It gave one day’s notice.

The Central Oregon & Pacific Railroad is shutting down operations between Eugene and Coquille today.

The railroad sent out a press release Thursday night through its parent company, RailAmerica. It blamed the closure on unsafe tunnel conditions.

“The rail line segment has nine tunnels, each more than 115 years old, several of which are no longer safe to transit,” the press release said.

The closure ends railroad shipments out of Coos County lumber mills and a bridge-building company. And that has state and local officials fuming.

The company estimated repair to the tunnels could cost up to $7 million over the next five years. It’s seeking a public-private partnership to pay for it, the press release said. State and federal officials say there’s not one dime set aside for emergency railroad repairs.

But tunnels apparently aren’t the only problem for this rail line.

“The Coos Bay line just doesn’t have enough business on it today to justify us making the repairs,” said CORP Marketing and Sales Manager Tom Hawksworth in the press release.

Off the tracks

At least four industrial companies locally rely on the railroad.

“It’s quite devastating. We ship probably 70 percent of our product out on that line,” said Jason Smith, manager of the Southport Forest Products sawmill on Coos Bay’s North Spit, on Thursday afternoon.

Smith said he had phone messages from CORP officials Thursday, but had yet to speak to them. He had, however, heard about the closure. His company has relied on rail service for seven or eight years. Each carload carries 80,000 to 95,000 board feet of lumber, adding up to two or three carloads a day. Without rail, lumber goes out on semi-trucks to Eugene for reload on rail there. That hikes the shipping costs an estimated 10 to 15 percent, Smith said.

Southport’s not alone.

American Bridge has used the rail line to bring in raw materials and ship out bridge segments. The Georgia-Pacific sawmill, which late last year employed around 140 workers in Coos Bay, loads lumber aboard railcars. Roseburg Forest Products’ 300-plus worker Coquille plywood mill does, too. It sells its lumber by carload. Last winter when the rail line closed for a month due to a tunnel collapse, the company claimed it lost money loading lumber on semis, taking it to Dillard, offloading and then reloading on rail.

“This has serious impacts to the state of Oregon, not just to Coos Bay,” Sen. Joanne Verger, D-Coos Bay, said Thursday.

CORP issued an embargo notice to the Association of American Railroads, which was posted this morning. It said rail cars no longer will be accepted for delivery on the Coos Bay short line due to unsafe conditions in tunnels 13, 15 and 18. An embargo gives the company a year to make repairs.

While the railroad was cooling its operations on the line Thursday, tempers in offices from Coos Bay to Salem were heating up.

State wants answers

“It’s just taken us all by surprise. I don’t have any documentation to look at,” said Kelly Taylor, administrator of the Oregon Department of Transportation’s Rail Division.

Taylor said she’s asked the company to send engineering reports to justify the closure. So has the governor’s office, according to Chris Wagner, Gov. Kulongoski’s transportation advisor.

“Frankly, if we found something that we felt was a danger, we have the authority to shut it down,” Taylor said.

But, the state hasn’t.

There really aren’t tunnel inspectors at the state and federal level. At least not in the sense that people might expect. Federal regulations, which the state enforces, deal with employee safety. Those rules require clearance around trains, so that if an employee needs to be in a tunnel, he could walk beside the tracks without being struck by a train, Taylor explained. Railroads are tasked with being sure they meet clearance standards.

When tunnels were built a century ago, Taylor said, crews carved a hole in a mountain. They put a ribbing of timber against the roof and covered it with concrete. Of course, wood rots.

“The rock and hillside continue to settle and push, push, push — you’ve got a side that’s starting to bulge,” she said.

Or, there’s a cave-in. That’s precisely what happened last November on the Coos Bay line just outside of Florence in a big way. It happened while a tunnel was being repaired. The tracks were closed for more than a month while the company spent $2 million hauling out hundreds of yards of muck and rebuilding the tunnel structure.

