FREIGHT AND PASSENGER RAIL BACKGROUND BRIEF LPRO: Legislative Policy and Research Office

HISTORY formation of in 1971, national deregulation of freight rates and routes in ’s first north-south rail line required 1980, and acquisition of Southern Pacific by two decades to complete, Union Pacific in 1996. beginning at Portland in 1869; ONTENTS it reached Salem in 1870 and C TODAY’S FREIGHT Roseburg in 1872. Finally, HISTORY SYSTEM extending to Ashland in 1884. Federal land grants financed TODAY’S FREIGHT SYSTEM Oregon currently has 2,342 this early track building. route miles of track and 23 Construction continued over COAL AND OIL TRAFFIC federally franchised freight the Siskiyou Mountains into railroads although not all are California and, by 1887, a FUNDING IMPROVEMENTS currently active. Union Pacific continuous route existed Railroad Co. (UP) and BNSF between San Francisco and RAIL FUNDING TASK FORCE Railway Co. (BNSF) dominate Portland. Meanwhile, in 1883, rail transportation west of the completion of a railroad along TODAY’S PASSENGER SYSTEM Mississippi River. UP has rail the Columbia River gave lines extending from Portland Oregon a transcontinental EXCURSION TRAINS into Washington State and connection across the east through Pendleton, La northern-tier states. Late in AMTRAK, PRIIA AND Grande and Ontario and 1884, completion of a line FUTURE FUNDING north from Hermiston to from Umatilla over the Blue Spokane and Canada. UP also Mountains established a has a rail line from Portland, second transcontinental link south through Eugene and through Idaho, Wyoming and OREGON RAIL AND PUBLIC over the Cascade Range to Nebraska. Rail mileage in TRANSIT DIVISION Klamath Falls and into Oregon peaked in the 1930s at California. nearly 4,350 miles. More than STAFF CONTACT BNSF track connects Portland 90 percent of the rail and to Canada, and infrastructure in 1927 hosted another rail line along the north bank of the both passenger and freight service, including Columbia River links Portland to Spokane more than a dozen daily passenger trains and beyond. A BNSF rail line to California between Portland and Eugene via two routes. diverges from the Columbia River line near Passenger trains served the Rogue River Valley Wishram, Washington and passes through into the 1950s. Other milestones include the Madras, Redmond, Bend and Klamath Falls

FREIGHT AND PASSENGER RAIL PAGE 1 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL into California. Between the Columbia River Oregon led the country in originated rail tons and Klamath Falls, BNSF and UP share 75 of lumber and wood products. Exports, miles of UP track and 218 miles of BNSF rail including large amounts of grain and line. Altogether, UP operates more than 1,085 fertilizers, accounted for 52 percent of rail miles of track in the state and BNSF operates traffic terminating in Oregon during 2012. 336 miles. Condition of mainline track is generally good, Oregon’s 21 other freight railroads are but the number of trains that can be safely and regional and short line carriers. Collectively, efficiently carried depends on several factors, Oregon’s short lines operate more than half of such as whether a signal system is present, the the state’s rail mileage, serving most of the complexity of that system, and the length of Willamette Valley, the Oregon coast and the and intervals between sidings. Sidings, where major communities along Interstate 5 trains pull off to allow other trains to pass, are between Eugene and the California border. critical because the vast majority of Oregon’s Short lines serve the lower Columbia River mainlines are single track. Some tunnels in basin and rural locations in Hood River, Oregon won’t allow passage of double stacked Gilliam, Union, Wallowa, Crook, Malheur domestic containers, which are larger than and Lake Counties. Most of today’s short line containers utilized for international trade. network, derived from former branch lines of Until onset of the economic recession in major carriers, was spared the fate of other rail 2008, traffic on short lines had grown lines abandoned following mill closures and substantially in prior years as operators rail deregulation in 1980. Oregon’s longest improved service, upgraded track and short lines today are the Portland & Western equipment, and attracted new customers. (PNWR), operating 558 miles, and Central However, some segments of Oregon’s short Oregon & Pacific (CORP) with 251 miles of line network will not allow freight speed of track in the state. While there are 23 railroads more than 25 miles per hour; the state’s in Oregon, 75.9 percent of the state’s rail minimum goal for secondary line operation. network is controlled by just three companies: Track conditions on a few short line segments UP, BNSF and short line conglomerate necessitate lighter loads in addition to slower Genesee & Wyoming. speeds. Since new rail cars can weigh up to According to the Association of American 286,000 pounds (286K) when fully loaded, Railroads (AAR), total Oregon rail freight track incapable of hosting heavier vehicles tonnage in 2012 was 54.4 million tons, up discourages customers if they must load cars from 49.7 million tons in 2009. AAR below capacity. The Oregon Department of indicated that railroads employed 2,026 Transportation (ODOT) estimates that the Oregonians in 2012, and that those employees cost of upgrading deficient lines in the state to earned $219.5 million in wages and benefits accommodate 286K cars is $125 to $150 that year. Principal commodities carried by million. trains are wood and paper products, farm- Additionally, a number of bridges and tunnels related products and chemicals (largely soda on the state’s short line system are aging. Most ash or potash). Transportation equipment, short line bridges are timber trestles built petroleum, metals products, stone, scrap between 1930 and 1950. Of 34 tunnels on the materials and varied wholesale and retail short line system, all but one was dug between shipments also were hauled. For 2012,

