Giant Claim Against Railroad & Pipeline

     LAS CRUCES, N.M. (CN) – Union Pacific Railroad sold rights to 1,871 miles of oil pipelines along rail lines in six states – but the rights aren’t the railroad’s to sell, landowners say in a federal class action.
     Lead plaintiffs Ernest and Hazel Terry sued Union Pacific and Kinder Morgan and its affiliated pipeline companies on Friday.
     They claim that though right-of-way laws allow a railroad to run a line across government land or by private landowner grant, the easements do not allow railroads to use land under the tracks except for purposes directly related to the railroad.
     But the Terrys say Union Pacific has charged SFPP (fka Santa Fe Pacific Pipelines) and Kinder Morgan millions of dollars in rent for 1,871 miles of pipeline through California, Arizona, Nevada, New Mexico, Texas and Oregon under the railroad’s right-of-way.
     The lawsuit traces the fight back to the 1850s, when Congress gave enormous tracts of land to rail companies to encourage them to build transcontinental railroads. The plaintiffs claim these grants were “mere easements” that “created no right of possession in the subsurface.”
     President Lincoln signed the Pacific Railroad Act into law in July 1862. More congressional rail acts followed, in 1871, 1875 and thereafter.
     Even more lawsuits followed, between landowners, states, the federal government and the railroads. By the 1950s, the railroad and the pipeline companies at issue were sister subsidiaries of Southern Pacific Corp.
     Citing decades of court rulings and federal legislation, the present lawsuit claims that the companies were granting and accepting subsurface easements they did not own.
     Corporate mergers and sales broke up the sister subsidiaries, and in 1991 the railroad sued the pipeline for higher rent. The pipeline settled by paying $5.5 million and both parties agreed the rent would be recalculated every 10 years based on fair market value, beginning in 1994.
     Another lawsuit followed that year, and the fair market value was set at $5 million a year, according to the present lawsuit.
     The next lawsuit came right on schedule, in 2004, by which time the fair market value had risen to $14 million a year, plus $100 million in back rent and interest, the new plaintiffs say.
     The pipeline appealed that judgment and won – but actually both it and the railroad lost, the Terry plaintiffs say.
     “The 2nd District Court of Appeal of California agreed with the Pipeline and issued an opinion finding that, under the Congressional Acts, the Railroad did not have a sufficient interest in the land to collect rent from the Pipeline,” according to the complaint. “The court explained that under the Pre-1871 Acts the Railroad could only use the subsurface for railroad purposes-the pipeline was not for a railroad purpose-and that under the 1875 Act the Railroad was granted a mere easement of the surface and had no rights to the subsurface.
     “The opinion specifically noted that the Railroad, in some instances, may have sought and collected rent for the use of property owned by others – including private landowners.”
     The landowners seek quiet title, back rent, a share of profits, and punitive damages for trespass, unjust enrichment, slander of title and fraudulent concealment of the years of trespass.
     Their lead attorney is Sara Berger in Albuquerque.

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