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AN ACT Relating to rail freight service; amending RCW 47.76.010, 47.76.020, 47.76.130, 47.76.030, 47.76.140, 47.76.160, 47.76.040, 47.76.050, 47.76.060, 47.76.070, 47.76.080, 47.76.090, and 47.76.170; adding new sections to chapter 47.76 RCW; recodifying RCW 47.76.010, 47.76.110, 47.76.020, 47.76.120, 47.76.130, 47.76.030, 47.76.140, 47.76.160, 47.76.040, 47.76.050, 47.76.060, 47.76.070, 47.76.080, 47.76.090, 47.76.170, and 47.76.190; and repealing RCW 47.76.100 and 47.76.150.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 47.76.010 and 1983 c 303 s 4 are each amended to read as follows:

The legislature finds that ((~~the~~)) a balanced multimodal transportation system is required to maintain the state's commitment to the growing mobility needs of its citizens and commerce. Freight rail systems are important elements of this multimodal system. Washington's economy relies heavily upon the freight rail system to ensure movement of the state's agricultural, chemical, and natural resource products to local, national, and international markets. Since 1970, Washington has lost nearly one-third of its five thousand two hundred rail miles to abandonment and bankruptcies, leaving approximately three thousand four hundred rail miles.

Abandonment of rail lines and rail freight service may alter the delivery to market of many commodities. In addition, the resultant motor vehicle freight traffic increases the burden on state highways and county roads. In many cases, the cost of upgrading the state highways and county roads exceeds the cost of maintaining rail freight service. Thus, the economy of the state will be best served by a policy of maintaining and encouraging a healthy rail freight system by creating a mechanism which keeps rail freight lines operating if the benefits of the service outweigh the cost.

Recognizing the implications of this trend for freight mobility and the state's economic future, the legislature believes that better freight rail planning, better cooperation to preserve rail lines, and increased financial assistance from the state are necessary to maintain and improve the freight rail system within the state.

Sec. 2. RCW 47.76.020 and 1985 c 432 s 1 are each amended to read as follows:

(1) The department of transportation shall prepare and periodically update a state rail plan, the objective of which is to identify, evaluate, and encourage essential rail service. The plan shall:

(a) Identify and evaluate those rail freight lines that may be abandoned or have recently been abandoned;

(b) Quantify the costs and benefits of maintaining rail service on those lines that are likely to be abandoned ((~~and the acquisition of right of way for the eventual restoration of service on lines recently abandoned~~)); and

(c) Establish priorities for determining which rail lines should receive state support. The priorities should include the anticipated benefits to the state and local economy, the anticipated cost of road and highway improvements necessitated by the abandonment of the rail line, the likelihood the rail line receiving funding can meet operating costs from freight charges, surcharges on rail traffic, and other funds authorized to be raised by a county or port district, and the impact of abandonment on changes in energy utilization and air pollution.

(2) The state rail plan may be prepared in conjunction with the rail plan prepared by the department pursuant to the federal Railroad Revitalization and Regulatory Reform Act.

Sec. 3. RCW 47.76.130 and 1990 c 43 s 4 are each amended to read as follows:

The state, counties, local communities, railroads, labor, and shippers all benefit from continuation of rail service and should participate in its preservation. Lines which provide benefits to the state and local jurisdictions, such as avoided roadway costs, reduced traffic congestion, economic development potential, environmental protection, and safety, should be assisted through the joint efforts of the state, local jurisdictions, and the private sector.

State funding for rail service or corridor preservation must benefit the state's interests, which include reducing public roadway maintenance and repair costs, increasing economic development opportunities, preserving jobs, and enhancing safety, and is contingent upon appropriate local participation. Before spending state moneys on projects the department shall seek federal, local, and private funding participation to the greatest extent possible.

(1) The department of transportation shall continue to monitor the status of the state's light density line system through the state rail plan and various analyses, and shall seek alternatives to abandonment prior to interstate commerce commission proceedings, where feasible.

(2) The utilities and transportation commission shall intervene in interstate commerce commission proceedings on abandonments, when necessary, to protect the state's interest.

