PRESEAULT 985 985 v. The State of Vermont Defendant-Cross-Appellant (1995)

J. Paul and Patricia Preseault and 985 Associates (appellants) appeal from the decision of the United States Court of Federal Claims ¹ denying their claim for “just compensation” under the Fifth Amendment for the alleged taking of their land.  Preseault v. United States, 27 Fed.Cl. 69 (1992) (Preseault II ).   The court held that the appellants had conditional reversionary interests in land subject to easements owned by the State of Vermont that were not taken from them when the Interstate Commerce Commission (ICC) disapproved abandonment of the railroad rights-of-way ² over the land, added them to the national railbank for possible future rail service, and approved their interim use as a recreational trail.   Although under Vermont state land law, the original condition of reversion was physical abandonment as a railroad, we conclude that appellants' reversionary interests were further conditioned by the federal transportation law in effect at the time of appellants' purchases and, therefore, cannot become possessory until abandonment of the rights-of-way is approved by the ICC.   The rights-of-way have not been so abandoned although trackage has been removed.   Even though the ICC action delays or potentially defeats appellants' possession of the rights-of-way, their reverters were acquired subject to that risk.   Therefore, as no property rights that they acquired were taken from them, we affirm the decision denying compensation.

On the cross-appeal by the State of Vermont, we vacate the Court of Federal Claims' ruling applying Vermont state land law, that Vermont owns only easements, not fees simple, because we need not and do not review this ruling.

I. BACKGROUND

The relevant facts are set out in two opinions of the Court of Federal Claims, Preseault v. United States, 24 Cl.Ct. 818 (1992) (Preseault I), and Preseault II, 27 Fed.Cl. 69.   Additional factual background can be found in an opinion of the Supreme Court, Preseault v. Interstate Commerce Commission, 494 U.S. 1, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990).   Only those facts necessary for our disposition are repeated here.

A. Evolution of the Jurisdiction of the ICC

In order to resolve the frequent conflicts between state laws and the federal railroad regulatory scheme, the Transportation Act of 1920 granted the ICC exclusive and plenary jurisdiction over abandonment, construction, and operation of virtually all the nation's railroad lines.   See Transit Comm'n v. United States, 289 U.S. 121, 127, 53 S.Ct. 536, 538, 77 L.Ed. 1075 (1933).   The provision of the 1920 Act governing abandonment stated:

(18) ․ no carrier by railroad subject to this Act shall abandon all or any portion of a line of railroad, or the operation thereof, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity permit ․ such abandonment.

Transportation Act of 1920, Ch. 91 tit. IV, Sec. 402, § 1(18), 41 Stat. 474, 477-78 (1920).   Accordingly, a carrier operating on a covered rail line is obligated to meet any demands for service until authorized by the ICC to abandon that line or discontinue service.  Id.  The 1920 Act gave the ICC “exclusive and plenary” jurisdiction not only to regulate abandonments but also to impose conditions affecting post-abandonment use of property.  Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 321, 101 S.Ct. 1124, 1132, 67 L.Ed.2d 258 (1981);  Ch. 91 tit. IV, sec. 402, § 1(20), 41 Stat. at 478.

The abandonment provision of the 1920 Act was reformulated in 1976 as part of the Rail Revitalization and Regulatory Reform Act (4-R Act).   Pub.L. No. 94-210 tit. VIII, § 802, 90 Stat. 125, 127-130 (1976) (codified as amended at 49 U.S.C. § 10903 (1988)).   Under subsection (a) of section 10903, a rail carrier subject to ICC jurisdiction may:

(1) abandon any part of its railroad lines;  or

(2) discontinue the operation of all rail transportation over any part of its railroad lines;

only if the Commission finds that the present or future public convenience and necessity require or permit the abandonment or discontinuance.

49 U.S.C. § 10903(a).   An ICC abandonment order allows a carrier to end its responsibility for providing service on a rail line and ends ICC jurisdiction over the line, although the ICC may impose conditions on the abandonment that continue in effect after ICC jurisdiction ends.   After abandonment, however, the line is no longer part of the national rail transportation system.  49 U.S.C. § 10903(b)(1);  Preseault, 494 U.S. at 5-6 n. 3, 110 S.Ct. at 918 n. 3.   Discontinuance, by contrast, allows a rail carrier to cease active operations on its line for an indefinite period while preserving its rail corridor for possible reactivation.  Id.  The ICC's authority to permit discontinuance of operations on railroad lines had been recognized for many years, even before enactment of section 10903, but discontinuance was not explicitly provided for in the 1920 Act.   See Smith v. Hoboken R.R., Warehouse & Steamship Connecting Co., 328 U.S. 123, 130, 66 S.Ct. 947, 951-52, 90 L.Ed. 1123 (1946).

In addition to restating the ICC's pre-existing authority over rail lines, the 4-R Act, in response to concern over the growing rate of rail line abandonments, sought to conserve the nation's rail corridors by promoting use of rail corridors for certain other public uses, including as recreational trails.  Preseault, 494 U.S. at 5, 110 S.Ct. at 918.   The codification of the 4-R Act provision at 49 U.S.C. § 10906 furthers that end, inter alia, by authorizing the ICC to delay a railroad's disposition of lines proposed for abandonment, but suitable for other public use, for 180 days after issuance of an ICC abandonment order (unless the properties previously have been offered for sale for public purposes).   Specifically, section 10906 requires that:

[w]hen the Interstate Commerce Commission finds under [49 U.S.C. § 10903] that the present or future convenience and necessity require or permit abandonment or discontinuance, the Commission shall find further whether the rail properties that are involved in the proposed abandonment or discontinuance are suitable for use for public purposes, including ․ recreation.   If the Commission finds that the rail properties proposed to be abandoned are suitable for public purposes, the properties may be sold, leased, exchanged, or otherwise disposed of only under conditions provided in the order of the Commission.   The conditions may include a prohibition on any such disposal for a period of not more than 180 days after the effective date of the order, unless the properties have first been offered, on reasonable terms, for sale for public purposes.

By 1983, Congress, according to the Report of the House of Representatives Committee on Interior and Insular Affairs, recognized that the 4-R Act “ha[d] not been successful in establishing a process through which railroad rights-of-way which are not immediately necessary for active service can be utilized for trail purposes.”   H.R.Rep. No. 28, 98th Cong., 1st Sess. 8 (1983), reprinted in 1983 U.S.C.C.A.N. 112, 119.   In response, Congress enacted the National Trails System Act Amendments of 1983, which add section 8(d) to the National Trails System Act.   Pub.L. No. 98-11, § 208, 97 Stat. 42, 48 (1983) (codified at 16 U.S.C. § 1247(d) (1988)).   The purpose of the amendments was to further the national policies “to preserve established railroad rights-of-way for future reactivation of rail service, to protect rail transportation corridors, and to encourage energy efficient transportation use.”  16 U.S.C. § 1247(d).

Section 1247(d) provides that a railroad wishing to cease operations along a particular route may negotiate with a state, municipality, or private group prepared to assume financial and managerial responsibility for the right-of-way.   If the parties reach an agreement the right-of-way may be transferred to the trail operator for interim trail use, subject to ICC-imposed terms and conditions.  49 C.F.R. § 1152.29 (1993).  Section 1247(d) states in part:

[S]uch interim [trail] 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 a State, political subdivision, or qualified private organization is prepared to assume full responsibility for management of such rights-of-way and for any legal liability ․ then the Commission shall impose such terms and conditions as a requirement of any transfer or conveyance for interim use in a manner consistent with this chapter, and shall not permit abandonment or discontinuance inconsistent or disruptive of such use.

By enacting section 1247(d) Congress specifically sought to address the problem that once a right-of-way held as an easement is abandoned there is nothing left for trail use if the abandonment causes the right-of-way to revert to the servient tenement owner.   Thus, section 1247(d) ensures that potential interim trail use will be considered prior to abandonment and that such trail use will not be treated as an abandonment.   H.R.Rep. No. 28 at 8-9, reprinted in 1983 U.S.C.C.A.N. at 119-20.

Under the regulations which implement section 1247(d), the ICC will issue a Certificate of Interim Trail Use (CITU) if a carrier negotiates an agreement with a public or private organization willing to assume responsibility for the right-of-way, and if “the public convenience and necessity permit abandonment.”  49 C.F.R. § 1152.29(b)(1)(ii).   The CITU permits the railroad to discontinue service, cancel tariffs and salvage its equipment.  49 C.F.R. § 1152.29(c)(1).   The interim trail use is subject to being vacated with future restoration of rail service if an application to construct and operate a rail line over the right-of-way is later approved by the ICC.  49 C.F.R. §§ 1152.29(c)(2), (3).   Thus, section 1247(d) treats interim trail use as a discontinuance which preserves ICC jurisdiction over the right-of-way rather than an abandonment which would end ICC jurisdiction and cause any right-of-way held as an easement to revert to the servient tenement owner.   The rail corridor is held in a national “rail bank,” subject to ICC control, for future rail use.

B. The History of this Case

This case concerns rights-of-way traversing three contiguous parcels of land (A, B, and C) in Burlington, Vermont.   The State of Vermont has actual possession of the rights-of-way, either through easements or fee simple ownership.   J. Paul and Patricia Preseault, as husband and wife, purchased parcel C in 1966 but subsequently transferred that parcel in 1979 to 985 Associates, Ltd., a Vermont limited partnership of which they are currently the sole partners.   The Preseaults purchased parcels A and B in 1980.   985 Associates has owned parcel B since 1990, although the Preseaults continue to own parcel A as individuals.

