Sunday, December 27, 2015

Short Line Gets New Lease On Life

WADOT news release from January 29, 1998.

A 108-mile freight line that connects Cheney to Coulee City, Wash., was deteriorating and headed for abandonment until Eastern Washington grain shippers, legislators, and the state Department of Transportation stepped in to help save it.

A 108-mile freight line that connects Cheney to Coulee City, Wash., was deteriorating and headed for abandonment until Eastern Washington grain shippers, legislators, and the state Department of Transportation stepped in to help save it.

Although the former Burlington Northern Santa Fe Railroad Corp. spur still is many millions of dollars away from being in prime shape, its condition has stabilized and its future looks brighter than it has in years.

Its current owner, Palouse & Coulee City Railroad Inc. (PCC), which bought the line from BNSF in September 1996 and employs about 20 people, hopes to make the line profitable by the year 2000.
PCC says it has hauled nearly 9,000 rail-car loads of cargo--mostly wheat and barley, but also some peas, lentils, fertilizer, and finished lumber--over and is looking to boost its volume this year.

"We have a real ability to increase it," with added support from shippers along the line so long as PCC can round up enough grain cars to meet demand, says company executive Mark Blazer.
Blazer is regional vice president of the railroad, which is based in Colfax, Wash., but owned by a Pittsburg, Kan., family. He holds the same title for several other companies owned by that family that are based or have operations in the Inland Northwest. Those companies include Blue Mountain Railroad Inc., of Walla Walla; Titan Railway Services Inc., which operates a locomotive and rail-car repair facility in Pasco; and Watco Inc., an industrial-switching company that moves rail cars for customers. Watco is based in Pittsburg, but has a regional office in Winston, Mont., and other offices in Wallula and Cosmopolis, Wash., and Springfield, Ore. Blazer works out of his home in Montana.

PCC has 11 locomotives, 52 of its own grain cars, and 29 cars that it leases from Washington state. Its rail system includes an 89-mile, Marshall-to-Moscow, Idaho, line that it bought at the same time it bought the Cheney-Coulee City line.

The latter line is the sole source of rail service for grain shippers in Coulee City, Hartline, Almira, Wilbur, Creston, Davenport, Reardan, and Medical Lake. Blazer says all of the grain that's picked up along the line eventually is taken to the Pacific coast for export. PCC transfers the loads over to BNSF at Cheney for the remainder of the trip, he says.

Early last year, the Federal Railroad Association downgraded the Cheney-Coulee City line to Class 1 status, which has a 10 mph maximum train speed, from Class 2, for which the maximum speed is 25 mph, because of the line's deteriorating condition. That change boosted the number of crew members needed to make a run and dramatically increased the tiny railroad's operating costs, Blazer says.

With help from state Sens. George Sellar, R-East Wenatchee, and Bob Morton, R-Orient, and the state Department of Transportation, PCC was able to secure a $610,000 low-interest loan last summer from the state-funded Essential Rail Assistance Account to upgrade 65 miles of the 108-mile track and return it to Class 2 standards. Six local farmers' coops formed the Coulee City Line Rail Shippers Association and raised an additional $200,000 in required local matching funds.

The upgrade project was to include replacing about 19,000 defective crossties. PCC had a Kent, Wash.-based company put in all but about 5,000 of the crossties, then ran out of funding for that work, and so has been installing the remaining new crossties itself, Blazer says. It hopes to complete that work this summer, but the 65-mile section of track already has been returned to Class 2 standards, he says.

Nevertheless, much work remains to be done. The crosstie-replacement work simply gives PCC some time to seek out funding sources for an estimated $6.5 million that's needed to renovate the Cheney-Coulee City line fully.

The railroad hopes to obtain federal grant money to pay for those improvements, Blazer says. But, he adds, "Numerous (railroad) short lines have been created in the state, and we'll have to compete with them for that money."

The big renovation expense is separate from basic maintenance costs, which PCC estimates at $4,000 a year per mile of track.

One person who's rooting for the railroad to succeed is Ray Allred, a state DOT rail-planning specialist who helped review and process PCC's application for the Essential Rail Assistance Account loan.

"We've lost close to 40 percent of our (state) rail system to abandonment in the last 25 years," he says. "We've gone from about 5,000 miles down to about 3,100, of which about 1,600 are light-density lines that are vulnerable to abandonment, and it has impacted our highway-maintenance costs dramatically."

A benefit-to-cost analysis done by the state as part of the PCC loan application review found, for example, that abandonment of the Cheney-Coulee City line would add nearly 15,000 heavy truckloads of grain to the state's highways annually, increasing highway maintenance costs by more than $3 million a year, Allred says.

The problem for many short-line railroads, he says, is that they can't get loans from private lenders to rehabilitate their tracks because they can't show adequate collateral, and the main federal-support program, called the Local Rail Freight Assistance Program, no longer is being funded.

"The state is about the last resort of public-sector funding to rehabilitate the short lines, " Allred says, but he adds that "our funding hasn't gone up at all." The DOT is considering nine loan applications from short-line railroads for amounts totaling about $4.4 million, but has only about $1 million to dole out through the Essential Rail Assistance Account over the 1997-to-1999 biennium, he says.
Gov. Gary Locke, in his transportation budget, has proposed another $1.6 million in funding for freight short-line rehabilitation this biennium, but it remains to be seen whether the Legislature will approve that proposal, Allred says.

Regarding PCC's hopes that it can obtain some federal grant money, Allred says that U.S. Sen. Slade Gorton has proposed including some money for freight rail line rehabilitation in the Intermodal Surface Transportation Efficiency Act, which is up for reauthorization this year. That proposal, too, however, might not be approved, Allred says.

The DOT's rail office estimates that basic maintenance costs for railroad branch lines in the state are between $12.7 million and $18.2 million a year. But small railroad associations "are only making enough revenue to maintain half of the track," Allred says, "so unless the state steps in, a lot of them are going to go out of business in a few years.