Skunk Train Gets Skunked; Great Redwood Trail Logs a Win

The Skunk Train 2009 [Photo from Drew Jacksich from San Jose, CA, The Republic of California, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons]

The Great Redwood Trail Agency, which owns the track, had asked the Surface Transportation Board, which regulates railroads, to allow it to abandon the track so it could start the process of converting it into a trail. The Board approved the abandonment, effective on June 19, unless it received a formal notice from an entity intending to buy part or all of the line. The Skunk Train, also known as Mendocino Railway, did so. Last Saturday, it filed its bid, known as an Offer of Financial Assistance, which the Board rejected within the five-day legal timeframe. The Board also lifted the hold on its authorization to abandon the line, which means that as of Tuesday, October 25, the entire 176 miles of track from Willits to just outside Eureka is officially an abandoned railway.

There is no appeals process, and the Board will take up further issues around converting the railway into a trail in the next few days. 

The Great Redwood Trail Agency is working closely with Senator Mike McGuire, the California Coastal Commission, and environmental groups including Friends of the Eel River, to build a 320-mile trail alongside or on top of the railroad line from Marin to the Humboldt Bay. The Agency also holds the deed to the Willits yard, or depot on Commercial Street, which is a critical part of the Skunk Train’s infrastructure. 

Last month, Robert Pinoli, the President and CEO of Mendocino Railway, told a judge he feared that if the line were abandoned, his company would no longer be able to use the yard. Pinoli was the only witness in a three-and-a-half day eminent domain trial, where Mendocino Railway is suing a landowner just outside of Willits, claiming that short lines like the Skunk Train are a vital element of the nation’s infrastructure. As such, Pinoli argued, the Skunk should be authorized to take the property because its use of it would serve the most public benefit. The eminent domain trial seemed to conclude about a week before the Great Redwood Trail Agency signed the deed to the Willits yard, but it’s since been reopened. It will start up again on November third.

The process of converting the railway into a trail appeared to be threatened over the summer, when an anonymous “Coal Train”  interest based in Wyoming declared its intent to purchase all 176 miles of the track and use it to carry coal from the midwest and ship it overseas from the port in Humboldt Bay. That plan was scuttled when badly redacted bank statements showed that the company was flat broke.

The Skunk Train’s challenge remained, though. On Saturday, it made good on its stated intent to buy the track from Willits to Longvale. In a 271-page Offer of Financial Assistance, the company argued that the Great Redwood Trail Agency had grossly overestimated the maintenance and rehabilitation costs of the line; that the Skunk Train had a potential client for its freight shipping services; and that it has the financial wherewithal to purchase the track for about five and a half million dollars. The company estimated that rebuilding the track would cost an additional seven to nine million dollars.

The Great Redwood Trail Agency’s attorney, Charles Montange, argued that “In order to show financial responsibility, MR (Mendocino Railway) must show available assets sufficient to cover purchase price and rehabilitation and other costs of sustaining the initial two years of operation.” The Agency calculated that the purchase price, rehabilitation costs, and the two years operation and maintenance would come out to a little over $39 million. The entire northern portion of the line is so unsafe that in 1998, the Federal Railroad Administration embargoed it, meaning that it is illegal to use the line. And a tunnel on the Mendocino Railway line between Willits and Fort Bragg has collapsed multiple times. There is no connection between the Mendocino Railway short line and the national rail network. Pinoli testified last month that to his knowledge, the last time Mendocino Railway interchanged a freight train with another train was the day before Thanksgiving of 1998. He did not know the last time a freight train left Mendocino County.

Mendocino Railway did not include its assets or the name of its potential shipping client in the public filing of its Offer of Financial Assistance. The Surface Transportation Board did have access to that information, and it found that the Railway “failed to demonstrate…that it has, or within a reasonable amount of time will have, the funds necessary to not only acquire the 13-mile rail segment, but to rehabilitate, maintain, and operate it as well.”

The Great Redwood Trail Agency hired Marie Jones, a Fort Bragg consultant, to conduct a market analysis of Mendocino Railway from Longvale to Willits. She wrote that, “As an abandoned community, (Longvale) will not provide a market for the rail-based transport of any finished goods, manufactured goods, or commuting traffic, and on its face, is not a tourist destination for excursion train use. Aggregates, gravel and sand are the only realistic potential freight from this area.” She calculated that permitted operations in the area allow for a maximum of 79,100 tons of gravel extraction per year. With competitive transportation costs in the Willits market, she concluded, “There is no space within the market for non-competitive transportation pricing.” Jones is dubious that any potential shipper would pay the higher rates she believes Mendocino Railway would have to charge to be profitable, especially since trucking is so much cheaper.

According to Jones, for the train to compete with trucks, it should charge $211 per railcar. But Jones concluded that “the total capitalized cost for acquisition, construction, and operating costs for the Longvale to Willits rail line would be $3,767/railcar, which is an order of magnitude higher than the average trucking cost of $211 for 80 tons of aggregate delivery.”

Montange summed up Jones’ findings:

The only shipper that could possibly be served on the Longvale to Willits segment is Wylatti dba Geo Aggregates, which has previously been identified by MR (Mendocino Railway) as the only shipper in the Longvale vicinity, and which is also present in Fort Bragg. GRTA (the Great Redwood Trail Agency) retained Marie Jones to examine rail need and feasibility for all the shippers identified by MR, and the transportation market generally from Longvale to Fort Bragg. Suffice it to say that Ms. Jones shows in her resulting report (attached to Jones Verified Statement, exhibit 4) not only that Wylatti is being served by trucks but also that that trucks are cheaper than rail to satisfy all current orexpected transportation needs. If trucks are cheaper, then freight rail is not feasibleor needed.

The Board agreed that Mendocino Railway “has not demonstrated financial responsibility.” Meanwhile, the Great Redwood Trail Agency has released its “Feasibility, Governance, and Railbanking Report,” which McGuire refers to as the “Master Plan.” He anticipates it will take two to three years to get through the details of construction, fire safety, and community engagement before trail building begins. There will be a virtual town hall about the master plan on Monday night at 6:30 p.m.