Since 1985 the City of Burlington has operated a bicycle and pedestrian trail on the rights-of-way which it leases from the State of Vermont.   The Preseaults argue that the ICC decision which allowed the interim trail use but denied permission for abandonment of the rights-of-way effects a taking, in violation of the Fifth Amendment unless they are compensated.   The history of the three parcels and the rights-of-way is relevant to this dispute.

In 1899 the Rutland-Canadian Railroad Company acquired rights-of-way across parcels A and B (the Barker estate) and parcel C (the Manwell property).   The railroad's charter, enacted as law by the General Assembly of Vermont in 1898, instructed the railroad to acquire rights-of-way necessary to construct and operate a railroad connecting the City of Burlington with the Town of Alburgh, both in Vermont.   1898 Vt. Laws 160, § 1.   To facilitate this goal, the charter granted the railroad the power of eminent domain which it exercised to acquire a right-of-way across the Barker estate.   The railroad acquired a right-of-way across the Manwell property through a warranty deed which stated that the Manwells “do give, grant, bargain, sell and confirm unto the said grantee a certain piece or parcel of land lying and being in Burlington in the County of Chittenden and State of Vermont.”

In 1964, with the approval of the ICC, Rutland Railway Corporation (the successor to Rutland-Canadian Railroad) conveyed the railway's interest in the rights-of-way to the State of Vermont via a quitclaim deed.   The state was authorized to acquire the rights-of-way by “An Act Relating to the Rutland Railway Corporation” which was passed by the General Assembly in 1963.   1963 Vt. Laws 162.   Vermont then leased the rights-of-way to Vermont Railway, Inc. which operated trains on the rail line until 1970.   In 1975 the railway company removed all the equipment, including the tracks, from the rights-of-way traversing parcels A, B and C even though the ICC had never approved the discontinuance of service, the removal of equipment, or the abandonment of the line, as required by law.

In 1985, the State of Vermont leased the rights-of-way to the City of Burlington for use as a pedestrian and bike trail and in 1990 the lease was renewed for five years.   Shortly after the initial lease was executed, the Preseaults petitioned the ICC for a certificate of abandonment of the rail line,³ but Vermont intervened.   The ICC retroactively approved Vermont's request to discontinue rail service on the line and allowed interim use of the rights-of-way, held in the national railbank, as a recreational trail, citing the 1983 National Trails Act Amendments, 16 U.S.C § 1247(d).  The ICC also denied abandonment in its decision, issued January 2, 1986.

The Preseaults appealed the ICC's decision to the Court of Appeals for the Second Circuit where they argued that, because under Vermont property law the rights-of-way could have reverted to the servient tenement owner in 1975, the application in 1986 of section 1247(d) by the ICC resulted in a taking of their reversionary interests, i.e., a physical occupation of their land, without just compensation.  Preseault v. ICC, 853 F.2d 145 (2d Cir.1988), aff'd on other grounds, 494 U.S. 1, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990).   In affirming the ICC's decision, the court of appeals ruled that even if the Preseaults held reversionary interests in the rights-of-way (rather than Vermont owning a fee simple), those interests would not become possessory until the ICC issued a certificate of abandonment.  Id. at 151.   Because the ICC had not done so, the Preseaults did not have possessory property interests that could be taken from them by physical occupation.   Id.  The Supreme Court affirmed the Second Circuit on other grounds, holding that if there had been a taking, the Preseaults could seek compensation under the Tucker Act.   Until they did so, their taking claim based on the ICC proceeding appealed from was premature and it was unnecessary to evaluate its merits.  Preseault, 494 U.S. at 17, 110 S.Ct. at 924-25.

In a suit against the United States and Vermont, the Preseaults and 985 Associates sought compensation under the Tucker Act in the Court of Federal Claims for loss of the rights-of-way and the decrease in value of the adjacent property.   On cross-motions for partial summary judgment the trial court initially considered only Vermont property law, and held the Canadian-Rutland Railroad obtained only easements traversing the Barker and Manwell estates in 1889 and, consequently, Vermont holds easements traversing parcels A, B and C, with the Preseaults and 985 Associates, as owners of the servient tenements, holding reversionary interests.  Preseault I, 24 Cl.Ct. at 825-30.   The court further held that, per such property law, Vermont Railway effectively abandoned the rights-of-way, extinguishing the easements, when it removed the tracks and other equipment in 1975 and, therefore, they reverted to the Preseaults' predecessors in interest at that point.  Id. at 830-35.   The court concluded that under Vermont property law, absent any influence of federal law, the current use of the rights-of-way as a recreational trail would constitute a taking by physical occupation.  Id. at 836.

In Preseault II, a later phase of the same lawsuit, the Court of Federal Claims examined the taking claim in light of both federal and state law on cross-motions for summary judgment.  27 Fed.Cl. 69.   The trial court held that the conditions of the reversionary interests in the rights-of-way were defined by both state and federal law extant at the time the current owner (the Preseaults as individuals or the 985 Associates) acquired the property in question.  Id. at 86-89.   Since the 1976 4-R Act was in effect when 985 Associates acquired parcel C in 1979, the earliest relevant acquisition date, each reversionary interest was acquired subject to this law.  Id. at 92.   The court further held that, in light of the 4-R Act, the plaintiffs' property interests were subject to continuing railroad easements for the purpose of railbanking and use as a trail and plaintiffs had no basis for assuming otherwise.  Id. at 94.   Thus, the court concluded that plaintiffs had no compensable property interest because the rights-of-way would not revert to them merely due to the removal of the trackage.   Under federal law, abandonment for railroad purposes required ICC approval.  Id. at 92-94.   Accordingly, the Court of Federal Claims granted summary judgment to the defendant.

The Preseaults and 985 Associates appealed to this court.   The State of Vermont cross-appealed the ruling in Preseault I that the state owns easements rather than fee simple interests in the rights-of-way.

We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1988).

II. STANDARD OF REVIEW

 We review Court of Federal Claims' decisions de novo for errors of law and for clear error on findings of fact.  Yancey v. United States, 915 F.2d 1534, 1537 (Fed.Cir.1990).   The parties do not dispute the facts of this case.   Therefore, the only issue on appeal is whether the actions of Vermont and the United States amount to a compensable taking under the Fifth Amendment to the U.S. Constitution.   Because the Court of Federal Claims decided liability as a matter of law by granting the United States' motion for summary judgment, our standard of review on all issues is de nova.  Turner v. United States, 901 F.2d 1093, 1095 (Fed.Cir.1990) (“We review the grant of summary judgment motions by the Claims Court de nova.”).

III. ANALYSIS

A. The Nature of Vermont's Property Interest

In Preseault I the Court of Federal Claims concluded that under Vermont state law the Rutland-Canadian Railroad Company obtained only easements and not fee simple interests when it acquired the rights-of-way traversing the Barker and Manwell estates in 1899.  24 Cl.Ct. at 827-30.   On cross-appeal, the State of Vermont argues that the court erred in holding that the Railroad did not acquire a fee interest in the rights-of-way.   If the Railroad did acquire fee simple interests, then the appellants can have no interest at all in the rights-of-way and the Railroad's successor in interest, Vermont, may use the rights-of-way as a trail or otherwise without compensating the appellants.

We decline to review Vermont's contention on this issue.   Even assuming the Rutland-Canadian Railroad Company acquired only easements and the appellants retain conditional reversionary rights in the easements, we conclude below that their reversionary rights, the terms of which are defined by federal law extant as of appellants' purchase dates, did not give the appellants possessory rights.   Thus, there has been no taking by Burlington's occupation or Vermont's failure to return the land.   We need not and do not address the issues of Vermont state law that determine the nature of Vermont's interests in the rights-of-way.   Accordingly, we vacate the Court of Federal Claims' rulings on these issues.

B. Defining Appellants' Reversionary Rights Implicates Federal Law

1. Per se vs. Regulatory Takings

Assuming for our analysis, that the appellants own reversionary interests in rights-of-way traversing the parcels, we must further define those interests in light of the appellants' takings claim.   The appellants contend that they were entitled to exclusive possession of the rights-of-way by 1985 when they asked the ICC to authorize abandonment.   Appellants assert the ICC's refusal caused a physical invasion of their property by indefinitely postponing reversion and possession of the rights-of-way past the day they should have reverted in 1985.

 Government action may require a property owner to suffer a physical invasion of his land.   In Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1989), the Supreme Court concluded “a permanent physical occupation authorized by [the] government is a taking without regard to the public interests that it may serve.”  Id. at 426, 102 S.Ct. at 3171.   Such a physical occupation has been referred to as a per se taking.  Id. at 442, 102 S.Ct. at 3179-80.  “In such a case, the property owner entertains a historically rooted expectation of compensation․”  Id. at 441, 102 S.Ct. at 3179;  see Kaiser Aetna v. United States, 444 U.S. 164, 179-80, 100 S.Ct. 383, 392-93, 62 L.Ed.2d 332 (1979) (“[T]he ‘right to exclude,’ so universally held to be a fundamental element of the property right, [footnote omitted] falls within [the] category of interests that the Government cannot take without compensation.”).   We conclude that government action here that allegedly postponed the right to regain exclusive possession of land subject to a reversionary interest implicates a per se analysis based on a physical invasion rather than a regulatory takings analysis under Penn Central Transp. Co. v. New York, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978).⁴

The initial question we must address is whether appellants would have had the right of exclusive possession absent the United States' (government's) decisions.   When dealing with a conditional reversionary interest this inquiry entails defining the conditions of reverter.   In other words, we must address whether the particular property interests purchased by the appellants gave them as of 1985 the right to possess the rights-of-way.   If their reversionary interests never entitled them to possession, the City of Burlington's admitted occupation of the land, by lease from the State of Vermont, cannot usurp any right the appellants have and does not result in a taking within the meaning of the Fifth Amendment.   Cf. M & J Coal Co. v. United States, 47 F.3d 1148, 1154 (Fed.Cir.1995) (holding that the first step in the analysis of a regulatory takings claim inquires into the nature of the land owner's estate to determine whether the use interest proscribed by the governmental action was part of the owner's title to begin with).