(3) As conditions warrant, the following criteria shall be used for identifying the state's essential rail system:

(a) Established regional and short-line carriers excluding private operations which are not common carriers;

(b) Former state project lines, which are lines that have been studied and have received funds from the state and federal governments;

(c) Lines serving major agricultural and forest product areas or terminals, with such terminals generally being within a fifty-mile radius of producing areas, and sites associated with commodities shipped by rail;

(d) Lines serving ports, seaports, and navigable river ports;

(e) Lines serving power plants or energy resources;

(f) Lines used for passenger service;

(g) Mainlines connecting to the national and Canadian rail systems;

(h) Major intermodal service points or hubs; and

(i) The military's strategic rail network.

(4) Local jurisdictions may implement rail service preservation projects in the absence of state participation.

(5) The department of transportation shall continue to monitor projects for which it provides assistance.

Sec. 4. RCW 47.76.030 and 1991 sp.s. c 13 s 22 are each amended to read as follows:

(1) The essential rail assistance account is ((~~hereby~~)) created in the state treasury. Moneys in the account may be appropriated only for the purposes specified in this section.

(2) Moneys appropriated from the account to the department of transportation may be used by the department or distributed by the department to ((~~first class~~)) cities, county rail districts, counties, and port districts for the purpose of:

(a) Acquiring, ((~~maintaining~~)) rebuilding, rehabilitating, or improving branch rail lines;

(b) ((~~Operating~~)) Purchasing or rehabilitating railroad equipment necessary to maintain essential rail service;

(c) Construction of transloading facilities to increase business on light density lines or to mitigate the impacts of abandonment; or

(d) Preservation, including operation, of viable light density lines, as identified by the Washington state department of transportation, in compliance with this chapter.

(3) ((~~First class~~)) The department, cities, county rail districts, counties, and port districts may grant franchises to private railroads for the right to operate on lines acquired((~~, repaired, or improved~~)) under this chapter.

(4) The department, cities, county rail districts, counties, and port districts may grant trackage rights over rail lines acquired under this chapter.

(5) If rail lines or rail rights of way are used by county rail districts, port districts, state agencies, or other public agencies for the purposes of rail operations and are later abandoned, the rail lines or rail rights of way cannot be used for any other purposes without the consent of the underlying fee title holder or reversionary rights holder, or compensation has been made to the underlying fee title holder or reversionary rights holder.

(((5) Moneys distributed under subsection (2) of this section shall not exceed eighty percent of the cost of the service or project undertaken. At least twenty percent of the cost shall be provided by the first class city, county, port district, or other local sources.

~~(6) The amount distributed under this section shall be repaid to the state by the first class city, county rail district, county, or port district. The~~)) (6) Projects should be prioritized on the basis of local financial commitment to the project as well as cost/benefit ratio. Counties, local communities, railroads, shippers, and others who benefit from the project should participate financially.

(7) Moneys received by the department from franchise fees, trackage rights fees, and loan payments shall be redeposited in the essential rail assistance account. Repayment of loans made under this section shall occur within a period not longer than fifteen years, as set by the department((~~, of the distribution of the moneys and shall be deposited in the essential rail assistance account~~)). The repayment schedule and rate of interest, if any, shall be ((~~set at the time of~~)) determined before the distribution of the moneys.

(8) The state shall maintain a contingent interest in a line that has outstanding grants or loans. The owner may not use the line as collateral, remove track, bridges, or associated elements for salvage, or use it in any other manner subordinating the state's interest without permission from the department.

Sec. 5. RCW 47.76.140 and 1990 c 43 s 5 are each amended to read as follows:

In rail banking situations where it is not practicable to implement or continue freight rail service operations until some future date and the line's right of way is available for ((~~purchase and/or~~)) acquisition or meets the criteria of this chapter ((~~47.76 RCW~~)):

(1) The department of transportation shall ((~~preserve~~)) identify and evaluate rail corridors ((~~for future rail service by purchasing the rights of way with funds specifically appropriated from the essential rail banking account created in RCW 47.76.160~~)) of state-wide significance in the state rail plan.

(2) The department shall preserve corridors of state-wide significance by acquiring the rights of way with funds specifically appropriated from the essential rail banking account created in RCW 47.76.160 (as recodified by this act).

(3) Acquisition of rights of way may also include track, bridges, and associated elements.

((~~(3) All corridors purchased under the rail bank program shall be identified by the department of transportation.~~))

(4) All corridors acquired by governmental entities ((~~by donation or reversion~~)) for future rail use shall be identified in the rail bank program.

