Casey's Railroad - - Gone?

Posted as background to Iowa Pacific Holdings recent acquisition of the Grenada Railway.

Casey's Railroad - - - - GONE?

By Tom Parker

(Reprinted from June  2009 Memphis Buff)

“HOMEWOOD, Ill., May 13, 2009 – CN (TSX: CNR)(NYSE: CNI) today announced the completion of agreements to sell three Mississippi line segments to Grenada Railway, LLC and Natchez Railway, LLC both non-carrier affiliates of V&S Railway and A&K Railroad Materials. This deal transfers ownership of 252 miles of track and preserves rail service on the two longest of these rail lines for at least the next two years. The terms of the transaction were not disclosed.“CN is pleased that this deal with Grenada Railway and Natchez Railway will allow these rail lines to remain in place serving Mississippi business,” said Jim Vena, CN's senior vice president, Southern Region. “CN will continue to offer interchange service to the new short lines, maintaining every customer's seamless access to the broader CN network.

Red: Lines Sold, Green: CN, Blue: KCS .

V&S Railway LLC operates successful short lines in Kansas and Colorado.”

This news release by the Canadian National Railroad probably signals the end of the line for the track that carried Casey Jones to his fabled end. The demise probably can be traced back to September 10^th, 1995. when Amtrak, due to the Illinois Central's reluctance to maintain passenger train standards over the district, rerouted the “City of New Orleans” over the IC's track through Greenwood, MS, leaving only local service for the line's dwindling customer base. The final blow for the Natchez line was the closing of International Paper's mill at Natchez.

Despite assurances in the news release that the new railroads “ will allow these lines to remain in place serving Mississippi business”, the parent of Grenada Railway and Natchez Railway is A&K Railway Materials, “the nation's leading supplier of new and used track materials” according to their website.

A&K's founder, president and majority shareholder, Kern W. Schumacher, began his career at the age of nineteen when he organized A&K Tie Company to salvage thousands of used railway ties being removed from the lower deck of the Oakland Bay Bridge in Oakland California. A&K purchased the redwood ties at .60 each and resold them to landscapers for $6.00 each.

In papers filed with the Surface Transportation Board, both the Grenada Railway and Natchez Railway are shown as “controlled by Mr. Schumacher”.

V&S Railway, is cited in the news release as operating “successful” short line railroads in Kansas and Colorado.

The Facts

In December of 2000 the V&S petitioned the STB to purchase a 41 mile segment of former ATSF trackage between Sun City and Attica, KS from the Central Kansas Railway. In May of 2003, the V&S petitioned to abandon 20 miles of the line between Sun City and Medicine Lodge. The remaining 22 miles of the line is still in use between a connection with the BNSF at Attica, KS, and Medicine Lodge where National Gypsum has a facility.

The V&S also operates a 5 mile switching line at Hutchinson KS, which it purchased from the Hutchinson and Northern Railway in 2006.

Another venture of the V&S is the Kern Valley Railroad. On October 31, 2001, The Kern Valley purchased the 30 mile line of the Trinidad Railway on Colorado with the express purpose of salvage, the Trinidad Railway already having filed for abandonment. Latest filings with the STB indicate that two miles of the line remain.

In 2008, V&S purchased the Gloster & Southern Railroad between Gloster, MS, and Slaughter, LA, from Georgia Pacific which owns an idled paper mill at Gloster.

In 1992, in conjunction with Michael Van Wagenen of Kyle Railways, Schumacher and Morris Kulmer, CFO of A&K, formed the Tulare Valley Railroad Company. TVR's original 158 miles has shrunk to 6.1 miles, with the rest of the line either being abandoned or sold to the San Joquin Valley Railroad. On March 12, 2009, TVR petitioned the STB to abandon the remainder of the railroad.

In 1999, the Canadian National Railroad transferred 145 miles of track to the Southern Manitoba Railway, an affiliate of the TVR. In March of 2006, the Southern Manitoba Railway applied to Manitoba's Motor Transport Board to discontinue operations over the last 78.6 miles of its line between Morris and Mariapolis, MB.

The 122 mile Colorado, Kansas and Pacific Railway was sold to V&S by the state of Colorado in December, 2005, for 10.35 million dollars, with a down payment of one million dollars with the remainder to be paid over a six year period.

In August of 2007 grain shippers were complaining of having to use trucks due to the railroads inability to supply cars and Colorado reported that it no payments had been received after the initial down payment. In 2006 a rail fan reported finding only two locomotives on the entire line, neither running and with rusty wheels and only five rail cars on line, four flats and a “5 Pack” intermodal spine car.

There are numerous other acquisitions and attempts at acquisitions by Schumacher and friends in filings with the STB, and also numerous abandonments. While it is difficult to match acquisitions with abandonments, presumably these earlier “V&S” lines no longer exist. Unless some action is taken by communities and industries along the line, the Grenada and Natchez Railways will probably join its former corporate brothers as short lived “Fallen Flags”.