(1) The executive director of the department of transportation, or his or her designee, is authorized to:

(a) Accept the donation of an abandoned railroad right-of-way from a railroad company to the state;

(b) Determine if the abandoned railroad rights-of-way to be donated by railroad companies should be accepted and the method of the conveyance;

(c) Allow the use of the railroad right-of-way for any public purpose; except that, if such use is incompatible with the operation of a freight or passenger rail service as determined by the director, the use incompatible with rail service shall cease when rail service commences.

(2) The executive director may, as soon as is practicable, sell, trade, or otherwise convey railroad rights-of-ways obtained pursuant to subsection (1) of this section to an individual, firm, corporation, partnership, association, or other legal entity that has been found by the executive director to be qualified to operate a freight or passenger rail service.

(3) Upon the sale of the railroad right-of-way to an individual, firm, corporation, partnership, association, or other legal entity that has been found by the executive director to be capable of operating a freight or passenger rail service, the executive director shall deposit the proceeds of the sale in the state rail bank fund created in section 43-1-1309.

(4) For purposes of this section, "abandoned railroad right-of-way" means any real property or interest in real property that is or has been owned and operated by a railroad company for rail service upon which the surface transportation board or other responsible federal agency has permitted discontinuance of service and disposal of the real property or interest in the real property. "Abandoned railroad right-of-way" includes any fixtures to the real property, including railroad tracks, that are used or useable in rail service.