Deregulation

While the railroad blames its troubles on rotten tunnels, Congressman Peter DeFazio blames deregulation for the nation’s rotten railroad infrastructure.

“We’ve stupidly deregulated the railroads and stripped their assets. CORP is a stripped asset,” he said Thursday by phone while waiting to board an airplane.

Prior to deregulation, DeFazio said, there were as many as 35 Class 1 railroads. Now, he said, there are three or four. The big railroads set up small corporations to rent and run the short line railroads. Those little railroads don’t have deep pockets.

For the Coos Bay short line, Union Pacific owns the extreme north end and the section from the south end of the Coos Bay Rail Bridge to Coquille. CORP owns the tracks in-between and then leases the railroad bridge from the port and the ends from UP. It also pays rent on the new rail spur out to Southport’s mill.

In the old days, DeFazio said, railroads had a regulated rate of return. They were required to make investments in rail, power and crews. Not anymore in a deregulated industry that’s been fiercely defensive of that deregulation. 

“They’ve got to do better. If not, we have to think about the big R word — Regulation,” he said.

Private railroads carry more than 40 percent of the nation’s freight, according to the Government Accounting Office. The agency released a report last month to Congress on railroad bridges and tunnels, suggesting the Federal Railroad Administration take a stronger role and provide safety oversight and investment in railroads.

That doesn’t solve the immediate problems on the Coos Bay short line. And CORP’s decision will have other repercussions.

Lawsuit

The Oregon International Port of Coos Bay Commission has authorized the port’s executive director to sue. On Thursday night, the motion approved by those commissioners — David Kronsteiner, Caddy McKeown and Jerry Hampel — was carefully worded. The director has the authority to pursue litigation regarding the obligations of CORP to the port. There are at least two.

First, a contract between the port and CORP requires the railroad to give 180 days notice before it suspends or discontinues rail service on the North Spit rail spur.

Second, the port still is waiting for CORP to make repairs to the rail bridge dating back almost three years, when a Foss Maritime Harbor Service tug collided with the center span. Temporary repairs were made then to the bridge that’s awaiting a complete rebuild funded by the state and federal governments.

And Thursday night, the port’s Executive Director Jeffrey Bishop was downright grumpy over the whole situation.

“It affects the Port of Coos Bay because we have a lot of businesses here that rely on affordable and effective rail service — and they are going to be left holding the bag,” he said.

He intends to go after CORP so it sticks to its responsibilities.

“Our position is the railroad is the tenant and the tenant is responsible for repairing the bridge. We’re going to hold them accountable for that,” he said.

As to the port’s future projects, including the proposed terminal to bring in 2 million containers a year to be shipped east on rail, CORP mentioned that in its press release.

“... The line could be reopened to support a container terminal at Coos Bay should such a terminal be developed,” the company said.

Mixed message

A CORP official said last year that a rail upgrade to accommodate double-stacked container cars would require a $160 million investment. The state already has committed $60 million in lottery bonds to help the port dredge the shipping channel deeper and wider to accommodate the new generation of container ships.

“We would need more information certainly to determine why the decision on embargo was made, and hope — and our expectation is — that it would be done for safety reasons and not any economic reason,” Warner said of the governor’s concerns.

Sen. Verger said Union Pacific officials already have stepped in to negotiate on that project. But Bishop said the tunnel is irrelevant to a container terminal, which would require an almost total rebuild of the rail line.

The immediate issue, Bishop said, is why CORP is balking at spending $7 million to keep the tracks open now, considering it’s owned by RailAmerica. The company operates 41 railroads in 25 states and three provinces in Canada. And RailAmerica was purchased in November 2006 by Fortress Investment Group, an equity management company with $43 billion in assets.

“It leads us to question what the intent of CORP is and whether it is time to talk to regulators as to whether they are the appropriate owners for the line to serve our customers and businesses,” he said.

— City Editor Elise Hamner covers the Oregon International Port of Coos Bay. She can be reached by calling 269-1222, ext. 239; or by e-mailing ehamner@theworldlink.com.