PNWR Bailey Branch...

RAILROAD ANNOUNCES EMBARGO OF BAILEY BRANCH

CORVALLIS, OR -- The Portland & Western Railroad has announced an embargo of the branch line running south from Corvallis beginning June 16, but shippers and local officials are vowing to fight the move.

A railroad executive, citing safety concerns, said the move is the first step toward permanently abandoning the Bailey Branch, a 23-mile spur that serves fewer than a dozen cargo shippers in south Benton County. Customers include Western Pulp Products in the Corvallis Airport Industrial Park, grass-seed producer Venell Farms and the historic steam-powered Hull-Oakes Lumber Co. mill at the line’s terminus in Dawson.

“Due to the track’s condition, it has become unsafe to operate down there,” said P&W President Bruce Carswell. There have been five minor derailments on the Bailey Branch in the past five weeks.

Former Hull-Oakes partner Wayne Giesy, a spokesman for the south county freight shippers, said his group isn’t about to give up on the line.

“We plan to contest it,” Giesy said of the abandonment plan.

“It’s disappointing,” said Benton County Commissioner Linda Modrell, a longtime rail-service advocate. “We will continue to push on this, but I also understand their problem.”

The problem is a combination of poorly maintained tracks and low freight volumes.

The Bailey Branch has been in sad shape since the Portland & Western (also known locally as the Willamette & Pacific) began leasing the tracks in 1993, first from the Southern Pacific and now from the track’s new owner, the Union Pacific.

Portland & Western officials have been threatening for years to abandon the line but have always backed off in the face of fierce opposition from shippers, elected officials and others determined to maintain rail service to the south end of the county.

Abandonment is a formal procedure that requires approval from the federal Surface Transportation Board. The request would have to come from the Union Pacific, which previously has declined to take that step.

Despite some $350,000 in state-funded repairs over the last few years and some additional work by the railroad, rotting crossties and light-gauge rails still limit freight trains to 7 mph — even slower on the worst stretches.

Freight volumes have never been high on the line and they continue to fall. Last year the Bailey Branch moved just 630 railcars, down nearly 100 carloads in just two years. The industry standard for a shortline railroad, Carswell said, is 100 carloads annually per mile of track.

“If you just do the simple math, obviously we’re not anywhere near that,” he said.

Giesy claims there could be more customers on the line if the railroad had invested more in upgrades and made a commitment to keep the branch open. He also argued the existing shippers have done their part by ponying up a $49-per-carload maintenance fee.

“The shippers on that line have been paying a surcharge so they can keep some of the hotspots protected,” Giesy said.

Carswell said the P&W has worked with the shippers to find alternatives, from building a rail-to-truck transfer station to finding another railroad to operate the line.

“None of them would pencil out and work economically, either for us or for the customers,” Carswell said.

The most recent scheme for keeping the Bailey Branch open involved a request last fall by Oregon Congressman Peter DeFazio that the Union Pacific donate the track. The railroad countered with an offer to sell the line, but at an asking price of $2.1 million, it found no takers.

If the Bailey Branch is abandoned, Giesy said, the shippers would lose the competitive advantage they get with rail transport and Benton County residents would have to contend with hundreds more trucks on the road.

But an even greater cost, he suggested, might be the loss of a possible future passenger rail link to Eugene as the population grows and gas prices continue to climb.

“It would be a shame to lose that corridor,” Giesy said.

“I think rail service is going to have to become more prominent here on the West Coast.” - Bennett Hall, The Corvallis Gazette-Times

 

Hmmm, I will be interested to see how this turns out!

John

 

SHIPPERS TO FIGHT RAILROAD EMBARGO OF BRANCH LINE

CORVALLIS, OR -- The Portland & Western Railroad has announced a shutdown of a branch line running south from Corvallis beginning June 16, but shippers and local officials say they will fight the move.

A railroad executive, citing safety concerns, said the move is the first step toward permanently abandoning the Bailey Branch, a 23-mile spur that serves fewer than a dozen cargo shippers in south Benton County.

"Due to the track's condition, it has become unsafe to operate down there," said P&W President Bruce Carswell. There have been five minor derailments on the Bailey Branch in the past five weeks.

Customers include Western Pulp Products in the Corvallis Airport Industrial Park, grass-seed producer Venell Farms and the historic steam-powered Hull-Oakes Lumber Co. mill at the lines terminus in Dawson.

