Pub. 10 2015 Issue 1

www.ucls.org 10 Issue 1 2015 / UCLS Foresights later prove to be so problematic, was forged. Also during the 1950s however, trouble was already brewing elsewhere for UP, as a federal case originating in Wyoming, and quite ironically involving UP itself, played out (US v UP - 353 US 112) in which the Supreme Court of the United States (SCOTUS) clarified that the land rights held by railroads under all federal grants were limited in scope to those uses which could be properly charac- terized as serving railroad purposes. As of that date, it appears at least possible that no issues or violations had arisen as a con - sequence of the land use being made by SF in California within the RR R/W, since the two entities were in legal effect unified, so the operations of either one were closely tied in a mutually contributory manner to the operations of the other. The seeds of future difficulty for UP had already been judicially planted however, as the myth that RR R/W typically constitutes a fee in - terest had just been conclusively exploded. The ensuing period of three decades, starting in the early 1950s, apparently saw a continuation of the primarily amicable and harmonious relationship between the pipeline operations and the rail operations, and presumably both expansion of ser - vices and mutual profitability marked this period, leading to an unspecified number of additional easements being granted to SF. Through a series of corporate machinations however, the close relationship of the rail and pipeline companies ended in 1983, and henceforward the two entities were thus compelled to deal with each other at arms-length, as typical separate and distinct corporate operations. The initial action in this regard was a new master agreement pertaining to the presence of the pipeline within the rail corridor, and the rental payments were obviously a major aspect of this agreement. This 1983 agree - ment apparently proved to be workable for at least a few years, but in 1988 Rio Grande acquired the railroad interest, and for unknown reasons things evidently began to turn sour. In 1991, corporate attorneys first engaged, in an unspecified California courtroom, setting in motion the extensive chain of litigation which has persisted to this day. As noted by the CCOA, the moti - vating factor at that point in time was the desire of the railroad executives to raise the rent being paid by the pipeline company, and with that objective counsel for the railroad made the fateful decision to file an action against SF, seeking to have the 1983 agreement judicially rescinded, for the purpose of revising the agreed rental rate. The 1991 litigation proceeded for a few years, evidently without resolution, until a settlement agreement was entered by the combatants in 1994. This settlement dealt with the issue of past rent and anticipated a new rental rate, which was to apply for a 10 year period, perpetuating this corporate collabo - ration at least to that extent. Some level of financial discontent with their relationship evidently persisted however, and thus matters apparently stood, with the parties embroiled in a smol - dering dispute, when UP acquired the railroad interest in 1996. By that time, each side had already invested millions of dollars in resolving their issues, but even more millions of dollars were at stake under the rental agreement, so they continued to pour funds into litigation focused exclusively on the financial compo - nent of their arrangement. Questions regarding the validity and scope of the land rights interest actually held by the railroad were raised at some point, but they were summarily dismissed at the trial court level, and they continued to be treated as an ancillary or peripheral matter at the appellate level, during the remainder of the 1990s and on through the first decade of this century. Thus the proverbial elephant figuratively occupied the courtroom for several years, silently watching as exorbitant ex- penses were piled up by both opponents, during the potentially pointless proceedings, in the absence of judicial recognition that the land rights component of the controversy posed a genuine threshold issue. Early in 2014, UP emerged victorious from a Los Angeles County Superior Court, in the context of the rental dispute, hav- ing obtained a $100 million dollar award, leading to the present appeal brought by SF. At this point in time, the pipeline system occupies more than 1800 miles of RR R/W, all of which was at issue for rental purposes, apparently classified or designated by the parties as comprising over 1000 unspecified “pipeline seg - ments” 3 . An unknown amount of that RR R/W exists solely by virtue of federal grants, and is located either upon land which remains public domain today, or upon land which was patent- ed out of the public domain subject to the RR R/W, and thus now represents some form of privately held title. Portions of the RR R/W have evidently been either sold or abandoned over the years, but no details pertaining to any such locations are provided in the text of the CCOA opinion, since the core title issue to be addressed and resolved is the original nature of the land rights that were acquired to create the RR R/W, rather than the subsequent fate of those rights. As Judge Kussman very poignantly, and very ominously for UP, stated at the outset: “A recurrent, yet heretofore unresolved, theme permeating this and prior cases between the parties is the nature of the Rail - road’s interest in the property through which the pipelines run ... The absence of a determination on this issue undermines the judgment.” 4 . Reversal was coming, the only question was how intensively the CCOA would examine the frail platform upon which the alleged property rights of UP were perched. The immense potential gravity of the inadequately ad - dressed title factor in this complex legal equation would soon become quite apparent, as the primary legal question, which had naturally been repeatedly suppressed by UP, and had been judicially treated as a “third rail” until 2014, finally became the focal point of this conflict. That question of course was very simply whether or not the land being utilized by SF for pipeline purposes was really ever property of UP or not. Thus were the RAILROAD RIGHT OF WAY continued from page 9 RAILROAD RIGHT OF WAY continued on page 13 3 See page 7 of the published decision. 4 See pages 3 & 4.