• The Surface Transportation Board reaffirms that its regulatory processes must be followed in order to extinguish a railroad's common carrier obligation.
  • Lack of use of a rail line and removal of tracks are not sufficient grounds to find a rail line "de facto" abandoned.

When is a railroad line abandoned? If a railroad has had no traffic for 16 years and the tracks were removed six years ago, is that sufficient? What if the railroad had sought legal authority to abandon the line nine years ago but didn't complete the formal action to do so?

The Surface Transportation Board (STB) recently had occasion to consider these issues, and others, and gave clear and unequivocal answers.

A railroad is a common carrier with a legal obligation to serve customers on reasonable request. Legally, it cannot extinguish its common carrier duties without obtaining permission from the STB. For decades, in the era of intense regulation, this could be a difficult process. It could take a railroad years to secure authority to shut down a money-losing line. But after partial deregulation of the industry in 1980, Reagan-era leaders of the agency with smaller-government views streamlined the process. They used the agency's exemption authority to create a categorical exemption from its prior approval requirements for lines that have had no traffic in the past two years. That process is still far from trivial, but it is much simplified versus the difficult, litigation-filled process that prevailed prior to deregulation.

The STB had occasion to revisit many of its fundamental rules in a recent case brought by Indiana landowners against the Indiana Southwestern Railway Co. (ISW) (STB served Jan. 27, 2020). This group of landowners hold property adjacent to a part of the ISW's right of way. Under Indiana law, if a railroad that acquired a right- of- way as an easement for railroad purposes abandons its common carrier duties, the title reverts to the adjacent landowners. So, the landowners asked the STB to issue what they characterized as a declaratory order of abandonment with respect to a 17.2- mile ISW corridor.

The landowners alleged that no trains have moved over the line since 2004 and that ISW removed the track sometime before 2013. They observed that ISW had filed for and received authority to abandon the line in 2010. Critically, though, they conceded that ISW had not exercised the discretionary authority to take the final step, called a consummation of abandonment. Nonetheless, they argued that the line had been de facto abandoned, given all the circumstances.

The STB rejected these arguments. It stated its black- letter law plainly. Its authority over railroad abandonments is "exclusive and plenary." In order for a railroad to relieve itself of its common carrier obligations on a line, it must come to the agency and follow the proper procedures. Either the railroad requests and receives advance authority to abandon, or it exercises its rights under the streamlined exemption process. In either case, there is a formal submission to the agency, the proper steps are followed, and the carrier secures authority to abandon. The grant of authority through either process is purely discretionary. The railroad does not have to exercise that authority. Typically, if not exercised, the authority expires after one year. Once the time to exercise has expired, the railroad must initiate another proceeding if it wishes to abandon.

To exercise that authority, the carrier must submit an unequivocal consummation notice, under which it advises the agency that it has exercised the granted right to abandon. This submission creates an unambiguous regulatory record. It leaves practically no room for debate over whether a line has or has not been abandoned, thus minimizing litigation over the issue in the courts or at the agency. ISW had never filed a consummation notice, so the line was not abandoned.

To be sure, the landowners are not without a regulatory remedy, generally referred to as an adverse abandonment. In such a proceeding, the applicant has a heavy burden to demonstrate that the public convenience and necessity require that the carrier's common carrier rights and obligations be extinguished. An adverse abandonment is, as the Board stated, typically a complex proceeding. It requires public input, statutorily-required environmental and historic reviews, a consideration of the present and future need for rail service on the line, and a decision whether that need is outweighed by other interests. This is a substantially heavier burden than the one that the landowners sought to carry by characterizing their request as a declaratory order of abandonment.

The Board was not sympathetic with the landowners, who had candidly stated in another forum that they had chosen the declaratory order approach in part to avoid the STB's $27,000 filing fee for an adverse abandonment. (Congress has required the STB to assess cost-based filing fees, and the adverse abandonment fee is far from its mandated highest charge.) The STB did, though, hint that if the landowners choose to seek an adverse abandonment, it might waive some requirements – possibly referring to some or all of the filing fee. Whether property owners seeking to secure ownership of 17.2 miles of corridor, with the substantial value which that implies, could make a showing that they deserve to have the filing fee waived is an interesting question.

So, why has ISW not simply abandoned the line? One possible explanation is the fact that it attempted in 2011 to negotiate a "trail use," or "rail banking," arrangement with a local trails organization. Under the National Trails System Act, if a railroad and a trails organization can reach agreement, the line of railroad goes into a rail bank , with the trails organization taking over management of the property for an indefinite period of time. A corridor in rail bank status has not been abandoned, and the property – even if acquired by easement for railroad purposes – does not revert. Rail banking has been done countless times over the decades, and today, many a community enjoys an unbroken public hiking and/or cycling trail that could never have been assembled at any achievable cost but for the "rails to trails" process. ISW may still harbor hopes that a trail arrangement can be negotiated with a community or charitable organization.

The regulatory process a railroad must follow to abandon a rail line has been criticized as excessively bureaucratic and economically unnecessary. Future simplification, or even elimination, of the prior approval requirement may come in an era of increasing deregulation. But this case demonstrates a clear remaining role for the STB as a recorder of unambiguous carrier abandonment consummations.