SB-0263, As Passed Senate, June 13, 2013
March 13, 2013, Introduced by Senators CASWELL, GREEN, JONES and PROOS and referred to the Committee on Transportation.
A bill to amend 1976 PA 295, entitled
"State transportation preservation act of 1976,"
by amending section 10 (MCL 474.60), as amended by 2012 PA 42; and
to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 10. (1) In weighing the varied interests of the residents
of
this state, the department shall give consideration to consider
the individual interest of any person, public or private
corporation, local or regional transportation authority, local
governmental unit, private carrier, group of rail users, state
agency, other public or private entity, including a port authority
established under the Hertel-Law-T. Stopczynski port authority act,
1978 PA 639, MCL 120.101 to 120.130, or any combination of these
entities, expressing a desire to acquire or lease or secure an
easement for the use of a portion or all of the real property owned
by a railroad company. The property acquired by the department
under this act may be conveyed or leased to an entity or
combination of entities listed in this subsection with appropriate
reimbursement, as determined by the department.
(2)
The department may begin divestiture or offer 10-year
leases
to the current operator of the properties described in this
subsection
within 180 days after July 3, 1998. Except as otherwise
provided
in this act, the department shall accomplish divestiture
or
create leases, without partitioning a segment or a portion of a
segment,
in the following order from the smallest segment first to
the
largest segment last, of the following defined segments of
state-owned
rail property:
(a)
Lenawee county system means the rail lines owned by the
state
between Adrian and Riga, between Grosvenor and River Raisin
and
Lenawee Junction.
(b)
Hillsdale county system means the rail lines owned by the
state
between Litchfield and the Indiana state line and between
Jonesville
and Quincy, excluding that portion of the segment
located
in Jonesville from Beck street to the St. Joseph river.
(c)
Vassar area system means the rail lines owned by the state
between
Millington and Munger, between Vassar and Colling, and at
Denmark
Junction.
(d)
Ann Arbor and Northwest Michigan system means the rail
lines
owned by the state between Durand and Ann Arbor, between
Owosso
and Thompsonville, between Cadillac and Petoskey excluding
the
portion of the segment located in Petoskey north of Emmet
street
and excluding the Jarman Spur starting at 450 feet from the
point
of switch on the main rail to US-131, between Walton Junction
and
Traverse City, between Grawn and Williamsburg, and between
Owosso
and St. Charles.
(3)
The specific terms of a sale will be as determined by the
department
except for the following required conditions:
(a)
Each purchase agreement shall require that the purchase
price
shall be not less than the net liquidation value of the rail
line
or lines.
(b)
Each purchase agreement shall require that the purchaser
provide
at a minimum the average level of service adjusted for
traffic
levels for 3 years after the date of sale unless otherwise
mutually
agreed upon between the purchaser and shippers that
existed
on that line on July 3, 1998, and that rates on the segment
purchased
from the state will not increase more than the average
percentage
increase in the Detroit consumer price index for the 12-
month
period each year for the base rate in effect on January 1,
1996
for 3 years after the date of sale.
(c)
Trackage in the segments sold by the state shall be
maintained
at not less than the federal railway administration
class
of track standards for each segment as of January 1, 1998.
(d)
In the case of the sale of the segment described in
subsection
(2)(d), the purchaser shall be required to charge
reasonable
freight rates for that section between Durand and Ann
Arbor
and honor all existing freight rate agreements and trackage
rights
for 3 years after the date of sale.
(e)
Any existing lease or agreement for operation of a segment
in
effect on July 3, 1998 shall be extended at the same terms and
conditions
until a sale or lease is executed.
(4)
If there are no acceptable offers to purchase, the
property
shall be offered for a lease of not less than 10 years, by
the
department to the following parties in descending order:
(a)
Current operator.
(b)
Current shippers on that segment.
(c)
Governmental entities.
(d)
Other railroad companies.
(5)
If the purchaser or lessee fails to comply with the
conditions
of sale or lease, the property shall revert back to the
department
and shall then be offered for sale or lease to the
following
parties in descending order:
(a)
Current shippers on that segment.
(b)
Governmental entities.
(c)
Other railroad companies.
(6)
Before the execution of a purchase agreement, the
potential
purchaser shall submit to the department its most recent
financial
statement and a proposed operation plan including
tributary
lines and including known potential sublease agreements.
As
used in this subsection, "tributary lines" means spur rail lines
that
only intersect with a rail line owned by the state on July 3,
1998.
(7)
If during the first 10 years after purchase the purchaser
abandons
service and sells the segment or any portion of the
segment
that does not involve main line track, or any rails, ties,
or
ballast, excluding normal salvage, 95% of the proceeds from the
sale
shall be returned to the state as additional purchase price. A
segment
or a portion of a segment may be sold with the approval of
the
department.
(8)
A party aggrieved by the performance or failure to perform
under
the terms of a purchase agreement may bring an action in the
circuit
court where the party resides or where the property is
located
for appropriate relief.