FREIGHT AND PASSENGER RAIL PAGE 2 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL 1883 and 1916 and many contain significant COAL AND OIL TRAFFIC portions of their original timber rib lining. Structural concerns within tunnels of CORP’s Since 1975, the only coal trains to be seen in Coquille-Eugene line were cited as the reason Oregon were those destined to Portland for the embargo of that line beginning in General Electric’s Boardman generating September 2007. The CORP embargo evolved plant, which has been targeted for closure in into an abandonment application that was 2020. While Oregon works to shut its only eventually resolved when the Surface coal-fired generating station, and while Transportation Board ordered CORP to sell utilities elsewhere in the U.S. have been the line to the Oregon International Port of switching from coal to natural gas, mining Coos Bay. Coos Bay Rail Link was hired to companies are looking at exporting coal resume commercial freight train service over through Pacific Northwest ports. In the fall of the line in October 2011. Port of Tillamook 2012 there were three active proposals for coal Bay’s rail line was severely damaged by a storm export terminals in Oregon, but by the end of in December 2007 and was abandoned in 2014 all three had reached a dead end. Other 2016 because the high estimated cost of coal export terminals proposed for repairs wasn’t justifiable. Washington State are unlikely to generate coal trains passing through Oregon, although they Most Oregon businesses that ship by rail, would run along the Columbia River in whether on a major railroad or short line, have Washington. access to only one of the state’s two interstate railroads. This lack of competition is of The North American oil boom that began in concern to shippers and the short lines. 2008 relies heavily upon freight trains to move crude oil to refineries on the East and West A 2004 study commissioned by the Port of Coasts. In the U.S., rail shipments of crude oil Portland, Freight Rail and the Oregon Economy, saw a dramatic and rapid increase from 2008 indicates that, although the rail industry is through 2014, after which falling crude oil stable, productive, and competitive enough to prices began to dampen demand. In Oregon, increase business, railroads are not in the crude oil carloads increased fourteen-fold over financial position to increase capacity quickly seven years from 1,685 in 2008 to 24,199 in due to the industry’s capital-intensive nature. 2014, then dropped to 9,144 in 2015 due to On average, railroads reinvest 18 percent of market dynamics. One big factor driving revenues in improvements. With reasonable Oregon’s increase was establishment, in late economic growth, freight volume is expected 2012, of an oil transfer terminal at Port to increase by 80 percent over the next 20 Westward near Clatskanie that previously was years. The study notes that if railroads are not created as an ethanol production plant. Crude able to maintain their current share of that oil arriving by train was pumped into tanks increase, additional tonnage will travel by and then transloaded to barges for movement truck, increasing public-sector costs for to domestic refineries. Of the 24,199 oil highways and private-sector transportation carloads moved through Oregon in 2014, costs. 14,227 terminated their trip in Oregon, 75 percent at Port Westward. However, beginning in the spring of 2016, the Port Westward facility was being converted back to