Former Hull-Oakes partner Wayne Giesy, a spokesman for the south county freight shippers, said his group isn't about to give up on the line.

"We plan to contest it," Giesy said of the abandonment plan.

"Its disappointing," said Benton County Commissioner Linda Modrell, a longtime rail-service advocate. "We will continue to push on this, but I also understand their problem."

The problem is a combination of poorly maintained tracks and low freight volumes.

The Bailey Branch has been in sad shape since the Portland & Western -- also known locally as the Willamette & Pacific -- began leasing the tracks in 1993, first from Southern Pacific and now from the new owner, Union Pacific.

Portland & Western officials have been threatening for years to abandon the line but have always backed off in the face of fierce opposition from shippers, elected officials and others determined to maintain the service.

Abandonment requires approval from the federal Surface Transportation Board. The request would have to come from the Union Pacific, which previously has declined to make it.

Despite some $350,000 in state-funded repairs over the last few years and some additional work by the railroad, rotting crossties and light-gauge rails still limit freight trains to 7 mph, even slower on the worst stretches.

Freight volumes have never been high on the line and they continue to fall. Last year the Bailey Branch moved just 630 railcars, down nearly 100 carloads in just two years. The industry standard for a shortline railroad, Carswell said, is 100 carloads annually per mile of track. - The Associated Press, The Portland Oregonian

 

The general rule of a hundred cars, per mile, per year is a fairly accurate measurement of a lines profitability. I would bet for several
years since the P&W leased the line, they have pulling dollars from other more profitable lines just to keep these 23 miles in operation
and safe. The fact that the SP and then later UP put very little maintenence dollars into the line was a direct reflection of the current and potential profitability of the line. It is probably safe to guess that the commodities: grass seed, pulp and occasional lumber
are not high value/high revenue producers hence the Class 1 connecting carrier, UP? did not want to encourage growth due to the limited capacity on their railroad to handle it.

As a railroad fan I would personally hate to see this line disappear due to the use of a caboose on the back up move to the sawmill and the undoubtly beautiful scenery. However, not all lines can be saved without state/federal financial assistance even if it means
outright purchase to limit the railroads expense and allow continued operation. As is often the case, the most interesting and beautiful
branches are usually the most expensive to maintain and a have low
revenue producing customers. Up north, we use to say when all that was left on a line was fertilizer and pulp wood the line would not be around long even after continued attempts to build new business.

If you were in the railroad business what would you do?

Just the thoughts of an experienced railroader.

Barry

 

Boxcab:

You bring up some valuable and valid points. Regarding potential business you really have to have the complete cooperation of the communities and shippers to not only address the problem but also the solution. There needs to be incentives for the railroad to stay and serve an area with marginal revenue and alot of the answers need to come from those who want to keep the line and build the business. Local governments need to provide economic incentives to exisiting and potential customers to help them locate and expand their use of the line. Local shippers need to find ways to expand their use of rail and help find new, profitable businesses to locate on the line. The phrase "fighting an abandonment" only sets up a contentious arena in which to try to solve problems. Not a good idea.
You are absolutley correct. Shippers and the public need to weigh their options and see what can be done to save the line. But don't expect the railroad to service a line with few existing or future growth opportunities forever. It is up to the railroad to make the best use of it's limited resources and apply them where they will
produce the best return on investment.

I hope that this line turns around with the help of all concerned. However, if it dosen't here are three options for the future:

1. The railroad be given economic help to continue and grow the business.

2. Sell it to the shippers and municipalities and see if they can do a better job operating the line.

3. Abandon it and remove the trackage keeping the entire right of way and bridges intact for later usage should the need exist. In truth the bridges (if any) may be limited in weight abilities and/or it and the track may be worn out. A complete rebuild of the current track structure would probably be prohibitively expensive and not allow for potentionally heavier cars for new customers.

The railroad is not a public sevant and exisits to make a profit otherwise it too will go out of business. Solving a problem like this requires a lot of cooperation and willingness to help in order to arrive at a positive solution.

Yup,

Barry

 

I have been following this one. PNWR is my road, and that it is an old SP line makes it doubly interesting to me.

I am not sure exactly what is going to happen. I talked to a PNWR conductor that I know. He is also not sure, and he usually has pretty keen insights into what is going to happen.

