ROSEBURG (AP) — The Oregon Transportation Commission was scheduled to vote today to rescind a $7.7 million grant to fund a new rail yard for the Central Oregon & Pacific Railroad.

The state threatened to yank funding for the project at Winchester near Roseburg last year when CORP closed the Coos Bay rail line, linking mills and other shippers on the coast with Eugene.

The grant was the largest among the $104 million in ConnectOregon grants approved for 44 projects statewide in July 2006 to improve transportation infrastructure while increasing jobs.

CORP planned to use the yard to ease traffic congestion. The yard expansion would enable train engineers to shorten trains from up to 120 cars to about 60, reducing the wait for motorists at railroad crossings in Roseburg.

Relations between the railroad and the state have been strained over the closure of the Coos Bay line.

CORP officials indicated they are readying to file suit over the grant issue, according to the story Wednesday in the Roseburg News-Review. Douglas County Commissioner Doug Robertson said he was surprised by the state’s proposal and that it would hurt not only CORP, but the area, too, the newspaper reported.

The Transportation Commission was planning to discuss the grant issue this morning at its meeting in Salem.