FREIGHT AND PASSENGER RAIL PAGE 3 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL ethanol, ending its short-lived existence as a accuracy. ODOT is also reviewing and revising crude oil transfer. Oregon Administrative Rules pertaining to requirements for railroads to report the types Starting in July 2013, there were several high- and quantities of dangerous commodities profile derailments in moving through Oregon communities. involving crude oil trains, resulting in Increasing safety via prevention pays off: from explosions, fires and, in Canada, loss of life 2004 through 2013, Oregon experienced an and destruction of a downtown. Those events 81-percent reduction in derailments. resulted in nationwide attention about various aspects of shipping crude oil by rail, FUNDING IMPROVEMENTS including tank car design, train speed and routes, and processes for notification to Except for two of five publicly owned short emergency agencies of significant crude oil lines, Oregon’s railroads are run by private shipments. Chemical analysis of crude oil companies that pay federal, state and local produced from the Bakken shale formation income taxes as well as property taxes assessed suggests its volatility is higher than other crude on their individual rights-of-way, buildings oils. and locomotives. All railroads, whether public or private, maintain their own equipment, The federal government is primarily track, and right-of-way. They pay an annual fee responsible for regulation of railroad based on gross revenue for state track and operations. A brief review by the Office of equipment safety inspections and for Legislative Counsel found that state and local facilitating the regulation of public rail governments are preempted from regulating crossings. Both federal and state highway railroads. There is a narrow exception for laws funds support rail crossing improvements, but of general applicability that is intended to very little federal money has been allocated to protect public health and safety, such as fire the states for other track improvements. The and building codes. exception is a federal loan program, the While there are several federal agencies and Railroad Rehabilitation and Improvement boards that have a regulatory role, the Federal Financing Program, and a capital grants Rail Railroad Administration (FRA), a branch of Line Relocation and Improvement Program. the U.S. Department of Transportation, has Both programs are administered by the FRA. primary responsibility. The FRA has delegated In 2016, the latter program was inactive due some of its authority to ODOT’s Rail and to lack of funding. Public Transit Division. Although federal rail programs are included in ODOT’s Rail Safety Unit has responded to six-year transportation authorization bills, the growth in crude oil transport by focusing some significant Oregon rail projects have on increasing safety through prevention. been accomplished in past years by ODOT’s inspectors regularly monitor train Congressional earmarks. Earmarks stipulated speeds, track conditions, train car placement in the 2004 federal appropriation measure and tank car worthiness. They also walk track, included $8 million for continued inspect cars, review operating procedures, rehabilitation of the railroad draw span over evaluate safety at crossings and check the Coos Bay harbor entrance; $7.5 million hazardous materials shipping documents for for replacing the trestle on the north approach

