September 18, 2001 11:00 pm

By Gary Fletcher

Observer Staff Writer

ENTERPRISE Union and Wallowa counties have again dodged the bullet that would surely shoot down hopes of resurrecting rail service from Elgin to Joseph.

The removal and salvage of the 61 miles of rails has been delayed for 90 days.

U.S. District Court Judge Robert E. Jones was scheduled Sept. 11 to hear a request for an injunction against Wallowa Countys requiring a permit of Klamert Salvage Company to salvage the rails of the abandoned Idaho Northern & Pacific rail line.

Federal courts were closed the day of terrorist attacks on the East Coast, and the hearing was rescheduled.

Jones on Friday postponed the hearing for some 90 days pending the outcome of a yet-to-be-scheduled U.S. Surface Transportation Board ruling on a petition from the Oregon Department of Transportations Rail Division.

The petition seeks to disallow Idaho Northerns abandonment rights on the line.

Wallowa County Commission Chairman Mike Hayward remains optimistic that a deal can be struck, in spite of the fact that recent efforts were not successful in agreeing on a purchase price for the line between Elgin and Joseph.

Richard Bertel, president of the parent company, Rio Grande Pacific Railroad, said that Union and Wallowa counties do not appear to be serious about acquiring the line, but are only delaying the inevitable the rails being salvaged.

Bertel said that others are interested in purchasing the line, and he will sell it to whomever will pay the highest price.

One potential buyer wants to acquire the corridor for speculation and sell parcels at outrageous prices to adjacent land owners, Bertel said. Nearby land owners have expressed interest in buying parcels from Bertel.

One plans to charge for access to the (Wallowa) River, he said.

On Sept. 7, Bertel in Fort Worth, Texas, spent the day with negotiator Gary Hunter, who represents the counties trying to make a deal.

When asked Monday about the negotiations, Hayward confirmed that Hunter offered $3 million. Bertel dropped his price from

an appraised $7.2 million to $5.75 million.

When told the counties could not come up with that much money, Bertel offered to finance a $6 million package, in which he would accept $3 million and the counties would make annual payments of $1 million. The $3 million down payment would be refunded if the counties could not come up with the remaining money. In turn, the counties would have to agree to not try to stop future attempts to pull the rails for salvage.

Issuing bonds to help purchase the line would be another possibility, Bertel said.

He also offered to finance a locomotive and passenger cars for the counties to pursue their interest in operating a tourist excursion train along with freight service.

Bertels counteroffer was rejected by the counties, Hayward said, because they did not think the line was worth more than $3 million, and that the line could not generate enough money to pay back more than the $1 million they were willing to borrow from the Oregon Economic and Community Development Department.

Union and Wallowa counties have $2 million promised in lottery bonds set aside to purchase the line. Gambling revenue, however, is in doubt because of a lawsuit challenging the legality of the Oregon Lottery. That has caused lottery bond issuance to be postponed.

The counties have indicated to Bertel an interest in purchasing the line from La Grande to Elgin, which is still operating. It is thought that more financing options would be available for it.

Bertel was not interested in that, Hayward said, but offered the counties first right of refusal.

We thought it (our counter offer) was a win-win situation, Bertel said. That $6 million offer is now off the table and we are reviewing our options, Bertel said.