The Working With the Railroads on Rail-Trail Conversions page is intended to help trail planners and advocates become more knowledgeable about rail-trails and better understand the railroad perspective. By increasing your understanding of the concerns and goals railroads are likely to have about rail-trail conversions, trail advocates can put together more effective approaches and increase the likelihood of success in negotiating with railroads for rail-trail projects.

Note that this page is mainly concerned with the negotiations for converting former railroad corridors into trails. For information on establishing trail use along an active railroad right-of-way, visit our Rail-with-Trail page.

Creation of an Industry

The first American railroad, the Baltimore & Ohio (B&O), began construction in 1828, aiming to link eastern cities to opportunities in the west. Over the next 40 years, numerous railroads were established, connecting towns and transporting essential goods like ore, coal, lumber and cotton, fueling the Industrial Revolution and boosting U.S. international trade. By 1869, the transcontinental railroad was completed, marking the start of the Golden Age of railroading, which peaked in 1916 with over 250,000 miles of tracks.

However, this golden era eventually began to decline due to several factors, including the rise of the automobile industry, economic challenges from the Great Depression and the creation of the Interstate Highway System in 1956, which made road transport more efficient and eroded the rail industry’s dominance.

Railbanking: Emergence of an Opportunity

In response to declining profitability, railroads pursued mergers and acquisitions to consolidate and increase efficiency. By 1970, however, the mergers were mostly complete, and the railroads were still struggling. Additionally, declining demand for rail passenger services, exacerbated by competition from cars and airplanes, became financially unsustainable. This led to the formation of Amtrak in 1971, a federal effort to relieve railroads of their passenger service responsibilities and ensure continued passenger rail service across the country. As freight rail use declined, people began to see abandoned rail corridors as ideal for biking and walking, sparking the rail-trail movement.

In 1980, the U.S. rail industry faced severe financial distress, prompting Congress to pass the Staggers Rail Act, which deregulated freight rail pricing and allowed railroads to abandon unprofitable lines more easily, aiding in their recovery. However, this resulted in the abandonment of over 65,000 miles of rail corridors. To address this issue, Congress introduced railbanking through an amendment to the 1983 National Trails System Act, preserving these corridors by converting them into trails. This initiative has successfully created hundreds of rail-trails nationwide.

For more in-depth information about how to railbank a corridor, visit our Railbanking resource.

Reactivation

Under the National Trails System Act, the railroad has the right to reactivate service on a railbanked corridor. The railbanked corridor is in “interim trail use” and is still a preserved railroad corridor.

This brings up an important negotiation point. After purchasing the corridor, the trail sponsor likely intends to spend significant time, effort and money to develop the trail. So what becomes of all that investment if the railroad reinstates service? In some cases, grants are used to pay for the infrastructure and cannot be applied to projects that aren’t considered “permanent.” While there is no simple answer to this question, it should be noted that this is a point of negotiation. The buyer, or trail sponsor, can insist on terms of reactivation. It is recommended that these terms include provisions for not only the fair value of the land at the time of the potential future transfer back to the railroad, but also the value of any capital improvements placed therein.

While there have been several instances of reactivation of corridors under railbanking protection, it is very rare.

Understanding the Railroad’s Perspective

In order to effectively negotiate with a railroad company on a rail-trail project, it’s imperative to understand their perspective and what motivates them. The railroad industry continues to evolve, with a focus on balancing immediate profitability and safety while being mindful of future opportunities. Railroads often prioritize the preservation of their corridors and tracks, which are essential to their operations. As a result, they can be cautious when faced with decisions about repurposing or selling inactive rail lines. Forecasting economic opportunities far into the future is inherently challenging, which sometimes makes maintaining the current state a more attractive option than taking immediate action.

A railroad making a decision to abandon a corridor must consider all of the following questions:

• What has the corridor been used for historically? This can range from coal/rock/ore mines, raw and finished goods from a factory, automobiles, chemicals, long-haul distribution from ports to major cities, or any other number of materials or goods.
• Does the corridor have current customers? If so, the line may be regulated. The Surface Transportation Board may restrict the railroad’s ability to stop serving the customer and enforce “common carrier obligations” dictating that the railroad cannot close, else it would cause detriment to the business.
• What are the economic prospects of the area and the likelihood that rail traffic may be present on the line in the future?
• What is the value of the line in a sale? Does that value represent enough incentive to effectively eliminate future revenue opportunities, such as a new factory locating on the line?

