State lawmakers remove Cincinnati Southern sale language from transportation bill

CINCINNATI (WXIX) - The current working version of Ohio’s transportation bill longer includes a change in state law required for the sale of the Cincinnati Southern Railroad to Norfolk Southern.

Cincinnati Mayor Aftab Pureval says he’s committed to working with legislators to ensure the change happens anyways.

“There has never been a more important time for our city to get out of the rail business. Selling now gives us local control over our assets in an investment trust for generations to come. No longer would our future be tied to the unpredictable and risky rail industry,” Pureval said Wednesday afternoon.

Technically speaking, Cincinnati has always been empowered put a CSR sale to public referendum. The new language changes a 153-year-old Ohio statute to allow the city to use the proceeds from the sale for capital projects (roads, bridges, etc.) Previously, the Ferguson Act of 1869 prevented the city from using sale proceeds for anything but debt service payments.

But the situation isn’t entirely clear. The terms of the CSR sale agreement to Norfolk Southen require, as a condition of the sale, that the change in state law be in effect. Pureval says as much, calling the change “necessary” to permit the sale. However, that clause in the sale agreement appears to be written such that Norfolk Southern can waive that condition prior to closing. See “Conditions precedent to buyer’s obligation to close” on page 38.

Nevertheless, Sen. Louis Blessing (R-Colerain) said it’s “extremely difficult” to imagine Cincinnati selling the railroad if the state law change fails. “I highly doubt that they would sell it then, even though they could.”

The status of House Bill 23

House Bill 23, Ohio’s transportation bill, passed out of the Ohio House of Representatives late last month with the CSR sale language intact.

The bill is currently with the Senate Transportation Committee. The committee voted on Wednesday to adopt a substitute bill without that sale language.

“It’s not the final budget yet,” said ranking Transportation Committee Member Nickie Antonio (D-Cleveland). “There’s still time to hear from all parties concerned.”

No single senator proposed to remove the language. Budget bills such as HB23 are worked on in a caucus setting, according to John Fortney with the Ohio Senate Majority Caucus.

Senators will be able to add amendments to HB23 in the Transportation Committee. They will then vote an omnibus version of the sub-bill out of committee, after which it will go to the full Senate. Senators will be able to offer amendments as well. Fortney expects a Senate vote sometime next week.

HB23, with the Senate changes, will then go back to the House, which will vote either for or against the changes. If the House votes against the changes, the bill will go to a conference committee comprising six members, three from each body (two majority members and one minority member each from the House and Senate). Those members will then decide on each point of disagreement between the two versions.

The entirety of HB23 must be passed by March 31.

There’s a long way to go before the bill heads to the desk of Gov. Mike DeWine, but the situation appears to have changed considerably since Blessing said in February he was the only one against the sale.

Concerns about the sale

Some lawmakers, including Blessing, worry about how Cincinnati will use the sale proceeds.

Others, such as Sen. Kristina Roegner (R-Hudson), object to the sale in the context of several recent Norfolk Southern incidents: the East Palestine derailment, the Springfield derailment and the crash in Cleveland that resulted in the death of a conductor.

“These are all serious concerns. People want to make sure that what’s rolling down the rails is safe,” Fortney said.

Forney stopped short of explicitly linking Wednesday’s action to the train derailments. “But I will say it hasn’t helped,” he said.

Roegner said Wednesday she’s “pleased” the sale language is out of the bill.

“Before the Ohio General Assembly sets about changing the Ferguson Act of 1869 to permit the sale of this railroad to Norfolk Southern, we should wait for the results of the NTSB investigation into the East Palestine derailment, our own Ohio Senate Select Rail Safety Committee findings, and, most importantly, satisfactory improvements to be made to rail safety in Ohio,” she said.

The CSR sale wouldn’t significantly impact Norfolk Southern’s rail operations in Cincinnati, for a variety of reasons. Still, the Norfolk Southern incidents are clearly weighing on lawmakers.

“You can divorce the issues,” Blessing said. “But as a practical matter, you can’t unsee what happened in East Palestine. Now, is that really fair to Norfolk Southern for the purposes of the sale? No. But that’s what’s happening.”

Blessing noted the situation is complicated by Ohio Attorney General Dave Yost’s lawsuit against Norfolk Southern.

“In a vacuum, I might have said there’s a possibility this comes back in the House, because that’s just how negotiations work,” Blessing said. “But it just seems difficult to say, ‘Alright, we’re going to insist this is how it’s going to be,’ and at the same time the state, through [Yost’s] office, is suing Norfolk Southern.”

DeWine could reject the CSR sale language with a line-item veto once the full bill hits his desk. Blessing said it’s a possibility in light of his “close relationship” with Yost and his harsh words for Norfolk Southern.

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