Oklahoma Lawmakers Consider Rail Line Purchase

By Janice Francis-Smith

For nearly 20 years now, a 66-mile stretch of railroad track between McAlister and Shawnee has lain dormant. For the last 15 years, the state of Oklahoma has been trying to buy the route. With some help from the Legislature and partnerships with private businesses, the Oklahoma Department of Transportation may finally be able to secure the property in 2008.

On one end of the track lies the National Guard Amory; on the other end is Shawnee Milling Co. All along the route in between are manufacturing businesses – including a brick manufacturer – that would love to have an alternative to trucking for getting their products to market.

With fuel prices on the rise, manufacturers are looking to expand in places that have rail access, said Jim Mills, executive director of the McAlester Economic Development Service. McAlester has benefited from having access to the A-OK rail line, which extends east from the city. The rail line legislators talked about Tuesday would connect to the A-OK line, extending the route east to Shawnee, where another line connects the route to Oklahoma City and beyond.

“In the last 40 months we’ve been able to create about 150 jobs in our industrial park, and I can promise you that of those 150 jobs, railroad played a role in all of them,” said Mills. “There was a time when rail wasn’t even discussed, but now you won’t stay on the list. That’s what economic development is all about – staying on the list until the client decides if they want to locate there or not.”

Steve Saxon, economic development director for the city of Seminole, said rail is of particular importance in rural areas that don’t have access to an airport. Rail access has moved to the top of the list of concerns for Seminole’s economic development professionals, he said.

“And that’s saying a lot, considering we lost about 1,000 jobs when Wrangler resized,” said Saxon. “I’ve got a list of companies that were very interested in Seminole, but we did not have rail and for that reason we were told no-go. We’ve probably lost 4,000 jobs that we’ve missed because we did not have rail.”

Brent Wright of the state Military Department said rail access would also help the armory at McAlester when the Department of Defense conducts the next round of Base Realignment and Closure, or BRAC, reviews.

Democratic state Rep. Ryan Kiesel of Seminole and Republican state Rep. Shane Jett of Tecumseh joined forces on an interim study to examine the feasibility of acquiring and revitalizing the rail line between Shawnee and McAlester owned by the Union Pacific Railroad. House Study Proposal 7131 was considered by the House General Government and Transportation Committee on Tuesday.

Though no representatives of Union Pacific were present for the meeting, state officials and others involved with the rail line offered their understanding of the situation for members of the committee. They said Union Pacific had been struggling to make a profit on the line even before a 350-foot stretch of the track was washed out by a flood 20 years ago. Though it made little financial sense to spend money to repair the track, the company was also reluctant to sell the property to the state, which would open up use of the track to its competitors.

The state has made several offers, but transportation officials want to make sure the state gets the best deal, said Oklahoma Department of Transportation Director Gary Ridley. Any purchase agreement would have to include the purchase of the connection points as well.

“Otherwise, you’re buying an island, with someone else controlling all access,” said Ridley.

The issue of who controls the access points has prevented the state from reaching a deal with Union Pacific in the past, he said.

ODOT owns 850 miles of track in Oklahoma, 95 percent of which is run by short-line operators on contract with the state. The railroad track owned by the state was purchased at salvage value, that is, the liquidation value of the property and track minus the cost of having the track removed, said Ridley.

Under a program the Oklahoma Legislature created in the 1970s to help the state recover from the Rock Island Railroad shutdown, ODOT gets back 10 percent of the profits earned by the short-line operators. Most of the money the state makes on the contracts is reinvested in maintenance on the lines, said Ridley. Jett said the state’s objective in supporting the rail system would not necessarily be to make a profit, but to create an infrastructure that helps improve the quality of life for Oklahomans and strengthens the state’s economy.

Kiesel said a bill to purchase the rail line nearly passed the Legislature two years ago, and the issue has only gained momentum since then. Lawmakers are considering a plan in which the state puts up the money to purchase the track at salvage value, allowing private businesses and possibly tribal governments to work together on a plan to refurbish the line.

But the estimated cost of buying and refurbishing the track is a matter of some dispute. ODOT commissioned two studies from national firms in the last few years to estimate the cost of the project. One study estimated the project could cost as little as $30,000 per mile; another study estimated the project would cost $190,000 per mile.

The studies found it would cost as much as $10.8 million to acquire the property, plus another $50 million to turn it into a Class One track, capable of handling traffic traveling up to 10 miles per hour. Bringing the track up to the highest quality, or Class Three, would cost as much as $115 million, according to one study.

David Donoley, president and CEO of the A-OK Railroad Co., has run a short-line operation under contract with the state since the 1970s. Donoley said the studies’ estimates seem too high. Salvage value for the track should be closer to $6 million, and the state could refurbish the line up to Class One standards for less than $28 million, he said.

Donoley compared some of the prices quoted in the studies with his cost for the same items, and found the studies consistently quoted much higher prices. For instance, the studies priced railroad ties at more than twice the price at which Donoley is able to purchase and install the ties. The studies also factored in thousands of dollars for drainage work Donoley said he has never needed to perform on his lines.

Donoley said the state could save money by investing in a rail system that could move more heavy cargo away from the road system. A rail car can carry up to four truckloads of material, and repairing a mile of rail costs a fraction of the price of rebuilding a mile of highway, he said.

Originally published by Janice Francis-Smith.

(c) 2007 Journal Record – Oklahoma City. Provided by ProQuest Information and Learning. All rights Reserved.