Some railroads will require evidence of financial capability prior to negotiating with a trail sponsor. This can prove quite challenging, given that there is often a reliance on grant funding for trail projects. You can strengthen your credibility by presenting a clear funding strategy. This should include your project timelines, the grants you are pursuing and relevant eligibility details. Additionally, highlight any preparations, partnerships and endorsements—such as letters of support or inclusion in planning documents—that make your applications more competitive. Furthermore, railroads often require environmental testing and soil management methods. Often, a railroad that is aware of, and amenable to, trail sponsor interest will enter into a Purchase and Sale Agreement with the trail sponsor, which outlines these and other conditions prior to ever filing with the STB for abandonment authority.

Understanding Corridor Regulatory Status

When planning a rail-trail project, it’s crucial to understand the regulatory status of a rail corridor to ensure compliance with federal and state laws, streamline negotiations, and identify any limitations that could impact future trail use. Railroads are regulated by the Surface Transportation Board (STB), which superseded the Interstate Commerce Commission (ICC) in 1996. [Note: While the STB regulates economic aspects of the railroad industry, the Federal Railroad Administration (FRA) is primarily concerned with enforcing safety regulations.]

Abandoned, Unregulated, Versus Unused … How Do I Know the Difference?

Determining the status is the first step in a rail-trail conversion, but even for seasoned railroaders, the task of simply looking at a rail corridor and knowing its regulatory status is a complex task. Tracks can be removed unknowingly, giving the indication of abandonment on a line that has not actually been abandoned. Corridors may be very active, yet may never have been regulated in the eyes of the STB. There are even corridors with active trails that are covering the tracks of what are considered fully-regulated, active corridors in the Federal Railroad Administration’s database.

For more information on determining the status of a corridor, visit the Corridor Research page.

Get notified of abandonments in your state. Sign up for RTC’s Early Warning System.

Approaching the Railroad

Balancing Passion With Pragmatism

While potential trail sponsors may be passionate about transforming their community into a walkable, bike-friendly place, it’s important to recognize that these benefits may not directly align with the priorities of the railroad. In some cases, removing the tracks and converting a rail corridor to a multiuse trail can limit the railroad’s ability to capitalize on future business opportunities. Even rail-with-trail projects, while allowing the tracks to remain, may impact long-term revenue, as they often lead to the redevelopment of historically industrial areas into commercial or residential zones.

However, there is a potential benefit to railroads through railbanking. This process allows rail corridors to be preserved for future railroad use while being repurposed as trails in the meantime. Should the railroad need the corridor in the future, the right-of-way can be reactivated, providing flexibility and maintaining the option for future rail operations.

Given these considerations, it can sometimes be challenging to encourage railroads to support rail-trail conversions. This is not meant to discourage planners, trail sponsors and advocates from pursuing their vision, but rather to illustrate the potential obstacles and emphasize the importance of thorough preparation before engaging with the railroad on such projects.

Do Your Research

Before approaching the railroad, take time to become knowledgeable about the railroad company’s history and current state of operations. Start with their website. Some railroads have dedicated sections of their websites or FAQs directed at those interested in rail-trail conversions. Contacts, financial information, system maps, valuation maps, operating statistics and more can be accessed on most websites.

Learning from other trail managers who have dealt with the same railroad company is a great way to find good contacts within the railroad. Use RTC’s TrailNation™ Collaborative Facebook page to connect with other trail managers across the country.

Understanding Property Rights

Railroads may have complex ownership rights. In legal terms, the “bundle of rights” refers to all the rights associated with property ownership. For example, does the railroad have title to the property in “fee-simple” (i.e., does it own it outright), allowing it to grant easements and other agreements over the property? Are there adjacent property reversionary clauses? Are there easements reserved to the original grantor, perhaps for a cattle crossing or other access? In many cases, railroads have granted easements to utility companies for water, power, sewer and fiber optic crossings. Sometimes, these agreements may even be stretching for miles through the corridor.

