---
kind: "section"
citation: "49 U.S.C. § 10904"
title: "49"
title_heading: "Transportation"
number: "10904"
heading: "Offers of financial assistance to avoid abandonment and discontinuance"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/49/10904"
units:
  - "Subtitle IV — Interstate Transportation"
  - "Part A — Rail"
  - "Chapter 109 — Licensing"
---

# §10904. Offers of financial assistance to avoid abandonment and discontinuance

- (a) In this section—
  - (1) the term “avoidable cost” means all expenses that would be incurred by a [rail carrier](/usc/49/10102.md?p=5) in providing [transportation](/usc/49/10102.md?p=9) that would not be incurred if the [railroad](/usc/49/10102.md?p=6) line over which the [transportation](/usc/49/10102.md?p=9) was provided were abandoned or if the [transportation](/usc/49/10102.md?p=9) were discontinued. Expenses include cash inflows foregone and cash outflows incurred by the [rail carrier](/usc/49/10102.md?p=5) as a result of not abandoning or discontinuing the [transportation](/usc/49/10102.md?p=9). 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](/usc/49/10102.md?p=8) income taxes; and
  - (2) the term “reasonable return” means—
    - (A) if a [rail carrier](/usc/49/10102.md?p=5) is not in reorganization, the cost of capital to the [rail carrier](/usc/49/10102.md?p=5), as determined by the [Board](/usc/49/10102.md?p=1); and
    - (B) if a [rail carrier](/usc/49/10102.md?p=5) is in reorganization, the mean cost of capital of [rail carriers](/usc/49/10102.md?p=5) not in reorganization, as determined by the [Board](/usc/49/10102.md?p=1).
- (b) Any [rail carrier](/usc/49/10102.md?p=5) which has filed an application for abandonment or discontinuance shall provide promptly to a party considering an offer of financial assistance and shall provide concurrently to the [Board](/usc/49/10102.md?p=1)—
  - (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](/usc/49/10102.md?p=6) 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](/usc/49/10102.md?p=9) over that part of the [railroad](/usc/49/10102.md?p=6) line; and
  - (4) any other information that the [Board](/usc/49/10102.md?p=1) considers necessary to allow a potential offeror to calculate an adequate subsidy or purchase offer.
- (c) Within 4 months after an application is filed under [section 10903](/usc/49/10903.md), any [person](/usc/49/13102.md?p=18) may offer to subsidize or purchase the [railroad](/usc/49/10102.md?p=6) line that is the subject of such application. Such offer shall be filed concurrently with the [Board](/usc/49/10102.md?p=1). If the offer to subsidize or purchase is less than the [carrier](/usc/49/13102.md?p=3)’s estimate stated pursuant to [subsection (b)(1)](#b-1), the offer shall explain the basis of the disparity, and the manner in which the offer is calculated.
- (d)
  - (1) Unless the [Board](/usc/49/10102.md?p=1), within 15 days after the expiration of the 4-month period described in [subsection (c)](#c), finds that one or more financially responsible [persons](/usc/49/13102.md?p=18) (including a governmental authority) have offered financial assistance regarding that part of the [railroad](/usc/49/10102.md?p=6) line to be abandoned or over which all rail [transportation](/usc/49/10102.md?p=9) is to be discontinued, abandonment or discontinuance may be carried out in accordance with section 10903.
  - (2) If the [Board](/usc/49/10102.md?p=1) finds that such an offer or offers of financial assistance has been made within such period, abandonment or discontinuance shall be postponed until—
    - (A) the [carrier](/usc/49/13102.md?p=3) and a financially responsible [person](/usc/49/13102.md?p=18) have reached agreement on a transaction for subsidy or sale of the line; or
    - (B) the conditions and amount of compensation are established under [subsection (f)](#f).
- (e) Except as provided in [subsection (f)(3)](#f-3), if the [rail carrier](/usc/49/10102.md?p=5) and a financially responsible [person](/usc/49/13102.md?p=18) (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 [Board](/usc/49/10102.md?p=1) establish the conditions and amount of compensation.
- (f)
