Final in a series
SHAMOKIN - Local customers are split over the idea of privatizing the local railroad system and disbanding the SEDA-COG Joint Rail Authority (JRA).
While the JRA points to a recent customer service poll that shows 74 percent of its approximately 90 customers were "very happy with their rail service," that doesn't mean competition wouldn't help, others argue.
Don Rosini, co-owner of Shamokin Filler just outside the city in Coal Township, said he has no complaints about the service North Shore Railroad, JRA's only operator since 1984, provides.
But, he added, "I'm a firm believer in a free market, and competition is a good thing."
Exactly what might happen if the five short-line railroads, 200 miles of tracks and related infrastructure the JRA owns in an eight-county area were open to more than one operator is just what proponents of privatization would like to find out.
The JRA and its supporters argue they have an ideal public-private partnership. The JRA is able to hold its private operator, North Shore, accountable for service and track maintenance that exceeds federal standards and require service even in areas with a limited customer base. Meanwhile, it has access to public funds that help the operation expand and improve, spurring economic development and creating jobs.
"We have a good reputation between us and the operator," Jeff Stover, executive director of the JRA, said in a Dec. 29 interview at The News-Item.
The debate began when Northumberland County commissioners passed a resolution by a 2-1 vote on Dec. 13 to seek the opinion of the state Attorney General's Office about selling the rail operation to a private company and disbanding the JRA. JRA board representatives from Centre, Clinton, Lycoming, Montour and Union counties have since told The News-Item they favor the current arrangement, while Columbia and Mifflin representatives have not replied to requests for their stance. All eight county boards would have to approve a move to disband the JRA and sell the railroad properties.
As for progress of the resolution, Northumberland County Commissioner Clausi said Friday the county solicitor had recently been in contact with the state Attorney General's Office, but he had no further information.
Private support
Part of the county's argument is that JRA and its exclusive contract with North Shore keeps other providers out of the region. Norfolk Southern, which works closely with North Shore Railroad, is the only main servicing railroad to the region. Others, including Canadian Pacific, a national competitor of Norfolk Southern, and Reading and Northern, a regional operator more like North Shore, which has access into the county at the east end, could spur such competition.
The JRA operation also prevents local shippers from using the rail lines if they wanted to buy their own engines and cars, the county contends.
Shamokin Filler is the largest customer on JRA's Shamokin Valley Railroad, which stretches 27 miles from Sunbury to Mount Carmel, with an average of four to five cars a week shipping carbon additives out of the plant.
"Competition would lower prices and increase services," Rosini maintains.
Dennis Reitz, a manager at Clark's Feed Mills, along Route 61 a few miles north of Shamokin in Weigh Scales, would also like to see privatization.
"I'm a believer in small government. I don't believe any government entity should provide goods or services in competition with free enterprise," he said.
Reitz is in a unique position in that he is on the JRA board as one of two Northumberland County representatives. In fact, his public comments in favor of the privatization resolution at the Dec. 13 commissioners' meeting led to his removal as JRA treasurer at Wednesday's meeting of that agency, although he remains on the board. He said he was insulted by the board's move, and that he has an obligation not only to the board but to the county he represents.
As for his work at Clark's, Reitz said he's satisfied with the rail service, but notes that private ownership of short-line railroads such as Shamokin Valley and the other four that JRA operates is the norm.
"Public ownership is the exception," he said.
Short-lines, railroad companies that operate over a relatively short distance as compared to larger, national railroad networks, are effective in private ownership, Reitz said.
Clark's Feed averages one car a week that brings in ingredients and grain for the manufacture of animal feeds.
Although Reitz supports privatizing, he recognizes the need to protect customers and rail lines.
"The shippers need to be able to expect the same level of service and the condition of the rail tracks should remain the same. Rail lines cannot be abandoned for a period of time," he said.
That's among the arguments that Stover and JRA board Chairman Jerry Walls make, and particularly for their Shamokin Valley line. The JRA forced North Shore to upgrade and keep Shamokin Valley operating despite just 180 carloads moving across them in all of 2010.
Stover has said the Shamokin Valley line, which JRA acquired in 1988, has perhaps benefited the most of the agency's five railroads, and may be in existence only because of the JRA.
Sealed Air: Keep JRA
Sealed Air Corp., a Paxinos manufacturer of plastic absorption pads used in meat packaging, would prefer keeping the JRA operation, said Skip Dressler, production manager.
"I don't think it's a good idea (to privatize). We've gotten good service from North Shore," he said.
Dressler, who said Sealed Air has one train car deliver about 120 tons of materials every two weeks, expressed concern that costs would increase and reliability would decrease if the rail was privatized.
"We've had a great relationship and they're very responsive to our needs," he said.
North Shore President and CEO Gary Shields has defended his company and its service, and said he was surprised by the resolution. He said the county wasn't interested in acquiring the railroad when North Shore wasn't making money, but now that rail service has been revived locally and nationwide, and with new opportunities because of the Marcellus Shale industry, the county sees a revenue source.
Shields had also said the company employs about 95 people, has been taking care of its customers for 25 years and has invested more than $30 million.
Two tracks of thought
In addition to Shamokin Filler, Clark's and Sealed Air, North Shore also serves Anthracite Industries, near Sunbury; TimberEnd, a wood processing company in Ranshaw, and Drug Plastics and Glass Co., Shamokin Township, on the Shamokin Valley line.
A representative of Anthracite declined to comment for this story, but Stover said the company has been supportive of JRA and helped secure a state grant to improve its siding, a track that branches off the main line to serve a customer.
A TimberEnd representative also declined comment, but the $1 million JRA-supported rail expansion near its operation, announced in December 2010, is expected to increase employment and allow the company to operate year-round rather than only eight months.
With $300,000 in TIGER II funds from the Federal Railroad Administration and $700,000 of PA Capital Budget funds from PennDOT Rail Freight, the project involves construction of a 2,000-foot long siding and a 1,500-foot runaround. Construction continues on those projects, and work should be complete in March if the weather cooperates, Stover said.
He said the TimberEnd project exemplifies the value of the JRA.
"It's a system that works very well. Customers are happy with it," he said.
Others, such as Reitz, point to successful private operations elsewhere in the U.S.
"Following those free enterprise models should be a possibility for (this) region," he said.