April 24, 2008

Wyden urges STB to investigate CORP's service reductions on Southern Oregon's Siskiyou rail line

Says railroads have a "duty to provide service"

Washington, D.C. - Oregon Senator Ron Wyden urged the Surface Transportation Board (STB) today to investigate the service reductions on the Southern Oregon Siskiyou rail line and to use its authority to ensure that all railroads are performing their obligation to invest in their long-term needs.

"Railroads have a duty to provide service upon reasonable request," Wyden said in testimony before the Board. "By law, a railroad may not refuse to provide service merely because to do so would be inconvenient or unprofitable."

Last fall, Central Oregon & Pacific Railroad (CORP) and its parent companies Rail America and Fortress Investment Group cited safety reasons for closing the rail line that links Eugene and Coos Bay and demanded public money to reopen it. Last week the STB ordered CORP and Rail America to show cause for why it abandoned the route. CORP has also reduced service on its Siskiyou Line in southern Oregon, raised rates for shippers and threatened to cease operations altogether.

"I applaud the Board's recent finding that CORP must now show why their actions on the Coos Bay line don't add up to unlawful abandonment,"
Wyden said. "I hope that the Board will also investigate CORP's actions along the Siskiyou line."

"This board is the last line of defense against this conduct, and you need to step in and protect the public," he added.

The Fortress Investment Group-owned Rail America is a short line and regional rail service provider that currently owns and operates approximately 7,800 miles of rail lines in the United States and Canada. Rail America's 30 U.S. subsidiaries operate 41 railroads in the United States. CORP operates 439 miles of track, including the now-closed 136 mile Coos Bay Branch.

"The Coos Bay line is a critical link for Oregon's entire southern coast, especially for industry and shippers and, with only one day's notice of the shutdown, many companies and firms were left scrambling to find alternative ways to move their products and adjust operations," Wyden said. "The havoc caused by this shutdown continues, and it is hitting the rail-dependent companies on the south coast especially hard due to the weakening national economy."

Wyden said that demands for increased rates and money from the state to keep the Coos Bay line open indicated that CORP, Rail America and Fortress were broke and could not afford the investment in infrastructure to improve the railroad.

"However, at the same time it was demanding an operating subsidy from the state of Oregon, Fortress loaned $24 million to Michael Jackson for his Neverland Ranch," Wyden said. "With the money they loaned Michael Jackson for Neverland Ranch, they could have upgraded the entire 136 miles of track to pristine condition and protected jobs for thousands of workers and their families."

"Its financing of Michael Jackson's property, however, has made it clear that Fortress and CORP are in their own Neverland," Wyden said. "A world where others will pay for their business's long term infrastructure investments and the government will directly subsidize their business operations. Who wouldn't want to get a deal like that if they could get away with it?"

The meeting can be viewed live online at www.stb.dot.gov. It is scheduled to begin at 6 a.m. PDT and rebroadcast during the day.