§10905. Offers of financial assistance to avoid abandonment and discontinuance

(a) In this section-

(1) "avoidable cost" means all expenses that would be incurred by a rail carrier in providing transportation that would not be incurred if the railroad line over which the transportation was provided were abandoned or if the transportation were discontinued. Expenses include cash inflows foregone and cash outflows incurred by the rail carrier as a result of not abandoning or discontinuing the transportation. Cash inflows foregone and cash outflows incurred include-

(A) working capital and required capital expenditure;

(B) expenditures to eliminate deferred maintenance;

(C) the current cost of freight cars, locomotives, and other equipment; and

(D) the foregone tax benefits from not retiring properties from rail service and other effects of applicable Federal and State income taxes.

(2) "reasonable return" means-

(A) if a rail carrier is not in reorganization, the cost of capital to the rail carrier, as determined by the Interstate Commerce Commission; and

(B) if a rail carrier is in reorganization, the mean cost of capital of rail carriers not in reorganization, as determined by the Commission.

(b) Any rail carrier which has filed an application for a certificate of abandonment or discontinuance shall provide promptly to a party considering an offer of financial assistance and shall provide concurrently to the Commission-

(1) an estimate of the annual subsidy and minimum purchase price required to keep the line or a portion of the line in operation;

(2) its most recent reports on the physical condition of that part of the railroad line involved in the proposed abandonment or discontinuance;

(3) traffic, revenue, and other data necessary to determine the amount of annual financial assistance which would be required to continue rail transportation over that part of the railroad line; and

(4) any other information that the Commission may deem necessary to allow a potential offeror to calculate an adequate subsidy or purchase offer.

(c) When the Commission finds under section 10903 of this title that the public convenience and necessity require or permit abandonment or discontinuance of a particular railroad line, it shall, concurrently with service of the decision upon the parties, publish the finding in the Federal Register. Within 10 days following the publication, any person may offer to pay the carrier a subsidy or offer to purchase the line. Such offer shall be filed concurrently with the Commission. If the offer to subsidize or purchase the line is less than the carrier's estimate provided under subsection (b)(1) of this section, the offer shall explain the basis of the disparity, and the manner in which the offer of subsidy or purchase is calculated.

(d) If, within 15 days after the publication required in subsection (c) of this section, the Commission finds that-

(1) a financially responsible person (including a governmental authority) has offered financial assistance to enable the rail transportation to be continued over that part of the railroad line to be abandoned or over which all rail transportation is to be discontinued; and

(2) it is likely that the assistance would be equal to-

(A) the difference between the revenues attributable to that part of the railroad line and the avoidable cost of providing rail freight transportation on the line, plus a reasonable return on the value of the line; or

(B) the acquisition cost of that part of the railroad line;

the Commission shall postpone the issuance of a certificate authorizing abandonment or discontinuance in accordance with subsections (e) and (f) of this section.

(e) If the carrier and a person offering financial assistance enter into an agreement which will provide continued rail service, the Commission shall postpone the issuance of the certificate for so long as the agreement, or an extension or modification of the agreement, is in effect. If the carrier and a person offering to purchase a line enter into an agreement which will provide continued rail service, the Commission shall approve the transaction and dismiss the application for abandonment or discontinuance. If the carrier and a financially responsible person (including a governmental authority) fail to agree on the amount or terms of the subsidy or purchase, either party may, within 30 days after the offer is made, request that the Commission establish the conditions and amount of compensation. If no agreement is reached within 30 days after the offer is made and neither party requests that the Commission establish the conditions and amount of compensation during that same period, the Commission shall immediately issue a certificate authorizing the abandonment or discontinuance.

(f)(1) Whenever the Commission is requested to establish the conditions and amount of compensation under this section-

(A) the Commission shall render its decision within 60 days;

(B) where subsidy has been offered, the Commission shall determine the amount and terms of subsidy based on the avoidable cost of providing continued rail transportation, plus a reasonable return on the value of the line; and

(C) where an offer of purchase has been made in order to continue rail service on the line, the Commission shall determine the price and other terms of sale. In no case shall the Commission set a price which is below the fair market value of the line (including, unless otherwise mutually agreed, all facilities on the line or portion necessary to provide effective transportation services).

(2) The decision of the Commission shall be binding on both parties, except that the person who has offered to subsidize or purchase the line may withdraw his offer within 10 days of the Commission's decision. In such a case, the Commission shall immediately issue a certificate authorizing the abandonment or discontinuance, unless other offers are being considered pursuant to paragraph (3) of this subsection.

(3) If a carrier receives more than one offer to purchase or subsidize, it shall select the offeror with whom it wishes to transact business, and complete the sale or subsidy agreement, or request that the Commission establish the conditions and amount of compensation prior to the 40th day after the date on which notice was published under subsection (c) of this section. If no agreement on subsidy or sale is reached within the 40-day period and the Commission has not been requested to establish the conditions and amount of compensation, any other offeror may request that the Commission establish the conditions and amount of compensation. If the Commission has established the conditions and amount of compensation and the original offer has been withdrawn, any other offeror may accept the Commission's decision within 20 days of such decision, and the Commission shall require the carrier to enter into a sale or subsidy agreement with such offeror, if such sale or agreement incorporates the Commission's decision.

