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15 Annotated Term Sheet Template for Acquisition of Real Property Interests from a Railroad by a Public Agency Seeking to Operate Passenger Rail Service The following sample term sheet presents the various issues that public agencies may encounter when pursuing a transaction to acquire interests in real property used for railroad purposes from a freight railroad. The term sheet contains Exhibit references as place-holders to illustrate the issues for which the parties would typically attach exhibits to a term sheet. We have not provided examples of exhibits themselves. We have provided footnotes to expand on the transactional or statutory background of particular items. We have indicated comments on various provisions by notes in italic font. Where any of several items are addressed, the options are contained in [brackets].
16 Outline of Terms for Real Property Transfer and Related Agreements Between [RAILROAD] and [AGENCY] The following outline of terms (this âTerm Sheetâ), dated as of ______________ 20__, is an outline of the essential terms for a Real Property Transfer Agreement (the âAgreementâ), as well as [ancillary easement], [license] and [other necessary agreements], to be negotiated between RAILROAD or its affiliates (âRAILROADâ) and [AGENCY]1 (âAGENCYâ) (each, individually, a âPartyâ and collectively, the âPartiesâ), to govern (a) the transfer of various interests in real property, (b) the grant of interests necessary for [rail transit operations] or [the development of a trail on such facilities], and [where appropriate] (c) the retention of such interests as may be necessary for RAILROAD to continue to fulfill its freight common carrier obligations,2 all in connection with the construction and operation of the public transportation corridor/s [description] (the âLineâ). I. Agreement Generally: The Parties acknowledge that this Term Sheet is intended to (a) establish the terms under which RAILROAD will transfer certain interests in property to AGENCY and (b) address the design and construction of the passenger rail facilities on the Line.3 The Parties agree to negotiate in good faith the terms and conditions of the Agreement and any ancillary agreements 1 In these agreements, the agency should be identified not only by name but by authorizing legislation, where applicable. E.g., South Florida Regional Transportation Authority Act, ch. 343, pt. I, Â§Â§ 343.51â343.58, Florida Statutes; Southern California Regional Rail Authority (SCRRA), CAL. GOVâT CODE Â§ 6500 et seq. and CAL. PUB. UTIL. CODE Â§ 130255. By setting forth the statutory authorization in the opening paragraph that identifies the agency, it confirms that its statutory powers and authority define the extent of its ability to agree to the terms of the agreement. Although the agency may later in the agreement be required to represent or warrant that it has sufficient authority to execute the agreement, the initial statement of its statutory, organic authority establishes at the outset the extent and the limits of that power and authority. 2 Rail carriersâ common carrier obligations are specified in 49 U.S.C. Â§ 11101. Agencies that wish to ensure that they do not acquire any freight common carrier obligation follow a procedure at the Surface Transportation Board (STB) referred to as the âState of Maineâ process, so-called because the first transaction in which it was used was the one in State of Maine, DOTâAcquisition and Operation ExemptionâMaine Central R.R. Co., 8 I.C.C. 2d 835 (1991). In a typical State of Maine proceeding, the agency files the pleadings required by 49 U.S.C. Â§ 10901 and 49 C.F.R. pt. 1150 to advise STB that it intends to acquire the line or other property or facilities, then files a Motion to Dismiss the proceeding, explaining that it will not acquire any of the rights or obligations from the transferring freight carrier that would translate into a transfer of any freight common carrier obligation to that agency. See, e.g., Mass. Depât of Transp.âAcquisition ExemptionâCertain Assets of CSX Transp., Inc., STB Finance Docket No. 35312, slip op. at 9 (Service Date May 3, 2010), affâd sub nom. Bhd. of R.R. Signalmen v. STB, 638 F.3d 807 (D.C. Cir. 2011); The Port of SeattleâAcquisition ExemptionâCertain Assets of BNSF Railway Company, STB Finance Docket No. 35128, slip op. at 3 (Service Date Oct. 27, 2008); Fla. Depât of Transp.âAcquisition ExemptionâCertain Assets of CSX Transp., Inc., STB Finance Docket No. 35110 (Service Date Dec. 15, 2010). Agencies should be aware that in some states (e.g., California) the state taxing authorities have determined that agencies that are subject to the jurisdiction of STB may be exempt from certain state-imposed sales, use, or other taxes. As a result, the agency may wish to balance the potential benefits (i.e., cost savings) of being exempt from certain state personal property or sales taxes against the potential risks and costs associated with becoming a carrier providing transportation subject to STBâs jurisdiction. 3 Issues will likely arise relating to the design and construction of passenger facilities following AGENCYâs acquisition of the corridor. The (a) property transfer terms and conditions and (b) design, construction, and operation parameters ultimately negotiated by the parties will likely, but not necessarily, be addressed in separate documents.
17 necessary to effect the property transfers and construction of facilities described in this Term Sheet, which terms and conditions shall include, without limitation, the key business terms set forth herein (or, with respect to the financial terms herein, terms that offer equivalent value to each of the Parties) and such additional terms and conditions (including, without limitation, with respect to defaults, representations, warranties, indemnification and insurance) as are commercially reasonable and consistent with agreements AGENCY has executed with RAILROAD as well as other agreements AGENCY has executed in connection with similar transactions. The Agreement(s) described in this Term Sheet shall be subject to (a) mutual agreement between the Parties with respect to the final form and substance of such Agreement(s), (b) authorization for the execution and delivery of such Agreement(s), (c) confirmation by AGENCY that the terms and conditions of the Agreement(s) are fully consistent with and will not in any way contravene any of AGENCYâs obligations under any federal grants related to the Project,4 and (d) the obtaining of all necessary regulatory,5 funding or other approvals for such Agreement(s) and/or the activities described therein. [AGENCY shall take the lead in seeking any state or federal funding needed to complete the work addressed in this Term 4 At the same time that an agency is stating here that it needs to confirm that the transaction does not contravene any obligations under applicable grants or other agreements with federal agencies (or for that matter, other state or local governments), the agency needs to be certain before signing even the term sheet that a public confirmation of its intent to acquire a piece of right-of-way or other facility will not be perceived by a granting agency that the project sponsor is making a premature statement of intent to acquire a particular property when the environmental process confirming the preferred alternative has not yet been issued. E.g., 23 C.F.R. Â§Â§ 771.117(d)(12), 771.118(d)(4). Having said that, the Federal Transit Administration (FTA) and Federal Highway Administration (FHWA) have issued regulations that permit preemptive purchases of rail corridors in order to protect the right-of-way needed for a transit project from being lost entirely or sold piecemeal to other purchasers in a way that would frustrate the agencyâs ability to complete the project. Id.; FTA Final Guidance on the Application of 49 U.S.C. Â§ 5323 to Corridor Preservation for a Transit Project, available at http://www.fta.dot. gov/documents/Final_Corr_Pres_Guidance_FINAL_10-27-2014.pdf (notice of publication in Federal Register at 79 Fed. Reg. 67238 (Nov. 12, 2014). FRA has not yet authorized a categorical exclusion that would accomplish the same objective. See Update to NEPA Implementation Procedures, 78 Fed. Reg. 2713, 2715 (Jan. 14, 2013): One commenter suggests expanding the list of CEs to include the purchase of existing railroad right-of-way and/or purchase of right-of-way for hardship or protective purposes. FRA notes that many acquisition activities typical of FRA projects are covered under FRA CE #17. FRA will reexamine CE #17 as part of the larger effort to reevaluate the FRA Environmental Procedures in the future. 5 The State of Maine proceedings at STB (see note 2, supra) are but one example of regulatory proceedings that may be required. Agencies should note that filing a State of Maine proceeding, if successful, will prevent the agency from asserting that STBâs jurisdiction over its operations preempts the requirements of otherwise applicable state and local environmental and other permitting requirements. See 49 U.S.C. Â§ 10501. That is, STB and courts have uniformly concluded that state and local governmentsâ attempts to enforce permitting or other local regulatory requirements with respect to actions of a rail carrier that is providing transportation subject to the jurisdiction of STB are preempted to the extent that enforcement of such requirements would interfere with the ability of the railroad to fulfill its common carrier obligations. See, e.g., City of Auburn, WA v. United States, 154 F.3d 1025 (9th Cir. 1988). Agencies that elect to preserve STBâs jurisdiction over their transactions may, on the other hand, elect to comply with state and local regulations and permitting requirements for political purposes. In addition, even when an acquiring agency secures an order confirming that STB has no jurisdiction over the agency, the agency may nonetheless assert that the presence of interstate freight operations on a corridor creates preemption of otherwise applicable state and local requirements.
