SENATE BILL REPORT

SB 5147

BYSenators Hansen, Rasmussen, Bauer, Barr, Patterson, Johnson and Pullen

Repealing authority for public utility and transportation corridors.

Senate Committee on Transportation

Senate Hearing Date(s):February 23, 1987; March 3, 1987; January 19, 1988

Majority Report:  That Substitute Senate Bill No. 5147 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Patterson, Chairman; Nelson, Vice Chairman; von Reichbauer, Vice Chairman; Barr, Conner, Hansen, Owen, Sellar.

Senate Staff:Gene Baxstrom (786-7303)

                  January 22, 1988

AS REPORTED BY COMMITTEE ON TRANSPORTATION, JANUARY 19, 1988

BACKGROUND:

To encourage public acquisition and use of abandoned property, Congress adopted in 1976 section 10906, Title 49 USC.  When a railroad determines that any of its properties are no longer economically viable and the Interstate Commerce Commission authorizes their abandonment, Section 10906 requires the Commission to determine whether such properties are suitable for use for public purposes.  Public purposes enumerated by Congress are highways, other forms of mass transportation, conservation, energy production or transmission, and recreation.

If the ICC finds that the abandoned property is suitable for public use, an order is entered prohibiting any disposal of the property for a period of up to 180 days, unless the properties have first been offered, on reasonable terms, for sale for public purposes.  In attempting to take advantage of federal provisions, public entities acquiring abandoned rail rights of way frequently encounter legal claims from private parties seeking to enforce reversionary clauses or similar real property interests in the same property. 

In the 1984 Legislature this problem was addressed by enactment of legislation which declared it to be in the public interest of the state that abandoned railroad operations properties should retain their public use character as public utility and transportation corridors.  Such properties were to be made available for public purposes including highways, other forms of mass transportation, conservation, energy production or transmission, and recreation.

In the event the ICC authorizes abandonment of railroad property, enters a finding of suitability for public use, and the property is acquired as a public utility and transportation corridor, the property is declared to continue its public use character.  Such property would not be subject to reversion, adverse possession or other similar property interests of third parties which might otherwise ripen on the cessation of railroad operations.

Property owners with reversionary rights to abutting railroad rights of way which have been or are likely to be abandoned challenged the constitutionality of the state legislation.

In 1986 the Washington State Supreme Court ruled that just compensation be given for the taking of property.  In reaching its conclusion, the court determined that reversionary interests in land are vested property rights and may not be affected by legislation.  An easement granted "for railroad purposes only" does not encompass recreational use and upon abandonment, the easement is extinguished and the property reverts to the grantor free of the easement.  The court also ruled that federal law in this area does not preempt state law regarding abandonment of railroad rights of way because property interests are determined by state law.

The public interest in maintaining railroad rights of way as public thoroughfares was not found to be unconstitutional.  The court did reject any suggestion, however, that converting abandoned rail corridors to trails is a permissible change in use.

The practical effect of the case is that in order to acquire abandoned railroad rights of way, just compensation must be paid when 1) the easement or grant is not broad enough to encompass recreational use; and 2) there are ascertainable persons holding valid reversionary interests in the land.

SUMMARY:

Repealed are sections of the law declaring that abandoned railroad operation property should retain its public use character as utility and transportation corridors.  In the event that the ICC authorizes abandonment of railroads, enters a finding of suitability for public use, and the property is acquired by a public entity as a public utility and transportation corridor, then the property is declared to continue its public use character.

EFFECT OF PROPOSED SUBSTITUTE:

The intent section of the statute is clarified to specify that nothing authorizes a public agency or utility to acquire reversionary interests in public utility or transportation corridors without payment of just compensation.

Language is repealed which provides that a public utility and transportation corridor:  (1) retains its public use character when owned by a public agency or utility; and (2) is not subject to reversion and that property interests do not ripen upon the cessation of railroad operations.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Richard Welsh, National Association of Reversionary Property Owners; Malcomb Williamson, farmer; Gary Smith, homeowner; Lloyd Flem, Legislative Director, Washington Association of Railroad Passengers; George Barner, Thurston County Commission; Jim Lazar, Bicycle Federation of the State of Washington; Ron Main, King County