MSN Money Central

June 20, 2007

PHOENIX, AZ (AP) - Responding to concerns about projects proposed by Union Pacific, the Arizona Legislature has voted to impose new state regulatory oversight of railroad projects involving auctions of state trust land or forced acquisitions of private land through use of eminent domain.

House and Senate votes of 43-13 and 26-0 sent the bill to Gov. Janet Napolitano on Tuesday.

The bill (HB2020) would allow the state Corporation Commission to require that railroads go through a new review process under which the railroads would have to hire experts to brief the commission on economic, natural resource, water and other possible impacts and to allow the commission to suggest alternatives.

Supporters of the bill, who include agricultural groups and property owners, argued that railroads now are largely unfettered with little oversight by the federal Surface Transportation Board.

"If you believe in state's rights, you should support this bill. If you believe in private property rights, you should support this bill," said the sponsor, Rep. Jonathan Paton, R-Tucson. "They don't call it being railroaded for nothing."

Opponents said the bill probably would illegally intrude into a federally regulated matter and could antagonize Union Pacific at a time when the state wants it to discuss putting commuter passenger trains on tracks now used for freight traffic.

"If you're going into negotiations with somebody, you don't open negotiations with somebody by spitting in their eye," said Rep. Steve Farley, D-Tucson.

A Union Pacific representative testified before a legislative hearing that the bill could jeopardize planned construction of a new switching yard between Phoenix and Tucson and possibly deter the railroad from considering use of its tracks for commuter rail service between the two cities.

Omaha, Neb.-based Union Pacific plans to build the switching yard near Picacho Peak State Park but has said it has dropped the idea of building a spur in the Yuma area to serve a proposed new port in Mexico.

The yard is needed, according to Union Pacific, to help handle traffic along the railroad's "Sunset Route" main line between Los Angeles and El Paso, Texas.

The bill originally would have required a railroad to get commission permission for projects, but its scope was downgraded to allow only a review.

Union Pacific had objected that the requirement to obtain state approval conflicted with federal law giving exclusive authority to the federal board to approve railroad projects.

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