18 Sheet.]6 The property that will be subject to the Agreement(s) and the work described herein is generally depicted on the Area Map attached to this Term Sheet at Exhibit A. II. Transfer of Real Property Interests by RAILROAD to AGENCY: In consideration for a price to be negotiated by the Parties for each of the following, RAILROAD and AGENCY shall negotiate the Agreement for the conveyance of real property interests,7 along with any ancillary agreements necessary to carry out the terms and conditions thereof, for the following parcels or interests: NOTE: The following list reflects the various interests that may be conveyed in connection with a transaction to transfer rail property for a public transportation project: A. Passenger Parcels: RAILROAD to convey parcels identified and described in Exhibit B in [fee simple]8 OR [as a passenger rail easement]9 to AGENCY. 6 Acquisitions of right-of-way by public entities typically arise at the request of the public body in connection with a federally assisted infrastructure project. Funding for new or improvements to existing freight rail facilities often constitutes a component of the consideration offered for the acquisition. 7 Federal grants and loans typically require the grantee/borrower to demonstrate a long-term interest and control over the use of property on which the grantee/borrower proposes to construct federally assisted facilities. In practical terms, this requirement will influence an agencyâs choice of the scope and duration of the interest it seeks to acquire. A long-term lease is typically the minimum interest that an agency must obtain in order to remain eligible for federal assistance. Grant Management Requirements, FTA Circular 5010.1D ch. IV, Â§ 3.e(1) (Nov. 1, 2008) (âThe grantee agrees to use project property for appropriate project purposes for the direction of the useful life of that property, as required by FTA.â); Final FTA Guidance on the Application of 49 U.S.C. Â§ 5323(q) to Corridor Preservation for a Transit Project 9 (Question 14) (Oct. 27, 2014) (as announced in 79 Fed. Reg. 67239 (Nov. 12, 2014)): The acquisition [of right-of-way (âROWâ) for corridor preservation] may take the form of a fee-simple acquisition of the ROW, a long-term lease, the acquisition of a long-term easement within the ROW, or the long-term acquisition of trackage rights (i.e., the right to operate on the existing tracks). The term of any property right, short of a fee simple acquisition, should be of sufficient duration to cover the time needed to plan and build the proposed transit facility and the useful life of that transit facility. 8 An agency should not approach any transaction in which it will acquire a fee interest from the rail carrier with an expectation of receiving a warranty, as opposed to a quitclaim, deed. In many states, courts have ruled that rail carriers that received property âin fee simple for railroad purposesâ (or similar language) did not in fact receive a fee simple interest but instead received only an easement that terminates when rail transportation authorization is abandoned. E.g., Chevy Chase Land Co. v. United States, 355 Md. 110, 733 A.2d 1055 (Md. 1999); City of Port Isabel v. Missouri Pacific R.R. Co., 729 S.W.2d 939 (Tex. Ct. App. 1987); Hartman v. J. & A. Development Co., 672 S.W.2d 364 (Mo. Ct. App. 1984); Pollnow v. Wis. Depât of Natural Resources, 88 Wis. 2d 350, 276 N.W.2d 738, 744 (1979); Veach v. Culp, 92 Wash. 2d 570, 599 P.2d 526 (1979). Unless a deed conveying the property interest to the railroad is quite specific that the conveyance is for freight rail purposes only (which would be unusual since it was quite common for railroads to have both passenger and freight operations until the creation of Amtrak in 1970 established a national passenger rail carrier, Rail Passenger Service Act of 1970, Pub. L. No. 91-518, 84 Stat. 327 (1970), as amended from time to time and now codified at 49 U.S.C. 24301, et seq.), the continuation of commuter rail and/or rail transit operations on a rail corridor is typically viewed as preserving rail operations in a way that avoids termination of the easement and reversion to the original grantor(s) or his/her/their heirs. In the event that there is a question as to whether the conveyance for commuter rail or rail transit purposes will preserve the corridor against the claims of those heirs in circumstances where the freight rail carrier is not preserving an easement for the purposes of continuing its freight service, agencies may wish to consider agreeing to use the corridor for trail use as well as transit. The Rails-to Trails Act, 16 U.S.C. 1247(d) and
19 B. Exchange Parcels. AGENCY to convey parcels identified and described in Exhibit C in [fee simple] or [as a freight rail easement]10 to RAILROAD. C. Relocation Parcels. AGENCY to convey parcels identified and described in Exhibit D in [fee simple] or [as a freight rail easement11] to RAILROAD. NOTE: If a project requires the relocation of a portion of RAILROADâs facilities, the property transfers necessary to accommodate such relocation will frequently be included as part of AGENCYâs acquisition. D. Temporary Easements for Construction Period: RAILROAD to convey temporary easements to be used during the period of construction for purposes that may include but are not limited to grading, installation and maintenance of sediment and erosion control measures, and construction access, as identified and described in Exhibit E.12 the implementing regulations at 49 C.F.R. Â§ 1152.29, present a powerful tool for local agencies to preserve corridors against the claims of reversionary property holders. Presault v. ICC, 110 S. Ct. 914, 922 (1990). 9 Even when the agency is acquiring only an easement rather than a fee simple interest, with the freight rail seller retaining an easement for freight service purposes, the agency should utilize the State of Maine process described in note 2, supra, to confirm that it has not inadvertently acquired any rights or obligations that would tip the scales towards a determination that it has acquired STB-jurisdictional interests. 10 The selling railroad will often, although not in every circumstance, seek to reserve an exclusive easement for freight rail purposes. In order to satisfy the shared objective of ensuring that the railroad and not the agency has the common carrier obligation, the conveyance from the railroad should be constructed to involve a transfer of the fee subject to a retained easement rather than having the agency re-convey an easement back following its acquisition. If the railroad does not wish to retain an exclusive freight easement, it may retain an interest of lesser scope. When conveying an âexchangeâ parcel, if the railroad is acquiring only an easement rather than a fee, then pleadings at STB will need to confirm that the conveying agency does not have any common carrier obligation over property on which the railroad will conduct its freight operations. 11 See note 10, supra. The Uniform Act requirements, 42 U.S.C. Â§Â§ 4601â4655, which typically apply to business relocations that are caused by a federal grant, are not triggered here. A railroad that relocates its operations from property being acquired by a public agency to another line will not likely qualify as a displaced person under the Uniform Act, since the railroad will continue its operations. In addition, since state and local governments have no condemnation power over a railroad, see, e.g., 14500 Ltd v. CSX Transp. Inc., Case No. 1:12 CV 1810, 2013 U.S. Dist. LEXIS 39806 *10 (N.D. Oh. 2013), a railroad will have voluntarily entered into the sale. Regional Transp. Dist. v. Outdoor Systems, Inc., 34 P.3d 408, 415â16 (Colo. 2001); see also Isham v. Pierce, 694 F.2d 1196, 1201 (9th Cir. 1982) (âThe legislative history of the [Act] demonstrates that Congress was concerned with acquisitions accomplished through the power of condemnation by federal agencies and state and local public agencies receiving federal financial assistance.â), Gomez v. Chody, No. 86 C 6776, 1987 WL 9574, at *4 (N.D. Ill. Apr. 15, 1987), (âThe [Act] was intended to benefit those displaced by public agencies with coercive acquisition power, such as eminent domain. It was intended to benefit individuals who were not willing sellers.â). However, the holders of other interests that may be displaced by a federally assisted project, such as the owners of billboards that must be removed, may be entitled to compensation under the Uniform Act. Regional Transp. Dist., 34 P.3d at 418â21. 12 The acquisition of temporary easements for construction purposes will not require STB authority because the rights granted under such easements do not involve the permanent conveyance of an interest in railroad property or a conveyance of a scope that would interfere materially with the railroadâs ability to fulfill its common carrier obligation.
