Oral Request_dh.doc

BEFORE THE SURFACE TRANSPORATION BOARD
__________________________________________________
STB DOCKET NO. AB-564
CAMAS PRAIRIE RAILNET, INC.
ABANDONMENT BETWEEN SPALDING AND GRANGEVILLE IN
LEWIS, NEZ PERCE, AND IDAHO COUNTIES, IDAHO

THE IDAHO PUBLIC UTILITIES COMMISSION’S
REQUEST FOR ORAL HEARING

BY:
Donald L. Howell, II
Deputy Attorney General

Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
[phone]

Express Mail Address:

472 W. Washington St.
Boise, ID 83702

DATED: June 2, 2000

BEFORE THE SURFACE TRANSPORATION BOARD
__________________________________________________
STB DOCKET NO. AB-564
CAMAS PRAIRIE RAILNET, INC.
ABANDONMENT BETWEEN SPALDING AND GRANGEVILLE IN
LEWIS, NEZ PERCE, AND IDAHO COUNTIES, IDAHO

THE IDAHO PUBLIC UTILITIES COMMISSION’S
REQUEST FOR ORAL HEARING

This request for oral hearing is filed pursuant to 49 C.F.R. ( 1152.25(d)(6) by the Idaho Public Utilities Commission (IPUC). The IPUC is the agency created by state law to supervise and regulate all public utilities in this state including railroad corporations. Idaho law requires that the IPUC hold a public hearing on any proposed railroad abandonment. Idaho Code § 62-424. The purpose of the State hearing is to determine whether the abandonment will be adverse to Idaho’s public interest.
Pursuant to the Board’s regulations, requests for an oral hearing are due ten days after the filing of the Application. 49 C.F.R. ( 1152.25(d)(6). A copy of Camas Prairie RailNet’s (Camas Prairie or Railroad) Application was received by the IPUC on May 30, 2000 and oral hearing requests are due June 5, 2000. Although the Commission has yet to conduct its public hearing, the IPUC asserts that there are significant and substantial issues that are in dispute. Consequently, the IPUC requests that the Board convene an oral hearing in Idaho for the primary purpose of cross-examining witnesses who file verified statements.
The rail line proposed for abandonment in this docket is 66.8 miles in length. Camas Prairie purchased this line and others operated by the former Camas Prairie Railroad in April 1998. Since the date of purchase, rail traffic on the Grangeville line has significantly increased. In addition, there is a mixture of shipped commodities (primarily wheat and lumber) and a healthy mixture of loaded inbound and outbound cars. Simply put, there is a substantial volume of traffic and several large shippers on this line.
REVENUES AND MAINTENANCE COSTS
1. Revenues. The IPUC understands that the Railroad’s calculation of car shipments and the corresponding revenue for the forecast year appears to be a disputed issue that warrants an oral hearing. The Application states that based upon the Railroad’s traffic survey, “there is little likelihood of any significant traffic increase except for traffic generated by U.S. Timber Co.” App. at 6. Camas Prairie’s revenue projection contained in its Application is based upon a forecast year showing total shipments of 2,621 cars. Exh. F, p. 3 of 3. However, based upon shipper surveys gathered by our Staff, the IPUC contends that car traffic for the forecast year will be in excess of 3,200 cars, or approximately 600 more cars than forecast by the Railroad. This significant discrepancy in car shipments and corresponding forecast revenue merits an oral hearing.
2. Maintenance Expenses. The IPUC believes that the Railroad has significantly overstated its normalized maintenance costs. In its Application, the Railroad observed that the general condition of the line is “good.” App. at 8. The Railroad acknowledges that the track does not require rehabilitation to meet FRA Class 1 standards. App. at 9. In addition, the Railroad’s maintenance report prepared by Parsons Brinckerhoff (PB Report) dated March 27, 1998, recognizes that the “bridges were found to be in good condition, with a minimum amount of deferred maintenance.” Executive Summary at p. 3 (Exh. D). The Application also states that approximately 4,700 ties were installed in 1998, presumably after the preparation of the PB Report.