(5) Any rail rights of way acquired with state money will be for present or future rail purposes and can only be used for other purposes with the consent of the Washington state department of transportation and the consent of the underlying fee title holder or reversionary rights holder, or if compensation has been made to the underlying fee title holder or reversionary rights holder.

Sec. 6. RCW 47.76.160 and 1991 sp.s. c 13 s 120 are each amended to read as follows:

(1) The essential rail banking account is created in the state treasury. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes specified in this section.

(2) Moneys in the account may be used by the department to:

(a) ((~~Purchase unused~~)) Acquire rail rights of way; ((or))

(b) Provide ((~~up to eighty percent of the~~)) funding ((~~through loans~~)) to ((~~first class~~)) cities, port districts, counties, and county rail districts to ((~~purchase unused~~)) acquire rail rights of way; or

(3) Use of the moneys pursuant to subsection (2) of this section shall be for rights of way that meet the following criteria:

(a) The right of way has been identified((,)) and evaluated((~~, and analyzed~~)) in the state rail plan prepared pursuant to this chapter;

(b) The right of way may be or has been abandoned; and

(d) Reestablishment of rail service would benefit the state of Washington; and this benefit shall be based on the public and private costs and benefits of reestablishing the service compared with alternative service including necessary road improvement costs, or of taking no action.

Funds in the account may be expended for this purpose only with legislative appropriation. Funds for acquisition of any line shall be expended only after obtaining the approval of the legislative transportation committee)). The department of transportation shall immediately report any expenditure of essential rail banking account funds on rail banking projects to the legislative transportation committee. The report shall include a description of the project, the project's rank in relation to other potential projects, the amount of funds expended, the terms and parties to the transaction, and any other information that the legislative transportation committee may require.

(4) The department may also expend funds from the receipt of a donation of funds sufficient to cover the property acquisition and management costs. The department may receive donations of funds for this purpose, which shall be conditioned upon, and made in consideration for the repurchase rights contained in RCW 47.76.040 (as recodified by this act).

(5) The department or the participating local jurisdiction shall be responsible for maintaining the right of way, including provisions for drainage management, for fire and weed control, and for liability associated with ownership.

(6) Nothing in this section and in RCW 47.76.140 and 47.76.030 (as recodified by this act) shall be interpreted or applied so as to impair the reversionary rights of abutting landowners, if any, without just compensation.

(7) The department shall develop guidelines for expenditure of essential rail banking funds in the best interest of the state.

(8) Moneys loaned under this section must be repaid to the state by the city, port district, county, or county rail district. The repayment must occur within a period not longer than fifteen years, as set by the department, of the distribution of the moneys and deposited in the essential rail banking account. The repayment schedule and rate of interest, if any, must be set at the time of the distribution of the moneys.

(9) The state shall maintain a contingent interest in any property that has outstanding grants or loans. The owner may not use the line as collateral, remove track, bridges, and associated elements for salvage, or use the line in any other manner subordinating the state's interest without permission from the department.

Sec. 7. RCW 47.76.040 and 1991 sp.s. c 15 s 61 are each amended to read as follows:

The department ((~~shall~~)) may sell or lease property acquired under ((~~RCW 47.76.140~~)) this chapter to a county rail district established under chapter 36.60 RCW, a county, a port district, or any other public or private entity authorized to operate rail service. Any public or private entity which originally donated funds to the department ((~~pursuant to RCW 47.76.140~~)) under this chapter shall receive credit against the purchase price for the amount donated to the department, less management costs, in the event such public or private entity purchases the property from the department.

If no county rail district, county, port district, or other public or private entity authorized to operate rail service ((~~offers to purchase such~~)) purchases or leases the property within six years after its acquisition by the department, the department may sell or lease such property in the manner provided in RCW 47.76.050 (as recodified by this act). Failing this, the department may sell or convey all such property in the manner provided in RCW 47.76.060 or 47.76.080 (as recodified by this act).

Sec. 8. RCW 47.76.050 and 1991 sp.s. c 15 s 62 are each amended to read as follows:

(1) If real property acquired by the department under ((~~RCW 47.76.140~~)) this chapter is not sold to a public or private entity authorized to operate rail service within six years of its acquisition by the department, the department may sell or lease the property at fair market value to any of the following governmental entities or persons:

(a) Any other state agency;

(b) The city or county in which the property is situated;

(d) The former owner, heir, or successor of the property from whom the property was acquired;

(e) Any abutting private owner or owners.