My state, for all the things it does right and all the things it has going for it, is not always the most on-the-ball when it comes to maintaining anything. We've got infrastructure problems all over the place. The rail on the Bailey Branch is in poor condition. It was in poor condition when SP was still running it. In western Oregon's wet climate, all wood, treated or not, will eventually rot, so I am sure the ties need to be replaced. The rail is well below 100 lbs/yard, in the 80-something range I think. Trains have been restricted in speed on that line, and there have been some stupid operating decisions made by individuals who no longer work for PNWR, as in the two guys who let the engine creep up to 14 MPH on a 7 MPH limit section who then caused a bad derailment of a 100T woodchip car which took their "control cab" caboose (they back the train for a large chunk of the branch when heading south) and flipped it on its side.

The end of the branch has the Hull-Oakes mill, which is a steam-powered mill that has the capability of running 85 foot long logs, which most mills do not. They will lose their ability to ship them if the railroad is not available, and that will be a loss to that specialty market. They, as I understand, have been quite good at shipping and receiving as much as possible on the line. There are other industries, too, and the City of Corvallis and Benton County have an interest in keeping rail access for some of these shippers.

I suspect what will happen in the short term is that service will stop, and that the State, Benton County, and Corvallis will scramble to see if they can invest some funds in helping to upgrade the line. I don't know if it will happen. I would hope that the ROW be kept, even if the trackage is removed. Once it is gone it will be gone forever.

Adam

 

Boxcab,

I have some limited references at home. I have a book by D.C. Jesse Burkhardt on shortlines and branchlines in Western Oregon, published in 1994. I have a buddy who is a conductor on that road and who knows some of the background. I am also a member of the PNWR yahoo group, which is where I get most of my contemporary information. The story about the guys flipping the woodchip car is from the conductor I know. The condition of the track is from the PNWR group mostly, with some 13 year old facts from the book. The line was in bad shape in 1994.

I do not know when the line was severed. I know that Corvallis is interested in eventually re-building a passenger link to Eugene through Monroe. I am guessing that maybe someone still owns the right-of-way in one piece if this is a dream that is even worth having. I just hate seeing branchlines disappear, so I have been against it.

The railroad has been charging $49/car as a surcharge for track maintenance. There is some speculation by critics of the decision that the money was just pocketed and no work was done. I could easily see that money getting sucked into just paying for the band-aid repairs that would have been needed to keep it going. I haven't seen a full accounting.

I can try to look up facts this evening if you have a list. I don't know if I can find anything about Monroe that isn't already online, but I can get some facts about the Bailey Branch when I get home if you would like them.

Adam

 

Adam:

Nice assessment of the current conditions and future of the Bailey branch. Hopefully there is a way to preserve service.

Boxcab:

I agree with your thinking on the use of the surcharge of $49./car.
Not much to spend on improvements probably just cover paperwork and the occasional derailment.

Too bad the shoved the caboose off the track hopefully not destroyed. It is getting more difficult each day to find good seviceable cabooses especially for making safe, long shoves.
Much too long a distance to ride the side of a car safely.

An engineer who will fully violates a slow track condition and causes an incident especially on a shortline is not helping the growth of the railroad nor thinking about his continued employment on the line.

Just a couple of observations.

Barry

 

I haven't been paying too much attention to this thread - it took this to make me realize. This is the branch which all trains had to be pushed down because there was no runaround at Hull-Oakes - the one featured in a Trains article from the late 80s, back when it was still SP. I instantly loved the odd line, and I hope it can be repaired.

 

FALLING OFF TRACK

Photo here:

[www.dhonline.com]

Caption reads: Sections of track along the Bailey Branch are in poor condition with broken ties and misshapen track, requiring the train to maintain low speeds. (Casey Campbell/The Corvallis Gazette-Times)

CORVALLIS, OR -- The bright orange Portland & Western locomotive rolls out of Corvallis at a stately 5 mph. It’s a fine pace for sightseeing, but it’s much too slow for a freight run -- and it’s about to get even slower.

“This is pretty nasty up here,” warns engineer Max Dilley, gazing ahead at an obvious dogleg in an otherwise straight stretch of track just south of town. “It’s like a snake.”

Dilley eases off the throttle as he reaches the damaged section, but the engine still lurches and rolls like a drunken cowboy navigating a barroom. It stays on the rails, but this stretch will be even trickier on the return trip, with loaded cars in tow.

