State looks to buy PCC rail line

Freight manager 'cautiously optimistic' about acquisition

OLYMPIA — A decision is expected early next month on the state's purchase of a rail line branch.

The state Legislature agreed in 2003 to buy and renovate three key sections of the Palouse River and Coulee City (PCC) Railroad from Kansas-based Watco Companies, Inc.

In November 2004, the state paid $6.5 million to buy the P&L Branch, which runs north and south between Marshall and Pullman, and the PV Hooper Branch, a line linking Hooper, Winona, Thornton, Colfax and Pullman.

But the state failed to purchase the 108-mile CW Branch, which runs between Coulee City and Cheney. The Legislature allocated $1.2 million for the line, and Watco and the state Department of Transportation had a verbal agreement on the sale of the branch, but no signed agreement. Watco closed the branch for a while under an embargo in November 2005, but it is back in operation.

Growers consider the line important in moving their product.

Coulee City wheat farmer Phil Isaak said in May an estimated 13,000 semi-trucks go on public roads, priarily county roads running north and south, if the rail line fails to operate, traffic increases would probably break the roads to pieces.

Area farmers and shippers want rail to run their product, Isaak said at the time, noting that rail cars make dealing with a bulk commodity like wheat much easier. Each car holds a little over three semi-trucks worth of grain, he said, and the process of loading grain onto a semi-truck is cumbersome.

Discussion between Watco and the state over making the final purchase went longer than anticipated, said Scott Witt, freight multimodal program and policy manager for the state's Department of Transportation.

"I think the complexity ended up catching everybody a little bit by surprise," Witt said. "A lot of it has to do with the all-inclusive nature of which we are looking at this now versus what we originally looked at. Records are extremely difficult to assess, and some of these are from the 1800s. That has proven to be quite an ordeal."

The department is asking for Watco's help in identifying properties, Witt said.

"It's really a Rubik's cube, going down to the warrants den, looking for some of these," he said. "Some of the maps I've seen have been so faded, and they were original plat maps."

Negotiations are ongoing, Witt said, with the majority of major points resolved. The department is waiting for final evaluations.

"We will have the final costs available for the Office of Financial Management for them to make a final decision hopefully here in the first part of January," Witt said. "At that point, it really is their decision. We've actually gotten to a place where we both believe we can live."

"I think (negotiations are) going well at this point," echoed Mark Blazer, senior vice president of strategic development at Watco. "I think we should have an agreement probably the first part of January."

The office has the authority to decide whether it wants to continue with the acquisition, Witt said, while the department presents the information for the office.

The Legislature already allocated funds for rehabilitation of the line, Witt said. The cost to operate the line depends upon the identity of the operator, he added.

"The operation will be bid out on those lines, so once the acquisition is completed, there would be a request for proposals out for those," he said. "It has taken longer than I believe anybody expected or wanted, but we're still cautiously optimistic everything will come out to a point where the Office of Financial Management will be agreeable."