(The following story by Lindsay Peterson appeared on The Tampa Tribune website on December 29.)
TAMPA, Fla. — A railroad company owner led the agency in charge of overseeing the state Department of Transportation when DOT proposed giving rail companies hundreds of millions to improve their private tracks.
Earl Durden was chairman of the Florida Transportation Commission when it reviewed DOT’s five-year work program in early 2005. Included in the plan: more than $6 million in state tax money for Durden’s North Florida railroad.
Another rail company executive, Ben Biscan, sat on two committees that helped define which projects would be included in the five-year plan. His Florida Central and Florida Northern railroads received about $10 million.
Since 2005, through legislation championed by former Gov. Jeb Bush, millions have gone to a half-dozen railroads whose owners and executives were insiders in the DOT planning process. They also were major donors to state political candidates.
The biggest company involved is CSX Corp., whose vice president for planning, Lester Passa, sat on one of the transportation advisory committees with Biscan. The state recently signed a $491 million deal with CSX to buy 61 miles of its tracks in the Orlando area for commuter rail and help the company expand its freight operations in Polk County and elsewhere in the state.
The Legislature will be asked to give the deal its final approval in the spring when it considers DOT’s annual budget, expected to exceed $8 billion.
But in addition to setting aside money for CSX, the 2005 Florida Legislature gave about $75 million to the state’s smaller railroads, including Durden’s Bay Line, based in Panama City.
Florida East Coast railroad is getting more than $40 million to expand and upgrade tracks along its line between Jacksonville and Miami. FEC executive Heidi Eddins sat on the transportation commission with Durden.
The rail subsidiary of U.S. Sugar Corp. received nearly $14 million for upgrades to its tracks around Lake Okeechobee. Norfolk Southern got $2.5 million.
All these companies have contributed generously to state candidates running for office. U.S. Sugar and its executives have given at least $9 million since 1996, including $4,000 to Bush and more than $1 million to the state Republican Party. Republicans hold a majority in the state Legislature.
CSX, its executives and lobbyists have given more than $1.1 million to state candidates, including $6,000 to Bush and more than $547,000 to the state Republican Party.
Durden, together with the many railroad companies he controlled and his immediate family members, has given more than $285,000, including more than $16,000 to Bush.
The Players
Durden has long wielded power in state transportation matters. Three years ago, Florida Trend magazine named him one of the most influential people in business, saying Panhandle business leaders credited him with bringing transportation projects to the area.
A colleague on the transportation commission, Janet Watermeier, called him a “visionary, … a wonderful man.” He was one of the early advocates of getting the state to spend its transportation tax money not only on highways, but also on railroads, seaports and airports.
“I know he did an awful lot for transportation in Florida,” Watermeier said. “He was a big-picture thinker.”
A railroad executive who started building his own railroad company in 1980, Durden became a force in politics. In the late 1990s, he helped start a national political fundraising group, the Club for Growth.
In 1999, the newly elected Bush appointed Durden to the FTC. The Legislature created the commission in 1987 to advise DOT, but also to keep an eye on its operations and spending.
Durden became chairman of the nine-member group in 2003, the year the Legislature approved a major change at DOT, also championed by Bush. It created a system of roads, rail corridors and ports considered most important to the state’s economic growth.
Before that, state spending on railroads was restricted mostly to crossing safety programs, and most of that was federal money. But the “strategic intermodal system,” as it was called, put railroads in line for state tax money, along with seaports and airports. The ports are run by public agencies, but the state’s 15 freight railroads are privately run. Jacksonville-based CSX is the biggest.
The strategic intermodal system law, known as SIS, also created a council of rail, trucking and port executives to advise DOT and the Legislature on how to spend money set aside for intermodal projects.
When the intermodal advisory council offered its advice to DOT in late 2004, three of the 11 members represented rail interests: Passa of CSX; Donald Connor, an executive with Durden’s company, Rail Management Corp.; and Biscan.
Biscan was appointed to the intermodal advisory council as a trucking representative, but the company he represented, RDS Trucking, was a subsidiary of Florida Central and Florida Northern railroads.
Former Speaker of the House Johnnie Byrd, a Republican from Plant City, appointed Biscan to the council. Biscan later donated $1,000 to Byrd’s U.S. Senate bid.
In 2002, Biscan was a member of a DOT committee of transportation officials that helped design the state intermodal system. Minutes of meetings show he persuaded the group to add Florida Central, which he managed, to the list of corridors eligible for funding.
The list of transportation projects the DOT prepared for the Legislature in 2005 contained, for the first time, hundreds of millions in improvements for most of Florida’s railroads, including the $6 million for Durden’s Bay Line.
And before it went to the Legislature, it went to the Florida Transportation Commission, led by Durden, for an annual review to make sure it met state laws and DOT policies.
Durden was not available for comment for this story, but Watermeier said the commission looked at the DOT work plan “in bulk,” not in detail. “The commission doesn’t have anything to do with allocation of funding,” she said.
But another FTC member at the time, Bob Namoff, said commissioners did look at the plan in detail. It couldn’t review each of the thousands of projects in the plan, but it would look at several, under the guidance of the chairman.
“Our job is to advise DOT on what is good, what is not good. … We did look at specifics,” Namoff said. He didn’t recall, however, whether Durden or any other commissioner raised questions about any rail projects.
Investing In Rail
After the FTC signed off on DOT’s work plan, it went to the Legislature, where it passed. Among the billions lawmakers approved for transportation projects during the next five years was more than $350 million for CSX, Durden’s Bay Line, Biscan’s railroads and many others for track expansion and improvements.
Bush lauded the bill that provided much of the transportation money, saying “investing in our transportation system is vital to Florida’s economic prosperity and our high quality of life.”
But as the state prepared to sign the $491 million deal with CSX this year, news of the plan emerged, and several lawmakers began to complain.
“These railroad companies are for-profit operations. Why is the state giving them money?” asked state Sen. Michael Bennett, a Bradenton Republican who helped write the bill.
There were no hearings on the rail spending and no discussions on the House or Senate floors, particularly on the CSX deal, they said. The projects were tucked into DOT’s five-year work program, which fills hundreds of pages.
Two months after the 2005 Legislature passed the transportation spending plan, Durden sold his rail company, a collection of 14 smaller railroads, called short lines. The buyer, rail company Genesee & Wyoming, based in Greenwich, Conn., agreed to pay him $243 million.
A Genesee & Wyoming spokesman, Michael Williams, said the state’s decision to spend $6 million on one of the railroads, Bay Line, was not a significant factor in the sale.
“There were several properties in several states,” he said. “State money for specific projects was not a factor in the purchase,” he said.
The company was swayed, however, by Florida’s decision to spend so much on rail.
“Speaking generally,” Williams said, “the fact that a state is supportive of rail transportation is certainly a positive factor in our decision to invest in that state.”