How big an answer are you looking for?  And for what area?  As a general rule, the further west you go, the cleaner the deals were, and the bigger you go, the cleaner they were.  When you get down to spurs and branch lines and small yards, it can get real murky even answering exactly who owns 'em.  I think there have been a few cases where roads got possession involuntarily, so to speak, when the were taxed for peoperty they only had an easement on.  In other cases (the yard at Alameda is a classic), people found that property they had assumed was owned turned out to revert to someone else when the track came up.

   Someone -maybe George Hilton?- raised the point that several eastern passenger lines would have been profitable if their land was taxed at the same rate as abutters.

BacktotheFuture: Great questions.  Rather than spend the rest of the afternoon replying, I'll refer you to two documents.  Frank N. Wilner, while with the AAR, produced an excellent monograph on the land grants.  And David J. DeBoer (olddj to regulars at this blog site) and I covered the subject in our "An American Transportation Story: the Obstacles, the Challenges, the Promise, published by IANA.

Briefly, only 8% of the U.S. rail system was built with land grants.  The railroads received title when they complied with the terms of the grants, usually laying certain amounts of track.  The grants, in most cases, were of alternating sections on either side of the right of way, which allowed the government to sell the remaining sections at higher prices than they had drawn before the grants were made.  Railraods that accepted land grants were required to give discounts from tariffs for mail, troops, and other government property they carried.  The traffic was desireable, even at those discounts, so non-land grant railroads effectively were forced to offer the same discounts or not have the traffic, even though they never got the land grants in the first place.  Congress, in 1940 determined that railroads had repaid the value of the land grants by a factor of 10.  The railroads were "permittedd" to continue the discounts throughout WW II and were not relieved of the discount requirement until 1946.

Answering one of your questions, the land grants were of public land, and I know of no property taxes attached to them.  To the best of my knowledge, property taxes are levied by state and local governments, not by the feds.  I think you'll also find that they were considerably more than 200 feet on either side of the right of way.

MRL was doing what BN at the time considered a favor.  It got only the NP line from Laurel to Sand Point.  BN at the time was in the hands of a management that was trying to dispose of as many hard assets as it could.  The NP main line was really a secondary line compared to the GN - High line.  The contract, which BNSF later tried unsuccessfully to get out of, provides for a payment of so much a car for haulage/trackage of BNSF traffic, subject to a minimum guarantee.  A great deal for Dennis Washington; not so great for BN.  

The bond indenture you refer to was not at all unusual.  The NP condition goes back to the 1893 bankruptcy and required that NP invest proceeds from mineral development and other income from its land grant in the physical plant of the railroad.  There were two series of bonds, and they had nothing to do with the land grant or the 1864 grant.  They were created in the reorganization from bankruptcy.  This was not a problem for most of the 20th Century, but BN was rapidly approaching a time when there would be so much coal mined, oil and gas produced, and real estate sold that the railroad (NP portion) would be gold plated - not good economics.  After much effort, BN was able to "defease" the bonds, and almost immediately separated the railroad properties from the non-rail assets that were no longer backing the railroad.  That's when BN Resources was created.

anmccaff:  You've got it about right, and I have nothing to add, except that I've never known a railroad to not know whether it owned land in fee simple or just an easement.  They knew; they knew.  It was the 4R Act of 1976 that barred discriminatory state and local taxation.  States and localities immediately began figuring out how to get around that federal law.  One does not give up a cash cow willingly.

Last question first:  I don't see how there could be an agreed upon rate.  There are many different taxing authorities and just as many tax assessors.  Different lines have different value.  A 40-mile light density branch should not be taxed like a multi-track main line.

I don't have a definitive answer to your first question, BTF, but I would imagine that rail property first was taxed as soon as it was owned.  That's not facetious.  If a taxing authoritgy taxed factories, residences, etc., taxing rail property would seem reasonable to me.  Except for the western rails that got public land through land grants, the bulk of the rail properties were purchased or acquired from prior owners through negotiation and eminent domain proceedings.  I do recall that Illinois had a hybrid gross receipts tax on the Illinois Central in l ieu of ad valorem taxes.

I once dealt with a multinational chemical company that had petrochemical plants along the Gulf Coast.  Discussion of their property tax was grounds for dismissal.  The company had a policy of negotiating taxes with local taxing authorities.  They were told what the public body's budget was, figured out what the rate in mills needed to be to provide the total revenue, then negotiated an agreement on the contribution the chemical company would make and set the plant's tax rate accordingly.  Not particularly democratic, but this particular company took pride in paying its fair share (of course, it got to decide what was fair).  It also was by far the largest tax payer in each of the communities where it had its plants.  This was considered a fair, equitable way of paying the cost of local government.  I tell you this, because I suspect, but do not know, that some railroads have done the same thing in some taxing districts.  Unfortunately, in most locations, the railroad is seen as an absentee property owner that can be milked of taxes like a cow.  That's why discriminatory taxation was outlawed by the 4R Act; locals wouldn't play nicely.

Thank you.  I'll accept the compliment as graciously as possible.  Care to tell what your interest is - other than simply an inquisitive mind?

LK>"Unfortunately, in most locations, the railroad is seen as an absentee property owner that can be milked of taxes like a cow.  That's why discriminatory taxation was outlawed by the 4R Act; locals wouldn't play nicely."

   One reason for the re-birth of the PW (although a relatively small one) was the "10 taxpayer" lawsuit in Worcester, in which a group of irate (and rather stupid) homeowners demanded that commercial property pay its fair share.  I forget exactly how much residential rates went up afterward, offhand, but that and some changes in federal housing assistance rules meant that a three-decker (apartment house) burnt every week for the better part of a school year.

   The assessor had, of course, been socking it to the commercial property, and somebody had to take up the slack when rates were equalized.

anmccaff: Here in Colorado, a statutory variance between comercial and residential property is embedded in the state constitution.  But, the difference is not between railroads and residential taxpayers, it is that railroads must be assessed on the same basis as other non-residential property.  AOur assessor sock it to commercial property by law.  Ain't we lucky?  As a homeowner, you bet.

BacktotheFuture:  As one who does not believe there is any such thing as a free lunch, I view property taxes as a part of any business' cost structure.  "Fair" is in the eye of the beholder - or the tax protester.  If you look at the broad accounts that railroads make public, I think you'll find that property taxes are a relatively small cost compared to maintenance, personnel, fuel, depreciation, etc.  It is the obligation of the people in Finance who handle state and local taxes to strive to have them as low as they can make them.  And once taxes are determined, they will be included in the costs that go into determining the rates that will be charged.  UP recently sent a letter to shippers pointing out that the $1.4 billion it will be required to invest in implementation of PTC throughout its system will be recovered through rates charged to customers.  Same principle; there are just three sources of money for railroads - stockholders, customers, and government.  Government has not been very forthcoming for a long time, and given their druthers, stockholders wouldn't install PTC, so I guess that leaves customers.

LK>"  AOur assessor sock it to commercial property by law.  Ain't we lucky?  As a homeowner, you bet."

   I dunno.  The dislocations that can cause can create their own problems.