Lakeshore Rail Trail landowners settle federal property-rights claims for $750,000

Twenty-five Muskegon County property owners reached a $750,000 settlement with the United States over property rights tied to the Lakeshore Rail Trail. The deal resolves Fifth Amendment claims from the trail’s conversion under the federal rails-to-trails program and underscores how adjoining landowners can seek compensation when railroad corridors become public trails.

Why it matters: - The settlement puts money behind a constitutional property-rights dispute tied to the conversion of a former railroad corridor into a public trail. - The case shows how rails-to-trails projects can trigger compensation claims when adjoining landowners own the underlying land and the railroad held only a limited easement. - The Lakeshore Rail Trail remains open to the public, so the settlement addresses compensation without changing trail access.

What happened: - Twenty-five property owners whose land adjoins the Lakeshore Rail Trail in Muskegon County reached a settlement with the United States. - The owners will receive a combined $750,000 for the taking of their property rights under the federal Rails-to-Trails program. - The claims were filed in the United States Court of Federal Claims in 1950 Lakeshore Drive, LLC, et al. v. United States. - The case numbers were 1:22-cv-902 and 1:23-cv-2086. - The trail conversion followed the federal railbanking process administered by the Surface Transportation Board.

The details: - The Lakeshore Rail Trail is part of the larger Muskegon Lakeshore Trail system. - The trail provides public access along the shoreline of Muskegon Lake. - The trail connects neighborhoods, parks, waterfront attractions and other recreational amenities across western Michigan. - The lawsuit claimed the federal government’s invocation of the Nation Trails System Act caused a taking of property rights requiring just compensation under the Fifth Amendment. - The settlement compensates landowners for property interests affected by the federal government’s railbanking action. - Federal rails-to-trails claims are brought against the United States in the United States Court of Federal Claims. - These cases seek compensation from the federal government, not from local governments or trail organizations.

Between the lines: - The settlement reflects a broader legal pattern in which trail conversions can create value disputes between public recreation goals and private property rights. - Michael J. Smith, an attorney at Stewart, Wald & Smith, said the settlement recognizes the constitutional rights of the property owners and noted that the Constitution requires just compensation when private property is taken to create trails. - Stewart, Wald & Smith says it represents landowners nationwide in federal rails-to-trails litigation and has helped property owners recover millions of dollars in just compensation. - Property owners bordering former or existing railroad corridors may have similar claims depending on the railroad’s property interest, state property law and whether the Surface Transportation Board issued a railbanking order.

What's next: - Stewart, Wald & Smith is offering free consultations for property owners who want to determine whether their land may qualify for a federal rails-to-trails claim. - Owners of property adjacent to railroad corridors may continue evaluating potential claims based on corridor history and property records. - The Lakeshore Rail Trail will continue operating as a recreational trail in the Muskegon area.

The bottom line: - The settlement closes one Muskegon County rails-to-trails case, but it also signals that similar trail conversions can still carry federal compensation exposure for the government.