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3/7/2006



Rail News: Rail Industry Trends

Small road's 'CW' segment not covering operational costs, Washington state DOT says



The Palouse River and Coulee City Railroad’s (PCC) Cheney-to-Coulee City, or CW, branch line has “consistently run fewer carloads than needed” to cover annual operating and maintenance costs, according to a recent Washington State University report commissioned by the Washington State Department of Transportation. (WSDOT).

The university determined the line will continue to be marginally profitable or unprofitable depending on market conditions. So, the line’s owner — whether it be PCC parent the Watco Cos., the state or a port entity — will need to fund track maintenance each year.

“The shippers we’re working with know that they need to make carload commitments on the CW line, and this report supports that,” said WSDOT Freight Strategy and Policy Director Barb Ivanov in a prepared statement.

In 2004, WSDOT agreed to buy all three of PCC’s track segments from Watco for $8 million. The agreement required Watco to sustain and expand PCC's customer base, and maintain the lines’ infrastructure until WSDOT rehabilitated the track.

The state eventually acquired two of the segments, but funds needed to purchase the third segment weren’t available until the 2005-2007 budget was approved. In September 2005, Watco withdrew its offer to sell the CW line to the state, WSDOT said.

The state recently commissioned three independent appraisals of the branch line’s net liquidation value. Late last year, WSDOT contracted the university to analyze the line’s current and potential market, financial results, and possible impacts to state highways and county roads if the line is abandoned.


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