Appellants contend that their reversionary rights must be defined solely by Vermont law as it existed the day the easements were first created, in 1899.   According to appellants, because, under the reverter terms, construed according to 1899 Vermont property law, their predecessors in interest were entitled to possession when Vermont Railway physically abandoned the line by removing trackage in 1975, the government took their property when the ICC refused to approve abandonment in 1986 and thereby create in them a right of immediate possession.

As part of their contention that only 1899 Vermont property law defines their interests appellants maintain that the rights of reversion in the rights-of-way have been conveyed unchanged from the original servient tenement owner to every successive owner thereafter, regardless of any change in the controlling state or federal law.   Accordingly, a central issue of this case is whether the conditions under which the appellants would take possession of the rights-of-way, their reversionary interests, are defined only by Vermont land law of 1899 or also by the federal transportation law in effect at the time they purchased the servient tenements and the corresponding reversionary interest.

2. The Appellants' Reversionary Rights Must be Defined by the Law Extant as of Their Purchase Date

Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), holds that the specific “bundle of rights” one acquires as a land owner is determined at the time one takes title, rather than some earlier date when the property interest in the land was first created.   Id. at ---- - ----, 112 S.Ct. at 2899-2900.   In Lucas the plaintiff acquired a fee simple in residentially zoned land subject to regulation by the South Carolina Coastal Council.   Subsequent to the plaintiff's purchase, the state legislature enacted a statute barring owners from erecting any permanent structures on their land.   The Court held that no compensation was owed the plaintiff if the statute simply made explicit what already inhered in the title itself, in the restrictions that “background principles” of state property and nuisance law already placed upon ownership of this land.  Id . at ----, 112 S.Ct. at 2900.   Explaining the connection between acquiring a “bundle of rights” in property and acquiring title, the Court stated:

Where the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate shows that the proscribed use interests were not part of his title to begin with.   This accords, we think, with our “takings” jurisprudence, which has traditionally been guided by the understandings of our citizens regarding the content of, and the State's power over, the “bundle of rights” that they acquire when they obtain title to property.

Id. at ----, 112 S.Ct. at 2899 (citations and footnote omitted).

The Court remanded the case to give the state an opportunity to “identify [the] background principles of nuisance and property law that prohibit the uses [the plaintiff] now intends.”  Id. at ---- - ----, 112 S.Ct. at 2901-02.   The Court did not instruct that the “background principles of nuisance and property law” were frozen in time as of some date earlier than when the plaintiff obtained title to the property, such as the date the property was first purchased by a private owner.   Because nuisance law and property law continually develop over time, applying the law as it existed far in the past might have had a profound impact on that case and, therefore, one would expect the Court to have provided guidance if this were its intent.

Instead, Lucas holds that the “background principles” which help shape an owner's bundle of rights will include nuisance law and property law as they existed when he took title.   In the same vein, that decision also states pre-existing limitations in a landowner's title can be asserted without compensation:

Where permanent physical occupation of land is concerned, we have refused to allow the government to decree it anew (without compensation), no matter how weighty the asserted public interests involved-though we assuredly would permit the government to assert a permanent easement that was a pre-existing limitation upon the landowner's title.

Id. at ----, 112 S.Ct. at 2900 (internal quotations and citations omitted).

 Thus, in deciding whether appellants had a compensable property interest, the conditions under which they would gain possession of the rights-of-way must first be defined by “the restrictions that background principles ․ already place upon land ownership” at the time they acquired their interest.  Id.  The conditions under which the railroad rights-of-way revert to the appellants are part of the bundle of rights they acquired when they took title to the servient tenements.   Based on the principle of Lucas, we conclude that the law extant when the appellants took title to the reversionary interests defines the conditions of reversion.

Our own precedent regarding regulatory takings likewise supports our holding that property interests and associated rights are defined as of the date of purchase.  M & J Coal, 47 F.3d at 1153-54 (“in analyzing a governmental action that allegedly interferes with an owner's land use, there can be no compensable interference if such land use was not permitted at the time the owner took title to the property”);  Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1177 (Fed.Cir.1994) (takings recoveries limited “to owners who could demonstrate that they bought their property in reliance on a state of affairs that did not include the challenged regulatory regime”).   If a property owner's “bundle of rights” is defined in accordance with the law extant as of the time he took title (his purchase date) in a regulatory takings analysis, we see no principled reason to define his “bundle of rights” as of some other date for analysis of a per se taking by alleged physical occupation.

 Moreover, there is no need to compensate appellants for federal restrictions existing at the time they bought the property to make them whole because they could not have lost anything they purchased.⁵  For instance, if a zoning restriction is placed on property while it is held by a first owner, a subsequent owner who purchases the property subject to the zoning restriction cannot complain that the restriction takes his property, although the first owner may have such a claim.   This is simply a matter of economic as well as legal common sense.   The market price paid by the subsequent owner likely reflected the restrictions in effect at the time of purchase, so any government compensation would be a windfall to the subsequent owner.   As we stated in Loveladies Harbor, Inc.:

In legal terms, the owner who bought with knowledge of the restraint could be said to have no reliance interest, or to have assumed the risk of any economic loss.   In economic terms, it could be said that the market had already discounted for the restraint, so that a purchaser could not show a loss in his investment attributable to it.

28 F.3d at 1177.   Under these circumstances, it is the first owner who has any takings claim, even after the sale, because the first owner received less for the property than he would have but for the restriction.   Contrary to the dissent's view, we do not hold that the sale extinguishes the first owner's takings claim.   Rather, the claim is not transferred from one owner to the next because the subsequent owner is not harmed-nothing is taken from him.⁶

The appellants nevertheless argue that permitting legislatures to redefine property rights so that their compensable property rights are defined by reference to the law in force when they took title would eviscerate the Takings Clause.   They describe the predicament of parties owning property whose value is lessened by legislation even before that legislation directly affects their property.   For example, upon enactment, legislation that will make it easier for the owner of an easement to avoid reversion may lessen the value of the property interest held by the owner of the servient tenement.   If the owner of the servient tenement sells before the legislation prevents a reversion that would have otherwise occurred, he may receive less without being compensated.   According to appellants, this situation can be avoided only if the prior owner of the servient tenement necessarily transfers all property rights as they stood before enactment of the legislation.

 Appellants' alarm is unwarranted, however.   If mere existence of the legislation causes a reduction in property value of constitutional dimension even before it directly affects the property, the owner of the servient tenement can bring an immediate takings action for compensation due to the loss.   See Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 295-96, 101 S.Ct. 2352, 2370-71, 69 L.Ed.2d 1 (1981) (enactment of new legislation can give rise to a taking claim when it denies an owner economically viable use of his land).   If, on the other hand, the reduction in value falls short of the level required to establish an entitlement to compensation under the Takings Clause, the holder of the contingent interest suffers no compensable loss.   Not every reduction in property value caused by government regulation is compensable.   See Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987);  Penn Central, 438 U.S. 104, 98 S.Ct. 2646.

For support of their contention that only Vermont property law of 1899 can define their property rights, appellants rely on Nollan v. California Coastal Comm'n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987).   Unlike appellants, however, the Nollans owned their property in fee simple with no pre-existing easement across the land.   The Coastal Commission agreed to grant the Nollans a building permit but only if they granted a public easement across their beach-front, a condition which the Court held resulted in a taking.   Id. at 827-28, 837, 107 S.Ct. at 3143-44, 3149.   This condition could not be justified as an exercise of the government's land-use regulation power because it was not substantially related to the requested building permit.  Id. at 837, 107 S.Ct. at 3149.

Appellants interpret a footnote in Nollan to mean that when the Nollans bought the fee from their predecessors in interest, they bought whatever rights their predecessors had originally owned.   That footnote, as quoted by appellants, states:

Nor are the Nollans' rights altered because they acquired the land well after the Commission had begun to implement its policy.   So long as the Commission could not have deprived the prior owners of the easement without compensating them, the prior owners must be understood to have transferred their full property rights in conveying the lot.

Id. at 834 n. 2, 107 S.Ct. at 3147 n. 2.   Because each new owner received the rights originally held by the previous owner, according to appellants, the rights conveyed never changed after the property interest was first created.   Based on this interpretation, appellants argue that they must now hold reversionary rights in the rights-of-way that have not changed since their creation by the 1899 conveyances.

Nollan does not support the proposition that appellants try to force from it.   First, because the Nollans purchased a fee simple with no pre-existing easement, it was not necessary for the Court to look farther back than the date they purchased the property to define their property rights.   Appellants expand the meaning of the quote beyond the factual context of Nollan by arguing that “the prior owners [who] ․ transferred their full property rights in conveying the lot” refers to anyone other than the owners immediately preceding the Nollans.

