By PAUL DELANEY
Staff Reporter
The Eastern Washington Gateway Railroad seems to have successfully survived the perfect storm of a troubled economy and Mother Nature.
That combination nearly derailed the short line that winds its way out of Cheney and on to Coulee City. But rail cars full of wheat and steel will continue to roll over old rails after the EWGR reached a new operating agreement on April 6. It came a little more than a month after it was announced that the Washington Department of Transportation (DOT) had planned to terminate the lease, effective July 3, 2009.
When rail traffic on the line took a big hit through a combination of a vastly reduced wheat harvest and business from the Geiger Spur, the EWGR experienced financial problems that prevented them from replacing railroad ties and doing other track maintenance required by WSDOT, owners of the nearly 100 miles of track.
The new agreement includes performance objectives, according to the railroad's general manager, John Howell. The first set was due April 6, and another on July 15. “We did pass all of our April 6 objectives,” Howell said recently.
“There were two factors and the largest was the poor wheat harvest in Lincoln, Douglas and Grant counties which is the area in which we serve,” Howell said.
According to one elevator manager, it was one of the worst wheat harvests in a dozen years, Howell said.
“The railroad lives on its ability to ship wheat,” he said. “Less wheat to ship means there's less revenue.”
The last half of the 2008 calendar year was much lower than the first half off 2008. “And the spring, January through April and May are not the heaviest months of the year,” Howell said.
“We rescinded the notice of termination,” the DOT's Mike Roswell said from his Olympia office. “Under the agreement, the Eastern Washington Gateway Railroad has to meet a number of benchmarks.”
“That was pretty much the idea of the first set of benchmarks, Roswell said. “To get a gut check, what's real out there.”
Roswell was not able to elaborate on exact details. “In general (they had to) show they are current on obligations; showing that they are receiving or are about to receive certain amounts of income.”
Had the EWGR not been able to craft a new deal, or if they are unable live up to the new agreement, Roswell said rail traffic would not be interrupted. “Under the agreement there are a variety of options,” he said, including seeking a new operator in a worse-case scenario.
But having a new operator is not something Howell sees happening as things seem to be turning around.
Howell said that along with the dreadful 2008 wheat harvest, one of the factors that nearly derailed his operation was business volume from a pair of steel fabricators that ended up being a fraction of projections. Originally it was thought that the EWG would run five cars a week, when in reality it was just eight cars in three months.
It is now estimated that there will be 30-40 rail cars over the next two months, according to Howell. “The economy hasn't turned around as yet, but that's certainly an indication of things to come,” Howell said.
Another part of the agreement calls for installing 3,600 ties before Sept. 30. “That's our commitment to the state,” Howell said.
Paul Delaney can be reached at [email protected].
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