The rail-trail ‘peace deal’ is political theater: It rests on shaky legal ground

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The Santa Cruz Branch Rail Line (SCBRL) has become the center of a battle between people who want to preserve rail and those who want trail-only development. The so‑called “peace deal” worked out between Santa Cruz Mayor Fred Keeley and District 1 Supervisor Manu Koenig promises 20 years of trail use while deferring rail service. 

That might sound appealing on paper, but it rests on shaky legal ground. Once you look at the facts, the deal is more political theater than enforceable reality.

The first problem is federal jurisdiction.

The Surface Transportation Board (STB), a federal board appointed by the U.S. president, has exclusive authority over freight rights. Local leaders can promise “no rail for 20 years,” but they don’t have the power to extinguish or suspend federally protected freight or railroad easements.

The Santa Cruz County Regional Transportation Commission (RTC) owns the land for the corridor, but it does not own the freight easement itself. Progressive Rail owns those rights. That easement was established in 2012 by Union Pacific by reserving it in the deed when it sold the corridor to the RTC. 

Progressive Rail also holds an operating contract known as an administration, coordination, and license (ACL) agreement through 2028. Even if the RTC doesn’t renew that contract, the freight easement doesn’t disappear, nor is it transferred to the RTC for non-freight usage. 

The use of the easement for freight service is protected, and since Progressive Rail holds the freight easement, it could file suit in state or federal court seeking an injunction to stop trail construction or other interference to its easement. Progressive Rail could also petition the STB to enforce federal jurisdiction, arguing that local actions unlawfully impair freight rights. 

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Either way, the RTC would be liable for damages if it loses and would have to stop trail development over the tracks.  

Hence, the “peace plan” exposes the RTC to a world of potential legal problems that it really can’t afford to take on.

Then there’s the issue of railbanking. 

I’m not an advocate for railbanking, however, this “peace plan” is railbanking without important safeguards. 

Railbanking was created to preserve corridors for future rail use while allowing interim trail development. It requires abandonment and a notice of interim trail use (NITU) from the STB. The NITU suspends abandonment, preserving the corridor from reverting to adjacent landowners, fragmentation and loss of federal jurisdiction. In other words, a NITU ensures continued federal protection.

The “peace deal” deliberately avoids railbanking, which means the corridor isn’t federally protected. Without railbanking, trail use rests on local agreements alone, leaving the corridor exposed to fragmentation and reversionary claims. Adjacent landowners could argue that exclusive trail use exceeds the scope of the current railroad or freight easements, and courts have sided with landowners in similar cases.

Toews v. United States (2004, California) is a perfect example. In that case, rail service on the Clovis Branch line was discontinued, and the corridor was converted into a public trail without railbanking. The court ruled that recreational trail use exceeded the scope of the original railroad easement, which had been established only for railroad purposes. Because the new use imposed different burdens on the landowners, the corridor owner now owed compensation to the property owners whose rights had been infringed.

That case shows exactly what can happen when rail service is discontinued but no formal abandonment or railbanking is pursued. If Santa Cruz County tries to delay rail for 20 years while converting the corridor to trail‑only use, it risks the same outcome.

Furthermore, if the RTC takes over as the freight operator in 2028 when the ACL expires, it can’t simply refuse freight service without STB approval. Any infrastructure built under the “peace deal” could be disrupted if freight service is reactivated. Because the freight easement is established, the STB retains jurisdiction and recognizes the preserved rail rights. The RTC cannot guarantee permanent trail-only use as long as the freight easement exists.

On top of the legal issues, there are financial and operational risks. Trail investments made under the assumption of exclusivity are vulnerable to disruption. Insurance and liability questions hang over projects that conflict with dormant freight rights. The RTC would be spending millions without securing the legal foundation to protect those investments.

Also, existing federal and state grants, such as the $19.5 million RAISE grant and California Transportation Commission funding for Segments 8–11, could be rescinded if the project no longer complies with its original rail‑with‑trail design.

In conclusion, the “peace deal” is built on fragile foundations. 

It avoids railbanking, leaving the corridor exposed to reversionary claims. It ignores the persistence of a freight easement, which remains enforceable by the STB until formally abandoned. It collides with STB jurisdiction, which cannot be overridden by local agreements. Legal precedent shows that corridors not railbanked but with rail discontinued can be lost to adjacent landowners.

By promising trail‑only use without securing federal protections, the “peace deal” invites litigation, fragmentation and eventual failure.

If Santa Cruz County truly wants to preserve the corridor for future rail and trail use, it must pursue a legally sound strategy. That means engaging the STB and acknowledging the persistence of freight rights. Anything less is just politics dressed up as policy, and it won’t hold when the legal challenges come.

Peter Gibson is a former software engineer now living in blissful retirement in Soquel.