Second, the appellants hold a very different property interest than did the Nollans.   The entire footnote ⁷ counters the argument that the Nollans could not have had a reasonable expectation of being able to exclude the public from their beach because they bought their property after the Coastal Commission had begun its program of conditioning building permits on the granting of such easements.   The Court concluded that the Nollans' compensable property interest was taken despite having been on notice when they bought the property that the government claimed the power to open beach-front property to the public.   This was so, the Court stated, because the building permit condition required the Nollans to yield possession of a property interest from the fee simple which they undisputedly acquired at the time of purchase.   Id. (“the announcement that the application for (or granting of) the permit will entail the yielding of a property interest cannot be regarded as establishing the voluntary ‘exchange’ that we found to have occurred in Monsanto ”) (citation omitted).

In other words, the Nollans were required to give up a stick from the bundle of rights which they acquired when they purchased the beach-front property.   Appellants, by contrast, have not been required to give up a stick from the bundle of rights which they acquired when they purchased their property.   The stick at issue here (reversion of the easement being governed solely by 1899 Vermont law) was removed from the bundle of rights before appellants obtained that bundle through purchase of the property.   At the time of their purchases, appellants acquired only conditional reversions.   The question presented by this case is the nature of those conditions and not, as in Nollan, whether any portion of an unconditioned property interest had been yielded to the state.   Accordingly, Nollan does not support the appellants' contention that their reversionary interests must be defined solely by Vermont real property law of 1899.

In summary, appellants did not purchase the same bundle of rights owned by the original grantor of the easement in 1899 and, therefore, the reversionary rights of that grantor are irrelevant.   After the government added reverter conditions and took a stick from the 1920 owner's bundle of property rights by passing the 1920 Transportation Act, the 1920 owner could no longer transfer that stick to the subsequent purchaser.⁸  The proposition that an owner cannot transfer what he does not own is fundamental.   In accordance with this rationale, we hold that the appellants' reversionary interests and, therefore, the conditions under which physical possession of the rights-of-way will revert to them, are defined by all applicable law in effect when they purchased those interests.

3. In This Case, Federal Transportation Law Preempts State Land Law to Establish When Possession of the Rights-of-Way Reverts

 Aside from the issue of timing, appellants, like the dissent, maintain that their specific rights can be properly defined only by state property law.   In support, they cite the principle, enunciated in Lucas, that property interests are created and their dimensions defined by “existing rules or understandings that stem from an independent source such as state law.”  505 U.S. at ----, 112 S.Ct. at 2901 (citing Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972)).

In holding that appellants' property rights are affected by federal transportation law as well as state property law, we first note that the quote above refers to “an independent source such as state law” (emphasis added), in no way limiting the definition of property rights solely to state law.   It is well established that although state law generally establishes real property rights, federal law may also alter a property owner's bundle of rights.   Lucas focused on preexisting limitations under state property and nuisance law, but the Court reaffirmed that federal law also supplies “background principles” by citing as an illustration Scranton v. Wheeler, 179 U.S. 141, 163, 21 S.Ct. 48, 57, 45 L.Ed. 126 (1900), which identifies the federal navigational servitude as a defining limitation on state-created riparian rights.  Lucas, 505 U.S. at ----, 112 S.Ct. at 2900.

Decisions of this court have also recognized that federal regulatory law, as well as state property law, may determine a property owner's rights to compensation.   In California Hous. Sec., Inc. v. United States, 959 F.2d 955 (Fed.Cir.), cert. denied, 506 U.S. 916, 113 S.Ct. 324, 121 L.Ed.2d 244 (1992), this court held that the long history of federal regulation of savings and loan associations meant that the owner of an insolvent savings and loan did not have a “historically rooted expectation of compensation” for a federal takeover of the offices.  Id. at 958-59.

Therefore, in deciding whether the appellants had compensable property interests that would provide them with a “historically rooted expectation of compensation” due to the ICC's decision allowing Vermont's occupation of the rights-of-way, a court must examine both federal and state law to define their bundle of rights.⁹

4. The Current Owners' Bundle of Rights is Fixed by the Applicable Federal and State Law as of Their Purchase Date

 Although the Preseaults as individuals are currently the sole partners of 985 Associates, we will not disturb the bright-line rule of the Court of Federal Claims that the date defining the bundle of rights and compensable property interests is the purchase date of the current owner whether that be the Preseaults or 985 Associates.   Preseault II, 27 Fed.Cl. at 88 n. 11.   We see no principled reason for ignoring the transfer from the Preseaults to 985 Associates given that its legal consequences cannot be ignored for other purposes.   The earliest relevant year for analyzing the appellants' property interest then is 1979, the year the Preseaults transferred parcel C to 985 Associates.

In sum, we hold that even though the original condition extinguishing the easements-physical abandonment as a rail line-was defined by Vermont's land law in 1899, subsequent enactment of the federal statutes, up until 1979, cannot be ignored when defining appellants' reversionary rights.   Because federal ICC law added another pre-existing limitation on appellants' reversionary rights-ICC approval of abandonment-their titles to the parcels have never included a reverter whose scope is determined solely by reference to Vermont property law.

C. Under the 1920 and 1976 Federal Acts Possession does not Revert Absent ICC Approval of Abandonment

 The reversionary interests held by the appellants were heavily encumbered by federal transportation law at the time of appellants' earliest purchase, in 1979.   Developments in federal law stretching from 1887 to 1979 demonstrate that the appellants were not entitled to take possession of the rights-of-way based merely on the railroad's 1975 removal of track from the rail line.   Congress enacted the Interstate Commerce Act which instituted federal regulation of the entire railroad industry in 1887.   Ch. 104, 24 Stat. 379 (1887).   The Transportation Act of 1920 added new provisions to the Interstate Commerce Act establishing the ICC's exclusive and plenary jurisdiction over construction, operation, discontinuance of service and abandonment of railroad lines.   Ch. 91, sec. 402, § 1(18), 41 Stat. at 477-78.   As federal law that was intended to occupy the field, the Transportation Act preempted any state laws or actions concerning abandonment of railroads.   Colorado v. United States, 271 U.S. 153, 165, 46 S.Ct. 452, 454-455, 70 L.Ed. 878 (1926) (ICC's abandonment jurisdiction prevails even against a contract between a state and a railroad antedating the 1920 Act).   The Vermont legislature recognized the ICC's preeminent jurisdiction over railroad matters when it has entered the railroad industry, for instance, by authorizing state acquisition of Rutland Railway properties in 1963 in An Act Relating to the Rutland Railway Corporation.   1963 Vt.Laws §§ 2, 4.   The ICC's authority over abandonment and discontinuance was reformulated without substantive change in the 1976 4-R Act.  49 U.S.C. § 10903.   The 4-R Act also encouraged the ICC to allow recreational and conservational uses of rights-of-way which were no longer used in active railroad service but which had been reserved for future rail use by their addition to the national rail bank.  49 U.S.C. § 10906.

Given this regulatory regime, the reversionary interests acquired by appellants beginning in 1979 were so circumscribed by federal transportation law governing the relationship between railroad easements and servient tenements that their conditional reversionary interests could not be defined solely by state law.   The appellants, unlike any predecessors in interest taking title to the three parcels prior to 1920, purchased estates servient to easements subject to exclusive and plenary ICC authority, including the authority to grant temporary discontinuances that do not trigger the vesting of reversionary interests.   In the bundle of rights purchased by the appellants, their possession arises only upon ICC approval of abandonment.   Furthermore, the 4-R Act expressly required that the ICC consider discontinuance of rail service and recreational uses for the right-of-way in lieu of authorizing abandonment.

Because the ICC lawfully refused to authorize abandonment of the rights-of-way, appellants were not entitled to possession.   The derivative actions of Vermont cannot revive rights that ICC action prevented from arising in the first place.   Therefore, Vermont's possession and the City of Burlington's recreational trail use under lease do not take any right owned by the appellants who, therefore, are not entitled to compensation.¹⁰

D. Appellants Were Not Entitled to Immediate Possession of the Rights-of-Way Under the 4-R Act Alone, Before its Regime was Strengthened by the 1983 Amendments

 As an alternative argument, the appellants contend that even if the federal law in place when they bought the servient tenements in 1979 defines their reversionary rights (specifically, the 1976 4-R Act), they were entitled to possession in 1985 when they asked the ICC to certify abandonment of the easements.   The gravamen of appellants' argument is twofold:  first, that the 1976 4-R Act required the ICC to issue a certificate of abandonment under the circumstances prevailing when the Preseaults requested the certificate in 1985;  and second, that application to them of section 1247(d) (from the 1983 amendments) ¹¹ by the 1986 ICC decision results in a taking of their property.

Appellants point out that when the ICC, citing the 1983 amendments, approved Vermont's belated request for permission to discontinue railroad service and to allow use of the rights-of-way as a trail, the ICC must impliedly have found that the public convenience and necessity permitted abandonment in accordance with the regulations implementing section 1247(d).  49 C.F.R. § 1152.29(b)(1)(ii) (“If the carrier is willing to negotiate an agreement, and the public convenience and necessity permit abandonment, the Commission will issue a Certificate of Interim Trail Use․”).   According to appellants, this finding would have required the ICC to approve abandonment of the line under the 4-R Act because that Act contains no provision for blocking the reversionary interests of servient tenement owners.¹²  Because the ICC presumably made the finding that abandonment was permitted, but delayed abandonment indefinitely, appellants argue that their property was taken because they could not have been prevented from taking immediate possession of the rights-of-way under section 10906, as they were under section 1247(d).

