to

lease the parcel to Reeves Grain Farm LLC.

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The lot has a pond, but otherwise is completely wooded, id. at 252-53, 259-60, 264; JX

37, and at the time the Schmidts purchased it, it had an “estimated wooded value” between

$10,000 and $12,000, Tr. 252-53 (Schmidt). Mr. Schmidt has planted some oak and walnut trees

on the lot, and has in the past used the lot for firewood, id. 254-55, but has no plans to harvest

the wood, id. at 264. In addition, the lot has “[l]ots of ups and downs,” id. at 252-53; access to

the railroad corridor requires traversing a ravine with a steep slope, id. at 256-57, 261-62.

The Schmidts have allowed their oldest son and a family friend to hunt deer on the lot, id.

at 254, and Mr. Schmidt is concerned that he might encounter other hunters who might have

accessed the lot via the railroad corridor notwithstanding the “no trespassing” signs he posted, id.

at 257.

If the Schmidts obtained the railroad corridor, Mr. Schmidt could plant more trees or feed

the deer. Id. at 258. Mr. Schmidt could not recall seeing the NITU prior to his deposition. Id. at

263.

C. Conclusions of Law

The facts elicited during trial inform both of the issues the court must address to

determine whether plaintiffs with cognizable property interests have established a taking: (1) the

nature of the alleged taking and (2) causation. Although the resolution of the causation issue

could render the other issue moot, the court addresses it second to facilitate compliance with the

Federal Circuit’s mandate.

1. The Nature of the Alleged Taking

As an initial matter, binding Federal Circuit precedent provides that the type of taking

involved in Trails Act cases is a categorical physical taking. See Caquelin III, 959 F.3d at 1367-

70; Ladd, 630 F.3d at 1025. Accordingly, to the extent that a taking occurred in this case, it was

a categorical physical taking.

Notwithstanding this conclusion, the court must apply the multifactor test set forth in

Arkansas Game & Fish for the assessment of temporary noncategorical physical takings to

comply with the Federal Circuit’s mandate. 34 The first factor identified by the Supreme Court is

the duration of the government’s interference with the property interest at issue. 35 Ark. Game &

Fish, 568 U.S. at 38. In this case, the Board issued the NITU on May 23, 2011, preventing

Indiana Southwestern from exercising its authority to fully abandon the railroad lines. The bar to

34

Given the Federal Circuit’s subsequent determination that the multifactor test set forth

in Arkansas Game & Fish is not applicable to a Trails Act taking triggered by a NITU, see

Caquelin III, 959 F.3d at 1369-70, the court’s analysis, while complete, is concise.

35

In Trails Act cases, duration is a factor that bears upon the compensation owed to a

landowner, not to the government’s liability for a taking. Ladd, 630 F.3d at 1025; Caquelin II,

140 Fed. Cl. at 579.

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abandonment remained in place for almost two-and-one-half years, until the NITU’s expiration

on November 8, 2013. 36 During this period, the affected plaintiffs were unable to reclaim the

land underlying the easements and use it for their own purposes––whether it be to farm, plant

trees or other vegetation, or explore for oil––or to take steps to exclude others. Such an extended

deprivation of the use of the land weighs in favor of concluding that a taking occurred. Accord

Caquelin II, 140 Fed. Cl. at 579-80 (concluding that a 180-day total deprivation of the use of

land weighed in the landowner’s favor); see also Banks v. United States, 138 Fed. Cl. 141, 149

(2018) (observing that “[t]emporary takings of less than six years have been held to be

compensable”).

The second factor identified in Arkansas Game & Fish is “the degree to which the

invasion is intended or is the foreseeable result of authorized government action.” 568 U.S. at

39. There can be no dispute that the affected plaintiffs’ inability to use the land underlying the

easements was both intended and the foreseeable result of the Board’s issuance of the NITU.