If the Portland & Western has its way, last week’s run could turn out to be the last ever for the Bailey Branch, a rickety 23-mile stretch of railroad from Corvallis to Dawson that was built in the early 1900s and has seen only sporadic maintenance since then.

On five of its previous six trips, the train jumped the tracks somewhere along the line -- despite safety rules that set the top speed at 7 mph.

On June 4, citing safety concerns, the Portland & Western announced plans to embargo the branch line as a first step toward permanent abandonment.

That’s not going to happen without a fight. The 11 shippers on the Bailey Branch say the railroad is abandoning them -- and walking away from a promise to provide a much-needed service.

“We’ve already sold 10,000 tons of (livestock feed) pellets by rail,” said Larry Venell of Venell Farms, one of the largest shippers on the line. Rail delivery is stipulated in the contracts, which may now have to be renegotiated.

“I don’t know what we’re going to do with that,” Venell said. “We’ve got to get them there by rail, or it’s going to cost us a lot of money.”

The embargo is the latest twist in a love-hate relationship that dates back to 1993, when several shortline operators engaged in a bidding war to lease 185 miles of low-volume track in the Willamette Valley, including the Bailey Branch, from the Southern Pacific.

The eventual winner was an East Coast company, Genesee & Wyoming, which set up the Willamette & Pacific Railroad to operate a cross-shaped section of track running from Albany west to Toledo and from Newberg south to Corvallis and on to Monroe, with a final westward jog to Dawson.

In 1995 Genesee & Wyoming established a sister line, the Portland & Western, to run routes out of Portland with a connection to the W&P at Newberg. Today the two lines operate about 520 miles of track in western Oregon and do business under the Portland & Western name.

Shippers on the Bailey Branch had little love for the Southern Pacific, which they claim never supplied enough cars and which pushed for abandonment of the branch in 1984. So when representatives of Genesee & Wyoming came courting back in ’93, they found a receptive audience.

“They took us to lunch,” recalled Larry Venell, whose family had cut back its once-substantial rail shipments to maybe 10 cars a year, in part because of dissatisfaction with SP’s service. “They wanted to know what they could do to make this thing work.”

The Bailey Branch shippers said they were ready to boost their freight volumes for a new operator, but they wanted some assurances in return, said Wayne Giesy, then a partner in the line’s biggest customer, the Hull-Oakes Lumber Mill at the terminus in Dawson.

“We wanted 20-year service and through-line rates,” Giesy said. “They agreed to it.”

It was a “gentlemen’s agreement,” Giesy said, with nothing put in writing, but at first the new relationship worked well for both sides. The shippers got the cars they needed, and the new Willamette & Pacific got a steady increase in business.

The W&P and its sister line, the Portland & Western, continued to expand, as did their parent company. Genesee & Wyoming went public in 1996 and today is the nation’s second-largest shortline operator, with 48 railroads and 10,500 miles of track. Last year the Greenwich, Conn.-based corporation earned $134 million on revenues of $478.9 million.

At the same time, however, the Bailey Branch -- built with the light-gauge rail of an earlier era -- was deteriorating, and the repairs it needed were costly. Derailments increased, and the railroad balked at investing in what was still a low-volume line compared to the rest of its system.

The problem came to a head in the summer of 2000, when the line seemed in danger of closing. But Benton County officials came to the rescue, helping to broker an unusual deal with the Legislature: If the state would pay to replace worn-out ties on the worst stretches of track, the Portland & Western would keep the line running. Over the next few years, the state kicked in $350,000 to improve the Bailey Branch.

The shippers did their part as well: They agreed to a $49-a-carload surcharge to help pay for maintenance.

The surcharge remains in effect, but today the line is in worse shape than ever, leaving shippers to question just how their payments have been spent.

Portland & Western President Bruce Carswell said all that money had gone into repairs for the Bailey Branch, along with additional investments by the railroad, though he declined to specify how much.

“The line needs well over $1 million in immediate repairs just to get it in operable condition, and probably two to three times that to bring it up to a reasonable standard,” Carswell said.

“We’re at a point now where we just can’t afford to continue to put money into it, even with the surcharge.”

No one bought into the promise of revitalized rail service more than Larry Venell.