1. The ICC Has Plenary Authority Over Rail Lines Under the 4-R Act and Unfettered Discretion whether to Declare Abandonment or Merely Discontinuance

The flaw in appellants' argument is its failure to recognize the ICC already had plenary authority over rail line abandonment under the 1976 4-R Act.   Appellants took their reversionary interests subject to the ICC's authority to wholly regulate both abandonment and discontinuance of service on the rail line.   The 4-R Act provides no criteria for determining when the “present or future public convenience and necessity require or permit the abandonment or discontinuance.”  49 U.S.C. § 10903.   It therefore leaves such matters entirely to the discretion of the ICC.   Because the 4-R Act does not require the ICC to declare a right-of-way abandoned in the first instance and because under the 1976 4-Act the ICC had plenary authority over rail lines, under the circumstances here the ICC was plainly not compelled by law to issue a certificate of abandonment whenever requested to do so by the appellants.   Although the ICC expressly relied on section 1247(d) in allowing the rights-of-way to be used as a trail, the ICC would not have been required to issue a certificate of abandonment, thereby giving the appellants possession of the easement, even if section 1247(d) had not been enacted and only the 4-R Act applied.

Moreover, an ICC finding that the public convenience and necessity permit abandonment, made in the context of section 1247(d), would not compel the ICC to find that the public convenience and necessity require abandonment in preference to discontinuance in the context of the 4-R Act.   Even if the ICC had not relied on section 1247(d) in denying appellants' petition, it would still not necessarily have approved abandonment given that the government and the public would thereby lose access to the rights-of-way and the public has an interest in preserving the rail infrastructure.   See Preseault, 494 U.S. at 5, 110 S.Ct. at 918.   This is especially true since the owner of the easements, Vermont, opposed the appellants' petition to declare the line abandoned.

The ICC could have refused to declare the line abandoned under the factual circumstances here even if section 1247(d) had not been enacted.   Under the 4-R Act alone, the ICC could have allowed discontinuance of rail service, and use of the rights-of-way as a recreational trail, while refusing to issue a certificate of abandonment in order to preserve the rights-of-way for future rail use.   The ICC had explicit authority to grant discontinuances under the 1976 4-R Act.  49 U.S.C. § 10903.¹³  Moreover, the ICC could have imposed any conditions on the discontinuance of service that it found were required by “public convenience and necessity.”  Id.  Presumably these could have included conditions in the trail lease as part of its approval.

In light of the ICC's plenary authority over both abandonment of rail lines and discontinuance of service under the 4-R Act, the ICC would not have been required under the circumstances of this case to declare the rail line at issue abandoned under the 4-R Act.   Therefore, appellants would not have been entitled to immediate possession of the rights-of-way but for enactment of section 1247(d).   Because section 1247(d) is not what blocks appellants' possession of the rights-of-way, its application cannot effect a taking of their property.

2. Because Vermont Is Not the Type of Owner Contemplated by Section 1247(d), the 4-R Act is More Pertinent, Anyway

The 4-R Act is more pertinent to this case than the 1983 amendments, in any event.   Appellants fail to recognize that the rails-to-trails provisions of section 1247(d) assume a fact pattern that is not present here.   Normally a railway company holds a right-of-way that it no longer uses and wishes to abandon.   If the railway company retains the line but discontinues service with ICC permission, the company accepts significant costs, including taxes and maintenance expenses, and risks of tort liability.   Because abandonment avoids these costs, railway companies seeking ICC authorization to cease operations on money-losing lines naturally prefer abandonment to discontinuance under the 4-R Act.

Because railroad easements are typically owned by railway companies that are not interested in operating trails after discontinuing rail service, under the 4-R Act an easement could be used as a trail only if an organization would purchase and maintain the right-of-way for trail use.   The ICC might consider abandonment rather than discontinuance necessary when the purchasing organization is not a railway company because the purchasing organization ordinarily would not be able to resume rail service if ordered to do so by the ICC.   The ICC can and has ordered carriers to restore service on discontinued rail lines where there has been a request for renewed service.¹⁴  Vermont and Vermont Ry., Inc.-Discontinuance of Service, 3 I.C.C.2d 903, 907 (1987) (citing Akron & B.B.R. Co.-Abandonment of Operation, 239 I.C.C. 250 (1940)).   Therefore, use of a rail line as a trail usually required abandonment as a first step under the 4-R Act.

Section 1247(d) was intended to solve these and other problems associated with using a right-of-way subject to an easement owned by a railway company for a recreational trail.   The amendments reduce the drawbacks of discontinuance by delineating a clearly approved means of shifting the costs and risks of preserving rights-of-way from the railway company to the trail operator.   Section 1247(d) allows another group to take responsibility for the right-of-way, while at the same time preserving it for possible future railroad use because the railway company maintains ownership and the ICC maintains jurisdiction.

This case is different than the typical situation contemplated by section 1247(d), however, because here the trail use could have taken place even without application of section 1247(d).   Vermont has owned the easements since 1964, previously leasing the rights-of-way for use as a rail line and now leasing them for use as a recreation trail.   When a state or other organization owns a railroad easement and is interested in allowing the right-of-way to be used for another public purpose such as a trail, the state does not have the same concerns as a private, for-profit railroad company.   Under the 4-R Act, a state could discontinue rail service with ICC permission and grant an easement or lease for trail use without any economic incentive for preferring abandonment.  Section 1247(d) thus did not originate discontinuance as an option for easement owners such as Vermont.

We know of no reason why Vermont and Burlington could not have reached the same lease agreement under the regime established by the 4-R Act, even without the authority of section 1247(d), as long as the ICC approved the arrangement.   Because the arrangement involved a discontinuance rather than an “abandonment,” the condition of reverter, even under the 4-R Act, possession of the rights-of-way would not have reverted to the appellants.

Thus, the appellants are incorrect when they argue that the 4-R Act required the ICC to declare the easements abandoned before authorizing trail use in this case.   Although the ICC cited a law passed in 1983, four years after the appellants acquired the servient tenements, in denying their request to declare the easements abandoned, the ICC could have based its decision on laws which were already in effect when they purchased the property interests and which curtail those interests.   Appellants would not have gained immediate possession of the rights-of-way under the 4-R Act and, therefore, they do not have compensable property interests which could have been taken from them by enactment of section 1247(d) and the ICC's reliance on that statute.

E. The Dissent

The dissent believes we err twice, once by condoning an uncompensated taking and again by condoning an unauthorized federal intrusion on state powers.   We will address each of these contentions in turn.

 Contrary to the dissent's assertion, and because it is not necessary to do so, we do not reach the issue of whether a taking ever occurred.   Rather, we hold only that no taking occurred as to the appellants.   As we stated above, “It was the owner in 1920 who could assert a claim based on the property interest that was altered by the 1920 Transportation Act.”   This conclusion flows as logically from the dissent's analysis as from our own.   A reversionary interest has two components:  a present fee simple estate and a future possessory interest.   A future possessory interest is a presently existing, legally protected property interest.   Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests 22 (2d. ed. 1984).   An owner of a reversionary interest may, in the present, devise the reversion or convey it inter vivos.  Id. at 57.   When the value of a future interest is diminished, the owner need not wait for the future interest to become presently possessory in order to assert a takings claim.¹⁵  If this were the case, as the dissent implies, a reversioner or remainderman could find the value of his future interest diminished, but would not be able to seek compensation until the occurrence of all conditions necessary to make the estate presently possessory.   For this reason, the dissent's assertion that a taking could have occurred no earlier than 1975 is in error.

When the 1920 Act was signed, it impacted the value of the future possessory interest in the strips of land comprising the rights-of-way traversing the appellants' parcels.   Before the 1920 Act, the owners of the property retained a possibility of reverter with respect to the rights-of-way (the railroad had to abandon the line before the possessory right reverted).¹⁶  After the 1920 Act became effective, the owner still held a possibility of reverter.   State law thus remained “the traditional source of real property interests,” Preseault, 494 U.S. at 22, 110 S.Ct. at 927 (O'Connor, J., concurring), but the conditions precedent to the reverter becoming presently possessory were enlarged.   Before 1920, only one hurdle had to be cleared before the owner took possession of the strips-abandonment of the line by the railroad.   After 1920, two hurdles had to be cleared;  first, physical abandonment as a railroad, and second, ICC approval in the form of the certification required by the 1920 Act.   The property's diminishment in value, if any, arose from the fact that federal transportation law attached an additional condition to the possibility of reverter, which made possession of the strips, already speculative, even less likely.   The owner of the parcel in 1920, and only that owner, could assert a takings claim because only he suffered the diminishment, if any.   However, we need not and do not decide the outcome of a takings claim brought by the 1920 owner.   That issue is irrelevant to our analysis of whether any property interest purchased by the appellants has been taken from them.

