10-30 railroad upgrade

Lake County Commissioners have established a loan agreement as an alternative to cover matching grant funds for railroad upgrades if the state legislature doesn’t approve a request for funding.

Major funding is being implemented to upgrade rail lines on Goose Lake Railway in Lake County in anticipation of Red Rock Biofuels operations beginning next year.

Earlier this year the U.S. Department of Transportation’s Federal Railroad Authority (FRA) approved $5.6 million in grant funds for freight rail system upgrades through the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program – called “The Build America Grant.” The CRISI grant requires a $5 million match, $1.4 million of which is dedicated from construction of the rail spur connecting to the main line at the currently under construction Red Rock Biofuels facility on the south end of Lakeview.

An additional $3.12 million was expected in matching funds from the Oregon State Legislature. Those pending funds have been delayed until the next legislative session as a result of unexpected delays earlier this year in part due to when the State Senate was brought to a halt by walkouts and contentious protests on unrelated votes.

Lake County Commissioner Brad Winters recently met with Oregon Sen. Betsy Johnson, tri-chair for the State Transit Committee, to push for railroad upgrade funding to match the CRISI grant. A total of $180,000 has already been approved to help with bridges, and Connect Oregon provided $500,000 as part of the match. The State of Oregon approved $245 million in bonds last year for the construction of Red Rock Biofuels.

In an effort to secure placeholder funding to proceed while awaiting legislative approval to cover the remainder needed of match funds, Lake County Commissioners approved a loan program through Business Oregon in partnership with Goose Lake Railway – operators of the Lake County rail line – earlier this month. The Business Oregon loan approval serves as a backup plan should legislative funding not be approved.

The loan, if activated, would be a 20-year agreement with Goose Lake Railway to repay cost of loan guarantees to the county. Utilizing the loan agreement as a place-setter establishes the required matching funds, allowing CRISI grant funds to be activated for railroad line upgrade work to begin.

In addition to Red Rock Biofuels utilizing the rail line to ship upwards of 15 million gallons of jet fuel, diesel fuel, and naphtha annually; the railroad line is also utilized by several other current industries in Lakeview – Cornerstone Mineral and Collins Pine. A railroad maintenance charge per car is assessed, which with Red Rock’s addition should be enough to cover the cost of loan payments should the matching loan funding be necessary.

“Railroad maintenance per car will cover the cost of debt service, and with Red Rock joining it would cover the cost to pay debt structure and extra leftover,” said Bruce Addington, Goose Lake co-owner, at the October Commissioners meeting. “It wouldn’t take all money away from funds for Goose Lake Rail.”

According to Winters, the current rail line is rated as accepted status, allowing up to five cars of biodiesel at a time. With Red Rock’s facilities expected to produce 10 rail cars of fuel each week, improvements are needed for safety with two anticipated shipments on the line from Red Rock’s facilities per week.

“The CRISI grant is needed for bridges and crossings that are not quite up to Class-1 accepted status,” said Winters. “Crossings and bridges must be at a certain standard for hauling biodiesel, so that’s where this money will go. The ultimate goal is to get 286,000 pound cars to cross, right now there are smaller cars, but if we get 286’s it allows Red Rock to haul more.”

One rail car is approximately equivalent to four fuel trucks in load capacity, adding incentive for rail upgrades to avoid further truck traffic affecting highway conditions and repairs.

“We are trying to put everything in place so that if the legislature doesn’t do it we’ll still be in grant compliance with the loan,” added Winters. “There are a lot of balls in the air, but this is going to happen. This has to happen.”

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