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Hearing this week on proposed railroad abandonment

Attorney General Jim Hood has joined the chorus of people asking the federal Surface Transportation Board to hold a public hearing on Grenada Railway’s plans to abandon  a stretch of rail from Grenada to Canton.

Hood asked the STB that the hearing be held in Grenada so stakeholders on the line could air their grievances.

Hood’s plea to the STB followed one by the Mississippi Department of Transportation.

Mike Tagert, whose northern district includes a significant portion of the targeted line, said abandonment could have an adverse effect on that area’s ability to attract new economic development.

“We’ll no longer have rail service in the area,” he told the Mississippi Business Journal in an interview last week. “And there are companies that already use the rail. It’ll have an immediate impact on them.”

Rep. Warner McBride, D-Courtland, chairman of the Transportation Committee, has set a hearing – not one sanctioned by the STB — at the Capitol for Tuesday. “I hope to let the general public know what’s going on,” McBride said. “We also want to let the Surface Transportation Board that we as a Legislature do not support the abandonment of this line.”

The request by Hood and MDOT has a tough road ahead of it, said Walter Brown, a Natchez attorney MDOT retained to represent the state.

The type of abandonment Grenada Railway seeks is what’s known as an “exemption abandonment,” meaning the company is asking the STB to fast-track the process, hearing it without rounds of hearings but with briefs.

“There are two ways to do it – the regular abandonment, where you have hearings with cross examination and all that, and an exemption abandonment, where the (the STB) makes a decision based on filings,” Brown said. An exemption abandonment means a fast-tracked, non-controversial process, which is not appropriate in this case. We’ll ask for the STB not to consider this as an exemption or an expedited track, but to consider the full application. Most abandonments are done on an exemption basis, so we know we have an uphill fight on that issue. Very rarely is an oral hearing granted in an exemption abandonment.”

Brown said Mississippi Department of Transportation has a filing due Oct. 27 that will seek a regular abandonment process.

If the STB chooses to allow Grenada Railway to proceed under exemption abandonment rules, there are options for the state, Brown said. For example, the STB could impose conditions for environmental reasons, or reasons meant to protect properties along the line that are on the National Register of Historic Places.

“But the most important thing right now is to try to persuade the STB to consider this a regular abandonment,” Brown said.

The timeline of an exemption abandonment is squarely on the side of Grenada Railway. By eliminating hearings, the railway can officially abandon the line 110 days after their original filing stating their intention to do so. In this case, that’s Jan. 6. A regular abandonment would slow down that process considerably.

Mississippi Central Railroad Co., an Illinois-based company that own a few lines in Northeast Mississippi, has filed with the STB a notice that it intends to file an offer of financial assistance. An OFA is an information-gathering technique one railroad uses to glean financial information about another that is considering abandonment. The possibility exists that Mississippi Central could purchase Grenada Railway and operate it as a short line railroad, Brown said.

In filings, Grenada Railway said the line handled 289 carloads of inbound and outbound freight in 2010. In the first six months of 2011, it handled 92 carloads. The operating loss for 2010 was $101,000; for the first six months of 2011, it was $94,674.

Grenada Railway bought the line from Canadian National in 2009.

Yet another option would be for the affected counties to form a railroad authority, similar to what three counties in Southwest Mississippi did earlier this year in response to their fears of Grenada Railway’s parent company abandoning a track from Brookhaven to Natchez and selling it for scrap.

The biggest problem with that, Brown said, is that Grenada Railway said in its initial filing that it would take no less than $21 million for the track and related materials in a scrap sale.

“That is a lot of money, and therein lies the problem,” Brown said.

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