A California appeals court has ruled that a company can qualify as a public utility — and seize property by eminent domain — even if it does not actively serve customers. The court also determined that the stated intent of such a public utility to use land acquired through eminent domain for public purpose is enough — it doesn’t matter if the public utility is primarily engaged in private business.
The case before the court, which was decided December 9, concerned Mendocino Railway v. John Meyer et al. Mendocino Railway is operator of the Skunk Train, a beloved excursion train and a significant local employer. Meyer owns a 20-acre parcel in Willits.
Mendocino Railway began seeking to acquire the parcel five years ago, but the railway and landowner could not agree on a price. On December 22, 2020, Mendocino Railway filed a complaint against Meyer in Superior Court to take the parcel by eminent domain for an appraised value of $350,000.
In 2023, Mendocino County Superior Court Judge Jeanine Nadel halted the effort, ruling that Mendocino Railway did not qualify as a public utility — a prerequisite for exercising eminent domain — and that the proposed taking was not supported by the state or federal constitution. The railway appealed.
During oral arguments heard Nov. 10, Mendocino Railway attorney Paul Beard pointed to a September ruling by the federal Surface Transportation Board affirming the company’s status as a common carrier. The board found that once an entity becomes a rail carrier, that status does not end simply because the carrier was not carrying passengers or freight. Instead, the board stated explicitly that common carrier obligations cannot be terminated without federal authorization .
Beard argued that under California law, common carriers are public utilities by definition. He cited the California Constitution, which states that “common carriers are public utilities,” and contended that the defining feature of a public utility is whether it dedicates its property to public use — not how many customers it serves or how frequently the service is used .
During the state trial, Meyer’s attorney had drawn attention to the railway’s revenue sources, noting that roughly 90% of its income comes from excursion train rides and about 10% from property leases and easements, rather than from transporting freight or passengers from one point to another. Meyer’s attorney, Stephen Johnson, also argued that the railway’s early plans for the property — which included a campground and RV park — reflected a private, not public, purpose.
The appellate court rejected that reasoning. In a detailed opinion, the panel held that Mendocino Railway met its burden of proof that it is a common carrier and therefore a public utility under California law. The court emphasized that the key question is whether an entity has dedicated its property to public use, not the number or type of customers it serves.
During oral arguments, justices pressed the railway on whether there are limits on how long a public utility could hold property acquired through eminent domain without actively using it for a public purpose. Beard acknowledged uncertainty on that point but noted that public utility status can be challenged through other mechanisms, including complaints filed with the California Public Utilities Commission.
The opinion, written by Justine Langhorne Wilson, addresses the issue of what recourse Meyer would have if Mendocino Railway does not dedicate the 20-acre parcel it is acquiring to a public purpose — namely to further a freight and passenger service that today is largely aspirational.
“Should the proposed development violate any provisions of the law or of the Constitution by furthering a purely private endeavor—i.e., campgrounds, retail spaces, etc.—Meyer’s remedy is in an action attacking that future development and not in in an attempt to defeat a proper acquisition of property for a valid purpose,” Langhorne Wilson wrote.
The appellate ruling does not end the dispute. Instead, it sends the case back to trial court, where the remaining issue will be how much compensation Meyer should receive for his property.
Photo by Thomas Hawk
Read Mendo Local News’ coverage of Mendocino Railway and the battle over its status:
Should the Skunk Train be Part of the Regional Transporation Plan?
California AG Bonta Challenges Mendocino Railway’s Federal Carrier Status
Mendocino Railway Rejects Fort Bragg’s Bid for Yearlong Pause in Litigation
Fort Bragg Plans Public Study Session, Website to Boost Transparency on Mill Site Development
Skunk Train, Fort Bragg Jointly Agree to Set Aside Default in Mill Site Suit
U.S. Supreme Court denies Skunk Train appeal
Federal Railway Agency Affirms Mendocino Railway’s Carrier Status
Default Notice Issued as Stormwater Contamination Battle with Fort Bragg Escalates
