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Editorial: Millions in railroad profits should be diverted to infrastructure

Puget Sound & Pacific Railroad has now had four derailments in about three weeks. This time, it happened in Centralia. The previous three happened on the rails between Montesano and Aberdeen.

Each time, the spokesman for Puget Sound & Pacific Railroad pledged that a thorough inspection of the tracks will occur before trains would roll.

Then, a couple of days later, another derailment would happen.

On social media, the buzz has been that all of this must be caused by foul play. The rail line concedes that’s just not true, blaming “failed ties” on the derailments that happened in Aberdeen. A cause for last week’s derailment isn’t known.

And there’s no word on what caused the recent derailment in Centralia.

We all owe a debt of thanks to Congressman Derek Kilmer, who saw that an independent investigation should be done and called on the Federal Railroad Administration to look into the matter. I had spoken to an official from the Federal Railroad Administration after the second derailment — and there was absolutely no plans for an investigation at that point.

There hadn’t been a death nor an injury. It didn’t rise to the level needed for an investigation.

The key to an investigation that didn’t result in injuries is that part of a Federal Railroad Administration’s criteria allows for an investigation of “incidents that arouse considerable public interest.”

Three derailments — and now four — definitely meet that criteria. And Kilmer pushed hard to make sure someone in Washington, D.C. was paying attention.

“When trains are going off the tracks it’s important to find out why and make sure neighborhoods and residents are safe,” Kilmer said.

We’ll see what the findings will tell us.

My guess is it’s antiquated rail infrastructure that desperately needs to be upgraded.

Those who wish to see crude oil shipped out of the Port of Grays Harbor usually use a talking point that the the rail line will be upgraded once the facilities receive permit approval and oil is about to roll down the line.

However, the Port had its best export year ever. That means that more cargo than ever is moving down the rail line now. Three of the derailments feature grain cars bound for Ag Processing, Inc. In fact, even though the Montesano rail line is open again, the cars were moving right past the cars that remain in ditches right above the banks of Higgins Slough, a tributary of the Chehalis River.

So, here’s my question, if the Port is having its best years ever, with the best exports ever, that would mean there’s a lot more rail traffic, right? And wouldn’t that mean the rail line is making hand over fist in money? As the economy has dragged a bit on the Harbor, it’s been double-digit unemployment or darn near close since 2008, the Port has been a shining beacon of economic hope bringing in car exports and grain exports in particular. And the biggest beneficiary of the export business, besides the Port, has been the short line railroad.

In 2012, Florida-based RailAmerica sold its assets, including Puget Sound & Pacific, to Genesee & Wyoming. A news release at the time said that the deal was valued at $1.39 billion. The Jacksonville Business Journal noted that the sale went through amid a practical bidding war for the company between several interested railroad operators. And, ultimately, the company was sold for $190 million more than what the company had been estimated it was worth.

The Jacksonville Business Journal noted that Genesee & Wyoming would be paying $27.50 per share — a 10.84 percent increase from RailAmerica’s closing price per share of $24.81 at the time of the announcement.

“Genesee & Wyoming said the deal would diversify its customer and commodity bases, increase its total revenue by nearly two-thirds to about $1.4 billion and double its North American revenue to about $1.1 billion,” The Wall Street Journal reported in its own coverage, noting it was “a move that combines the two largest short-line and regional railroad operators in North America.”

Puget Sound & Pacific owns or leases 135 miles of track, according to a Genesee & Wyoming annual report.

The latest quarterly filings, released as part of the company’s investor relations, notes that G&W made $39.6 million in the first quarter of this year.

At the end of 2012, the company made $52.4 million, according to its notice to investors. After acquiring RailAmerica and noting the surge in coal and oil train traffic, by the end of 2013, things were even better, reaping the company $272.1 million. Those are on top of the millions of dollars in debt and integration costs it took for RailAmerica.

A spokesman for the company notes that Puget Sound & Pacific has had $4.3 million in track upgrades between Centralia and Hoquiam since Genesee & Wyoming took over. That may be the case. But, obviously, more is needed.

The company has pledged another $3.9 million in upgrades, including improvements needed on our own ailing Devonshire Bridge, outside Montesano. But the railroad would do that work only if the U.S. Department of Transportation agrees to fund a grant made by the Port of Centralia for $9 million. Our own Port of Grays Harbor has tried unsuccessfully to get one of these grants for the past few years and ended up just taking its own bond out to pay for improvements

That means it’s a real crap shoot if the federal grant will ever actually be awarded.

In the wake of these recent derailments, maybe Genesee & Wyoming should carve out more of the profits its earned since acquiring RailAmerica and devote it to even more infrastructure improvements to be done now.

At this point, with grain being spilled every few days, when does it become an insurance risk? When will traveling on our antiquated rail infrastructure become a liability? When will a train fall off the tracks and actually kill someone?

After the third derailment outside Montesano, eight more “failed” ties were discovered up and down the tracks by a visual inspection — and yet the railroad says those same visual inspections had already occurred after the first derailment and after the second one. Why weren’t they noticed after one of those times?

The railroad talks about its special “geometry cars” that go down the track and help determine areas of concern. However, the very day after one of those cars went down to check the tracks, the derailment occurred in Montesano. If the inspections are so rigorous, how is that even possible?

And, even after all the publicity on the three other derailments, yet another one occurred in Centralia. Let’s hope we get some real answers from the Federal Railroad Administration.

Steven Friederich is editor of The Vidette. Contact him at