20 E. Aerial Easements: RAILROAD will grant AGENCY aerial easements to permit the construction, operation and maintenance of the Line over lines owned and/or used by RAILROAD, at locations described in Exhibit F. F. Permanent Easement for [Subsurface Support] [Support Structure] [Crash Wall]. RAILROAD will grant AGENCY a perpetual easement for construction of [subsurface support structures] [footings, piers and related above-ground support structures] [crash walls] in [location relative to the RAILROAD right-of-way]. The location for the perpetual easement is more fully described in Exhibit G. NOTE: Key design requirements for such structures should be included in the preceding paragraph. G. Access/Maintenance Easement: Depending on the proposed configuration of future facilities, RAILROAD and/or AGENCY may grant one another permanent access easements over their respective properties to allow for inspection, maintenance, rehabilitation or reconstruction. The easement may allow solely for passage of certain persons and equipment, or may also allow for occupancy in order to conduct work. The location of the access easement is more fully described in Exhibit H. H. Facilities License: RAILROAD and/or AGENCY may grant one another licenses on their respective properties to allow for the installation and occupancy of equipment and access to maintain such equipment. The location of the access easement is more fully described in Exhibit H. I. Rights Reserved by RAILROAD: The conveyance of any real property interests by RAILROAD to AGENCY shall be subject to RAILROADâs reservation of [salvage rights and value of salvaged material] [freight operating easementâinterim or permanent]13 [utility easement and rents]14 [parking easement] [building easement] [mineral or water rights] [drainage] [indicia of control and occupancy of real property].15 13 See note 10, supra. 14 Railroads will frequently reserve any fiber optics or related communications easements in their rights-of- way. Any such retained rights should be reflected in a reduction in the value of the property conveyance to the public body. 15 A railroadâs desire to retain indicia of control over property being conveyed to an agency may conflict with the requirements of federal grants and loans that typically require the grantee/borrower to demonstrate a long- term interest and control over the use of property on which the grantee/borrower proposes to construct federally assisted facilities. 49 U.S.C. Â§ 5307(c) (âA recipient may receive a grant in a fiscal year only ifâ(1) the recipientâ¦submitsâ¦a certification for that fiscal year that the recipientâ¦(C) has or will have satisfactory continuing control over the use of equipment and facilitiesâ); 49 C.F.R. 18.31(b) (âUse. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes [sic], and the grantee or subgrantee shall not dispose of or encumber its title or other interests.â); Master Agreement for Federal Transit Administration Agreements, FTA MA(21) (Oct. 1, 2014) Â§Â§ 21(a) (âThe Recipient agrees that: (1)â¦It will maintain continuing control of the use of Project property satisfactory to FTAâ), (g) (âAbsent the express consent of the Federal Government in writing, the Recipient agrees to preserve the Federal interest in its Project property and to maintain satisfactory continuing control of that Project property as followsâ¦.â). In practical terms, this requirement will influence an agencyâs choice of the scope and duration of
21 III. Condition of Property: NOTE: In general, the Term Sheet should provide for a time certain within which AGENCY (and RAILROAD, if it is acquiring property) may conduct due diligence, including environmental and title investigations, and seek cure of any identified violations or defects. A. Right of Entry for Environmental and Geotechnical Investigations: Subject to authorization by RAILROAD and the execution of appropriate permits in the form attached as Exhibit I,16 AGENCY will have the right to enter upon RAILROADâs property to inspect and perform environmental due diligence or geotechnical investigations (including but not limited to borings or other invasive testing), or such other investigation as is required to complete the engineering and design of the Line on the properties AGENCY will acquire or occupy in connection with AGENCYâs construction and operation of the Line. NOTE: Railroads will likely grant a right of entry to permit visual inspections. However, railroads are not likely to permit invasive environmental testing unless the acquiring public body is willing to indemnify for or otherwise guarantee that it will bear responsibility for any remediation that may be required for any environmental degradation discovered during or caused by testing. B. Existing Encumbrances: NOTE: Typically, the acquiring agency will desire all encumbrances to be removed from the property prior to transfer. However, the acquiring agency must carefully analyze the facts and circumstances relevant to any given transaction to determine whether it wishes to assume any of RAILROADâs interest in such encumbrances. RAILROAD will provide to AGENCY a list of all agreements, leases, licenses, permits, and other like encumbrances on the property to be transferred to AGENCY, and further, will provide information or documents as requested by AGENCY. RAILROAD will exercise all rights with regard to the termination, removal, or relocation of any utilities, encroachments, agreements, leases, licenses, permits, and other interests encumbering the right-of-way AGENCY will require for construction and operation of the Line and related facilities in a manner that will (a) provide AGENCY an unencumbered right-of-way prior to the transfer of property the interest it seeks to acquire. A long-term lease is typically the minimum interest that an agency must obtain in order to remain eligible for federal assistance. 16 These are typically the railroadâs standard âright of entryâ or similar permits. Railroadâs standard form agreements typically expect the other party to fully indemnify the railroad. State limitations on the ability of public agencies to provide unlimited indemnification or insurance, however, may require negotiation of these terms. See, e.g., VA. CODE ANN. Â§ 33.2-1726 (2014) (enumerating the powers of a local Transportation Board, but limiting that power insofar as âno liability or obligation shall be incurred pursuant to this chapter beyond the extent to which money has been provided under the authority of this chapter.â); OKLA. CONST. art. X, Â§Â§ 23, 26; Okla. Op. Attây Gen. No. 06-011 (2006), 2006 WL 1987826, at *4 (âA limitation of liability provision which releases a vendor from responsibility for damages caused by its own negligence or intentionally wrongful acts puts the vendor's interest above that of the public. Such a clause is, therefore, not only constitutionally suspect but void as against public policy.â); N.M. Op. Att'y Gen. No. 00-04 (2000), 2000 WL 1833589, at *4 (finding that an indemnification provision created a debt under the state Constitution, which "preclude[s] a government from entering into an agreement subjecting it to contingent liability, the amount of which is uncertain at the time of the agreement"); Ohio Op. Atty. Gen. No. 96-060 (1996), 1996 WL 708356, at *9 (finding that limitation of liability provisions may be acceptable, but only when the liability does not exceed the life of the contract, the contract contains an express dollar amount cap, and the source for any potential payments has already been appropriated). See note following text as well.
