Federal Court Recognizes a New Constitutional Federalism Principle

Railroad running through a small town

Last week, a federal court recognized a new federalism principle for local governments seeking just compensation under the Fifth Amendment. I developed this constitutional federalism principle when I worked for the United States Department of Justice.[1]

The United States Court of Federal Claims held that, when states create local governments, the United States treats those local governments as agents of the states. Therefore, when one local government triggers a federal law that causes a second local government to lose a property right, the second local government has no Fifth Amendment right to just compensation for that property loss. In other words, a state’s left hand has no right to just compensation when the state’s right hand caused the taking.

Background

In Balagna v. United States,[2] BNSF Railway Company owned a railroad right-of-way through the City of Canton and the Village of Norris. Canton and Norris own parcels of land under that right-of-way, and the BNSF owned easements over those parcels.

In 2013, BNSF informed the federal Surface Transportation Board that it intended to abandon its right of way. The Canton Park District, a recreation district in Illinois, sought to use the right-of-way for a recreational trail. Illinois had created park districts as local government authorities to encourage and to manage parks and recreation over large areas of land—areas that may include cities.

The District asked BNSF to discuss BNSF transferring its right-of-way to the District, so the District could build a recreational trail there. BNSF agreed. A federal law known as the Trails Act,[3] required the Board to stop BNSF from abandoning the right-of-way as long as BNSF and the District were negotiating. BNSF and the District have not, yet, reached an agreement.

The Cities’ Claims

Canton and Norris claimed that the federal Board took their property rights by stopping BNSF from abandoning the right-of-way. They sought just compensation under the Fifth Amendment to the United States Constitution because that amendment prohibits the United States from taking “private property . . . for public use, without just compensation.”

To be clear, the Cities contended that BNSF’s right-of-way included an easement over land the Cities owned, and but for the Board’s action, the Cities would have regained whole ownership—without any BNSF easements. The Cities wanted the United States to pay them for the easement.

The Federalism Ruling

“No State can be heard to complain about damage inflicted by its own hand.”

The United States asked the Court to throw out the Cities’ claims. It demonstrated that Illinois had delegated authority to both the District and to the Cities, and it argued that Illinois had caused the situation in which the easement remained on Cities’ land. The Supreme Court has held plainly that “[n]o State can be heard to complain about damage inflicted by its own hand.”[4]

The Cities argued in response that the Trails Act and the Fifth Amendment made the United States liable to pay them the value of the easements on their lands.[5] The Cities contended that it did not matter that the District caused the easement to remain because a federal statute caused the Cities to lose that property right.

The Court held in favor of the United States. It recognized that Illinois ultimately holds the property rights that its local governments manage.[6] Thus, Illinois ultimately owned the land that the Cities claimed to own. Further, the Court held that Illinois delegated sufficiently broad authority for the District to request BNSF to negotiate over the right-of-way. Therefore, the Court held, Illinois “effectively consented to the federal government holding the City’s and Village’s properties for use as a trail.”[7] The Court dismissed the Cities’ Fifth Amendment claims for just compensation.

Conclusion

Very rarely do courts recognize new constitutional federalism principles like this one. Here the Court followed consistent Constitutional federalism principles. The Court restrained itself from delving into the relationship between and among Illinois local governments. It curbed its own power out of respect for states’ rights and responsibilities. In the end, it treated Illinois as a single entity and made it responsible for all of the actions of all of its local governments instead of letting Illinois’s local governments extract taxpayer dollars from the United States through a complex transaction.

 

[UPDATED October 9, 2017, to add the last clarifying sentence.]

Notes

[1] I no longer work at the Department of Justice. I feel grateful to U.S. Department of Justice Trial Attorney Sarah Izfar for arguing this issue and for carrying it across the finish line. To be clear, this blog expresses my views and do not necessarily reflect the views of the United States, the U.S. Department of Justice, or Ms. Izfar.

[2] Opinion and Order, Nos. Nos. 14-21L/16-405L (Fed. Cl. Oct. 5, 2017), ECF No. 132.

[3] Pub. L. No. 98-11, § 208, 97 Stat. 42 (1983) (codified at 16 U.S.C. § 1247(d)) (amending the National Trails System Act (“Trails Act”), Pub. L. No. 90-543, 82 Stat. 919 (1968)).

[4] Pennsylvania v. New Jersey, 426 U.S. 660, 664 (1976).

[5] See Preseault v. United States (Preseault II), 100 F.3d 1525, 1552 (Fed. Cir. 1996) (en banc).

[6] Opinion and Order 12.

[7] Id. at 13.

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