Railbanking is the act of preserving railroad rights-of-way for possible future use. Railbanking leaves the rail corridor, railbed, bridges or bridge right-of-way, and other infrastructure intact. This relieves the railroad's operator from the responsibility of maintenance, and from taxation. Existing rails may or may not be maintained intact on the railbed, depending on their condition or any planned interim use of the railbed. Often the rail corridor is put in custody of a state transportation agency, which then seeks a new operator for possible rehabilitation or reactivation. This helps ensure the possibility of future restored rail service when new economic conditions may warrant resuming operation.
In the United States
In places with many environmental laws and other governmental regulations as the United States, it is very difficult to restore an abandoned line, but it is easier with a railbanked line than one that has undergone a "total abandonment", as the federal government guarantees the railroad the full rights to reactivate it. A railbanked line can be reopened within a year's time while an abandoned corridor could take years to be reactivated, if it was even possible. In railbanking, the government helps fund the line's rebuild. In the 25-year period from 1983 to 2008, of railroad have been abandoned. Of that, , representing 56.8% of the lines abandoned in the past 25 years, were originally negotiated for railbanking agreements.
Twenty-one percent of those railbanking agreements failed; that is, they were ultimately abandoned. Of those originally negotiated, actually reached a railbanking agreement, representing 35.8% of the lines abandoned during the 25-year period. The remaining 43.2% of the lines, representing , were lines that railroads never considered trying to have railbanked, and were abandoned in their entirety. In total, of the abandoned during the 25-year period were not railbanked (64.2%). Some railroads refuse to railbank lines, and instead sell the land in parcels to the surrounding landowners.
Since railbanking began in 1983, less than twenty railbanked corridors have been approved for reactivation by the Surface Transportation Board (STB). Some of these reactivated corridors had only short sections reactivated, while others had the entire corridor reactivated. Railbanked corridors are usually utilized as multi-use recreational trails for cyclists, walkers, joggers, snowmobiling, cross country skiing, and horseback riding.
The land over which railways pass may have many owners—private, rail operator, or governmental—and, depending on the terms under which it was originally acquired, the type of operating rights may also vary. Without railbanking, on closure, some parts of a railway's route might otherwise revert to the former owner. The owner could reuse them for any purpose, or modify the ground conditions, potentially prejudicing the line's future reuse if required. However, the landowner must agree to keep the infrastructure such as bridges and tunnels intact.
Approximately 85% of the railroad rights-of-way in the United States were acquired by easement from the then-abutting property owners. Normally, when the use for an easement is abandoned, the easement is extinguished and the land is not burdened by this adverse use. In 1983, Congress passed what is now known as the federal Rails-To-Trails law codified as 16 U.S.C. 1247(d). The federal law took the property rights of property owners throughout the United States for rail trails. Several property owners sued the government as the law took property without compensation. In 1990, the United States Supreme Court ruled that the property owners were entitled to compensation for the land taken for these rail trails. In 1996, the plaintiff was awarded $1.5 million as compensation for the land taken for a trail through his property (see Preseault v. U.S., 100 F3d 1525, Fed. Cir. [1996]).