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Remarks of Lieutenant Governor Timothy P. Murray
Massachusetts Rail Summit

May 9, 2008
Worcester, Massachusetts

 

 

 

I’m glad to see so many of you here this morning, because the future of rail in Massachusetts is a vital issue. It’s important for our economy, our environment and our efforts to build better communities.

 

That’s why the Patrick/Murray administration has placed a very high priority on the full utilization of the Commonwealth’s rail assets. It is only prudent to do so, because it’s important we secure the important public interest from an economic development, environmental and public safety perspective.

 

Our administration’s commitment to rail has manifested itself in many ways over the past 15 months. For the first time, we established a Deputy Secretary of Transportation for Rail and Intermodal Programs, with priorities and responsibilities that reflect the importance of that title. That person is Tom Cahir, who of course is with us here today, and he’s doing a great job. Congratulations, Tom.

 

EOT has also hired an experienced rail professional to serve as Manager of Rail, who has, among other things, been charged to work closely with Secretary Cahir, the MBTA, MBCR, the commuter rail operator, and freight rail operators to look for ways to improve existing services and prioritize expansion projects.

 

Over the past few months, we’ve been piloting Wi-FI internet access for commuters on the Worcester/Framingham line, and it’s been a great success. Plans are now in development to expand that system to other lines next year.

 

Working closely with the legislative delegation from North Worcester County and Congressman Olver, we are moving forward on a $150 million upgrade of the MBTA-owned Fitchburg line aimed at reducing travel time from Leominster/Fitchburg to Boston to an hour.

 

In Southeastern Massachusetts, we’ve begun the South Coast rail expansion project and have designated a project manager to facilitate the process to bring commuter rail service to Fall River and New Bedford by 2016.

 

The public participation process associated with that project is well underway, and the permitting is beginning.

 

As the Gateway Cities report and other policy reports on the state’s economy have indicated, it is critically important that our Gateway Cities like Worcester and Fitchburg, Fall River and New Bedford , have regular and dependable transportation options to and from the Greater Boston Metropolitan area to facilitate the cross pollination of housing and economic development opportunities.

 

And, just this week, our administration announced the launch of a statewide rail plan, to identify existing opportunities and challenges to maximize usage of all of our rail assets.It’s the first time since 1989 that we’ve undertaken a comprehensive process to improve our rail system. Anyone remember who was governor in 1989?

 

As you know, there are eleven freight carriers in Massachusetts, of which eight own various rail assets and track right of ways. Only one, CSX Transportation, is a class 1 carrier. The statewide rail plan will take a look at all of them. When completed, the study will help us to identify opportunities for growth, and help us better target resources where we have infrastructure or operational issues.

 

Moreover, this updated plan will better position the Commonwealth to compete for federal transportation dollars.

 

As we develop this plan, we hope to work closely with many of you here today, to form the partnerships that will yield solutions to challenges, and help us improve rail operations, both freight and passenger in Massachusetts. To that end, let me talk for a moment about our recent experience with CSX, the region’s major freight carrier. This experience has been the subject of several press accounts and is, I am sure, of interest to you all.

 

Within the first few months upon taking office, our administration accelerated discussions with CSX aimed at improving and expanding passenger service along the Worcester Framingham line.

 

As most of you know, I have been a strong supporter and advocate for more and better passenger rail service to Worcester for some time. The Governor shares this as a priority. The Worcester piece, however, is just one part of the discussions we’ve had with CSX. We’ve been working on agreement with major state-wide economic impact.

 

The discussions have focused on acquiring from CSX the rail right of way they own between Framingham and Worcester, which is the only segment of the right of way between Boston and Worcester, the so-called Boston Main Line, that is not publicly owned.

 

The potential agreement also includes the state acquiring rights of way needed for the South Coast Rail project, and two strategic assets in Boston and Cambridge – one that serves the Port of Boston and one that connects the south side and the north side of the MBTA’s service areas. Again, these are important assets, with significant public interests, that are owned by CSX.

 

Not only would CSX get a fair price for theses assets, as part of the agreement, the Commonwealth—meaning the taxpayers—would agree to pay $40 million to raise the clearance height on several state-owned bridges between the New York line and Westborough. The bridge work would be a tremendous benefit to CSX, allowing them to double stack freight cars through much of the state, enhancing their efficiency and profitability.

 

Now before I go into greater detail on this transaction, let me offer to you some historical perspective of the state’s investments on this privately owned segment of the line.

 

For over 150 years, Worcester enjoyed direct passenger service to Boston. That service was provided by a series of freight rail companies, which were then under a legal obligation to provide passenger service.

