Union Pacific Railroad v. Santa Fe Pacific Pipelines, Inc.

INTRODUCTION

This is the latest of multiple appeals in a case in which courts have been called upon to determine the amount of rent a pipeline company must pay to a railroad for the use of land underneath its rights-of-way, most of which were initially granted to it by the federal government beginning in the mid-19th century in order to build and operate transcontinental railroads. The rent is to be determined by the terms of a settlement agreement entered into in 1994 arising out of previous litigation between the parties — former sister companies that separated and have been involved in lawsuits ever since.

Appellants are Santa Fe Pacific Pipelines, Inc., previously known as Southern Pacific Pipelines, Inc.; SFPP, L.P., Kinder Morgan Operating L.P. “D”; and Kinder Morgan G.P., Inc. (collectively, the Pipeline). Respondent is Union Pacific Railroad Company, successor to Southern Pacific Transportation Company (the Railroad). The two parties previously existed under the same corporate umbrella. In that context, they entered into master agreements in the mid-1950’s under which the Railroad granted easements to the Pipeline in the subsurface underlying the Railroad’s…