Accord Caquelin III, 959 F.3d at 1367 (“The NITU . . . compelled continuation of an easement

. . . intentionally and with specific identification of the land at issue; and it did so solely for the

purpose of seeking to arrange, without the landowner’s consent, to continue the easement for still

longer . . . by an actual trail conversion.”); Caquelin II, 140 Fed. Cl. at 580 (“The [Board] issued

the NITU with intent to block [the plaintiff] from any use of the corridor segment while a

potential trail use was being negotiated. . . . [T]he result of the NITU was foreseeable, as the

very point of a NITU is to prevent a landowner’s reversionary interest from taking effect so the

trail negotiating process can take place.”); Banks, 138 Fed. Cl. at 150 (“The owners of the

underlying fee are precluded from using their own land. That result requires no great foresight to

anticipate.”). Accordingly, this factor weighs in favor of concluding that a taking occurred.

The third Arkansas Game & Fish factor is “the character of the land at issue . . . .” 37 568

U.S. at 39. Most of the land bordering or surrounding the railroad lines is farm land with good

soil and crop yields. Mr. Goebel described average yields of 210 bushels of corn per acre, 55

bushels of soybeans per acre, and 4000 pumpkins per season. Mr. Siebert described yields of

more than 200 bushels of corn per acre and from 60 to 75 bushels of soybeans per acre. Mr.

Martin agreed that the soil quality is good and described yields of 200 bushels of corn per acre,

55 to 70 bushels of soybeans per acre, and 80 to 100 bushels of wheat per acre. Mr. McDonald

stated that the soil quality was very good and described good yields of 242 bushels of corn per

acre and 71 to 72 bushels of soybeans per acre. Mr. Memmer stated that the soil quality was

very good and described a yield in 2018 of up to 300 bushels of corn per acre. And, Mr. Reeves

agreed that the soil quality is high and described average yields of 240 bushels of corn per acre.

36

Plaintiffs contend that the duration of the taking is indefinite. Because interference

that lasts for two-and-one-half years is sufficient to support the conclusion that a taking occurred

under the Arkansas Game & Fish multifactor test, the court defers addressing plaintiffs’

contention until it reaches the issue of the extent of the alleged taking.

37

As noted by the trial court in Caquelin II, this factor is not relevant in determining

liability in a Trails Act case since liability in such a case does not depend upon the nature of the

land; rather, this factor is relevant to determining just compensation. See 140 Fed. Cl. at 581

n.22; accord Banks, 138 Fed. Cl. at 150.

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Indiana Southwestern does not maintain the railroad corridor adjacent to any of the farm land,

but the farmers all take steps to ensure that weeds and other vegetation do not grow on the

corridor and then spread into their fields. Thus, the corridor mainly consists of residual ballast or

rocks, with a limited amount of weeds and other vegetation. Reclamation of the corridor would

allow the land to be used to grow crops.

The remaining land bordering the railroad lines is wooded or residential in nature. With

respect to the Effinger and Schmidt parcels, the line borders woodland and is suitable for

planting trees or cover crops for wildlife to feed on. With respect to the Jenkins parcel, the line

runs along the rear of the backyard of a small, unwooded lot in a residential neighborhood.

Indiana Southwestern does not maintain the railroad corridor adjacent to these parcels. Mr.

Jenkins maintains the portion of the corridor adjacent to his parcel, and it mainly consists of

residual ballast or rocks, with a limited amount of weeds and other vegetation. However, neither

Mr. Effinger nor Mr. Schmidt maintains the portions of the corridor adjacent to their parcels and

they are therefore overgrown with vegetation.

In short, the portions of the railroad corridor adjacent to the parcels at issue do not exhibit

any characteristics that would prevent the NITU from triggering a taking. Therefore, the third

Arkansas Game & Fish factor weighs in favor of concluding that a taking occurred.

The fourth factor identified by the Supreme Court is “the owner’s ‘reasonable

investment-backed expectations’ regarding the land’s use.” Ark. Game & Fish, 568 U.S. at 39.

It is unclear whether this factor has any relevance for an alleged physical taking outside of the

flooding context presented in Arkansas Game & Fish. See In re Upstream Addicks & Barker

(Texas) Flood-Control Reservoirs, 146 Fed. Cl. 219, 261 (2019) (“[F]looding cases can pose an

exception to the quotidian rule that physical

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