 

Over time, with changes in the economy and the rail industry in general, it became difficult for the freight railroads to continue to provide passenger service.

 

In 1970, the United States Congress took two important steps: (1) it relieved the freight railroads of their legal obligation to provide passenger service; and (2) it created the National Railroad Passenger Corporation, AMTRAK, which took over intercity passenger rail service in the United States in 1971.

 

In addition to its inter-city obligations, AMTRAK continued to provide commuter rail service to Worcester through 1975, when subsidies from the Commonwealth were halted and service was suspended.

 

As most of you know, and through the efforts of many in this room today, commuter rail service between Worcester and Boston was restored in 1994 with 6 rush hour daily round trips. This significant step was the result of a lot of hard work and was contingent on a series of obligations set forth in an operating agreement between the MBTA and Conrail, the owner of the line between Worcester and Framingham at the time.

 

As a condition of obtaining the right to run passenger cars on this segment of the line, Conrail required the MBTA, and, through the MBTA, the Commonwealth to invest upwards of $13 million in track, signal, and other improvements on the line.

 

It required the MBTA to enter into a so-called “no-fault” liability arrangement with the company; and that the Commonwealth, through a special act of the legislature, cap the amount of damages for which Conrail could be responsible on account of an accident on the line. The cap is $75 million. But to guard against even that level of exposure, Conrail also required the MBTA to purchase an insurance policy to cover damages up to $75 million, the premium of which cost about $3.8 million a year, again paid for by taxpayers and fare-payers through the MBTA.

 

Pretty sweet deal, don’t you think.

 

The MBTA, of course, was also required to make payments to Conrail for the use of the line.

 

All these investments earned us the right to run 6 round trip trains for Worcester commuters. And there’s more.CSX acquired the line from Conrail in 1999. Then, in 2001, the public—meaning the Commonwealth taxpayers— invested another $90 million dollars in infrastructure, including adding back a second track along much of the line, to allow for the expansion to 10 round trip commuter trains between Worcester and Boston.

 

So over time, the people of Massachusetts, through various state agencies, have spent more than $100 million to upgrade this privately owned rail line, because we understand there is a strong public interest in maintaining both passenger and freight rail service in the Commonwealth.

 

Since 2001, elected officials, commuters and others have lobbied hard and have demanded additional passenger service on the line. In fact, we know because of this significant public investment, and through our own modeling and analysis, that the Worcester line, today, can support more commuter rail service, without negatively impacting freight service. Regardless of track ownership issues, there is currently existing capacity to run at least 7 additional trains between Worcester and Boston—four inbound trains, and three outbound trains.

 

Let’s look at the numbers and think about it for a moment.

 

Right now, on a daily basis between Framingham and Boston, the publicly owned portion of the track, there are 40 MBTA trains (20 round trips), 14 CSX trains, and 2 AMTRAK trains. However, between Framingham and Worcester, the CSX-owned portion of the track, there are 20 MBTA trains (10 round trips), 19 CSX trains, and 2 AMTRAK trains running daily.

 

Folks, this is double-tracked line for the entire length from Worcester to Boston except for a small stretch here in Worcester and a small stretch through Allston.

 

The tracks are almost exactly the same, yet on the Worcester—Framingham piece we have half the number of commuter trains. What’s wrong with this picture?

 

Anyway, back to the larger transaction. To expand commuter rail service along the Worcester line, and to secure the rights we need for the South Coast project, and the other rail assets I’ve discussed, our administration since last spring has been negotiating with CSX. However, despite the fact that as a part of the transaction the Commonwealth would be purchasing the Worcester line for an agreed-upon price, CSX continues to insist on a no-fault liability arrangement.

 

No-fault is a deal breaker.

 

Under this no-fault scenario, if there was an accident, the MBTA, and ultimately the Commonwealth’s taxpayers, would be liable for damages to passengers; even if the MBTA was not at fault. Even in instances where CSX was grossly negligent, the MBTA would still be liable. That’s bad public policy, and frankly it’s absurd.

 

CSX will tell you it’s the national model. The truth is there is no national model. The passenger-freight liability arrangement in the entire CSX footprint in Massachusetts and nationally is a checkerboard resulting from the hodgepodge history of the various entities that have been involved. In fact, here Massachusetts, CSX runs its trains everyday over tracks already owned by the MBTA, and on those tracks there is a fault-based liability arrangement.

 

Let me say that again—CSX operates everyday in Massachusetts, taking on the responsibility to pay for damages if it is at fault. All we’re saying is, that policy will stay in place, if and when the state takes ownership of the tracks between Worcester and Framingham.