22 interests to AGENCY and (b) require payment of no compensation by AGENCY to any holder of such right or interest. NOTE: RAILROAD may elect to retain certain utility easement rightsâsee Rights Reserved by RAILROADS above. C. Encumbrances Generally: Unless AGENCY expressly so consents in writing, RAILROAD shall not grant any new agreement, lease, license, or permit, or allow any encroachment or other encumbrance to arise on any parcel in which RAILROAD will grant an interest to AGENCY between the date on which the Parties enter into this Term Sheet and the [date certain as established by the Parties].17 RAILROAD shall cure any lien that attaches to the property after the date of execution of this Term Sheet within 30 days of the filing of such lien. D. Title: AGENCY shall have the right to order a review of title to the property to be conveyed, and shall notify RAILROAD within [XX] days of Closing under the Agreement of any defects in title which RAILROAD will be responsible to cure. Alternatively, AGENCY may elect to terminate the Agreement upon [YY] daysâ notice to RAILROAD if AGENCY reasonably determines that such defects cannot be cured within a reasonable time. IV. Design Reviews and Approvals: A. RAILROAD has provided AGENCY with its design requirements pertaining to construction adjacent to RAILROADâs facilities and AGENCY will be guided by the requirements set forth therein to the extent that they apply to the construction and operation of the Line and related facilities.18 However, the Parties will work collaboratively to review and develop as appropriate any standards for design, engineering, operations, and maintenance where any of the standards set forth in RAILROADâs guidelines will unreasonably impede AGENCYâs ability to construct and operate the Line safely, efficiently, and cost-effectively. In the event of review and discussion of revision of RAILROADâs guidelines, both AGENCY and RAILROAD will bear in mind the primary goal of preservation of safety and efficiency of both the RAILROADâs and the AGENCYâs operations. 17 There are circumstances in which the conveying railroad may have no choice in the matter. STB has the authority to require a railroad: 1) to permit another carrier to use its tracks or facilities in or near a terminal area, 49 U.S.C. Â§ 11102; or 2) as a condition of the approval of a transaction between two railroads to divest parallel tracks or grant trackage rights or access to other facilities pursuant to 49 U.S.C. Â§ 11324(c). The proceedings at STB, however, typically extend over a sufficient period of time that the agency will have ample opportunities to evaluate the potential impact on the proposed transit operations. 18 Any new construction, any rehabilitation of existing track or facilities, or any other activity within any right- of-way that is shared with a freight railroad will be subject to FRAâs Track Safety Standards, 49 C.F.R. pt. 213, and all applicable FRA regulations. Most freight railroads incorporate those standards into their own requirements and then layer on additional requirements. Even if the agency is proposing a light rail operation that would not otherwise trigger the application of FRAâs rules, the FRAâs Shared Use Policy, 49 C.F.R. pt. 209, app. A, confirms that FRA has jurisdiction over such operations and that the agency can only operate or conduct any construction or other activities that are inconsistent with FRA rules if it has secured a waiver pursuant to 49 C.F.R. pt. 211, subpt. C and app. A. Any request for waiver in a right-of-way shared with a freight railroad will require concurrence of that rail carrier.
23 NOTE: Railroads are unlikely to deviate from their published standards for construction work or operations on track over which the railroad operates. The degree to which a railroad may agree to alternate approaches in connection with other facilities will be determined by the specific circumstances of each project. B. To the extent that they are not covered in RAILROADâs design guidelines, RAILROAD will provide AGENCY with any RAILROAD guidelines for [segmental bridge construction and drop-in] [highway bridge construction] [pedestrian bridge construction] [use of overhanging cranes and gantries along the RAILROAD main line right-of-way] and [retaining walls] [other facilities as required for the project]. AGENCY will review any such guidelines and provide questions or responses to RAILROAD within thirty calendar (30) days of receipt thereof and the Parties will discuss any variance from those requirements that AGENCY may require for the period of construction of the Line. NOTE: The facilities listed in the preceding paragraph are intended as illustrations; any given project will likely involve others. C. RAILROAD will provide information to AGENCY as necessary to allow AGENCY to design and install facilities (NOTE: e.g., catenary, rail, signal towers) on structures belonging to RAILROAD of which RAILROAD will retain ownership and control. RAILROADâs review of design drawings will include review of the design of such facilities as RAILROADâs interests may appear. D. AGENCY will provide RAILROAD with all drawings and plans to the extent required by RAILROADâs design guidelines, and RAILROAD will use all commercially reasonable efforts to complete its reviews of such drawings and plans and provide responses thereto within thirty (30) calendar days of its receipt of such documents. RAILROADâs approval of such drawings and plans shall not be unreasonably withheld. E. NOTE: Items and issues typically included in RAILROADâs review of AGENCYâs proposed design and construction efforts include: â¢ Milestones and time frames for design review. â¢ Procedures for modifying designs. â¢ Access to right-of-way by AGENCY personnel or representatives. â¢ Funding and reimbursement procedures. â¢ Rights in event of delay. â¢ Insurance and indemnification. â¢ Notification procedures for field work. â¢ Procedures and allocation of responsibility for clearing debris, disabled equipment, and wrecksâ see sample provision below. â¢ Rights to as-built documentation. â¢ Post-construction inspection and acceptance. â¢ Grade crossings. â¢ Flyover easements and associated facilities.
24 V. Applicable Law: A. NOTE: The Term Sheet should require the Parties to comply with all federal, state, and local statutes, regulations, and directives relating to the transaction, the subsequent project, and any funding commitments. Such requirements typically arise from, but are by no means limited to, the sources listed below. Project participants should conduct regular reviews of the funding sources applicable to each project to ensure that the Parties remain in current compliance with all requirements resulting from such funding. â¢ STB jurisdiction over rail transactions.19 â¢ FTA grants.20 â¢ RRIF loans.21 â¢ TIGER grants.22 â¢ Uniform Act requirements.23 â¢ NEPA.24 â¢ Federal and State public procurement laws. Âº NOTE: In transactions with Amtrak, AGENCY will have to address an additional overlay of federal law specific to Amtrak and federal court jurisdiction. â¢ Buy America requirements.25 â¢ The Americans with Disabilities Act.26 19 STBâs jurisdiction is delineated in 49 U.S.C. Â§ 10501, and the specific transactions and activities that are subject to its jurisdiction are spelled out in 49 U.S.C. Subtitle IV (Â§Â§ 10101, et seq.) 20 FTA provides two types of grants: formula grants and discretionary grant programs. For an explanation by FTA of its programs and the process of applying for such grants, see http://www.fta.dot.gov/grants/12830_263. html. 21 Railroad Rehabilitation and Improvement Financing Program (RRIF), 45 U.S.C. Â§ 821, et seq. The regulations governing the RRIF Program can be found at 49 C.F.R. pt. 260. Further information about the program is available at http://www.fra.dot.gov/Page/P0128. 22 This is the Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grant program, created under the American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111â5, 123 Stat. 115 (2009). Information about applying for TIGER grants can be found at the Web site created by USDOT for this purpose: http://www.dot.gov/tiger. 23 This refers to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Pub. L. No. 91-646, 84 Stat. 1894 (Jan. 2, 1971), codified at 42 U.S.C. 4601, et seq. 24 The National Environmental Policy Act of 1969, Pub. L. No. 91-190, 83 Stat. 852 (1970), as amended from time to time, codified at 42 U.S.C. 4321, et seq. 25 FTA and FHWA each has its own regulations for implementation of Buy America requirements. These regulations can be found for FTA at 49 C.F.R. pt. 661 and for FHWA at 23 C.F.R. Â§ 635.410. FRAâs Buy America requirements are found in each programâs authorizing statutes. See, e.g., 49 U.S.C. chs. 244, 246; Â§ 24405 (High Speed Rail Program). 26 The Americans with Disabilities Act of 1990, Pub. L. No. 101-336, 104 Stat. 327 (1990), as amended by the ADA Amendments Act of 2008 (Pub. L. No. 110-325), which became effective on Jan. 1, 2009, currently codified at 42 U.S.C. ch. 126 and 47 U.S.C. ch. 5 (ADA). The Department of Justice has regulations implementing the ADA, and each governmental agency is responsible for ensuring compliance as well in all matters that come within its jurisdiction. As a result, for example, USDOT issued rules regarding level boarding at commuter rail stations in 2011. Transportation for Individuals with Disabilities at Intercity, Commuter, and High Speed Passenger Railroad Station Platforms; Miscellaneous Amendments, 76 Fed. Reg. 57924 (Sept. 19, 2011) (DOT Final Rule
