MCR: Podgurski Comments On Sale

Mass Coastal Railroad President & CEO Christopher Podgurski responds to MCR’s pending sale by auction

Mass Coastal Railroad President & CEO Christopher Podgurski generously responded in detail to Editor’s inquiry on aspects of the MCR’s pending sale by auction on 16.June. MCR is being sold to recompense investors in the bankrupt Iowa Pacific Holdings’ (IPH) San Luis and Rio Grande (SLRG) property. We appreciate Chris’s detail and candor.

Josh, thanks for the call.

As you’re aware, the situation between myself and the last seven years of IPH involvement is coming to an end. One thing I retain is an agreement to acquire 100% of the shares of Mass Coastal RR, a company that I started in 2007 along with others. Thirteen years later, I have a devoted staff of professionals that operate the railroad on a daily basis.

From the beginning, it has always been my mantra to operate the railroad in a safe and compliant manner. Trying to do the best that we can for the employees with respect to fair wages and benefits. The challenges are frequent and numerous! Since 2013, it’s clearly been an uphill battle. Thankfully the light is in view at the end of the tunnel.

Now, South Coast Rail is coming along and it looks like co-existence with Commuter Rail is in the near future. The MC is supporting the ongoing construction activities for the South Coast Rail Project. As the current 49CFR Part 213 “track owner,” the MC is responsible for continued compliance with the various regulations. This will remain until the MBTA formally converts SCR to “Joint Operations,” commuter rail and freight.

The MC partners with MASSDOT and MBTA in several areas, and in doing so performs every safety-centric role under 49CFR. Since 2008, we have overseen the implementation of many DOT-sponsored construction projects too numerous to list. All of them have been much-needed capital projects that upgrade the rail lines, bridges and grade crossings.

Many challenges

From the typical measurements of rail traffic, the MC is “freight anemic” and doesn’t even approach the rubric of carloads-per-mile. As shortline railroaders know, we don’t leave any stone unturned on making a new move happen. Often times, a move that should happen doesn’t materialize due to equipment availability or just making the rates competitive with trucking.

If I were looking from the outside in, I would see several complexities in going forward. The first being a IRS Tax Obligation that, if applying the filings by the United States of America vs. SLRG, could aggregate to over $13 million, mostly stemming from unpaid payroll taxes. There are also numerous other commercial-legal issues lingering from IPH that need to be cured and unwound. Needless to say, the IRS is in first-place, and It is a wild card as to how it all will end up being cured. Any new buyer would potentially assume the entire potential obligation(s). What is it they say? Good things happen to good people?

The next would be that the MC is currently operating on the fifth Extension of the 2007 License and Operating Agreement, which is on the 58.5 Miles of SE Mass Lines. That extension expires on September 28th, 2021, which really just around the corner, unless terminated earlier (all of the agreements, whether construction related or operations, are all terminable on 30 days notice at the sole convenience of the Commonwealth). Such a short horizon presents natural challenges to obtaining financing, as well as undertaking capital investments. These tests are not new.

Whoever the new owner is, they will probably face one of the most difficult years in the MC’s history, due to the Coronavirus pandemic. The MC and its vendors are in compliance with COVID-related requirements. As part of the interstate railroad network, we are subject to the Interstate Commerce Act 49 USC §10101, and are part of the nation’s critical infrastructure as defined by 42 USC §5195c. Our “recovery plan” will be to bob and weave with the economy. We have taken steps to use a product called PERMA TREAT that is an anti-microbial product for treatment of surfaces. The rolling stock and facilities have been treated in anticipation of some operation.

In closing, so much of the last several years – both time and resources – have been lost to fending off the infidels. If my bid is successful, I will enjoy the chance to concentrate on freight business development and the logistics therein. In my 13 years as a railroader, it has always felt like a victory to put a new move together. Arranging for the transportation of high-wide transformers a recent example.

Cohasset MA

MC 2009 pulls a high-wide transformer load and four ballast cars across the Cohasset Narrows bridge {MCR photo}.