(The Center Square) — Now that Cincinnati is selling the Cincinnati Southern Railway, could Georgia take the same approach with the historic Western & Atlantic?
The state built the railroad before the Civil War and has leased it for more than 150 years. The state most recently leased the line to CSX Transportation in 2019 for 50 years, and the state will reportedly collect more than $1.2 billion over half a century.
Would it be wise to sell the railroad, or is the state better off earning an annual lease on the line?
“While it would be great for Georgia to get out of the railroad business and reap the windfall benefits of a sale for taxpayers, I think a near-term sale is unlikely unless something dramatic happens to force a reconsideration of the terms of the lease,” Marc Scribner, a senior transportation policy analyst with the Reason Foundation, told The Center Square.
“The Cincinnati Southern sale was the product of 2020 lease negotiations, where the city trustees and Norfolk Southern diverged on the terms and led Norfolk Southern to make an offer,” Scribner added. “This didn’t happen with Georgia and CSX when they renegotiated a 50-year extension in 2019.”
Collen Clark, a lawyer and founder of Schmidt & Clark LLP, said Georgia could legally sell the Western & Atlantic Railroad, but it would require a lot of legal and political hurdles to overcome.
“First, the state would need to get approval from the voters, as the railroad is a public asset that belongs to the people of Georgia,” Clark told The Center Square. “Second, the state would need to get clearance from the federal Surface Transportation Board, which regulates rail mergers and sales. Third, the state would need to negotiate a fair price with a potential buyer, which could be CSX or another railroad company.
Whether the state would be wise to sell the Western & Atlantic Railroad or earn an annual lease on the line “depends on how you look at it,” Clark said.
“On one hand, selling the railroad could generate a large amount of money for the state, which could be invested in other priorities, such as education, health care, or economic development,” Clark said.
“On the other hand, keeping the railroad could provide a steady source of income for the state, which could increase over time as the demand for rail transportation grows,” Clark added. “Moreover, keeping the railroad could preserve the state’s control over the historic and strategic asset, which has played a significant role in Georgia’s history and economy.”
While Georgia could sell the historic line, Clark said state officials would need to weigh the pros and cons of doing so.
“As a lawyer, I think that the sale would be a complex and risky transaction that would require careful analysis and evaluation,” Clark said. “I think that the state should consider the long-term implications and consequences of the sale and consult with the stakeholders and the public before making a decision.”
