FRIENDS OF THE NORTH COAST RAILROAD

P.O. Box 1884, Redway, CA  95560  

Chronology of Events Leading to Sale of Timber Rights



Dec. 15, l986.   Eureka Southern Railroad files for Chapter 11 in U.S.

Bankruptcy Court for the Northern District of California, located in Santa

Rosa.



Jan. 15, l987.   Jerry E. Gregg, one of five nominees of the U.S. Dept. of

Transportation, is appointed by Judge Alan Jaroslovsky to be Trustee of the

Eureka Southern Railroad.



Jan. 1, 1990.  North Coast Railroad Authority is created by State Senate

Bill 1663 (Keene) "to acquire and operate railroads or select a franchise

to operate a rail transportation system..."



June 1990.  Proposition 116, the Rail Transportation Bond Act, and

Proposition 108 are passed by California voters.  Prop 116's purpose as

stated is  "...to provide funds principally for passenger and commuter rail

systems..."  Prop 116 provided the funds necessary to purchase the Eureka

Southern.  Prop 108 included funds for maintenance projects along the

railroad.



August 1990.  Dexter Jacobson, representing Paul Sosnowski of the

bankrupted El Dorado Inn of Sonoma, CA,  is murdered one day before he was

to meet with FBI agents in San Francisco to discuss corruption in the Santa

Rosa Bankruptcy Court.



November 1990.  Forbes  and the Santa Rosa Press Democrat carry stories

indicating that "the FBI and other federal bodies are quietly conducting an

investigation of bankruptcy officials and professionals," including Judge

Jaroslovsky.  "The corruption cases have labeled the North Bay bankruptcy

district as one of the dirtiest in the nation..."  (Press Democrat, Nov.

24, 1990).   Trustees Charles Duck and June Haley were both indicted for

illegally taking funds from bankruptcy cases.  Duck was convicted and

sentenced to 27 months in prison.



November 1990.   Objections to the liquidation of assets and Plan of

Reorganization of the Eureka Southern Railroad by Trustee Jerry Gregg as

represented by his attorney, Philip Arnot of Eureka, CA, are filed in the

Bankruptcy Court by the County of Humboldt, County of Mendocino, City of

Willits, California Public Utilities Commission, Eel River Sawmills,

Humboldt Bay Harbor Recreation and Conservation District, the United States

Trustee, Southern Pacific Transportation Co., and the Humboldt County Tax

Collector.  The objections state that notice should be given to creditors

and other interested parties of Trustee's intention to liquidate assets

such as  timber rights, side rails, substantial portions of the physical

plant, etc.  The Trustee was originally given a five year period, beginning

in December of 1986, to sell the railroad intact.  The Objections that were

raised state that a new four month limit imposed by the trustee for finding

a buyer for the intact railroad is inappropriate, particularly in light of

the passage of Prop 116.     All interested parties urge the full remaining

year allowed be used to seek a buyer before liquidation.

	

	Objecting parties state that liquidation of the railroad would result in

the following negative effects:  loss of potential passenger service, loss

of freight service, damage to Eureka Port development project of which

railroad is a principal part, serious environmental damage to the Eel River

Canyon and salmon habitat from erosion, increased truck traffic on highways

resulting in road damage, increased accidents and air pollution, damage to

tourist industry, subsequent loss of jobs and tax revenues.

November 1990 (contd.). Trustee's attorney Arnot reveals that Pacific

Lumber is interested in purchasing not just the timber rights, but possibly

the entire railroad.



December 5, 1990.   Despite objections, Trustee Gregg and Attorney Arnot

convince the bankruptcy court of the urgent need to sell all timber rights

along railroad in Mendocino, Humboldt and Trinity Counties in perpetuity to

Pacific Lumber (PL) of Scotia and Britt Lumber of Arcata for sum total of

$180,000.  They assert that if the sale was not made that same day, payroll

would not be met and the railroad would cease to function within 24 hours.

No evidence was asked for or offered to verify this claim.  Although not

discussed in the court hearing, an additional clause was added to the

contract which gave PL and Britt the option to purchase any or all portions

of the Railroad right of way which are located adjacent to real property

owned by PL or Britt for $20,000 should the railroad fail to operate and

maintain its operation.  No definition of what lands this would constitute

was specified in the contract or anywhere else.



January 1991.  Assembly Bill 344 (Hauser) expands the authority of the

North Coast Railroad Authority to act on railroad purchases in the event of

the bankruptcy or sale of railroad lines.



April 1991.  Paul Sosnowski, picking up where murdered attorney Dexter

Jacobson left off, sues Philip Arnot and others charging that they had

conspired with Charles Duck to run legal proceedings to benefit themselves

and not their client.



December 15, 1991.   The U.S. Bankruptcy Court for the Northern District of

California designates the North Coast Railroad Authority as the purchaser

of the Eureka Southern for $5.25 million.



August 3, 1992.  Caltrans releases Feasibility Study of Intercity Rail

Passenger Service on the San Francisco Bay Area-Eureka Corridor, Phase 1,

Final Report which concludes that the potential for implementing North

Coast Railroad passenger service lies in serving the excursion/recreational

market in the northern section interested in viewing the scenic Eel River

Canyon.  Projections state that profits from tourism in the North would

enable the less profitable Bay Area section to meet the 55% farebox

requirement for State funding.



November 16, 1992.  Pacific Lumber files Timber Harvest Plan (THP)#1-92-410

HUM for a 51 acre clearcut on Bloyd Creek, including railroad right of way.



Dec. 2, 1992.  Pacific Lumber files THP #l-92-437 HUM to clearcut 89 acres

on Pipeline Creek, including railroad right of way.



Jan.-present 1993.  Pacific Lumber files an additional six THP's in close

proximity of the railroad and the Eel River, bringing the total to 2300

acres to be logged.



April 1993.  Newly elected Humboldt County Supervisor Roy Heider appoints

Pacific Lumber Company Lumber Manager Dennis Wood to the North Coast

Railroad Authority.



May 1993.  Friends of the North Coast Railroad (FNCRR)  locate funding to

repurchase timber rights along the railroad right of way.  Eighty-eight

percent of the costs can be secured through the Transportation Enhancement

Activities Program provided for within the Inter-Modal Surface

Transportation Efficiency Act passed by the U.S. Congress in 1991.  Twelve

percent matching funds are available from the Environmental and Mitigation

Program enabled by California State law AB471.  Additionally, FNCRR is

seeking an agency to apply for these funds to preserve the integrity of the

railroad tracks and scenic value of the corridor.