25 VI. Activities During Construction and Operation of the Line: A. The Parties will agree upon processes, means, and mechanisms that will allow AGENCYâs construction to proceed safely, efficiently, and cost-effectively within the constraints of engaging in construction activities on property near or adjacent to an active railroad right-of-way. B. AGENCY will reimburse RAILROAD for the cost of any flagging protection that is required during AGENCYâs construction. At least [days/weeks] in advance of the time that AGENCY will require flagging protection, AGENCY will provide RAILROAD with a schedule of when flaggers will be required, and RAILROAD will provide flagging support at times and with sufficient personnel to avoid delays to the construction project. Notwithstanding the foregoing, in the event of changes to AGENCYâs work schedule, it will advise RAILROAD as soon as it learns of the need for flagging.27 NOTE: An AGENCY may wish to consider asking RAILROAD for dedicated flagging teams to avoid delays that could arise if railroad exigencies develop that would otherwise trigger redeployment of personnel. C. RAILROAD will designate an individual as the Line Project Coordinator, who will be the RAILROAD representative who has authority to answer questions and resolve issues that arise during the design and construction process. AGENCY will pay RAILROAD ____% of that individualâs compensation from the date of execution of the Agreement until AGENCY provides completion of the design and construction phases of the Line project that involve RAILROAD property. D. During the construction phase, the Parties will agree upon a schedule of monthly meetings among representatives of RAILROAD, AGENCY, and their contractors to ensure that the Parties have regular opportunities for consultation and collaboration in order to allow for the expeditious completion of the construction process in accordance with the schedule agreed upon by the Parties. E. RAILROAD acknowledges that AGENCY will enter into separate agreements related to operations and maintenance of the Line and ancillary facilities, as may be necessary, with [State, County or Municipal entities], and that nothing in such agreements will be inconsistent with or will cause AGENCY to violate any of the terms and conditions of the Agreement. F. RAILROAD shall be fully responsible for clearing and removing any wrecks of its equipment from the Line and shall bear the full cost of such clearance and removal. In the event of occurrence of such a wreck that impacts the Line right-of-way directly, or that is on the RAILROAD right-of-way and will have an impact on Line operations, RAILROAD shall: (i) immediately notify AGENCY of the cargo amending 49 C.F.R. pts. 37 and 38). This rule accounts for the potential conflict between high-level platforms, on the one hand, and freight operations that might involve dimensional equipment on tracks adjacent to platforms, on the other hand, by permitting commuter rail operators to use alternative means to enable disabled passengers to have access to each car on a train. 49 C.F.R. Â§ 37.42(c). 27 The Railroad Workplace Safety regulations, 49 C.F.R. pt. 214, establish the minimum requirements. These include the Roadway Worker Protection rules, 49 C.F.R. Â§Â§ 214.301â214.355, as well as other requirements. Rail carriers may establish their own rules that require more than the FRA mandates, as long as the additional rules are not inconsistent with the requirements established by FRA.
26 and any hazardous materials on the trains involved in the incident, such notification to consist of the information RAILROAD is required to provide in accordance with 49 C.F.R. Â§Â§ 171.15 and 171.16 (NOTE: FRA is currently evaluating potential amendments to its hazardous materials shipment rules); (ii) provide AGENCY with frequent, regular updates on the status of the wreck removal operations and of the resolution of any matters relating to the presence of hazardous materials; and (iii) fully reimburse AGENCY for any costs (including loss of revenue) incurred by AGENCY or its contractors or the Concessionaire to repair any Line equipment, track, catenary, or facilities that may have been impacted by a wreck as described in this paragraph. G. NOTE: If AGENCY contemplates transferring its interests to a concessionaire as part of a publicâ private partnership (P3), the Term Sheet should address construction by the concessionaire, for instance: AGENCY will select the Concessionaire to complete the design and implement construction and operation of the Line. Prior to issuance of any request for proposals for the Concessionaire, RAILROAD may comment upon the qualifications for the Concessionaire but AGENCY shall have the sole right and authority to establish qualifications and rights and obligations of the Concessionaire, and to select the Concessionaire. All operations of the Line, whether by the Concessionaire or by employees of AGENCY, shall be conducted in accordance with all applicable state and federal safety regulations. RAILROAD will consent to the assignment of AGENCYâs rights and obligations to Concessionaire.
27 VII. Compensation: NOTE: Compensation for the acquisition of rail property is likely to be addressed at least in part through cash compensation, similar to real estate transactions generally, but is determined by the parties. Other mechanisms may include an exchange of property, reimbursement to RAILROAD for the costs associated with changes to its facilities occasioned by AGENCYâs project, and construction by AGENCY of new facilities on behalf of RAILROAD.28 VIII. Insurance and Indemnification: NOTE: The examples of insurance provisions included below are most typical of a construction or joint use agreement involving AGENCYâs activities on or near RAILROADâs right-of-way rather than terms and conditions that would typically appear in a purchase and sale agreement. However, the scope of insurance issues must be fully negotiated at the property acquisition phase so that AGENCY can obtain a full picture of the liabilities and obligations it will incur in connection with acquiring real property interests. 28 There is no statutory or regulatory mandate that establishes a valuation methodology for conveyances of interests in real estate from a rail carrier to a non-rail carrier. The values paid by public agencies for rail corridors or other ancillary facilities often reflect some component of approved valuation based on an across-the- fence (i.e., fair market value) approach, an âassembled corridor factorâ that reflects the extra value of the cost of putting together a fully linked corridor. The statute that authorizes Amtrak to take property interests from railroads when the two parties cannot agree, currently codified at 49 U.S.C. Â§ 24311(c), requires STB to require the carrier to convey the property to Amtrak âon reasonable terms, including just compensationâ but does not define the standard to be used in establishing that compensation. In the first case to use that statutory condemnation authority, the ICC determined that the appropriate methodology for determining compensation in such cases is either Net Liquidation Value or Going Concern Value, whichever is higher. National Railroad Passenger Corp.ââConveyance of Boston and Maine Corp. Interests in Connecticut River Line in Vt. and NH, et al. 4 I.C.C. 2d 761 (1988), revâd on other grounds, Boston and Maine Corp. v. I.C.C., 911 F.2d 743 (D.C. Cir. 1990), revâd and remanded, Natâl R.R. Passenger Corp. v. Boston and Maine Corp., 503 U.S. 407 (1992). The I.C.C. and STB jurisprudence is replete with decisions establishing fees for trackage rights compensation in the freight context. See, e.g., Ark. & Mo. R.R. Co. v. Mo. Pac. R.R. Co., 6 I.C.C. 2d 619 (1990); CSX Corp. and CSX Transp., Inc., Norfolk S. Corp. and Norfolk S. Ry. Co.âControl and Operating Leases/AgreementsâContrail Inc. and Consolidated Rail Corp., STB Finance Docket No. 33388, and Responsive ApplicationâState of New York, by and through its Department of Transp., and the New York City Economic Development Corp., STB Finance Docket No. 33388 (Sub-No. 69) (Service Date Dec. 18, 1998); South Plains Switching, Ltd. CoâCompensation for Use of Facilities in Alternative Rail ServiceâWest Texas and Lubbock Ry. Co., STB Finance Docket No. 35111 (Service Date Dec. 15, 2008). The formulas there could prove useful even though the dynamics and wear and tear of adding passenger trains to freight lines are not the same as adding freight trains. The compensation amounts for Amtrakâs use of freight lines (as opposed to outright acquisition, as discussed above) are not particularly helpful here, either, because those are based on the avoidable cost methodology that was established when Amtrak was created in the early 1970s to relieve freight railroads of their passenger common carrier obligations. The requirement that Amtrak work out an allocated cost methodology with states that use its Northeast Corridor, Passenger Rail Investment and Improvement Act of 2008, Section 209, codified at 49 U.S.C. Â§ 24101 note, may prove to be a useful methodology or formula for determining allocated costs. Even this methodology, however, will still have the disadvantage of assessing allocation of costs between passenger railroads (for the most part, although there are freight carriers operating on the Northeast corridor as well) and not taking into account the differences between freight and passenger operations. As a result, the negotiation of such compensation for acquisition or use will most often be based upon a methodology to be agreed upon by the parties. There is no standard methodology across the industry at this time.