(9)
The specific terms of a lease will be as determined by the
department
except for the following required conditions:
(a)
Each lease agreement shall require that the lessee provide
at
a minimum the average level of service adjusted for traffic
levels
for 3 years after the date of the lease agreement unless
otherwise
mutually agreed upon between the lessee and shippers that
existed
on that line on the effective date of the amendatory act
that
added this subsection, and that rates on that segment leased
from
the state will not increase more than the average percentage
increase
in the Detroit consumer price index for the 12-month
period
each year for the base rate in effect on January 1, 1996 for
3
years after the date of the lease.
(b)
Not less than 50% of trackage rights revenues shall be
reinvested
in eligible expenditures. As used in this subdivision,
"eligible
expenditures" includes the material and direct expenses
required
for the installation of railroad ties, track, ballast,
crossing
improvements, ditch and drainage repair or improvements,
brush
trimming, and the expenses required to conduct track and
signal
inspections as specified in federal regulations.
(c)
Trackage in the segments leased by the state shall be
maintained
at not less than the federal railway administration
class
of track standards for each segment as of January 1, 1998.
(d)
In the case of a lease of the segment described in
subsection
(2)(d), the lessee shall be required to charge
reasonable
freight rates for that section between Durand and Ann
Arbor
and honor all existing freight rate agreements and trackage
rights
for 3 years after the date of sale.
(10)
A party aggrieved by the performance or failure to
perform
under the terms of a lease agreement may bring an action in
the
circuit court where the party resides or where the property is
located
for appropriate relief.
(2) (11)
Upon acquisition of a right-of-way,
the department
may preserve the right-of-way for future use as a railroad line
and, if preserving it for that use, shall not permit any action
that would render it unsuitable for future rail use. If the
department determines a right-of-way or other property acquired
under this act is no longer necessary for railroad transportation
purposes, the department may preserve and utilize the right-of-way
for other transportation purposes or may dispose of the right-of-
way or other property acquired under this act for the purposes
described in section 6, or may dispose of or lease the right-of-way
or other property for other purposes, as appropriate. The
department shall not dispose of or lease a right-of-way without
first offering to transfer the right-of-way to the department of
natural resources. If the department of natural resources desires
to lease or purchase the right-of-way, the department of natural
resources
must indicate their its desire to
lease or purchase the
right-of-way within 60 days and accept the offered transfer within
1 year after the offer is made. If the department of natural
resources
does not indicate their desires a
desire to lease or
purchase the right-of-way within 60 days, the department may
dispose of or lease the right-of-way as otherwise provided for in
this act. If the department of natural resources does not accept
the
offered transfer within 1 year after indicating their its
desire to lease or purchase the right-of-way, the department may
dispose of or lease the right-of-way as otherwise provided for in
this act. When appropriate, a right-of-way or other property shall
be transferred or leased to a public or private entity with
appropriate reimbursement, as determined by the department.
(3) (12)
In preserving a right-of-way for
future rail use, the
department may do 1 or more of the following:
(a) Develop the right-of-way for use as a commuter trail where
the use is feasible and needed or lease the right-of-way to a
county, city, village, or township expressing a desire to develop
the right-of-way as a commuter trail. The lease shall be for an
indefinite
period of time , and
is cancelable by the department
only if the right-of-way is needed for rail usage. The trails,
unless leased to a county, city, village, or township, shall remain
under the jurisdiction of the department.
(b) Transfer, for appropriate reimbursement, the right-of-way
to the department of natural resources for use as a Michigan
trailway pursuant to part 721 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.72101 to
324.72115,
324.72116, if the deed includes restrictions on the use
of the property that assure that the property remains viable for
future
rail usage, and includes a clause that provides that
requires
the department of natural resources shall
to transfer, for
appropriate reimbursement, the right-of-way to the department, upon
a determination of the director of the department that the right-
of-way is needed for use as a railroad line.
(c) Lease the right-of-way to the department of natural
resources, or upon approval of the department of natural resources,
to a county, city, village, or township for use as a recreational
trail.
The lease shall be for an indefinite period of time , and is
cancelable by the department only if the right-of-way is needed for
rail usage. A recreational trail shall be reserved for non-
motorized forms of recreation or snowmobiling only. Snowmobiling
shall not be allowed on more than 50% of the mileage of the
recreational trails established pursuant to this act.
(d) In cases where a trail serves both a significant commuter
and recreation function, authorize the joint development of the
trail by the department and the department of natural resources, or
the department and any interested county, city, village, or
township. Administration of the trail shall be determined jointly
by the department and the department of natural resources.
(4) (13)
As a term of conveyance, the
department may require
restrictions on the use of the property that assure that the
property remains viable for future rail use and that the rail line
is made available by the purchaser for future freight or passenger
rail
uses and that the property shall will revert to the department
if the purchaser fails to maintain the property so that it remains
viable for future rail use.
Enacting section 1. Sections 10a to 10g of the state
transportation preservation act of 1976, 1976 PA 295, MCL 474.60a
to 474.60g, are repealed.