Public use requirement for a condemnation under eminent domain powers created prior to the passage of the Property Rights Protection Act
Wolfe v. Reading Blue Mountain, 2022 WL 16909471 (Pa. Cmwlth.) (unreported), allocatur granted June 27, 2023, appeal dockets 73-74 MAP 2023
In this case, the Supreme Court granted allocatur to consider whether the 2006 Property Rights Protection Act applies to condemnations under eminent domain powers created prior to the Act such that it was error for Commonwealth Court to rely on caselaw addressing the public use requirement prior to the Act’s passage.
Commonwealth Court summarized the relevant background as follows:
On June 11 2021, [Reading Blue Mountain and Northern Railroad Company (RBMN)] filed the Declaration, seeking to condemn a 0.0889-acre portion of the Wolfes’ property located at 3901 Pottsville Pike, Muhlenberg Township, Pennsylvania (3901 Property). The Wolfes also own the adjoining property at 3907 Pottsville Pike (3907 Property) (collectively, Properties), at which their tenant, Wolfe Roofing A Tecta America Company, operates a commercial roofing company it purchased from the Wolfes. The Wolfes acquired both Properties by deed in 1982 from L.H. Focht & Sons, Inc.
In the early twentieth century, the Reading Company owned a portion of the Wolfes’ Properties. At that time, a portion of the 3901 Property was part of a larger parcel of land that the Reading Company conveyed by deed in 1928 to G.W. Focht Stone Company (1928 Deed). The Reading Company operated a railroad and, as described in the 1928 Deed, the property had rail siding running onto it.
The 1928 Deed contained two easements in favor of the Reading Company. The first easement is not at issue in this appeal. The second easement was for siding already existing on the property, but the easement required that the grantor and its successors would have to remove the siding within 90 days of demand by the grantee and its successors, the Wolfes. The existing siding was connected to the main railroad line by a single track that crossed State Route (SR) 61 (Crossing). The subject siding was on the 3901 Property when the Wolfes acquired it in 1982, but RBMN ceased active use of the Crossing and siding on the 3901 Property after 1982. On January 15, 1998, the Public Utility Commission (PUC) suspended the Crossing due to lack of use. Thereafter, SR 61 was repaved, and the tracks were buried or destroyed.
On June 11, 2021, RBMN sought the PUC’s approval to re-establish rail service over the Crossing. On October 20, 2021, the PUC granted RBMN’s request. On April 4, 2022, the Wolfes’ counsel notified RBMN that the Wolfes wanted the siding removed from the 3901 Property per the 1928 Deed easement termination provision. On April 15, 2022, RBMN’s president informed the Wolfes that RBMN refused their demand and intended to move forward with its plan to once again use the siding at the 3901 Property. On April 20, 2022, the Wolfes filed a complaint and emergency motion for a preliminary injunction to prevent RBMN from unlawfully entering the 3901 Property. On April 21, 2022, the trial court enjoined RBMN from entering the Wolfes’ 3901 Property pending a hearing on the Wolfes’ emergency motion.
On April 21, 2022, RBMN filed a declaration of taking, and then, on April 27, 2022, filed the Declaration. According to the Declaration and exhibits attached thereto, RBMN plans to erect rail sidetracks on the 3901 Property and connect it to a reconstructed Crossing, to provide service to one of RBMN’s customers, Berks County Russell Standard (Russell Standard), an asphalt plant related to SemMaterials Energy Partners LLC, which owns the property to the south of the Wolfes’ Properties. On May 20, 2022, the Wolfes filed the Preliminary Objections, therein alleging that RBMN’s taking was not for a public purpose, but rather for conferring an impermissible private benefit on Russell Standard. The Wolfes also asserted that RBMN’s plan is a de facto taking of the Properties, since the Crossing will cut across the access point to the Properties and neighboring properties, and will landlock the 3907 Property. The Wolfes also contend that RBMN’s taking is a bad faith attempt to avoid the negotiated express easement terms, which require RBMN to remove the siding within 90 days of the Wolfes’ demand. Finally, the Wolfes aver that RBMN failed to post sufficient security with the Declaration. On May 25, 2022, RBMN opposed the Wolfes’ Preliminary Objections.