Have a competent title attorney perform title research and a title commitment, even if the trail may be transferred under a railbanking agreement. A title search confirms the seller’s legal ownership and ensures there are no problems that could impact the property’s transfer. A title commitment alerts buyers, lenders and other parties to any issues that may affect the title or limit how the property can be used.

Environmental Issues

Railroad corridors, due to their industrial nature, often have environmental impacts. These can be caused by derailments, spills, use of defoliants, dumping by trespassers, etc. A prudent buyer should insist on some level of environmental testing prior to purchasing a corridor. Read more on the types of environmental contamination and how to conduct due diligence on our Environmental Contaminants page.

Preparing for the Initial Call With the Railroad

Prior to contacting a railroad, a trail sponsor should try to gather a team, understand the local political appetite and identify potential sources of funding. Negotiations with the railroad will differ, depending on the nature of the property, and the options and interests of the railroad.

The initial call to the railroad should be well thought out, with the sponsor prepared to answer several questions:

1. What are the physical boundaries of the corridor of interest? Answering this question can be as simple as between Street “A” and Street “B” in City, State, etc. However, it is helpful to learn to speak some of the railroad’s language. Railroads use mileposts, and each rail segment has a unique prefix, typically two or three letters long, followed by a numerical value. Beginning at the “turnout” (the point where the rail connects to another rail line), this is typically denoted as mile 0.0, continuing to the end of the line. Determining the milepost prefix and area in question will help to identify the regulatory status and give high-level information with respect to train traffic. You can find milepost details through the Federal Railroad Administration’s Crossing Inventory.
2. Who should be responsible for communications with the railroad on behalf of the trail sponsor? This can be one of a wide variety of individuals, such as a local politician or a person representing an economic development authority trail advocacy group. As a general rule, it is best to appoint a single contact that has the time and professional skillset to manage a multiyear project. A local mayor or state representative is likely to already have relationships within the railroad, and casual discussion initially is encouraged to get a feel for the railroad’s position. However, it is not advisable to escalate matters politically without knowing whether it is necessary. Such moves can often have detrimental effects and cause both sides to become entrenched in their position.
3. Why should the railroad consider this transaction? Typically, the answer to this is financially motivated. Perhaps there are no existing customers on the rail line, and the opportunity for future rail business is minimal. Offering to purchase the corridor may be the last chance to make money off an otherwise depleted asset. However, there are cases in which appeals to corporate stewardship, political goodwill, land swaps and other motivations have influenced a railroad’s decision to part with assets.
4. What is the timeline for this project? While some railroads are willing to enter into long-term discussions about corridors in highly-urbanized areas that have high value, the cap on negotiations at four years leads railroads to ask: “Is this the right time and the right trail sponsor?” Demonstration of a willingness to act quickly, identify funding sources and commit to the railroad’s requirements improve the chances of successfully catching the attention of the real estate department.
5. Is there an entity willing to take possession of the corridor and indemnify the railroad as required? Local governments often have issues with language agreeing to “indemnify” or “hold harmless.” Sometimes prohibition of such language is included in local governmental ordinances or state constitutions. Forming an organization can take time, so plan accordingly.
6. What is the current regulatory status of the corridor? The STB can help clarify this. 

Contacting the Railroad

Once you are armed with answers to the above questions, it’s time to contact the railroad.

The initial call should be brief but demonstrate a willingness to take the regulatory steps as well as probe for motivations of the railroad that can be helpful during negotiations. Be professional, respectful and curious. Approach the conversation as a collaborative inquiry, expressing genuine interest in understanding the railroad’s perspective and priorities.

Navigating through the corporate structure to find a representative who is willing to discuss rail-trail acquisition and development may be difficult. Large rail companies like Class I and II railroads own and manage vast amounts of land across the United States and don’t always know the full realm of the properties they own. Class I railroads often have dedicated real estate teams, but Class II railroads may not. Railroads get many requests to sell property, and rejecting these requests is often the easiest option, especially if a deal seems unlikely or too time-consuming. It’s not out of ill will—it’s just business. Railroads make very little of their income from real estate sales, so don’t be surprised if your interest in acquiring a corridor isn’t their top priority. Don’t let this discourage you! Be persistent and contact other trail managers to learn more about successfully negotiating with the railroad. Use your network to see if there is someone with a personal connection at the railroad.