FREIGHT AND PASSENGER RAIL PAGE 4 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL to the Willamette River rail bridge at Albany; Transportation Commission selects projects $7.1 million for new rail yard capacity in for funding with input from modal and Portland’s Rivergate District; $1 million for regional advisory committees and a final enhancements at Eugene’s rail passenger review committee. station; and $700,000 for upgrading a serving Willamina. The Coos Bay The 2005 ConnectOregon I program funded drawbridge money later was redirected toward 15 rail projects totaling $39 million. Projects the Oregon International Port of Coos Bay’s included short line improvements throughout 2009 acquisition of the Eugene-Coquille rail the state, construction of new track, upgrades line. to passenger rail facilities and equipment purchases. Thirteen rail projects received a In 2001, Oregon started a $2 million Short total of about $56 million under the Line Credit Premium Account with lottery ConnectOregon II program. Projects included bond proceeds to fund short line rail yard expansions, bridge upgrades and infrastructure improvements and to pay the building an intermodal truck/rail grain credit risk premium required for federal loans. transfer and a storage facility. Under Nine projects were funded and the Mount ConnectOregon III, 16 rail projects totaling Hood Railroad obtained a $2.6 million $40 million were approved and for the $40 federal loan with state dollars paying the credit million ConnectOregon IV there were 10 rail premium. The nine projects entailed projects totaling $12.6 million. Seven rail replacement of ties and track, placement of projects totaling $13.2 million were awarded ballast rock and repair of bridges. The short from the $42 million available under lines provided an average 67 percent match ConnectOregon V. Of 75 applications for the improvements. currently being evaluated for the $45 million The legislature in 2003 authorized another $2 ConnectOregon VI program, 14 are railroad- million for the short line rehabilitation related. Project selection is scheduled to occur program and funded a new $8 million by summer 2016. Industrial Rail Spur program to create or RAIL FUNDING TASK FORCE improve rail access to industrial sites. In 2005, the legislature created the first of Oregon’s lack of dedicated, sustainable several successive multimodal ConnectOregon funding for rail investments is one of the programs, authorizing $100 million in lottery- primary challenges to maintaining a viable rail backed bonds during each of the 2005, 2007 system for both passenger and freight in and 2009 sessions; $40 million in the 2011 Oregon. Oregon does not have a dedicated session; $42 million in the 2013 session; and revenue stream available to provide the $45 million in the 2015 session. required match for federal funds to improve ConnectOregon provides grants and loans for passenger rail service or to maintain or operate non-highway transportation projects, the infrastructure once built. including aviation, marine, rail passenger and In 2011, ODOT convened a Rail Funding rail freight, public transit and Task Force made up of 14 diverse bicycle/pedestrian projects. ODOT representatives of Oregon industries, administers a competitive application process passenger rail advocates, local governments for ConnectOregon, and the Oregon and community leaders to identify a long-term

FREIGHT AND PASSENGER RAIL PAGE 5 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL sustainable funding source for passenger and between Salem and Portland, and six daily freight rail in Oregon. The task force round trips between Eugene and Portland. submitted its final report to the Oregon Two round trips are scheduled daily between Transportation Commission in December Portland and Astoria via Seaside. Some of the 2011. The funding recommendation Thruway buses in the Willamette Valley are described in the report includes five designed as extensions of more frequent train components: the creation of a special district; service available between Portland and Seattle, allocation of lottery proceeds to rail; and to generally offer Oregonians more reallocation of railroad property taxes to rail; options when making travel plans. a telephone access fee; and a rail investment tax credit. These sources would generate an Early in 2012, Oregon and Washington estimated $75 - $80 million annually for rail. recognized that continuation of the region’s unique intercity Amtrak Cascades service TODAY’S PASSENGER SYSTEM faced significant future hurdles, especially with respect to funding. Forming a closer Oregon is currently served with passenger partnership, one that it is hoped eventually train service by the daily Amtrak Coast Starlight will include , was seen as that runs between Seattle and Los Angeles, important to success of the corridor. As a first and by Amtrak’s daily Empire Builder between step, ODOT and the Washington State Portland and Chicago. The states of Oregon Department of Transportation (WSDOT) and Washington cooperate to sponsor a signed a Memorandum of Understanding regional passenger train service between March 7, 2012, which committed the two Eugene and Vancouver, B.C., branded as agencies to the concept of joint operation of Amtrak Cascades. Washington State supports the service as a single corridor. WSDOT and two daily round trips between Vancouver, B.C ODOT developed a Corridor Management and Seattle, and four daily round trips work plan signed by the two agencies’ between Seattle and Portland. ODOT directors January 31, 2013. This work plan contracts with Amtrak to operate two daily provides a framework for the initial steps round trips between Portland and Eugene. ODOT and WSDOT will follow in developing a single Cascades Rail Corridor. ODOT also contracts with Oregon bus companies to operate intercity service that The Vancouver, B.C.-to-Eugene rail corridor operates under Amtrak’s Thruway brand as is one of 10 federally designated high-speed well as a state-created Public Oregon Intercity rail corridors. The FRA defines “high-speed” Transit (POINT) branding. The program as speeds reasonably expected to achieve 110 provides bus schedules that supplement miles per hour or more, though top speeds on Amtrak Cascades train service, but also the line today are 79 miles per hour. The includes routes connecting points in locomotives and Talgo cars in operation today southwestern, central, eastern and north coast are designed to run at higher speeds, but the Oregon with Amtrak and Amtrak Cascades current track and signal system is not. The train service at Portland, Eugene, Chemult strategy to reduce run time, increase daily and Klamath Falls. Early in 2014, service round trips and improve on-time performance frequencies in the Willamette Valley were between Eugene and Portland on the current increased to seven round trips per day freight system is estimated to cost