Slip op. at 2-4. Sustaining Wolfe’s Preliminary Objections, the trial court held, as summarized by Commonwealth Court:
[T]h[e] [trial] court found that the condemnation was effectuated solely to benefit a single private commercial enterprise, Russell Standard, and as such, violated the prohibition on using eminent domain for private purposes. The power of eminent domain may only be exercised for a public purpose. This condemnation, based on the evidence, is at the behest of and for the sole use of Russell Standard, a single private entity. The public does not benefit from [RBMN]’s condemnation in any way. The public will buy Russell Standard’s asphalt regardless of whether or not the needed materials arrive by rail or truck to Russell Standard’s plant.
Russell Standard wants the railroad for the convenience of its manufacturing process. The only goods moved on the rail will be those bought by Russell Standard. [RBMN] will serve no other customers. [RBMN] will provide no public transportation. Whatever public benefit may ensue from the condemnation, the land being taken is to be used for a private enterprise and as such is prohibited. The presence of a public benefit, even if it were [sic] a significant one, cannot save what is otherwise an improper condemnation. Pa. Mut. Life Ins. Co. v. City of Phila., … 88 A. 904 ([Pa.] 1913). To condemn land owned by the Wolfes, so Russell Standard can commercially profit from the land to the Wolfes’ detriment serves a purely private, and thus, unconstitutional interest.
…. [I]n the instant case the condemnation sought is excessive to [RBMN]’s need to serve Russell Standard. It appears that [RBMN] is protecting Russell Standard’s interest not to clutter its property with tracks where the rail cars could sit indefinitely until the products are needed. Instead, it intends to clutter [the] Wolfes’ property.
Slip op. at 6, quoting Trial Ct. Op. at 12-13 (emphasis added by Commonwealth Court). RBMN appealed arguing, inter alia, that the trial court ignored the Wolfes’ heavy burden of proof, and erred by finding that the taking was improper because it was not for a public purpose.
Commonwealth Court concluded that RBMN satisfied its burden of proving that the condemnation was for a public purpose and, therefore, the trial court erred by sustaining the Wolfes’ Preliminary Objection on the basis that RBMN did not take the 3901 Property for a public purpose. Commonwealth Court reasoned:
With respect to the Wolfes’ burden, the Pennsylvania Supreme Court long ago emphasized:
[T]he rule is that [“]the burden of showing the company is exercising franchises which it does not possess is on those alleging that [the corporation] is attempting to do what it is not authorized to do – construct a railroad for purely private purposes.[”] Deemer v. Bells Run R.R. Co., … 61 A[.] 1014 [(Pa. 1905)]. The corporate directors have power to decide as to the location of, and public necessity for, an extension of any part of the road, be it a branch or otherwise, and it is to be assumed, unless the contrary is plainly shown, that such officials, like all other officials, have performed their duty in good faith, when they declare a public necessity for an extension, or when they designate it as a branch.
Pioneer Coal Co. v. Cherrytree & Dixonville R.R. Co., 116 A. 45, 48 (Pa. 1922) (emphasis added; citation omitted).
Regarding public use/public purpose, the Pioneer Coal Court explained:
What constitutes public use is a point not free from difficulties, but wherever it appears from the attending circumstances that a section of road about to be constructed will in some direct way tend to contribute to the general public welfare, or the welfare of a considerable element of the public, it cannot be said that it will not serve a public use. This principle is now too well established in Pennsylvania to be questioned. Here, conceding that the extension under discussion will be largely employed to take coal from the … [c]ompany’s properties, yet, since it must also be conceded that the life, happiness and prosperity of the people of Pennsylvania depend to a very large degree upon getting the coal supply of the [s]tate out of the mines, [and] on its way to the consumer, this in itself, on the facts at bar, stamps a project as that before us as one for public use sufficiently to justify the exercise of the right of eminent domain.
Id. (emphasis added; citations omitted).
Further,
“it is not the special use made [of a section of road] which characterizes it [as a part of the public road], but its convenient necessity to that part which is [undeniably] for public use.” P[hila]., W[ilmington] & B[alt.] R.R. Co. v. Williams, 54 Pa. 103, 107 [(1867)]. Finally, the mere fact that some selfish interest may have inspired the plan for the part in controversy in no sense prevents that section from being classed as a “branch” road, or for public use.
