Railroad Giant CSX Seeks Huge Government Bailout In Amtrak Bill On House Floor This Week

Taxpayers Would Foot Bill for Damages Caused by Train Wrecks Due to Corporate Negligence & Wrongdoing

October 21, 1997

WASHINGTON (DC) -- This week the U.S. House of Representatives will consider legislation -- the Amtrak Reauthorization bill (H.R. 2247) -- that would force American taxpayers to pay for the reckless misconduct of multi-billion dollar railroad companies such as CSX Transportation (CSX). The legislation would force Amtrak and the taxpayers who fund it to bailout freight carriers by footing the bill for damages assessed in lawsuits against them resulting from train wrecks, injuries and deaths. Even outrageous private freight carrier misconduct that results in Amtrak train accidents would be fully protected. Railroad giants such as CSX, which has been involved in five major accidents in the past 18 months that have killed or seriously injured scores of passengers, would be fully insulated from being held financially accountable for their wrongdoing.

One recent case illustrates the outrageousness of this taxpayer bailout. This past July, a Florida jury imposed a $50 million punitive damage award against CSX for misconduct that led to a 1991 derailment and crash of an Amtrak Silver Star No. 82 train traveling on CSX track. The derailment occurred due to a defective switch on one railroad track, which was negligently maintained by CSX. Eight passengers died in the crash and 78 were injured. The jury awarded an additional $6.1 million in compensatory damages ($3.1 million economic damages; $3.0 million non-economic damages) to the family of 35-year old Miami Police Sergeant Paul Palank for his death.

On October 9, 1997, Florida judge Arthur J. Franza, in upholding the jury's punitive damages verdict, issued a stinging rebuke of CSX calling their actions that led to the Amtrak train crash "borderline criminal." He also noted that with respect to CSX, "the consequences of carelessness and greed resulted in death, the ultimate violation."

If H.R. 2247 had been law when the 1991 Amtrak train crash occurred, all damages assessed against CSX ( compensatory and punitives) would have to be paid for by Amtrak -- not CSX.

"The clear and convincing evidence shows that Silver Star No, 82's tragic derailment was caused by willful, wanton negligence, which is the functional equivalent of manslaughter," said Judge Franza.

"The CSX bailout bill would represent a huge government shield for corporate wrongdoing and cause the American taxpayer to foot the bill for the lax safety standards of America's biggest railroad companies," said Frank Clemente, Director of Public Citizen's Congress Watch.

Besides giving a blanket indemnification policy to the country's largest railroads for the most egregious misconduct (misconduct that is wanton, willful or deliberate), H.R. 2247 would also take away the legal rights of injured train passengers who seek to hold CSX and other corporate wrongdoers fully accountable for their actions. For instance, H.R. 2247 would cap punitive damage awards at $250,000 or three times economic losses, whichever is greater. In the Palank case, had the bill been law, the punitive damages assessed against CSX could not have exceeded $9.3 million, or three times the $3.1 million award for economic damages. Companies consider the risk of punitive damages in determining how great an investment to make to achieve railroad safety.

Further, the House bill would also prohibit passengers injured in train accidents from receiving non-economic damages greater than $250,000 of their economic loss, regardless of the circumstances. Such awards include compensation for gross disfigurement, loss of fertility, loss of vision and pain and suffering. This cap discriminates against the elderly, the poor, children and women -- especially those not employed outside the home -- whose injuries often involve mostly non-economic losses.

This legislation is doubly ironic given an October 8, 1997, report from the Federal Railroad Administration that details safety shortfalls in all areas of CSX's operation. "FRA found an atmosphere at CSXT in which some CSXT field managers consistently failed to demonstrate full commitment to safety," says the FRA report. "Some front-line managers emphasize train operations over safety precautions."

In a further example of how too much of the business of Washington is protecting business, the October 20, 1997, Washington Post reported that "The head of safety for the Federal Railroad Administration [Jim Schultz] accepted a vice president's post at CSX Transportation Inc. the day after the agency released a scathing report on the company's safety culture and the condition of some of its tracks and signals."

"These provisions are corporate welfare, plain and simple," said Clemente. "Look at what the FRA and Judge Franza say about CSX's utter disregard for safety. With CSX's record, you know the next catastrophe is just waiting to happen. Why should American taxpayers pay for this company's -- or any other private railroad's -- future misconduct?"

Clemente continued, "Through its new hire CSX appears to have bought the silence of its chief watchdog. It's also been buying the support of Congress, which is poised to pass this outrageous legislation. CSX contributed $1.4 million to political candidates and parties since 1995. Union Pacific, the other giant, contributed $2.7 million. Both maxed out to the one person who had the most to do with crafting this legislation -- Rep. Bud Shuster (R-PA), chairman of the House Transportation Committee. And CSX paid $90,000 over the last six months to hire as one of its lobbyists on the liability issues in the Amtrak bill Ann Ephardt, Shuster's former chief of staff.