Page 59 - FDI Alliance International Magazine | September 2018 1

ally resulting in better rates and service. An entire because it is not subject to the jurisdiction of the STB occur when the line is at risk of being abandoned.
project can sink or swim depending on access to at that point. A careful review of STB and business There are other situations due to certain laws enact-
rail service. As a result, it is important to understand records related to the line is advisable at the earliest ed in the 1970s where a special court must approve
the STB regulatory landscape required to enter the stages of a proposed development project to estab- these types of rail transactions. Once again, it is im-
freight rail world before proceeding with a project lish whether the line has been abandoned. portant to inspect the records related to the line to
involving rail service. determine if any of these exemptions or special laws
If a line is not abandoned and is still subject to the are applicable.
It is extremely important to understand the jurisdiction of the STB, a developer would need ap-
complex STB regulatory requirements be- proval to purchase the line from the existing owner. If Moreover, some rail lines have been turned into trails
fore beginning a project involving rail service. the developer already owns a line, it might still need in accordance with federal law. These rail trails are
The STB has numerous prerequisites that a developer approval to operate the line or have a contracting technically railbanked and can be reactivated if there
must comply with before beginning to operate or pur- railroad operate it. Once again, a careful review of is a need for common carrier rail service. However, if
chase a rail line for a project. Without proper authority records is called for to determine a line’s status. the line was abandoned and then made into a trail,
from the STB, a developer risks having the rail portion of a developer has no regulatory right to reactivate ser-
a development project dismantled. Also, it is important to determine what type of rail vice and must then rely on the market to purchase
First, with respect to these STB prerequisites, a devel- trackage is involved in a project. The line at issue the line.
oper should know the status of a rail line involved in may be considered an active rail line, an exempt
a project, which can make a difference in how one type of track (like switching or siding track), or pri- As noted, rail service can be the key to a successful
should file at the STB. A rail line can be an active vate track. Transactions involving private and exempt economic development project. Having the ability
piece of railroad subject to the jurisdiction of the STB track do not require approval from the STB; how- to connect to such a powerful transportation source
or an abandoned line no longer subject to regula- ever, as discussed above, operating an active rail greatly increases the value of any development site,
tion. If one wants to reactivate a rail line that has been line does require different types of STB approval, to and from which products will be moved around
dormant to serve shippers, abandoned or not, one depending on the situation. the country or world. However, it is important to un-
would have to get approval from the Board. If a line derstand the complex regulatory requirements at the
is abandoned, the developer would need approval In addition, the STB can exempt lines from regula- STB when buying or operating a rail line. By seeking
to provide service on a line or to construct the line if tion in certain circumstances, like where a state entity appropriate advice before entering into a transaction
the track has been removed. A developer would not buys a line from a railroad to maintain rail service in of such great importance, a community or develop-
need approval to buy the line if it was abandoned, the area or where a railroad buys a line and is ex- er can avoid many of the pitfalls of project develop-
empted from regulation. Usually, these types of sales ment in the regulated rail industry.

FDI ALLIANCE | SEPTEMBER ISSUE 2018 59