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Railroad Suitor Can’t Justify Reneging, CCPA Says
EAST LIVERPOOL, Ohio – The energy giant Tervita Corp., based in Calgary, Canada, lacked sufficient cause to withdraw from its agreement to buy the Youngstown & Southeastern Railroad from the Columbiana County Port Authority last August, the CEO of the port authority, Tracy Drake, said Monday
After hearing Lawrence A. Drane III, Canfield operations manager of Tetra Tech, present his report to the authority board, Drake told its five members, “In my experience, the [environmental] issues raised by Tervita were not enough to cause the deal to fall through.”
Sale of the 36-mile short line that runs from Youngstown through North Lima and Negley to Darlington, Pa., was supposed to close in July after Tervita put down $150,000 in earnest money.
A report dated July 11, “Phase One Environmental Site Assessment on Youngstown and Southeastern Railroad Co.,” which Jerry Beckman prepared for Tervita identified two areas of concern, a tool house and fueling area near North Lima and a maintenance shop and underground diesel and gasoline storage tank area adjacent the landfill near Negley.
That pushed the closing date to Aug. 8 but the Tervita board decided the potential responsibility to clean up the environment outweighed the benefits of completing the purchase of the railroad.
“At the North Lima site,” Tetra Tech's Drane found “a lot of oil on top of the ground” from fuel spilled while locomotives refueled. He saw “a formerly lined section of track to aid [in the prevention of] fuel migration but also evidence of regular fuel spills in this area.”
Drane wrote, “During our site visit, no pooling of oil and water was observed under the locomotives. Stained soils were noted below the locomotive and appear to be limited in extent and there was no indication that contaminants have migrated off-site and impacted adjacent properties.” Correcting the situation could easily by handled by “excavating the impacted materials and off-site disposal.”
The port authority's Drake said afterward the practice has been for railroads to use and periodically replace the collection mats placed along such tracks as required by the Federal Railroad Administration. “Some soil was stained,” Drake said, but it was a matter easily remedied.
At Negley, Tervita complained of the leaks of greases and oil from storage tanks over the years that crossed the railroad tracks to the landfill. Drane found tanks had been installed -- two in 1938 and five more later-- but “By 1951, it appears [from reviewing aerial photographs] that the tanks have been removed and only the earthen dikes remain. By 1959, the earthen dikes appear to be vegetated and by 1965 the earthen dikes appear to have been removed.”
In 1995, Drake added, the state fire marshal inspected the site of the tanks and “forced the owner to do remediation and fixed [the situation]. No further action was needed.”
In any event, he noted, the greases and oils found were “not a hazard to human health [and any cleanup] is the responsibility of the previous owner.” The quantity contaminants Tervita found were small and unlikely to migrate to threaten human health.
In other business, the board learned that with the Ohio Rail Commission forgiving the debt the authority owed for the Y&S short line, monthly interest expense has fallen to $826 a month from $66,348 and that the port authority will be roughly $180,000 to the good by year-end.
The board also learned from directors Tim Weigle and Don Crane of the unsafe north wall in its headquarters building at 1250 St. George St. Both men conducted an inspection that led them to ask their colleagues whether the wall should be shored up or torn down and replaced. The expense could run anywhere from $80,000 to $300,000, Drake said.
Crane advocated replacing the wall “because it’s so heavily deteriorated.” Weigle noted, “The other walls are in poor condition, too.” He expressed concern for the safety of the port authority staff if they remain in their second-floor offices.
The structure was built sometime between 1910 and 1920, Drake said afterward.
Regardless of whether the wall is replaced or shored up, it would appear the staff of the port authority would have to relocate, at least temporarily, possibly to offices in World Trade Park, Leetonia.
Also in need of work is the Loudon Building in the East End where the roof needs to be either repaired or replaced, the board learned. While that building has served as an incubator, the tenants use it solely as a warehouse, Drake said.
Yet another property the port authority owns, the Network Operations Building in World Trade Park, needs attention. The Dryvit finish sprayed on four years ago has begun falling off and three major leaks have appeared, all near the skylights and near the main electrical box.
Drake also had some good news. A lawsuit the port authority filed against One Community, based in Cleveland, seems near resolution in favor of the authority. Retired Jefferson County Common Pleas Judge John J. Mascio has mediated the dispute where the port authority accused One Community of using port authority fiber-optic lines to serve its customers and claiming ownership on its book.
A settlement where Community One admits to “unjust enrichment” seems near, Drake told his board. “Judge Mascio has come up with a methodology to settle the case,” the CEO of the port authority said.
Copyright 2012 The Business Journal, Youngstown, Ohio.