28 A. Commercial General Liability Insurance. AGENCY maintains and shall continue to maintain a minimum of $NNN,NNN,NNN.00 commercial general liability coverage. 29 B. Railroad Protective Liability Insurance. NOTE: RAILROAD is likely to require railroad protective liability insurance or a railroad operations endorsement on AGENCYâs CGL policy to cover activities on or near the right of way during due diligence and construction. AGENCY shall secure RPL insurance naming RAILROAD as the sole named insured having a combined single limit of not less than XX Million Dollars ($XX,XXX,XXX.00) each occurrence and YY Million Dollars ($YY,YYY,YYY.00) in the aggregate applying separately to each annual period. Said policy shall provide coverage for all loss, damage, cost, or expense, including attorneysâ and consultantsâ fees, arising from bodily injury and property damage liability, and physical damage to property, attributed to acts or omissions at any job site impacted by the Project. The policy shall be issued using Insurance Services Offices forms CG 00 35 10 01, or their equivalents. C. NOTE: the following is a particularly detailed Workersâ Compensation provision: Workers' Compensation and Employers Liability Insurance: Coverage must include but not be limited to: AGENCYâs statutory liability under the workers' compensation laws of the state of [_________], and Employers' Liability (Part B) with limits of at least $X00,000 each accident, $X00,000 each employee by disease and a policy limit of $X00,000 by disease. If AGENCY is self-insured, evidence of state approval and excess workers' compensation coverage must be provided. Coverage must include liability arising out of the U.S. Longshoremen's and Harbor Workers' Act, the Jones Act, and the Outer Continental Shelf Land Act, if applicable. The policy must also contain the following endorsements (which must be shown on the certificate of insurance): Federal Employer Liability Act (FELA) ISO Form WC 00 01 04 A (or a substitute form providing equivalent coverage), and Alternate Employer endorsement ISO form WC 00 03 01 A (or a substitute form providing equivalent coverage) showing RAILROAD in the schedule as the alternate employer.30 D. Pollution Liability Insurance: Pollution Liability coverage must be written on ISO Form âPollution Liability Coverage Form Designated Sitesâ CG 00 39 12 04 (or a similar form providing equivalent coverage) with limits of at least $X00,000,000 per occurrence and an aggregate limit of $X00,000,000. E. Umbrella or Excess Insurance: If AGENCY utilizes umbrella or excess policies to comply with limits of coverage required, these policies must âfollow formâ and afford no less coverage than the primary policy. 29 49 U.S.C. Â§ 28103(a) limits the aggregate liability from a single accident or incident âarising from or in connection with the provision of rail passenger transportation, or from or in connection with any rail passenger transportation operations over or rail passenger transportation use of right-of-way or facilities owned, leased, or maintained by any high-speed railroad authority or operator, any commuter authority or operator, any rail carrier, or any State,â to $200,000,000 (in 1997 dollars). This statutory cap was increased in the FAST Act enacted on Dec. 4, 2015. Accordingly, the federal statutory cap, as thus amended, is a reasonable limit for an agencyâs liability and the amount of insurance AGENCY must maintain. 30 Although it is unlikely, some agencies may find themselves subject to the Federal Employer Liability Act, 45 U.S.C. Â§ 51, et seq. (FELA). Any agency that finds itself subject to FELA will require substantially more insurance because the liability of the employer is set by a court rather than based on state statutory limits as is the case with state-based workersâ compensation arrangements.
29 F. To the extent permitted by [State] law, each Party shall indemnify, and hold the other Party, including such other Partyâs contractors, agents, and employees, harmless from any and all payments, costs, and expenses in connection with or arising out of any claims, actions, or demands against such other Party or its respective officers, directors, agents, or employees arising from the work performed under the Agreement, to the extent of the indemnifying Partyâs negligence. G. Allocation of Liability: NOTE: State law may limit the extent to which a public entity may indemnify RAILROAD for RAILROADâs own negligence, and may also prohibit the imposition of unlimited liability on AGENCY without legislative appropriation.31 The following provisions are examples: 1. Notwithstanding the foregoing, the Parties specifically acknowledge and agree that AGENCY shall have no duty to indemnify or hold harmless RAILROAD from: (a) Any claims, actions, or demands seeking damages, including bodily injury or death caused by the willful misconduct of RAILROAD, its agents, licensees, employees, officers, or directors. (b) An award of punitive or exemplary damages caused by the conduct of RAILROAD, its officers, employees, agents, licensees, or subcontractors. (c) Any claims, actions, or demands seeking damages, including bodily injury by employees of RAILROAD.32 NOTE: Depending on the nature and extent of an agencyâs insured retention, the parties may wish to allocate responsibility for willful misconduct or punitive damages based on ability to lower those claims by insurance. H. Each Party shall, in addition to any indemnities flowing to such Party, require each of its contractors (NOTE: including, for AGENCY, the Concessionaire, as applicable) and subcontractors at all tiers to agree to secure insurance and to indemnify, defend, and hold harmless the other Party from and against any and all liability, expense (including but not limited to defense costs and attorneysâ fees), claims, causes of action, and lawsuits for damages of any nature whatsoever, including but not limited to bodily injury, death, personal injury, or property damage arising from or in connection with any alleged act and/or omission of the contractor (including, for AGENCY, the Concessionaire) or subcontractor arising from the work performed under the Agreement. 31 See note 16, supra. In some states, the public agencies have successfully sought changes to the otherwise applicable statutory or state constitutional limitations on their liability in order to satisfy the requirements of the freight carrier from which they are acquiring corridors. See COLO. REV. STAT. Â§ 24-10-115 (2014); N.M. STAT. Â§ 56- 7-1 (2005); MINN. STAT. Â§ 398.04 (2014). 32 Rail carrier employees will all be covered by FELA, as discussed in note 30, supra. Because the railroad will have insurance or reserves established to cover their employeesâ injuries, an agency should negotiate an arrangement that preserves the railroadâs responsibility for its own employees.