(2) Notice of intention to sell under this section shall be given by publication in one or more newspapers of general circulation in the area in which the property is situated not less than thirty days prior to the intended date of sale.

(3) Sales to purchasers may, at the department's option, be for cash or by real estate contract.

(4) Conveyances made under this section shall be by deed executed by the secretary of transportation and shall be duly acknowledged.

(5) All moneys received under this section shall be deposited in the essential rail ((~~assistance~~)) banking account of the general fund.

Sec. 9. RCW 47.76.060 and 1991 sp.s. c 15 s 63 are each amended to read as follows:

If real property acquired by the department under ((~~RCW 47.76.140~~)) this chapter is not sold to a public or private entity authorized to operate rail service within six years of its acquisition by the department, the department may transfer and convey the property to the United States, its agencies or instrumentalities, to any other state agency, or to any county or city or port district of this state when, in the judgment of the secretary, the transfer and conveyance is consistent with the public interest. Whenever the secretary makes an agreement for any such transfer or conveyance, the secretary shall execute and deliver to the grantee a deed of conveyance, easement, or other instrument, duly acknowledged, as necessary to fulfill the terms of the agreement. All moneys paid to the state of Washington under this section shall be deposited in the essential rail ((~~assistance~~)) banking account of the general fund.

Sec. 10. RCW 47.76.070 and 1991 sp.s. c 15 s 64 are each amended to read as follows:

The department is authorized subject to the provisions and requirements of zoning ordinances of political subdivisions of government, to rent or lease any lands acquired under ((~~RCW 47.76.140~~)) this chapter, upon such terms and conditions as the department determines.

Sec. 11. RCW 47.76.080 and 1991 sp.s. c 15 s 65 are each amended to read as follows:

(1) If real property acquired by the department under ((~~RCW 47.76.140~~)) this chapter is not sold, conveyed, or leased to a public or private entity ((~~authorized to operate rail service~~)) within six years of its acquisition by the department, the department may, in its discretion, sell the property at public auction in accordance with subsections (2) through (5) of this section.

(2) The department shall first give notice of the sale by publication on the same day of the week for two consecutive weeks, with the first publication at least two weeks before the date of the auction, in a legal newspaper of general circulation in the area where the property to be sold is located. The notice shall be placed in both the legal notices section and the real estate classified section of the newspaper. The notice shall contain a description of the property, the time and place of the auction, and the terms of the sale. The sale may be for cash or by real estate contract.

(3) In accordance with the terms set forth in the notice, the department shall sell the property at the public auction to the highest and best bidder if the bid is equal to or higher than the appraised fair market value of the property.

(4) If no bids are received at the auction or if all bids are rejected, the department may, in its discretion, enter into negotiations for the sale of the property or may list the property with a licensed real estate broker. No property may be sold by negotiations or through a broker for less than the property's appraised fair market value. Any offer to purchase real property under this subsection shall be in writing and may be rejected at any time before written acceptance by the department.

(5) Conveyances made under this section shall be by deed executed by the secretary of transportation and shall be duly acknowledged.

(6) All moneys received under this section shall be deposited in the essential rail ((~~assistance~~)) banking account of the general fund.

Sec. 12. RCW 47.76.090 and 1991 sp.s. c 15 s 66 are each amended to read as follows:

Transfers of ownership of property acquired under ((~~RCW 47.76.140~~)) this chapter are exempt from chapters 8.25 and 8.26 RCW.

Sec. 13. RCW 47.76.170 and 1990 c 43 s 8 are each amended to read as follows:

The department shall evaluate the state freight rail program performance at the end of six years (in 1996) with respect to past and current conditions and future needs. The results of this evaluation shall be presented to the legislative transportation committee.

NEW SECTION. Sec. 14. RCW 47.76.010, 47.76.110, 47.76.020, 47.76.120, 47.76.130, 47.76.030, 47.76.140, 47.76.160, 47.76.040, 47.76.050, 47.76.060, 47.76.070, 47.76.080, 47.76.090, 47.76.170, and 47.76.190, whether or not amended by this act, shall be recodified within chapter 47.76 RCW in that order.

NEW SECTION. Sec. 15. The following acts or parts of acts are each repealed:

(1) RCW 47.76.100 and 1990 c 43 s 1; and

(2) RCW 47.76.150 and 1990 c 43 s 6.