State Claims Board to take up Talgo case (UPDATE)

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State officials will take up a claim that the U.S.-subsidiary of a Spanish train maker has filed in a dispute stemming from Gov. Scott Walker’s refusal of federal money for the construction of a high-speed rail line between Milwaukee and Madison.

In a legal filing against the state submitted in November, Seattle-based Talgo Inc. alleged it is owed nearly $65.9 million as compensation for the state’s breach of a contract for the purchase of two trains. The trains were to run on Amtrak’s Hiawatha line between Milwaukee and Chicago, but the contract raised the possibility that two more sets would be purchased for the proposed high-speed line between Milwaukee and Madison.

That project came to a screeching halt with Walker’s election in 2010. In the months leading up to his victory, Walker had made it known he did not intend to accept $810 million the federal government was offering in part to help pay for the high-speed line, which he deemed a boondoggle.

Some of the federal aid was also to go toward a maintenance building for the two trains that were already purchased by the state under former Gov. Jim Doyle. After federal authorities responded to Walker’s stated intentions by withdrawing the offer of the aid, state lawmakers were asked to approve the issuance of $2.5 million in bonds to design the maintenance building. They turned the request down, citing concerns about costs.

Wisconsin Department of Transportation officials cited the absence of money being set aside for the project as reason to break the contract.

In response, Talgo representatives have argued in legal filings the agreement could be breached only if the state was incapable of paying for its maintenance obligations. Company representatives argue that the state not only had the money to meet those obligations, but, if that money was lacking, the state was required to negotiate over lowering the required payments before breaking the contract.

Taglo’s claim will go before the state Claims Board on April 30. The board acts as an arbiter in contractual disputes with the state. If the company prevails before that panel, its claim will still need approval from the Legislature and the governor.

If the claim is rejected, Talgo will be free to file suit against the state in circuit court. Follow @TDR_WLJDan