Despite the good condition of the track and bridges, the Railroad contends that the forecast year cost for maintenance of way and structures is $890,013. Exh. 1, p. 1 of 3. However, approximately three-fourths of these alleged maintenance costs are attributable to expenses calculated in the PB Report. The Railroad has not offered any verified statements supporting the assertions and calculations contained in the Report. In addition, the Report and the observations underlying the Report are more than two years old. Significant maintenance was performed after presentation of this Report (e.g., the installation of approximately 4,800 ties).
3. NLV. The IPUC and other interested persons have had only four days to examine the Railroad’s Application and other supporting documents. Approximately two-thirds of the rail line passes through the Nez Perce Indian Reservation. For purposes of calculating the net liquidation value (NLV), the Railroad asserts that it possesses 1,039 acres of non-reversionary property in the right-of-way. The IPUC believes that the amount of reversionary property, and thus the NLV, is disputed and must be carefully examined by the Board.
The IPUC also questions whether the removal costs for the many structures on this line are understated. At a minimum, the IPUC maintains that removal and salvaging of the line immediately adjacent to Lapwai Creek (between Milepost 0 and 14) will in all likelihood be greater than estimated by the Railroad. Lapwai Creek is critical habitat for a threatened species-- steelhead trout. In a letter dated May 2, 2000 (attached), the Idaho Department Fish and Game notified the Railroad of the existence of this threatened species and its critical habitat. As set out in paragraph 5 of the attached letter, the Grangeville line crosses Lapwai Creek and its tributaries no less than 9 different times. Consequently, salvage of the track, and other structures will require added safeguards to protect this threatened species and its critical habitat. The Railroad’s Environmental and Historical Report does not mention the attached letter.
ADVERSE IMPACT ON RURAL AND ECONOMIC DEVELOPMENT
Contrary to the assertions of Camas Prairie, the abandonment will have a serious adverse impact on rural and economic development. As the Railroad noted in its Application, the line proposed for abandonment transverses a sparsely populated area of rural Idaho with less than 7,000 residents. In addition to increased transportation costs for agricultural products, some crops (most notably malt barley) may no longer be produced if rail service is not available. In addition, it has been reported that at least one lumber mill in Grangeville may incur additional transportation costs of up to $100,000 per year if the rail line is abandoned. Conversion of rail traffic to truck traffic will have a significant impact on the local roads if the rail line is abandoned. This is all the more ironic considering that one of the Railroad’s largest shippers recently began operations at Craigmont based upon the existence of the Railroad’s operation of the Grangeville line. It is the IPUC’s understanding that shippers and local government representatives have formed an association to oppose the abandonment. The IPUC anticipates that they will be able to describe in particular detail the serious and adverse impacts on rural and community development, if given the opportunity at an oral hearing to do so.
CONCLUSION AND REQUESTED RELIEF
In summary, there are serious discrepancies in the facts we have access to and the information contained in the Application that can best be addressed by conducting an oral hearing in Idaho. Revenues have been grossly understated, expenses have been vastly overstated, and the abandonment will have serious and adverse impacts on the rural and community development in this area of Idaho. In addition, it is patently unfair to accept the alleged maintenance expenses based upon a two year old Report that is not sponsored by any witness’s verified statement.
Based upon the foregoing, the Board should schedule an oral hearing in Idaho.
RESPECTFULLY SUBMITTED this 2nd day of June 2000.

Donald L. Howell, II
Deputy Attorney General

Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074

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The Board’s regulations provide that the forecast year begin “with the first day of the month in which the application is filed.” 49 C.F.R. § 1152.2(h). The Railroad’s forecast year begins in the month following the filing of the Application. App. Exh. 1, p. 3 note 2. The IPUC is unsure whether this discrepancy is material.

ORAL HEARING 6