By comparing Scranton v. Wheeler and Kaiser Aetna v. United States, the dissent extracts the rule, “[w]here a title predates the servitude ․ a landowner can demand compensation if the Government opens his property to the public.”   We agree with this statement.   We disagree with the dissent only as to whose title is critical here.   The dissent assumes the critical title is that transferred when the property interest was first created in 1899.   In contrast, we conclude the critical title is that purchased by the owner asserting the takings claim, not some past title.   A proper analysis of Scranton and Kaiser Aetna supports our view.   In Scranton, the Court held no taking occurred when the federal government built a pier boarding Scranton's land because his riparian interest in the submerged land was held subject to the government's navigational servitude.  Scranton, 179 U.S. at 163, 21 S.Ct. at 57.   In contrast, a taking did occur in Kaiser Aetna when the government imposed a navigational servitude on a marina created at the petitioner's expense after it had purchased the property at issue.   The petitioner's title was not purchased subject to that servitude.  444 U.S. at 178-80, 100 S.Ct. at 392-93.¹⁷

The dissent also admonishes us for allowing federal law to intrude into the state sphere of land law.   Both the appellants and the dissent argue that we are impermissibly allowing federal law to reshape the appellants' real property rights.   The dissent's concern that this court tramples on fundamental principles of federalism, although well articulated, is misplaced.   We do not hold that federal law defines the entirety of the appellants' property rights.   Rather, we conclude only that, in the case of abandonment of railroad rights-of-way, federal transportation law has supplemented Vermont's state land law.   Where federal transportation law is silent, state land law alone controls.   Our decision in this case follows the Supreme Court's guidance that “[a]lthough the [ICC's] actions may pre-empt the operation and effect of certain state laws, those actions do not displace state law as the traditional source of the real property interests.”  Preseault, 494 U.S. at 22, 110 S.Ct. at 927 (O'Connor, J., concurring).

 The Supreme Court in this very case held that the Commerce Clause did empower Congress to pass the statutes at issue here, which clearly add another condition to the reversionary interests.  Id. at 18-19, 110 S.Ct. at 925-26.   Moreover, Congress has the power, under the Supremacy Clause of Article VI of the Constitution, to preempt state law.   Louisiana Pub. Serv. Comm'n v. Federal Communications Comm'n, 476 U.S. 355, 368, 106 S.Ct. 1890, 1898, 90 L.Ed.2d 369 (1986).   Pre-emption occurs, inter alia, where there is outright or actual conflict between federal and state law.  Id.  The federal and state laws that define when the appellants' reversionary interest becomes possessory clearly conflict with one another.   Under Vermont land law, the original and sole condition of reversion was physical abandonment as a railroad.   The 1920 Act, and its reformulation in the 1976 4-R Act, however, require that the ICC first find “that the present or future public convenience and necessity permit ․ such abandonment” before the Preseaults' future interest can become presently possessory.   This conflict can be resolved only by allowing the federal law to preempt the state law regime.

The dissent does not dispute that these federal statutes have preempted the sole condition of reversion set by state law or that Congress has power under the Commerce Clause to pass those statutes.   In spite of this, the dissent states, “[f]ederal law cannot shape or alter the Preseaults' ‘bundle of property rights' defined and created by state law.”   In other words, the dissent asserts that only state law, but never federal law, may define a stick in the bundle of rights associated with a particular property interest, here a possibility of reverter.   The dissent simply cannot mean what it says because it never argues that the federal government's actions were illegal, only that they amounted to a compensable taking of the appellants' property.

The dissent concludes that the ICC has the power to preclude the appellants' present right of possession of the rights-of-way, assuming the federal government pays adequate compensation, but that Congress did not have the power to alter the reversion conditions by passing the 1920 Act, perhaps creating a claim in the owner at that time.   The first action, which the dissent concedes is legal, is as much a redefinition of property rights as the second, which the dissent asserts is not legal.   In short, the dissent's position is internally inconsistent.   Contrary to the dissent's statements, its own rationale requires, and we agree, that federal law can alter a property owner's “bundle of rights” created and initially defined only by state law, provided the federal government pays for that privilege.

The dissent then errs, however, by misidentifying the ultimate issue presented by this case.   That issue is not whether the federal government has the power to redefine state-created property rights, for clearly it does, but whose rights were thus redefined, the 1920 owners' or the appellants'.   The dissent incorrectly answers this question because it assumes that federal preemption of state law occurred only in 1985 when the ICC denied the Preseaults' petition for approval of abandonment.   We agree that if federal preemption of the appellants' state-created property rights occurred at that time, they would have suffered a compensable taking.   However, preemption occurred in 1920 when the Transportation Act changed the conditions of reversion by giving the ICC plenary control over abandonment of railway rights-of-way.   Thus, in a proper exercise of its power under the Commerce Clause, Congress passed the 1920 Act which redefined the 1920 owners' reversionary interest by preempting Vermont land law to the extent of requiring ICC approval before a railway right-of-way is abandoned.

IV. CONCLUSION

For purposes of our analysis, we have assumed that appellants purchased doubly conditioned reversionary interests in rights-of-way occupied pursuant to easements held by the State of Vermont.   We hold appellants' interests will become possessory only if and when the ICC approves abandonment of the rights-of-way, thereby releasing them from the national railbank, regardless of when physical abandonment as a railroad occurred.   As appellants still hold these very same conditional reversionary interests, which although still subject to ICC regulation are not subject to any conditions imposed since appellants' 1979 date of purchase, nothing has been taken from them.   Furthermore, allowing interim use of the railbanked rights-of-way as a recreational trail did not require the ICC to approve abandonment, as opposed to discontinuance, under the 1976 4-R Act.   Underlying our holding is our legal conclusion that appellants' possessory rights in the rights-of-way are defined, inter alia, by federal statutes in effect at the time of their purchase.   Although the 1986 ICC decision not to approve abandonment delays or potentially defeats appellants' gaining possession, their possessory rights were conditioned on ICC approval of abandonment since their purchase of the reversionary interests in 1979.   Therefore, they had no right to possession that was defeated by the 1986 ICC decision.   Nor was their possession ousted by the State of Vermont or its lessee, the City of Burlington as the trail operator.   Therefore, we affirm the Court of Federal Claims' decision that the appellants' property interest has not been taken within the meaning of the Fifth Amendment and its dismissal of their takings claim.

Because we do not reach and decide whether the State of Vermont owns fee interests or merely easements, we vacate the ruling of the trial court that Vermont owned only easements for the rights-of-ways traversing parcels A, B and C.   See United States v. Munsingwear, Inc., 340 U.S. 36, 39-40, 71 S.Ct. 104, 106-07, 95 L.Ed. 36 (1950).

Consequently, the decision of the Court of Federal Claims granting summary judgment in favor of the United States is

AFFIRMED-IN-PART and VACATED-IN-PART.

COSTS

Each party shall bear its own costs.

This court's majority opinion permits federal law to take the Preseaults' property, without compensation.   In essence, the court's opinion confuses the Federal Government's right to take property with its obligation to compensate for such a taking.   Thus, to my view, the court condones an uncompensated taking.

This court conducts an exhaustive inquiry into the regulatory environment of railroads and the interplay of state and federal laws affecting property rights.   In fact, the case is much simpler.   Without federal intrusion, the Preseaults would have regained their property under state law.   Instead the Government took the Preseaults' property and converted it into a public trail.   The Government owes the Preseaults compensation.   Therefore, I must respectfully dissent.

I.

A brief review of the record shows that federal law took the Preseaults' property.   Prior to 1899, the owners of what became Parcels A and B of the Preseaults' land held fee simple estates.   In 1899, the Rutland-Canadian Railroad acquired rights-of-way by eminent domain for the railroad across Parcels A and B.   Under Vermont law, the rights-of-way were easements for the construction, maintenance, and accommodation of such railroad.   Vt. Acts No. 160, § 1 (1898).   Vermont law dictates that a railroad right-of-way is

a right to use the land in a particular mode for a particular purpose and ․ the estate would cease and the land revert, the moment it was put to any other use than the one designated in the charter or statute, by or under which the appropriation was made.

Hill v. Western Vt. R.R., 32 Vt. 68, 77 (1859) (emphasis added);  accord Troy & Boston R.R. v. Potter, 42 Vt. 265, 274 (1869);  Dessureau v. Maurice Memorials, Inc., 132 Vt. 350, 318 A.2d 652 (1974).   To emphasize, “any other use” terminates the easement and triggers reversion to the lawful property owner.   Indeed, the trial court correctly concluded that under Vermont law, “reversion occurs at the moment when a right-of-way is abandoned.”  Preseault v. United States, 24 Cl.Ct. 818, 835 (1992).   Abandonment under Vermont law occurs automatically upon removal of tracks and any use other than for a railroad.  Proctor v. Central Vt. Pub. Serv. Corp., 116 Vt. 431, 77 A.2d 828, 830 (1951).   Therefore, when the railroad stopped using its line on Parcels A and B in 1975, Vermont law returned to the owners their fee interest in their land.   In other words, they recovered full rights of possession.

When the Preseaults purchased Parcels A and B in 1980, they purchased not only the previous owners' reversionary interest but also the right to possess the land under the terms of the easement and Vermont law.   See, e.g., Nollan v. California Coastal Comm'n, 483 U.S. 825, 833-34 n. 2, 107 S.Ct. 3141, 3147 n. 2, 97 L.Ed.2d 677 (1987).   The Federal Government, however, took from the Preseaults their right to possess the land abandoned by the railroad in 1975.

II.

In a series of enactments between 1920 and 1983, the United States Congress enacted laws which stripped the Preseaults of the land that reverts to them when a railroad ceases active operations along a right-of-way.   The Transportation Act of 1920 (1920 Act) required that the Interstate Commerce Commission (ICC) certify any proposed abandonment of railroad easements before reversion of the property.   See Transportation Act of 1920, ch. 91, tit. IV, sec. 402, § 1(18), 41 Stat. 456, 477-78.   Before the 1920 Act, state law governed reversion and possession.   In Vermont, reversion and possession upon abandonment were automatic.  Proctor, 77 A.2d at 830.   The 1920 Act expressly conditioned the landowner's possession on ICC approval of abandonment.   Thus, if the ICC denied the landowner's petition, it took the landowner's property.