Pioneer Coal, 116 A. at 48 (emphasis added).
Subsequently, in C.O. Struse & Sons Co. v. Reading Co., 153 A. 350 (Pa. 1931), the Pennsylvania Supreme Court addressed a contested taking in which the Reading Railroad attempted to appropriate the plaintiff’s land to rebuild a branch road to Sears Roebuck & Company’s (Sears) facility for the purpose of facilitating merchandise shipments. The C.O. Struse Court stated: “The right to build branch railroads … has been many times affirmed by th[e Pennsylvania Supreme C]ourt.” Id. at 352. The C.O. Struse Court referenced Pioneer Coal, and other decisions, summarizing:
In Getz’s Appeal, 10 Wkly. Notes Cas. 453 [(__)], the right of a railroad company to construct a branch to connect with a rolling mill was sustained. The right to maintain a branch railroad used only to transport freight from a manufacturing plant was sustained in Rudolph v. [Pennsylvania] S[chuylkill] Val[ley] [Railroad] [Co.], … 31 A. 131 [(Pa. 1895)]. A branch or spur track may constitute a part of the railroad’s transportation facilities although when constructed it may lead only to a single industry. Union Lime Co. v. Chicago [&] N[w.] R[y.] Co[.], 233 U.S. 211 [(1914) (railroad track connecting to two quarries)]. See also [Borough of] Bethlehem v. Lehigh & N[ew] E[ngland] R.R. Co., 253 Pa. 251 [(1916) (railroad track connecting to a chemical company)]; McAboy’s App[eal], 107 Pa. 548 [(1884)]. In the construction of a branch the railroad company has the same power of eminent domain as in building the main line. Mayor, etc., of Pittsburgh v. The P[a.] [R.R.] Co., 48 Pa. 355 [(1864)]. There is no controlling distinction between a coal mine or manufacturing plant which serves the public and a merchandise establishment, which does the same. Moreover, Sears[ ] [is] engaged or [is] about to engage in the manufacture of paints on a large scale for commercial purposes.
C.O. Struse, 153 A. at 352 (emphasis added).
RBMN contends that its taking, here, similarly serves a public purpose. It claims that it is “reconstructing a siding in order to serve a customer who [sic] provides goods, namely, asphalt, to the public [and that] the [railroad] tracks [will be used] for the same purpose as they were used for in the past when the siding was last active – i.e., transporting asphalt f[ro]m the Russell Standard property.” RBMN Br. at 19. Russell Standard, an asphalt plant, is not unlike the coal mine in Pioneer Coal, the Sears merchandise establishment serving the public in C.O. Struse, and the manufacturing plant, lime quarries and chemical plant addressed in the cases cited therein. Consistent with Pioneer Coal and the Pennsylvania Supreme Court’s statements in C.O. Struse that “[a] branch or spur track may constitute a part of the railroad’s transportation facilities although when constructed it may lead only to a single industry[,]” and “[t]here is no controlling distinction between a coal mine or manufacturing plant which serves the public and a merchandise establishment, which does the same[,]” C.O. Struse, 153 A. at 352, and given the “strong presumption that the condemnor has acted properly[,]” In re Condemnation No. 2, 943 A.2d at 1002, this Court agrees and concludes that RBMN’s condemnation is for a public purpose and, thus, the trial court erred by sustaining the Wolfes’ Preliminary Objection on the basis that RBMN did not take the 3901 Property for a public purpose.
Slip op. at 6-11. Wolfe sought Supreme Court review, relying on the 2006 Property Rights Protection Act, which amended the eminent domain law to add 26 Pa. C.S. § 201, et seq., to include an express prohibition (with limited exceptions) against state and local governments condemning private property for use by private entities.
The Pennsylvania Supreme Court will consider the following issue:
Whether the Commonwealth Court erred by reversing the [trial court] where it held that the taking at issue was for a public purpose and based its decision on caselaw addressing the public use requirement for a condemnation under eminent domain powers created prior to the passage of the Property Rights Protection Act, 26 Pa. [C.S.] § 201, et seq.
For more information, contact Kevin McKeon or Dennis Whitaker.