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State agrees to buy railroad in Eastern Washington

THE ASSOCIATED PRESS

OLYMPIA, Wash. -- The state has agreed to buy the third branch of the Palouse River and Coulee City Railroad, an important transportation link for farmers and businesses in Eastern Washington, the governor's office announced Thursday.

The line runs from Coulee City to Cheney and Spokane. The purchase price is about $5.6 million, according to Mark Blazer, senior vice president for the western region of Watco Companies Inc., the company that owns the line.

The state had purchased two other branches of the railroad in 2004 for $6.5 million: one that runs from Marshall to Pullman and another from Hooper to Thornton.

The freight rail system, covering more than 300 miles, is the second largest in the state and provides rail service to several companies and farms in the eastern and central sections of the state.

"Washington, for the first time, will become the owner of a critical operating rail system that supports a large portion of our agricultural community," Gov. Chris Gregoire said in a news release.

The railroad warned state officials in 2001 that it would have to abandon "significant sections" of its network by 2006 because it wasn't making enough money to cover maintenance costs on tracks dating back to the 1890s, plus the debt from purchasing the lines in the mid-1990s.

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Businesses and farmers were concerned the loss of the railroad would spell trouble for the area, because costs to ship their products by truck were much more expensive than shipping by railroad.

"Although recent years have been challenging, the Palouse River and Coulee City Railroad has been an integral part of Eastern Washington rail since 1992," Blazer said in the release.

"We remain encouraged that the agreement we have reached is a mature approach to continued rail service in Eastern Washington."

The state Department of Transportation and Watco had negotiated for two years regarding acquisition of the third branch, the release said.

Watco will continue to operate all three branches until May 31. Operation of two of the lines, including the one announced Thursday, will be put out to bid, said Scott Witt of DOT. The line that runs from Hooper to Thornton will continue to be run by Watco.