Contrary to this court's suggestion, the original owner of the Preseaults' land had no taking claim upon enactment of the 1920 Act.   The easement across Parcels A and B did not terminate under state law until 1975, when the railroad abandoned the line.   Until 1975, the right-of-way gave the railroad the right to possess the land.   Only in 1975, upon abandonment, did the federal laws begin to operate to take the property.

In 1920, the owners could not foresee when, if ever, the railroad would abandon the line.   Further, in 1920, the owners could not foresee that the ICC would exercise its new authority to block their possession over five decades later.   No taking claim arose on Parcels A and B in 1920.

A 1976 enactment, the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act), Pub.L. No. 94-210, tit. VIII, § 802, 90 Stat. 125, 127-30 (1976) (codified as amended at 49 U.S.C. § 10903 (1988)), recast the abandonment provision of the 1920 Act.   The 4-R Act granted railroads the option of “discontinuing,” in addition to abandoning, a section of track.   See 49 U.S.C. § 10903(a).   Discontinuance permits a railroad to preserve a dormant rail corridor.   The 4-R Act also permitted the ICC to convert the rail line to another public use without abandonment.  Id. at § 10906.

The 4-R Act compounded the Government's intrusion on property rights under state law.   The options of discontinuance and conversion permitted a railroad to postpone, potentially forever, the abandonment of a dormant rail line.   Moreover the Government could convert the rail line into a public park or some other public use under the guise of preserving rail corridors.   By creating options other than direct abandonment, the 4-R Act gave the Government new ways to invade the property rights of landowners, without compensating them for their loss of property rights.

Under Vermont law, however, “any other use” beyond the railroad use would terminate the easement and trigger the reverter.   Therefore, when the Government converted the land to “any other use,” it took the state law property right to immediate possession.

Finally, in 1983 Congress enacted the National Trails System Act Amendments of 1983 (Rails-to-Trails Act), Pub.L. No. 98-11, 97 Stat. 42 (1983) (codified at 16 U.S.C. § 1247(d) (1988)).   Section 208 of the Rails-to-Trails Act permitted a railroad seeking to abandon a dormant line to convert the right-of-way into a public trail.   97 Stat. at 48.   The Rails-to-Trails Act treats such a conversion as a discontinuance, which permits ICC to take over the line under the guise of future reconversion back to active rail use.   See 49 C.F.R. § 1152.29(c)(2), (3) (1993).

Under Vermont law, when the railroad stopped using Parcels A and B as a rail line, that land reverted automatically to the lawful owners.   The federal law, however, changed the Preseaults' state law rights to future possession of these lands.   When the ICC denied the Preseaults' petition for abandonment of the rail line that crosses Parcels A and B, it took the Preseaults' property without compensation.

III.

This court's majority opinion detects no taking even though the 1920 and 1983 Acts altered the terms of the Preseaults' reversionary interests.   In effect, the court erroneously posits that the Preseaults have no claim for compensation as a result of the federal action.   In fact, it is the reversion in fee simple that the 1920 and 1983 Acts took without compensation.   Under such a doctrine, Congress has the power to enact a regime that supplants state property law without compensating for the taking.   Consequently, under this court's dangerous new doctrine, the same federal law may both redefine state property interests and, in the process, take property without just compensation.

This court's majority opinion claims it is “well established” that federal law may alter state property rights.   This is not disputed.   The question, however, is not whether federal law may alter state property rights, but whether federal law may alter state property rights without giving just compensation.   To support its theory, the court cites two cases.   The court, citing Scranton v. Wheeler, 179 U.S. 141, 163, 21 S.Ct. 48, 57, 45 L.Ed. 126 (1900), identifies the federal navigational servitude as a limitation on state-created riparian rights.  Scranton, however, is inapposite.   Scranton simply acknowledged the basic property law concept that the earlier title governs.  Scranton featured a navigational servitude that predated most state law titles.   The servitude dates to the Constitution and English law in colonial times, thus generally predating titles under state law.   Where a title predates the servitude, however, a landowner can demand compensation if the Government opens his property to the public.   See Kaiser Aetna v. United States, 444 U.S. 164, 178-80, 100 S.Ct. 383, 392-93, 62 L.Ed.2d 332 (1979).   In this case, the Preseaults rely on state property rights created in 1899, which predate the first federal intrusion on these rights by over twenty years.   Thus, Kaiser Aetna, not Scranton, governs this case.

The second case this court relies upon is California Housing Sec., Inc. v. United States, 959 F.2d 955 (Fed.Cir.1992), cert. denied, 506 U.S. 916, 113 S.Ct. 324, 121 L.Ed.2d 244 (1993).   In California Housing, this court rejected a claim that the Resolution Trust Corporation took the premises of an insolvent savings and loan by physical occupation when it acted as receiver.  Id. at 960.   This case is also inapposite.   California Housing (1) entered the savings and loan business with full notice of Government regulations, (2) received Government benefits of federal deposit insurance in exchange for acceptance of the Government's prerogative to take property that was used in violation of federal banking law, and (3) violated the law, triggering the taking.  Id. at 958-59.   The Preseaults, by contrast, have never been in the railroad business, never benefitted from federal railroad regulation, and never agreed that the Government could convert the easement into a public park if they committed certain acts.   Further, the criminal context of California Housing renders it even more distant from the Preseaults' circumstances.

Based on these two inapplicable cases, this court concludes that “a court must examine both federal and state law to define [the Preseaults'] bundle of rights.”   This court further attempts to support this conclusion by noting that the Commerce Clause empowered Congress to pass the 1920 and 1983 Acts.   This argument is irrelevant.   Congress is not exempt from the Fifth Amendment simply because it exercises power under the Commerce Clause.  Kaiser Aetna, 444 U.S. at 174, 100 S.Ct. at 390.   Congress had the power to pass the 1920 and 1983 Acts, but it must provide compensation for takings resulting from that federal action.   The 1920 and 1983 Acts redefined abandonment under Vermont law and effected an uncompensated taking of the Preseault's reversionary interest.

Federal law cannot shape or alter the Preseaults' “bundle of property rights” defined and created by state law.   See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001, 104 S.Ct. 2862, 2871-72, 81 L.Ed.2d 815 (1984) (quoting Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972)).   Hence federal laws cannot alter the terms of the Preseault's reversionary interest, but could-under Fifth Amendment eminent domain powers-take the Preseaults' right to possess the parcels.   Justice O'Connor recognized this exact principle when this case was last before the Supreme Court:

Although the Commission's actions may pre-empt the operation and effect of certain state laws, those actions do not displace state law as the traditional source of the real property interests․   The Commission's actions may delay property owners' enjoyment of their reversionary interests, but that delay burdens and defeats the property interest rather than suspends or defers the vesting of those property rights․   Any other conclusion would convert the ICC's power to pre-empt conflicting state regulation of interstate commerce into the power to pre-empt the rights guaranteed by state property law, a result incompatible with the Fifth Amendment.

Preseault v. Interstate Commerce Commission, 494 U.S. 1, 22, 110 S.Ct. 914, 927, 108 L.Ed.2d 1 (1990) (O'Connor, J., concurring) (citations omitted) (emphasis added).   See also Ruckelshaus, 467 U.S. at 1003-04, 1012, 104 S.Ct. at 2873, 2877-78 (state law creates property right in trade secrets for purposes of the Fifth Amendment).   As Justice O'Connor stated, “state law creates and defines the scope of the reversionary or other property interests affected by the ICC's actions.”  Preseault, 494 U.S. at 20, 110 S.Ct. at 926.

State law defines the Preseaults' “bundle of property rights,” it is the “traditional source of the real property interests.”  Preseault, 494 U.S. at 22, 110 S.Ct. at 927;  accord Ruckelshaus, 467 U.S. at 1003-04, 1012, 104 S.Ct. at 2873;  Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161, 101 S.Ct. 446, 450-51, 66 L.Ed.2d 358 (1980).   No precedent supports this court's contention that federal law can “condition” (in this context, a euphemism for “take”) the Preseaults' reversionary rights in Parcels A and B without paying just compensation.

IV.

This court's majority opinion goes astray by supposing, in the name of “economic common sense,” that the Preseaults purchased Parcels A and B in 1980 at a price that reflected federal law changes in the reversionary interests.   To the contrary, the Preseaults acquired in 1980 all the rights and interests of their predecessors, including the reversionary and possessory rights under Vermont state law and the easement.   See, e.g., Nollan, 483 U.S. at 833-34 n. 2, 107 S.Ct. at 3147 n. 2.   When the ICC denied the Preseaults' petition for a certificate of abandonment in 1986, it took their property.

Common sense rejects this court's “economic common sense” that the Preseaults' 1980 purchase price has already compensated them for a federal intrusion and that further compensation would be a “windfall.”   Just compensation for a physical invasion supplied by market forces, rather than operation of law, would be a startling addition to takings jurisprudence.

Moreover, nothing in the record supports the appellate fact-finding inherent in this court's “economic common sense.”   In fact, the record contains no purchase price at all for the land in 1980, let alone a purchase price reflecting a reduction due to federal enactments.   According to the terms of the easement, the Preseaults paid for the right to possess the land when no longer used “for railroad purposes.”   The Government took that property right.   Thus, the record belies this court's presumption.