30 I. AGENCY agrees to waive its right of recovery against RAILROAD (NOTE: and RAILROADâs indemnitees, as RAILROAD may specify) for all Liabilities (defined below) that could be insured against by the insurance required to be maintained hereby. In addition, its insurers, through the terms of the policy or policy endorsement, must waive their right of subrogation against RAILROAD for all claims and suits. AGENCYâs certificate of insurance must reflect the waiver of subrogation endorsement. AGENCY further waives its right of recovery, and its insurers also waive their right of subrogation against RAILROAD for loss of its owned or leased property or property under AGENCYâs care, custody, or control. J. All policy(ies) required above (excluding Workers Compensation, as applicable) shall include a severability of interest endorsement and Railroad shall be named as an additional insured with respect to work performed under this agreement. Severability of interest and naming Railroad as additional insured shall be indicated on the certificate of insurance. K. The fact that insurance (including, without limitation, self-insurance) is obtained by AGENCY [its contractors or Concessionaire] shall not be deemed to release or diminish the liability of AGENCY [its contractors or Concessionaire] including, without limitation, liability under the indemnity provisions of this Agreement. Damages recoverable by RAILROAD shall not be limited by the amount of the required insurance coverage. NOTE: In some states, the Agencyâs inability to indemnify may require substitution of a provision that limits the Agencyâs liability to the amount of insurance that the Agency obtains. Inclusion of such a provision would likely cause the amount of the insurance required by Railroad to increase. L. Prior to entering property owned or controlled by RAILROAD or within ___ of the centerline of RAILROADâs active right-of-way, AGENCY [its contractors or Concessionaire] shall furnish to RAILROAD an acceptable certificate(s) of insurance including an original signature of the authorized representative evidencing the required coverage, endorsements, and amendments and referencing the contract audit/folder number if available. The policy(ies) shall contain a provision that obligates the insurance company(ies) issuing such policy(ies) to notify RAILROAD in writing at least 30 days prior to any cancellation, non-renewal, substitution, or material alteration. This cancellation provision shall be indicated on the certificate of insurance. In the event of a claim or lawsuit involving RAILROAD arising out of this agreement, AGENCY [its contractors or Concessionaire] will make available any required policy covering such claim or lawsuit. M. NOTE: If RAILROAD seeks a waiver of a punitive damages exclusion, AGENCY must determine whether it would be permitted to do so as a matter of state law, in addition to evaluating whether it wishes to accede to the request as a business decision. IX. Dispute Resolution: A. The Parties should identify their proposed dispute resolution mechanism in the Term Sheet. NOTE: Good faith negotiation followed by mediation is typical, with resort either to binding arbitration or to litigation following. Some states have a mandatory dispute resolution process based on state procurement laws, and each agency will first need to determine whether that is an issue. If mandatory dispute resolution is not an issue, then each agency needs to consider its own preferred mechanisms for dispute resolution.
31 X. Environmental Obligations: A. The Parties agree that they shall share responsibility for the direct costs of the remediation for all parcels in total as required to comply with any environmental law, regulation, or other requirement, that is incurred from and after the date of transfer of an interest in any parcel to AGENCY (âCostsâ), with respect to investigation, remediation, response to, or any other requirement to cure in accordance with applicable municipal, state, or federal environmental law, regulation, or other requirement, those conditions concerning a release of any hazardous substance on or affecting any parcel for which RAILROAD will convey an interest to AGENCY if such release occurred prior to the date on which any such interest is transferred to AGENCY, in accordance with the following allocation: NOTE: The following allocation is based on the premise that RAILROAD would not incur Costs in the absence of AGENCYâs project and on the reality that many states do not permit any agency of the state to assume unlimited liability. For that reason, AGENCY would bear the responsibility for initial Costs. The greater the Costs, the greater the likelihood any liability for such Costs derives from pre- existing conditions under RAILROADâs control. The circumstances of each transaction will affect how the parties perceive their exposure to potential Costs, so the provisions provided below are illustrative only of the premises outlined in this note. (1) AGENCY shall pay the initial Costs that the Parties collectively incur up to a total amount of $N,NNN,NNN, and RAILROAD shall have no responsibility to pay any such Costs until AGENCY has incurred a total of $N,NNN,NNN. (2) For Costs that the Parties collectively incur in an amount between $N,NNN,NNN and $ZZ,ZZZ,ZZZ, each Party shall pay fifty percent of such Costs, with each Partyâs share not to exceed a total amount of $XX,XXX,XXX. (3) RAILROAD shall pay any and all additional Costs that the Parties collectively incur in an amount exceeding a total of $ ZZ,ZZZ,ZZZ and AGENCY shall have no responsibility to pay any such Costs after it has incurred a total of $XX,XXX,XXX. B. Notwithstanding the foregoing in paragraph A, above, RAILROAD shall not be responsible to cure any condition concerning a release of a hazardous substance caused by AGENCY in the course of due diligence or other activity performed by AGENCY prior to the date on which RAILROAD transfers its interest in the affected parcel to AGENCY. C. For purposes of this Term Sheet, (i) the term "Hazardous Substances" means any material or substance (1) that is present in quantities and in a form that requires investigation, removal, cleanup, transportation, disposal, response or remedial action (as the terms "response" and "remedial action" are defined in Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Â§ 9601 (23) and (24)) or under any Environmental Law; or (2) that is defined as a "hazardous waste," "hazardous substance," "pollutant," or "contaminant" under any Environmental Law; and (ii) the term "Environmental Law" means any and all laws, statutes, regulations, enforceable requirements, orders, decrees, agreements, judgments, or injunctions validly issued, promulgated, or entered by any court or governmental agency with jurisdiction, relating to the
32 environment, to preservation or reclamation of natural resources, or to the management, release, or threatened release of contaminants applicable to the Real Property, including without limitation the Hazardous Substances Transportation Act (49 U.S.C. Â§ 1802 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Â§ 9601 et seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Â§ 6901 et seq.) and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act (33 U.S.C. Â§ 1251 et seq.), as amended by the Clean Water Act Amendments of 1977, the Clean Air Act of 1970 (42 U.S.C. Â§ 7401 et seq.), as amended by the Clean Air Act Amendments of 1990, the Safe Drinking Water Act (42 U.S.C. Â§ 300f et seq.), the Toxic Substances Control Act of 1976 (15 U.S.C. Â§ 2601 et seq.), any similar or implementing state or local law, and all amendments thereto and regulations or rules promulgated thereunder. D. RAILROAD shall remain responsible for the removal of any hazardous substances on the Line to the extent required by, and pursuant to, any applicable voluntary cleanup plan existing as of the effective date of this Term Sheet. E. RAILROAD shall complete and return the Questionnaire attached as Exhibit J hereto, and provide copies of all documents requested in the Questionnaire, to AGENCY within ___ days after the effective date of the Purchase and Sale Agreement to be negotiated between the Parties. AGENCY may elect to terminate this Agreement without further obligation to RAILROAD in the RAILROAD fails to fully complete and return the Questionnaire or provide copies of the documents requested in the Questionnaire in a timely fashion. F. Except to the extent otherwise required by authorities having jurisdiction over the Line, AGENCY shall not disclose to any third parties any information AGENCY discovers or obtains concerning the Line as a result of any inspections, surveys, tests, or other activities conducted with respect to the Line (âConfidential Informationâ) including, but not limited to, any oral, electronic, or written information provided by RAILROAD or on RAILROADâs behalf. Notwithstanding the foregoing, AGENCY may disclose Confidential Information to those of AGENCYâs agents directly involved with AGENCY with respect to the acquisition of the Line, provided such individuals and firms have agreed to maintain the confidentiality of Confidential Information and provided further that AGENCY shall be liable hereunder for any breach by such parties of such obligation. Confidential Information shall not include information that is or becomes in the public domain other than as a result of a breach by AGENCY or its agents. If AGENCY or any of its agents receive a request to disclose any part of the Confidential Information, AGENCY shall (a) notify RAILROAD immediately of the existence, terms, and circumstances of such request, (b) consult with RAILROAD on the advisability of taking legally available steps to resist or narrow such requests, and (c) if disclosure of such Confidential Information is required to prevent AGENCY being held in contempt or subject to other penalty, shall (i) furnish only such information as is legally required to be so disclosed, and (ii) use its best efforts to obtain an order or other reliable assurance that confidential treatment will be afforded to the disclosed Confidential Information. If the transaction contemplated in this Term Sheet does not close for any reason then AGENCY shall, promptly upon RAILROADâs request, forward to RAILROAD all Confidential Information without keeping any copies thereof.
