COOS BAY — Federal railroad regulators say it appears RailAmerica and the Central Oregon & Pacific Railroad have abandoned the Coos Bay rail line.

And they want to know why.

The U.S. Surface Transportation Board issued a decision to RailAmerica, CORP’s parent company, on Friday demanding it explain its lack of action. It ordered the railroad to justify why it should be allowed to keep the rail line closed and why it shouldn’t be forced to fix the tunnels and run railcars — or give up ownership.

CORP closed the line Sept. 21, 2007, on 24 hours’ notice. The railroad told companies three tunnels were unsafe and needed $7 million in repairs. It filed an embargo legally limboing future of traffic on the line. Since then, the railroad has made no repairs and apparently hasn’t maintained the tracks. All the while, it’s called on the state, shippers and port of Coos Bay to pony up the biggest chunk of $23 million it deems necessary to bring the line back to status quo.

Federal regulators aren’t buying it.

Strong language

“... A carrier is not given a free pass to choose not to serve just because of circumstances that make it difficult or expensive to provide service,” the agency concluded in its decision.

RailAmerica’s senior vice president and general counsel, Scott Williams, said Friday he was taking his first look at the STB decision.

“We can’t comment on it. We need some time to understand it,” he said.

The agency gave the railroad until May 12 to respond to the order.

In meeting rooms in Washington, D.C., the South Coast’s representatives — Rep. Peter DeFazio and Sens. Gordon Smith and Ron Wyden — have been hammering away on the issue ever since the railroad closed.

“It’s a great decision,” DeFazio said of the STB action Friday. “The arrogance of RailAmerica has been extraordinary. They’ve hired a new lobbyist to work this issue. I think they knew they were about to get handed their head.”

DeFazio said the STB order reflects unusually strong language. The decision surprised people on the South Coast who’ve hired lawyers trying to find a swift solution to a maddeningly leisurely bureaucratic process.

“This is very rare. It’s very thorough, very detail-oriented,” said Jeffrey Bishop of the six-page STB order.

Bishop, the executive director of the Oregon International Port of Coos Bay, said he doubts anything can be done to get the rail line open this year, but this is progress. For repairs to happen, RailAmerica previously said bids would have to go out now, in time for crews to fix tunnels and tracks this fall, before wet winter sets in.

Worsening economics

For shippers, the situation is bad. RailAmerica  plans to close its Siskiyou line into California. The economy is stalled and there’s a terrible housing slump, said Bob Ragon, spokesman for the Coos/Siskiyou Shippers Coalition.

Ragon said the coalition is compiling documentation to show the closure will cost lumber mills and other shippers on the Coos Bay line $3 million to $4 million a year in losses.

“Companies are not going to be able to sustain that,” he said.

Some of that loss is reflected in delays and damage. Lumber is loaded on trucks and sent inland to rail. Then it’s offloaded to sit and wait for reloading. And more, with a track closure at Oakridge due to a slide, those trains now head to Portland and east — even to get to California.

Seven months into the closure, the STB can’t force a quick fix. Ultimately, there seem to be three options:

n The STB can try to compel the railroad to run trains;

n it can direct another railroad to provide the service; and/or

n force formal abandonment.

The STB has a hearing scheduled on railroad issues later this month. Smith, Wyden and DeFazio all plan to be there.

“I would be thrilled in this matter if CORP stepped up and worked with the shippers. They’ve all told me they’re willing to pay a bit more and willing to help CORP,” DeFazio said.

But in the bigger picture, the Democrat sees welcome progress in that the STB is willing to regulate, officiate grievances and take action at a time there is a crisis with national transportation policy. The nation needs to maximize freight on rail, he said, but the U.S. rail system is simply “pathetic.”

Behind the competition

“We’re the only major industrial rail system on the earth without robust passenger rail and many other (countries) are better than us in freight,” DeFazio said.

The robber barons of two decades ago who consolidated big railroad companies and drained their assets are gone, but railroad problems aren’t going away.

“We’re in the days of the hedge funds, who would be as bad as the robber barons. That’s the new threat,” he said, using Fortress Investments LLC, the parent company of RailAmerica, as the example.

Still, DeFazio said he sees the first stirring of a rebirth of a coastal shipping industry. High fuel prices are feeding it.

RailAmerica might sense it, too. This week, the company sent its latest proposal to Gov. Ted Kulongoski. It is seeking a 50-50 joint venture with the Oregon Department of Transportation to own and operate the Coos Bay line.

But the written proposal doesn’t address the governor’s bottom line, said Rem Nivens, his deputy communications director. And the governor reiterated that in an e-mail Friday.

“The STB’s decision supports what I’ve told Rail America — fix the railroad and get freight moving.  Once that happens, the state will sit down and discuss how we can partner to restore the jobs and economic opportunity for the South Coast for the long-term,” Kulongoski said.