Finally the Preseaults' reversionary and possessory interests have not been merely postponed, as this court suggests.   Justice O'Connor refuted this position:

The Commission's actions may delay property owners' enjoyment of their reversionary interests, but that delay burdens and defeats the property interest rather than defers or suspends the vesting of those property rights.

․

The ICC may possess the power to postpone enjoyment of reversionary interests, but the Fifth Amendment and well-established doctrine indicate that in certain circumstances the Government must compensate owners of those property interests when it exercises that power․   Nothing in the Court's opinion disavows these principles.

Preseault, 494 U.S. at 22-23, 110 S.Ct. at 927-28 (citations omitted).   The Preseaults' property was taken-without any, let alone just, compensation.

V.

In addition to taking an easement from the Preseaults, the Government has impermissibly expanded that easement.  Dolan v. City of Tigard, 512 U.S. 374, ----, 114 S.Ct. 2309, 2317, 129 L.Ed.2d 304 (1994), suggests that when the nature of the use changes, the court should examine the relationship between the old and the new uses.   A “rough proportionality” must exist between the justification for the old uses and the new uses.  Id. at ----, 114 S.Ct. at 2319.   When the use of the Preseaults' land went from rail line to a public park, this rough proportionality ended.   Rail lines are simply not similar to a public park.   Few people picnic on active rail lines.

This court's opinion, in effect, treats the Federal Government as though it had power to add “and also for public trail uses” to the Preseault's railroad easement.   However, the court does not suggest where the Government obtained the power to turn a railroad easement into a public park without paying just compensation.   This court cannot justify forcing the Preseaults to fully shoulder the costs of a recreational park meant to benefit the public at large.

The railroad's easements in Parcels A and B disappeared by their terms when the railroad ceased using its line across that land in 1975.   Upon purchasing the land in 1980, the Preseaults enjoyed the right to possess it.   The Federal Government intervened and took away that right of possession in 1986, creating, instead, a public park.   The Preseaults should not bear the full cost of that park on their land without just compensation.

I must respectfully dissent.

FOOTNOTES

1.   As of October 29, 1992, the United States Claims Court became the United States Court of Federal Claims, pursuant to Title IX of the Federal Courts Administration Act of 1992, Pub.L. No. 102-572, 106 Stat. 4506.   Although the trial court proceedings spanned the time of this name change, for consistency we will refer to the court throughout as the Court of Federal Claims.

2.   We use the term “rights-of-way” to designate linearly-aligned strips of land originally assembled for a railroad corridor, whether the interests in the strips are in the nature of easements or fee simple holdings.

3.   An adjacent landowner claiming a reversionary interest in abandoned railroad property may establish a “proper interest” in an abandonment proposal, giving him standing to seek issuance of a certificate of abandonment from the ICC.  Preseault II, 27 Fed.Cl. at 76 (citing Modern Handcraft, Inc.-Abandonment in Jackson Cty., Mo., 363 I.C.C. 969, 971 (1981)).

4.   Government regulation may result in a Fifth Amendment taking without any physical invasion when “regulation goes too far” and impinge on private freedom.  Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922).   In determining whether regulations result in a taking, a court must consider the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations as to permissible uses of the land.  Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659.   The issue here, however, is not uses of land, but possession.

5.   Appellants' actual knowledge concerning ICC control, and how that knowledge affected the price they paid for the reversionary interests is irrelevant to our analysis because purchasers are held to constructive knowledge of property restrictions.   See M & J Coal, 47 F.3d at 1154 (coal mining company “knew or should have known” restrictions on its right to mine at time it took title to property).

6.   In other words, we do not hold that property rights disappear when the property to which they pertain is conveyed.   Rather, we hold rights extinguished by the government are not among those conveyed by a sale.   If the government takes a stick from a first owner's bundle of rights, for instance by changing reverter conditions, and thereby lessens the value of that owner's property, he has a takings claim.   Subsequent purchasers, such as appellants, cannot claim compensation for the missing stick because those rights were never transferred to them, the stick having been taken before they acquired the property.   Rather, the claim based on the right taken by the government remains with the first owner from whom that right is taken, even after the other rights related to the property are transferred to a subsequent purchaser.   We know of no authority holding that the first owner's legal claim for a taking is transferred with the remaining property rights.   Moreover, for the reasons explained in the text, we conclude such a rule would be legally unsupported and economically ill-advised.

7.   The portion of the footnote preceding that quoted above reads:Justice Brennan also suggests that the Commission's public announcement of its intention to condition the rebuilding of houses on the transfer of easements of access caused the Nollans to have “no reasonable claim to any expectation of being able to exclude members of the public” from walking across their beach.   Post, at 857-860 [107 S.Ct. at 3159-3161].   He cites our opinion in Ruckelshaus v. Monsanto Co., 467 U.S. 986 [104 S.Ct. 2862, 81 L.Ed.2d 815] (1984), as support for the peculiar proposition that a unilateral claim of entitlement by the government can alter property rights.   In Monsanto, however, we found merely that the Takings Clause was not violated by giving effect to the Government's announcement that application for “the right to [the] valuable Government benefit,” id., at 1007 [104 S.Ct. at 2875] (emphasis added), of obtaining registration of an insecticide would confer upon the Government a license to use and disclose the trade secrets contained in the application.  Id., at 1007-1008 [104 S.Ct. at 2875-2876].   See also Bowen v. Gilliard, [483 U.S. 587, 605, 107 S.Ct. 3008, 3019, 97 L.Ed.2d 485 (1987) ].   But the right to build on one's own property-even though its exercise can be subjected to legitimate permitting requirements-cannot remotely be described as a “governmental benefit.”   And thus the announcement that the application for (or granting of) the permit will entail the yielding of a property interest cannot be regarded as establishing the voluntary “exchange,” 467 U.S., at 1007, [104 S.Ct. at 2875], that we found to have occurred in Monsanto.Id. at 833-34 n. 2, 107 S.Ct. at 3147 n. 2.

8.   It was the owner in 1920 who could assert a claim based on the property interest that was altered by the 1920 Transportation Act.   We need not now decide the outcome of a takings claim, had one been brought by the 1920 owner, however.   We need only examine the property rights purchased by the appellants in 1979.

9.   There is no doubt that federal law has constitutionally preempted state law in this case.   In an earlier decision in this litigation, the Supreme Court held that the ICC's denial of the appellants' abandonment petition and its approval of discontinued service and interim trail use were proper exercises of Commerce Clause power.   Preseault, 494 U.S. at 17-19, 110 S.Ct. at 924-926.   The Court held that, in light of the long history of congressional attempts to address the problem of rail abandonments, Congress was entitled to make the judgment that every rail line is a potentially valuable national asset meriting preservation even if no future rail use for it is currently foreseeable.  Id. at 19, 110 S.Ct. at 926.   Under the Commerce Clause and the Supremacy Clause then, Congress had authority to work such preemption.

10.   Because appellants still hold conditional reversions and they do not allege that the reversions themselves have been taken, they do not have a valid takings claim.   A reversion, however, is a compensable property interest and if it is obliterated, a taking has occurred.   Preseault II, 27 Fed.Cl. at 86-87.

11.   As appellants characterize section 1247(d), the ICC can relinquish jurisdiction over a railroad right-of-way only if it finds both that the public does not need rail service on the line and that no responsible organization wants to operate a trail on the right-of-way.

12.   The House Committee Report on the 1983 Rails-to-Trails Amendments explained the need for section 1247(d) which insured that trail use would be considered before a right-of-way could be abandoned:  “The concept of attempting to establish trails only after the formal abandonment of a railroad right-of-way is self-defeating;  once a right-of-way is abandoned for railroad purposes there may be nothing left for trail use.   This amendment would ensure that potential interim trail use will be considered prior to abandonment.”   H.R.Rep. No. 28 at 8-9, reprinted in 1983 U.S.C.C.A.N. at 119-20.   The Court of Federal Claims concluded, “[i]t is undisputed that the sole purpose in enacting section 1247(d) was to frustrate the reversionary interest of owners of the fee underlying railroad easements, which interest would become present possessory the instant the ICC certified abandonment under the 4-R Act.”  Preseault II, 27 Fed.Cl. at 90.

13.   In addition, ICC decisions applying the 1920 Transportation Act had specifically acknowledged that the preservation of rail corridors for future use represented a legitimate basis for allowing discontinuance while refusing abandonment.   See Baltimore & Annapolis R.R., 348 I.C.C. 678 (1976) (authorizing retention of line, then out of service for seven years, for possible future use).

14.   We note that the lease between Vermont and the City of Burlington provides the State of Vermont and Vermont Railway, Inc. with the right to terminate the lease, to relay railroad tracks and resume railroad operations over all or a portion of the right-of-way, and prohibits raising or lowering the existing railroad grade without their approval.  Vermont and Vermont Ry., Inc.-Discontinuance of Service, 3 I.C.C.2d 903, 906 n. 6 (1987).   Therefore, Vermont Railway could resume service if ordered to do so by the ICC.

15.   The value of a future interest can be affected in numerous ways.   For example, a contingent future interest is diminished in value when further contingencies are added.

16.   The reversionary interest here was only a “possibility of reverter,” even before 1920, because it was possible that the railroad might never abandon the line, and thus the reverter would never become possessory.

17.   Lucas makes precisely this point in contrasting Scranton and Kaiser Aetna.  505 U.S. at ----, 112 S.Ct. at 2900.

Opinion for the court filed by Circuit Judge MICHEL.   Dissenting opinion filed by Circuit Judge RADER.