PCC Railroad future in question

Loss of CW Branch line would lead to increased truck traffic

COULEE CITY — The fate of a short-haul rail line has some people concerned about the fate of the area's rail service and roads.

Sen. Mark Schoesler, R-Ritzville, explained in his February and March 2006 SRC Ag Alerts, releases from his office, that 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 is now asking for more money for the stretch and closed the line down in November 2005.

According to e-mails dated April 25 from Barbara Ivanov, director of the WSDOT Freight Office, with recipients including PCC stakeholders and House and Senate members in affected districts, Ivanov's office and the state's office of financial management began discussions April 24 with Watco to restart rail service on the CW and P&L branch lines, with the intention of developing a short-term agreement providing access to rail service for shippers on both lines during the 2006 harvest season with no rail car surcharges.

In an e-mail dated Tuesday, Ivanov reported that WSDOT had learned Friday that a shipper on the CW branch line attempted to order rail cars last week and was informed by Watco representatives that Watco embargoed that line in December.

Sen. Joyce Mulliken, R-Moses Lake, worked with Schoesler and others to persuade grain growers and Watco earlier in the year to reach agreement to keep the line in operation. She felt that shippers who use the rail line, the WSDOT rail division and Watco needed to come together in order to do so. Mulliken explained that the department needed to demonstrate an ability to purchase the tracks, Watco to be willing to work with the state and shippers, and shippers to be willing to commit to the service. The parties involved need to recognize that Watco is in the business of making a profit and can't operate at a loss and still be in business, while shippers need service in a timely manner to make rail lines equitable to shipping by truck, she said.

Coulee City wheat farmer Phil Isaak said an estimated 13,000 semi-trucks, primarily carrying wheat, will go on public roads, primarily county roads running north and south, if the rail line fails to operate. It's an amount of traffic that would probably break the roads "all to pieces," Isaak said.

Area farmers and shippers want rail to run their product, Isaak said, 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," is Isaak's opinion.

"I think most people feel the trucks and rail will keep one another in line," Isaak said. "If it gets down to someone having a monopoly on the situation, we're at the mercy of whatever someone wants to charge us."

Ed McKechnie, chief commercial officer for Watco, echoed Isaak's sentiments, saying as soon as the railroad is gone, higher road maintenance costs and transportation costs would be the result.

"Truck rates would increase the next day," he said. "You will see money leave the economy of eastern Washington. That's a decision local people have to make. We can't make that for anybody."

McKechnie said the CW branch has been suffering from loss of carload volume in the past several years.

The Burlington Northern Santa Fe Railway put in a shuttle loader in Ritzville two years ago, and McKechnie said the rates to truck products from the shuttle loader in Ritzville to the coast are cheaper than the rate to use the rail from the line to the coast.

The east half of the railroad, in particular, has suffered a decline in volume.

"When you have 108 miles of railroad, it takes a significant volume of rail cars to keep that line operating," McKechnie said, explaining that the rule of thumb is about 50 rail cars per mile, but it also depends on the rate. "We just need more cars than what shippers can ship, because they're trucking it to Ritzville. What shippers are doing is, they're using us to reduce their shipping costs, but they want the railroad to stay in place to keep truck rates down. Once the railroad goes away, the next day, truck rates will go up just because of the market."

McKechnie said his company is awaiting a response from the state, having proposed several scenarios Watco has determined to be feasible and can work with.

"We've really seen a lack of commitment by the Department of Transportation to work in a positive way for this to be successful," he said, noting that the contentious issue is a "small" surcharge per car, around $225 to $250. "The shippers are not willing to either make a commitment on the volume to ship or pay a higher price. Since that's the case, they're not shipping. So that's where we're at."

The company is ready to sell the railroad and has priced it to the state, but McKechnie said the state wants to pay a reduced price for the line.

"We bought it, we own it, we know what the value of it is," McKechnie said of the railroad. "The state consistently wants to pay an amount lower than it's worth, and we don't think that's right."

If the railroad closes down, McKechnie said, it will lead to severe deterioration on local roads as grain is moved by truck in significantly higher volumes, primarily on secondary and county roads.

"Five years from now, you will see severe deterioration on the roads," he said. "Everyone will say, 'Geez, what happened here?' The public policy question is, do you want to pay a higher amount to maintain the roads or do you want to pay a smaller amount to maintain the railroad?"

Isaak agreed that additional trucks would only serve to enhance the problems of safety and congestion.

"Highway 17 is busy enough and has been identified as a safety problem already," he said. "I think when you understand the whole picture, the best thing is to keep the rail operation to move this product out of here."