In 1996, Venell Farms spent nearly $1 million to build a covered loading facility and started moving everything it could by rail. Annual shipments have averaged around 200 carloads the last two years and have been as high as 300, Venell said.

Now he feels betrayed.

“They said they were going to be here for the next 20 years,” Venell said.

“I don’t think they ever intended to put any money in it. They were just going to use up what it had left and walk away. I think the community was sold a bill of goods.”

Various plans have been put forward to salvage the Bailey Branch, most recently a request by Congressman Peter DeFazio to the Union Pacific Railroad -- which acquired the line in its 1996 purchase of the Southern Pacific, along with the SP’s shortline lease agreements -- to donate the troubled branch line to Benton County. The Union Pacific responded with an offer to sell the line for $2.1 million, a price county officials rejected as too high.

While the Portland & Western was within its rights to halt service on the Bailey Branch because of the legitimate safety concerns on the line, an embargo is only a temporary solution.

By law, the railroad has 60 days to either repair the track or apply for a discontinuance of service to the Surface Transportation Board, the federal agency that regulates railroads. At the same time, the Union Pacific Railroad would apply for abandonment.

While the Staggers Act made it easier for railroads to abandon unprofitable lines, getting approval is far from a sure thing, said STB spokesman Rudy St. Louis.

“We’d have to balance the economic harm to the shippers with the economic harm to the railroad,” he said.

But the longer the Bailey Branch stays out of service, he added, the more likely the STB would be to grant an abandonment request.

The shippers have no intention of allowing the matter to drag out, however. In a meeting Monday night at Venell Farms, they decided to force the issue.

On Thursday, their attorney fired off a letter to Carswell and Mack Shumate, senior attorney for the Union Pacific, demanding that the railroads move immediately to an abandonment filing.

“Unless an abandonment application is filed at the STB in the very near future,” wrote the shippers’ lawyer, railroad litigation specialist Thomas McFarland of Chicago, “I intend to file a formal complaint at the STB in behalf of the Oregon Shipper Group against your companies seeking, as damages, the additional transportation and related costs being paid by the Shippers as a result of your companies’ failure to provide rail transportation on reasonable request.”

As alternatives to a costly legal battle, the letter suggests that the Union Pacific either donate the line to Benton County, sell it to the shippers at a more reasonable price or sublease it to a smaller shortline willing to take it on.

All those options, however, have been previously considered and rejected by the railroads.

Carswell, for one, isn’t counting on a different outcome this time.

“There’s possibly a solution out there that I haven’t thought of,” he said. “But I’m not optimistic at this point.”

Love-hate relationship: Shippers and railroads

Shippers need railroads and railroads need shippers, but it’s rarely an equitable relationship.

It used to be that shippers had the upper hand, with a regulatory structure designed to protect their interests from predatory pricing and uncertain service. But by the 1970s, the U.S. freight rail industry was on the brink of collapse as restrictive rules dragged several major carriers into bankruptcy.

The result was deregulation.

In 1980 Congress passed the Staggers Act, which created a more market-driven system that led to a wave of consolidation, with the number of major carriers shrinking from 40 to just four today.

While lowering rates for most shippers, Staggers also liberalized abandonment rules, allowing the mainline carriers to walk away from unprofitable routes and leading to the rise of shortline operators.

Shortline railroads started off slowly in Oregon but picked up steam throughout the 1990s, with strong growth continuing into this decade.

In 1992, Oregon had 14 shortlines with just 207 miles of track. Those railroads moved 8,685 carloads and brought in $5.1 million in revenue, according to ODOT’s Rail Division. Last year, 21 shortlines moved 195,391 carloads on 1,296 miles of track to bring in revenues of $77.5 million.

The Portland & Western had a big share of that business, moving nearly 97,000 carloads on its 520-mile system and generating revenues of about $36 million. Its Bailey Branch, however, was only a small fraction of that business with just 630 carloads.

Bob Melbo, the rail planner for the Oregon Department of Transportation and the first president of the old Willamette & Pacific, said ODOT will fight the railroad’s efforts to abandon the Bailey Branch.

But he added that, from the railroad’s perspective, the economics of the south Benton County branch line are dismal.

“I think they’re basically between a rock and a hard place,” Melbo said. “On the one hand, they can’t hardly operate without derailing, and yet they can’t justify putting the money into it to repair it.” - Bennett Hall, The Corvallis Gazette-Times