 

I’m sure you all read about the recent accident in Canton. Because it happened on a state-owned line, whoever is at fault will have to pay for the damages. If we had no-fault in Canton, the MBTA would be liable for the injuries to over 100 passengers hurt in the unfortunate accident, even if the MBTA was not at-fault.

 

In 2004, following an exhaustive investigation by Walt Bogdanich, the New York Times reported, due to a no-fault liability arrangement between CSX and AMTRAK, AMTRAK has, for upwards of three decades been paying passenger liability claims that have nothing to do with AMTRAK fault.

 

The Times reported that, since 1984 alone, AMTRAK has paid more than $186 million for accidents blamed mostly or entirely on others.

 

Just this past week, the Florida legislature rejected a proposal to pay $649 million to CSX for 61 miles of track based, at least in part, on this no-fault indemnity clause which would have handed Florida taxpayers the bill for CSX negligence.

 

Simply put, the no-fault concept as demanded by CSX in this transaction is bad public policy.

 

Despite CSX’s apparent indifference to the public interest we are not dissuaded in our effort to expand rail to Worcester and other parts of the state. While we work to try and resolve this major liability issue, we have also attempted to reach agreement with CSX on making immediate improvements to existing service by paying for dedicated dispatch and maintenance crews on the Worcester line.

 

We also need to keep talking with CSX given the importance of the South Coast rail to our overall rail plans, and the importance of the other two rail assets that are included as a part of the transaction. And as I’ve said, we’re at the table in good faith, talking about fair compensation.

 

As has been reported both in the Telegram and Boston Globe, the acquisition of the tracks and right of way and purchase of Alston-Brighton rail yard by a third party would net CSX between 300-400 million dollars. This is at a time when CSX is earning record profits.

 

CSX is ranked 261 on the Fortune 500 listing, last year they had profits of $1.3 billion. This year is shaping up even better for CSX. In the first quarter, they had record revenues of $2.7 billion, with earnings of $351 million.

 

Now let’s be clear—I think it’s great when companies make money. What I object to, however, is when companies that have benefited substantially from public investments, turn around and stymie the public interest.

 

In an April 4, 2008 letter to the Massachusetts Congressional Delegation from Michael J. Ward, CSX chairman, president and CEO, Mr. Ward says because of his responsibility to shareholders, he must insist on the no fault provision of the agreement. With all due respect to Mr. Ward, you also have an obligation to the public interest, especially for this asset that has been so heavily subsidized by public taxpayer dollars.

 

Our models show that there is capacity on the Worcester line for more passenger trains. We have already invested over $100 million in the line making improvements that benefit not just the MBTA and the commuters, but CSX as well. We have offered to pay for additional maintenance resources to facilitate expansion of commuter service on the line. But still, their demand for this unreasonable no-fault clause blocks what would otherwise be an important economic development, public safety, and environmental opportunity for Worcester and the Commonwealth as a whole.

 

I think we are all aware of the term “getting railroaded.”

 

Well, now, we the public truly know what it means.

 

Nevertheless, the Patrick/Murray administration remains steadfast in its commitment to see this process come to a successful conclusion. Recently state rail officials have explored the use of the “Worcester line” north through West Boylston, Clinton to Ayer and on to the Fitchburg line, owned by PamAm Railways, which travels to North Station.

 

Re-establishing service on that line could yield an express train or a train with limited stops from Worcester to Boston, thereby accomplishing the goal of increased service here.

 

Moreover, on several occasions over the past several months I have met with members from our state transportation team and with the Massachusetts Congressional delegation, on this important issue. We’ve also met with Congressman Jim Oberstar who chairs the House Transportation Committee.

 

We are grateful that our Congressional delegation led by Congressman McGovern, Senators Kennedy and Kerry understand the magnitude of this issue and are strategizing with us in fashioning possible legislative solutions.

 

One such proposal would require the Federal Surface Transportation Board, formerly known as the Interstate Commerce Commission, to play a proactive role in arbitrating these types of disputes in a way that ensures the public interest not just shareholder interest is properly and fairly served.

 

Moreover the Patrick/Murray Administration is pursuing our various legal options in ensuring that the public interest of the citizens of Massachusetts from an economic development, public safety, and environmental perspective is protected in this case.

 

At the end of the day, I think we all want the same things. We want to see our freight and passenger rail systems thrive and grow. We want a robust rail system to help our overall economy grow.

 

To achieve that goal, however, requires people of good will to come together and work in a spirit of true partnership.

 

I hope today’s summit helps us make progress down that track.

 

Thanks very much,

 

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