August 28, 2002 11:00 pm
LOAD OF LUMBER: Wallowa Forest Products was the only company shipping freight along the rail line. (The Observer/GARY FLETCHER).
LOAD OF LUMBER: Wallowa Forest Products was the only company shipping freight along the rail line. (The Observer/GARY FLETCHER).

By Alice Perry Linker

Observer Staff Writer

ELGIN — Wallowa Forest Products has stopped shipping lumber by rail.

Jack Boyd, timber manager for the mill at Wallowa, said Wednesday that the railroad "is charging too much."

The mill shipped its first trainload of lumber, amid much fanfare, Aug. 5. Only about three loads went out by train, Boyd said, and no logs are being shipped by rail to the mill.

According to Boyd, the higher charges come from Union Pacific Railroad, although the Idaho Northern and Pacific actually provides the train along the line owned by the two counties that runs into Wallowa County. Near Elgin, line ownership shifts to Union Pacific, and under federal law, each railroad company charges a separate fee for its segment of the line.

Boyd said that Wallowa Forest Products agreed to ship some product by rail as long as the cost did not exceed the cost of sending freight by truck. He said he thought a price agreement had been reached.

"The railroad said that it couldn't do it for that (amount)," Boyd said. "We're waiting for the railroad to come back to us."

The announcement that shipping had ended came toward the close of the first Wallowa-Union Railroad Authority meeting. Union County Commissioner Steve McClure, who chaired the meeting, said the authority will try to help negotiate a satisfactory rate agreement.

"We're having conversations with Idaho Northern," McClure said.

Wallowa Forest Products was the only company shipping freight along the rail lines, recently purchased by the two counties, using a $2 million grant from the state. Under the $6.5 million purchase contract, Idaho Northern agreed to operate a freight train and maintain the rail lines for one year — until May 2003. The counties must repay $4.5 million to the railroad.

Next year, operation and maintenance of the railroad will fall to the Wallowa-Union Railroad Authority, which is made up of county residents appointed by both counties.

McClure told the authority that funds from the state include about $100,000 to allow the authority to contract for some staff and hire consultants.

Many issues face the authority, including finding freight customers. Other possible sources of revenue are rail car storage and the operation of a school for railroad engineers, although neither of these is certain.

A Wallowa County-based organization, Friends of the Joseph Line, has expressed interest in developing a tourist train.

McClure admitted that the railroad authority cannot operate the line and make debt payments without a substantial infusion of money from the federal government. It is unlikely any railroad money will be released to the counties during the upcoming fiscal year.

"Basically, we've borrowed $4.5 million," he said. "It's very difficult to almost impossible to meet that. Federal participation is essential. There is too much debt service to make this work over the long term without it."

McClure said the counties have been contacting 2nd District Congressman Greg Walden and U.S. Senators Ron Wyden and Gordon Smith. McClure said he has researched the cost of hiring a lobbying company and found that would range from about $6,500 to $8,000 per month.

Enterprise Mayor Susan Roberts urged the authority to talk to all of Oregon's representatives to Congress. Other less expensive lobbying opportunities may be available, Roberts said, as other small communities have been able to join with larger groups in hiring lobbyists at lower costs.

Authority members will take a rail trip from Elgin to Joseph in early September to look at crossings, fire risks and safety hazards along the line. The trip takes about five hours.

As the authority grappled with the many issues surrounding the operation of the newly purchased railroad, Wallowa County planner Bill Oliver suggested the group consider acquiring the rights to the rail line from Elgin to La Grande at a cost of about $8.5 million.

"We certainly don't have to make that decision today," McClure said.