33 XI. Positive Train Control:33 A. The Parties agree that if positive train control ("PTC") is required by law to be used by either Party's Trains operating in the corridor: a. RAILROAD shall approve the PTC system to be used by both Parties (NOTE: if Amtrak operates in the corridor, its requirements must be addressed as well: which system will be compatible with both RAILROAD and Amtrak PTC systems), based on the design standards acceptable to RAILROAD in its sole and absolute discretion; and b. The costs related to the installation and maintenance of the PTC systems shall be allocated as follows: (i) AGENCY shall pay all costs for the PTC system on its Line, and AGENCY shall pay for or reimburse all RAILROAD costs that arise out of and/or would not have been incurred but for AGENCY's ownership of, or passenger rail operations on, the Line. Without limiting the generality of the foregoing, in the event that RAILROAD would have been required under federal law, due solely to its freight rail operations, to install PTC on the Line, then AGENCY shall be responsible only for any incremental costs incurred by RAILROAD to accommodate AGENCY's operations. NOTE: Elements of the PTC system whose cost may be at issue include, but are not limited to: â¢ Software. â¢ Hardware. â¢ Wayside Equipment. â¢ Locomotive Equipment. â¢ Central Control Equipment. â¢ Access to radio frequency bandwidth. â¢ Costs of permitting and constructing PTC control towers. XII. Force Majeure: No Party shall be considered in breach or default of its obligations under the Agreement in the event that performance is prevented or materially delayed by an event of Force Majeure, which for purposes of the Agreement, shall mean a cause beyond the reasonable control of the affected Party, which it shall be unable to avoid by due diligence, including without limitation, damage or destruction by fire or casualty; strike directly involving workers where work is being conducted at locations as contemplated in this Term Sheet; lockout; civil disorder; war; or acts of God; including AGENCYâs inability to obtain an appropriation of funds; provided that the affected Party (i) notifies the other in writing of the extent and nature of the Force Majeure event within five (5) days after the affected Party knows or has reason to know of any such condition or event, (ii) limits delay or suspension of performance to that required by the event, and (iii) takes all reasonable steps to minimize delays or suspension of performance. 33 PTC requirements are found in 49 U.S.C. Â§ 20157; 49 C.F.R. pt. 236. The following provisions assume that the freight and passenger operations will share track following an agencyâs acquisition and construction of its passenger rail facilities in a corridor in which the existing freight service (and/or Amtrak) is already required to employ PTC. In this example, each Party is responsible for its own PTC costs, with costs allocated according to how/whether the Federal PTC requirements applicable to a railroadâs Line may change due to the addition of passenger operations. The total costs of PTC implementation, operation, and maintenance will differ in each circumstance.
34 XIII. Subject to Approvals: The Agreement will be subject to all applicable governmental and other public approvals including, as applicable, without limitation, approval by federal, state, and local regulatory bodies, the [State] Board of Public Works, and of the Board of Directors of RAILROAD as necessary. XIV. No Binding Effect: It is hereby agreed that this Term Sheet does not create or give rise to any contractual or other legally enforceable rights, obligations, or liabilities of any kind on the part of either party; it being the intent of the Parties that only a subsequently formalized Agreement or Agreements, if executed and delivered, shall so obligate a Party on the matters set forth herein. The Parties nevertheless intend to proceed in good faith to negotiate expeditiously the Agreement(s) described in this Term Sheet, consistent with the terms and conditions set forth herein, and will complete negotiation and execution of any such agreements by no later than [DATE]. NOTE: The Parties may wish to exclude from this âno binding effectâ section, which would have the effect of making the promise binding, the promise of the RAILROAD not to undertake or permit any additional liens or other encumbrances on the Property without providing notice and the opportunity to object to the AGENCY. XV. Assignment: Neither Party may assign all or any portion of its rights under this Term Sheet without 30 daysâ prior written notice to the other Party; provided, however, that AGENCY may assign its rights, title, and interest to [other party] without further approval of RAILROAD. Such notice shall identify the proposed assignee and the Party proposing the assignment shall certify that its proposed assignee acknowledges this Term Sheet and agrees to negotiate in good faith as set forth herein. NOTE: Although detailed discussion of P3 project delivery approaches are beyond the scope of this Term Sheet, if AGENCY anticipates that it will seek a concessionaire to perform any of the design, construction, maintenance, or operation of its planned facilities, the assignment of AGENCYâs interests should be addressed as early as possible in negotiations with RAILROAD. An example provision follows: In the event that rights transferred in accordance with the Agreements to be executed pursuant to this Term Sheet, or any work to be completed pursuant to such Agreements, remain incomplete at the time a contract is made between AGENCY and the Concessionaire, the Parties may amend this Term Sheet (as appropriate) in writing to add the Concessionaire as a party-in-interest to this Term Sheet and to assign to the Concessionaire the necessary authority to act for and on behalf of AGENCY to complete the work or to accept the property transfer contemplated under this Term Sheet. XVI. Miscellaneous: NOTE: In addition to the terms and conditions described above, the following terms and conditions typically addressed in real estate transactions generally also apply to the acquisition of railroad property: â¢ Pre-Closing Requirements. â¢ Condemnation (not applicable to property necessary and directly used for RAILROADâs fulfillment of its common carrier obligation). â¢ Allocation of Liability. â¢ Closing. Âº Payment.
35 Âº Adjustments. Âº Escrow. Âº Liens. Âº Timing. Âº Delivery of Documents. Âº Recording. Âº Conditions Precedent to and Requirements for Closing. Âº Transfer of Utilities. Âº Closing Costs. â¢ Post-Closing. Âº Billing. Âº Document/Record Inspection. Âº Reconciliation of Property Taxes. â¢ Condition of the Property/DisclaimerâAs Is, Where Is/With All Faults. â¢ Representations and Warranties. Âº Legal Entity. Âº Authority. Âº Title Warranty. Âº Enforceability. Âº General Compliance with Laws. â¢ Covenants. â¢ Brokerâs Fees. â¢ Covenants Run with the Land. â¢ Conflicts of Interest. â¢ Conditions Precedent. Âº Sellerâs Right of First Refusal for Repurchase. Âº Condemnation. Âº Title Exceptions. Âº Due Diligence. Âº Environmental. Âº Permitting/Regulatory. Âº Additional Property. Âº Funding. Âº Trackage Rights Agreement. Âº Insurance. Âº Third-Party Agreements. Âº Third-Party Purchase. â¢ Agreement Interpretation. â¢ Third-Party Beneficiaries. â¢ Agreement Term/Termination. â¢ Agreement Amendment. â¢ Default. â¢ Merger/Survival. â¢ Severability. â¢ Choice of Law and Venue. â¢ Attorneys Fees. â¢ Waiver of Right to Trial by Jury.
36 â¢ Counterparts. â¢ Notice to Parties. â¢ Binding Effect. â¢ Relationship to Other Agreements. â¢ Relationship to Third Parties. â¢ Entire Agreement/Scope of Agreement. â¢ Good Faith. â¢ General Compliance with Laws/No Pending Litigation. â¢ Confidentiality. â¢ Time Is of the Essence. â¢ Closing/Delivery of Documents. â¢ Term/Termination. â¢ Amendment.
37 [Signatures appear on the following page]
38 IN WITNESS WEREOF, the parties have caused this Term Sheet to be executed in duplicate, each by its duly authorized officers, as of the date of this Agreement. [AGENCY] By:___________________________ [Name] [Title] [Organization] [RAILROAD] By:___________________________ [Name] [Title] [Organization]