(The Staunton News Leader posted the following article by David Fritz on its website on October 14.)
WASHINGTON — The future of a deal to lease CSX’s tracks through Staunton and Waynesboro to a short-line railroad could hinge on two key issues that will be decided by December:
n Whether the deal is a legitimate lease, as CSX contends, or an attempt by CSX to continue reaping revenue from the line while shedding the costs of remedial and ongoing maintenance.
n And whether federal regulators base their review narrowly on competitive economic grounds, or look more broadly and favorably on a union’s characterization of the transaction and its contention that that the public’s safety would be imperiled.
Those issues emerged Wednesday during arguments before the Surface Transportation Board of the federal Department of Transportation.
The proposed lease between CSX and Dillwyn-based Buckingham Branch Railroad is unique and deserves special consideration by the three-member panel, argued Richard Edelman, lawyer for the Brotherhood of Maintenance of Way Employees.
With most leases to short-line railroads, the short-line pays the major railroad and in return gets the right to fully operate an under-used stretch of tracks for 20 years or more.
This lease is different, Edelman said, because CSX is leasing the line without actually giving it up. All it gives up is maintenance responsibility and it hands over track rights to Buckingham Branch.
“This is not like putting together four short-lines. Not only are there serious remedial (maintenance) problems, we are talking about a line with CSX, Buckingham Branch and Amtrak all operating on it,” Edelman said.
And while Buckingham would pay CSX $140,000 a year to lease the route, CSX would turn around and pay Buckingham $2 million a year so its trains could run over the leased rail line. And although the lease is a 20-year deal, it includes an escape clause and rate re-negotiation at 10 years.
That, Edelman said, means that by leasing the track, Buckingham Branch actually nets a $1.86 million annual payment from CSX — a payment that the union contends is cheaper than fixing the neglected track.
Maintenance would provide a special challenge to Buckingham Branch, he argued, because today the family owned railroad operates a single 17-mile rail line. It plans to replace CSX’s 14 union track maintenance employees with eight all-purpose workers.
Documents filed in advance of Wednesday’s hearing are packed with dueling photos, diagrams and statements dwelling on whether the line is safe in its current condition. Union documents show broken ties, incorrectly spaced tracks, missing bolts and missing spikes along various parts of the nearly 200-mile route.
CSX lawyer Louis Gitomer said that there hasn’t been a derailment on the line since early 2002, but transportation board Vice Chairman Frances Mulvey countered that one derailment in three years on a 200-mile stretch of track is not much of a safety record. The derailment in question involved a CSX gauge measurement car brought into the Piedmont end of the route specifically to test track conditions.
Although safety isn’t a primary concern of the Surface Transportation Board, an economic regulatory agency, the Federal Railroad Administration, which oversees safety, doesn’t get to sign off on leases.
Mulvey focused on what he suggested was an anti-competitive provision of the lease. CSX would charge Buckingham a higher rate when it carries freight destined for a carrier other than CSX.
Still CSX characterized the deal as entirely routine in its experience of trimming down its far-flung rail system.
“These are not novel transactions,” said Peter J. Shudtz, CSX vice president for federal regulation. “Short-lines and regionals have demonstrated through the years they have great success in operating.
“We don’t engage in sham transactions.”