  - (1) Whenever the [Board](/usc/49/10102.md?p=1) is requested to establish the conditions and amount of compensation under this section—
    - (A) the [Board](/usc/49/10102.md?p=1) shall render its decision within 30 days;
    - (B) for proposed sales, the [Board](/usc/49/10102.md?p=1) shall determine the price and other terms of sale, except that in no case shall the [Board](/usc/49/10102.md?p=1) 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](/usc/49/10102.md?p=9) services); and
    - (C) for proposed subsidies, the [Board](/usc/49/10102.md?p=1) shall establish the compensation as the difference between the revenues attributable to that part of the [railroad](/usc/49/10102.md?p=6) line and the avoidable cost of providing rail freight [transportation](/usc/49/10102.md?p=9) on the line, plus a reasonable return on the value of the line.
  - (2) The decision of the [Board](/usc/49/10102.md?p=1) shall be binding on both parties, except that the [person](/usc/49/13102.md?p=18) who has offered to subsidize or purchase the line may withdraw his offer within 10 days of the [Board](/usc/49/10102.md?p=1)’s decision. In such a case, the abandonment or discontinuance may be carried out immediately, unless other offers are being considered pursuant to paragraph (3) of this subsection.
  - (3) If a [rail carrier](/usc/49/10102.md?p=5) receives more than one offer to subsidize or purchase, it shall select the offeror with whom it wishes to transact business, and complete the subsidy or sale agreement, or request that the [Board](/usc/49/10102.md?p=1) establish the conditions and amount of compensation before the 40th day after the expiration of the 4-month period described in [subsection (c)](#c). If no agreement on subsidy or sale is reached within such 40-day period and the [Board](/usc/49/10102.md?p=1) has not been requested to establish the conditions and amount of compensation, any other offeror whose offer was made within the 4-month period described in [subsection (c)](#c) may request that the [Board](/usc/49/10102.md?p=1) establish the conditions and amount of compensation. If the [Board](/usc/49/10102.md?p=1) has established the conditions and amount of compensation, and the original offer has been withdrawn, any other offeror whose offer was made within the 4-month period described in [subsection (c)](#c) may accept the [Board](/usc/49/10102.md?p=1)’s decision within 20 days after such decision, and the [Board](/usc/49/10102.md?p=1) shall require the [carrier](/usc/49/13102.md?p=3) to enter into a subsidy or sale agreement with such offeror, if such subsidy or sale agreement incorporates the [Board](/usc/49/10102.md?p=1)’s decision.
  - (4)
    - (A) 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 [rail carrier](/usc/49/10102.md?p=5) from whom it was purchased, prior to the end of the fifth year after consummation of the sale.
    - (B) No subsidy arrangement approved under this section shall remain in effect for more than one year, unless otherwise mutually agreed by the parties.
- (g) Upon abandonment of a [railroad](/usc/49/10102.md?p=6) line under this chapter, the obligation of the [rail carrier](/usc/49/10102.md?p=5) abandoning the line to provide [transportation](/usc/49/10102.md?p=9) on that line, as required by [section 11101(a)](/usc/49/11101.md?p=a), is extinguished.

## Source credit

(Added Pub. L. 104–88, title I, § 102(a), Dec. 29, 1995, 109 Stat. 825.)

## Notes

### Editorial Notes

### Prior Provisions

Provisions similar to those in this section were contained in section 10905 of this title prior to the general amendment of this subtitle by Pub. L. 104–88, § 102(a).

A prior section 10904, Pub. L. 95–473, Oct. 17, 1978, 92 Stat. 1404; Pub. L. 96–448, title IV, § 402(b), Oct. 14, 1980, 94 Stat. 1941; Pub. L. 98–216, § 2(4), Feb. 14, 1984, 98 Stat. 5, related to filing and procedure for applications to abandon or discontinue railroad lines or rail transportation, prior to the general amendment of this subtitle by Pub. L. 104–88, § 102(a). See section 10903 of this title.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective Jan. 1, 1996, except as otherwise provided in Pub. L. 104–88, see section 2 of Pub. L. 104–88, set out as a note under section 1301 of this title.