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State Funding Of Railroad Work Spurs Investigation

Tribune file photo by COLIN HACKLEY

Rep. Susan Bucher, D-West Palm Beach, asks a question about the liability issues surrounding the CSX commuter rail deal last month.

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By LINDSAY PETERSON

The Tampa Tribune

Published: May 15, 2008

Updated: 05/15/2008 12:11 am

TAMPA - A state representative has called for an investigation into how railroad executives influenced state plans to give their companies millions for track improvements.

In response to complaints from state Rep. Susan Bucher, D-West Palm Beach, the Department of Transportation's inspector general opened an investigation last month.

The track improvement program provided money for several railroad projects, including the state's $649 million deal with CSX Transportation.

"The whole thing smells," said Bucher, who was one of the few House members who repeatedly questioned the CSX deal during the legislative session that ended May 2. She asked for the investigation after reading Tribune stories about the state spending.

The Tampa Tribune reported in December that rail executives had served on groups that advised the state Department of Transportation in 2005, when the DOT planned a program containing more than $350 million for CSX and five smaller rail companies.

Executives from two of the companies that received money, Earl Durden of Rail Management and Consulting and Heidi Eddins of Florida East Coast railroad, sat on the Florida Transportation Commission, the DOT oversight agency that approved the spending plan in 2005. Durden was chairman at the time.

Conflicting Financial Gains Banned

The state Legislature created the nine-member transportation commission 21 years ago to advise the Florida DOT and keep an eye on its operations and spending. The governor appoints all members.

State law bans commissioners from having a financial interest in any DOT contract or benefit during the commissioners' terms or for two years afterward. It also prohibits transportation commissioners from taking part in specific DOT operations, such as awarding contracts and selecting consultants.

Durden and Eddins no longer serve on the transportation commission. Neither responded to calls from the Tribune.

State officials have said the rail spending projects were small pieces of a multibillion-dollar statewide work program and that the commissioners didn't have any direct involvement with choosing the projects included. But Bucher questions that.

"I don't know how they define involvement, but this looks bad," she said. "All you have to do is read the statute."

In March and April, Bucher sent letters to the state attorney general and the governor's chief inspector general, calling their attention to one of the Tribune stories and the statute regulating commissioners' actions.

Attorney General Bill McCollum's office wrote back, saying that "no authority is extended to this office to investigate or prosecute possible violations of the statute."

Chief Inspector General Melinda Miguel responded on April 18 that her office had reviewed the material Bucher sent and had assigned the matter to the DOT's inspector general for investigation.

"The Office of the Chief Inspector General will provide supervision and oversight of the investigation until its conclusion," Miguel wrote.

Mike Bowen, of the DOT inspector general's office, confirmed this week that his office had started a preliminary investigation. "We are in the information gathering phase, making sure of the facts and the information in the case," he said.

It could be 60 days before the agency moves to the next step and formally opens an investigation, if the facts warrant it, Bowen said. When doing an investigation, the inspector general will conduct research, including interviews, to determine if an allegation is founded or not. If so, the office will prepare a report for the agency requesting the information. In this case, that would be the governor's inspector general.

This session was Bucher's last. After eight years in office, she's being forced out because of term limits. During her time in the Legislature, she developed a reputation as a persistent questioner, but her colleagues from both parties gave her a standing ovation when she gave her farewell speech.One of the issues under her scrutiny this year was the CSX deal. "The whole thing was just a mess. And the problems aren't just with CSX," she said. She's not sure what will come from the DOT inspector general's investigation.

"I wanted someone to look into it," she said. Companies "got money and they weren't supposed to, not if you go by the statute."

State Money Was Factor In Purchase

The state had planned to spend $649 million to buy 61 miles of CSX tracks in the Orlando area for commuter rail. It would have given CSX $150 million for the tracks and used the rest to help the company expand its freight rail operations into a new hub in Winter Haven.

The deal died when the state Senate failed to approve CSX's final condition, protection from liability lawsuits on the commuter line, which CSX freight trains would have shared with passenger trains.

The DOT's work program approved in 2005 gave $6 million to Durden's North Florida railroad called the Bay Line. The program also included about $40 million for Eddin's FEC and more than $300 million for CSX and other railroads.

In mid-2005, two months after the state Legislature approved the program, Durden sold his rail company, a collection of 14 smaller railroads across the country. The buyer, Genesee & Wyoming, based in Greenwich, Conn., paid $243 million.

A Genesee & Wyoming spokesman, Michael Williams, said the state's decision to spend $6 million on Durden's Bay Line was not a significant factor in the purchase. But Florida's decision to spend so much on rail statewide was.

"The fact that a state is supportive of rail transportation is certainly a positive factor in our decision to invest in that state," he said.

In January 2006, several months after his sale to Genesee & Wyoming, Durden pitched in to help with the CSX deal. He met with then-DOT Secretary Denver Stutler and CSX Chief Executive Officer Michael Ward, according to an e-mail from DOT rail administrator Fred Wise.

They discussed several specific issues, Wise wrote to an assistant, including "the possibility of federal funding ... to reduce merchandise train traffic in the corridor, property tax holding CSX to 2005 levels and ILC Access."

The ILC, or intermodal logistics center, is the hub CSX plans to build in Polk County.

Stutler said that he spoke with Durden about the CSX package as many as five other times in 2006, but he denied that it amounted to direct involvement or violated any laws.

The purpose of the Jan. 20 meeting was to move the CSX talks forward, he said. They had started in late 2005, but slowed after some personnel changes at CSX.

"I didn't have a clue on some of these issues," Stutler said. "I perceived Earl Durden as an expert on rail. ...We were trying to kick things forward."

Reporter Lindsay Peterson can be reached at (813) 259-7834 or lpeterson@tampatrib.com.

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