FREIGHT AND PASSENGER RAIL PAGE 6 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL approximately $2 billion. The Pacific One specific expansion, required by funding Northwest Rail Corridor received more than awarded and scheduled for completion in $800 million out of $8 billion allocated for 2017, requires Washington to add two “high-speed” rail as part of the federal additional round trips between Portland and American Recovery and Reinvestment Act Seattle. Because WSDOT owns three of the (ARRA) of 2009, and all projects are five older trains and Amtrak owns the other scheduled for completion by fall of 2017. two, that expansion could have meant a Oregon’s share was $10.5 million to replace disruption in or elimination of service the roof at Portland’s Union Station and to between Portland and Eugene. To ensure conduct preliminary engineering for two rail equipment is available for Portland-Eugene projects in north Portland and another in service, Oregon opted to purchase trains that Eugene. Another $8.9 million in federal high- can be used cooperatively with the older fleet speed rail funds were allocated to Oregon for everywhere in the corridor. By owning further planning and environmental work at equipment, Oregon now has a stronger role as Union Station, to help fund an update of the a partner in the Cascades corridor, and Oregon State Rail Plan, and to assist creation ODOT gained the ability to implement of a Corridor Investment Plan (CIP) for schedule changes that were impossible to Willamette Valley passenger service. The latter accomplish before the new trains joined the will incorporate a Tier 1 Environmental fleet. However, owning trainsets has presented Impact Statement to analyze route options new challenges, including the need for and produce a service development plan. The additional funding to maintain the assets. CIP is required to meet minimum federal In calendar year 2015, ridership on the planning requirements and to be eligible to Oregon-funded Amtrak Cascades trains and apply for future federal dollars. The CIP and its recommendations are expected to be the Portland-Eugene segment of the Coast completed in 2018. Starlight was 139,975 passengers. Another 88,967 persons traveled the Portland-Eugene During the second half of 2013, ODOT took corridor in 2015 aboard Amtrak Thruway delivery of two new 13-car passenger trainsets ODOT POINT buses. From 1996 to 2012, manufactured by Talgo, the company that the Oregon passenger rail system and its allied earlier built the five existing trains used for the bus network have shown sustained ridership Amtrak Cascades service since 1998. The new growth with the exception of 2009, a year trains were purchased with federal ARRA hard-hit by the recession. In 2013, ridership highway funds saved when highway projects began to decline because of a number of came in under bid. Oregon purchased the factors. A recent schedule change, trainsets for several reasons, including improvements in on-time performance, wanting to increase its contribution to – and completion of construction activities, and stature in – passenger rail service in the Pacific marketing efforts have resulted in a nine Northwest. The five trains operating in the percent ridership increase on the Amtrak Cascades corridor, prior to the addition of Cascades service for first quarter of 2016 as Oregon’s two new trains, were stretched to compared to the first quarter of 2015. their limit covering existing service commitments. Any planned expansion would not be possible without additional equipment.