If repeated attempts to contact the railroad go unanswered, don’t be discouraged. You may need to just change tactics. Elected officials can sometimes facilitate meetings by using their networks and influence. Request that they reach out on your behalf or arrange a meeting with key railroad representatives.

Regional and short line railroads (Class II and Class III) may be easier to contact since they are much smaller companies that usually have local offices. Search the American Short Line and Regional Railroad Association’s directory of members for local contact information.

Real Estate Department

Start with the real estate department if the railroad in control of the corridor has one. They can answer questions regarding operations over the line and real estate title (who owns what), and will be able to give a fairly quick position as to whether or not they are open to considering a transaction. In some cases, the railroad may be willing to share “valuation maps” or “valmaps.” These are surveys that the railroad has conducted and often show a vast array of information, including boundaries of the parcels, agreements impacting the corridor, and things like bridges and tunnels. (You can also obtain valuation maps from the National Archives).

If there is no dedicated real estate team, you may be able to contact other departments. Below is a description of each department and what they can do to help you.

Asset Management or Strategic Planning Department

This department is responsible for continuously evaluating the profitability of all the rail corridors in a railroad system. They decide how to dispose of the property, if needed. You can request system diagram maps from this department.

Operations Department

This department schedules and operates trains, and maintains the rolling stock and track. Operating personnel often have a deep understanding of the corridor. If you know someone in this department, ask them for information about the corridor, such as the condition of existing structures, any drainage issues and other maintenance problems. The regional manager may also be able to assist with arranging a tour of the corridor.

Legal Department

This department evaluates contracts and issues opinions on labor, government and business-relations matters. The legal department also submits filings to the Surface Transportation Board. The legal department can furnish copies of abandonment applications, notices and other legal documents and is sometimes the most receptive to rail-trail negotiations.

Public Affairs Department

This department monitors state and local politics that may affect the railroad via attorneys that are assigned to a region or state. A public affairs representative may be more than willing to assist on high-profile, widely supported projects. They can also act as a liaison between departments.

Once you have established a relationship with the railroad, your negotiations may lead to a preliminary agreement for gaining site control, setting a purchase price and establishing an acquisition process and timeline. Acquiring Rail Corridors: A How To Manual will help guide you through the process and provide tips on negotiating with the railroad.

Navigating Common Issues in Negotiations

Valuation

Many trail deals fall victim to failed negotiations because the two sides simply cannot agree on a price. Sponsors and advocates, understandably, are dealing with limited funding, while on the other hand, the railroad wants to be compensated for its land rights, given that conversion to a trail limits long-term business opportunities.

The two primary means of valuing an intact corridor (think of one covered by NITU/CITU, or owned in fee-simple) are corridor factor valuation (ATF x CF = Value) and Net Liquidation Value (NLV). Note that these methodologies are different from traditional real-estate parcel appraisals, and corridor appraisers hold a unique skillset.

Learn more about corridor valuation methods on our toolbox page.  

It is recommended that during the initial call with the railroad, questions are raised about valuation. How will the railroad value the corridor? Do they require an appraisal? Does the trail organization require an appraisal (typically, yes)? Can an agreement be reached to agree to a scope and methodology for the appraisal in advance? Often, negotiations fall apart because the two sides have both procured an appraisal from different appraisers and the values were determined, unsurprisingly, to be different! This is not uncommon across any segment of the real estate industry because, after all, appraisals are simply opinions of value.

Railroad negotiations are often seen as intimidating. They don’t need to be. Armed with some high-level information, a trail sponsor can be prepared to deal with obstacles and plan accordingly.

Resources

‣ Webinar – Working with Railroads Part 1: Productive Partnerships for Successful Projects

‣ Webinar – Working with Railroads Part 2: RTC Expert Q&A

‣ Manual – Acquiring Rail Corridors: A How-To Manual 

‣ Manual – Secrets of Successful Rail-Trails 

‣ Fact Sheet – Who Actually Owns the Right-of-Way?