McFarland-Plaistow_Morse_Wyatt_dh.doc

May 22, 2000

VIA FACSIMILE

Thomas F. McFarland, Jr.
McFarland & Herman
20 N. Wacker Drive, Suite 1330
Chicago, IL 60606-2902

Joseph J. Plaistow
L.E. Peabody & Associates, Inc.
1501 Duke Street, Suite 200
Alexandria, VA 22314-3449 Ed Morse
Morse & Company
2101 Lakewood Drive, Suite 225
Coeur d’Alene, ID 83814

Paul Wyatt
PO Box 85
Lenore, ID 83541

Re: Camas Prairie RailNet

Gentlemen:

Friday afternoon I had a telephone conversation with Camas Prairie’s lawyer, John Heffner. Mr. Heffner indicated that the Railroad would file its abandonment application next Tuesday or more “probably” next Wednesday, May 24. John indicated that he would send me the application and supporting workpapers by overnight mail. I can then have the application documents copied and distributed to you.

He also was interested in discussing the possibility of entering into a stipulation regarding certain expenses of the Railroad. He mentioned that the Railroad “allocated” certain expenses over the four divisions. The four areas he mentioned were:

Locomotives: Camas Prairie has six locomotives and would retain four locomotives upon abandonment of the second subdivision. He wanted to stipulate to the reduction in fuel expenses, maintenance expenses and lease payments for the engines.

Freight Cars: He indicated that approximately 14% of the Company’s freight car costs are related to the second subdivision.

Trucks/Autos: The Railroad allocated a 20% reduction in the Railroad’s auto/truck fleet, or approximately three vehicles. This would reduce maintenance expenses, insurance, lease payments, etc.

U.S. Timber Traffic: He also wanted to explore stipulating to increased labor, fuel, and car hire expenses if U.S. Timber’s car shipments increased the total car shipments from “2100 to 2600.”

I told him that I would not stipulate until after I reviewed the application and supporting documents with my experts. We will want to discuss these issues after reviewing the applications.

We also discussed my outstanding requests for certain information and documents. In particular, John said that the property deed for the 1100 acres of railroad right-of-way were located in the Railroad’s Texas offices. He did indicate that there were approximately 26 parcels and I assume a corresponding number of deeds. John indicated that the deeds could probably be made available to us at a nominal fee. Tom, my understanding was that the Railroad would provide documents to other parties without charge. As a party, can’t we obtain the requested documents without charge?

John also inquired when the Public Utilities Commission might hold its state hearing. At this juncture, my inclination would be to look at either June 8 or 9 or June 19 or 20. The Commissioners and I will be out of town on June 11 through 17. John asked that the hearing not be scheduled on June 21 because he will be in Orlando delivering a speech. He suggested maybe June 26, which of course, would be about the last two weeks of the 45-day filing window. What do you think would be the better dates?

I told John that I was disappointed that the Railroad and shippers could not reach a satisfactory accommodation to continue rail service. He indicated that he would probably have Bill Glavin with him at the state hearing and that Bill would be “all ears” for all offers of purchase or financial assistance. Nothing like leading everybody along.

Call me at [phone] if you have any questions or comments. Should we plan on a conference call on Friday, May 26 (assuming they file on May 24 and I forward the materials to you on May 25)?

Sincerely yours,

Donald L. Howell, II
Deputy Attorney General

Vld/LmcFarland-Plaistow_Morse_Wyatt_dh
I am wondering whether this means that he does not anticipate car traffic will be above 3,000 cars in the forecast year?

May 22, 2000
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