The NC Railroad is a private, state-owned company. Are its records public or private?
An environmental organization is asking a Wake County court to declare that the public should have the same access to information from a private, state-owned railroad as it does from state agencies.
The Southern Environmental Law Center sued the N.C. Railroad on Monday, saying that the company that owns the 317-mile rail line from Morehead City through the Triangle and the Piedmont to Charlotte should be subject to the N.C. Records Act. That’s the law that declares that “public records and public information compiled by the agencies of North Carolina government or its subdivisions are the property of the people.”
In this case, the SELC sought records from the railroad related to the Durham-Orange Light Rail project, the planned $2.7 billion transit line that would have used part of the railroad’s corridor in Durham. GoTriangle, the regional transit agency, ended the project this spring in the face of several challenges, including opposition from Duke University and concerns raised by the railroad.
In a press release, the SELC says the railroad’s “intransigence in negotiations,” including “several last-minute impossible demands,” helped derail the project. The organization requested documents from the railroad in late May to help it understand “the circumstances surrounding this project’s demise,” according to the lawsuit.
Last week, an attorney for the N.C. Railroad denied the request, saying the company is not subject to the state’s public records law. In a statement Monday, the railroad said it has operated as a private company for more than 150 years and that the lawsuit could have wide-ranging repercussions.
“This lawsuit — if successful — would create an unprecedented requirement threatening every private company in which the State of North Carolina invests, to share private records with the public at any time,” the railroad said.
The argument over the N.C. Railroad’s status stems from the company’s unusual blend of public and private. The railroad was created by the General Assembly in 1849, with the state as its majority shareholder. The state bought out the remaining shareholders and became the sole owner in 1998.
The SELC says a state Court of Appeals decision from 1981 establishes that a private corporation can be considered a government agency under the public records law when the government has “supervisory responsibilities and control.” The lawsuit cites several ways in which the governor and legislature are involved in the railroad, including the appointment of its board of directors.
The lawsuit also says the railroad has received $196.3 million from the state over the years for tracks, signals, bridges and other capital projects, in addition to the state’s investment in the company.
“The North Carolina Railroad is built on state taxpayer funds,” Kym Hunter, the attorney based in Chapel Hill who filed the suit, said in a statement. “It spends and invests the people’s funds, it receives debt relief from the state, and pays no income taxes. It does all this purporting to be ‘working for the good of the people of North Carolina.’ It is only right then that the people of North Carolina get some oversight over its actions.”
But in a six-page letter to Hunter last week, attorney Jim Cooney III said the railroad does not receive operating money from the state, which he said does not review the company’s budget. Cooney said the governor and legislature appoint members to the board because the state owns the railroad, not because the railroad is “a state or public entity.” He also noted that the State Auditor and the State Ethics Commission don’t consider the railroad a state agency.
And while the railroad may not pay state income tax, Cooney says it pays property taxes in all 16 counties in which the railroad owns property. “State agencies do not pay property taxes,” he said.
The lawsuit, filed in Wake County Superior Court, also names railroad president Scott Saylor and all 13 members of the railroad’s board of directors, including former Durham Mayor Bill Bell.
This story was originally published July 2, 2019 at 11:59 AM.
