Legal action, which farmers have threatened to take against CIE, could also delay the completion of a new walking and cycling route on the line — the Great Southern Trail.
The walkway was envisaged as rivalling the Great Western Greenway, a successful tourist attraction in Co Mayo.
A group of farmers, who have set up the North Kerry Abandoned Rail Line Action Group, claim ownership of the line. Their solicitor has written to CIE as the company insists it is the owner of the land.
It is believed no progress was made at a recent meeting between CIE and farmers’ representatives.
Consultant John Hannon, engaged by the farmers, said at the weekend they had no comment to make.
It has been estimated more than 100 acres are in dispute and the property could be worth about €1m.
CIE is supporting the Great Southern Trail.
The plan is to develop an 85km trail from Rathkeale, Co Limerick to Fenit, Co Kerry. Work on a 40km section, as far as the Kerry border, has been completed.
The ownership dispute came to a head on Feb 2 last when about 150 walkers, approaching from the Limerick side of the disused line, had their way blocked at the county border by around 30 farmers who prevented them from entering Co Kerry in a three-hour stand-off.
Great Southern Trail chairman Liam O’Mahony claimed the objecting farmers are trying to put pressure on Kerry County Council not to draw up plans to extend the trail into Kerry.
He feared the council may also be reluctant to apply for grants to do the work because of the dispute, saying the people of north Kerry and west Limerick would be the losers.
Tourism and Transport Minister Leo Varadkar, who officially opened the section of the trail from Abbeyfeale to the Kerry border on Feb 23, is strongly supporting the project.
He indicated grants from the €65m Cycle Network Fund could be made available for the trail.
Mr Varadkar, also responsible for CIE, has said the rail body “will continue to access this property as necessary”.
The Limerick to Tralee railway line closed in 1977 and farmers are claiming squatters’ rights.
They have called on CIE to clarify legal issues and indicated they are prepared to go to court, if necessary.
There are fears if the dispute cannot be resolved through negotiations, there could be protracted legal action resulting in long delays in completing the trail.
Meanwhile, Mr O’Mahony has urged Kerry County Council to press ahead with a plan to develop the next section of the trail and said if farmers wished to continue their opposition they could submit objections through the normal channels.