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Acquiring Rail Corridors:
Chapter 6: Can You Take Advantage of Railbanking
As mentioned in the previous chapter, a rail corridor generally has several ownership types along its length. These ownership differences are largely irrelevant to a railroad while the corridor is in active use, since the railroad had acquired the right to lay down tracks and operate a train over the entire corridor. Once a railroad decides to abandon a corridor, however, these ownership distinctions become important.
Upon abandonment, the railroad loses control of all parcels of land within the corridor to which it merely held an easement. At this point, even though the corridor may appear unchanged, it legally no longer exists. In these cases, acquiring a corridor can become incredibly complex, since it may be owned by many different people.
In certain cases, however, it may be possible to avoid this complexity in the acquisition process. If the rail corridor has not yet been abandoned, you may be able to take advantage of the federal "railbanking" statute to increase your chances of success.
What is Railbanking?
In the early 1980s, Congress became concerned about the dramatic decline in the nation's railroad infrastructure. With so many railroads abandoning corridors, it became apparent to certain Members of Congress that something needed to be done to preserve the nation's rail system for future transportation uses. In 1983, Congress amended Section 8(d) of the National Trails System Act to create a program to preserve rail corridors for future transportation use. This program, called "railbanking," is a method by which corridors that would otherwise be abandoned can be preserved for future rail use through interim conversion to a trail.
Under the railbanking statute, a railroad is allowed to remove all of its equipment, with the exception of bridges, tunnels, and culverts, from a corridor and to turn the corridor over to any qualified private organization or public agency that has agreed to maintain the corridor for future rail use. This property transfer precludes abandonment. In 1990 the U.S. Supreme Court unanimously ruled, in the case of Preseault v. United States, that preserving a corridor for future rail use through railbanking is a legitimate exercise of governmental power. Although the corridor will no longer have tracks and ties, it is still being used for railroad purposes, legally speaking. This means that a railroad can legally transfer all forms of its ownership, including easements, to a trail group.
Like most things in life, railbanking does have a few catches. Any railroad may legally decide to re-establish rail service on a railbanked corridor. Should that occur, the trail managing agency would be entitled to compensation from the railroad that wants to re-establish rail service. In most cases, a trail group could expect to receive fair market value for the property as well as payment for all improvements. However, this issue may need to be specifically addressed in the initial contract with the abandoning railroad, since it may want to develop other payment terms.
As railbanking is voluntary, you will need to convince the railroad that railbanking the corridor is in the railroad's best interest. This is particularly important because most railroad personnel have historically relied on the piecemeal sale of a corridor as their preferred method for disposing of a corridor.
Requesting Railbanking
Since the establishment of railbanking in 1983, trail activists and organizations have requested more than 200 railbanking orders from the Surface Transportation Board (STB) and its predecessor, the Interstate Commerce Commission. While certain railroads have been more cooperative than others, every major railroad should understand the railbanking process.
The STB has developed different abandonment procedures which a railroad must follow, depending on the nature of rail service on the particular line the railroad wants to abandon. If the line has not been used in two or more years, or if the STB finds there is no vital interest in continuing rail service on that line, the railroad may follow a less stringent "exemption" procedure. Regardless, to railbank a corridor you need to send a letter to both the STB and the Legal Department of the railroad applying for abandonment authorization. You must send your letters before the railroad has consummated the abandonment. For a sample letter requesting railbanking, see the box on the following two pages.
What Constitutes an Abandonment
Legally, the process of abandoning a railroad corridor consists of two stages:
1. The STB must authorize abandonment of the rail corridor.
2. Physical abandonment of the corridor must occur.
In most states, mere non-use of the corridor by the railroad is not sufficient for the corridor to be considered abandoned. Often, state laws require one or more demonstrable acts by the railroad acts ranging from removing the tracks and ties to selling off the railroad's interest in the corridor before the corridor is considered abandoned. To find out what constitutes abandonment in your state, contact a knowledgeable attorney or the Rail Branch of your state Department of Transportation.
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Your request for railbanking should include a "Statement of Willingness to Assume Financial Responsibility." By filing a "Statement of Willingness to Assume Financial Responsibility," you are merely indicating that you are capable of assuming financial responsibility should your agency and the railroad reach mutually agreeable terms for the transfer of the corridor. This is not a contract, and your agency is under no obligation to acquire the corridor.
Request for Railbanking
The following letter requests both a public use condition and railbanking. Complete the items in italics, as well as fill in the blanks.
