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Short Line Railroad Can Be Profitable, Port Authority Learns"
By Dennis LaRueEAST LIVERPOOL, Ohio -- If the Dardanelle & Russellville Railroad in Arkansas, parent of the Central Columbiana & Pennsylvania Railroad, isn't up to managing the short line that runs from Youngstown to Darlington, Pa., there is no shortage of operators who think they can, Tracy Drake said Monday night.At Monday night's meeting of the Columbiana County Port Authority, Drake, its chief executive officer, discussed the fallout since the Central Columbiana & Pennsylvania Railroad -- CQPA as federal railroad officials identify it -- filed for Chapter 11 protection in a bankruptcy court in Arkansas June 14.The port authority is involved in the bankruptcy because it bought the 36-mile short line and leases it to the CQPA, which contracted to buy it; payments are set to begin next month. Since the news broke, at least four operators have contacted Drake about running the short line, the majority of whose tracks are in Columbiana County, the port authority CEO said. Even before the CQPA filed bankruptcy, Drake said, "On and off, I'd gotten five or six calls saying, 'If anything ever happens, we're interested.' "Drake declined to identify the operators.Many of the short line's financial problems, he said, can be traced not to insufficient demand but poor service. Customer complaints about the quality of service offered hindered the CQPA's ability to collect bills, which in turn made it tough to meet its obligations."Long-term, the railroad will be healthy and successful in its operations," Drake assured the five directors of the port authority.Russell Albright, chairman of the port authority, noted the railroad was "required to do a lot of things they didn't do" in meeting its debt schedule, providing customer service and making upgrades on the tracks. "The bankruptcy court can replace them [as operator] immediately [once the trustee is named]," he said. "There are several companies that want to replace them." The CQPA could continue to operate the short line after the bankruptcy court in Arkansas names a trustee, Drake said, an action expected in three weeks or so. Or the trustee "could bring in a third party" to run its day-to day operations, he added. The federal railroad administration has recommended "five potential operators" to the court, he reported.A third option, Drake said, is the port authority could name a new operator since the bankruptcy filing, under the CQPA's contract with the authority, constitutes a breach of contract that allows the authority to take that action.Railroad bankruptcies differ from most other bankruptcies in that the court and trustee it appoints must be more concerned with the public good -- that is, serving the railroad's customers -- than that creditors be repaid as quickly and as much as possible, Drake explained.Thus customers should enjoy at least the same level of service and possibly better service. The port authority will seek to transfer venue from the bankruptcy court in Arkansas to the court in Youngstown, although Drake concedes he's pessimistic that will occur.On the bright side, Drake remarked, the CQPA must pay its new debts "cash on the barrel head," so that any further upgrades and repairs the port authority makes in behalf of the short line will be paid up front.The short line's inability to collect its bills delayed cleanup of a derailment in March and the port authority stepped in to pay the remaining balance.In its original business plan, the CQPA projected it would haul 1,000 cars the first year and 3,000 the second. That second-year figure was closer to 2,700 and could have been 6,000, Drake said, because of the demand for hauling clean debris to two landfills in Columbiana County and finished product from Darlington Brick. The demand was there but the railroad couldn't satisfy it, Drake said. The brickyard alone could have filled 2,000 cars annually but inadequate service held it to 1,000 or so."They should be able to make money, enough money to repay their debts and show a small profit," he said.Calls to the Dardanelle & Russell Railroad in Russellville, Ark., were referred to the railroad's attorney. The attorney's receptionist said he was out of the office and he had not returned this newspaper's call by 3:30 p.m. today.Contact Dennis LaRue at [email protected] "