Railbanking takes place during a rail corridor abandonment process. Official negotiations with a railroad begin after the railroad submits an initial notification to abandon a line (similar to a letter of intent to abandon) to the Surface Transportation Board (STB). Negotiations end with either railbanking or line abandonment.
Due to the quick nature of abandonment proceedings, groups interested in acquiring a corridor for trail use may want to approach the railroad before the abandonment process begins.
Since railbanking is a pre-abandonment strategy, you will be dealing with either the legal or the asset management departments of the railroad company. These departments, more than the real estate department, may have a better understanding of how a bulk sale to a trail group can benefit a railroad. Because you and the railroad negotiator have a common interest in corridor preservation, playing to this shared goal can provide you some leverage. Otherwise, as soon as a corridor is abandoned and assigned to the real estate department for liquidation, maximizing the sale price becomes the overriding railroad objective.
Railroads must follow one of three abandonment procedures that the STB has developed:
- Regulated abandonment (the most stringent and least common)
- Individual exemption
- Class exemption
Railroads that follow the individual exemption procedure will file a Petition for Exemption, which is used when the transaction is of “limited scope” or when regulation of the transaction is “not needed to protect the shippers from the abuse of market power.” Class exemptions, currently the most common option, apply if the line has not been in use for two or more years or if the STB finds there is no vital interest in continuing rail service on that line.
All abandonment proceedings are assigned a docket number that is used to catalogue all filings from the railroad and decisions from the STB. When searching the STB website or contacting the library for specific filings, it's helpful to know the docket number associated with the particular abandonment procedure so you can track progress and information most efficiently. These docket numbers begin with the letters “AB” (for abandonment procedure) and are followed by a number that indicates which railroad company has filed for abandonment. A sub-number (Sub-No.) is then assigned to the specific case. The full docket number for a regulated abandonment might look like this: AB-16 (Sub-No. 200). Individual and class exemption applications are then followed by the letter “X,” such as “AB-16 (Sub-No. 200X).”
Below you will find basic information and a timeline for exemption proceedings. For more information on abandonment proceedings, refer to STB’s Web resources on rail-trail conversions.
This breakdown allows you to see the process for responding to a Notice of Exemption filing, including when each action takes place and who is responsible for the action or filing submissions.
Before Abandonment Filing
When: 10 days prior to abandonment filing
The railroad sends a notification to the State Service Board (or equivalent agency).
Day of Abandonment Filing
When: Day of abandonment filing
A petition for abandonment exemption (Notice of Exemption) is filed with the STB. To search for filings, visit the STB website and click on the drop down menu: E-Library > Filings. Sign up for RTC's Early Warning System to receive notice of abandonments as soon as the railroad files with the STB.
After Abandonment Filing
When: 30 days after abandonment filing
Who: Agency/organization interested in trail development
A request for a Notice of Interim Trail Use (NITU) is filed with the STB and the abandoning railroad’s legal department. This request should also include a “Statement of Willingness to Assume Financial Responsibility” and a request to establish a Public Use Condition (PUC). 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/organization 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. 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 almost always grant, may buy additional time to convince the railroad to negotiate with you.
When: 40 days after abandonment filing
Once the railroad has received the agency/organization's letter expressing the desire to negotiate for railbanking, the railroad has 10 days to decide whether to participate in a discussion and to notify the STB.
When: 50 days after abandonment filing
Who: Another railroad interested in acquisition
Within 50 days of the abandonment filing, it is possible for another railroad to submit an Offer of Financial Assistance (OFA) to purchase the line; this intervention trumps railbanking. If no ITU, PUC or OFA has been filed within 50 days of the abandonment filing, and the railroad has addressed all environmental and historic-preservation conditions imposed by the STB, then the railroad may consummate abandonment of the line.
When: 110 days after abandonment filing
If the railroad agrees to negotiate and submits a letter to the STB, then the STB will issue a NITU, which along with the PUC “stays” the abandonment for an initial 180-day period. Both parties can use this time to reach an agreement, and the railroad and trail group may extend the NITU indefinitely (in 180-day increments) to continue negotiations if an agreement has not yet been reached. The STB tends to be generous with extensions, as it is in their best interest to keep the rail system intact. However, the STB will only grant extension requests if both parties are amenable. Both the railroad and trail group can terminate NITU negotiations at any time.
End of Negotiations
If the negotiations are successful and the parties agree on a price, then the railroad will pass over a deed to the trail group, similar to any land acquisition. At this point, the railroad files a consummation notice with the STB, which will officially railbank the corridor. If the negotiations are unsuccessful and the railroad decides to abandon the corridor, they must also file a consummation notice with the STB
The railroad will file a “Petition of Exemption” if they are seeking an individual exemption. Groups interested in pursuing railbanking will need to file a Certificate of Interim Trail Use (CITU), and the timeline for abandonment in an individual exemption is the same as for class exemptions. The only difference is that the STB retains the right to request further information from third parties in an individual exemption.