Mr. Vernon A. Williams
Secretary
Surface Transportation Board
1925 K Street, NW, Room 711
Washington, DC 20423
Re: [Name of Railroad Company]-Abandonment-[Name of County and State] AB-xx (Sub-no. yy)[STB Docket Number]
Dear Mr. Williams:
This comment should be treated as a protest or a petition for reconsideration in the above-captioned proceeding. This comment is filed on behalf of [Agency Name] which is a [political subdivision or government agency interested in transportation and/or natural resources, private public interest organization interested in conservation and/or recreation, etc.], which is hereinafter referred to as "Commenter".
While not taking a position on the merits of this abandonment, Commenter requests issuance of a Public Use Condition as well as a Certificate or Notice of Interim Trail Use rather than an outright abandonment authorization between [endpoint a] and [endpoint b].
A. Public Use Condition
Commenter requests the STB to find that this property is suitable for other public use, specifically trail use, and to place the following conditions on the abandonment:
1. An order prohibiting the carrier from disposing of the corridor, other than the tracks, ties and signal equipment, except of public use on reasonable terms. The justification for this condition is that [example: the rail corridor in question is along a scenic river and will connect a public park to a major residential area. The corridor would make an excellent recreational trail and conversion of the property to trail use is in accordance with local plans. In addition, the corridor provides important wildlife habitat and greenspace and its preservation as a recreational trail is consistent with that end.] The time period sought is 180 days from the effective date of the abandonment authorization. Commenter needs this much time because [example: we have not had an opportunity to assemble or to review title information, complete a trail plan or commence negotiations with the carrier.]
2. An order barring removal or destruction of potential trail-related structures such as bridges, trestles, culverts and tunnels. The justification for this condition is that these structures have considerable value for recreational trail purposes. The time period requested is 180 days from the effective date of the abandonment authorization for the same reason as indicated above.
B. Interim Trail Use
The railroad right-of-way in this proceeding is suitable for railbanking. In addition to the public use conditions sought above, Commenter also makes the following request:
STATEMENT OF WILLINGNESS TO ASSUME FINANCIAL RESPONSIBILITY
In order to establish interim trail use and rail banking under section 8(d) of the National Trails System Act, 16 U.S.C. §1247(d), and 49 C.F.R. §1152.29, [Agency Name] is willing to assume full responsibility for management of, for any legal liability arising out of the transfer or use of (unless the user is immune from liability, in which case it need only indemnify the railroad against any potential liability), and for the payment of any and all taxes that may be levied or assessed against the right-of-way owned by [Name of Railroad Company] and operated by [Name of Railroad Company].
The property, known as the extends from railroad milepost near [endpoint a] to railroad milepost near [endpoint b] a distance of miles in [County Name(s)], [State]. The right-of-way is part of a line of railroad proposed for abandonment in STB Docket No. AB-xx (Sub-no. yy).
A map depicting the right-of-way is attached.
[Agency Name] acknowledges that use of the right-of-way is subject to the user's continuing to meet its responsibilities described above and subject to possible future reconstruction and reactivation of the right-of-way for rail service.
By my signature below, I certify service upon [Railroad Company and address], by U.S. Mail, postage prepaid, first class, this day of 19 .
Respectfully submitted,
Name:
on behalf of:
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In addition, ask the STB to establish a "Public Use Condition" (PUC). A PUC prevents the railroad from selling or otherwise disposing of any property or trail-related structures, including bridges, tunnels, or culverts for a 180 day period from the effective date of abandonment. Since a railroad may not agree to a railbanking negotiation, requesting a PUC, which the STB will grant fairly automatically, may buy additional time to convince the railroad to negotiate with you.
As soon as the railroad has received permission to abandon the line, and has consummated the abandonment, the STB no longer has jurisdiction over the line. At that point, railbanking is no longer an option.
The ICC, the Surface Transportation Board and the Future of Railbanking
In 1887, Congress created the Interstate Commerce Commission (ICC) to protect farmers, shippers, rural Americans and others from the monopolistic power of the railroads. As Congress and the Administration have struggled to re-invent government over the past few years, they placed the ICC, the nation's oldest federal regulatory agency, under great scrutiny. Many Members of Congress questioned the need for continued regulation of the rail industry now that Americans are no longer threatened by the monopolistic power of railroads. In the fall of 1995, Congress passed legislation to eliminate the Interstate Commerce Commission, and to transfer the ICC's oversight of the rail corridor abandonment process to a new entity, the Surface Transportation Board (STB) within the US Department of Transportation.
