During the past 40 years, freight railroad operators in the U.S. have dedicated nearly $740 billion to capital expenditures and maintenance. Scheduled facility or infrastructure upgrades offer a wealth of opportunities for railroad operators, including ways to reduce liabilities, generate revenue, improve community relations and enhance the natural environment.
One such set of opportunities is decommissioning and demolishing old buildings, typically built on land leased to private businesses. This can be a great way to improve safety and deliver positive environmental and financial outcomes.
Transforming Liabilities Into Assets
Railroad companies typically own the land under the rail lines they operate and sometimes own the land adjacent to their main corridor. Adjacent land owned by the railroad operator was generally leased to private companies, government agencies or private citizens that required access to the rail lines. If the railroad company owns old facilities or dilapidated tracks, it is the railroad company’s responsibility — and in its interest — to decommission or demolish the unused structures.
Private businesses working on land leased from the railroad company are required to decommission and demolish old facilities they no longer use — but follow-through is not guaranteed. A business that goes bankrupt might leave a derelict building or structure on the leased land.
When no one is maintaining old buildings and structures near railroad tracks, environmental and structural integrity issues may ensue. These old structures could contain asbestos, lead-based paint or polychlorinated biphenyls (PCBs), a highly toxic chemical used in coolant fluids until the U.S. government banned it in 1978. If these contaminants are not properly addressed, a release could occur, creating liabilities for the railroad company.
These structures and sites with safety and environmental concerns could be turned into assets if these properties could be reused for new rail operations or other businesses. Also, regardless of who owned a structure, the railroad company now has an opportunity to free up space and build structures more compatible with rail operations.
Strategies to Remove Unused Structures
Decommissioning and demolition are typically considered capital expenditures with no immediate return on investment. Due to this short-term financial impact, it is desirable to develop a cost-effective strategy before decommissioning or demolishing these facilities.
Railroad companies considering a decommissioning and demolition project should be aware of some important steps:
- Identify structures and properties that legacy leaseholders aren’t operating but have left on land owned by the railroad company. Also, take this opportunity to identify old yard tracks and support facilities that are owned by the railroad company but are no longer in use.
- Identify the age of unused or decrepit structures. This is an important step to identify other issues, such as the likely presence of asbestos or lead-based paint.
- Investigate and quantify potential environmental and safety issues, such as unmanaged asbestos.
- Assess the integrity of each structure. This can help prioritize which structure needs to be demolished first due to safety concerns. Some structures may be able to stand for a couple more years.
- Work with the demolition consultant and review potential impacts to rail traffic and yard operations, as well as estimated project costs and schedule.
Many of these steps will be managed by the demolition team, but railroad companies should be aware of what the project will entail. The railroad operator and demolition team can develop a strategy to prioritize projects, but community relations also should factor into prioritizing which structures are demolished first.
A Brighter Future for Forgotten Land
Even though the railroad operator owns the deed to the land, public opinions may vary about what should be demolished first and what should be created in its place. Removing an old grain silo that is an eyesore for the community might be a higher priority for elected officials, even though a rail operator might prefer removing old tracks before addressing the unused grain silo. Put simply, political realities can affect prioritization.
When structures are decommissioned and demolished, new opportunities emerge for the rail operator and the community. Developing a rail-served master plan can be a meaningful step to envision a new future for the land. During this step, the railroad operator, elected officials and economic development professionals can assess the needs of all stakeholders. After decommissioning and demolition are complete, the available land could be turned into a transload facility, rail-served industrial park, intermodal facility or distribution center. These options can spark long-term economic growth for the railroad operator and the community.
Decommissioning and demolishing a facility is a significant decision and a complex process. For railroad operators, decommissioning and demolition projects are first and foremost an opportunity to reduce liabilities and minimize environmental risks. Each project will have unique needs, but these projects also provide new opportunities. By reframing these projects, railroad operators who demolish or decommission blighted structures can envision and support new tenants or facilities that better align with their objectives.
Improving or building new freight and transit rail infrastructure requires additional steps beyond infrastructure design and construction. Learn how we help rail owners manage route selection, permitting, improving railroad crossing safety and environmental remediation.
