Stretched too thin WASHINGTON -- After discovering that the owner of a shortline had sold the track to scrap dealers in violation of a legal obligation to provide rail service, an attorney for 11 Ohio shippers said the Surface Transportation Board may be stretched too thin to do its job, the Journal of Commerce Online reports. Transportation attorney Keith O'Brien is seeking STB assistance in restoring rail service over a 36-mile line linking Youngstown, Ohio, with Darlington, Pa. The shortline connects with CSX and Norfolk Southern and shippers signed verified statements that in excess of 1,000 carloads of freight would move over the line annually. The National Transportation Policy instructs the STB to preserve and promote rail service, but O'Brien said, "The STB has not been swift in meeting its congressional directive." Had the STB sufficient resources to employ field inspectors, who are "the regulators' eyes and ears," said O'Brien, it would have realized that the line's owner, Railroad Ventures Inc., "was allowing the line to be unlawfully dismantled." It is not a matter of insufficient freight revenue or not enough capital, said O'Brien. Several state agencies "would have paid for reconstruction of the line" and the Columbiana County Port Authority "is prepared to buy the line" from Railroad Ventures for a price considerably more than Railroad Ventures paid, he said. In the four years Railroad Ventures has owned the 36-mile line, said O'Brien, it has sold the track to a scrap dealer (although not all the track has been ripped up), sold an easement to an electric utility for $880,000, paved over a portion of the right-of-way to permit access to a shopping center partly owned by the CEO of Railroad Ventures, permitted local towns to pave over other line segments to improve highways and been in negotiations to sell portions of the right-of-way for industrial development. There has been no rail service over the line since Railroad Ventures acquired it in 1996. Railroad Ventures purchased the line from bankrupt Pittsburgh & Lake Erie Railway, which had a contract with shortline Ohio & Pennsylvania to provide rail service. The Columbiana County Port Authority unsuccessfully opposed that sale, alleging Railroad Ventures would attempt to scrap it. Upon taking control of the line, Railroad Ventures canceled the Ohio & Pennsylvania's operating lease and then "delayed repair work financed by the Ohio Rail Development Commission," said O'Brien. "When service wasn't restored and Railroad Ventures showed no interest in rehabilitation of the line, the state agency became disenchanted and stepped back." Although Railroad Ventures reinstated the operating lease, service still was not restored. In May 1999, Railroad Ventures asked the STB to permit abandonment of the line. The Columbiana County Port Authority followed with an offer to purchase the line and operate it through a subsidiary, the Central Columbiana & Pennsylvania Railway. The STB subsequently set the sale price at $1.1 million, which would be a tidy profit, said O'Brien, because that price is almost $300,000 more than Railroad Ventures paid for the line, not including the $880,000 it received for selling a power-line easement to Ohio Edison. As the deal moved toward conclusion in May, a former official of Railroad Ventures came forward, said O'Brien, with the first evidence that Railroad Ventures had sold the track to a scrap dealer 20 days after acquiring the line in 1996 and never intended to provide rail service. This helps explain why 40 separate portions of the right-of-way have been paved over and why Railroad Ventures "was not enthusiastic" about public aid for rehabilitation, said O'Brien. So on June 8 O'Brien asked the STB to reverse the 1996 sale of the line to Railroad Ventures. If the STB agrees, the port authority will be able to negotiate a new purchase agreement with the Pittsburgh & Lake Erie bankruptcy trustee rather than pay the STB-set acquisition fee of $1.1 million to Rail Ventures. O'Brien and attorney Richard Streeter, who represents the proposed new shortline operator, also are seeking from the STB a directed service order giving the new shortline immediate access to the line while it is determined how the final transfer to the port authority is to proceed. This would permit more prompt rehabilitation and restoration of service, said O'Brien. Yet a month after the petition was filed, the STB has not acted. "In situations such as this, the board should move quickly to prevent any further destruction of a line and preserve the status quo. That has not been done here," he said. Attorney Richard Wilson of Altoona, Pa., who represents Railroad Ventures, said he had no comment. (First Story)

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July 17, 2000
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