Although the ICC Termination Act of 1995 signals the end of the Interstate Commerce Commission as an independent government agency, the Act should only lead to minor changes with respect to rail corridor abandonments. The "abolition" of the ICC is more a downsizing coupled with a name change than a true abolition. The Surface Transportation Board still has a great deal of responsibility with respect to the railroad industry, including some rate-related regulation, rail merger regulation, new rail construction regulation, and continued rail abandonment regulation. There will be a small staff, headed by three Commissioners (as opposed to five ICC Commissioners) to complete all of the work. As a result, railbanking and interim trail use issues are unlikely to be among the STB's top priorities. Rails to Trails Conservancy (RTC) will, however, continue to monitor implementation of the railbanking provisions, and RTC staff are available for consultation and advice.
The most significant changes affecting the rail abandonment process are (1) the removal of statutory timelines for STB approval of rail abandonment applications, and (2) modification in the timing for invocation of the forced sale for continued rail use. The ICC Termination Act did not substantially alter the provisions of the National Trails System Act and the Revised Interstate Commerce Act that previously governed railbanking/interim trail use. In addition, the two legislative cornerstones of railbanking, Section 8(d) of the National Trails System Act, 16 U.S.C. §1247(d), and the "public use" condition, 49 U.S.C. §10905, were reenacted.
For the time being, the Surface Transportation Board will be headquartered at the former ICC building:
Surface Transportation Board
1925 K Street, NW, Room 711
Washington, DC 20423
Feel free to contact the STB for additional information.
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Once the railroad has received your letter, it will notify the STB as to whether the railroad is interested in entering into railbanking negotiations with you. If the railroad agrees, the STB will issue either a "Certificate of Interim Trail Use" (CITU) or a "Notice of Interim Trail Use" (NITU), depending on the nature of the abandonment. Although NITUs are issued during the exempt abandonment process, while CITUs are issued during the regulated process, these documents are otherwise identical. From the date the Certificate or Notice is issued, you will have 180 days to reach an agreement with the railroad. As this is a non-binding negotiation, the railroad has the option to end negotiations at any point and dispose of the property however it wishes. On the other hand, if both sides are pleased with the progress, you can request an extension of the negotiating period from the STB should you need one.
Two points of interest:
First, since railbanking is a pre-abandonment strategy, you will be dealing with either the Legal Department or the Asset Management Department. The people in these departments may have a better understanding than those in the Real Estate Department of how a bulk sale to a trail group can benefit a railroad. This understanding may give you some leverage, since you and the railroad negotiator have a common interest: corridor preservation. Once a corridor is abandoned and assigned to the Real Estate Department for liquidation, maximizing the sale price becomes the overriding railroad objective.
Second, on valuation, pay only for property to which the railroad has good title. While railbanking preserves easements, the railroad would not be able to realize any return on easement property in the absence of railbanking. This is because the railroad's control over the property would be extinguished upon abandonment. A railroad may try to extract a payment from you for railbanked property that it holds only as easements; resist such a demand. Point out that, absent railbanking, the railroad would be unable to sell any of the parcels it holds as easements.
Creating a State Rail Corridor Preservation Policy
While the federal railbanking statute is one of the most important tools in a trail developer's "toolbox," another valuable tool is a state railbanking statute or rail corridor preservation policy. RTC research shows that when a state government develops explicit policies to promote the preservation of rail corridors through rail-trail acquisition and development, a greater number of corridors are preserved than would have been otherwise. Wisconsin, Connecticut, Texas, New York, West Virginia, Michigan, and Pennsylvania all have policies promoting rail corridor preservation. If you live in one of these states, contact your state Department of Transportation to learn more about these policies, so you can take advantage of any resources your state has allocated to assist with corridor acquisition.
If your state doesn't have a rail corridor preservation policy, you should consider working with the state Department of Transportation and/or the state Department of Natural Resources to create one. Obviously, this policy may not be in place in time to assist with your acquisition, but it may prove useful in the future.
As a starting point, the goal for a state rail preservation policy should be no net loss of corridors. Rail corridors are extremely difficult to reassemble, so the state should commit to preventing their loss. Specifically, a strong policy should include the following elements:
- Establishment of a rail-trail program within a state agency;
- Development of a rail corridor assessment and planning process to ensure that all rail corridors are evaluated for their future rail, transit, and trail potential;
- Establishment of a right-of-first-refusal statute so state agencies (or their designees) would have the first option to buy a soon-to-be abandoned corridor; and
- Creation of a dedicated funding mechanism to assist with acquisition.
For more specific information about creating a policy in your state, please contact the National Policy Division at RTC to obtain a copy of Integrating Rail-Trails into the Statewide Long Range Plan.
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