FREIGHT AND PASSENGER RAIL PAGE 7 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL EXCURSION TRAINS same time, Oregon and Washington reevaluated how to equitably share the cost of Excursion trains are important to the the Amtrak Cascades service. The net result of financial future of some Oregon short lines these congressionally mandated actions has and to the economies of regions in which been to substantially increase annual costs for they operate. Two small freight carriers that both Oregon and Washington. rely heavily on excursion revenue include Funding sources used heretofore by Oregon to Mount Hood Railroad and Wallowa Union provide citizens with a passenger rail Railroad. Two other operators, Sumpter alternative do not generate sufficient revenue Valley Railroad and the Oregon Coast Scenic to cover the new and higher costs imposed by Railroad, run exclusively for tourists. the federal government. As a result, a number of states, including Oregon, have been AMTRAK, PRIIA AND FUTURE required to make funding decisions regarding continuation of intercity passenger rail UNDING F service. In 2015, the legislature approved Passenger rail funding discussions in Congress $10.4 million in operating funds to continue are inevitably tied to the discussion of passenger rail in Oregon. Amtrak’s future. In 2002, Amtrak was on the COMMUTER RAIL brink of closing lines. Missing congressional deadlines to be operationally self-sufficient, In February 2009, the Tri-County Amtrak reorganized and, in 2011, overhauled Metropolitan Transportation District its accounting processes. With the exception (TriMet) began commuter rail service between of the , Amtrak’s ticket Beaverton and Wilsonville, with three revenue does not cover operating costs. The intermediate stations in Beaverton, Tigard company’s cross-country trains show the high- and Tualatin. The service operates over est losses. Affected communities and states are upgraded freight rail tracks belonging to urging Congress to more fully support the PNWR. The Westside Express Service (WES) system in order to provide alternatives to uses three self-propelled diesel multiple-unit crowded highways and airports. vehicles (DMUs) plus one non-powered trailer Meanwhile, Congress put in motion changes car. Early in 2010, TriMet acquired two used to significantly shift the burden of funding self-propelled rail diesel cars (RDCs) from the regional services – those covering distances of Railroad and overhauled them as less than 750 miles – to the states in which the standbys for the newer DMUs. WES trains services operate. Provisions of the Passenger average 37 miles per hour over the route and Rail Investment and Improvement Act of travel up to a maximum speed of 60 miles per 2008 (PRIIA) set a deadline of October 2013 hour. WES trains run every 30 minutes during for states to begin paying fully allocated costs the morning and afternoon rush hour on of state-supported passenger service run by weekdays only. Ridership in calendar year Amtrak. During 2010 and 2011, 2013 grew to 478,766 from 433,861 in 2012. representatives of the states and Amtrak WES connects with TriMet’s Westside MAX worked to devise a fair method for () and buses at the Beaverton Transit apportioning costs between parties. At the Center. At Wilsonville, the service interfaces

FREIGHT AND PASSENGER RAIL PAGE 8 OF 9 UPDATED: SEPTEMBER 2016 FREIGHT AND PASSENGER RAIL with South Metro Area Regional Transit The Legislative Policy and Research Office does not (SMART) transit buses and also buses provide legal advice. Background Briefs contain operated by the Salem-Keizer transit district. general information that is current as of the date of publication. Subsequent action by the legislative, OREGON RAIL AND PUBLIC executive or judicial branches may affect accuracy. TRANSIT DIVISION

The Rail Division and Public Transit Division of ODOT were combined in June 2012. Within the enlarged division, specialists carry out programs in Rail Safety, Rail Employee Safety, Crossing Safety, Planning and Operations. Most division staff is involved in regulatory activities focusing on safety. They ensure compliance with federal and state regulations related to track, equipment, operating practices, railroad employee safety, highway-railroad crossings and hazardous materials handling. The division directly manages 155 miles of state-owned railroad right-of-way in six counties as well as federal and state-funded crossing improvement projects. Staff provides oversight and inspection of rail-related ConnectOregon projects. Finally, the division helps manage and market the Amtrak Cascades passenger service and connecting Thruway and POINT bus networks.

STAFF CONTACT

Patrick Brennan Legislative Policy and Research Office [email protected] 503-986-1674

Please note that the Legislative Policy and Research Office provides centralized, nonpartisan research and issue analysis for Oregon’s legislative branch.

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