(The following story by Lindsay Peterson appeared on The Tampa Tribune website on February 7.)
TALLAHASSEE, Fla. — A new catch emerged Wednesday in the state’s nearly half-billion-dollar deal with CSX Transportation.
A spokesman for state Chief Financial Officer Alex Sink said she opposes the liability agreement between the state Department of Transportation and CSX railroad. Without it, the deal can’t go through.
The agreement would protect CSX from liability in any accidents on a commuter line that is part of the deal. The agreement requires the state to take responsibility, even if the rail company was negligent in its use of the line.
Michael Carlson, the department’s legislative affairs director, said that the risk to the state is too high for the benefit of a private company.
“The department doesn’t need to take that on. …It’s beyond that which is reasonable,” Carlson said at a meeting of the House Committee on Audit and Performance.
State Rep. Ed Homan, R-Temple Terrace, who is chairman of the committee, agreed. “This is not going to fly.”
The liability agreement is the final unfinished piece of a $491 million deal between the state and CSX railroad. According to the deal, the state would buy 61 miles of CSX tracks in the Orlando area for the commuter rail and pay the company for improvements to its freight operations into a hub planned for Polk County.
The state would own the 61 miles of track, but CSX would pay an annual fee of about $10 million to run freight trains on the line 12 hours a day.
The state would be required to spend about $2 million a year for an insurance policy to cover any accidents on the commuter line, even accidents caused by CSX.
“It would be extending public money for a private enterprise,” said Bartow lawyer David Frost, who has studied the proposed agreement.
Even if the accident was the result of “willful or wanton” neglect on the part of CSX, the state would still be held responsible, Frost said. “It creates an environment where they are not encouraged to do the right thing… If they kill somebody at a train crossing, the state of Florida is on the hook.”
Also, if the state ends up contracting with CSX to provide dispatching, maintenance or other services on the commuter tracks, the company would be granted the same immunity the state has from lawsuits.
Michael O’Malley, vice president for state government and community affairs for CSX, said the agreement was standard in every state where CSX operated on tracks also used by passenger trains, including Amtrak. He said it provides for up to $200 million of coverage per year.
If an accident occurs, it allows for a quick payout to the damaged parties, “because no one is worried about who is at fault,” O’Malley said.
He disputed Frost’s assessment that the agreement would remove the company’s incentive to be safe, saying that CSX has improved its safety record by 40 percent over the past four years and will continue to do so.
Still, the agreement rankled members of Homan’s committee. State Rep. Franklin Sands, D-Plantation, congratulated CSX for working out such a good deal for itself.
“Why are we asking the state to pay for a $200 million liability policy” for a private company, asked state Rep. D. Alan Hayes, R-Umatilla. “That doesn’t sit well with me at all.”
Alexis Yarbrough, general counsel for the state DOT, explained that the state is not totally liable for accidents on the commuter line. If they affect people beyond the tracks, in the case of a derailment, for instance, the state and CSX would split the cost of paying damages.
Homan disagreed. “That’s not what’s written here,” he said, referring to the proposed legislation written by the state DOT. “This seems like pretty blanket liability… We’re on the hook.”
Yarbrough had to take a couple of minutes to read it before she could answer. When she finished, she conceded that what she was talking about wasn’t there. Though “this doesn’t track what I described,” she said, it’s what the state worked out with CSX.
The legislation DOT is proposing was written broadly so the state can use it to negotiate similar arrangements with other railroad companies in the future.
“Sounds like, the way this conversation is going, there will be changes to this,” Homan said. “It sounds like this was written by CSX” and the state needs to come up with something different that’s more favorable to the taxpayers.
O’Malley said CSX would be willing to sit down with state officials to discuss changes. But he said that “there would a concern about substantially departing from what is a consistent practice” across the country.
Nevertheless, Homan said, changes would be needed. “I don’t see the CFO signing off on this the way it is.”