This Story From "The News Review" Roseburg, Oregon 5-12-08


The parent company of Roseburg-based Central Oregon & Pacific Railroad plans to submit an application within the next three years to abandon most of the rail line’s Coos Bay spur.

In a notice filed last week with the Surface Transportation Board in Washington, D.C., RailAmerica said it plans to abandon nearly all of the 136-mile line between Eugene and Coquille, which was shut down last September for safety reasons. The company would retain a small portion of the line, linking Noti and Eugene with the Union Pacific line at Eugene.

Keeping that portion of the tracks would essentially guarantee that another rail line operator would not be interested in taking over the rest of the Coos Bay spur, Rep. Susan Morgan said. It would not be economically feasible to lose out on that portion of the line, which serves a mill in Noti, and also have to pay CORP to run cars over that segment to Eugene.

“I think it’s an attempt to throw a red herring into the conversation,” Morgan said.

The filing came only a few days before the company was ordered to respond to a show-cause order from the Surface Transportation Board. The transportation board asked RailAmerica to defend its decision to keep the line closed. Today is the deadline for the company to respond to that order.

The notice to the STB was filed by Sidley Austin, an international law firm with offices in Washington, D.C., and 15 other cities worldwide. The company represented Fortress Investment Group in its acquisition of RailAmerica and Morgan said she’s encouraged by their involvement.

“This may have shown up on RailAmerica’s radar screen as something they need to pay attention to, which I think is a positive sign,” she said.

Since the Coos Bay spur closed, shippers have had to transport their products by truck, which is more expensive. Roseburg Forest Products is spending about $167,000 more a month to ship its lumber products from the coast by truck.

American Bridge on Bolen Island outside Reedsport has been unable to bid on certain projects because it has no way to ship its massive beams. They have to be transported by rail.

Over the weekend, Fortress sold its loan to pop star Michael Jackson on his Neverland Ranch to Colony Capital.

Fortress was criticized by Rep. Peter DeFazio and other members of Oregon’s congressional delegation for loaning Jackson a reported $24 million in March rather than using the money to repair tunnels along the Coos Bay spur and reopen the line.

The bailout of Jackson was mentioned several times over the past two months as a reason the state of Oregon, shippers and other players in the rail line situation should not provide RailAmerica any financial assistance.