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In the United States it is said that many railroad rights of way are held by railroad corporations in easement rather than in fee simple. It seems strange that it would be done that way when one considers that many railroad tracks continue to function for well over a century. Some tracks have probably been used for more than 150 years. Perhaps the only reason we cannot (yet) say that they typically last more than 250 years, or more than 2000 years, is that railways have not yet existed long enough for us to know that. So why would a railroad buy an easement rather than buying the land unconditionally? Might it be because in the 19th and early 20th centuries people thought railroads would be replaced by some other technology within a few decades?

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  • $\begingroup$ I just read in a book on property law that in Vermont (and consequently I suspect in some other states) railroads can take land in eminent domain for the purpose of building tracks, but what they take is an easement. $\endgroup$ – Michael Hardy Jun 13 '18 at 17:41
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Though these are only educated guesses (contract law is not my forte) I'd suppose that there might be a few reasons why this is:

It's best able to handle the competing interests of the parties involved. Historically, the US Federal Government was more willing to grant public lands to railroads (particularly in the little-settled west). However, due to shifts in the general public's will over the later part of the 19th century (stemming, apparently, from an 1871 decision Hash v. United States, which granted more explicit rights over the land to railroad companies) it became more difficult to either deed massive tracts of land to the railroad companies, or lease it to them at below market-competitive rates. (Note- much of this taken from this source.) Ultimately, this leads to a hold-up problem. The country needed railroads to cover the vast interior to ensure development, but without the earlier subsidies, laying tracks for thousands of miles was prohibitively expensive. Therefore, rights-of-way allow for a sort of middle ground, allowing cheap access to the land for the beneficial railroad lines, without giving them as large of subsidies as previously done.

It should also be noted, as in this source, that these agreements are the result of an incredibly tangled history, where many different private players, in addition to state and federal governments, all had vested interests in the outcomes. Newly formed territories and states needed the railroads to allow for their development; as linking commerce with reliable, cheap and relatively fast transportation was shown to be incredibly useful with the 1825 completion of the Erie Canal. Therefore, states had incentives to lower the development costs for railroads as much as possible. However, much of the burden of the cost fell to the federal government (who owned the lands being deeded), which was influenced by other individuals hesitant to provide such lucrative benefits for private corporations. Thus, the rights of way agreements came from a compromise-position.

Note, this source puts the major reason for the shift in agreement structure as federal dissatisfaction with how the railroads were handling their earlier deeded land. Instead of selling the granted land for commercial purposes, many railroads held onto the land (assuming it would only become more valuable), which delayed development.

Finally, by granting these easements, governments were able to ensure other public utilities used the same general routes (see page 1406)- something that railroads could have foreclosed had they owned the land outright.

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I suspect that part of the answer lies in the following (although I haven't been able to find a definitive source).

Over the 19th century, US railways spread over huge distances (eg the first transcontinental railway was built during 1863-69). Since railways often passed through range land on which cattle were grazing, the problem arose as to how to deal with trains being blocked by cattle on the track. Fencing railways over such long distances would have been very expensive, especially before barbed wire (for which a key patent was filed in 1874) came into use. Instead, the solution adopted was to fit locomotives with cowcatchers, common in the US but rare for example in the UK where distances are much shorter and railways are almost always fenced. Thus the technology was not well adapted to support a legal arrangement with a division of ownership between the railway and the surrounding land.

Note that the question can also be asked from the point of view of the original landowner: why would they prefer not to sell a strip of land to a railway company? From their point of view, a concern might have been to avoid liability to the railway company for any consequences of their cattle straying on the track.

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