(4) No purchaser of a line or portion of line sold under this section may transfer or discontinue service on such line prior to the end of the second year after consummation of the sale, nor may such purchaser transfer such line, except to the carrier from whom it was purchased, prior to the end of the fifth year after consummation of the sale.

(5) Any subsidy provided under this section may be discontinued on notice of 60 days. Unless, within such 60-day period, another financially responsible party enters into a subsidy agreement at least as beneficial to the carrier as that which was or was to be discontinued, the Commission shall, at the carrier's request, immediately issue a certificate authorizing the abandonment or discontinuance of service on the line.

( Pub. L. 95–473, Oct. 17, 1978, 92 Stat. 1405 ; Pub. L. 96–448, title IV, §402(c), Oct. 14, 1980, 94 Stat. 1942 ; Pub. L. 103–272, §4(j)(26), July 5, 1994, 108 Stat. 1369 .)

Historical and Revision Notes
Pub. L. 95–473

Revised Section	Source (U.S. Code)	Source (Statutes at Large)
10905(a)	49:1a(11).	Feb. 4, 1887, ch. 104, 24 Stat. 379 , §1a(6), (7), (11); added Feb. 5, 1976, Pub. L. 94–210, §§802, 809(c), 90 Stat. 129 , 130, 146.
10905(b)	49:1a(6)(a), (7).
10905(c)	49:1a(6)(b).

In the section, the word "transportation" is substituted in each place for "service" for consistency and as being more precise because the jurisdictional grant to the Interstate Commerce Commission under subchapter I of chapter 105 of the revised title is over transportation.

In subsection (a)(1), the words "in the case of discontinuance" and "in the case of abandonment" are omitted as unnecessary.

In subsection (a)(2), the words "rail carrier" are substituted for "railroad" as being more appropriate and for consistency.

In subsections (b) and (c), the phrase "part of the railroad line" is used as being more precise.

In the introductory matter of subsection (b), before clause (1), the words "present or future public convenience and necessity require or permit" are substituted for "public convenience and necessity permit" for consistency with section 10903(a) of the revised title.

In subsection (b)(1), the phrase "(in the form of a rail service continuation payment)" is omitted as unnecessary.

In subsection (b)(2), the words "be equal to" are substituted for "cover" for clarity. The word "freight" is omitted for consistency with sections 10903 and 10904 and the remainder of section 10905 of the revised title.

In subsection (b), after clause (2), the words "binding" and "an assistance or acquisition and operating" are omitted as unnecessary. The words "governmental authority" is substituted for "governmental entity" for consistency.

Pub. L. 103–272

Section 4(j)(26) and (27)(A) amends 49:10905(d)(1) and (e) and 10910(a)(1) by substituting "governmental authority" for "government authority" for consistency in the revised title.

Amendments

1994-Subsecs. (d)(1), (e). Pub. L. 103–272 substituted "governmental authority" for "government authority".

1980-Subsec. (a). Pub. L. 96–448 reenacted subsec. (a) without change.

Subsec. (b). Pub. L. 96–448 substituted provision directing any rail carrier which has filed an application for a certificate of abandonment or discontinuance to provide a party considering an offer of financial assistance and the Commission with specific items of information necessary to allow the potential offeror to calculate an adequate subsidy and purchase offer for provision directing the Commission, when it finds under section 10903 of this title that the present or future public convenience and necessity require or permit abandonment or discontinuance, to publish the finding in the Federal Register and if, within 30 days after the publication, the Commission finds that a financially responsible person, including a governmental authority, has offered financial assistance and it is likely that the assistance would be equal to the difference between the revenues attributable to that part of the railroad line and the avoidable cost of providing rail freight transportation on the line, plus a reasonable return on the value of the line, or the acquisition cost of that part of the line, the Commission postpone the issuance of the certificate authorizing abandonment or discontinuance for a reasonable time, not to exceed 6 months, to enable the person or governmental authority to enter into an agreement with the rail carrier to provide assistance or to buy that part of the railroad line and to continue to provide rail transportation over the line, and upon notice that such an agreement has been entered, to postpone issuance of the certificate as long as the agreement, or an extension or modification of the agreement, is in effect. See subsecs. (c) to (e) of this section.

Subsec. (c). Pub. L. 96–448 substituted provision directing the Commission, when it finds under section 10903 of this title that the public convenience and necessity require or permit abandonment or discontinuance of a rail line, to, concurrently with service of the decision on the parties, publish the finding in the Federal Register and permitting any person, within 10 days following publication, to offer to pay the carrier a subsidy or offer to buy the line, which offer is to be filed concurrently with the Commission and is to explain, if it is less than the carrier's estimate provided under subsec. (b) of this section, the basis of the disparity and the manner in which the subsidy or purchase is calculated for provision directing a rail carrier to provide a party considering offering financial assistance its most recent reports on the physical condition of that part of the rail line involved in the proposed abandonment or discontinuance and traffic, revenue, and other data necessary to determine the amount of financial assistance required to continue rail transportation over that part of the railroad line. See subsec. (b) of this section.

Subsecs. (d) to (f). Pub. L. 96–448 added subsecs. (d) to (f).

Effective Date of 1980 Amendment

Amendment by Pub. L. 96–448 effective Oct. 1, 1980, see section 710(a) of Pub. L. 96–448, set out as a note under section 10101 of this title.

Section Referred to in Other Sections

This section is referred to in sections 10362, 10903, 10904, 10907, 11505, 11702, 11901 of this title; title 45 section 748.